Comments on: My Favorite Lesson From The Market Crash http://www.myfindependenceday.com/my-favorite-lesson-from-the-market-crash Personal Finance Advice for 30 Somethings and Beyond Sun, 18 Sep 2011 00:21:40 +0000 hourly 1 http://wordpress.org/?v=3.0.1 By: Carnival of Pecuniary Delights http://www.myfindependenceday.com/my-favorite-lesson-from-the-market-crash#comment-1288 Carnival of Pecuniary Delights Mon, 08 Feb 2010 06:52:53 +0000 http://www.MyFindependenceDay.com/?p=429#comment-1288 [...] mfd from My Findependence Day presents My Favorite Lesson From The Market Crash. [...] [...] mfd from My Findependence Day presents My Favorite Lesson From The Market Crash. [...]

]]> By: Carnival of Pecuniary Delights No. 7: I Pick Up Pennies Edition | Carnival of Pecuniary Delights http://www.myfindependenceday.com/my-favorite-lesson-from-the-market-crash#comment-968 Carnival of Pecuniary Delights No. 7: I Pick Up Pennies Edition | Carnival of Pecuniary Delights Sat, 16 May 2009 20:21:17 +0000 http://www.MyFindependenceDay.com/?p=429#comment-968 [...] My Findependence Day presents My Favorite Lesson From The Market Crash. [...] [...] My Findependence Day presents My Favorite Lesson From The Market Crash. [...]

]]> By: The Strump http://www.myfindependenceday.com/my-favorite-lesson-from-the-market-crash#comment-955 The Strump Mon, 11 May 2009 02:59:10 +0000 http://www.MyFindependenceDay.com/?p=429#comment-955 <strong>Car Sharing - Update...</strong> Well, it looks like I'll be keeping my car … for now. I didn't quite get the price I wanted on Craigslist (and I curse all Craigslist low-ballers by the way) and my roommate will be paying extra rent for the ability to use the car whenever he wants... Car Sharing – Update…

Well, it looks like I’ll be keeping my car … for now. I didn’t quite get the price I wanted on Craigslist (and I curse all Craigslist low-ballers by the way) and my roommate will be paying extra rent for the ability to use the car whenever he wants…

]]> By: Silicon Prairie http://www.myfindependenceday.com/my-favorite-lesson-from-the-market-crash#comment-951 Silicon Prairie Sat, 09 May 2009 19:54:24 +0000 http://www.MyFindependenceDay.com/?p=429#comment-951 It's interesting to remember that some people take a small pullback in a bull market as a sign to buy more - that's certainly one way to take good advice the wrong way. On the other hand when the whole index goes below the long-run trend it's a much better picture. It is always good to remember the potential for changes if you have a shortening time horizon. Now a lot of people will probably keep their money in stocks because they want to get back to a certain point and then get out - which might just take 10-20 years. It’s interesting to remember that some people take a small pullback in a bull market as a sign to buy more – that’s certainly one way to take good advice the wrong way. On the other hand when the whole index goes below the long-run trend it’s a much better picture.

It is always good to remember the potential for changes if you have a shortening time horizon. Now a lot of people will probably keep their money in stocks because they want to get back to a certain point and then get out – which might just take 10-20 years.

]]> By: mfd http://www.myfindependenceday.com/my-favorite-lesson-from-the-market-crash#comment-949 mfd Sat, 09 May 2009 16:19:25 +0000 http://www.MyFindependenceDay.com/?p=429#comment-949 Hey Silicon Prairie, I totally agree with what you've said. The lesson isn't meant to focus on market timing. The problem with people when they invest is they have a tendency to be too optimistic or over confident. By remembering that "the market can always get worse" adds a bit of pessimism and in turn can keeps people grounded. Look at all these retiree's who lost money because of the crash. I bet a majority of them know about asset allocation but they were too focused on the bull market. I'm sure plenty of them thought "well I've made X% return if I just leave my money in all equities for another year then I can retire even more comfortably" Had they stopped for a second and remembered that things can always get worse then they would have paid closer attention to their asset allocation. Hey Silicon Prairie,

I totally agree with what you’ve said. The lesson isn’t meant to focus on market timing. The problem with people when they invest is they have a tendency to be too optimistic or over confident. By remembering that “the market can always get worse” adds a bit of pessimism and in turn can keeps people grounded.

Look at all these retiree’s who lost money because of the crash. I bet a majority of them know about asset allocation but they were too focused on the bull market. I’m sure plenty of them thought “well I’ve made X% return if I just leave my money in all equities for another year then I can retire even more comfortably”

Had they stopped for a second and remembered that things can always get worse then they would have paid closer attention to their asset allocation.

]]> By: Silicon Prairie http://www.myfindependenceday.com/my-favorite-lesson-from-the-market-crash#comment-948 Silicon Prairie Sat, 09 May 2009 15:59:06 +0000 http://www.MyFindependenceDay.com/?p=429#comment-948 If you're investing for the long-term, it's not really a big problem if a stock or index keeps going down after you buy it - it does make sense that if the price just got better you would want to buy more and no one can hit the bottom precisely. If you put all your cash in on a slight dip in an overvalued stock it's not likely to gain you much but it's still better than investing before the drop. It would be even better to monitor the situation over time, and if something is overvalued slowly increase your investments as it comes down. I think the bigger lesson to remember is that when the majority of people agree on something they're wrong (especially if they're acting on it). It's true that stocks can always go down further, but when everyone starts to expect the second consecutive 50% decline it turns out that the market has no more room to go down (for now) because there's already been too much selling. If you’re investing for the long-term, it’s not really a big problem if a stock or index keeps going down after you buy it – it does make sense that if the price just got better you would want to buy more and no one can hit the bottom precisely. If you put all your cash in on a slight dip in an overvalued stock it’s not likely to gain you much but it’s still better than investing before the drop. It would be even better to monitor the situation over time, and if something is overvalued slowly increase your investments as it comes down.

I think the bigger lesson to remember is that when the majority of people agree on something they’re wrong (especially if they’re acting on it). It’s true that stocks can always go down further, but when everyone starts to expect the second consecutive 50% decline it turns out that the market has no more room to go down (for now) because there’s already been too much selling.

]]> By: mfd http://www.myfindependenceday.com/my-favorite-lesson-from-the-market-crash#comment-947 mfd Sat, 09 May 2009 15:45:04 +0000 http://www.MyFindependenceDay.com/?p=429#comment-947 hi DGI, The thing with “The markets/stock can always get worse” lesson is that in encompasses so many aspects of personal finance. Like the ones you mentioned and other things like asset allocation or "catching a falling knife". It simplifies all these things when making personal finance decisions especially since people have short term memories and only focus on the upside of things. hi DGI,

The thing with “The markets/stock can always get worse” lesson is that in encompasses so many aspects of personal finance. Like the ones you mentioned and other things like asset allocation or “catching a falling knife”. It simplifies all these things when making personal finance decisions especially since people have short term memories and only focus on the upside of things.

]]> By: Dividend Growth Investor http://www.myfindependenceday.com/my-favorite-lesson-from-the-market-crash#comment-944 Dividend Growth Investor Fri, 08 May 2009 13:06:34 +0000 http://www.MyFindependenceDay.com/?p=429#comment-944 I guess the lesson learned is: do not invest with money you can't afford to lose.. Don't bet the house on the stock market.. I guess the lesson learned is: do not invest with money you can’t afford to lose.. Don’t bet the house on the stock market..

]]> By: This and That: Market melt-up edition | Canadian Capitalist http://www.myfindependenceday.com/my-favorite-lesson-from-the-market-crash#comment-941 This and That: Market melt-up edition | Canadian Capitalist Fri, 08 May 2009 03:48:09 +0000 http://www.MyFindependenceDay.com/?p=429#comment-941 [...] My Findependence Day on his favourite lesson from the market crash. [...] [...] My Findependence Day on his favourite lesson from the market crash. [...]

]]> By: mfd http://www.myfindependenceday.com/my-favorite-lesson-from-the-market-crash#comment-927 mfd Tue, 05 May 2009 18:19:01 +0000 http://www.MyFindependenceDay.com/?p=429#comment-927 doh! fixed now. Thanks :D doh! fixed now. Thanks :D

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