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Author: DeltaOne81 Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76418  
Subject: Re: Portfolio Allocation for age 35 Date: 2/14/2007 12:34 PM
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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:
http://finance.yahoo.com/q/bc?s=%5EGSPC&t=5y

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)?
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