As the stock market slides, remember long haul victory

Published August 22, 2015   Posted in How to Save

If you’re paying any attention to the markets this week, then you are probably aware of its sharp slide over the past several days, sending the Dow plunging 300+ points for two straight days and down 5% this week alone.  Around the globe, stocks are sharply down.

Yesterday, the Dow gave back 530 points and, over the past week, lost its 2015 gains.  Apparently, a 10% correction in the market is widely anticipated among investors, and many believe this may be its chance that it is happening, down 10% from its all-time high.

The Dow’s 530-point drop on Thursday was the biggest in four years.  Well-known companies like Netflix, Apple and even Disney – all down more than 16% this week alone.

According to the “experts”, uncertainty over China’s economy and a possible Federal Reserve interest rate hike have combined into a perfect shit-storm of selling throughout the stock market, which might mean that it’s the right time to buy.

Regardless of the reason this time, the stock market is a living and breathing “thing”.  It has good days and bad, and we investors take the bad with the good as it continues its trek.

We sent an additional $7500 into the markets this week – of course, this was a planned activity and in no way associated with the down tick in the markets.  But nevertheless, this is the nature of the stock market.  It rises and falls, and the trick is to buy when prices dip and sell when prices are high.  Easy in concept, not so easy in practice.

Only time will tell whether buying this week will turn into a profitable circumstance, but we are keeping our heads held high because investing in the stock market is about the long term, not week or month long stretches where investors either lose their shirt or “get rich”.  It doesn’t happen that way.

Are you in the stock market for the long term?  Do you even notice its weekly rises and dips?

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Comments

11 responses to “As the stock market slides, remember long haul victory”

  1. I personally try to only buy any investment when it is on sale. Down days are the best time for me to buy. Where most see market declines as something to fear, I have changed my natural psyche to be greedy when people are fearful and fearful when people are greedy.

    A huge 46% pop in the VIX also helps when you like to sell options like I do. Premiums get bloated as fear levels rise in the market. I took this weeks downturn to deploy a little of the the massive and growing cash stash by selling put options on the SPY etf. If exercised they would give me an effective price around $179.50 or about 16% cheaper than the all time highs put in this year.

    I have literally been preparing for a market correction all year. My hope and investment thesis is that prices will continue to get slashed, making for even better prices than this week. Yesterday was just step 1 of my plan to deploy the capital I have built up and freed up at the beginning of the year (and continue to do so).

    Making steps to front load our retirement accounts by maxing them both out in January of 2016.

    If it gets really bloody, I would even consider diverting the extra cash we are throwing at the mortgage into more investments. But I would need to see markets down by at least 25%, which I do think is a huge possibility in 2016. But only time will tell.

    Cheers!

    • Steve says:

      Hey Dominic!

      I think this market downturn is truly happening at the best possible time. With our planned retirement for the end of next year, this is the year that we want the market to “correct itself”, making prices low and stocks ripe for the buying, and expectations for a subsequent recovery – or at the very least, stability – a reasonable expectation for the first year that we slip into our new retirement lifestyle.

      It might turn into a perfect situation. 🙂

  2. I’m in it for the long haul baby! I definitely notice, but do I care??? NOOOOOO. Well sort of. Makes me feel better when my biweekly 401k contributions get invested on the cheap, or I send a little more money into the IRA or brokerage account since I feel like I’m getting a deal. But overall, we know that markets go up over time, so when it goes down, you have to take advantage. I should have a fairly nice income month in September so I’m hoping for investors to stay “scared” and let me put that money to work at nice prices.

    Do you follow Downtown Josh Brown on twitter? If not, highly recommended. Love his commentary making fun of the news stories.

    • Steve says:

      Hey Fervent!

      Right on man, that’s the way to do it. In it to win it, over the long haul.

      And yes, I am following Downtown Josh Brown – NOW. 🙂

  3. Dave says:

    I agree it’s time to buy, but I don’t have much cash on hand at the moment to do so. I put a few thousand in the market last week which turned out to be bad timing. I did have a 401k contribution due to my paycheck on Friday – not sure the timing of it but I hope it was EOD!

    I hope the market doesn’t bounce right back. If it stays down for a few months, I’ll have more time to get money in the market and capitalize.

  4. […] example, this week is “market correction” territory.  The Dow lost nearly 10% of its value last week.  This is one of those times […]

  5. We for sure *notice* what the market is doing (good morning, more declines!), but we try not to react much to it. We’re index investors, so we basically have no plan to sell a darn thing until we actually retire, and even then we won’t sell for at least a year in, because we’ll have a cash cushion to get us through the first bit. At times like right now, we’re tempted to buy more, but we do our best to stick to the long-term plan and keep making scheduled investments. We have learned the hard way that trying to time the market is not a good strategy!

  6. […] thinksaveretire, As the stock market slides, remember long haul victory […]

  7. Hank says:

    It is hard to predict if we reached a bottom, but I also stepped in last Monday with 10% of my Cash, and if a new bottom starts to appear in September, I will buy more. My strategy is to have a Cash-buffer for 3 years, so if my early retirement starts (end of 2015), i can survive a crash, and wait for better times to tap into the funds. Next to this, like you see on ERE forum, I also broaden my skills in being self-sufficient, so if we really hit a bad period (let’s say 10 years of decline), I can survive on less money per Month, and still be happy.

  8. […] I decided to login to my Vanguard account to take a look at my market performance over the years. I’m seeing mostly green with a couple areas of red (hello 2015 market correction!). […]

  9. […] mini-crash of September, 2015 ushered in the start of what some expected to be a “recession”. Most believed the […]

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