Ibon wrote:In 1999 I went from $ 100k in my portfolio up to $ 675K and then back down to $ 150k. It was a roller coaster that left me so fried in the brain I completely exited the stock market and never looked back. I won't go there again. Real estate investments in Canada, Thailand, Panama and the USA has been much more reliable and profitable. It's tangible, its a piece of land, you work it, increase its value and sell it.
As much as stocks makes up the fundamental building block of capitalism the way the market is manipulated by traders working algorithms makes me steer clear. There is something parasitic and messed up with it. Most small time investors are just pawns licking up a few scraps.
You can do these things slowly, and relatively carefully and gradually. Examples:
I noticed early this year that my stock holding percentage has been skewed upward by the strong US market (generally) since spring 2009, well away from my 50/50 cash/stock default. So I have taken a decent amount of profits to move toward rebalancing. And as Trump insurance. I don't like realizing the capital gains, but better paying 20% cap gain taxes than watching a financial panic without as much cash as I want. If the US market keeps unreasonably screaming upward, I'll just have to force myself to take some more profits later this year. This is the first big shift for me since the financial crisis mess, where I finally put stocks in my 401-K when the S&P dividend yield passed 4%.
I held MSFT in the 90's. (I loved PC's and software, and wrote software. It was a blindingly obvious pick). It split so many times it ended up scaring me. 600 shares went to like 3200 shares with splits. Sometimes those shares could move about $5 on a volatile day. So that was a potential gain or loss of roughly $16,000 in one day -- just from one stock. With me earning under $400 a day (and being a coward at heart).
I couldn't hack that (and sleep), so I sold half. Then every time it split, I sold half ('94, '96 '98 and '99). At least that way if something really bad happened, I'd already taken a bunch of money off the table multiple times. Then I got lucky. When the big MSFT anti-trust lawsuit happened, as an IBMer, it smelled like the nasty consent decree mess IBM had been put through. So I sold 80% of what I had left near the top (somewhere late in '99 -- No, I wasn't smart enough to sell it all). (I'd rather be lucky and cautious than greedy and "clever" anytime). So I got out at the right time for mostly the wrong reason.
One doesn't have to play the market like a casino. Over the long run, it strongly trends up. Timeframes like one year are pure speculation and yes, 1999 was a doozy of a year.
For me the stocks I hold are almost all broad based stock index funds now that I'm retired -- and many of those index funds are international, not just US. I'm keeping all the international stocks since the world markets overall have NOT been on a huge tear like the US, and have actually been subdued over the last decade. Plus (hopefully) Trump stupidity won't mess up the whole world (aside from a possible cascading short term panic if the US markets tank, like in 2008).
If you hold such funds for several decades, then time tends very strongly to take care of you IF you just leave it alone, reinvest the dividends, and don't panic on dips.
If I'm holding for 3 or more decades, I don't really care if traders play games in the short run. In the long run, corporate earnings will strongly correlate to stock prices.
Disclosure: I'm not comfortable with making large international real estate investments - if that works well for you then great. Stocks pay dividends. Land tends to require upkeep and taxes, which means negative cash flow. If I'm not living on it, I don't like that. If I want to own rental real estate, that's what REIT funds are for (and I never have to pick up a screwdriver or deal with a tenant).
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.