Investing, Retirement 

How To Time The Market

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Did we just experience a dead cat bounce or are we in the midst of an actual rally? Are the bears going to take over or were the bulls just getting a drink before they plow onward? Correction or actual sustained downturn? I have the answer.

Don’t worry about it.

If you’re like me, all your investments are in either a 401(k) or a Roth IRA. No matter how the market moves, up up down down left right left right (A B Select Start), you won’t “benefit” until you have retired. Even if you have non-retirement accounts, are you in it for the long haul or are you day trading? If you’re a day-trader, you probably aren’t reading this because you know a lot more than I do and shouldn’t be considering my opinions. (If you’re a day-trader and don’t know more than I do, get out, you’re the sucker the table!) A month-long slide followed by a week-long bounce shouldn’t bother you at all because you won’t see any of it until you’re pushing 65. In fact, in 20 years you won’t even remember what happened that fateful May in 2006 when commodities and emerging markets dropped from near all-time highs.

Don’t bother timing the market, go enjoy the outdoors, do something you can enjoy now (Spend some money at the mall! Keep our economic engine humming!) – don’t spend your time worrying about something you won’t see for another few decades.

{ 4 comments, please add your thoughts now! }

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4 Responses to “How To Time The Market”

  1. Trent says:

    This advice works best if you are well diversified. As a rule of thumb, at least 20 percent of your investments should be in each of the following:

    1) US Stocks
    2) US Bonds
    3) Foreign stocks

    That gives you a minimum of 60 percent of your investments. The rest of them can be allocated to the same three categories or to other asset classes such as commodities, cash, or variations on the themes (high yield bonds, emerging markets).

    Two large-cap US stock funds are not diversification. But three ETFs fitting into the above categories could provide a great deal of diversification and help you weather all kinds of markets.

  2. Ricemutt says:

    Ah, playing 2-player Contra with the bro. I’d forgotten all about that ’til now. Good times, good times…

  3. Ignorance is Bliss

    One especially nice thing about index investing is, I don’t pay a lick of real attention to the day-to-day goings on of the stock market. That said, of course I like seeing the market go up, and am not a huge fan of watching it go down (unless i…

  4. sean says:

    Hmmm, sorry about that trackback. Not sure why it ended up with that <pre> formatting – did the same thing when I pinged 43folders a while back.

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