Off-Topic: Thoughts for investors
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Name:
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MartiniMan
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Subject:
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Thoughts for investors
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Date:
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10/28/2008 8:42:26 AM
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I heard an interesting perspective yesterday regarding what to do if you are still in the stock market with your IRA/401k/post-tax investments and have ridden it down so far.
Step 1 is to ask yourself the question, when will I really need this money? For me the answer is 15 years.
Step 2 is to ask yourself if you really believe the stock market will be lower in __ years. For me the answer is no, I don't believe it will be lower in 15 years than it is today.
Step 3 is to ask yourself if you think the market is going to outperform "safe" investments (i.e., T-bills, money market, etc.) that will likely be very low for years to come. For me the answer is no, I don't think those safe investments will out perform the stock market.
If you answered like me, especially the part about not needing the money for at least 5 years, then the answer is not to sell, but buy, buy, buy. Interesting fact, in the year after the stock market collapsed during the Depression it went up in value over 50%. After the October 1987 crash we entered a long bull market. After 9/11 stocks went up until the recent collapse. The stock market is based more on expectation than any current reality. As a result, it goes down in anticipation of an economic slowdown and rises before the economic upturn. This is a great time to buy the stocks of solid companies.
By the way, I am not a professional investment advisor. Just a small businessman with a keen interest in economics.
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