David Cordell
Finally pulled the trigger. Bought some S&P 500 index funds as of market close yesterday. An amount equal to one half of the annual distribution that I intend to begin drawing when I retire.
The decision looks prescient right now. At this minute, the S&P 500 is up by 6.5% this morning. Total luck. It may be down by 6.5% by the end of the day. Who knows. I am going to spill the same amount about three more times, but I haven't established a discipline, i.e. when and/or under what conditions to invest. I'm trying to pursue a version of "dollar cost averaging."
I am hoping that the Congress will pass the bill today. Not to be too political, but I think the Democrats are behaving very badly by trying to jam unrelated programs into the legislation. They are cynically following Rahm Emanuel's advice: Never let a good crisis go to waste.
One thing that may come into play in the short term -- Lots of institutional investors rebalance their portfolios at the end of a quarter. Because stocks have gone down so much, their asset allocations (i.e. percentage of stocks versus percentage of bonds) is way out of whack. So, if they were 60% stock and 40% bonds, a 33% drop in the stock value changes their allocation to 50-50. That is, I think there is potential for buying at the end of the quarter if they re-balance to 60-40
Who knows? I have never tried to "time" the market. I know that my purchase yesterday may not have been at the bottom of the market. My overriding philosophy is that the market will go back up eventually. I don't know when I will be back to where I was, but it will be happen. Meanwhile, I have a much larger allocation to stock than is normally advised for someone my age, and I hope to ride the roller coaster back up to the top. Meanwhile, I plan to keep working in the fall semester!
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