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i'm definitely much more prepared if it does happen again to take advantage of the buying opportunities...
The problem with these types of perpetual "buying opportunities" is that it may never end and there may never be a "selling opportunity" for the securities you are buying on firesale today.
There are two extreme views these days - one, this is the end of the world and everything is going to fall apart. So buy guns, cans of tuna and yes, gold.
Two, this is business as usual and soon everything will be back to normal and we can all go back to sleep again. In the meantime, buy what you can.

I personally think there is a structural shift in the making.
Eventually, the dust will settle and the modern capitalistic, social democratic system will continue.
However, there may be a qualitative change in the dynamics of our social economy.
Therefore, what investment we make today may not represent the growth paths of the future.
They may stagnate or become totally irrelevant.
We make assumptions today about the growing demand for oil.
Will that continue, or will our reliance on oil reduce significantly?
We make assumptions today about high-tech companies continued growth (Apple, RIM, Micro$oft, etc.)
Will that pan out or will this field (and hence the companies) stagnate and wither away?

By buying stocks and industry sectors that have performed well in the last 10 years or so (finance, oil, energy, tech) we may be chasing ghosts of the past.
I obviously don't know the right answer but I am personally wary of considering these market dips as buying opportunities for stocks that have had a bull run for the last 10 years.
 

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Gold and guns are a hold. Tuna (agriculture) and nat gas are buys! Crash or not, people will eat food and heat their homes... among other bullish factors.
 

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The problem with these types of perpetual "buying opportunities" is that it may never end and there may never be a "selling opportunity" for the securities you are buying on firesale today.
There are two extreme views these days - one, this is the end of the world and everything is going to fall apart. So buy guns, cans of tuna and yes, gold.
Two, this is business as usual and soon everything will be back to normal and we can all go back to sleep again. In the meantime, buy what you can.

I personally think there is a structural shift in the making.
Eventually, the dust will settle and the modern capitalistic, social democratic system will continue.
However, there may be a qualitative change in the dynamics of our social economy.
Therefore, what investment we make today may not represent the growth paths of the future.
They may stagnate or become totally irrelevant.
We make assumptions today about the growing demand for oil.
Will that continue, or will our reliance on oil reduce significantly?
We make assumptions today about high-tech companies continued growth (Apple, RIM, Micro$oft, etc.)
Will that pan out or will this field (and hence the companies) stagnate and wither away?

By buying stocks and industry sectors that have performed well in the last 10 years or so (finance, oil, energy, tech) we may be chasing ghosts of the past.
I obviously don't know the right answer but I am personally wary of considering these market dips as buying opportunities for stocks that have had a bull run for the last 10 years.
Buy non cyclical common stock with a history of growing dividends at a reasonable price. Focus on companies that provide services or products that people NEED (cross off RIM, Apple, etc), and preferably a non reusable product.

Turn off the TV, and ignore all the end of the world, market crash, etc.

Collect rising income stream, and reinvest in above said companies while in building stage.

I do not know the right answer either, and there are many roads to wealth, but dividend growth investing makes the most sense to me, is easy to implement.
 

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As an asset accumulator, I'm hoping that stocks do get very cheap and stay there for a long time. Yes, the present portfolio wouldn't look very pretty but cheaper stocks are nothing but welcome news for investors accumulating stocks.
 

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Discussion Starter #10
Stocks continually getting cheaper might be the bee's knees for younger investors with a long time horizon.

However, for older investors, with a diminishing time line, stocks that keep declining in value can start to wear on one's nerves!!:mad::(
 

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However, for older investors, with a diminishing time line, stocks that keep declining in value can start to wear on one's nerves!!:mad::(
Regardless of age, people who are heavily invested in equities should:

(1) be aware of the risks involved in investing in stocks (and therefore, should not be complaining when portfolios lose 50% of their value if they choose this strategy); or,

(2) not invest in equities if they can't assume the risk.


It's not rocket science -- the market giveth and taketh away. Over the long haul, it generally "giveths". If you are no longer in it for the "long haul", then you need to balance appropriately.


K.
 

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^^^^^

Great advice. People need to remember that a stock represents a fractional ownership in a tangible company and not just e-paper to be shuffled around and obsessed about every minute.
 

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Discussion Starter #13
My point is that when you are in your 70's and 80's, you're no longer in anything for the long haul!!:(

Does this mean that you should get out of equities by the time that you are in your late 60's??:(
 

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Does this mean that you should get out of equities by the time that you are in your late 60's??:(
You need to achieve the risk/reward balance best suited to your situation.

Of course, how each individual interprets this reply will vary. As a simple example, Warren Buffett's multi-billion dollar fortunes allowed him to "play" for quite a long time in the equities market with little need to worry about his ability to afford food if his portfolio dropped by 25%. But someone with a $100k portfolio which has to last for the next decade could be adversely affected by a 25% drop.


K.
 

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The issue is that when you are withdrawing from your portfolio, the sequence in which you achieve your returns - the order in which the returns occur - has a dramatic effect on the sustainability of your income flow in retirement. This is known as the "sequence of returns risk" and the impact can be proven mathematically.

So unless you are willing to dramatically downgrade your withdrawals in retirement (i.e., live on less), you likely should move some/most/all of your investments out of equities and into less volatile instruments.

The question of what the optimal asset and product allocation is in retirement depends entirely on a series of basic factors: your expected lifetime, your spending rate, the size of your portfolio, and how it is invested - including whether you have longevity-, inflation- and sequence-of-returns protected income.

The question of "how much in equities?" is not as simple as it sounds. Moving all of your nest egg to bonds and ratcheting down your spending to as low to zero as you can tolerate isn't necessarily any "better" or more rational than keeping some fraction of your nest egg in equities for the long haul (although you would eliminate the risk of leaving lots of unspent capital on the table, when you don't necessarily have any bequest motive)...the problem is how to find the optimal spot on the legacy-sustainability frontier, incorporating both the right asset allocation and the right product allocation.

But: at a basic level: if you cannot tolerate variability, don't invest in products that have a high level of it.
 

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One of the things that bugs me about the idea of a person's "risk tolerance" profile is that an individual's tolerance for risk or variability can change dramatically when they become more educated about investing. I know this was true for me: in my 20s I had a deep suspicion of investing in stocks, which was based purely on ignorance, and my investment profile was very conservative. As I got older and started learning more, my risk profile changed.

So I think one's tolerance of variability and risk is a moving target and should be revisited every few years to make sure it hasn't shifted.
 

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Discussion Starter #18
I have a possibly unique problem that some of the rest of you may not face--I don't know when I am going to die!!

This makes many investing decisions rather difficult. I also don't know how much I can spend and when.

How is one expected to know what to do when you don't know how much longer one has to live?

It's a real bummer!!!:confused:
 

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I have a possibly unique problem that some of the rest of you may not face--I don't know when I am going to die!!

This makes many investing decisions rather difficult. I also don't know how much I can spend and when.

How is one expected to know what to do when you don't know how much longer one has to live?

It's a real bummer!!!:confused:
Plan to spend all your money by 95. If you're broke at that age (and still alive), the government will take care of you and/or you won't care.
 

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I have a possibly unique problem that some of the rest of you may not face--I don't know when I am going to die!!

This makes many investing decisions rather difficult. I also don't know how much I can spend and when.

How is one expected to know what to do when you don't know how much longer one has to live?

It's a real bummer!!!:confused:

Huh? So most people know when they're going to die?? Somehow I don't think your "problem" is unique. Of course if you keep stressing over stuff like this you can knock a few years off your lifespan. ;)
 
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