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TMFPostOfTheDay (< 20)

Hang In There



October 23, 2013 – Comments (1)

Board: Retirement Investing

Author: jgc123

"Staying in through thick and thin is terrible advice."

"The best decision I ever made was getting out of all my holdings in March of 2000"

I disagree with your first sentence.

I don't question your second sentence for a second, but not one person at TMF (or anywhere else) told me to get out of all of my holdings in exactly March of 2000, nor did anybody tell me at the time that they were getting out of all their holdings.

During the crash of 2008-9, there was nothing but gnashing of teeth and capitulation all around me and now there are dozens of people telling me in hindsight that they got out in 2008-9.

The one investment that I have that I have ridden through thick and thin is my IRA which took a big haircut in 1987, another in 2000-2, and again in 2008-9, and now, with the help of continued contributions and drips could be chopped in half and still have a higher nominal value than the highs of 2006-7.

Furthermore, the drips that I bought in 2008 are now nearly double the purchase price even though my timing was wrong and they suffered a big haircut in March of 2009. Even if those drips lost half their value in the next year, they would be worth their purchase price and have a higher dividend yield than they had when I bought them.

And even if I had been smart enough to get entierely out in March of 2000 and/or March of 2009, I was not smart enough to know when to get back in. In fact, I thought we would retest the lows of 2009 because I failed to foresee the power and will of the Fed to create money.

As a result, my IRA, and my wife's increased contributions to the max for people over 50 started out as a hedge and turned into my best performers over the last 5 years.

Staying through thick and thin has outperformed my trading accounts over the last 15 years.

That being said, I guess I still time the markets to the extent that I have spent the last year paying off debts and increasing my savings rather than add to my nonsheltered accounts so that I will have a buffer against the whims of Congress, China, Europe and the Fed.

I am not sure that Buffett does not time markets to the extent that he amasses cash during frothy markets to enable him to take advantage of crashes whenever they finally happen.

1 Comments – Post Your Own

#1) On October 24, 2013 at 2:57 AM, maniladad (< 20) wrote:

Well said, igc123. I guess there must be some people who can time the market although I suspect that most do so, as you suggest, through the liberal application of the retrospectoscope. The reason that I think that some people must be able to time the market is because I am absolutely terrible at it. My timing is consistently atrocious. So there must be someone out there on the other side of the bell-shaped curve who does extremely well in timing. For me, after years of different approaches I've found that MF Pro is a service that is closely matched in philosophy of investing and in goals and strategy with my own situation and psychological makeup. I do what I can to learn about the companies that they recommend but that is primarily so that I won't be tempted to panic when the news is bad or bail out too soon when the stock price goes up. I've proven to my own satisfaction that Jeff Fischer knows more about investing than I do and I accept his opinions. My only responsibility is to make sure that the recommendations are compatible with my indivdual circumstances.

So, if I were to make a recommendation to young investors, recognizing that few of them will exercise the diligence required to become truly knowledgeable investors I would suggest that they find an investment service such as MF SA which takes a long-term view,  which seeks financially strong companies with good past histories and future prospects and which is appropriate for younger investors. I would suggest that rather than follow the recommendations slavishly they try to learn as much as they can about the companies they own to develop their own investment skills. Only the relatively few who are willing to read SEC Filings and scrutinze balance sheets and cash flows and study the competition and do all the things necessary until they know the company and management inside and out should rely on their own evaluations to choose their companies to invest in. The rest of us dilitantes should find good advisors and heed them.

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