Well, I have to admit I’ve found myself second guessing my strategy of buy and hold. Of course I’m not making any rash decisions and certainly won’t be selling as the market goes down, but I have thought about a couple things.
1) Maybe I should have moved a percentage of my portfolio to cash as part of an ongoing diversification strategy
2) I definitely need to keep more than 5% of my net worth in cash so that I can take advantage of the market dips
So, I’ll ride the roller coaster. The good news is that, like Flexo over at Consumerism Commentary, I’m dollar cost averaging all the way down. I’m happy to be buying a nice chunk of indexed funds every two weeks in this market. Since these investments are for the LONG term, I’ll just sit back and let the investing happen.
C’mon Hazzard, you’re in it for the long haul, keep your eye on the big picture and stick with your original plan.
I doubt that you can consistently move to cash before a market downturn and move back to equities before it goes up. Better to stick with your current plan.
The current market downturn doesn’t even count as a correction yet.
Not sure I agree. It boils down to how you know your equities are undervalued. I do not have the skills to make this evaluation. I rely on heresay and my own dumb guesses. THEREFORE, if the overall market is going down, I bail, 100%! An INVESTOR would not, but an INVESTOR can perform the fundamental analysis that signals undervaluation. A TRADER bails 100%. So decide which team you’re on. If you’ve done the due dilligence that revealed undervaluation, then you’re right there with Warren Buffett, a true long. But if you don’t know this stuff, then I don’t understand your committment to riding dips down. It’s also clear to me that I can wait and wait and wait until the market is obviously bottomed *and already rising* before investing. This makes more sense to me than dollar cost averaging.