Author Topic: DOW is droppin like it's hot and I'm loving it!  (Read 11677 times)

Sebastian

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DOW is droppin like it's hot and I'm loving it!
« on: June 20, 2013, 02:24:46 PM »
So I recently just got into investing a few months back. I'm 26 years old right now and a few months back everything kept going up up up. I was hoping to get into the market at a lower point but either way I was hoping that the market would take a crap while I'm still young so I could buy more stock on sale!

Lol at the people in my office worrying about this. Who cares?! I hope it keeps going down so my poverty salary can actually buy a decent chunk of stocks. :)

What are your guys' thoughts?

NumberCruncher

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Re: DOW is droppin like it's hot and I'm loving it!
« Reply #1 on: June 20, 2013, 02:28:32 PM »
I guess I feel kinda neutral, but also kinda happy for the same reasons you listed!

My coworkers were also talking about it in worried tones! Bring it on. I have some former downpayment money that's looking for a job.

arebelspy

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Re: DOW is droppin like it's hot and I'm loving it!
« Reply #2 on: June 20, 2013, 02:34:48 PM »
The market goes up, it goes down. 

Sitting out waiting for drops, being happy or sad because it's going up or down... just seems silly.

We're still higher than we were a mere 6 months ago, so on that perspective it's not particularly low.  On the other hand it could shoot up, or drop more.

Just keep investing, up or down.

Would I prefer it to drop?  Sure.  Do I care so much what it does?  Not really.

:)
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dragoncar

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Re: DOW is droppin like it's hot and I'm loving it!
« Reply #3 on: June 20, 2013, 02:56:00 PM »
I care because my time horizon is short.  I hate months like this where I "save" thousands, but my net worth goes down.  It means yet another month longer before FI :-(

(no, I'm not 100% stocks)

mpbaker22

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Re: DOW is droppin like it's hot and I'm loving it!
« Reply #4 on: June 20, 2013, 02:57:53 PM »
Ironically we had a pizza party to celebrate my company crossing a threshold share price yesterday (it crossed a few weeks/months ago).  Then, it dropped several percent today and is now below the threshold.

I don't celebrate or get too sad by these swings.  However, it's always a little difficult not to feel a little down when I've "lost" close to $1000 in one day when it takes me almost two weeks to get that much in a paycheck.
The only reason to care is if you're 2 days away from retirement and need to sell a percent every quarter starting then.  Otherwise, you'll likely make it up plus some.
I don't necessarily change the way I buy/sell based on day to day fluctuations, but I'm getting close to having a few grand saved in my bank (which is when I arbitrarily decide to transfer funds) so i might buy some if they stay low.

I care because my time horizon is short.  I hate months like this where I "save" thousands, but my net worth goes down.  It means yet another month longer before FI :-(

(no, I'm not 100% stocks)

Look at it this way.  If you retired last month and your portfolio dropped 10% this month, your likelihood of your portfolio going to $0 increases dramatically.

Joet

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Re: DOW is droppin like it's hot and I'm loving it!
« Reply #5 on: June 20, 2013, 03:00:21 PM »
I'm getting pwnd like any buy and holder (still up ~10% on the year, so how pwnd is that?)

But I'm 'catching the knife' as it were via easing into equities ever so slightly (started last week a little) and today bought some more. Wife's 401k purchase went in yesterday heh, mine goes in tomorrow...

I usually do a horrid job of catching-the-falling-knife so any available cash that is targeted towards equities I'm just gradually putting in 250-1k at a time/week. Just easing in consistent with my 70/30 AA. What's weird is bonds are getting obliterated too. Such a mess lol. Soon Gold will hit my buy price at this rate and I'm trying to fund a decent chunk into lending club this month to catch their $300 bonus (10k). So many buying opportunities :)

Joet

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Re: DOW is droppin like it's hot and I'm loving it!
« Reply #6 on: June 20, 2013, 03:02:12 PM »

Look at it this way.  If you retired last month and your portfolio dropped 10% this month, your likelihood of your portfolio going to $0 increases dramatically.


Cat Food :)


also on a side note I get a little bitter about 'youngins' applauding market dips. Quiet you guys! People on the other side are getting pwnd. I guess its just a wealth transfer mechanism at the end of the day though.

tooqk4u22

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Re: DOW is droppin like it's hot and I'm loving it!
« Reply #7 on: June 20, 2013, 03:09:33 PM »
The reality is that it is not that big of a deal and is actually quite healthy and needed, especially since the start of the year.  Investors became so certain that QE would go on forever and they chased assets at any cost - so whether or not the fed will actually taper the message is that it could - and that put a tiny amount of fear into people and if logic persists then they will migrate back to more fundamental relative return expecations (doubt it).

Given the expectations for economic growth and if the 10yr treasury was where it fundamentally should be at about 3.5-4% the would be trading about 10-15% lower than current so S&P 500 at 1350 - this will play out between two scenarios (1) the market will correct and go down or (2) the market will stay about where it is and let earnings/rate conditions grow into the appropriate valuations in the next couple of years but you paid dividends to wait. My bet is on #2 and rest assured there will be ups and downs inbetween but until.

tooqk4u22

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Re: DOW is droppin like it's hot and I'm loving it!
« Reply #8 on: June 20, 2013, 03:11:59 PM »
I care because my time horizon is short.  I hate months like this where I "save" thousands, but my net worth goes down.  It means yet another month longer before FI :-(

(no, I'm not 100% stocks)

Sorry but hate to break the news to you but the fed involvement, which caused asset classes to rise together over the last couple years is having the opposite affect now - equities fall, bonds fall, commodoties fall so it doesn't matter if your in all equities or not.  On one hand the fed intervention inflated asset prices, which was good and needed, but it comes at a cost, lower returns as it exits over time or declines but it eventually normalizes.

matchewed

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Re: DOW is droppin like it's hot and I'm loving it!
« Reply #9 on: June 20, 2013, 03:17:08 PM »
As a member of the generation that has embraced the term "meh" I use it to the fullest amount of apathy I can muster. Day to day/month to month/year to year it doesn't matter much for the long haul.

marty998

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Re: DOW is droppin like it's hot and I'm loving it!
« Reply #10 on: June 20, 2013, 03:44:33 PM »
You guys have a habit of dragging the rest of the world down with you don't you!

Our market hasn't bounced to new highs post GFC like the US did. We still need to rise 40% to get back to the death throes of the 2007 bubble. It's mainly due to BHP being in the doldrums for 6 years, rest of the market is higher but with all the dilution that happened with cap raisings and all you wouldn't know it.

$A is falling out of the sky.....right back down to where it should have been all this time.

My net worth is down, but when markets come back as they inevitably do it will snap back like a slingshot so I'm not too worried.

smedleyb

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Re: DOW is droppin like it's hot and I'm loving it!
« Reply #11 on: June 20, 2013, 04:21:11 PM »
But...the market is only down 5% from all time-highs?


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Re: DOW is droppin like it's hot and I'm loving it!
« Reply #12 on: June 20, 2013, 05:30:57 PM »
The market value on any given day doesn't mean much because I don't need to sell to eat.   The rent checks and the dividend checks keep appearing in my mailbox.  Stock market getting cheap?  Time to buy more shares.

Mr Mark

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Re: DOW is droppin like it's hot and I'm loving it!
« Reply #13 on: June 20, 2013, 08:41:12 PM »
The market value on any given day doesn't mean much because I don't need to sell to eat.   The rent checks and the dividend checks keep appearing in my mailbox.  Stock market getting cheap?  Time to buy more shares.

+1

I'm not normally a market timer. Almost the antithesis. But the freak out in the market right now is a classic buy folks. Us long term investors should always be on the lookout for short term dips, and then, as a long term buy and hold accumulation investor, you should really go long, and run down other short term funds to reinvest a few months equity purchases.

Just because we like indexes and long term, doesn't mean we have to deny ourselves see a buying opportunity, and thus accelerate cash flow to take advantage. Use reserves to buy the market, and pay yourself back from cash on hand over the next few months into shorter term reserves.

arebelspy

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Re: DOW is droppin like it's hot and I'm loving it!
« Reply #14 on: June 20, 2013, 08:50:48 PM »
The market value on any given day doesn't mean much because I don't need to sell to eat.   The rent checks and the dividend checks keep appearing in my mailbox.  Stock market getting cheap?  Time to buy more shares.

+1

I'm not normally a market timer. Almost the antithesis. But the freak out in the market right now is a classic buy folks. Us long term investors should always be on the lookout for short term dips, and then, as a long term buy and hold accumulation investor, you should really go long, and run down other short term funds to reinvest a few months equity purchases.

Just because we like indexes and long term, doesn't mean we have to deny ourselves see a buying opportunity, and thus accelerate cash flow to take advantage. Use reserves to buy the market, and pay yourself back from cash on hand over the next few months into shorter term reserves.

I disagree with this idea in principal.

Set rebalancing bands/limits.  If it's triggered due to the drop, okay.  If it's not, fine.

But don't try and guess that because of this drop you're going to change your AA beyond what it would be otherwise.

YMMV.
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Mr Mark

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Re: DOW is droppin like it's hot and I'm loving it!
« Reply #15 on: June 20, 2013, 09:04:58 PM »

Arebelspy,

You're doing the same thing, but in real estate, and over a much longer termination. If you buy stocks every month, and the market takes a big 60 day average dip, .... sorry, it's a buy.  The rational choice is to use shorter term reserve to accelerate investment.

arebelspy

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Re: DOW is droppin like it's hot and I'm loving it!
« Reply #16 on: June 20, 2013, 09:17:08 PM »

Arebelspy,

You're doing the same thing, but in real estate, and over a much longer termination. If you buy stocks every month, and the market takes a big 60 day average dip, .... sorry, it's a buy.  The rational choice is to use shorter term reserve to accelerate investment.

I'm invested in real estate because it was undervalued when I created my AA.

I don't have money sitting idle to take advantage of that again.  I have shifted away from buying the SFRs of the type I was due to the ROI.  If prices dip back down where they were in my area, I'll shift back to buying it.

All of that will be with incoming cash (both from my job and other investments), I'm not going to have money sitting idle hoping that happens.

Ditto with my equity investing.  If the market dips, I'll continue investing with my incoming cash flow.  I won't have money sitting idle hoping for dips.

If I have a 85/15 AA between stocks and bonds, with a 10% rebalancing band, and stocks dip enough to be out of balance (I.e. bonds hit 25%+ of my AA), I'll rebalance.  That will be very unlikely, as most rebalancing is done via investments (during the acquisiton phase). In the meantime, as I make ongoing investments (from my cash flow and job) they'll go into stocks as they have dropped and are thus lower than 85% of my AA.

I don't even understand where, when, or why one would keep a "short term reserve" just on the possibility of dips.  I assume you have a written plan?  How big of dips, over how long of a period?  3% drop? 5%?  What happens when you use your reserve after a 5% drop and it drops another 5%?

Me, I'll skip that, continue investing (and yes, enjoying the lower costs basis when equities are on sale), and rebalance when necessary.

Much better in theory and in practice, IMO.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
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mpbaker22

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Re: DOW is droppin like it's hot and I'm loving it!
« Reply #17 on: June 20, 2013, 09:44:19 PM »
If you are working and buying stock you should hope for a collapse. If you are retired and living off passive income, you could be in for a year of rice and beans.

True, but stock collapses oftentimes come just before massive layoffs, so maybe a collapse is a signal to further cut costs for workers?

Joet

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Re: DOW is droppin like it's hot and I'm loving it!
« Reply #18 on: June 20, 2013, 10:26:42 PM »
Emergency fund and cash flow make it pretty easy to take advantages of little dips like this one, eg if your income is 3k more than your expenses monthly after all automatic investing you've got to pick when to buy. Me personally it's the end of the month after all accounts/spending are squared away. But for today I decided to dip into the emergency fund just a hair in advance of when I normally determine what the months sweep into investing is...

I am puzzled how investors don't have any $ looking for these opportunities. Perhaps over-budgeting, cash flow issues, or lack of an emergency fund. Or all of these?

arebelspy

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Re: DOW is droppin like it's hot and I'm loving it!
« Reply #19 on: June 20, 2013, 11:09:12 PM »
I am puzzled how investors don't have any $ looking for these opportunities. Perhaps over-budgeting, cash flow issues, or lack of an emergency fund. Or all of these?

None of the above.  I don't know what over-budgeting is (I thought if you budget, you have money to invest?  Idk, I don't budget at all, I spend what I need and invest the rest), I have no cash flow issues (save 80+% of the cash coming in), and no, I have no emergency fund, and even if I did, I wouldn't use it for this, it's not an emergency.  If I decided an emergency fund was needed, I'd save it for that purpose.  If you feel that it's okay to lower it right now, you may understand why I don't have one at all.

What puzzles me is idle cash.

I assume you have a written AA which has a cash component.  I'm not a fan, but I'm okay with it.  The only reason then to be buying on these dips with it would be because the drop was big enough (unlikely, unless you have a very small portfolio) that it hit your rebalancing band because your cash portion got too large. 

If you don't have a cash portion in your AA, why do you have idle cash sitting around?

In other words, why do you have "$ looking for these opportunities." -- my money has so many opportunities if it's just sitting around looking it's not working. That's not good.

All my money coming in each month that doesn't get spent gets invested.  When the market dips, my cost basis is lower.  But I don't shove "extra" money into the market, because that implies that if the market DIDN'T dip, I'd keep that extra money and... do what with it?  I don't even know.

I invest as much as I can, all the time.  If the market is down, great.  If not, fine.  But when it's high it's not like I invest less than I can, so I have idle cash sitting there.  That would just be silly.

EDIT:  Market timing aside, of course.  I was assuming based on your other posts Joet that you're not huge into market timing, but apparently I may be wrong.
« Last Edit: June 20, 2013, 11:11:19 PM by arebelspy »
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George_PA

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Re: DOW is droppin like it's hot and I'm loving it!
« Reply #20 on: June 20, 2013, 11:34:39 PM »
The funny thing I used to watch this funny channel on the TV back in the day, the channel was called CNBC.

Anyway, one there, they would really sensationalize the ups and downs in the market; I mean they could work it;

So if there was either a big drop or big gain in the dow for the day, the commentators or news anchors would soak it for all its worth;

if there was a big drop, i.e. 1% or 2%, then this was a tragedy; you would flash red symbols similar to alarms on the screen; the commentators would talk in a panic tone of voice, dart their eyes around the room like the ceiling in the television studio was ready to cave in on them at any moment; they would lose their composure on the air, they would losen their tie and unbutton their skirt a bit because they were "in the thick of it" and start sweating profusely; and also there were times that they would have to "interrupt this broadcast" for a surprise breaking development on the floor on the stock exchange. 

On the other hand, if there was a big gain; oh my GOD; this was just as huge; people were talking about the "new age", the new wealth and prosperity coming to American, some commentators on the network would get so excited they would practically have an organism right there and then on live television during the broadcast;

The funny thing sometimes the dow would drop a couple percentages points one day, then go up a couple percentage points the next day, and repeat then this process several times over a week or two; so if you watched; it was a manic depressive network; it is really entertaining; you have to give them credit, they were trying to make a dry subject sound like a Hollywood blockbuster action movie script;

honestly I don't really care very much if the market goes up or down, but these guys really really wanted you to believe that a 1-2% move in the markets mattered greatly to your everyday life; heck, If I had their job being a commentator on CNBC, I don't think I could even keep a straight face, it would be just to funny to go through the motions on a daily basis.
« Last Edit: June 20, 2013, 11:48:09 PM by George_PA »

Joet

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Re: DOW is droppin like it's hot and I'm loving it!
« Reply #21 on: June 21, 2013, 12:05:04 AM »
Huh weird, merits of an emergency fund are a side topic I suppose, probably over $1m portfolio or around FI not necessary and all that. I throw off around 3k a month outside of automatic inveting and get to decide when to invest. Not sure what your "all the time" vs regularly scheduled vs pre-empting cash flow and all that happens to mean. My 6-12 month emergency fund is less than 5% of portfolio, and no--it's not all 'cash' but its liquid enough and part of it is in cash-like money markets. Most of what I'm talking about for this example is whatever is available in the account used for paying bills. Got an extra k or 3 in there at various points of the month.

Acting on a really bad day doesn't qualify as market timing, IMO, it's just recognizing these days that violate 1 or 2 standard deviations of volatility. Has nothing to do with a balancing band as in my opinion those shouldn't be looked at more than once a year. In my position I just readjust with contributions.

Whatever works for you I guess, sounds like semantics. My household gets paid 4x a month and I reconcile monthly and invest outside of automatic stuff only once or twice a month. Being more frequent than that sounds like over budgeting to me. If you disagree with my use of the word I don't know what to say about that :)
« Last Edit: June 21, 2013, 12:09:24 AM by Joet »

SnackDog

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Re: DOW is droppin like it's hot and I'm loving it!
« Reply #22 on: June 21, 2013, 04:11:27 AM »
Nothing wrong with buying on a dip.  Dips are inevitable so take advantage of them.  People get in trouble trying to time sales and that usually is a mistake.

matchewed

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Re: DOW is droppin like it's hot and I'm loving it!
« Reply #23 on: June 21, 2013, 04:31:27 AM »
Nothing wrong with buying on a dip.  Dips are inevitable so take advantage of them.  People get in trouble trying to time sales and that usually is a mistake.

But what if the "a dip" you bought it on is not the only dip? What if the next day it goes down further and further on the day after that? Sure you can always say you purchased lower than a historical up but you can say the same with DCA. When looking at the long timeline is the reaction to a small dip of 3% worth the opportunity cost of the money sitting waiting for an investment opportunity? I personally don't think so although there is a part of me that saw the market yesterday and was hopping up and down saying buy buy buy.

SnackDog

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Re: DOW is droppin like it's hot and I'm loving it!
« Reply #24 on: June 21, 2013, 07:34:43 AM »
If you liked the stock at 3% off, you will LOVE it at 5% off!

aclarridge

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Re: DOW is droppin like it's hot and I'm loving it!
« Reply #25 on: June 21, 2013, 08:37:44 AM »
If you liked the stock at 3% off, you will LOVE it at 5% off!

And because you LOVE it, you invest your last penny in it at 5% off right? Then maybe it goes down 40%. Well you're madly, insanely, addicted to it then, but no cash to get any.

I largely agree with ARS on this. The logical side of me knows it doesn't matter, my decisions on when to buy are not affected by share prices. The emotional side of me is hoping prices "drop like it's hot" and that long term, the market hovers at a ridiculously cheap price for all of my earning years, then shoots up right as I FIRE.

The logical side has control of the "confirm transaction" button though.

Cecil

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Re: DOW is droppin like it's hot and I'm loving it!
« Reply #26 on: June 21, 2013, 09:55:48 AM »
I'd love to buy on this dip, but I can't because I have no spare cash. I invested it all as soon as I earned it.

DoubleDown

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Re: DOW is droppin like it's hot and I'm loving it!
« Reply #27 on: June 21, 2013, 10:14:19 AM »
The reality is that it is not that big of a deal and is actually quite healthy and needed, especially since the start of the year.  Investors became so certain that QE would go on forever and they chased assets at any cost - so whether or not the fed will actually taper the message is that it could - and that put a tiny amount of fear into people and if logic persists then they will migrate back to more fundamental relative return expecations (doubt it).


+1. I'm greeting this market dip with a shrug, and I'm glad the Fed is finally putting the word out that QE will be ending.

mpbaker22

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Re: DOW is droppin like it's hot and I'm loving it!
« Reply #28 on: June 21, 2013, 10:26:18 AM »
I love how many people are "buying on the dip" but claim they aren't "market timing."  If you specifically bought stocks today you are market timing.  Don't be shy about it, it's what you're doing and that's fact.

I'm thinking about doing it.  I normally save money for a month or two then put a couple thousand in stocks at the same time.  I'm thinking about putting it in now rather than wait longer.  And I'll call it what it is, it's market timing.  But I'm doing it because the drop was a wake up call that I have idle cash.

Freeyourchains2

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Re: DOW is droppin like it's hot and I'm loving it!
« Reply #29 on: June 21, 2013, 10:59:17 AM »
I watched Wall Street: Money never Sleeps, last night just for the fun of it, as I collected some more dividends yesterday. They are kind of like Rent from Rentals, except without the Insurance payments, time spent to cash checks, etc.

With leveraging maxed to the hilt still in stocks, business, and/with real estate starting to again because of "low mortgage rates"; market swings are very volatile. This time with millions of less jobs from 2009-2013. Yet same spending and borrowing as before, even though taxes have risen and will rise some more, and inflation + gas prices have made necessities even harder to obtain.

7+ Trillion in leveraged Debts again already out there with no one knowing where the bottom is. With the US Government owing 17 Trillion and growing now from bailing out banks from last time, and spending a whole lot more on overpriced wastefulness. $1 Billion alone for Obama to Vacation 12 times.

Ben Bernanke fired the first shot heard round the world! And Warren Buffet predicted it exactly.

From Forbes today, "Donald Yacktman and Warren Buffett are two investors whose styles overlap and who have both earned high returns investing in sound companies for the long term. Yacktman quips that he is a “dumpster diver” who seeks to buy stocks at rock-bottom prices and valuations. His team at Yacktman Asset Management is also concerned with what he calls forward rate of return. Buffett calls his style a mix of Benjamin Graham and Phil Fisher, and has said, “We want businesses to be ones (a) that we can understand; (b) with favorable long-term prospects; (c) operated by honest and competent people; and (d) available at a very attractive price.”

The two men own nine stocks in common. These are the largest: Wells Fargo (WFC), Coca-Cola (KO), Procter & Gamble (PG), Wal-Mart (WMT) and U.S. Bancshares (USB)."
« Last Edit: June 21, 2013, 11:11:04 AM by Freeyourchains2 »

arebelspy

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Re: DOW is droppin like it's hot and I'm loving it!
« Reply #30 on: June 21, 2013, 11:08:07 AM »
Nothing wrong with buying on a dip.  Dips are inevitable so take advantage of them.  People get in trouble trying to time sales and that usually is a mistake.

But what if the "a dip" you bought it on is not the only dip? What if the next day it goes down further and further on the day after that? Sure you can always say you purchased lower than a historical up but you can say the same with DCA. When looking at the long timeline is the reaction to a small dip of 3% worth the opportunity cost of the money sitting waiting for an investment opportunity? I personally don't think so although there is a part of me that saw the market yesterday and was hopping up and down saying buy buy buy.

(Emphasis mine.)

Well said.


I collected some more dividends yesterday. They are kind of like Rent from Rentals, except without the Insurance payments, time spent to cash checks, etc.

No need to spread FUD.  Insurance payments are automatic (just like a scheduled market investment), and I don't cash checks - all the rents are direct deposited straight into my account, same as dividends are.  (This is where I add a "Rents are kind of like dividends from stocks, but much higher amounts." ;)  )
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

mpbaker22

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Re: DOW is droppin like it's hot and I'm loving it!
« Reply #31 on: June 21, 2013, 11:17:49 AM »
No need to spread FUD.  Insurance payments are automatic (just like a scheduled market investment), and I don't cash checks - all the rents are direct deposited straight into my account, same as dividends are.  (This is where I add a "Rents are kind of like dividends from stocks, but much higher amounts." ;)  )

Just a short comment - a lot of people on here have been talking about rents as automatic payments, unlike dividends which can end, or stock valuation which can always change.  I think people do need to recognize a certain amount of months will have buildings empty and a certain number of tenants won't pay.  I think too many people are assuming full payment month after month.

arebelspy

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Re: DOW is droppin like it's hot and I'm loving it!
« Reply #32 on: June 21, 2013, 11:32:37 AM »
No need to spread FUD.  Insurance payments are automatic (just like a scheduled market investment), and I don't cash checks - all the rents are direct deposited straight into my account, same as dividends are.  (This is where I add a "Rents are kind of like dividends from stocks, but much higher amounts." ;)  )

Just a short comment - a lot of people on here have been talking about rents as automatic payments, unlike dividends which can end, or stock valuation which can always change.  I think people do need to recognize a certain amount of months will have buildings empty and a certain number of tenants won't pay.  I think too many people are assuming full payment month after month.

I don't see that.  Clearly there can be vacancies, and in every house analysis anyone's posted we account for them.

We're all aware they happen - I have 100% occupancy right now, but I have a vacancy coming up here at the end of June.

I think that may be something you were assuming that people were assuming.

Dividends are much more automatic, but let's talk about all options genuinely, rather than spreading FUD.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Freeyourchains2

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Re: DOW is droppin like it's hot and I'm loving it!
« Reply #33 on: June 21, 2013, 11:35:39 AM »
I collected some more dividends yesterday. They are kind of like Rent from Rentals, except without the Insurance payments, time spent to cash checks, etc.

No need to spread FUD.  Insurance payments are automatic (just like a scheduled market investment), and I don't cash checks - all the rents are direct deposited straight into my account, same as dividends are.  (This is where I add a "Rents are kind of like dividends from stocks, but much higher amounts." ;)  )

Usually the higher returns in rent result from the 10x leveraging with your cash through a mortgage.

Unless your stache has enough for 1+ rentals straight up, and you are willing to lock it up long term.

And typically your risk is greater (good tenants leave/move, repairs unless you have mustachian repair skills, etc) though you get greater returns, without much time effort after the initial research, followed by lending approvals, buying house process, appraisals, connections with laborers, any renovations, etc, that are involved with real estate.

I do like the investment idea of real estate renting in general, and I am learning more about that investment vehicle all the time.

Stocks (now adays) have opened up to the low staches entrance to that investing vehicle, with leveraging options at 2.5x, especially if the markets go to rock bottom prices like in 2009.

mpbaker22

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Re: DOW is droppin like it's hot and I'm loving it!
« Reply #34 on: June 21, 2013, 11:39:03 AM »
I'm saying they do go up and down with vacancies, non-payments etc.  It's part of the reason renting is usually more than buying the same place.  I'm just saying this because there was a thread where someone was talking about rents and assuming a constant, steady stream.  While that may be true on average, there's always going to be some vacancy risk, non-payment risk, etc.

It's just something to take into consideration, not something to fear.

arebelspy

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Re: DOW is droppin like it's hot and I'm loving it!
« Reply #35 on: June 21, 2013, 11:48:39 AM »
I'm saying they do go up and down with vacancies, non-payments etc.  It's part of the reason renting is usually more than buying the same place.  I'm just saying this because there was a thread where someone was talking about rents and assuming a constant, steady stream.  While that may be true on average, there's always going to be some vacancy risk, non-payment risk, etc.

It's just something to take into consideration, not something to fear.

I fully agree.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Eric

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Re: DOW is droppin like it's hot and I'm loving it!
« Reply #36 on: June 24, 2013, 10:27:43 AM »
If you were happy on Thursday, you must be ecstatic today!

matchewed

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Re: DOW is droppin like it's hot and I'm loving it!
« Reply #37 on: June 24, 2013, 10:29:07 AM »
Can I be "meh" about last Thursday and today?

WetBandit

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Re: DOW is droppin like it's hot and I'm loving it!
« Reply #38 on: June 24, 2013, 11:18:47 AM »
If only I hadn't bought in last week .... :/ Hindsight is 20/20.

matchewed

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Re: DOW is droppin like it's hot and I'm loving it!
« Reply #39 on: June 24, 2013, 11:35:02 AM »
That is a perfect example of the emotional swings the short view gives. If you're trying to short term trade then you (probably) will get burned. If you are trying to achieve FIRE then investing last week when it was "up" is meaningless as this "down" is meaningless to the metric of a long term investment.

It's like using a microscope to measure the length of a pen. It's pretty darn useless to stare at the market day in day out (guilty of it myself) when you're investing for a 30-60 year timeline.