Is the stock market too expensive to get back in?

[Tordo]

Is it the right time to get into the stock market or it is too expensive? If decided to wait for a correction (~10% down), what would be an alternative investment option until then?

After a relocation package and a home sale + previous savings I reached 500k. Got into the Vanguard 500 fund a month or so ago but got scared due to the apparent high cost and pulled out. I know I should leave the money in but do not want to start my investing life at a S&P 500 peak (1900).

On a side note, I'm planning to reach FI in 6 years but no rush (for now).

Comments?
Thanks in advance!!!
Tordo

[nereo]

what you are talking about is "market timing".  If you've got a multi-year horizon and you want to invest go ahead and invest it.
The market could go down 10% (or more), or it could go up another 10%+ before dropping significantly.  no one knows for sure.
It's time that's your biggest asset.  If you keep waiting you are squandering your biggest asset.  Dollar-Cost-Average (DCA) if that makes you feel better, putting a set amount in every week for the next few months. 

EDIT:  If you're worried about investing "at a S&P 500 peak" consider this: about half of all years during the last century have seen a new SP500 peak.  Why?  Because the market goes up!  If history is any guide there will be another dozen+ years where there's a new peak set over the next two decades.

[wtjbatman]

You are probably ok to invest now. Over time, the market trends upwards. Who knows when the next correction will be. 6 months? A year? Several years?

If you insist on waiting for a market correction, don't let your money sit in a regular savings account. It will just lose value over time. At the very least, put your money into a CD. Preferably one with small penalties for withdrawing early, since you said you will invest once the market has a 10% correction.

In the end I would still advise you to just put the money into the market now. But it's your stash!

[innerscorecard]

Don't time the market. The hot money - especially individual investors who try to time the market -  always suffers. Anyways, the market is still in what Buffett recently called a "zone of reasonableness." It's not a bad time to invest, if your time horizon is long enough.

[SDREMNGR]

Yes it is overpriced.  But so is pretty much everything right now.  So unless you have a better plan, diversify in the stock, bond, gold, real estate, or whatever you think is a balanced portfolio.  Unfortunately,  so many asset classes are highly correlated so it is very tempting to time markets.  In fact I'm still waiting for signals to bail.  I'm twitchy as well but these are the times to hold on until your signals tell you to bail.  So far the economic growth has bailed out the high valuations and it may continue to but at the first real sign of a slowdown, I believe the stock market will come down 30%+.  Maybe it may happen despite all the cheap money from Fed and ECB.  In the end, who knows.  But it's your money and you should educate yourself on it and do what you want.  Better to sleep well at nights.

[Ottawa]

Is the stock market too expensive to get back in?

Yes!!  If I were you I wouldn't invest in the market - better to just keep working.

;-)

[hybrid]

Don't time the market. The hot money - especially individual investors who try to time the market -  always suffers. Anyways, the market is still in what Buffett recently called a "zone of reasonableness." It's not a bad time to invest, if your time horizon is long enough.

There are still plenty of quality stocks where the P/E is lower than 18 and pay a good dividend. You should be able to get into a blue chip fund that focuses more on current value and pays good dividends (Ford, Hawaii Electric) than one that is based on a very bright future value (Amazon, Facebook).

Note that while everyone above is right about stocks recovering it should be noted that the Nasdaq Composite is STILL 20% off it's 90s tech boom high. Cisco ($24.52) was at 80 at one time after all. If you are going to get back in, there are more conservative ways to do it. Not all stocks are in a bubble, though some surely are,

[nereo]

veryone above is right about stocks recovering it should be noted that the Nasdaq Composite is STILL 20% off it's 90s tech boom high. Cisco ($24.52) was at 80 at one time after all. If you are going to get back in, there are more conservative ways to do it. Not all stocks are in a bubble, though some surely are,

sure - but be careful about comparing nominal closing prices without factoring in dividends.  The share price of the nasdaq 100 composite still hasn't hit the absolute peak seen in the 1990s, but if you factor in the dividends, had you held during this entire time period oyu would still come out ahead.

[Ottawa]

Seriously though - one must disregard commentary spewed by the pundits on a daily basis.  The only reason we still hear them is because people actually listen to them!  Sort of a digression from the OP...but also related:

First read:
1) http://canadiancouchpotato.com/2012/04/13/why-daily-market-commentary-is-a-joke/

Then read this:
2) http://canadiancouchpotato.com/2014/05/27/how-one-investor-found-inner-peace/

[Franklin]

Is it the right time to get into the stock market or it is too expensive?

I'm assuming that when you ask if "the stock market" is too expensive you are referring to a broad market index.  Otherwise it's like asking "are cars too expensive?" Well, which car are you talking about? What features are you looking for? What do you consider a good value?  How long do you plan on owning it?

If you time the market blindly you are just asking to be taken advantage of.  Others will steal your money.  But if you know the type of company you want to invest in, the type of growth it should have displayed, the quality of its management team, and the durability of its brand, then there is no time like the present to start averaging in.  Good luck!

[dragoncar]

We really need a sticky for this topic....

http://forum.mrmoneymustache.com/investor-alley/stock-market-is-hight-am-i-too-late/
http://forum.mrmoneymustache.com/investor-alley/stock-market-expensive-now-alternatives/
http://forum.mrmoneymustache.com/investor-alley/where-to-put-your-investment-money/
http://forum.mrmoneymustache.com/investor-alley/a-safe-investment-on-the-stock-market/
http://forum.mrmoneymustache.com/investor-alley/long-term-buy-and-hold-timing-the-market-why-is-this-a-no-no/

[nereo]

We really need a sticky for this topic....

http://forum.mrmoneymustache.com/investor-alley/stock-market-is-hight-am-i-too-late/
http://forum.mrmoneymustache.com/investor-alley/stock-market-expensive-now-alternatives/
http://forum.mrmoneymustache.com/investor-alley/where-to-put-your-investment-money/
http://forum.mrmoneymustache.com/investor-alley/a-safe-investment-on-the-stock-market/
http://forum.mrmoneymustache.com/investor-alley/long-term-buy-and-hold-timing-the-market-why-is-this-a-no-no/

agreed.  Maybe arebelspy can do this?  Dunno...

[waltworks]

Yes, sticky the topic for god's sake. This is a daily thread practically.

And yet, I am responding to it....

-W

[rmendpara]

Tordo, Rather than try to time the market, which is a fool's errand by the way, just do what helps you sleep at night.

If you don't feel comfortable investing everything right now, then don't. Simple as that. Whether you are leaving money on the table or not doesn't really matter if it's too risky for your nerves

Personally, I don't believe anyone can accurately time the market overall. If I were in your situation, I would choose a target asset allocation for the year 2016, and then start putting in money on a weekly/monthly basis (maybe ~$5k/week?). If you see markets selling off, then accelerate your investments to $6-7k/week, and if markets take off upward, then maybe slow down to $3-4k/week.

This way, you don't win big or lose big, but also don't end up standing on the sidelines waiting to play.

[nereo]

Yes, sticky the topic for god's sake. This is a daily thread practically.

And yet, I am responding to it....

-W

AFter my next paycheck I will have about $300 that I want to invest, but with the SP500 breaking 1900 I'm worried about overvaluation, so I'm wondering if I should put it all in at once, or put in $30 a day for the next two business weeks.  any thoughts appreciated.
(j/k)

[KS]

Agree about the sticky!

For the OP: when I discovered this blog (think it was mid-Oct 2012 sometime) it finally got me motivated to set up my IRA in addition to the 401(k) investing I was already doing. The amount I put in was obviously a lot smaller than what it sounds like you have on hand now, but still it felt like a lot for a lump sum and I went through your same worries. Ultimately I decided to just dump it in and be done with it. Aside from a little slide immediately after the election that made me hold my breath a bit (which now looks like a pretty small blip on the market graphs) it's been a lot of up since then and I'm glad I didn't wait! Of course it can go the other way too, but that will always be the case so I'd recommend listening to all the wise folks here and DCA if you like but don't try and time it.

[waltworks]

Just stick it in there, man. Biggest mistake is usually waiting, and spreading out the contents of ONE paycheck over 2 weeks? Waste of time. Stick in all you can/want to *every* 2 weeks and you are dollar cost averaging like a boss.

-W

Yes, sticky the topic for god's sake. This is a daily thread practically.

And yet, I am responding to it....

-W

AFter my next paycheck I will have about $300 that I want to invest, but with the SP500 breaking 1900 I'm worried about overvaluation, so I'm wondering if I should put it all in at once, or put in $30 a day for the next two business weeks.  any thoughts appreciated.
(j/k)

[thepokercab]

Just stick it in there, man. Biggest mistake is usually waiting, and spreading out the contents of ONE paycheck over 2 weeks? Waste of time. Stick in all you can/want to *every* 2 weeks and you are dollar cost averaging like a boss.

-W

Yes, sticky the topic for god's sake. This is a daily thread practically.

And yet, I am responding to it....

-W

AFter my next paycheck I will have about $300 that I want to invest, but with the SP500 breaking 1900 I'm worried about overvaluation, so I'm wondering if I should put it all in at once, or put in $30 a day for the next two business weeks.  any thoughts appreciated.
(j/k)

I think he was joking but solid advice nonetheless. 

[ArbitraryGuy]

"Is the stock market too expensive to get back in?"

I don't know.  And neither does anyone else.  I do know that trying to time the market, more likely than not, leads may a poor soul to financial ruin, so all the better to embrace ignorance and adopt a buy-and-hold strategy of purchasing low-cost, diversified index funds every month. 

At least, that's what I know.

[nereo]

Just stick it in there, man. Biggest mistake is usually waiting, and spreading out the contents of ONE paycheck over 2 weeks? Waste of time. Stick in all you can/want to *every* 2 weeks and you are dollar cost averaging like a boss.

-W

Yes, sticky the topic for god's sake. This is a daily thread practically.

And yet, I am responding to it....

-W

AFter my next paycheck I will have about $300 that I want to invest, but with the SP500 breaking 1900 I'm worried about overvaluation, so I'm wondering if I should put it all in at once, or put in $30 a day for the next two business weeks.  any thoughts appreciated.
(j/k)

I think he was joking but solid advice nonetheless.

yes.  it was a (poor) joke, which is why I put the "(j/k)" in there.. but humor can't go through sometiems.

[Will]

I noticed too that the topic is "Is the stock market too expensive to get back in?"

It implies that the OP was in and decided to get out at some point.

[matchewed]

I noticed too that the topic is "Is the stock market too expensive to get back in?"

It implies that the OP was in and decided to get out at some point.

Yeah the OP said it right in their post.

Is it the right time to get into the stock market or it is too expensive? If decided to wait for a correction (~10% down), what would be an alternative investment option until then?

After a relocation package and a home sale + previous savings I reached 500k. Got into the Vanguard 500 fund a month or so ago but got scared due to the apparent high cost and pulled out. I know I should leave the money in but do not want to start my investing life at a S&P 500 peak (1900).

On a side note, I'm planning to reach FI in 6 years but no rush (for now).

Comments?
Thanks in advance!!!
Tordo

[William]

Dollar cost average...  Don't try to time the market.  You won't win.  Unless you can predict the future.  Can you predict the future?  If so, you'll get rich without worrying about this thread.

[Will]

I noticed too that the topic is "Is the stock market too expensive to get back in?"

It implies that the OP was in and decided to get out at some point.

Yeah the OP said it right in their post.

Is it the right time to get into the stock market or it is too expensive? If decided to wait for a correction (~10% down), what would be an alternative investment option until then?

After a relocation package and a home sale + previous savings I reached 500k. Got into the Vanguard 500 fund a month or so ago but got scared due to the apparent high cost and pulled out. I know I should leave the money in but do not want to start my investing life at a S&P 500 peak (1900).

On a side note, I'm planning to reach FI in 6 years but no rush (for now).

Comments?
Thanks in advance!!!
Tordo

Oh yeah.  Dur! 

[matchewed]

Oh yeah.  Dur!

;)

[Will]

I am sure I read that originally, but in the days since forgot.  Half a million dollars into and out of the market in less than a month.  Somebody needs an investment policy statement.

[arebelspy]

We really need a sticky for this topic....

The best part about a sticky like that is how hilarious it looks when there is a crash.

(E.g. picture a similar sticky created on Bogleheads or E-R.org in 2007.)

:D

[libertarian4321]

Is it the right time to get into the stock market or it is too expensive? If decided to wait for a correction (~10% down), what would be an alternative investment option until then?

After a relocation package and a home sale + previous savings I reached 500k. Got into the Vanguard 500 fund a month or so ago but got scared due to the apparent high cost and pulled out. I know I should leave the money in but do not want to start my investing life at a S&P 500 peak (1900).

On a side note, I'm planning to reach FI in 6 years but no rush (for now).

Comments?
Thanks in advance!!!
Tordo

I first started investing in early 1987.  Yeah, that's right, I started investing right at the peak of the market.

I got HAMMERED (on paper) 10 months later (Black Monday).

But I left my money in and kept investing regularly.

I kept investing through the Gulf War, the Russian crisis ('91?), the asian stock crash ('97?), the "millenium" panic, 9-11, the bursting of the tech bubble, the 2007-2008 "collapse" and probably a dozen smaller "panics."

You know what, that little "blip" in 1987 doesn't seem like all that big a deal now (though everyone, at the time, thought the world was coming to an end).  Hell, even the big "collapse" of 2008 doesn't seem like a big deal anymore.

I just keep chugging along, investing regularly, never trying to "time" the market.

If you fuss over every $50 you invest, you will fail.  You'll invest high and sell low.  I see people do it all the time.

Invest your money over time. Dollar cost average.  Don't obsess.  Don't panic.  Don't screw with it.

30 years from now, you won't even remember if the market was "high" or "low" when you started investing in 2014.

Will the next panic be next week, next month, next year, or 3 years from now?  I have no idea, but I know for sure that people go berserk every so often.  When the idiots go into full panic, it's the best time to sit back, pop open a cold one, and do nothing.

At this point, I greet every "crisis" with a "whatever" and just keep chugging along, making my regular investments in the market.

[RapmasterD]

I'm with libertarian shabbadabbadooba. I had $18,000 in 1987 and lost 1/3 of it simply because I panicked and sold. Lesson learned nearly 30 years ago.

[Dollarbill49]

Have no fears.  20-25 years from now, you'll look back at the market levels today and think we've gone up quite a bit since that forum post on MMM.

I would dollar cost average over 6 months or so if that makes you more comfortable.

Good luck!

[Sparkie]

I'm in a similar boat as the OP sitting on $400k cash. Luckily Im at least getting 4% on it, but I want to obviously deploy it properly.

No one can predict what will happen. Staying the course, DCA, etc, have all been sound strategies in the past. But for me, i sleep better at night waiting for the correction. I won't try to time the market once in, but there's enough reasons for me to wait for a pull back, or at least DCA slowly over a longer period than 'normal'

Normalcy bias is a risk. Just because the US market has continued to rise over decades, doesn't mean it will continue to bounce back. Look at Japan for example. The S&P 500 is only just higher than it was in 2007, and 2000.

The circumstances that caused the 2007 crash haven't been resolved, just papered over with loose monetary policy. The real economy doesn't match the stock market rise. Inflation adjusted wages are the same as 40 years ago. The banks are now bigger, taking on the same risks as before, interest rates are being held artificially low etc etc.

There may be a crash and it might not go lower than if I got in now, because it might not happen for months or years. But that's ok. For every expert that'll tell you things are booming, there's another that'll tell you it's not. I'm happier to forgo some upside to minimise the downside risk. For now. All you can do is assess the facts and make a decision you can live with. You won't know who was right until after the fact, but that's life. Make your choices and live with the consequences

[RapmasterD]

Have no fears.  20-25 years from now, you'll look back at the market levels today and think we've gone up quite a bit since that forum post on MMM.

I would dollar cost average over 6 months or so if that makes you more comfortable.

Good luck!

I agree 100%. And Sparkie, you may want to consider this for your 400K as well. Or chunk out 8 monthly purchases of 50k each. In essence, go long on what's returned the most for decades. Go short on emotion and hyperbole. It will not serve you.

[Sparkie]

And Sparkie, you may want to consider this for your 400K as well. Or chunk out 8 monthly purchases of 50k each. In essence, go long on what's returned the most for decades. Go short on emotion and hyperbole. It will not serve you.

I already did consider it, and have decided to wait a while. No hyperbole from me. Just how I see it. Just because you disagree doesn't make it hyperbole. I may be wrong- who knows. Do I back my own judgement and live with the consequences, or go with RapmasterD off the Internet?

[rmendpara]

And Sparkie, you may want to consider this for your 400K as well. Or chunk out 8 monthly purchases of 50k each. In essence, go long on what's returned the most for decades. Go short on emotion and hyperbole. It will not serve you.

I already did consider it, and have decided to wait a while. No hyperbole from me. Just how I see it. Just because you disagree doesn't make it hyperbole. I may be wrong- who knows. Do I back my own judgement and live with the consequences, or go with RapmasterD off the Internet?

Based on history, we are more likely to see a rough market based on some event (maybe a real slowdown in China?). Personally, I think Europe is still at a bottom, and will have a long and slow climb because they have a lot of things to work through in order to return to growth. The US has been growing, but not as a whole. One sector is growing (mostly tech) while others are struggling... it's more of a rebalancing in the US than anything else in terms of what will be the growth engine.

Regardless, I agree with your point, you should wait for a correction. However, you should identify now what you consider to be a correction and valuation level that is attractive to you to prevent making an emotional decision (e.g. "If the Dow reaches 15,500, I'll start putting in money. And if the Dow reaches 14,500, I'll dump the rest.") This way, you don't listen too much to the news and people's feelings on CNBC and make a smart decision based on what makes you feel comfortable.

[Blindsquirrel]

   Here is a good link for you to look at, http://www.advisorperspectives.com/dshort/updates/PE-Ratios-and-Market-Valuation.php  for a good perspective on valuation of the S&P500. We buy continually in our 401k's the index funds. After tax cash has been plowed into rental real estate as the P/E there is about 5-6ish or a tad lower in our area. In the end, your call but dollar cost ave reduces your chance of only buying high. From a historical perspective it is a tad expensive, in 20 years the blips will not matter much at all. An decent play is also good dividend payers as their yield lowers the beta. ie, SDY as a fund or your PG, APPL, XOM, BP type stocks if you are into single stocks.

[Sparkie]

Based on history, we are more likely to see a rough market based on some event (maybe a real slowdown in China?). Personally, I think Europe is still at a bottom, and will have a long and slow climb because they have a lot of things to work through in order to return to growth. The US has been growing, but not as a whole. One sector is growing (mostly tech) while others are struggling... it's more of a rebalancing in the US than anything else in terms of what will be the growth engine.

Regardless, I agree with your point, you should wait for a correction. However, you should identify now what you consider to be a correction and valuation level that is attractive to you to prevent making an emotional decision (e.g. "If the Dow reaches 15,500, I'll start putting in money. And if the Dow reaches 14,500, I'll dump the rest.") This way, you don't listen too much to the news and people's feelings on CNBC and make a smart decision based on what makes you feel comfortable.

I think what you say is prudent. I don't want to get caught trying to time the bottom.

I have $250k already in the market so its not like I'll totally miss out if I'm wrong. But the same people who like to quote history - 7% historical returns, and the market always rises, tend to ignore the bits that show bull markets usually run for 5 years and then correct, and that interest rates aren't usually this heavily manipulated forcing people to chase yield etc. 

The US is, in my view nearer the top of a run up than the bottom. Interest rates are near the low end of history than the high end.  This bull market is based on the belief that the Fed has your back in terms of risk, rather than a booming economy. US budgetary spending requires foreign investment that is drying up, leaving the Govt to buy its own bonds, essentially printing money to pay the bills.

I hate not being invested, and am a set and forget type of investor. I can get 4% govt guaranteed on cash. That's better than inflation and maintains my principle. Chasing another 3% or so isn't worth it to me right now.

[Sparkie]

   Here is a good link for you to look at, http://www.advisorperspectives.com/dshort/updates/PE-Ratios-and-Market-Valuation.php  for a good perspective on valuation of the S&P500. We buy continually in our 401k's the index funds. After tax cash has been plowed into rental real estate as the P/E there is about 5-6ish or a tad lower in our area. In the end, your call but dollar cost ave reduces your chance of only buying high. From a historical perspective it is a tad expensive, in 20 years the blips will not matter much at all. An decent play is also good dividend payers as their yield lowers the beta. ie, SDY as a fund or your PG, APPL, XOM, BP type stocks if you are into single stocks.

I wish real estate was an option in my town but the yields are terrible - generally<3% and the opportunity for capital appreciation has gone in my view. The median price in Melbourne is 650k. But I like property because I can control it a bit.

I'll be wanting dividend payers when I get in. Just takes away the mental volatility for me in terms of stock prices etc. I'm happy to wait, however unpopular that is :)

[RapmasterD]

Based on history, we are more likely to see a rough market based on some event (maybe a real slowdown in China?). Personally, I think Europe is still at a bottom, and will have a long and slow climb because they have a lot of things to work through in order to return to growth. The US has been growing, but not as a whole. One sector is growing (mostly tech) while others are struggling... it's more of a rebalancing in the US than anything else in terms of what will be the growth engine.

Regardless, I agree with your point, you should wait for a correction. However, you should identify now what you consider to be a correction and valuation level that is attractive to you to prevent making an emotional decision (e.g. "If the Dow reaches 15,500, I'll start putting in money. And if the Dow reaches 14,500, I'll dump the rest.") This way, you don't listen too much to the news and people's feelings on CNBC and make a smart decision based on what makes you feel comfortable.

I think what you say is prudent. I don't want to get caught trying to time the bottom.

I have $250k already in the market so its not like I'll totally miss out if I'm wrong. But the same people who like to quote history - 7% historical returns, and the market always rises, tend to ignore the bits that show bull markets usually run for 5 years and then correct, and that interest rates aren't usually this heavily manipulated forcing people to chase yield etc. 

The US is, in my view nearer the top of a run up than the bottom. Interest rates are near the low end of history than the high end.  This bull market is based on the belief that the Fed has your back in terms of risk, rather than a booming economy. US budgetary spending requires foreign investment that is drying up, leaving the Govt to buy its own bonds, essentially printing money to pay the bills.

I hate not being invested, and am a set and forget type of investor. I can get 4% govt guaranteed on cash. That's better than inflation and maintains my principle. Chasing another 3% or so isn't worth it to me right now.

"I think."

"My view."

"I hate..."

Whatever....

[Sparkie]

"I think."

"My view."

"I hate..."

Whatever....

Yeah, you're right. Thinking for yourself is over rated.

I guess someone told you once being a dick makes you all Gangsta or something. It doesn't. Just makes you a dick.

[butchmonkey]

   Here is a good link for you to look at, http://www.advisorperspectives.com/dshort/updates/PE-Ratios-and-Market-Valuation.php  for a good perspective on valuation of the S&P500. We buy continually in our 401k's the index funds. After tax cash has been plowed into rental real estate as the P/E there is about 5-6ish or a tad lower in our area. In the end, your call but dollar cost ave reduces your chance of only buying high. From a historical perspective it is a tad expensive, in 20 years the blips will not matter much at all. An decent play is also good dividend payers as their yield lowers the beta. ie, SDY as a fund or your PG, APPL, XOM, BP type stocks if you are into single stocks.

I wish real estate was an option in my town but the yields are terrible - generally<3% and the opportunity for capital appreciation has gone in my view. The median price in Melbourne is 650k. But I like property because I can control it a bit.

I'll be wanting dividend payers when I get in. Just takes away the mental volatility for me in terms of stock prices etc. I'm happy to wait, however unpopular that is :)

Sparkie,

There is nothing wrong with paying attention to valuations.

The important thing is to have a plan and stick to it.

So if you don't want to invest in stock at times like these, define what it is that makes you uncomfortable and create a rule for yourself.

as an example you could use the Schiller P/E ratio to determine your allocation of stocks and bonds: the higher the P/E ratio the lower your allocation to stocks.

Just don't fly by the seat of your pants. That's a loser's strategy.

All of your reservations about putting money in stock right now could've been well stated 1 year ago and of course the stockmarket did great last year.




Sent from my iPhone using Tapatalk

[hodedofome]

I think what you say is prudent. I don't want to get caught trying to time the bottom.

I have $250k already in the market so its not like I'll totally miss out if I'm wrong. But the same people who like to quote history - 7% historical returns, and the market always rises, tend to ignore the bits that show bull markets usually run for 5 years and then correct, and that interest rates aren't usually this heavily manipulated forcing people to chase yield etc. 

The US is, in my view nearer the top of a run up than the bottom. Interest rates are near the low end of history than the high end.  This bull market is based on the belief that the Fed has your back in terms of risk, rather than a booming economy. US budgetary spending requires foreign investment that is drying up, leaving the Govt to buy its own bonds, essentially printing money to pay the bills.

I hate not being invested, and am a set and forget type of investor. I can get 4% govt guaranteed on cash. That's better than inflation and maintains my principle. Chasing another 3% or so isn't worth it to me right now.

Just a thought to what you've said here. You've listed a lot of downside risks to the economy and implicitly the stock market (and I don't necessarily disagree with the risks you've provided). However, it's good to consider the upside risks as well. What if the market climbs a wall of worry and never has more than a 10% correction for years? IMO a good plan considers both possibilities.

[matchewed]

I think what you say is prudent. I don't want to get caught trying to time the bottom.

I have $250k already in the market so its not like I'll totally miss out if I'm wrong. But the same people who like to quote history - 7% historical returns, and the market always rises, tend to ignore the bits that show bull markets usually run for 5 years and then correct, and that interest rates aren't usually this heavily manipulated forcing people to chase yield etc. 

The US is, in my view nearer the top of a run up than the bottom. Interest rates are near the low end of history than the high end.  This bull market is based on the belief that the Fed has your back in terms of risk, rather than a booming economy. US budgetary spending requires foreign investment that is drying up, leaving the Govt to buy its own bonds, essentially printing money to pay the bills.

I hate not being invested, and am a set and forget type of investor. I can get 4% govt guaranteed on cash. That's better than inflation and maintains my principle. Chasing another 3% or so isn't worth it to me right now.

Bolded for emphasis is my edit.

The things I bolded don't agree with what you've said. I see no problem with people setting up conditions which would cause them to buy or sell. Then the conditions dictate their actions. You are not demonstrating that sort of resolve here. You are also not demonstrating your set and forget style of investing. You've decidedly not forgotten and are pulling money on a decision based off of observation and guess work. That's fine if you're cool with those risks. But don't label yourself as an ice cream lover and spit out Ben and Jerry's when you taste it.

[Sparkie]

I don't really see the point in repeating myself over and over. I didn't start the thread. I wasn't looking for advice. I initially commented to the OP that I'd wait, and gave some reasons. I don't really need those reasons validated by anyone else, although I appreciate most people are trying to be helpful.

I didn't pull money from the market; it wasn't in it. I'm not trying to time the market in the sense that I'll be in and out of it. I don't even want to get in at the bottom per se. I think the markets, which currently bear little resemblance to the underlying economy are due a correction, so I'm waiting, because I think it will be sizeable. 

If I'm wrong, I'm ok with that too. The downside risk outweighs the upside.  Every time you want to buy a stock/etf, someone else wants to sell it. They think the opposite to you. Surely the buyer isn't always right?

I'll leave it at that. Can't believe the OP makes one post and we're all running with it while s/he is long gone.

[RapmasterD]

"I think."

"My view."

"I hate..."

Whatever....

I guess someone told you once being a dick makes you all Gangsta or something. It doesn't. Just makes you a dick.

Now you're getting somewhere. When it comes to investing, particularly with all the options available to individual investors these days, thinking for yourself IS over-rated, particularly when said 'thinking' is based on emotions and fears versus price charts. Pick your AA and whatever you do, don't "think."

Of course we will enter another bear market...and younger investors will witness many of them, but there is nothing factual to indicate when that will happen or how severe they will be.

Your posts seem to indicate that with a sum of money ($400K) it is somehow better for it to sit in cash, an asset class guaranteed to lose money over time, versus investing it over time in the asset class guaranteed to provide a higher return. I apologize if I offended you, but I think CASH invested in US dollars is a bad place to park any more than a minimum 'rainy day fund,' unless you have a short term need for a pot of cash for a home downpayment, etc.

You may want to consider basing more of your thinking on data and facts, and less on emotion. Case in point: in one of your posts, you write, "the downside risk outweighs the upside." Says who? And based on what facts?

Finally, I guess you now know what the "D" in RapMasterD stands for. XXOO

[Sparkie]

"I think."

"My view."

"I hate..."

Whatever....

I guess someone told you once being a dick makes you all Gangsta or something. It doesn't. Just makes you a dick.

Now you're getting somewhere. When it comes to investing, particularly with all the options available to individual investors these days, thinking for yourself IS over-rated, particularly when said 'thinking' is based on emotions and fears versus price charts. Pick your AA and whatever you do, don't "think."

Of course we will enter another bear market...and younger investors will witness many of them, but there is nothing factual to indicate when that will happen or how severe they will be.

Your posts seem to indicate that with a sum of money ($400K) it is somehow better for it to sit in cash, an asset class guaranteed to lose money over time, versus investing it over time in the asset class guaranteed to provide a higher return. I apologize if I offended you, but I think CASH invested in US dollars is a bad place to park any more than a minimum 'rainy day fund,' unless you have a short term need for a pot of cash for a home downpayment, etc.

You may want to consider basing more of your thinking on data and facts, and less on emotion. Case in point: in one of your posts, you write, "the downside risk outweighs the upside." Says who? And based on what facts?

Finally, I guess you now know what the "D" in RapMasterD stands for. XXOO

I'm getting 4% govt guaranteed for up to 12 months, not not losing money if I use 2-3% as inflation.

Fair play for taking the dick thing on the chin. Not literally of course. Not that there's anything wrong with that.  :)

[AMustachianMurse]

Tordo, Rather than try to time the market, which is a fool's errand by the way, just do what helps you sleep at night.

If you don't feel comfortable investing everything right now, then don't. Simple as that. Whether you are leaving money on the table or not doesn't really matter if it's too risky for your nerves

Personally, I don't believe anyone can accurately time the market overall. If I were in your situation, I would choose a target asset allocation for the year 2016, and then start putting in money on a weekly/monthly basis (maybe ~$5k/week?). If you see markets selling off, then accelerate your investments to $6-7k/week, and if markets take off upward, then maybe slow down to $3-4k/week.

This way, you don't win big or lose big, but also don't end up standing on the sidelines waiting to play.

What do you do that you have $5k disposable income every week.  and also...do you want a mentee?  I make a mean cup of coffee and am very good at googling things.  /s.  but...also kind of serious

[YoungInvestor]

"I think."

"My view."

"I hate..."

Whatever....

I guess someone told you once being a dick makes you all Gangsta or something. It doesn't. Just makes you a dick.

Now you're getting somewhere. When it comes to investing, particularly with all the options available to individual investors these days, thinking for yourself IS over-rated, particularly when said 'thinking' is based on emotions and fears versus price charts. Pick your AA and whatever you do, don't "think."

Of course we will enter another bear market...and younger investors will witness many of them, but there is nothing factual to indicate when that will happen or how severe they will be.

Your posts seem to indicate that with a sum of money ($400K) it is somehow better for it to sit in cash, an asset class guaranteed to lose money over time, versus investing it over time in the asset class guaranteed to provide a higher return. I apologize if I offended you, but I think CASH invested in US dollars is a bad place to park any more than a minimum 'rainy day fund,' unless you have a short term need for a pot of cash for a home downpayment, etc.

You may want to consider basing more of your thinking on data and facts, and less on emotion. Case in point: in one of your posts, you write, "the downside risk outweighs the upside." Says who? And based on what facts?

Finally, I guess you now know what the "D" in RapMasterD stands for. XXOO

Thinking for yourself may include using data to draw the conclusion that, right now, the index does not seem to be a good investment.

For someone with statistical modelling/time series knowledge and general economic knowledge, attempting to "time" the market isn't necessarily a loser's game. I'm not saying this is the OP's situation, but let's diss the whole idea.

[vivophoenix]

i may have missed it in this thread, or i may be bumbling into high water, but what is DCA? I found this blog about four months ago and immediately started selecting my own allocations for my 401k and then opened an IRA an put that in  an index fund. then i read about springy  debt and put part of my emergency fund in cash, part in bonds and part in index funds. now im trying to learn more

[Scandium]

We really need a sticky for this topic....

http://forum.mrmoneymustache.com/investor-alley/stock-market-is-hight-am-i-too-late/
http://forum.mrmoneymustache.com/investor-alley/stock-market-expensive-now-alternatives/
http://forum.mrmoneymustache.com/investor-alley/where-to-put-your-investment-money/
http://forum.mrmoneymustache.com/investor-alley/a-safe-investment-on-the-stock-market/
http://forum.mrmoneymustache.com/investor-alley/long-term-buy-and-hold-timing-the-market-why-is-this-a-no-no/

Yes please a sticky! Or immediately consolidate all these threads into one giant "market timers anonymous" topic..

Sticky could look like this:
Is the market too expensive?
yes/no/maybe/who knows. You should go 100%: S&P/cash/gold/guns and canned food

Or my favorite: rainfall futures:
http://www.cmegroup.com/trading/weather/files/rainfall-futures-and-options.pdf

[Jags4186]

i may have missed it in this thread, or i may be bumbling into high water, but what is DCA? I found this blog about four months ago and immediately started selecting my own allocations for my 401k and then opened an IRA an put that in  an index fund. then i read about springy  debt and put part of my emergency fund in cash, part in bonds and part in index funds. now im trying to learn more

DCA is dollar cost averaging.

The theory is if you have $12,000 to invest, you invest $1000 a month every month for a year to "average" your money into the market vs. plunking it in all at once.

The numbers tell us lump sum investing will get you ahead (i.e. investing $12,000 on January 1, vs $1000 January 1, February 1, etc. etc.).   This is because in general the market goes up so you want your money in the market as long as possible.  In reality when initially investing DCA will be better for you in a down year and worse for you in an up year.  If you're just getting started and you have a lump of cash to invest, I don't think it's necessarily the worse thing for you to do.

If you are just starting out and have no money you are effectively DCAing simply because you will be investing a portion of your paycheck every week/month.