Friday, February 27, 2009

The Stock Market

If you're a regular reader you'll remember that I continue to be an advocate for stocks. While the last few months have been challenging, in my mind, buying a company is still a good idea.

How low would the market (I'm using the Down Jones Industrial Average in my example) have to go for you to sell all your stocks? 5,000? 4,000? 3,000?

Are you curious to as what I'm going to do if doom and gloom continues? Keep buying. I've got 30+ more years until retirement. I figure if I can buy GE for $8.51 today, I'll be alright come retirement.


Mort said...

You know, I always hear the advice "buy low and sell high". I've never heard anyone advise selling low... The way I figure it, it's a no-brainer at this point in time to be investing in mutual funds that track an index. The only way you're gonna lose money on that if the entire economy collapses. And then we'd have more to worry about than losing money on the mutual fund.

Mac Noland said...

I couldn't agree more. I've got a contact at the U of M who spent significant time studding how people use their 401k. He said you'd be amazed at how many people will adjust their plan so that they move money out of fund that is down, and into a fund that is up. I.e. the equivalent of selling low and buying high.

While I understand that some funds warrant getting out of at some point (as I should have with the Putnum New Opportunities fund), for the most part, it's best to stick it out.

Chris said...

Watch yourself when it comes to GE. Actually watch yourself when it comes to any single name equity in the finance industry. GE has massive problems. Not the least of which is that Brigger works for them. I don't claim to have all the answers, but there's just so much dilution risk with financials these days. A lot of people probably thought Citi looked good at $20, $15, $10, $5, etc. Now it's barely $1 with not much of a future. Buy some ETFs or mutual funds if you must, but avoid the single names (unless you want to get crazy and try something like BWF...which I helped issue and could tell you all about). Then again I'm quite paranoid. I've had 80-85% of my 401k in cash for the last year and a half and spend about 12 hours a day working with people in the industry and we're all pretty much just sitting around wondering when the next round of layoffs is coming.

Anonymous said...

Just bought 2000 GE shares at $7 because on your recommendation.

Mac Noland said...

Great job on the purchase. Include me in any upside ;)