Question about election-year DJIA

[Doctor_J]

my advisor is jumpy to get in the broad-based (balanced) model right now, despite the 6% drop over the last week. I am loathe to jump in until the slide is over. Also the campaign season gives me pause. Does any of you know about presidential election-year trends? Are you buying, selling, or standing this month? FWIW spouse and I are 55, employed in safe jobs with no real plans to retire, and our move into the market would not be huge by any measure.

[lastlib]

1. A couple points:

1) If you're using the DJIA as a market gauge to base an investment decision on, forget it. Look elsewhere. The Dow is 30 of the largest companies--not a good measure of the economy/market as a whole, and one week's performance isn't a great measure. It has other more technical flaws as a market gauge. Look at the S&P-500 or the Russell 2000 for a better indicator.

2) You're at least ten years away from retiring, and you probably have a life expectancy of 25-30 years, if you're in good health now. With that kind of time horizon, forget about trying to time the market and just maintain a realistic asset allocation. Sixty to seventy percent in equities, 20-25% in fixed-income, the rest in cash, wouldn't be an unreasonable allocation. If you're buying in during a decline, take advantage of dollar-cost averaging and increase your equity buying. No one really knows where the bottom is, or where the top is, so the best bet is to just keep adding a steady amout to your portfolio on a regular basis, and accumulate assets through dollar-cost averaging. It may be a cliche, but sometimes the tortoise does better than the hare in this race!

Good luck to you both!

(P.S.: Yes, I would be buying in this market! if I had the wherewithal, which, right now, I don't)

[Warpy]

2. First, the S&P is a better indicator because it covers more stocks.

Second, expect the overall jumpiness to last until the first of next year, after the world doesn't end (again).

It's better to buy when the bears are out and stocks are down and everybody is pessimistic than it is while they're going up and people are buying that second bottle of champagne because, gee whiz, they're rich and it will last forever.

[Po_d Mainiac]

3. The adage goes, In May go away

IMHO...Lotta pain for indices this summer, unless the next round of QE is announced. Don't fight the FED.

The make-up of the major indices are 20% financial. Much of the recent ramp-up have been ... the financial sector. The JPMorgue just took a 20% hosing in the last month. Of coarse none of the other banks fudge their SEC filings or mark their 'assets' to myth

There is a lot more room for this market to find a floor than the ceiling.

Ymmv

[unc70]

4. I learned it as "Sell in May and go away."

Was thinking about that phrase late this past afternoon. Was looking at the slide since the month began.

In the old days, the trading volumes over the summer were low, lots of people were on vacation or left the city Thursday night. Thin markets and staggered holidays around the world make the markets ripe for manipulation.

Push a rumor Friday involving a market that is closed on Monday, play some games with FX, futures, commodities, or some stock while no one is around to respond, and then take your profits.

Oh, the good old days.

[Po_d Mainiac]

5. You're probably right on the verbage

To push numbers today, instead of wispering in the pits or leaving a note in the communal bathroom, u run the rumor through FT (like the 922nd Greek bailout for the month) at 3:45pm EST, or post something on Farcebook.