DOW down around 7500

**Broken Arrow** · 02-18-2009, 07:33 AM

Hey zetta. I'm kind of surprised by this question, coming from you, because I think you're one of the smartest people on here.

But I think I can also understand why you are asking, because it doesn't hurt to ask to begin with?

Bottom line: I have no idea. None. Zilch. Seriously, I don't.

What we DO know right now is that the Dow is at 7500. That's a pretty good level for buying in general. I've already bought in, but it's up to you.

**GREENBACK** · 02-18-2009, 07:43 AM

BA
I think the bottom is now seriously lowered. I thought 8 k was it b4 the stimulous package but now think we're in free fall. Wait for the new "bottom" then buy like hell.

**zetta** · 02-18-2009, 07:52 AM

I thought I'd ask just to generate some discussion.

Philosophically I believe in dollar cost averaging. In practice I am a lazy investor. I put money in my IRA and SEP-IRA once a year (as cash) and then invest a lump sum when I get around to it. (My husband does dollar cost average through his 401k). I don't follow the DOW or the other indexes, but when I hear from the news that there's been a big crash or my dad calls me up, then I tend to think, "maybe I should get off my rear and invest that money." I'm not advocating this approach as a strategy, mind you.

**Broken Arrow** · 02-18-2009, 07:52 AM

Greenback:
With all due respect, I don't believe anyone can find the bottom with certainty.

Although I do monitor market conditions daily (mostly for learning purposes), my basic philosophy is to simply buy a great company for a good price. I just bought Wells Fargo, and to me, it's a great company that is currently available at a phenomenal price! Regardless of where the bottom is.

When a deal is this good, you go in. That's how I look at it.

Zetta:
I had a feeling it was that. I've read posts and blog entries from you before. Though you may not claim so, I think you are among the smartest investors here. I should be asking YOU questions!

**Slug** · 02-18-2009, 07:58 AM

Noone knows the bottom so I think it's great timing to be buying and dollar cost averaging. My hope is it will matter very little at what time I bought in the last 6 and next 6 months when I look back on it in 20 years.

**GREENBACK** · 02-18-2009, 08:10 AM

I don't pretend for a moment to know where the bottom is other than zero. I have observed that since late November we've been bouncing around 8k. I was hoping that things were coming around. I don't know what is going to happen one way or the other. It's interesting to speculate on this stuff though. Some people make a lot of money doing that and don't have any more of a clue than we do. Am I in the wrong line of work?

**Scanner** · 02-18-2009, 08:23 AM

If you are nervous about a bottom why not (*everyone shreik now*

), actively manage your money vs. "buy and hold?"

You could use ETF's and place a buy order on SPY let's say, for 10% over the market price. That way, if hte market rallies, you get in. If the market continues to drop. . .you are still sitting on cash.

Or you can buy in now, if you think this is the bottom and place a buy order at 10% below, thereby limiting your loss to 10%.

I see nothing wrong with developing exit and entrance strategies but I know this flies in the face of the "buy and hold" philosophy, which is really just "buy and surrender to others" philosophy IMO.

**MonkeyMama** · 02-18-2009, 08:33 AM

Buy now; buy always

We dollar cost average. I became a huge fan of this method since our portfolio held up okay through the last downturn, thanks to DCA.

That being said, with the market low as it has been the last few months, we have been shifting more of our resources to investing than we probably would otherwise. We've had the opportunity to buy at the same prices as were available 10 years ago. I will have some money to invest in July and October and I may scan the markets a month or 2 prior. I would consider using our available cash to buy on an extraordinarily low day, tying it up for a month or 2. I have a 6% CD coming due in OCtober. For now I don't want to tie up my available cash for 8 months. At the same time I am not ready to call the bottom and break my CD. 6% is pretty darn good - I may get to invest even lower than 7500, come October.

So today I plan to do nothing.

**SavingCash** · 02-18-2009, 09:12 AM

My general strategy is to add to my index funds and IRA on a regular basis (once a month for me). The bottom is near impossible to find, so as long as you invest on a regular, consistent basis that's probably one of the safest strategies out there. I'm 30+ years out from retirement, so I'm just seeing these lows as fantastic buying opportunities.

**jIM_Ohio** · 02-18-2009, 09:58 AM

401k has not been touched since Dec 31 and that is a 94% equity purchase 2-5 X per month.

Roths were on in Jan, and will be off in Feb-Mar. Hit with a $3400 medical bill March 6, so we need cash on hand to pay it until the HSA has enough to pay it back.

Once Roths are turned back on, they will be 100% equity purchases. Equity Income for me, heavy on real estate and financials for wife (with some energy, tech, health care and emerging markets for good measure too).

**zetta** · 02-18-2009, 10:32 AM

Once Roths are turned back on, they will be 100% equity purchases. Equity Income for me, heavy on real estate and financials for wife (with some energy, tech, health care and emerging markets for good measure too).

What is an equity income fund? I'm familiar with growth, growth and income, and balanced funds. How is equity income different?

**jIM_Ohio** · 02-18-2009, 11:05 AM

Originally posted by zetta View Post

What is an equity income fund? I'm familiar with growth, growth and income, and balanced funds. How is equity income different?

equity income is probably analagous to large value.

equity income means income from dividends, and dividends are the core part of my whole investing strategy- meaning I overweight any sector or asset class which pays dividends approaching 3% per year.

DOW down around 7500