Comments on: Where does the Dow go from here? http://www.penny-saved.com/2006/09/29/where-does-the-dow-go-from-here/ Personal Finance and Wealth by the Penny Thu, 02 Feb 2012 21:32:12 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: thhq http://www.penny-saved.com/2006/09/29/where-does-the-dow-go-from-here/comment-page-1/#comment-43667 thhq Fri, 06 Mar 2009 20:31:32 +0000 http://www.penny-saved.com/2006/09/29/where-does-the-dow-go-from-here/#comment-43667 I don't know whether anyone is maintaining this site anymore, but I enjoyed reading the above post here in March 2009. I like this line: "Does that mean sell off all of your stock and hold it in a high interest savings account? Not if you’re a long term investor." I did that in 2001 and have been called a fool for it. I did it because I had held losing stocks before. Even in a climbing market, their recovery was painfully slow. After losing 50% it took some of them 7 years to get back to their initial value. If you drop 50% you have to gain 100% to get back where you started. I decided that it was better to hedge against the possibility of a drop and take the best interest-paying investments I could find. I think my strategy was the correct one, given where we are in 2009. It's the one the Chinese have employed, to their advantage. Save yourself rich: 1. Put most of your money in 3-5 year securities. Don't let an "investment advisor" tease you with sure thing mutual funds. Heed the advice about past performance being no guarantee of future gains. My 401K mutual funds show gains going back 10 years, but they are not static. A year ago most funds showed 10 year yields of 10%+ - now they are all negative 3-5%. The gains are only real if you capitalize them. 2. Never invest money in the stock market that you can't afford to lose. If you can't afford to lose your retirement, it shouldn't be invested in the stock market. 3. Save every penny you possibly can. I thought that that was the point of this site, until I read this article... 4. Buy local as much as you can. If you don't, there won't be any local economy. If there's no local economy, who'll buy your house when you need to sell it? 5. If you're in the market, and you make some money, capitalize your gain. Unless you're in it just for the dividends, you're gambling when you play the market. In order to make money gambling you can't get caught up in the game and forget to pocket your winnings. Lots of people, egged on by financial touts, got caught up in the game and stayed "fully invested". They should have booked their 15% annual gains into CD's, instead of losing both their gains AND their stake. I don’t know whether anyone is maintaining this site anymore, but I enjoyed reading the above post here in March 2009.

I like this line:

“Does that mean sell off all of your stock and hold it in a high interest savings account? Not if you’re a long term investor.”

I did that in 2001 and have been called a fool for it. I did it because I had held losing stocks before. Even in a climbing market, their recovery was painfully slow. After losing 50% it took some of them 7 years to get back to their initial value. If you drop 50% you have to gain 100% to get back where you started. I decided that it was better to hedge against the possibility of a drop and take the best interest-paying investments I could find.

I think my strategy was the correct one, given where we are in 2009. It’s the one the Chinese have employed, to their advantage. Save yourself rich:

1. Put most of your money in 3-5 year securities. Don’t let an “investment advisor” tease you with sure thing mutual funds. Heed the advice about past performance being no guarantee of future gains. My 401K mutual funds show gains going back 10 years, but they are not static. A year ago most funds showed 10 year yields of 10%+ – now they are all negative 3-5%. The gains are only real if you capitalize them.

2. Never invest money in the stock market that you can’t afford to lose. If you can’t afford to lose your retirement, it shouldn’t be invested in the stock market.

3. Save every penny you possibly can. I thought that that was the point of this site, until I read this article…

4. Buy local as much as you can. If you don’t, there won’t be any local economy. If there’s no local economy, who’ll buy your house when you need to sell it?

5. If you’re in the market, and you make some money, capitalize your gain. Unless you’re in it just for the dividends, you’re gambling when you play the market. In order to make money gambling you can’t get caught up in the game and forget to pocket your winnings. Lots of people, egged on by financial touts, got caught up in the game and stayed “fully invested”. They should have booked their 15% annual gains into CD’s, instead of losing both their gains AND their stake.

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