Market Concerns

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bbaker

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Is anyone concerned about a market correction? Hittng new market highs usually comes before some type of major correction? Maybe earnings season and economic slow down will cause problems in the last quarter of 2007.

Many financial advisors/ analysts predicted that the market would go to 14K this year but would maintain that level for the rest of 2007. I want to say the number was like 9 out of 10 but can't remember the source.

I'm not one to get excited about articles but this is a great little article about market conditions.

http://biz.yahoo.com/bizwk/070720/jul2007pi20070719957191.html?.v=1

I was planning on buying an index fund but didn't want to see it sit there for the remainder of the year.

I am not one to say, "sell the house, sell stocks, buy gold/silver and head to the hills," I'm just wondering everyones thoughts and predictions about the market for the rest of 2007.
 
bbaker said:
Is anyone concerned about a market correction?
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No. A market correction will allow me to buy more shares while I'm young and have a long investment horizon. I would consider a correction in this stage of my life as a buying opportunity.

bbaker said:
Hittng new market highs usually comes before some type of major correction?
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Of course it does because new market highs come all the time. The only reason you're not used to it is because there was recently a big bear market (2000-2002) so we had the unusual situation where we weren't hitting new market highs all the time for a few years. Because the market usually goes up, it is usually hitting new market highs. This is normal and does not mean a correction is imminent. (Of course, a correction will come at some point so of course new market highs come before a correction, but nobody knows how much before. Economists have correctly predicted 9 of the last 5 recessions.)

bbaker said:
Maybe earnings season and economic slow down will cause problems in the last quarter of 2007.
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Maybe they will. Nobody knows. If your investment plan depends on correctly guessing what will happen during the last quarter of 2007 to be successful your plan will fail. Maybe not this year, but eventually.

bbaker said:
Many financial advisors/ analysts predicted that the market would go to 14K this year but would maintain that level for the rest of 2007. I want to say the number was like 9 out of 10 but can't remember the source.
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Nearly every financial advisor/analyst I know of gets paid to make predictions, not be right. Studies show that most financial advisors can't make accurate predictions, so what do you care what 9/10 of them think?

bbaker said:
I'm not one to get excited about articles but this is a great little article about market conditions.
http://biz.yahoo.com/bizwk/070720/jul2007pi20070719957191.html?.v=1
Click to expand...

Stop reading financial pornography. It is detrimental to your investing success. Market timing is a loser's game.

bbaker said:
I was planning on buying an index fund but didn't want to see it sit there for the remainder of the year.
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Go ahead and buy the index fund. It almost surely won't just sit there for the rest of the year. It may go down in value, or it may go up, but I'll bet you $10 it won't just "sit there." Chances are very good it will be waaaay up in 20-40 years when you retire. Better yet, buy yourself a fund-of-index-funds such as a Vanguard Target Retirement 2040 fund. Instant diversification in one purchase. Make sure you've opened a Roth IRA. At this stage in your life your savings percentage matters much, much more than your returns.

bbaker said:
I am not one to say, "sell the house, sell stocks, buy gold/silver and head to the hills,"
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Then don't.

bbaker said:
I'm just wondering everyones thoughts and predictions about the market for the rest of 2007.
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I don't know and I don't care. That is extremely liberating. Go here to learn more:
http://www.diehards.org/

http://coffeehouseinvestor.com/Principles.htm
 
bbaker said:
Is anyone concerned about a market correction? Hittng new market highs usually comes before some type of major correction? Maybe earnings season and economic slow down will cause problems in the last quarter of 2007.

Many financial advisors/ analysts predicted that the market would go to 14K this year but would maintain that level for the rest of 2007. I want to say the number was like 9 out of 10 but can't remember the source.

I'm not one to get excited about articles but this is a great little article about market conditions.

http://biz.yahoo.com/bizwk/070720/jul2007pi20070719957191.html?.v=1

I was planning on buying an index fund but didn't want to see it sit there for the remainder of the year.

I am not one to say, "sell the house, sell stocks, buy gold/silver and head to the hills," I'm just wondering everyones thoughts and predictions about the market for the rest of 2007.
Click to expand...

Your best bet is to "dollar cost average". Divide the total amount of your investment by 12 and buy 1/12 every month. This protects you somewhat from the ups and downs of the market. When the index drops, you get more shares.

Ed
 
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YES! YES! YES!
\Thank you:
edmadison said:
Your best bet is to "dollar cost average". Divide the total amount of your investment by 12 and buy 1/12 every month. This protects you somewhat from the ups and downs of the market. When the index drops, you get more shares.

Ed
Click to expand...
 
Thanks for the messages.

Here is the problem. It costs $10K, through Fidelity, to buy this fund and then I can dollar average in at $250. I have to invest the $10K first. I'm fine buying the fund and investing this money, I am concerned about timing. By no means am I trying to time the market but look at a good entry point and leave the money there for about 4 years. I am thinking I might need the money in 4 years to buy a practice.

Bottom line, my concern is an entry point. The market will increase in the next 4 years but I would rather jump in at some type of correction. Wouldn't the forum agree?

I already have plenty of the Vanguard Target Retirement funds but all are with Fidelity.
 
If you are investing for the long-term, whether you jump in right now at a correction is not important. It's a nice bonus, but the difference will be insignificant compared to what you will earn over the long run. You don't need to believe me -- you will learn it on your own eventually: it is very difficult (some would say impossible) to time the market, so you might just end up happier if you don't even try.
 
bbaker said:
Thanks for the messages.

Here is the problem. It costs $10K, through Fidelity, to buy this fund and then I can dollar average in at $250. I have to invest the $10K first. I'm fine buying the fund and investing this money, I am concerned about timing. By no means am I trying to time the market but look at a good entry point and leave the money there for about 4 years. I am thinking I might need the money in 4 years to buy a practice.

Bottom line, my concern is an entry point. The market will increase in the next 4 years but I would rather jump in at some type of correction. Wouldn't the forum agree?

I already have plenty of the Vanguard Target Retirement funds but all are with Fidelity.
Click to expand...

You already have Vanguard TR funds with Fidelity? You mean through a fidelity brokerage account?

At any rate, if your time horizon is 4 years, equities of any kind probably aren't appropriate. Have you considered a CD, or even a short term bond fund?
 
Yes, I have funds that are similar to vanguard but are through fidelity (FFFFX). I've made about 9% on these funds YTD which are located in a ROTH and some more in a traditional IRA.

I totally agree that I can't time the market, I'm just looking for some type of pull back. I think any pull back will be expected with record highs.

I also have a list of funds, about 8 funds, from a financial advisor that need to be executed. This money may or may not be needed in 4 years. After the min. investment is reached on all funds, I will be averaging in the rest.

Active- to answer your question. One of these eight funds is a bond fund (FTBFX) that will have an additional $10K.
 
No - nobody can tell you anything about market timing. If they can - it won't be anyone here.
Just dollar cost average into one of your 4 existing funds.
Quit looking at your funds
and if you need it in 4 years, then you better look at a conservative fund - like a bond fund that covers both the yield, and then the value (PIMCO).
If you are not even in Dental school - then don't worry - you can borrow at that time -

Seriously - I don't give any advice on which fund; but groups.

Don't jump 10K into something - put in the smaller lots in existing places, otherwise, like earlier post - CD if you MUST have the money in 4 yrs.

bbaker said:
Yes, I have funds that are similar to vanguard but are through fidelity (FFFFX). I've made about 9% on these funds YTD which are located in a ROTH and some more in a traditional IRA.

I totally agree that I can't time the market, I'm just looking for some type of pull back. I think any pull back will be expected with record highs.

I also have a list of funds, about 8 funds, from a financial advisor that need to be executed. This money may or may not be needed in 4 years. After the min. investment is reached on all funds, I will be averaging in the rest.

Active- to answer your question. One of these eight funds is a bond fund (FTBFX) that will have an additional $10K.
Click to expand...
 
The correction today was what I am looking for- a buying opportunity. I need a few more hundred point drops and I'll be happy.

I'm in dental school and will probably finish up in 4 years.

I hate CD's. I would rather find the funds, try to enter the market during a discount time, roll the dice, and see where I will end up. I'm not sure if I will need the money in 4 years to buy a practice.

I also hate bonds. I know this can be debated but I am too young to buy bonds- especially when I don't even know if I need the money. I will be buying one bond fund in my portfolio.
 
Another market correction today, down 311 points, which is part of the correction that I was looking for.

I like the idea of buying into a market that is falling.

I bought several funds and will DCA in the rest of the money.
 
Another market drop. This is exactly what I was talking about- buying into the market during some type of drop- not trying to time the market. I was never trying to buy at the lowest point but buy during a dropping market- almost like a discounted price. Picked up several funds today!

Over a 5% market correction from when this chat started.
 
bbaker said:
Another market drop. This is exactly what I was talking about- buying into the market during some type of drop- not trying to time the market. I was never trying to buy at the lowest point but buy during a dropping market- almost like a discounted price. Picked up several funds today!

Over a 5% market correction from when this chat started.
Click to expand...

yeah i'm "down" pretty bad on the stock i picked up this week, but it's not like i need the money tomorrow or anything, so i'm not concerned.
 
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I don't know, do you guys really think you're buying in at the right time? With falls like these, it seems like there's usually a snowball effect and it tumbles even more before it gets better.

I think it's smarter (if you're into timing at all) to buy when things start going up after an extended sell-off (like at least a few weeks-- if not longer).

How long do bear markets usually last?
 
bbaker said:
Another market drop. This is exactly what I was talking about- buying into the market during some type of drop- not trying to time the market. I was never trying to buy at the lowest point but buy during a dropping market- almost like a discounted price. Picked up several funds today!

Over a 5% market correction from when this chat started.
Click to expand...
Sure, buy low, sell high. But the market may drop lower and you may be wishing you had waited. A long-term investor worries not about these fluctuations. Whether you bought 2 weeks ago, last week, or next week doesn't matter in the grand scheme of things.
 
UserNameNeeded said:
I don't know, do you guys really think you're buying in at the right time? With falls like these, it seems like there's usually a snowball effect and it tumbles even more before it gets better.

I think it's smarter (if you're into timing at all) to buy when things start going up after an extended sell-off (like at least a few weeks-- if not longer).

How long do bear markets usually last?
Click to expand...

I have good info from an analyst friend on Wall St. that this bear market will last for 163 days.
 
UserNameNeeded said:
I don't know, do you guys really think you're buying in at the right time? With falls like these, it seems like there's usually a snowball effect and it tumbles even more before it gets better.

I think it's smarter (if you're into timing at all) to buy when things start going up after an extended sell-off (like at least a few weeks-- if not longer).

How long do bear markets usually last?
Click to expand...

well i bought the stock that i wanted last week because the individual security was trading at a price that i was comfortable with. sure, had i bought half then and half on friday i would have made out better, but in the grand scheme of things it won't really matter. i remember when i bought aapl back when it was 88.50, and then it split and went down to like 38 or something. my brother was like "haha you should have waited." now the stock is at like 150; it all works out in the end...
 
Market will probably drop again today due to sub-prime mortgages and oil prices. It appears that everyone is pulling back and we're not far from a 10% correction.

My strategy is to buy the min. investment of each fund (so far I've bought about 5 and about 4 more to go) and then I'm buying lots of $500 to average in the rest of the funds. I'm also holding back some $ for an index fund but will wait for entire market to hit bottom. Not sure on the timeframe of these investments but a min. of 4 years.
 
bbaker said:
Market will probably drop again today due to sub-prime mortgages and oil prices. It appears that everyone is pulling back and we're not far from a 10% correction.

My strategy is to buy the min. investment of each fund (so far I've bought about 5 and about 4 more to go) and then I'm buying lots of $500 to average in the rest of the funds. I'm also holding back some $ for an index fund but will wait for entire market to hit bottom. Not sure on the timeframe of these investments but a min. of 4 years.
Click to expand...

The market-timer's hall of fame is an empty room. Good luck, you're going to need it. You should be careful when you use phrases like "pulling back" and "we're not far from a 10% correction." What you really mean to say is "pulled back" and "the market has lost 9% over the last 2 weeks." The way you phrase it seems to imply an ability to predict the future, which I doubt you have.
 
ActiveDutyMD said:
The market-timer's hall of fame is an empty room. Good luck, you're going to need it. You should be careful when you use phrases like "pulling back" and "we're not far from a 10% correction." What you really mean to say is "pulled back" and "the market has lost 9% over the last 2 weeks." The way you phrase it seems to imply an ability to predict the future, which I doubt you have.
Click to expand...

Why do you like to argue every point? Are you an angry person? I am clearing stating what we have seen and in no way trying to time/predict the market. It's a clear decision to buy funds when the market is not at a historically high and market is falling (especially when you are buying funds). I will hold these funds for at least 4 years or until I need the money.

I also have a degree in finance and another degree in economics.

Angry person.
 
bbaker said:
Why do you like to argue every point? Are you an angry person? I am clearing stating what we have seen and in no way trying to time/predict the market. It's a clear decision to buy funds when the market is not at a historically high and market is falling (especially when you are buying funds). I will hold these funds for at least 4 years or until I need the money.

I also have a degree in finance and another degree in economics.

Angry person.
Click to expand...

Excuse me. I humbly beg your forgiveness. I will cease to respond to your questions so as not to annoy you.
 
bbaker said:
Market will probably drop again today due to sub-prime mortgages and oil prices. It appears that everyone is pulling back and we're not far from a 10% correction.

My strategy is to buy the min. investment of each fund (so far I've bought about 5 and about 4 more to go) and then I'm buying lots of $500 to average in the rest of the funds. I'm also holding back some $ for an index fund but will wait for entire market to hit bottom. Not sure on the timeframe of these investments but a min. of 4 years.
Click to expand...
Your degrees in finance and economics don't make you right. Case in point: You missed predicting today's market performance by a mile. Someday, you will learn....
 
jota_jota said:
Yup, this week was pretty brutal. Are you going to "double-down" or sit tight? Personally, I think that this is probably a good time to buy, but who knows......
Click to expand...

actually, i pretty much sunk all of my investment funds into this, so i've got no free cash left to "double down" with. i guess this is why one should always ease into a position, but again, if i have the fortitude to hold it as long as i should, it wont matter in the end.
 
I am actually going to take a more conservative approach. I have bought about 6 funds to date and added $$ to those 6 funds on market down turns.

I am still about 80% cash in my investment account. The money is sitting in a money market fund making 5.05%.

At this point I think I am going to wait and see what happens with credit issues/ mortgages. I'm very happy with my investments so far but still want to wait and see what happens.
 
bbaker said:
The money is sitting in a money market fund making 5.05%.
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which bank do you use? 5.05% seems really nice for a money market account, mine is less than that. thanks!

edit: never mind, i'm happy with the bank that i use, and i don't need to have several banks and accounts.
 
OK- market took another huge hit today and things don't appear to be getting better anytime soon. Noticed gold/ silver prices are still about the same. Scary!
 
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Yeah, people that bought stocks in July and early August are in for a rough time in the months to come. It seems like, for now, those big guys are selling into the rallies.
 
etf said:
down almost 13% in the span of a week. i put a significant amount of money into this position. a true test of patience...
Click to expand...

I bought a stock, with a great outlook through the end of next year, same time as you. Sunk a good chunk of money into, too. As of this morning it is down almost 25% from the point that I bought it. I've lost too much money to sell now, so I'm just going to wait at least until the end of the year to see where it is. Truly a test of patience - I wish I had just invested in a CD instead (my bank's current one is 5.5% APY).
 
RisingSun said:
I bought a stock, with a great outlook through the end of next year, same time as you. Sunk a good chunk of money into, too. As of this morning it is down almost 25% from the point that I bought it. I've lost too much money to sell now, so I'm just going to wait at least until the end of the year to see where it is. Truly a test of patience - I wish I had just invested in a CD instead (my bank's current one is 5.5% APY).
Click to expand...

my position (which has subprime exposure) is down 17% in about 3 weeks. the good news is, it paid a hefty dividend on the 15th, which was reinvested at a nice price. long term...
 
I still feel that I should be buying in (DCA) for IRA & Roth accounts. These are long term accounts and I will never be able to time the market but buy along the way. I have over 30 years for retirement.

That said, I am going to wait and see where the market is headed and a little more stable- the 200 point swings scare me a little.

The Fed rate reduction and pumping money into the economy is a temporary solution to a big problem.

ETF- congrats on selling. 4% loss is nothing- make sure you claim it on your taxes. There is no price on peace of mind.
 
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