The irony of stock market and dollar losses

V

Victor

Senior Member
Location
midwest USA
It is ironic that people, including me, will fret over losing a dollar here or there or not taking advantage
of a little coupon, while losing hundreds or even a thousand dollars (or pounds) in the market in a single
day. My mother would lose thousands in the market and it didn't bother her but she was upset to lose a dollar
or forget a coupon. Technically the market losses are only on paper, people say, but in reality that loss
may be permanent. I could lose a whole semester (4 months) of pay entirely in a few days.
This scares me but you will not make much in other financial instruments (in U.S) like CD's.

Do you feel this way?
 

I keep an eye on the ups and downs of the market but I don't figure that I've lost or gained anything until the day I sell.

I can't control the market but I can control other things, like using a coupon, turning back the thermostat, shopping at the thrift store, etc...

I remember 2008 and the white knuckle ride for a couple of months until we found the bottom and things settled down, scary stuff LOL!!!

For me the answer has been to keep a cash cushion so I don't have to sell in a down market. Some folks would say that is foolish because if the cash was working in the market I would be better off over time, who knows. We each need to manage our finances in a way that makes us comfortable.
 
Victor said:
It is ironic that people, including me, will fret over losing a dollar here or there or not taking advantage
of a little coupon, while losing hundreds or even a thousand dollars (or pounds) in the market in a single
day. My mother would lose thousands in the market and it didn't bother her but she was upset to lose a dollar
or forget a coupon. Technically the market losses are only on paper, people say, but in reality that loss
may be permanent. I could lose a whole semester (4 months) of pay entirely in a few days.
This scares me but you will not make much in other financial instruments (in U.S) like CD's.

Do you feel this way?
Click to expand...

I don't because I totally agree with Aunt Bea.
Quote
" We each need to manage our finances in a way that makes us comfortable."


I credit that comfort to a Fidelity employee that explained to me the advantage of converting 401k's into traditional & self directed IRA's. Other advice included not falling in love with a stock & holding it forever.
 

I have someone who manages my money and he has created a conservative portfolio that doesn't leave me too exposed if the market drops sharply. Knowing that it's well diversified and that we're very conservative, means that we may miss out on some large (temporary) gains, but are protected when the market takes an inevitable dive. When I retired I moved all my 401k money into an IRA. I don't have to worry about it day to day. That's what I pay the advisor for.
 
Do you think we could have another 2008 stock market catastrophe? Well, I didn't think so, but in the last few days I've begun to worry a little.

Especially since reading this: https://www.nytimes.com/2017/05/05/us/politics/dodd-frank-finance-banking-regulations.html?_r=0

And this: "It is an enormous package of gifts for Wall Street and the worst actors in finance,” said Lisa Donner, executive director of Americans for Financial Reform, who said the bill House Republicans passed would increase the likelihood of another financial crisis."

So, we'd better be very careful.
 
Do you think we could have another 2008 stock market catastrophe? Well, I didn't think so, but in the last few days I've begun to worry a little.
Click to expand...

Yes. My financial analyst has noted that the technicals on the market are cause for concern. The market is very expensive and ripe for a correction. The question is when it will happen.
 
our balance is our balance whether we sell or not .selling may be a tax event but that value is your balance at any given time .

yeah , we all heard the incorrect mantra that says it is only a loss or gain on paper until you sell but that is false .

it is all your money at any given time and whether you close a position each night and rebuy the same investment or another one the next morning is no different than deciding to keep the same money in play over night .

you may not care what your balance is at the moment but that does not mean it does not count . that investment may never come back .

in fact in retirement my yearly draw is based on my balance each dec 31st whether i sell or not .

investing in variable assets is no different than working on straight commission . there are bad years , good years and flat years . but in the end if your horizon is long enough temporary dips don't matter at the end of the day .

i have been using the fidelity insight news letter for more than 30 years and following the portfolio models .

the growth portfolio has taken 100k in 1987 and made it 2.20 million today without adding another penny using plain ole fidelity funds .

that is through crashes , recessions , the 2000 tech crash the 2008 financial crash and most important the lost decade when equities barely moved on an inflation adjusted basis .

i have been up or down 5 digits in one day exceeding my wifes yearly salary . but it is all part of the variable balance process .

today i am more conservative in retirement but i still maintain 40-45% equities .

i run 3 newsletter optimized portfolios .

5 years withdrawals in a conservative , income model which is 23% equities and 72% assorted bond funds for eating in years 1-5 , 5 years in a growth and income model that is 60/40 for eating in years 6-10 and all the rest in a 100% equity growth model for eating in years 11-30 plus .
 
Bobw235 said:
Yes. My financial analyst has noted that the technicals on the market are cause for concern. The market is very expensive and ripe for a correction. The question is when it will happen.
Click to expand...

actually stocks are high but not by much when interest rates are considered .

p/e's are about 21 with the historical average about 19 . but historically bonds are in the 5-6% range . at these levels stocks are not so high . in fact earnings have been very good with 3/4's of the s&p coming in better than expected .

bull markets do not end when pessimism is this high about them . most of us are pessimistic about things and that sits well for markets
 
Predictions for stock market performance, by the "experts", are all over the place....but more and more of them are predicting that the markets will continue to climb...with only minor corrections. There are even some of these predictions claiming that the market will soar to previously unthinkable levels.

http://www.patientwealth.com/dow-150000/

Bottom line....there is no other mechanism, other than the markets, to allow a person to maintain, or grow their savings....money in the bank is growing dust. A well balanced portfolio should grow nicely, over time.
 
mathjak107 said:
our balance is our balance whether we sell or not .selling may be a tax event but that value is your balance at any given time .

yeah , we all heard the incorrect mantra that says it is only a loss or gain on paper until you sell but that is false .

it is all your money at any given time and whether you close a position each night and rebuy the same investment or another one the next morning is no different than deciding to keep the same money in play over night .

you may not care what your balance is at the moment but that does not mean it does not count . that investment may never come back .

in fact in retirement my yearly draw is based on my balance each dec 31st whether i sell or not .

investing in variable assets is no different than working on straight commission . there are bad years , good years and flat years . but in the end if your horizon is long enough temporary dips don't matter at the end of the day .

i have been using the fidelity insight news letter for more than 30 years and following the portfolio models .

the growth portfolio has taken 100k in 1987 and made it 2.20 million today without adding another penny using plain ole fidelity funds .

that is through crashes , recessions , the 2000 tech crash the 2008 financial crash and most important the lost decade when equities barely moved on an inflation adjusted basis .

i have been up or down 5 digits in one day exceeding my wifes yearly salary . but it is all part of the variable balance process .

today i am more conservative in retirement but i still maintain 40-45% equities .

i run 3 newsletter optimized portfolios .

5 years withdrawals in a conservative , income model which is 23% equities and 72% assorted bond funds for eating in years 1-5 , 5 years in a growth and income model that is 60/40 for eating in years 6-10 and all the rest in a 100% equity growth model for eating in years 11-30 plus .
Click to expand...

You & I share the same thought process when it comes to money management. Having the patience to spend time learning for ourselves what works for what we want achieve didn't start a few years ago. Time has been our friend. I'm not knocking those that use an advisor just pointing out for those that may still have quite a few years before they retire that learning for yourself can pay off really well.
 
I have never panicked about stock market losses because I'm in it for the long haul and I know the markets always bounce back. Plus I may never need to touch the money because I have more than enough monthly income. Another thing is that even during the downturn, my investments did well. What's ironic is the ones I chose over the years with my crazy, unscientific method are the ones that did well. The one mutual fund and one stock that all the financial analysts were touting so highly are the two investments that tanked. So I will never listen to the "experts" again! Good thing I didn't pour a lot of money into either of them.

I agree that if you lose a dollar or two, your wallet feels it immediately. If someone loses thousands but still has the principal to draw from or like me, has faith that the markets will rebound, it doesn't seem as "real". I just did an about face on my savings/investment plan after re-reading a financial article. I realized that it is worth the risk for me to put more into my relatively stable investments earning 10 to 14.5 percent on average annually than to keep so much money in a bank account paying less than 1% annually. Doing so is literally losing money in two ways. First lost growth and secondly being eaten up by inflation with no income to replenish what was lost. Gosh, I remember when a small savings and loan in our city that eventually closed it's doors, was paying 14% on CDs. That is unheard of now.
 
what we usually give up is more than what things typically drop .

just look at bonds the last year . many pulled out of bonds and bond funds because the rates went up .

we get about 2400 a month in bond fund interest from our bond allocation . we would have given up 28k because we sat in cash the last year had we feared bonds .

we could actually fall 11k and still be ahead of 1% in cash instruments waiting things out .

peter lynch was so correct when he said more money is lost or given up in preparation for the next downturn than has been lost in the downturn by markets .
 
one of the reason investors do poorly trying to guess markets is that it take a real nervous nellie to bail out now and go to cash when markets may very well go higher .

it takes balls of steel to buy when markets are plunging and while everyone is else is running for the fire exit you are running in .

rarely does one person possess both qualities . generally the nervous nellies bail , have visions of having all this cash and markets plunge .

but in reality they never act because they are afraid it is still going to fall .

in the mean time markets reverse course without any signs anything is any better . they believe it is a suckers rally so they delay buying . it goes higher and higher and of course now they are waiting for the roll back to get in , which of course does not happen and they get left behind a 2nd time .
 
I've found that the best financial advice, for me, comes from watching CNBC, and their analysts...especially Jim Cramer, at breakfast every day. Following their tips, and monitoring my portfolio myself has allowed me to keep our assets intact. I've been pulling a monthly allotment from the IRA for almost 16 years, and as of this morning, I have slightly more than what I started with....essentially giving us over $400K of "free" money, since retiring. The stock markets are certainly a bit of a gamble, but if a person pays attention, and reallocates as market conditions change, the "ride" is not that bumpy.
 
that means really nothing without numbers . cramer's track record is no better than a coin flip at best . reminds me of my aunt who used to buy individual stocks and tuck the certificates away . she would tell us how well the issues are doing . we would ask her what they were doing , she would say , they are up .

when we looked many years later a simple index fund would have given her 2x what these stocks did .
 
"Playing" the stock market is one of my hobbies/obsessions. I even love stocks with high volatility, like TSLA and AMZN and NVIDA etc. I only wish I had started investing earlier than my mid 50s. And I wish I had known then what I know now, especially not to use margin. Margin was my biggest downfall during the early 2000's and the dot.com crisis.

I love ETFs because you can trade them like stocks but are safer than individual stocks, although they don't go up as much. I figured that since this bull market is now 9 years old and stocks are expensive I sold some and have cash available for an impending crash. Yes, you're not supposed to ''time the market'' but I simply could not resist taking some profits and have a wish list of stocks and etfs I plan to buy at discounts of 30% and 50% discounts.
 
"Playing" the stock market is one of my hobbies/obsessions. I even love stocks with high volatility, like TSLA and AMZN and NVIDA etc. I only wish I had started investing earlier than my mid 50s. And I wish I had known then what I know now, especially not to use margin. Margin was my biggest downfall during the early 2000's and the dot.com crisis.

I love ETFs because you can trade them like stocks but are safer than individual stocks, although they don't go up as much. I figured that since this bull market is now 9 years old and stocks are expensive I sold some and have cash available for an impending crash. Yes, you're not supposed to ''time the market'' but I simply could not resist taking some profits and have a wish list of stocks and etfs I plan to buy at discounts of 30% and 50% discounts.
 
individual stocks take on a whole other level of risk .they take on individual company risk and market risk .unless you own enough of them you are not investing ,you are speculating .

you are trying to find just the right company ,in just the right market at the right time , in the right market sentiment.

the problem is even if you got all that correct you still don't know what the competitors have on their drawing board .

look at the pounding ibm and verizon just took because they missed earnings .

i do play with etf's and stocks but i am careful to keep that play very separate from my serious money which only takes on market risk .

i do very well trading in and out of stocks but i would never do that with my serious money .
 
My stock broker man said I should get some safe mid-cap stocks in my portfolio.It is too
aggressive, so he says. Well, that is a lot of research. I have the time but not
the know-how to find them. A high yield, medium share price solid company that
is not in energy or retail sectors. Happen to know any?
 
Victor said:
My stock broker man said I should get some safe mid-cap stocks in my portfolio.It is too
aggressive, so he says. Well, that is a lot of research. I have the time but not
the know-how to find them. A high yield, medium share price solid company that
is not in energy or retail sectors. Happen to know any?
Click to expand...
Did he make any suggestions? Just curious.
I would buy an ETF, since they are safe because they hold lots of companies, rather than put all your money into one stock. Of course, they don't go up as much (or down) as the companies in it. My favorites are the S&P etf SPY and the tech QQQ. You can also get banking XLF and defense ITA and internet hacking HACK or CIBR. Just a few ideas. Of course, all of them are at or near highs so I'd wait for a correction to buy them. All of the ones I mentioned are on my Wish List.
 
inexperienced people should not be buying individual companies . buy diversified index's , allocate to your temperament and goals and forget about speculating in individual stocks .
there are enough lazy portfolio's to choose from .

but you need to get clear in your own head just what your priorities are , as the best for you may be different than the best for me .

your goals may be you want the biggest gains ? or you may want the least losing years or low volatility so the swings don't bowl you over . they are not going to be all found in one portfolio so you need to pick what is important .

you can compare popular lazy portfolio's here .

https://portfoliocharts.com/portfolios/
 
Most of my stocks were inherited. I chose a few myself, some are winners like Walmart and they all have high yields. That is
very important. I also use mutual funds.
I buy a small number of shares anyway, to limit possible losses. Some stocks went up and I wish I bought more.
. I try to analyze
the stocks the best I can and am not inexperienced...but I have much to learn!
I know exactly what I want...your pie charts are easy to read but why call them lazy?
 
high yield is the least of importance .at the end of the day only your total return matters. if anyone doubts this i will happily pay you more than your highest yield but i keep the invested dollars .
 
Victor said:
Most of my stocks were inherited. I chose a few myself, some are winners like Walmart and they all have high yields. That is
very important. I also use mutual funds.
I buy a small number of shares anyway, to limit possible losses. Some stocks went up and I wish I bought more.
. I try to analyze
the stocks the best I can and am not inexperienced...but I have much to learn!
I know exactly what I want...your pie charts are easy to read but why call them lazy?
Click to expand...

they are called lazy portfolio's because except for rebalancing they do not have to be tended to or acted upon very often.

there are all called lazy or couch portfolio

https://whitecoatinvestor.com/150-portfolios-better-than-yours/
 

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