So how do you know you are actually buying "low" and that the market will not fall a further 25%? You don't of course. There are some major unknowns (such as the swaps exposures) which could drag this market way, way down.
And you also don't know anything about when the high will be reached. If we get stuck in a depression, it could take generations.. look at Japan or tell me when the NASDAQ will again reach 5,000?
All I know for sure is that I have lost $40K (or about 25%) of my retirement. IMHO better to plan for a later retirement and invest more in a safer place than to play the market lottery, at least for now. Once they clean this whole mess up then maybe that will be a time to get back in - meanwhile be prepared for a very bumpy ride. I have given up riding this bear for the time being.
peter runrigof CA4:19AM October 06, 2008
Two changes:
1. Sold a stock fund in my taxable portfolio to claim the tax-loss. Will re-invest it in the same fund in 31 days to prevent violation of the wash sale rules. Next year, Uncle Sam gives me a $2,000 tax break.
2. Redirected all 401(k) contributions to U.S. stocks, reblanced 401(k) from bonds back to stocks to take advantage of the 40% off sale in stocks. What part of "buy low, sell high" is not clear here?
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peter runrig of CA 4:19AM October 06, 2008
Dave of CA 11:33PM October 02, 2008