As the market turns down, I expect there will be a lot of four letter words being used. Here are some of the common ones in investing, in order of desperation:
It probably won't be long before these four letter words are being regularly used,
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This is not financial advice. Please consult a professional advisor.
Copyright © 2015 Achievement Catalyst, LLC
Tuesday, August 25, 2015
Monday, August 24, 2015
What I Learned from the Last Crash
The market volatility of the past three days has caused me to think back to the last major stock market crash in 08/09. Here's what I learned from then:
My plan for now is to keep our current investments and add funds with every 10% decline in the market indices, with a target of being fully invested around a 50% decline. While good in theory, I expect the plan will be difficult to execute as our current stock investment values are reduced by 50%.
For more on Strategies and Plans, check back every Monday for a new segment.
This is not financial advice. Please consult a professional advisor.
Copyright © 2015 Achievement Catalyst, LLC
My plan for now is to keep our current investments and add funds with every 10% decline in the market indices, with a target of being fully invested around a 50% decline. While good in theory, I expect the plan will be difficult to execute as our current stock investment values are reduced by 50%.
For more on Strategies and Plans, check back every Monday for a new segment.
This is not financial advice. Please consult a professional advisor.
Copyright © 2015 Achievement Catalyst, LLC
Labels:
Strategies and Plans
Sunday, August 23, 2015
The Party Feels Like It's Over
This is the third longest bull market in U.S. history, and all bull markets must end.
There's a tremendous amount of negativity on the current bull market.
The only positive I found was that 2015 is the third year of a presidential term. Since WWII, the market has not experienced a loss during the third year. However, it has closed flat during two of those third years: 1947 and 2011.
The negatives far outweigh the positives. Unfortunately.
So it is very likely the market will continue to fall this week. The only question is, "How far?"
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This is not financial advice. Please consult a professional advisor.
Copyright © 2015 Achievement Catalyst, LLC
There's a tremendous amount of negativity on the current bull market.
The only positive I found was that 2015 is the third year of a presidential term. Since WWII, the market has not experienced a loss during the third year. However, it has closed flat during two of those third years: 1947 and 2011.
The negatives far outweigh the positives. Unfortunately.
So it is very likely the market will continue to fall this week. The only question is, "How far?"
For more on New Beginnings, check back Sundays for a new segment.
This is not financial advice. Please consult a professional advisor.
Copyright © 2015 Achievement Catalyst, LLC
Labels:
New Beginnings
Saturday, August 22, 2015
It's Probably Going to Get Really Ugly
The 1017 point drop in the Dow this week has wreaked havoc on my investment portfolio. Unfortunately, I believe the indices will continue to fall next week. At this point,China and the Fed have lost their economic credibility with the market. Hence, I expect the selling will continue.
One factor that may contribute to a steeper decline is the high level of existing margin debt. As stock prices fall, accounts with margin debt may receive margin calls that require further selling of stock. I have also read that the emerging market currency crisis may be another factor causing a stock market decline, just like in 1998.
Right now, I'm anticipating at least a 20% drop in the market indices. During that time, I will be trickling in a small amount funds into commission free broad market ETFs. In addition, I will make some small purchases of specific stocks to build our retirement dividend portfolio. For now, I don't expect to put more than 20% of our cash position back into the market.
For more on Reflections and Musings, check back Saturdays for a new segment.
This is not financial advice. Please consult a professional advisor.
Copyright © 2015 Achievement Catalyst, LLC
One factor that may contribute to a steeper decline is the high level of existing margin debt. As stock prices fall, accounts with margin debt may receive margin calls that require further selling of stock. I have also read that the emerging market currency crisis may be another factor causing a stock market decline, just like in 1998.
Right now, I'm anticipating at least a 20% drop in the market indices. During that time, I will be trickling in a small amount funds into commission free broad market ETFs. In addition, I will make some small purchases of specific stocks to build our retirement dividend portfolio. For now, I don't expect to put more than 20% of our cash position back into the market.
For more on Reflections and Musings, check back Saturdays for a new segment.
This is not financial advice. Please consult a professional advisor.
Copyright © 2015 Achievement Catalyst, LLC
Labels:
Reflections and Musings
Wednesday, August 12, 2015
Managing Our Investment Risk
With the recent volatility of the U.S. stock market, I decide to revisit how we are managing our retirement investment risk.
My simple qualitative measure is whether i would be relatively free from worry in the event of a major market downturn. In 2007, I gave an unequivocal yes as the answer. However, during the 08/09 bear market, I was far from worry free. I had too much invested in my company stock and not enough cash reserves in our accessible funds.
My answer today is a qualified yes. Yes, mainly because we've significantly increased our cash reserves, which we didn't do in 2007. Qualified due to my continued exposure company stock, even though I've greatly reduced the amount and reinvested the proceeds in a diversified stock portfolio. Unfortunately, some of my company stock will need to be sold in the next two years, no matter what the price. Hence, the possibility of higher worry during a near term bear market.
So from a risk perspective, we're better than in 2007 but not as good as I hope we will be in 2018. If we are lucky, the current bull market may last for three more years.:-)
For more on The Practice of Personal Finance, check back Wednesdays for a new segment.
This is not financial advice. Please consult a professional advisor.
Copyright © 2015 Achievement Catalyst, LLC
My simple qualitative measure is whether i would be relatively free from worry in the event of a major market downturn. In 2007, I gave an unequivocal yes as the answer. However, during the 08/09 bear market, I was far from worry free. I had too much invested in my company stock and not enough cash reserves in our accessible funds.
My answer today is a qualified yes. Yes, mainly because we've significantly increased our cash reserves, which we didn't do in 2007. Qualified due to my continued exposure company stock, even though I've greatly reduced the amount and reinvested the proceeds in a diversified stock portfolio. Unfortunately, some of my company stock will need to be sold in the next two years, no matter what the price. Hence, the possibility of higher worry during a near term bear market.
So from a risk perspective, we're better than in 2007 but not as good as I hope we will be in 2018. If we are lucky, the current bull market may last for three more years.:-)
For more on The Practice of Personal Finance, check back Wednesdays for a new segment.
This is not financial advice. Please consult a professional advisor.
Copyright © 2015 Achievement Catalyst, LLC
Labels:
The Practice of Personal Finance
Saturday, August 08, 2015
Market Pain Is Increasing
The market volatility and decline is starting to worry me. At first, I believed the market was similar to 2012, i.e. lots of volatility but still finishing higher. However, I'm starting to believe 2015 is going to be more like 2008, i.e. lots of volatility and a big downward spike. The main difference from 2008 is that market indices are still near the all time highs highs.
One argument against a significant decline is that almost everyone expects one to happen. In fact, many of the pundits turned negative on the market over the last couple weeks. Often, high negative sentiment is a good contrarian indicator that a market correction time frame is not near. And the sentiment seems very negative at this time.
At this point, I'm still in a wait and see mode. I'm ready for a downturn and trying to prepare myself to buy should there be a 20% or greater drop. Hopefully, if there is a significant drop, I will have the discipline to put some funds into the market.
For more on Reflections and Musings, check back Saturdays for a new segment.
This is not financial advice. Please consult a professional advisor.
Copyright © 2015 Achievement Catalyst, LLC
One argument against a significant decline is that almost everyone expects one to happen. In fact, many of the pundits turned negative on the market over the last couple weeks. Often, high negative sentiment is a good contrarian indicator that a market correction time frame is not near. And the sentiment seems very negative at this time.
At this point, I'm still in a wait and see mode. I'm ready for a downturn and trying to prepare myself to buy should there be a 20% or greater drop. Hopefully, if there is a significant drop, I will have the discipline to put some funds into the market.
For more on Reflections and Musings, check back Saturdays for a new segment.
This is not financial advice. Please consult a professional advisor.
Copyright © 2015 Achievement Catalyst, LLC
Labels:
Reflections and Musings
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