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Sun Mar 9, 2014, 10:07 AM

Hubby bailed on the stock market in 2008.

It scared him badly, watching his funds drop to new lows. Now he's very upset with himself over missing this run-up.

Would you get in now? Is anyone thinking the market is overpriced and will be brought down anytime soon? He's nervous as hell about this, but beating himself up, too.

He's probably 12 to 15 years from retirement. I appreciate your thoughts.

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Reply Hubby bailed on the stock market in 2008. (Original post)
Ilsa Mar 2014 OP
denverbill Mar 2014 #1
elleng Mar 2014 #2
BillZBubb Mar 2014 #3
A HERETIC I AM Mar 2014 #4

Response to Ilsa (Original post)

Sun Mar 9, 2014, 10:25 AM

1. There are obviously no guarantees.

In my opinion, you should move back in, but do so gradually. The market could go up or down 5-25% any time, and I'd hate to have you jump completely back in only to have the market drop 5000 points. The market is going to have it's ups and downs, and you need to look at the downs as buying opportunities. Anytime there is a big market drop, move a bit more back into the market. And always try to keep some money on the sidelines just in case it drops back 2008 levels, because that's when you want to be buying, not selling.

Maybe move 10-25% back in now, wait a month and see where the market is. If it's dropped 5%, move 15-30% back in. If it's gained 5% or stayed about even, move another 5-10% in. Eventually, maybe over the course of a year or two, get the the point where you have about 85-90% in stocks. But always keep some on the side for when the big drops come, because they are going to come eventually.

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Response to Ilsa (Original post)

Sun Mar 9, 2014, 12:01 PM

2. There are thoughts both ways.

I invest in well-managed funds, so no need to worry day to day.

Not an official recommendation cause that's not my job, but Warren Buffet recently said he's invested, or suggested his wife invest in Vanguard (I think) Index fund that invests in entire range/scope, so all of the stocks in one fell swoop. Its always sounded like a good idea to me, but I'm in another company because my Dad was, and I've kept my funds there.

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Response to Ilsa (Original post)

Sun Mar 9, 2014, 12:39 PM

3. Your husband has to learn market patience.

He picked the WORST time to get out of stocks. If a Democrat wins the White House, historically market returns have been exceptional. If a Repub wins, then consider getting out because returns are generally poor. 2008 was a great investing opportunity, not a time to sell. If a Repub wins in 2016, I would get out of stocks. That is the only proven timing method.

The markets go up, the markets go down. Sometimes the movements are frightening and people react in exactly the wrong manner. Your husband panicked when the market fell. Now he is afraid to invest because it is "too high". He should not be investing in the market at all if he feels uncomfortable accepting the risk involved. Seriously! Better to take small returns of safer investments and sleep well.

No one here can honestly tell you that now is a good time to buy or sell stocks. Since your husband has over 10 years to retirement, he can weather any downturns by simply holding on to stocks of solid companies. Don't panic when the market drops, don't get too excited when it rises. The best stock investment vehicle for him is probably a no load S&P 500 index fund--like Vanguard. Invest what you are comfortable having at risk and nothing more. Buy and hold for the long term.

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Response to Ilsa (Original post)

Wed Mar 12, 2014, 12:30 AM

4. One way to do what you are proposing is via a "Dollar Cost Averaging" approach.

Here is an interesting write-up on the subject;


http://www.investopedia.com/articles/stocks/07/dca-fight.asp

Taking a moderate sum and investing it each week or 2 weeks, regardless of market direction. In fact, it is best to be buying when a market falls as you will get more for your buck as prices fall.

Unfortunately, your hubby is not alone. Many, many millions of Americans did the same thing. After all, that's how the Dow went from 14,000 to 6600 in the first place. People sold.

He needs to have a portfolio that is appropriate for his and your risk tolerance, taking in to account how long till retirement and what the investable assets amount to. The less risk he is willing to take, the more in fixed income investments, that sort of thing.

It would be best if he spoke face to face with a financial professional he knows and trusts. Someone in the business can help structure the portfolio in such a way as to allow you both to sleep at night.

Best of luck.

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