This report with Americans for Financial Reform is an urgent warning: it details how the money pouring into AI could spiral into an economy-wide crisis and lays out recommendations for policymakers on how to keep an AI crash from devastating ordinary people’s finances.
It depends on how close you are to retiring. If you are more than 10 years away, you are probably better off doing nothing differently. Look at the inevitable dip as a buying opportunity.
Even if you are close, you still need to be careful. Yes, the market is probably due for a 40% haircut at some point. But if it takes another 3 years to get there, then the market might increase more than that before then.
There are funds that track the entire S&P 500, but omit those 7 large Tech companies, and their performance has consistently lagged behind the whole index. If you thought years ago that the Tech sector would be do for a correction and backed out of those 7 companies while keeping the rest, you would be objectively worse off.
Buying a dip is still trying to time the market. If you have a view then you implement it, if you have no view then you’d probably dollar cost average into broad indices. I think you can look at your personal stake, what you can afford to lose with your horizon, and then make any necessary changes to limit the downside. Like you say, you might need to give up some possible gains.
I what I mean by timing the market is reallocating based on what I think may happen. Simply increasing contributions (if I can) when the market craters might technically be timing it, but differently than what I mean.
Actually buying the dip is timing the market, not trying to. You really can’t go wrong with that. It becomes an issue when you don’t invest because you’re waiting for the dip.
It depends on how close you are to retiring. If you are more than 10 years away, you are probably better off doing nothing differently. Look at the inevitable dip as a buying opportunity.
Even if you are close, you still need to be careful. Yes, the market is probably due for a 40% haircut at some point. But if it takes another 3 years to get there, then the market might increase more than that before then.
There are funds that track the entire S&P 500, but omit those 7 large Tech companies, and their performance has consistently lagged behind the whole index. If you thought years ago that the Tech sector would be do for a correction and backed out of those 7 companies while keeping the rest, you would be objectively worse off.
https://finance.yahoo.com/markets/stocks/articles/p-500-without-big-tech-131814927.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAKEWlTWLgFm2v_Z_KWgtpxWHRJX9oq8AyGrJY_ncAHXMfPfAv-57QtF9de1k6kcxi5jWzRXy9d0PfXrMjpvTBkn0RniESyNydXPMyCCxbCmjNoumHxNTq57EiGAvvdANCn8mNVvsX6jW1q216ri5UDPlWNrscHhG39PN94rdIz7b
So there are some articles saying the opposite
Buying a dip is still trying to time the market. If you have a view then you implement it, if you have no view then you’d probably dollar cost average into broad indices. I think you can look at your personal stake, what you can afford to lose with your horizon, and then make any necessary changes to limit the downside. Like you say, you might need to give up some possible gains.
I what I mean by timing the market is reallocating based on what I think may happen. Simply increasing contributions (if I can) when the market craters might technically be timing it, but differently than what I mean.
Actually buying the dip is timing the market, not trying to. You really can’t go wrong with that. It becomes an issue when you don’t invest because you’re waiting for the dip.
@DarkDarkHouse Take care of the downside and the upside will take care of itself.