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Consider for example what's happening in Europe. 2 years ago, the expectation was unbridled descent into chaos, with the most storied European firms collapsing, barricades in the streets, tear-gas and overturned cars, stock trading floors littered with the detritus of thrown-in towels, brokers and traders jumping out of windows (not skyscraper windows... Europe isn't supposed to have skyscrapers, remember?).
Instead, we are seeing a healthy rebound in the European stocks, both in the "core" of Europe and in the "periphery". Investors who doggedly held on to European index funds in the harrowing times of 2-3 years ago, would now find themselves vindicated.
Perhaps in a couple of years, we'll be saying the same about emerging markets.
I bought in the idea of the decline of the US economy and the US dollar due to the massive trade deficit, national debt and printing of the dollar so I put half of my 401K money into an Emerging Market Fund. Last year while my colleagues earned 20% to 25% in their 401K accounts; my account gained about 8%. 45% of my 401K money is still in the same Emerging Market Fund. Do I pull back now or bite the bullet and keep it there? My fear is that the US market will pull back after the spectacular gain and Emerging Market will come alive after two years of bad performance.
If you are looking for results in 1 year (which is totally different than investing for the long term), I suggest you either hit Vegas, or listen to the traders on here talk about the stocks they trade....they can guide you in that direction you're looking for.....same thing.
If you are looking for results in 1 year (which is totally different than investing for the long term), I suggest you either hit Vegas, or listen to the traders on here talk about the stocks they trade.
To listen to the traders would be to listen to predictions which you don't like to see on the forum. Predictions are scorned aren't they.
All these opinions about funds, gold, silver, ETF's, are all predictions.
A stock bought today and sold next week is an investment.
It's not in the minds of those who have brained washed themselves into believing that trading and stock options and other tools are not investing.
They are investments.
BUT, they are not for everyone.
Last edited by howard555; 01-11-2014 at 10:22 AM..
Anyone who claims to know the answer is lying. Or speaking from vested interests. Or ignorant.
The reality is, NO ONE knows the answer.
The way to attack the market is not through timing, which is EXACTLY what you're doing.
Timing markets destroys wealth. Not creating it. 97% of all people who try to time markets end up losing money.
Market timing through sectors is kind of like trying tactics in fighting a river. A river will flow around you.
whereas a strategy, like diverting a river, is what you need.
Thus, a STRATEGY in truly investing in the market is thus:
Find a % of each sector that you're willing to invest in and STICK WITH IT.
For example, right now I am in my early 30s and thus have another 30 years to go for an investment horizon.
For someone like me, I choose 60% into domestic stocks (evenly between a small cap, mid cap, and large cap funds), 30% into foreign funds (only one fund available, mostly Europe but some Asia), and 10% into bonds. I do invest in my company's stock purchase plan but I count that as part of my domestic stocks, and no more than 5%.
So, last year, my total performance was around 19%. That's not the 26% or more from the S&P500, but that's last year. This year will be different, and I have no idea what sector will boom next and anyone foolish enough to think otherwise is a fool parting with money, and the 3% who get lucky will undoubtedly say "dur hur hur I beat the market!" Well the next year no one will hear their tears falling. Whereas I will probably come out ahead anyway or at least less-negative as in a broad bear market like we had in 2007-08. Some guys I know lost 60% of their 401k. I ended up losing only about 10% because I invested in conservative funds but still kept some in the market because I didn't know when it would shoot up again. Come 2009 early on, I decided to go back in with a more typical investment profile for someone my age.
That's the only advice I ever give anyone. Find a % profile and STICK WITH IT because a) you're NOT a trader, b) you're NOT clairvoyant, c) anyone who advertises otherwise is LYING or AN IDIOT, and d) investing is a LONG TERM activity that you will NEVER beat a gangbuster single sector, but COME OUT AHEAD in the end. Make sense?
I would allocate your account into an appropriate diversified portfolio (including some to EM) that is reflective of your personal situation and long-term goals. Then don't mess with it except to rebalance as needed. So yes, that would involve cashing out a chunk of the EM fund now
What Acgood said. Build a solid and diversified portfolio that will perform well over the long term and stop trying to guess and time the market.
Yes, I would love to have a lifetime 8% but if the average gain is 23% and I have 8% then it means that I screwed up big. I think I am looking to reduce my EM exposure to about 30%.
Quote:
Originally Posted by mysticaltyger
Good point. 8% is actually a realistic long term rate of return for stocks.
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