Posted on 08/22/2015 7:01:16 AM PDT by SeekAndFind
Stocks slumped world-wide this week, with U.S. and European markets off more than 5% and the Shanghai Composite Index losing more than 11%. Oil prices also skidded, dropping more than 6%. Traders feared that slowing growth in China, the devaluation of the Chinese currency and the overhang of too much debt could stifle global economic recovery. Here are five things you should know about how not to react.
1 Don't fixate on the news.
The more often you update yourself on the market’s fluctuations, the more volatile and risky it will appear to you — even though short, sharp declines of 5% to 25% are common. The U.S. stock market has, in the past few years, been extraordinarily placid by historical standards. Even the sudden drops of the past few days are well within the long-term norm. Fixating on fluctuations in the short term will make it harder for you to remain focused on your long-term investing goals.
2 Don't panic.
While stocks are certainly not cheap, they aren’t wildly overpriced, given today’s levels of interest rates and inflation. U.S. stocks are trading at 24.9 times the average of their long-term, inflation-adjusted earnings, according to data from Yale University economist Robert Shiller – down from 27 in February. Over the full sweep of bull and bear markets in the past 30 years, they’ve traded at an average of 23.8 times adjusted earnings.
3 Don't be complacent.
You should use the latest turbulence as a pretext to ask yourself honestly whether you are prepared to withstand a much worse decline. Did you make it through the epic bear market of 2007-09 without selling all your stocks? Are you extremely well diversified, with plenty of cash, some bonds, and with large and small stocks from markets around the world?
(Excerpt) Read more at blogs.wsj.com ...
It’s already too late to panic. ;-)
5 ways to have your ass handed to you by the professionals.
Translation - if those who aren’t astute in the market will only leave some of their stuff available, the really rich can find ways to sop some more of it up as they help drive us into the dumps.
The House always wins.
OK - now I'm ready to panic...
Quick, invest in cattle futures before Hillary grabs them all up.
When you talk to investment ‘specialists’ it is NEVER time to sell. No matter the circumstances, they’ll say don’t sell. If you are 90 years old and don’t have time to recover if there is big drop ... same advice, don’t sell.
Save yourself the fees these people charge for ‘advice’. Just put up a big sign in your room saying NO MATTER WHAT HAPPENS DON’T SELL. You’ll save a lot of money on investment advice.
We came into 50,000 earlier this year and a financial adviser wanted us to put it all into equities. I said I want to wait until after market corrects later this year. He said the market is fine and there is no good time NOT to buy. I demurred and now waiting for the market to bottom out so I can buy low.
There is an old Wall Street adage: A bear market is when assets are returned to their rightful owners.
Make a list of the companies you would like to own, and what you are willing to pay. If they hit that price, buy them. Don’t get greedy and hope they drop another 10%. You have named you price, now take it.
You can get very good names at very low prices if this keeps up.
and where is that bottom?
That has been my plan for over a year now but will be doing it in this vehicle:
VDIGX,
and dca monthly on the way down
The fact is, the emotional drive to sell emerges from the signals given by the market itself. Individuals feel the impulse to sell simultaneously with others. The individual feeling intensifies simultaneously with its intensification with others. Most traders simply respond, or react, to the signals given by the market.
There is a time to sell. It’s when optimism is at its peak.
In the days when J.P. Morgan and others coined it, it may have been functionally accurate - times have changed.
2) Buy when the blood is running in the streets.
3) Don't try to grab a falling knife.
I don't concern myself with the ups and downs. Because I'm constantly putting money in, the dollar cost averaging helps me ride out the ups and downs. Didn't do anything different during the 1987 crash or the 2000 dot.com bust.
Those who have a day-trader mentality or otherwise try to time the stock market usually get burned the most.
That's the rub. Timing a bottom can be as risky as timing a top. Right now the top close this year was 18,312 on May 19 and Friday's close was 16,460 with a drop from the top of almost exactly 10%.
There's more bad news coming but the market has already anticipated that. The question is, is there un-anticipated bad news like Korea.
Exactly.
They want their commissions and fees, so there is not time that is not a good time to buy and there is no time to sell.
Simple as that. Just like real estate agents.
Buy a safe and invest $30 K in gold or silver. You will not be sorry. JMHO.
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