No. of Recommendations: 10
What I was referring to is when we are in prolonged bear market - as in declining for consecutive months over a good length of time. Since I will be making regular monthly contributions, I felt it'd be more Foolish to put the contributions into fixed-income-type funds, and once the bull market comes back (again, this is determined over periods of months, not looking at daily charts), I'll resume monthly contributions toward equities portion of the portfolio.

When the market is down, stocks are on sale. Why would you want to buy something at higher prices, but not at lower prices? The stock market is on the only market where buyers don't like a sale - and it doesn't make much more sense than in any other market.

Deciding where to put new assets (just as potentially deciding where to move old ones) still assumes that you know what will happen, which is very different than what has happened.

If you act now based on what has just happened, it is somewhat akin to driving using only the rear view mirror. You won't move out of/stop adding to equities until they have already taken a good hit, and you won't move back into them/start contributing again until they have already made a good rise. That, plus taxes, and any transaction fees, if you're selling, means you're quite likely to end up worse off.

And you've just forfeited the opportunity to buy equities at some of the cheapest prices you're probably ever gonna see again.

Take a look at this S&P 500 chart:

Are you really saying it woulda been a bad idea to be picking up stocks at the prices available in 2002 and 2003? You really woulda been buying bonds (who's value would have declined since then due to the Fed actions)?
Print the post  


The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.