How are your folks who have retired in the last year investing your money ?. To me, both the stock and bond markets appear over valued at the same time, return on CD's or other comparable investments are negligible. How is one to make a at least a 5 % return without taking too much risk ?
44 replies (most recent on top)
@9ibc, you are right about having to be both lucky and knowing when to get in or out of the market with pin-point precision to make big money. A one or two day miss (sometimes hours) can make all the difference. I've been lucky only a few times hitting the exact low entry and high exit dates in my 30 years investing in the stock market. I've been the most successful in timing my buying and selling stocks within two to three days of the of optimum date. Still, I have had a track record that is better than average. Books have been written that try to teach strategies and systems. All very helpful, but it's knowledge in the company or sector you are investing in, along with trading experience and a good gut feel that cannot be taught. That's the winning edge everyone needs to come out ahead.
Market timing is pretty much a crap shoot. There was a study done a few years back showing that over a 35+ year period (mid 70s to mid 00s) the average annualized return was basically cut in half if you missed the best 50 days of the market, which was about 0.6% of the total time period studied. So unless you are convinced you know exactly when to get back in, you are likely to miss one or more of these key days that might drive the bulk of the return for an entire year. Good Luck!!
@8zpy, yours is the "64 thousand dollar question". There are many books published about how to trade and systems to use. It's not easy sometimes to know when to get in and out of the market. I've been investing for over 30 years and can tell you it's a combination of knowledge and luck. The best advise I can give you is don't gamble, because you will lose almost always. You need to invest in sectors in which you have a good understanding of what affects them to the upside and downside. Invest in more than one stock or fund; in other words, diversify. I always track the historical performance of my investments and take note of what happened to cause rallies and pullbacks. Having this knowledge will help you in charting your best entry and exit points into investing. It's impossible to time the markets, but if you employ economic fundamentals that affect a stock or fund sector into your investing strategies and you also have good common sense, you will do better than most.
@8fea - How will you know? Do you wait for it to go up for some number of days and hope to get in at the beginning of an increase? If it goes down do you hold of and wait for an increase? How many days does it have to go up or down for the trend to be meaningful? This is what's always been a problem for me. In hindsight it's easy to look at a graph and say, "sell here and buy here", but when you're in it what do you use? Financial pundits are of little use because there as often wrong as right, and anyway usually half say buy and half say sell. On any given day you kind find articles saying that such and such points to a coming plunge in prices or that such and such points to a new bull market.
It has been proven throughout the history of investing that on an average you will have better returns by just staying in and weathering the storm, up, down, whatever. It has been shown mathematically. Now, there are lucky people. There are people who win the lottery too. Jump in and out at your own peril.
@8eve, politics aside, I am now 100% in cash. I plan to remain out of the market until right after the Presidential elections. By that time, the markets will show us the direction of things to come.
Wow. Do commenters actually read what others write? I'm not wanting to discuss the merits of the various candidates here. It's pointless, no one will be convinced one way or the other. My only point only is that the election brings uncertainty, and uncertainty tends to suppress investment in the stock market.
Now, what I was really interested in was the other parts of my question. How will the person who claims to be 50% cash now decide when to get him/herself back into the market again? That seems like a tricky question when you consider all the possible scenarios.
Some might pitch "Better the beast you know than the one you don't" in support of HC??? BUT, as Americans we deserve more than picking between two evils.
I suggest that we focus on the VPs and hope for a quick turn on the Presidency on which ever wins the election. Frankly, its the only way I can place my vote this coming November!
Yes, a certainty. A continuation of False Promises and lies, but a certainly. A continuation of underhanded dealings with foreign countries, including ominous ones, but still a certainty. A continuation of lack of respect for the constitution and our military who secure the rights of every American, but yet a certainty. A facade of false claims of championing women's rights while behaving the polar opposite in real life circumstances, but yet a certainty. A pathological liar to the extent of not being able to trust a single word she says, but yet a certainty. A shrewd, conniving, deceptive, skilled politician with a polished charm that can beguile even the most sincere and honest of hardworking taxpayers, mainly democrats, but still.......a certainty.
I will happily take a chance on an uncertainty. After all, over 50% of the voters did for the last 8 years.
Yes, @8ftf, he has no track record in government and managing fiscal and monetary policy, and has failed to give any specifics on what he would do, other then that he's against free trade (which is not something that businesses like to here). Maybe his alleged business acumen will translate to the office of President, maybe it won't. That's the uncertainty. Clinton's economic policies will almost certainly be an extension of Obama's. You might like them or hate them, that's your choice, but there's much less uncertainty. That's my point. In any case, I was just expressing an opinion about what I feel will be affecting the stock market in the coming months. Chill out.
Trump has no track record, 8ewt? Perhaps not in politics, but he does have a strong track record in business, creative thinking and solving problems. He knows how to negotiate and has a lengthy experience dealing with government bureaucracy. If that's the wildcard you are talking about, I'd vote for that every time on a federal, state and local level. On the other hand, Clinton's track record is very well known. It's only in politics and underhanded dealings. She would be terrible for the future of this country.
That's a false dichotomy. He could be both. Trump is a wild card because he has no track record and few economic policy specifics. I don't think this is a good place to discuss the election, but it's hard to deny that Trump increases the economic uncertainty. It's kind of why people are voting for him, to stir things up. Investors get nervous when they don't know what the future holds and tend to take money out of the market and wait for things to settle down.
Trump is no wildcard, moron. He's the last chance this country has to come back from the brink.
@8siv - You might be right. I've been considering dropping my percentage of stocks because of the uncertainty caused by the upcoming election. Trump is a wild card, and more than anything the market hates uncertainty. Sooner or later the fed has to raise rates.
In any case, how do you decide when to get back in? What do you do if it keeps going up? Do you wait for it to eventually come back down? What if it doesn't get back to this level for years or ever? Do you eventually decide to jump back in anyway or risk being permanently out of the market? If you had pulled out in '96 after an 8 year bull market you'd still be waiting to get back in at a lower price. I'm not criticizing your strategy, but the question of when to get back in is the reason I've never actually tried market timing. That, and the fact that research seems to argue against it's efficacy.
Ok folks. But low, sell high. What is the S&P 500 doing these days. Why it's at an all time high and PE ratios are getting close to that level as well. Hymn. Wonder if you should be buying or selling. I'm at 50% cash as of Friday. Let's see how it goes over the next few months. If I'm correct, I'll be buying back in within a few months. And yes, I'm managing my own $.
Soon y'all will be ex-chevron
@IpfwWen-4esh, This is a website for Chevron and ex-Chevron employees, not you.
Move along now. nothing to see here.
Wow, @IpfwWen-4vtu, that IS pretty graphic, you apparently know from personal experience. Nothing to add to the investment discussion, I see. Run along now, perverted little children.
Watch out. You're revealing some latent homosexual tendencies, 4vtu?
-1xwd - There's that guy who is obsessed with mens butts and keeps leaving their anus in a state of pain? You don't go in dry, do you? Bet you don't have the common courtesy to give the guy a reach around, do you? HA
@IpfwWen-2eih, Please disregard that comment from the poor soul who trolls this forum with nothing to contribute to any discussion who tells everyone who uses popular internet abbreviations, or does not like the post, that you have " no job, no prospects, no woman" I believe he is in that situation himself otherwise why would he dwell on it? He replies to some of my posts like that and I am a married woman with a job that I love, and last time I checked, not g--. Go figure. Maybe he just needs to let out his feelings and air his problems?
Wow, @IpfwWen-2kpg, are you new to the internet and the Abbreviations used? You can look all of them up if you need help - LOL! I agree, though that this poster, who obviously gets under your extremely thin skin, should not be making fun of someone who is less successful than they are.
ROTFLMAO, the turd with No woman, No prospects, No job, No future. It's been a while since we heard from you. Where were you all this time, in jail?
@IpfwWen-1ytx Ha Ha ha ha ha Ha !!!! A whole hell of a lot more than THAT!!! On top of that, How in God's name did you end up with ONLY $3.18k monthly???? Sorry, dude, but you're the one who invited the laughter - ROTFLMAO!!!
Death and The Maven
https://en.wikipedia.org/wiki/Anne_Scheiber
Laugh your assoff if you like. All I know is I'm retired, living debt free and in great health. I have a cool $1.64MM in my 401k, $115k in local banks, and living on a $3,188/monthly Chevron annuity. Now waiting for another 3 years to get my social security. What's in your wallet?
I don't know about all that but anyone who's experience in investing was primarily during the last 7 years, or the largest portions of their contributions were in that timeframe should not be considered experienced. That timeframe will give you a distorted view of the stock market and it's true ups and downs over time, i.e. false optimism. Ask any old timer who has been investing for some time. They will laugh at you if you think that the last 7 years represents the stock market. In 2009-10 the stock market was recovering from approximately a 40% crash. So you got in at the right time out of luck? whoop-de-frickin do. You're just a real financial genius, aren't you. Go start your own investment firm like all of those wannabees who crashed and burned when the market crashed. They all thought they were geniuses when they got lucky too.
What happened to the poor little butthurt loser who is all "I'm an experienced avid investor" and "I know how to invest better than everyone else" who only got a fraction of what the rest of the market did?
-1mvt, I think you misread that other post from whoever. The Increase in the Dow alone in the last 7 years has been roughly 300% total depending on the exact date. I am not doubting that you have good returns, but the other post also indicated "annual" returns.
@1mvt - Now you've got me wondering about your calculations. An average annual return of 13.8% for 7 years is not the same as 96.6% growth, it's actually much larger. If your portfolio grew by 96.6% in the last seven years (i.e. a little less than doubled) then your did worse than the S&P, which grew 132% over that time (from 932 on 7/15/16 to 2161 today, adjusted for dividends). So if your investments went from $100 to $196.6 over the last 7 years, then your annual return was 10.1%, worse than the S&P's 12.8%.
@1sgw, I was clear in mentioning my an average annual earnings over the past 7 years was 13.8%. That equates to 96.6%. I think that beats the 40% rate you mentioned.
@1uea - Very few people can consistently beat the indices over the long haul. For example, your returns sound great, but you've picked a time period where the market has been going gangbusters. My quick calculation shows that the S&P 500 has returned 12.8% over the last 7 years (7/15/09 to 7/15/16). So if our calculations are correct, you did beat a low cost index fund, but not by much, and the difference is most likely just good luck. Anyone who can consistently and significantly beat the indices over the long haul would be foolish not to start their own investment firm, as they could easily make 100s of millions investing other people's money. In any case, I have no problem with people investing their money as they see fit, I just think it's reckless to recommend a strategy of moving in and out of stocks frequently on a board such as this where most readers are probably not experienced investors. For the vast majority, buy and hold low-cost index funds is the best strategy. That's Warren Buffett advice to his heirs (http://www.marketwatch.com/story/warren-buffett-to-heirs-put-my-estate-in-index-funds-2014-03-13) , and he's one of the few investors who does seem to consistently beat the average.
@IpfwWen-1uea, The average annual growth of most index funds in the last 7 years is over 40%. I am not an avid investor but I am aware of the unusual "rebound growth" that the market experienced after the democrat inspired housing crisis/market crash. Wouldn't 13.8% compared to an index fund (like VTI), be a lackluster return during that timeframe? Please correct me, as I may have some numbers off as I am not an investment guru.
@1fzi, to each his own. My strategy for the last 15 years was to reallocate my diversified portfolio every 3 months. This did not necessarily mean disposing of a stock to get into another. Most of the time, I just cut back or bought more of a particular stock or mutual fund. I did this both in my Vanguard 401k and my personal holdings. After 26 years on the job, my portfolio grew very well. My average annual earnings over the past 7 years was 13.8%. If you're not an avid investor, then buy and hold solid blue chips that pay good dividends. If you are an experienced investor, you will do much better if you reallocate 3 to 4 times a year.
@1ksf - If buy and hold no longer works, then how do cheap index funds consistently beat managed funds and hedge funds?
If buy and hold no longer works, then no one should be investing in stocks. It implies that stocks are no longer going up with time.
Using a strict 'buy and hold' strategy when investing is not your best tact. Maybe limiting your portfolio to no more than 20% to this strategy with a good dividend paying stock is fine, but your strategy is reallocating the other 80% of your portfolio. Buy and hold was the mantra in the 60-70's when the stock market was a boring place. Since the advent of super computers, millisecond trading, dirivitives, and a slew of Wall Street scandals and Bernie Madoff crooks, it's best keep your money moving around.
Buy high, sell low.
Buy low, sell high.
Buy and hold, focus on dividend producing stocks