Investing for the long term


#1

Guys I saw a comment a while regarding the stock market and how stocks are declining, due the 10 year bull run in the stock market.

It got me thinking as I DCA money into the S&P 500 each month which is effectively the whole American stock exchange. As the S&P 500 prices decline, I can buy more with my monthly DCA.

As I’m a long term investor I hope for prices to recover and ultimately make money in the long run for my retirement… I am 27 now.

The question I have to anyone out there who can help is :

Why didn’t people do this in the 2008 crash? To me it seems most logical to buy on the way down, and wait for the recovery. Something like the S&P 500 can’t go to 0, nearly impossible… with a recovery likely in the future even though it could take years.

Isn’t this how you build wealth? I am talking about building a retirement pot, with hopefully compounding effect over the next 30 years.

@lordhumungus @peter @K_Godel @kryptokenzie @Manuel_Villarreal @Nathan_D @Clarky663

What do you all think about this in terms of building long term wealth?


#2

Isnt it better to short the market now?


#3

Oh god, you’re asking me? Definitely not qualified to offer advice, as I’m irresponsible, my risk tolerance is very high, and I lack the patience for stocks. :stuck_out_tongue:


#4

Both crypto and stocks will be amazing opportunities in 2019 for going long for your timeframe, but personally I don’t think the time is quite here yet. If your strategy is DCA you’ll do alright in the coming years though.


#5

Yeah I’ll need to look into that one mate, my only worry would be the fees involved in holding a s&p position for a long time. I know most uk brokers charge for holding positions overnight and charge a good % more for foreign markets. It might be something your mate in the city would be able to give you better advice on.:+1:


#6

#7

“Over the past twenty years, the S&P 500 returned 5.6% a year. The investor who DCA’d earned 7.9% a year.”


#8

There are many whose strategy is exactly this:
(1) Sit in cash

(2) Wait for an opportune market recession, 2008 was a perfect example of this, and showed how many in the wealthy class executed
Case in point Warren Buffet in 2007:

“He has also counted Bank of America among his past holdings.
In the midst of the subprime crisis in 2007, Berkshire bought 8.7 million shares, quickly increasing the stake to 9.1 million shares.”

and in 2011:

“On Thursday, Berkshire Hathaway, run by Mr. Buffett, announced plans to invest $5 billion in Bank of America,
a vote of confidence for the beleaguered financial firm.”

https://dealbook.nytimes.com/2011/08/25/buffett-to-invest-5-billion-in-bank-of-america/

(3) Rinse and repeat, as you begin to realize ROI on your holdings, be them granted stock or purchased, scale out holdings
Typically this is done elegantly, in consultation with advisors, and often painted with a kind brush
(i.e., cashing out was done to help those in need, or for charity purposes)

Sept. 2018:
“Mark Zuckerberg to sell $13B in Facebook stock to help cure major diseases”

https://www.bloomberg.com/news/articles/2018-07-26/facebook-insiders-have-sold-4-billion-of-shares-since-scandal

https://www.bizjournals.com/sanjose/news/2018/11/01/zuckerberg-facebook-stock-sales-fb.html

The saying may be overly-used, but it is nonetheless true:
When the masses become fearful, the rich become greedy.

Many times the fear is engineered, via biased sources, sources owned by the same interest of those who benefit.


#9

I’m not a financial advisor. I hold no formal qualifications or education in finance or economics.

But personally, I wouldn’t touch traditional equities with a 20 foot pole in this market.


#10

Scared money don’t make money brotha…


#11

Trust me, it’s not scared money. It’s this bubble never fully popped the first time around and has been on life support for the past decade so I’m only buying bitcoin money.


#12

All you have to do is to implement the Crash bot… after its done its thing you can buy as much of anything at stupid cheap prices… it should be ready in 2 to 3 months.


#13

That’s a hell of a difference in returns over a long period of 20-30 years. Probably 10’s if not 100’s of thousands difference at the end of your long term horizon?

So what do you think about my strategy? Keep DCAIng £150 a month into the S&P 500 as part of my retirement portfolio in 30 years time, and hope that the American stock market recovers in time and those price appreciations begin to then compound themselves?

Thank you everyone for your responses, it has been noted and shall be some of the first I buy drinks for when we all get together to celebrate our future portfolios :sweat_smile:


#14

Good read!

This where I am at right now. Everyone sees fear and get out signs everywhere.

I see it as a opportunity to dollar cost average into the declining American stock market over the next 20/30 years. Yes I’m not timing the bottom and will probably tank a hell or a lot more, but if I continue to buy on the way down won’t my compound effecting be then greatly increased on the way back up??


#15

Preach!

I am of that mindset, albeit maybe a bit to liberal with that mentality.

I want to retire at 55/60, which in today’s climate is good going.

Do you think investing in a declining market like the s & p 500 is a good long term investment?

I just don’t understand why more people aren’t viewing it the way I am? Surely something like S&P with a great track record of decent performance + its recovery after crashes throughout the years says it makes sense to be investing now and over the next 2 years or so whilst we continue to tank further?


#16

Don’t limit yourself to 500 mostly large cap growth American stocks. Buy as close to every stock on the planet as you can, as cheaply as you can. Compensated risk doesn’t know where it’s located.