Stock Market continues its dive

Senior Member 75+ Posts Join date : 2018-06-17

Hi John. Good questions all.

I have no tax issues since almost all my money is in IRA accounts, mostly Roth IRAs. I would invest the same way even if I had tax issues. I invest for gain, not to keep my taxes down.

Let me give you the 2008 stock market crash as an example -

Those that see a crash coming and sell near the high and buy back near the start of the recovery fare much better than those that buy and hold. I sold in December of 2007 and got back into the market in early June, 2009. I ended up buying 40% more shares of stock with the same amount of money I sold my stocks for in December, making my portfolio far larger and the gains much larger as the market climbed, than if I would have held onto my stocks through the collapse of the market. The dividends I missed, which many companies slashed or ended altogether, are a minor factor compared to the amount I gained by selling before the crash. All the signs of a market were there in the fall of 2007. The first reports on the Lehman Brothers problems was the tipping point for me as far as deciding to sell everything. I read a lot of financial news and I knew how big a deal the collapse of Lehman Brothers would be, on top of everything else that was happening. I watched things very closely for a few months, then as things continued to get worse, I got out of the market. In March of 2009, the stock market started to recover and by mid June, I was convinced the worst was over.

I'm sure you've heard the phrase, "the markets hate uncertainty", or some other word meaning the same thing. The problems caused by the pandemic were much worse and more widespread than most people realized, then Russia began amassing troops on Ukraine's border.

You can't predict all the ups and downs of the stock market, but I've been able to predict the big crashes just by reading the information that's available to everyone. It does help to have an analytical mind.

There's nothing wrong with staying in the market and riding it out, the market will always recover, but you don't know when. Some people are happy with what they have and that's fine, but if your brain is wired for numbers and you don't mind spending the time to do the research, you can do a lot better.

Beginning Member Join date : 2014-10-30

There are believers on both sides of the fence John. I will admit to holding on in previous downturns and I ended up fine. I guess, my present day feeling is, I don't care if my nest egg makes any money, I just don't want to lose anything I have.

Beginning Member Join date : 2012-08-22

re stock market downturn, if you sell ,then when do you decide to get back in?
i dont know if there is a right or wrong answer here.
selling with a profit will incur capital gain taxes, no?
selling with a loss, i think losses are limited to every year,allthough they can be carried over,but a paper work headache.?
what about holding on thru the downturns prices drop dividends willl be reinvested at lower prices, so that when economy improves, earnings improve,market will go higher, stock assets will increase in value.
tell me what i am missing here.
john

Senior Member 75+ Posts Join date : 2018-06-17

On January 18th of this year I decided that there's too much bad stuff going on in the world and got out of the market, selling almost all of my stock investments except for one closed fund that has been very successful. I kept that one knowing if I sold I'd never be able to get back in. I'm glad I made that decision because the market has dropped 4,000 points (Dow) since then. The latest inflation report that came out today showed inflation still increasing, not a surprise as anyone who buys gas and groceries already knew that. I feel really bad for middle class and poorer families that were already struggling financially.
If anyone has any money left, I predict interest rates will rise faster than expected and by October you'll be able to lock in some very good rates on CD's. At this point I have no idea when things will improve, maybe the end of this year when the higher interest rates may slow things down a bit.

Beginning Member Join date : 2014-10-30

I don't think our economic outlook is particularly positive. That is, if the present is any indication.
As far as the stock market, I've never been very accurate in predicting the movement there. I pulled everything out when covid hit, believing that companies weren't going to prosper. I missed out on a lot of gains. Of course, still being out of the market feels pretty good lately......

Senior Member 75+ Posts Join date : 2018-06-17

It's not for most people, Cliff.

Site Administrator Join date : 2010-11-22

I don't like the Stock Market, Sports, Hollywood celebrities, They seem to get along without Me. Sleep

And I without them even though they're hurt by my outlook! Cascara.

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Senior Member 75+ Posts Join date : 2018-06-17

Checking the stock market this morning, its continuing to fall. The Dow is down 6,000 points or so from its high. I am curious as to what others think the next year or two will be like for the economy.

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