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Senior Contributor
Posts: 612
Registered: ‎04-09-2013

Re: Getting Out

[ Edited ]

Jens,

 

You are not asking, but I would recommend a reading of Burton Malkiel’s Random Walk Down Wall Street (1973). It has a been updated over the years, but Professor Malkiel’s research and lessons remain the same.

 

That is, do not try to time markets because they are just too d*mn and counfoundingly unpredictable. It follows that 99% of us ordinary amateurs should probably ignore all of the so called learned advice of TV business channel experts and Wall Street Journal prognosticators. Pointendly, the track records of these highly paid personalities are oftentimes worse then terrible. Besides, if any one of them had actual insight into future market moves, you can be assured that they would not be sharing such priceless information with either you or me. Instead of heeding their “free advice,” you might be better off just flipping an honest coin when making your most critical market investment decisions.

 

As an alternative, consider buying into something as boring as a cheap S&P 500 or Wilshire 5000 index fund and then acquire a personal 10-15 year horizon on how long you will stay invested. Any additional money you might need before this somewhat lengthy period of time might best be left in US Treasuries and high quality, low cost bond index funds.

 

Let time and diversification be your friend. Otherwise, remember this historical tidbit: Between October 1929 and July 1933 the Dow Jones lost 88% of its total value. It took the Great Depression, WW II and another 21 years for the Dow to return to its 1929 high. Moral: Sometimes markets can go down a whole lot farther than most of us think. And when they do, sometimes they can also stay down for a whole lot longer than most of us realize.