Free Advice and Worth the Price

People who are telling you not to get out of the market if you are in your 20s and 30s are not crazy. You are getting very depressed prices now, so keep dollar-cost averaging (putting in the same amount each month) and hold on. 20 and 30 somethings who did that through the 1987 crash have seen the Dow more than triple even to this "low point" and they aren't even at retirement yet, so don't fret.


Anonymous said...

And in fact, much of the gains in the stock market over decades happens in a relatively small number of days. If you pull out at the bottom, you're very likely to miss the upswing.

Male Moon said...

I'd have to disagree with you here. While your strategy of dollar-cost averaging is a good one for normal times, I'm not confident that we're in such a normal time right now. There's no certainty that the prices today are depressed; they may still be overvalued. I'm content to let this financial crisis shake out before investing any new money in the market.

And with respect to the first comment, is there a link that supports the assertion that "much of the gains ... happen in a relatively small number of days"? My guess is that the opposite is true. I think that if we were to look at the 100 biggest days for gains and 100 biggest days for losses, that the losses would win out. The only info I can find in support of this is simply looking at a long-term graph of the DOW index. The periods of decline seem to be a lot steeper than the periods of gain.

Male Moon said...

Holy crap. I swear that I wrote that last post before seeing the swan dive that the market is doing today.