Author Topic: Is it possible the market has peaked?  (Read 11503 times)

JenniferW

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Is it possible the market has peaked?
« on: October 23, 2018, 09:03:06 AM »
I know trying to guess market timing is a bad idea but I just wonder right now.  Since the market has had a rough past few months, and the Shiller PE Ratio is higher than the great depression approaching the levels during the tech bubble of 1999-2000.

I guess in my case, I shouldn't stop investing in it because, I just started out.  If it keeps declining I'll keep dollar cost average down, then perhaps get a lot of bargains during a recession.. I dunno.

I am just wondering what I'd do if I had caught the wave back in 2009 and rode it until now.  Would I put more in bonds?   What do you guys think?

DS

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Re: Is it possible the market has peaked?
« Reply #1 on: October 23, 2018, 09:10:32 AM »

terran

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Re: Is it possible the market has peaked?
« Reply #2 on: October 23, 2018, 09:16:06 AM »
Yes, it's possible. What actionable information does that give you?

markbike528CBX

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Re: Is it possible the market has peaked?
« Reply #3 on: October 23, 2018, 09:49:03 AM »
......I guess in my case, I shouldn't stop investing in it because, I just started out.  If it keeps declining I'll keep dollar cost average down, then perhaps get a lot of bargains during a recession.. I dunno....
You DO know, you just presented one of the best arguments FOR staying steady on course.

also, the TOP IS IN....   If a 2 year 53 page thread doesn't convince you of the rightness of your course, then try the RED DOW! thread.

sol

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Re: Is it possible the market has peaked?
« Reply #4 on: October 23, 2018, 09:59:32 AM »
Peaked like forever?  Like it will never again be as high as it was yesterday?  That seems pretty unlikely. 

What's more likely is that the market price will continue to move up and down in a quasi-random fashion.  Sometimes it will go down, but in the long term it will go up.  Are you invested for the long term?

I commented on the day's market drop to my 13 year old daughter this morning, and she asked me to explain what that means.  I told her that stocks cost less money today than they did yesterday, and she said "Is that bad?"  Um, well, no when you put it like that I suppose that's actually a good thing for anyone who wants to own more stocks.

ketchup

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Re: Is it possible the market has peaked?
« Reply #5 on: October 23, 2018, 10:10:06 AM »
Write a formal IPS if you haven't.  Stay the course.

Frankies Girl

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Re: Is it possible the market has peaked?
« Reply #6 on: October 23, 2018, 10:17:55 AM »
I actually don't know or care what a Shiller or PE or whatawhozit is.

You know there is a study that showed the portfolios that performed best during the crashes were the ones where the people basically didn't even remember to check them? Literally didn't do a damned thing, and they outperformed the market timers/panic buy/sellers. Because just leaving things alone and letting it drop and then recover (as long as you're not invested in one volitile company/industry) was the best way to weather the crashes. So if you're invested in a broad market assortment - like an index fund AA - LEAVING IT ALONE (and just keep buying like normal, all the way down) - is the smartest thing to do.

I don't care if the market has peaked, the bears are coming, dogs and cats living together mass hysteria...

It is noise. All those news channels and financial gurus need to talk about the next big crash, the hot new investment, who is going bankrupt, who is going public... they gotta predict, fear-monger, and get SUPER EXCITED because otherwise they'd be out of a job and their books and sites might not be so popular.

Markets go up, then they might go down for a while. Might be a sudden drop, might take a while. Might go flat even. That is what they are supposed to do. It is expected, it is normal and shorting this or market timing that isn't going to matter a hill of beans and mostly is just a waste of precious brain space trying to figure out if I need to sell this or buy that RIGHT NOW.

I have my IPS, I trust my AA, and I am over here sittin' next to honey badger... I don't even care. And I'm down like 80K and counting so far. No worries.

Top is in.
« Last Edit: October 23, 2018, 10:20:10 AM by Frankies Girl »

ketchup

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Re: Is it possible the market has peaked?
« Reply #7 on: October 23, 2018, 10:46:16 AM »
You know there is a study that showed the portfolios that performed best during the crashes were the ones where the people basically didn't even remember to check them? Literally didn't do a damned thing, and they outperformed the market timers/panic buy/sellers. Because just leaving things alone and letting it drop and then recover (as long as you're not invested in one volitile company/industry) was the best way to weather the crashes. So if you're invested in a broad market assortment - like an index fund AA - LEAVING IT ALONE (and just keep buying like normal, all the way down) - is the smartest thing to do.
I think that study you're thinking of showed the best investors were dead people, followed shortly by people who forgot they had opened the accounts.

hadabeardonce

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Re: Is it possible the market has peaked?
« Reply #8 on: October 23, 2018, 11:15:26 AM »
You know there is a study that showed the portfolios that performed best during the crashes were the ones where the people basically didn't even remember to check them? Literally didn't do a damned thing, and they outperformed the market timers/panic buy/sellers. Because just leaving things alone and letting it drop and then recover (as long as you're not invested in one volitile company/industry) was the best way to weather the crashes. So if you're invested in a broad market assortment - like an index fund AA - LEAVING IT ALONE (and just keep buying like normal, all the way down) - is the smartest thing to do.
I think that study you're thinking of showed the best investors were dead people, followed shortly by people who forgot they had opened the accounts.
Some information out there claims the study never actually took place and the "dead people" part of it is definitely false:
https://www.nytimes.com/2016/08/06/your-money/401k-retirement-plan-investment-stock-markets.html
http://financialuproar.com/2016/08/30/remember-fidelity-study-said-dead-investors-best/

It made a good headline, but it also jives with the whole "buy and hold" conclusion that Bogle and Malkiel spread, so it isn't harmful advice. Once you've got your asset allocation and investment expenses optimized there isn't a whole lot to do anyway beyond waiting for events that throw your portfolio out of whack enough to require rebalancing(if you're nit picking.) Passive investing should be a snoozefest by definition and design.

JenniferW

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Re: Is it possible the market has peaked?
« Reply #9 on: October 23, 2018, 11:29:33 AM »
I'm going to be invested for the long term.  Saving 61% of my income.  I don't need any more income.  I just want to retire with some dignity at 67.  I'm almost 48 now.   I  only have $3890 invested in stocks at the moment with a little cash in the bank -- just starting out.  I am saving/investing about $1900 per month.

DS

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Re: Is it possible the market has peaked?
« Reply #10 on: October 23, 2018, 11:36:59 AM »
I'm going to be invested for the long term.  Saving 61% of my income.  I don't need any more income.  I just want to retire with some dignity at 67.  I'm almost 48 now.   I  only have $3890 invested in stocks at the moment with a little cash in the bank -- just starting out.  I am saving/investing about $1900 per month.

To answer your question seriously, it's possible the market has peaked, but highly unlikely. If it has, no one really knows what the alternative action is because that means something catastrophic is about to happen that would ensure none of us retires anytime soon. This would be a disaster.

So, may as well keep it invested and hope history is somewhat of an indicator, if not totally reliable.

Going forward, the best bet is to learn more. The common reading to start out is here: https://jlcollinsnh.com/stock-series/

brooklynmoney

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Re: Is it possible the market has peaked?
« Reply #11 on: October 23, 2018, 11:46:02 AM »
Do you get worried when your favorite store has a sale? Seems pretty silly when you think of it that way right?
Listen to Warren Buffett: I'm going to buy hamburgers the rest of my life. When hamburgers go down in price, we sing the 'Hallelujah Chorus' in the Buffett household. When hamburgers go up in price, we weep. For most people, it's the same with everything in life they will be buying ó except stocks. When stocks go down and you can get more for your money, people don't like them anymore."

sol

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Re: Is it possible the market has peaked?
« Reply #12 on: October 23, 2018, 11:48:43 AM »
I'm going to be invested for the long term.  Saving 61% of my income.  I don't need any more income.  I just want to retire with some dignity at 67.  I'm almost 48 now.   I  only have $3890 invested in stocks at the moment with a little cash in the bank -- just starting out.  I am saving/investing about $1900 per month.

If you are just starting out, you should be desperately praying for a huge market crash.  Yes, you'll lose a few thousand dollars, but that will be far far FAR outweighed by the positive returns you will earn on larger sums in the future by being able to buy in during a period of depressed prices.

When I started investing larger sums in 2008, I was pretty devastated to see the 08/09 crash take away almost half of the few grand I had invested in the market.  But I kept buying through the depths of the crash, and some of the money I invested back then has quadrupled in value since then.  It has earned dividends all along the way, and now here I am ten years later comfortably retired.  That crash at that moment was the best thing that could have happened to me.  You should be so lucky.

swinginbeef

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Re: Is it possible the market has peaked?
« Reply #13 on: October 23, 2018, 11:54:53 AM »
The only scenarios I can come up with that could actually cause the market to peak for the infinitely long term would be 1) a world-wide disaster that physically cripples majority of businesses to the point that they decide to shut their doors and not rebuild, or 2) every business decides that they have enough money and there is no longer any reason to grow, become more efficient or seek any other way of creating more profit. I'm leaning toward world-wide disaster, being more likely than humans giving up on greed.

JenniferW

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Re: Is it possible the market has peaked?
« Reply #14 on: October 23, 2018, 11:57:25 AM »
Thanks Sol for sharing your story.

So I should still buy every month at this point even if I anticipate a crash soon then?  And just be content with even up to 50% drop in a couple years?  Because in the long run I'll do well because I will be able to buy at bargains right?

Or perhaps should I maybe keep 1/2 in Ally and invest during volatile dips ?   Seems more volatile lately.

Its all guesswork I realize. i read JL Collins book in its entirety and respected what he had to say.  I do wonder what he thinks now with such a high Shiller PE Index in late 2018.


JenniferW

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Re: Is it possible the market has peaked?
« Reply #15 on: October 23, 2018, 12:11:46 PM »
Oh what I meant when I said peaked, was the peak before a crash and recession. I know it ultimately keeps rising and counting on that long term.

I'm a red panda

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Re: Is it possible the market has peaked?
« Reply #16 on: October 23, 2018, 12:16:06 PM »
Oh what I meant when I said peaked, was the peak before a crash and recession. I know it ultimately keeps rising and counting on that long term.

I think Sol knows what you meant. Rather, I think his response was to point out how little it matters in the long term.

It might have peaked, or it might peak in 3 months, or 3 years. We have no idea.  You can't make decisions based on guesses. Well you can, but you shouldn't.

sol

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Re: Is it possible the market has peaked?
« Reply #17 on: October 23, 2018, 01:17:17 PM »
So I should still buy every month at this point even if I anticipate a crash soon then?

That's what I would do.  Anything else is probabilistically incorrect.  When making decisions about my financial future, I try to choose the right answers as often as possible.

Quote
Or perhaps should I maybe keep 1/2 in Ally and invest during volatile dips ?   Seems more volatile lately.

You don't care about volatility until the day you start selling your stocks.  Give up on the idea of trying to "beat" the market by getting in and out around the volatility, you don't want to beat the market you want to own the market.  You want to minimize transaction fees by avoiding extra buys and sells, and you want to ride out the market swings, in both directions.  You're trying to tie your fortunes to the fortunes of every corporation in the index.  Your money becomes their money, and vice versa, and the daily price swings should have just as much impact on you as they do on those companies (i.e. almost none).  They need to keep making product day in and day out regardless.  You need to be investing day in and day out regardless.

Quote
i read JL Collins book in its entirety and respected what he had to say.  I do wonder what he thinks now with such a high Shiller PE Index in late 2018.

You could just ask him.  He's around.

PDXTabs

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Re: Is it possible the market has peaked?
« Reply #18 on: October 23, 2018, 01:27:49 PM »
I started investing in June of 2007 and contributed with every single paycheck since. I only regret not being 100% equities the whole time.

We could see a 60% drop, or we might not, unless your full time job is at a bank trading desk I wouldn't worry about it. Just stay in the market and invest with every paycheck and you'll hit that retirement goal.
« Last Edit: October 23, 2018, 01:39:00 PM by PDXTabs »

Steeze

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Re: Is it possible the market has peaked?
« Reply #19 on: October 23, 2018, 01:42:43 PM »
My strategy is to buy on Thursdays, occasionally on the 1st of the month as well.

Cultivate the habit of buying at regular intervals and ignoring the price of the market.

Think of the final amount of money you will have in your investing career - now thing about how much you have invested now.
If you lost 50% of your investment today, what % of your final retirement amount is that?
For me, that is about 3-4% ... that is acceptable risk for me.
It will be a bummer to see the value in my accounts drop 50%, but in the grand scheme, its not a big deal at this stage.

Mississippi Mudstache

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Re: Is it possible the market has peaked?
« Reply #20 on: October 23, 2018, 02:26:39 PM »
I started investing in June of 2007 and contributed with every single paycheck since. I only regret not being 100% equities the whole time.

Seriously. More specifically, I regret not being 100% US equities for the duration of my investment career. I've had money on the line since ca. 2011. Early on, I set my investment mix at 65% US equity, 25% international equity, 10% bonds. I've been tempted several times to reduce the bond and international exposure, but it always feels like a market-timey thing to do, so I'm just holding tight and watching my investment mix fall behind the S&P 500 year after year. I mean, I've still been killing it for the past seven years, so at least there's that.

one piece at a time

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Re: Is it possible the market has peaked?
« Reply #21 on: October 23, 2018, 03:46:24 PM »

So I should still buy every month at this point even if I anticipate a crash soon then?  And just be content with even up to 50% drop in a couple years?  Because in the long run I'll do well because I will be able to buy at bargains right?


It might be better to buy every-other-month rather than every-month if the amounts are small and your fees are high, but that is a tactical decision and we're talking about strategy here.

JenniferW

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Re: Is it possible the market has peaked?
« Reply #22 on: October 23, 2018, 08:06:37 PM »
One thing I am finding is that I can't seem to save enough cash in my bank account for an emergency fund.  I feel uncomfortable that the cash would be just sitting there and not working for me.  So I end up investing it all in non-retirement investment account: Robinhood -- it's commission free. Is this a really bad idea?  My income right now is pretty stable .. it's disability income from SSDI which I've been collecting for past 15 years.   Kind of treating my Robinhood investments as my emergency fund.. and if I have to draw from it at a loss, I guess that is something I am willing to risk. But I guess I *should* save at least a few grand of cash in the bank first shouldn't I?  Our monthly expenses here are $1800 (including mortgage) and my BF helps out with about half of that per month.

What's wrong with me? Why can't I just let the cash sit there in the bank!?  I see a stock drop in price and I just want to buy it at the discount lol.

Radagast

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Re: Is it possible the market has peaked?
« Reply #23 on: October 23, 2018, 09:27:51 PM »
One thing I am finding is that I can't seem to save enough cash in my bank account for an emergency fund.  I feel uncomfortable that the cash would be just sitting there and not working for me.  So I end up investing it all in non-retirement investment account: Robinhood -- it's commission free. Is this a really bad idea?  My income right now is pretty stable .. it's disability income from SSDI which I've been collecting for past 15 years.   Kind of treating my Robinhood investments as my emergency fund.. and if I have to draw from it at a loss, I guess that is something I am willing to risk. But I guess I *should* save at least a few grand of cash in the bank first shouldn't I?  Our monthly expenses here are $1800 (including mortgage) and my BF helps out with about half of that per month.

What's wrong with me? Why can't I just let the cash sit there in the bank!?  I see a stock drop in price and I just want to buy it at the discount lol.
I have that problem too. Right now the ol' checking account has $2k. I am almost certain nothing bigger than that will go through before Friday. I really need to start bank bonus churning or something. Or get a checking account with a higher rate than 0 so I feel more comfortable with cash.

jacoavluha

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Re: Is it possible the market has peaked?
« Reply #24 on: October 23, 2018, 09:33:31 PM »
OP I really hope youíre not buying individual stocks

HBFIRE

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Re: Is it possible the market has peaked?
« Reply #25 on: October 23, 2018, 11:32:40 PM »

I have that problem too. Right now the ol' checking account has $2k. I am almost certain nothing bigger than that will go through before Friday. I really need to start bank bonus churning or something. Or get a checking account with a higher rate than 0 so I feel more comfortable with cash.

Just get a high yield checking, heritage pays 3.3%.  I'm comfortable having some cash reserves at that rate.  I know some people like to have no cash reserves or very little.  I like to have several months of expenses, helps me sleep at night.  I'm not one of those people that is comfortable with 100% market exposure.  Of course, when the market takes a hit, I do get tempted to deplete some of those reserves. 
« Last Edit: October 23, 2018, 11:38:27 PM by dustinst22 »

Tempname23

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Re: Is it possible the market has peaked?
« Reply #26 on: October 24, 2018, 06:53:18 AM »
Well, I looked at the market two day ago, and saw the decline.
 I lost close to $100k, the good thing is, I'm in Panama City Fl.
 Lots of damage to my home, out buildings, greenhouse, my wooded
area between, my lot and the commercial lot has been destroyed*.
 But I didn't panic because I didn't have internet service for 12 days
and didn't know what was happening. /s/

                                        :-/
*used to be able to tell sunrise, now the commercial lights make that
impossible, it always looks like sunrise. (Car Dealership)

btw Verizon let us down, no phone service for a week and then poor service after that and still.
Republic Wireless worked worked flawless the whole time!
 I bought an AT&T phone and tethered it to my laptop to get back online.
My IP says it could be 1 to 2 months before we have Internet service again.

ysette9

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Re: Is it possible the market has peaked?
« Reply #27 on: October 24, 2018, 07:07:07 AM »
I actually don't know or care what a Shiller or PE or whatawhozit is.

You know there is a study that showed the portfolios that performed best during the crashes were the ones where the people basically didn't even remember to check them? Literally didn't do a damned thing, and they outperformed the market timers/panic buy/sellers. Because just leaving things alone and letting it drop and then recover (as long as you're not invested in one volitile company/industry) was the best way to weather the crashes. So if you're invested in a broad market assortment - like an index fund AA - LEAVING IT ALONE (and just keep buying like normal, all the way down) - is the smartest thing to do.

I don't care if the market has peaked, the bears are coming, dogs and cats living together mass hysteria...

It is noise. All those news channels and financial gurus need to talk about the next big crash, the hot new investment, who is going bankrupt, who is going public... they gotta predict, fear-monger, and get SUPER EXCITED because otherwise they'd be out of a job and their books and sites might not be so popular.

Markets go up, then they might go down for a while. Might be a sudden drop, might take a while. Might go flat even. That is what they are supposed to do. It is expected, it is normal and shorting this or market timing that isn't going to matter a hill of beans and mostly is just a waste of precious brain space trying to figure out if I need to sell this or buy that RIGHT NOW.

I have my IPS, I trust my AA, and I am over here sittin' next to honey badger... I don't even care. And I'm down like 80K and counting so far. No worries.

Top is in.
I heart this post

jc4

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Re: Is it possible the market has peaked?
« Reply #28 on: October 24, 2018, 07:37:55 AM »
I believe if we never see GDP increases again or shift to perpetual deflation, then the market very well may have peaked.

If I'm wrong someone can correct me.

GuitarStv

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Re: Is it possible the market has peaked?
« Reply #29 on: October 24, 2018, 07:46:24 AM »
I believe if we never see GDP increases again or shift to perpetual deflation, then the market very well may have peaked.

If I'm wrong someone can correct me.

Other events that would be likely indicators of the market having peaked:
- Unstoppable meteorite the size of the moon headed straight for Earth
- Zombie apocalypse
- Global pandemic that wipes out all mammilian life
- Explosion of the Sun
- Alien visitors who share cheap matter conversion, teleportation, and 60's style free-lovin' ways
- Alien visitors who gestate in our chest cavities and then burst forth hungrily

DS

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Re: Is it possible the market has peaked?
« Reply #30 on: October 24, 2018, 08:04:08 AM »
I believe if we never see GDP increases again or shift to perpetual deflation, then the market very well may have peaked.

If I'm wrong someone can correct me.

Other events that would be likely indicators of the market having peaked:
- Unstoppable meteorite the size of the moon headed straight for Earth
- Zombie apocalypse
- Global pandemic that wipes out all mammilian life
- Explosion of the Sun
- Alien visitors who share cheap matter conversion, teleportation, and 60's style free-lovin' ways
- Alien visitors who gestate in our chest cavities and then burst forth hungrily

-Infinite resources instantly available to all of us for eternity

Aegishjalmur

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Re: Is it possible the market has peaked?
« Reply #31 on: October 24, 2018, 08:17:51 AM »
My advice: invest as much as you can afford each month. Set up an automatic transfer and leave it alone. If the market dives, see if you can cut expenses somewhere else to buy more, even if it is only another $10. The thing to keep in mind is that unless you sell when the market is down you haven't lost any money. Do not try to time the market. Even if you try to invest when the market is low(er), it takes a couple days to transfer funds and by then the market has changed. I saw an article a couple years ago that essentially said that most of the market gains in a given year are over only a small number of days, so if you are trying to time the market, you've likely missed them.


marty998

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Re: Is it possible the market has peaked?
« Reply #32 on: October 24, 2018, 02:24:52 PM »
I saw an article a couple years ago that essentially said that most of the market gains in a given year are over only a small number of days, so if you are trying to time the market, you've likely missed them.

This is really really bad reasoning that I see time and time again. The sentiment is correct, in that you shouldn't try and jump in and out of the market.

But as well as missing the best days, you are just as likely to miss the very worst days too. The days where the market bounces 2-3% are generally the days following when it has lost 3-4%. And typically those days where the market moves up by 2-3% only tend to happen during corrections and bear markets.

So if you are out for the up-day, chances are you were also out for the mega down-day the day before.

Glenstache

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Re: Is it possible the market has peaked?
« Reply #33 on: October 24, 2018, 04:22:46 PM »
Paging @thorstach

Is the Top In???

JenniferW

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Re: Is it possible the market has peaked?
« Reply #34 on: October 24, 2018, 05:34:05 PM »
OP I really hope youíre not buying individual stocks

Yeah I've read JL Collins book and I understand the general sentiment here on the forum regarding investing in index funds vs picking individual stocks.

However, I am currently investing in individual stocks on Robinhood, which is commission free.  I currently own shares in AAPL, FB and KSS.  (I plan on buying a bunch more FB this next paycheck on the 3rd, hoping it drops even more than it did today.) So far I am doing okay as he past 90 days my portfolio has dropped 2.58% compared to 4.79% of VOO.

I have thought about it and think what I am doing might not be the best idea, because do I really want to have to keep up with the news and all the financial details of every company I am invested in, buying in volatile dips? Or just auto-deposit and auto-purchase VOO (or VTI) on Vanguard and keep my mind free for other things.

I have to put $5500 in Roth by April of next year, and that will all definitely go into VOO or VTI on Vanguard.com.

EDIT: I like that index funds are auto-cleansing as JL Collins says.
« Last Edit: October 24, 2018, 05:44:21 PM by JenniferW »

use2betrix

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Re: Is it possible the market has peaked?
« Reply #35 on: October 24, 2018, 06:13:43 PM »
I work as a contractor so I usually keep a pretty large emergency fund (close to 10 months bare bones living expenses). Right now, Iím saving around $9k-$10k/mo.

Iím currently on an 18-24 month contract, so I feel pretty secure in my position. Because of this, Iím fine with digging into my oversized emergency fund during this market dips. Not a ton, but investing an extra $5k when thereís larger dips like this is fine with me.

Itís basically market timing, but on a small scale and using it from my oversized emergency fund. I donít foresee myself touching my investments for 12-15 years, so if I am dumping this extra in and it really drops hard, Iím cool with that too.

FYI - itís all going into VTSAX.

ketchup

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Re: Is it possible the market has peaked?
« Reply #36 on: October 24, 2018, 06:27:15 PM »
I currently own shares in AAPL, FB and KSS.  (I plan on buying a bunch more FB this next paycheck on the 3rd, hoping it drops even more than it did today.) So far I am doing okay as he past 90 days my portfolio has dropped 2.58% compared to 4.79% of VOO.

I have thought about it and think what I am doing might not be the best idea, because do I really want to have to keep up with the news and all the financial details of every company I am invested in, buying in volatile dips? Or just auto-deposit and auto-purchase VOO (or VTI) on Vanguard and keep my mind free for other things.

I have to put $5500 in Roth by April of next year, and that will all definitely go into VOO or VTI on Vanguard.com.

EDIT: I like that index funds are auto-cleansing as JL Collins says.
Just buy VTI.  Set it and forget it.  What you're currently doing sounds exhausting.

brooklynmoney

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Re: Is it possible the market has peaked?
« Reply #37 on: October 24, 2018, 06:48:34 PM »
No offense, but what makes you qualified to pick stocks? Are you a professional trader or a financial analyst? Why would you trust yourself to stock pick when you have no special knowledge or experience doing so? Even people that are professionals dont beat the index consistently!

JenniferW

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Re: Is it possible the market has peaked?
« Reply #38 on: October 24, 2018, 07:10:37 PM »
No offense, but what makes you qualified to pick stocks? Are you a professional trader or a financial analyst? Why would you trust yourself to stock pick when you have no special knowledge or experience doing so? Even people that are professionals dont beat the index consistently!

I pick companies which I think make superior products (like I have everything Apple here at home .. have for a decade even before they became the first trillion dollar company).  Or companies which I feel are at bargain prices currently like FB.  My interest in Kohl's is the fact that both Amazon and Aldi are interested in Kohl's and doing business with them.  They pay nice dividends as well at 3.74%.  Btw Aldi and Amazon are my top two place to shop, but I can't afford Amazon stock right now because of its high price per share.  I'd invest a lot into Aldi but they are private.  I also focus on companies with relatively lower P/E ratio.  Then to back up my choices I read reports on Vanguard from Argus and MarketWatch.

sol

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Re: Is it possible the market has peaked?
« Reply #39 on: October 24, 2018, 09:39:25 PM »
Then to back up my choices I read reports on Vanguard from Argus and MarketWatch.

Well, if you're a stock picker, you can probably throw out all of my previous advice.  It won't matter.  You're likely to underperform the market by stock picking by approximately the same amount you would underperform by market timing.

Your best strategy at this point is to regularly invest fixed amounts into an index fund.  If you don't have the discipline to resist the siren song of stock picking, you probably don't have the discipline to resist the siren song of market timing either.  I do know of a great discussion about momentum investing strategies that you might like, though.

letired

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Re: Is it possible the market has peaked?
« Reply #40 on: October 24, 2018, 11:48:56 PM »
You can buy VTI with Robinhood, which you probably knew, but just in case. You can also buy VTI without any transaction fees via Vanguard.

As everyone else has said, picking individual stocks is the Danger Zone. I've done it when I didn't know better, and one pick worked out while the rest were merely meh. And the amount of work/stress that goes into it is awful.

If you want to buy Amazon AND FB AND Apple, buy VTI. Their current top 10 holdings:
1. Apple Inc.
2. Microsoft Corp.
3. Amazon.com Inc.
4. Alphabet Inc.
5. Berkshire Hathaway Inc.
6. Facebook Inc.
7. JPMorgan Chase & Co.
8. Johnson & Johnson
9 Exxon Mobil Corp.
10. Bank of America Corp.

JenniferW

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Re: Is it possible the market has peaked?
« Reply #41 on: October 25, 2018, 05:42:09 AM »
You can buy VTI with Robinhood, which you probably knew, but just in case. You can also buy VTI without any transaction fees via Vanguard.

As everyone else has said, picking individual stocks is the Danger Zone. I've done it when I didn't know better, and one pick worked out while the rest were merely meh. And the amount of work/stress that goes into it is awful.

If you want to buy Amazon AND FB AND Apple, buy VTI. Their current top 10 holdings:
1. Apple Inc.
2. Microsoft Corp.
3. Amazon.com Inc.
4. Alphabet Inc.
5. Berkshire Hathaway Inc.
6. Facebook Inc.
7. JPMorgan Chase & Co.
8. Johnson & Johnson
9 Exxon Mobil Corp.
10. Bank of America Corp.

Thanks for sharing that list.  I had looked at that a few months ago and I think that's why I kind of liked idea of stock picking. 

I am not a big fan of Microsoft -- and it's the #2 holding.  I used to be, starting back with MS-DOS 3.3, Windows 3.0 and so forth.  But back in 2008 I switched to Mac OS because I fell in love with the dock, expose, skeuomorphic graphics and the fact it ran on Unix. Then the iPhone was revolutionary and got that.   In fact, I wanted to buy a lot of Apple stock back in 2009 but didn't have the money.. I really saw it going places when it introduced the app store. 

I don't know what's wrong with me.. hopefully I'll learn my lesson soon and just invest in the index funds.  For some weird reason I think there is a chance I can outperform the market.  I've liked to gamble in the past, maybe that's my problem.
« Last Edit: October 25, 2018, 05:47:45 AM by JenniferW »

swinginbeef

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Re: Is it possible the market has peaked?
« Reply #42 on: October 25, 2018, 06:42:52 AM »
gambling and stock picking are very similar. The possibility of a big win is always there, but you're more likely to lose the longer you play.

PDXTabs

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Re: Is it possible the market has peaked?
« Reply #43 on: October 25, 2018, 08:26:48 AM »
I am not a big fan of Microsoft -- and it's the #2 holding.

Me either, and in my day job I encourage our organization not to use any of their technologies. But the point of owning a market cap weighted fund is to make me money, and that's exactly what Microsoft is doing: Microsoft up on sales jump even as market falls which is why they have a $829 Billion market cap.

EDITed to add - MSFT is up ~23% YTD while NASDAQ is only up 2%, and I never would have seen that coming. Which is why I own VTWSX.
« Last Edit: October 25, 2018, 08:33:13 AM by PDXTabs »

Gondolin

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Re: Is it possible the market has peaked?
« Reply #44 on: October 25, 2018, 08:56:54 AM »
Quote
I've liked to gamble in the past, maybe that's my problem.

Probably. Most of the sentiments you have expressed in this thread are textbook novice stock picker nonsense. If I had a dollar for every new stock picker who:

A) believes reading Marketwatch and Morningstar gives them an inside edge
B) saw Apple coming but just didn't have the money to invest at the time
C) chooses only consumer goods stocks based on their fandom of the company's products
D) cares about their past 90 days performance

I'd be retired already.

sol

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Re: Is it possible the market has peaked?
« Reply #45 on: October 25, 2018, 09:01:33 AM »
For some weird reason I think there is a chance I can outperform the market. 

Of course there's a chance!  It's just less than 50%.

You say you liked to gamble in the past?  Did you prefer games where the odds were more stacked against you?  That seems like a decidedly masochistic hobby.  Just like stock picking.

JenniferW

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Re: Is it possible the market has peaked?
« Reply #46 on: October 25, 2018, 09:11:08 AM »
For some weird reason I think there is a chance I can outperform the market. 

Of course there's a chance!  It's just less than 50%.

You say you liked to gamble in the past?  Did you prefer games where the odds were more stacked against you?  That seems like a decidedly masochistic hobby.  Just like stock picking.

I favored blackjack and craps.

ketchup

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Re: Is it possible the market has peaked?
« Reply #47 on: October 25, 2018, 09:11:48 AM »
It doesn't matter if you like Microsoft or their products.  Let's go back to that top 10 list.

1. Apple Inc.
2. Microsoft Corp.
3. Amazon.com Inc.
4. Alphabet Inc.
5. Berkshire Hathaway Inc.
6. Facebook Inc.
7. JPMorgan Chase & Co.
8. Johnson & Johnson
9 Exxon Mobil Corp.
10. Bank of America Corp.

I'll apply that list to me. 

I use an iPhone, which shows I have confidence in Apple.  But if I didn't?  Do I really think that none of the other companies that get my money use Apple products in their business?  Of course they do.
I use Microsoft products every day.  But even if I didn't, you'd be hard pressed to find a day in your life that you don't interact with a company that uses MS products.
Same with Amazon.  Even if you don't shop there directly, have you used the internet recently?  AWS hosts an outrageous percentage of internet traffic.
Same with Alphabet/Google.
Same with Berkshire Hathaway, Facebook, Chase, Exxon Mobil etc.

If one of those companies went away, it would very likely impact many companies that you like that do produce your "superior products" you're basing your investments on.  If you think the local farmer grows really good strawberries, that's a result of many supporting industries.  Maybe he uses Apple products in his business.  Maybe he also uses Microsoft products in his business.  I'll bet he uses someone that hosts on AWS.  I bet he advertises on Facebook.  Maybe he banks with Chase or BoA (or works with someone that does).  He probably fills his truck he delivers the strawberries on with Exxon Mobil fuel.

These companies are so massive and therefore so represented in the index, because they are deeply involved with almost every part of our economy.  It's complex.  Too complex to think you have an edge by simply buying companies you like.  Buy posters of bands and sports teams that you like; don't buy shares of companies that you like.  It'll cost you less money.

Going back to Microsoft, it only matters that MS is a solid company that performs well and will make you money as part of VTSAX/VTI/whatever while that remains the case.  If they tank, guess what? MS will become less a part of VTSAX, the "self-cleansing" part of index funds you said you like.

MustacheAndaHalf

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Re: Is it possible the market has peaked?
« Reply #48 on: October 25, 2018, 09:21:41 AM »
Something I thought about while away from this thread: think relative to other investments, not relative to a "big scary drop".  How good are other strategies if the S&P 500 beats them 80% of the time?  Even going full speed into a nasty drop, an index fund comes out ahead.

You can even see this for yourself during a big crash or just plain fearful times: look at the amount in cash for any fund.  Index funds should be a fraction of 1%.  Active funds will wind up 5%, 15% or so in cash.  And then the recovery kicks in... while they're holding cash.

Don't compare "how can I avoid a big loss by predicting the future".  Compare how index funds do against other approaches.  SPIVA data can help (80-85% of the time the S&P 500 beats active funds - and in general these comparisons don't include taxes, which heavily favors index funds with their minimal buying and selling).

PDXTabs

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Re: Is it possible the market has peaked?
« Reply #49 on: October 25, 2018, 09:29:13 AM »
C) chooses only consumer goods stocks based on their fandom of the company's products

Yea, I thought that Mac OS peaked ~2005 with OS X 10.4, but stocks are priced almost entirely as a multiple of future earnings, not as geek cred. Recently Apple has been falling down on the job with the Mac line (where's my new mini with replaceable SSD and RAM?, Mac Pro that isn't a total joke?) but their stock is still raising, because investors believe that the profits will keep rolling in.