| Survive the Stock Market Crash-Topic for long-term investors |
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thepracticalsaver
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| Survive the Stock Market Crash-Topic for long-term investors |
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A couple of days ago, I created a post on how to survive the stock market crash. This article sheds light as to what the investors, mainly young investors, might want to do in situations like we are facing right now, that is, consistent decline in the stock market.
The article explains in detail the actions that the investors may consider. Such actions include, but are not limited to,:
1. Diversification
2. Buying low, selling high
Please visit the website when you have time.
www.thepracticalsaver.com/stock-market-crash-4-tips-you-need-to-do
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Wed Jan 27, 2016 5:00 pm |
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littleroc02us
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Warren Buffet the 3rd riches man in the world recently wrote to his investors stating his intentions for his fortune when he passes. It's this simple:
90% S&P 500 Index funds
10% Bond Index funds
** No trading
Risk comes from not knowing what you're doing. (Warren Buffet)
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Wed Jan 27, 2016 5:44 pm |
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global
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If everyone did this though then we would all end up losing money.
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Thu Jan 28, 2016 1:40 am |
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christcorp
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So true global.
Too many people think buying stocks, bonds, mutual fund, etc. are some form of "Commodity" that you simply buy and can possess. It's not oil, corn, etc. Even those, most times you can't actually take possession of "X" amount of barrels of oil. Other than gold and silver, real estate, fine art, etc., there's very few investment purchases that you can buy and physically possess.
My point is; most times, there are a FIXED NUMBER of stocks in a company. You can't simply decide to BUY a piece of a company. In order to BUY....... SOMEONE must be willing to SELL. As such, that, along with HFT, Day Trading, and a number of other things manipulate the market. We are no longer living in the age of our parents and grand parents, where you bought stocks because you were investing in a company.
Normally, Cash, which includes silver/gold/cd's, etc; Bonds, and equities (Stocks), usually form a triangle. As one goes up, one goes down, and one shifts sideways. That was how investments moved around. Unfortunately, with the HFT, and other manipulative trading, you're seeing stocks, gold, silver, bonds, oil, etc. moving many times in the same direction. Sometime erratic. There use to be a time where people MOVED their money, based on the market. Now, it's a crap shoot.
I do recommend a 15-20% of your portfolio in Silver and Gold. (Mainly silver, because it's at a 78:1 ratio right now and way undervalued. And I only recommend PHYSICAL silver and gold. No ETF's, mining companies, stocks, etc. I'd still buy a well rounded set of stocks and bonds.
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Thu Feb 04, 2016 12:24 am |
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littleroc02us
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quote:
Originally posted by global
If everyone did this though then we would all end up losing money.
I'm glad others aren't following Warren Buffets advise, because it's advantageous to my portfolio. 
Risk comes from not knowing what you're doing. (Warren Buffet)
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Thu Feb 04, 2016 4:41 am |
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christcorp
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But it's true. Everyone can't be 90% invested in the S&P500 and 10% in bonds. It's not possible.
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Thu Feb 04, 2016 5:40 am |
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global
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Well for what it worth I think 90% in S&P500 index funds and 10% in a mutual fund actually is a good strategy, because most people won't do this. A lot of people have a competitive nature and want to move shit around and do weird stuff. Even if it did fail it would most definitely beat inflation which putting your money in a bank doesn't do.
I'm actually planning on using the above strategy or something like it. Hopefully other people won't too. There will always be people wanting to move shit around so we're good.
To be honest the numbers on the graph move up and down. People try and sound like oh there is a reason yada yada percentage this percentage that. I personally have no clue why the numbers move up and down. All I know is that S&P500 and Dow Jones look like they have always gone up long term wise. Seems like a good bet. S&P500 uses the best 500 expected-to-do-well companies every year or something like that. Not entirely sure.
So I guess I'll put my money there hope it goes up and don't look back and pray it isn't a giant ponzi scheme on a global level.
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Thu Feb 04, 2016 7:32 am |
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christcorp
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Obviously, if you get into the S&P500, you're having to do it as a "Fund". It's pretty much impossible for the average person to actually invest in 500 individual stocks. Also, you can't really look at the historical data since inception that it's made 10%. Main reason is, very few if anyone has invested in the S&P500 SINCE INCEPTION. So, it matters when you have your money there. For instance, if you had it in the S&P500 in the 60's, you got totally screwed.
Overall though, just like with most any funds that are so widely diverse, you will come out ahead. Even with the 2008 crash, assuming you didn't take your money out; and assuming you still did dollar cost averaging and continued putting money in, you probably fared well. My portfolio is better today than it was in the past. I.e. There's more money in it, than I put in it. And some of my money is in an S&P500 fund.
Also realize, that if you are old enough to have been putting money into the S&P500 since inception, if you factor in inflation, the actual return has only been between 6.5-7%. Still not a bad return. Simply saying that when people speak of the S&P500 being the benchmark and it having such a good long term successful performance, the numbers can be a little misleading. But as with most funds, in the long haul, they perform well. I've never not recommended the s&p500 funds. But I've also never recommended just one fund either. I am a major proponent of diversification. Can you be diversified to the point where your returns are lower? Yes. Then again, diversification reduces risk. So for me, I'm OK with that. I've "Never" been in a position, in the last 35-40 years of investing, where my balance was LESS than I've put in. But, I've also probably not made or lost as much as others have either. For me, I like a balanced portfolio.
I have S&P500, I also have overseas/international funds, as well as some bond and sector funds. I also have real estate, gold and silver (Physical), as well as other cash investments. This isn't Atlantic City or Vegas or Lotto. Some people look for the big knockout investment. But I recommend finding a balance over a 30+ year period, where you can work an acceptable rate of return that will meet your goals.
That's why this topic is so difficult. Many want to pull money out, move, or at least stop contributing when the market starts to turn down. Unless I was within 5-7 years of retiring, and depending on what funds I was invested in, I see major down turns as great opportunities. Remember, buy low and sell high. Can't do that if the market never goes low. Of course, this all assumes that you are well rounded and have enough money to take care of expenses if something bad happens. Are debt free (Which is one of the BEST INVESTMENTS), and are in a position where your investments aren't taking food off the table. Many people, like in the 2008 era, had to STOP investing, had to remove money from savings and their IRA/401K/etc. Those people didn't benefit from the LOW PRICES by continually buying. They are worse off today than they were then. And depending on their age, probably being forced to work more years than they wanted.
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Thu Feb 04, 2016 2:34 pm |
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littleroc02us
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quote:
Originally posted by christcorp
But it's true. Everyone can't be 90% invested in the S&P500 and 10% in bonds. It's not possible.
Investing is very simple and boring, it's longterm and doesn't consists of calculated moves like stock trading. My wife and I simply invest in Roth IRA's/Index funds using dollar cost averaging, as well with our 401k's.
Risk comes from not knowing what you're doing. (Warren Buffet)
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Thu Feb 04, 2016 3:08 pm |
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oldguy
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quote:
But it's true. Everyone can't be 90% invested in the S&P500 and 10% in bonds. It's not possible.
My point is; most times, there are a FIXED NUMBER of stocks in a company. You can't simply decide to BUY a piece of a company. In order to BUY....... SOMEONE must be willing to SELL. As such, that, along with HFT, Day Trading, and a number of other things manipulate the market. We are no longer living in the age of our parents and grand parents, where you bought stocks because you were investing in a company.
Maybe not possible if literally EVERYONE did that, not enough float to cover it. But, in general, only the "zero sum" shortterm vehicles would have problems. The Options, the Flash trades, the Day Trades , that need to close, reconcile daily. But longterm investors are not affected - if I'm going to keep something for 30 years I don't care if the Flash trades run it up/down every second, every hour, every day, every week, every year - no effect - when one trader makes a killing an equal & opposite trader takes a loss (in the zero sum trades).
quote:
So, it matters when you have your money there. For instance, if you had it in the S&P500 in the 60's, you got totally screwed.
Not really.
1940 to 1970 11.85%/yr
1950 to 1980 10.83%/yr
1960 to 1990 10.16%/yr
Ie, you can put the 1960s-decade at the front of your 30 years, in the middle of your 30 years, or at the end of your 30 years - and you still get a double-digit return. But you are right in that if you isolated the 1960s decade you got poor returns.
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Thu Feb 04, 2016 4:22 pm |
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christcorp
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I'm with you old guy. Unfortunately, not everyone, mainly the younger workers, take retirement investing as serious. I see it everyday. The 18-29 barely put anything away. The 30-40 start to take it seriously. Not as much as they should. It's usually the 40+ group that gets serious. Then, they are playing catch up. Most don't have 30 years to invest properly.
Each person is different, with different plans. Until I was 37, I was in the military. Not a lot of money in the paycheck for investing. And until the last 5 years, buying a house wasn't much of an option when you're moving every 3-4 years. So, I did what I could. In the 80's, I had CD's. Getting 6-8% was pretty good. Didn't have 401k, deferred comp, etc. type work related savings. Didn't want to lock in funds that I might need. I also made sure I was debt free 100%. Thus, more money to save. I was then able at 37, to buy a home, and pay it off in 10 years. Thus, freeing up $1200 per month to invest. I've since been able to remain debt free, build a healthy mutual fund/Ira/Roth/401k combination portfolio, along with silver and gold, that we keep me comfortable when I retire in a couple years through until I die. Hopefully in the 90-100 year mark. But while I am exposed in the s&p500, that would not have been the best choice for me to be 100% in. Or even 90%.
But that's me. Not saying others need to do it my way. I've known some that think keeping a mortgage forever and investing everything, is the way to go. Not my style. Probably good for the individual who knows they'll stay in the same house for 50+ years. Everyone is different. Different tolerances to risk. Different standards of living. I know some who are proud of and brag about close to a million dollars in their stock/fund accounts. Yet, they still owe a couple hundred thousand in a mortgage, have large credit card and auto loan balances, and very little in savings or liquid funds. Plus, they aren't far from retiring. All is good, assuming they don't run into any financial difficulties. I saw many of these people have to stop contributing and some actually have to take money out of their funds during the melt down in 2008-2009.
So I'm all for the s&p500 funds. I'm simply saying, I'm not necessarily in favor of investing 90% into it. I believe that elimination of debt, minus a mortgage, is priority #1. Having a healthy savings for shtf, is #2. Having long term investments for retirement, including a diverse portfolio which has s&p and some other funds is #3. And having inflation protection assets is #4. This, for me at least, is the prudent thing to do. But that can change for the individual smart enough to start long term investing at 25 years old vs those who don't get serious until 40+.
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Fri Feb 05, 2016 12:02 am |
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littleroc02us
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What's crazy is my wife is so frugal that when we got married, she was 27 making only 28k a year and had almost 100k in her Roth IRA. Wow! Just think of the ratio on that amount. There are lots of people we know that make over 100k and are in their mid 30's and don't even have 100k saved for retirement. Pathetic! So to say you have to make a ton of money to build wealth, your absolutely crazy. It's the choices you make in life that affect the outcome. If you like buying McManshion, expensive clothing, expensive vacations, new cars and borrowing lots of money, you won't get the same result.
Risk comes from not knowing what you're doing. (Warren Buffet)
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Fri Feb 05, 2016 4:36 am |
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Excentris
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Resources!
capacitors, transistors! bullets, food and even stored water
but predicting you .. you laugh it up!
get yourself ballistic Armour and a bug out plan from the dwelling and have a traffic free rout out of major city's
bullet proof your car!
do research. wisdom and knowledge on urban to wilderness survival and more along the lines of all wisdom and knowledge you can grasp get it to save your life maps and locations of resources and extra fuel!
i would not lie!
pretend these are going to be rough times!
Murphy's law is an adage or epigram that is typically stated as: Anything that can go wrong, will go wrong.
Murphy's advice and wisdom - be prepared and better safe then sorry!
I hope this advice is of no use to you but if it is i am happy i saved your life!
good luck!
Resources will go back up in price even! safest investment man!
don''t fall for the sugary maple syrup and go for the protein!
resources will even soar in prices after crash you will see!
they will refuse to sell and lock up! (fact)
(food is a stock market resources as is anything tied with money!)
if my predictions are correct markets who sell food "may"lock up and remove stock from shelves to avoid raid!
w/ the gold standard gone the only thing giving the dolor value is the stock market! if it crashes the dolor is just a cotton slip! with green ink of envy!
and gold will just be an alloy the only gold worth jack is the eternity band around your finger placed by your wife! worth as much if it were bronze only because its a symbol of love and adore!
your risk is your own though! have fun!
for the thousandth time this is a stock market crash there is a reason why they all through history desperately avoided a stock market crash at all costs because its just like a nation in a hellish 2000 mph bullet train wreck of havoc !! money being everything to you as blood the stock market is a main artery and heart of monetary!
again... good luck folks and lady's! best wishes go to you! and all free people that we pull through! with our lives!
what is the difference between me and you to Albert Enestine! nothing.. only yourself! look at you! rise above yourself!
(energy equals everything squared!
sovereign light! fallow the path of light or descend!
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Fri Feb 05, 2016 7:45 am |
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christcorp
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Littleroc; you are so correct. Matter of fact, if you look at the average "Retirement" savings of people, the most recent report is astounding. Assuming you HAVE a retirement savings fund/account of some kind, the average in the 60's year age group, is only about $173,000. Even if the 4% rule to withdraw was viable, that would only be about $7,000 per year to live on.
Other recent info shows that about 62% of all americans only have about $1,000 in their savings account. 21% don't even have a savings account. Forums are great, but they generally attract like minded people. Whether it's a financial forum like this, or an Car forum, Sports forum, etc. So much people, just by coming to this forum, have a different mindset. But most people don't fall into this category. Most don't save, live beyond their means, are in debt, think that's ok, and expects the government (Meaning the rest of us), to have to pay for their laziness or irresponsibility.
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Fri Feb 05, 2016 2:38 pm |
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christcorp
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FWIW: There was a market crash in the 2008 period. Dropped almost 50%. Those of us who didn't live outside our means; continued contributing. (Buying low is good). Those of us who were responsible with our lifestyle and savings, didn't have to remove money from our savings and retirement accounts. As such, we not only pulled through just fine, most of us recouped any loses in about 2-3 years and are ahead again.
The stock market is definitely not without risk. But in the long run, it is an indicator of the country's economy. It will do well. If it was to totally tank; then the country's economy would have to totally tank. And if that happened, then it wouldn't matter where you had your money. NONE of it would be worth anything. Except gold and silver; and other "Barter" items.
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Fri Feb 05, 2016 2:48 pm |
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