I have been casually noting the ups and downs of the stock market since Bear Stearns crashed and bit the dust in 2008. My modest 401K never recovered from it’s literal March 2008 high. Even now. When it kept dropping and dropping (and I tried to hold out as long as I could, but it seemed like there was no end in sight), I pulled out, and shifted to safer fare, and then went back in again. Financial experts say this is a dumb idea. Financial experts, also said pre-2008 that the stock market, even with the dips, was a sure thing…kind of like housing prices ALWAYS going up, and the best investment to make was in your home, because, you know, it could be your own little piggy bank you could pull equity from whenever you wanted….riiiiiiiiggggggghhhhhhttttttt.
Now, I have seen the overall value of my funds go UP and DOWN, UP and DOWN. At this point it’s not unfair to say that many investors’ strategy to ride out awful economic news, aside from not investing at all in the stock market, is to ride the wave up, and immediately realize gains, by pulling out right before it DROPS again, which of course it will, erasing like 90% of the temporary gains. I’ve seen this tango. And you know what? Maybe, it’s time I joined. All of a sudden the DOW is at a 5 year high…wanna bet its gonna come crashing down in the next couple of days. It’s like a balloon that is about to pop. It all depends on the collective action of hundreds of thousands of players…or, realistically, the actions of a few mega players (banks, hedge funds) that can control the swings in the market by dumping, or buying, hundreds of thousands of shares, or millions. So the question is…will the key players continue to pump more money in, driving retail players to rush in like fools trying to grab at something, or will they unceremoniously dump their shares once they’ve gotten sufficiently fat that will cause the DOW to drop most of the gains within the last quarter, or two? I do not know. I will anxiously await for the next couple of days.
Last time I checked…the labor market still sucks.
All I know is, I am seriously tempted to capture the gains I’ve made and pull out, sit for a while and put it back in once the drop settles. I’ve seen this tango dance way too often in the last year to even believe this is a legitimate increase in value based on fundamentals as opposed to speculation.
I have read numerous places that what determines a winning portfolio over the life of an investor is not the decision the investor makes as to what funds they invest in, but at what point in their life cycle did they start to invest (preferably young) AND that they started investing in a bear market – meaning they bought low (not because of brilliantly waiting it out but because it was just PURE LUCK that they came of age to invest in a down market). Lucky for me I came of age a year before a bear market smacked up my returns. Nothing like buying high and riding it all the way down.
I still have money in a 401K but stuff like this makes me want to put my money in my mattress. But since I know that’s an even worse idea, I keep it in. But sometimes, I feel like I am being played just like everybody else.