Raptor
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Location: Missouri
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Great point. I was sitting on 50% cash when the market headed south. I started to toss that money in every month as it went downhill. The dollar averaging allowed me to make up for my losses now that the market is at 10500. However, I recently moved to 25% cash position. I may increase that or decrease it depending on the next couple of months. I think another correction is coming once the stimulus money starts running low at midyear and everyone realizes the stimulus was a temp fix, that didn't fix anything, just spent a trillion dollars on nothing, except pothole repairs.
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Sun Jan 03, 2010 3:41 am |
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coaster
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Cash: $ 1318.80
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Joined: 11 Oct 2005
Location: Wisconsin
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| Re: Smart Stock Investing |
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quote:
Originally posted by Payroll Tampa
Smart stock investing can be done when the markets are low. .
That's the correct textbook approach; much easier said than done. Human psychology works against it. People aren't interested in buying stocks for some time after the market tanks. Usually they only start getting interested after it's recovered.
~Tim~
Eye Candy : Why Whimsy
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Sun Jan 03, 2010 4:16 am |
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coaster
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Cash: $ 1318.80
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Joined: 11 Oct 2005
Location: Wisconsin
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quote:
Originally posted by Raptor
I started to toss that money in.....
Ha ha. Me too. I had the feeling that I was trying to rescue the market single-handedly. But I wish I had had more cash. I went from about 10% to 1% in late '08. People thought I was nuts. I said to them you don't know when the market's recovered until it's half-way back. So what's the diff buying half-way down or buying half-way back up?
So, if you're holding long-term, why sell now something already bought on the cheap? You just have to pay cap gains taxes. You don't know you'll be able to buy it back any cheaper. Better to hold and collect the dividends. The only reason to sell is to put the money in something else that's a better opportunity.
~Tim~
Eye Candy : Why Whimsy
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Sun Jan 03, 2010 4:22 am |
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Raptor
Full Member
Cash: $ 14.50
Posts: 70
Joined: 15 Nov 2009
Location: Missouri
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The only thing I would change is not to be as bold up front. I had most invested by the end of 08 and when March low hit I didn't have much remaining to toss in. When I went in on the down slope, I went with tech and small caps since they were already at value and became undervalue. A great call because these sectors made a terrific return. Time to start looking at mid and large caps again over the coming year. Also I concerned about inflation or the possibility of stagflation. The stimulus money factor is hard to calculate. Not sure which markets are going to dive and which will boom when midyear comes and we enter the bottom half of the stimulus.
Does anyone else have a concern for stagflation? My though is even after all the cost cutting, companies are going to have to raise prices in the end to keep from going under as the cost of borrowing money goes up. Secondly, the stimulus money will run dry and this little uptick in the economy will end. Inflation is already here, just not on the surface numbers. However your dollar no longer buys the same product. Recently, everything seems to be so cheaply made, the value of the product is lower but cost the same. That meets my definition of inflation. Prime example, the portion size of the meal you get at a restaurant, keeps getting smaller.
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Sun Jan 03, 2010 5:14 am |
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coaster
Senior Advisor
Cash: $ 1318.80
Posts: 6496
Joined: 11 Oct 2005
Location: Wisconsin
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Stagflation, you bet. Jimmy Carter returns!! 
You're so right about the quality factor. I've noticed that with several items bought recently.
~Tim~
Eye Candy : Why Whimsy
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Sun Jan 03, 2010 9:15 pm |
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