I tell this to literally everyone who asks about their 401k. DO NOT DO NOT DO NOT try and market time with a portfolio that has a 30+ year horizon. The single fastest way to destroy returns is to not be invested at all times.
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It is deceptive: "oh I'll just invest in money market during Shit Show 2. I will be among the few who actually invest at the bottom!" Having zero imagination for the fact no one knows what or when the bottom is, and therefore end up missing the bounce. And all the dividends in the meantime.
related to this....assuming you are being paid regularly as well any dips that occur you will already be buying into at that regular payroll basis...it's the ultimate dollar cost averaging plan
Yeah, this isn’t like COVID, which was an unstoppable, unignorable physical destruction of value. This is all being caused by political decisions, which means they can change on a dime and the place you want to be invested is “in the herd that can make the loudest noise.” So it’s index funds.
“What if they destroy value all across the S&P” then you want your interests to be aligned with the folks whose compensation is tied directly to those numbers not collapsing
The equity markets have always recovered from drawdowns. The 49% decline in 2000 took the longest to recover: a little over 7 years. If you don't need to sell stocks for 7 years, you're probably ok.
I don't know what I did to be blessed with an ironclad belief in "don't try to time the market, buy regularly and follow the same rules" but times like these make me very thankful.
I fully recognize that "it's different this time" is a dangerous thing to say, but it's different this time. Whether that means that US stocks will be bad to own, I don't know. I certainly own a lot. But I am not confident that extrapolating from the past under these circumstances is justified.
I have a lot of politics and a modest amount of investments and every time I've tried to apply politics - especially my own - to my investments they get more modest.
This is good advice. Timing the market is for suckers. trump will (hopefully) be gone in 4 years. For someone with 20+ to retirement, don't do anything.
I appreciate what your saying - and you a probably right. But I don’t trust this administration not to crash the stock market or devalue the dollar. I’m also considering moving my money to a foreign bank since they are messing with FDIC
If this is from a Federal worker, the TSP G fund monthly return averages out bonds of 5+ year duration each month. So it's pretty unique in its ability to adjust to things like inflation. I agree its not the same return as stocks, it has some good uses but is not available to everyone.
I don't invest in any bonds. I personally prefer setting trailing stop losses. So far, this has worked better for me. When I see the chart get over extended and the VIX is low (<$14), then I usually buy VIX calls, TQQQ puts, SQQQ shares, and sell a portion into strength.
I mostly get burned on stop losses. So many times it barely hits and the price is already higher by end of day. I want a stop loss that only triggers after a couple of hours.
100% The issue isn’t even that you could be wrong now it’s that should the fall come you may not do the reallocation and you’ll miss the rally. Know plenty of people who were still bearish at 700 on the S&P in early ‘09
I’m not talking about maximizing returns; I’m talking about hedging against tail risk.
Just like how over covid, I started holding more cash for backup emergency use. Now that the US political situation seems less stable, I plan on looking more into international holdings.
I dodged the worst of the ‘08 crisis because I was rolling my funds over into a new account at a new job and they sent me a physical check that sat on my desk for a few months. I don’t know of many financial planners who would suggest that strategy, tho.
the one place where I go back and forth is US vs ex-US allocation within equities... a lot of people have made allocation decisions based on recent outperformance that it may not be a bad idea to revisit? but otoh I've been thinking that for years and the US just keeps outperforming.
Try signing up for an app like @weareplootus.bsky.social at https://www.plootus.com or on the app store to help you with how to allocate your 401k dollars across the funds available in your plan to maximize returns and keep fund costs low, and personalized for your individual situation.
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Maybe it'll pay off, but it probably won't! That's the inexorable math of leveraged, risk-bearing assets versus unleveraged, risk-free* assets.
*relatively speaking
(110-age)=stock %
(This is far afield from George’s market-timing point, which I fully agree with and which the replies are vigorously proving necessary)
Just like how over covid, I started holding more cash for backup emergency use. Now that the US political situation seems less stable, I plan on looking more into international holdings.