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>>Having lived through having my 401k shrink by $100k in the early 2000's before I got my act together

> Assuming you were well diversified in 2000, getting your act together >likely lost you money in the long run. For those that stayed fully >invested and continued to add money via DCA, most had regained all that >they had lost and then some by 2005.

Waiting five years to get your money back is not my idea of comforting.

>You risk the same mistake this time if you are panic-selling.

You risk alot more if this 10% correction turns into something more substantial like a 20-30% bear market. You can always get back in if the market goes up.

It's not just that we have a 10-15% correction on our hands, it's that the professionals are selling. Check the volume on up days vs. down days and you will see what I mean.

>a relatively short window to retirement but not within 5 years.

>If you are not planning to retire in the next five years, why are you >overly concerned? A 10% correction occurs nearly every single year. What >we have seen with the stock market right now was LONG overdue and is >necessary for the longterm health of market.

Because mutual fund managers will repeat the same mistakes they did in the 2000 bear. You are right about a 10% correct. What if it turns into a ten or 20 - 30% correct. The gain to break even after a lose is always large then the loss itself. See a %loss to %break-even table:

http://www.fundblawg.com/journal/2006/10/19/avoid-large-losses.html

The other myth perpetuated is that on AVERAGE the market has gone up 8-10% annually. You don't earn average returns; you earn geometric returns. By way of illustration a 100% gain, followed by a 50% loss is a 50% average gain. The real return is zero.
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