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Sunday, Nov 8, 2009
A bit of oft-ignored advice on the stockmarket:
Be a bear, hybernate.
Unless the company you have shares on goes under you have not made a loss until you sell. Hold onto your shares and hope for luck, because chances are so long as the underlying and business is decently run, the shares will come back up again.
Relationship?? Dominating???
WTF are you ranting about?
Why do you have to make every husband-wife argument into a women's rights and assault complaint?
The wife here was just wondering what her husband might say to her losses: He doesn't look like the wife-beating kinda guy (she NEVER said that).
And now you go and sow discord into their family through your permanent suspicion that every man who looks at his wife in anger wants to beat her.
What a moron.
Get off your high horse.
This was a plain financial advice. That's all.
Don't bring your life into this.
Then things are looking up a little:
"Stocks ended a holiday-shortened week with some of the steepest gains in 75 years. Major indexes have locked in some big advances, including 16.9 percent for the Dow Jones industrial average and 19.1 percent for the Standard & Poor's 500 index, since the rally began Nov. 21."
A bad outcome doesn't mean you made a bad decisions.
Consider this:
"Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.
Equities will almost certainly outperform cash over the next decade, probably by a substantial degree."
And this:
"In confessions of a winning poker player Jack King said few players recall big pots they have won strange as it seems, but every player can remember with remarkable accuracy the outstanding tough beats of his career."
Or you can look up cognitive bias in Wikipedia.
Too bad Cognitive Behavioral Financial Therapy isn't available.
My prior post wasn't simply recommending a "buy and hold" approach.
Few people really know their risk tolerance without being tested in the markets.
You now have a little more self knowledge and what you learned isn't comforting.
1. Don't panic.
But if you now KNOW you will panic if the market continues to decline........
2. Panic early.
That is, do whatever you need to do to avoid the possibility of selling at the absolute bottom. Don't just try to paper over your fear.
A lot of investors are having their "Come to Jesus" moments these days.
What would you do if the markets decline another 30% without a material change in fundamentals? Buy more? Sell it all? Slit your wrists?
Maybe you need to move to 1/2 stocks, 1/2 bonds to feel grounded. Or some other ratio.
The only correct
First, if it's 25 years until you retire, then you're absolutely fine. Look up "dollar cost averaging" and take comfort in the fact that any money you put into your stocks right now is buying more stock - which will go up when the market does. And it will. It will go up and down several times between now and your retirement, but because of dollar cost averaging you will end up better off than your husband. Now is a very good time to not do anything to your stocks. Panicked people rarely make the right decision. You would probably end up pulling all of your money out of stocks when they are low, which is exactly the wrong thing to do. But that is what people do - they sell when stocks are low (because they're afraid of losing everything) and buy when stocks are high (assuming that something that is already strong will only get stronger - bad assumption, by the way). Sit tight. Listen to that voice telling you not to do anything. Even experienced agents don't know what to do right now.
Second, open up some lines of communication with your husband. You should be able to talk to him about this. If you can't, then get counseling.
What is _your_ frickin' problem? Are you so emotionally invested in "marriage always equals happy-ever-after" that you strike back at anyone who even hint that might not be true? Even Cary noted that the LW sounded far more afraid of her husband's reaction than normal circumstances would warrant. She sounds like a guilty, dependent little girl than a mature woman. Sorry if you aren't perceptive enough to read between the lines of her letter--and that you lack the intelligence to be at all curious as to why she sounds so fearful.
If her husband's a good guy he's going to say - "Well, I thought your investments might have been a bit risky so that's why I was putting so much in CD's. We're in this together and so you can look at your losses at being 50% less."
... watch her show and read her books. She has wonderful advice for those in your position.
Unless you are crazy enough to sell, that is.
You have taken what investors call a "paper loss". That is, your investments, which were "worth" some amount 12 months ago, are now worth less than that amount if you sell them.
But of course you're not planning to sell. You've made the right decision and elected to invest for the long term. The next 25 years, to be precise.
The great thing about stockmarket downturns like this is that it shakes the foolishness out of the market. Turns out, 12 months ago, your investments were not "worth" what they said they were. A lot of that "value" was built on sand, or, more specifically, bad loans. Now, however, it isn't anymore.
Don't say a thing. There is absolutely no need for you to call anyone, do anything, or open any mail. Assuming, of course, that you have a properly diversified portfolio.
Wait it out. It's the value of your portfolio AT RETIREMENT which is important, right? What your portfolio is worth now is almost completely irrelevant.
Much of the initial coverage about Fort Hood turned out to be wrong. Is there anything wrong with that?
The accountability imposed by another country for the CIA's kidnapping and torture reveals much about our own.
Fox News' morning show plays to type, talking about whether Muslims in the Army should face "special debriefings"
The survivor and author is upset about comparisons some on the right are making to genocide
Once seen as a lunatic fringe, reactionary anti-women groups are courting respectability
Salon headlines in your mailbox
