The stock market feels like hell

[pattern39]

Over the past few years, I've held mutual funds and stocks, both short term and long term. Regardless of risky instrument held, I've always felt like I'm in hell whenever I held any. It's like my mind suddenly switches to 24/7 "anxiety" mode. Anyone else feel similar?

[boipinoi604]

If that's the case, you're bearing more risk than what you can tolerate. Perhaps ease off the equities and have some bonds into your portfolio mix?

[Stryker]

Over the past few years, I've held mutual funds and stocks, both short term and long term. Regardless of risky instrument held, I've always felt like I'm in hell whenever I held any. It's like my mind suddenly switches to 24/7 "anxiety" mode. Anyone else feel similar?

The last time I felt that way was during the market crash of 1987. Since then I just take the markets ups and downs in stride. In fact, if you're young you should be praying for a market that goes down, and stays down for a long time. That way when you purchase equities you get more dividends and shares for the same cash outlay. The stock market must be the only place I know of where the crowd runs away when the goods go on sale.

[TheRed]

Does losing 12% off your portfolio making you feel anxiety?

I bought many of my stocks during the highs on April of this year, and as you know it takes a huge plunge after that in May, June...not a good timing I know to enter the stock market.

How would you feel about this if you were me?

[cjottawa]

Over the past few years, I've held mutual funds and stocks, both short term and long term. Regardless of risky instrument held, I've always felt like I'm in hell whenever I held any. It's like my mind suddenly switches to 24/7 "anxiety" mode. Anyone else feel similar?

It seems you investment strategy is incompatible with your personality if that's the way you feel about being in the market.

Define long and short term? "Long" should be 20+ years, not "a few years."

I quote this passage a lot but it bears repeating and you might consider reading the book it's from, "The Four Pillars of Investing" by Dr. William Bernstein, on short term volatility versus long term return:

A superb metaphor for the long-term/short-term dichotomy in stock returns comes from Ralph Wanger, the witty and incisive principal of the Acorn Funds.

He likens the market to an excitable dog on a very long leash in New York City, darting randomly in every direction. The dog's owner is walking from Columbus Circle, through Central Park, to the Metropolitan Museum. At any one moment, there is no predicting which way the pooch will lurch. But in the long run, you know he's heading northeast at an average speed of three miles per hour.

What is astonishing is that almost all of the market players, big and small, seem to have their eye on the dog, and not the owner.

Stop watching the dog.

[Sylvestre]

You are not comfortable with risk. Get a handle or realize you aren't cut out for equities.

[ccyk]

long term means 20+years in 70s, 10years in 90s, 5 year in 08, 1 year today
dont you guys notice stock crash more often then before? internet fasten the enon cycle.

OP, are you losing money? if not why all the worry?
if you keep on losing money, you should change your style, maybe to stay out of equity market all together. buy only bonds and real estate.

[FunSave22]

long term means 20+years in 70s, 10years in 90s, 5 year in 08, 1 year today
dont you guys notice stock crash more often then before? internet fasten the enon cycle.

Here's a chart of 1920 to 1940. You'll notice four crashes of at least 35%.

http://stockcharts.com/freecharts/hi...a19201940.html



Long term means the same thing it always meant. There's no evidence the internet has done anything to the economic cycle.


And even if the economic cycle has sped up, so what? When I began investing I knew that I would be doing it for many decades and would go through a number of crashes. Why would it make a difference if there were a couple more?

Over the long term growth in the stock market will closely correlate to growth in the economy. Over the short term movement in the stock market will be a random walk.

[Mark77]

Try reading this article:

http://www.kitco.com/ind/Tekoa_Silva/20120725.html

Yes, its from a goldbug website, and the example given towards the end is of Barrick Gold (ABX) -- but the lesson is very relevant. The average TSX-listed firm has, over the past 12 years, more than tripled its earnings, paid off massive amounts of debt, and has tripled its dividend yield. Yet the stock prices have mostly stagnated. Despite interest rates falling so much that the dividend yield of the TSX index is now triple that of the BoC rate, and the earnings yield is at least 7-8X

[ccyk]

Try reading this article:

http://www.kitco.com/ind/Tekoa_Silva/20120725.html

Yes, its from a goldbug website, and the example given towards the end is of Barrick Gold (ABX) -- but the lesson is very relevant. The average TSX-listed firm has, over the past 12 years, more than tripled its earnings, paid off massive amounts of debt, and has tripled its dividend yield. Yet the stock prices have mostly stagnated. Despite interest rates falling so much that the dividend yield of the TSX index is now triple that of the BoC rate, and the earnings yield is at least 7-8X

yea stocks are better value than before, generally speaking, except insurance co and financial.
i guess 2008/09 scared too many out of equity forever.

[rfdrfd]

Sooner or later, everyone will feel this way, it is because NONE of us have ever been taught how to invest. And every book that's been written doesn't really tell you the truth. Diversification is a fancy way of saying: We really don't know or want to tell you how to make money in the market, so just pick a wide variety. So if one goes down, the other goes up."

Translated loosely, that means you'll break EVEN. Depending on how much % you pick on the one that's going up.


I started wondering what the heck my financial "advisor" is doing when after 10yrs, my mutual fund is up $500. WTH? And others are actually negative.
- they only tell you to buy, and never to sell
- didn't they see the 2008 crash?
- don't they know WHEN is a good time to buy? or Sell ?

So, that's what I seeked out education on how the market really trades. And so far, I liked what I've found and learned from my school. The main thing none of us know how to do (without real education) is MARKET TIMING.

YES, you MUST do market timing. And yes, it IS possible. Also, everyone needs to learn to put in stop losses. LONG term investing doesn't mean, for the first 5 yrs, I can let it go to negative 12%-20%, because in 10 yrs, it will come back. HOW DO YOU KNOW?? Really??? Even if its breakeven, so you've wasted 5 yrs. Answer : market timing and stop losses.

Volatility in these markets is how people make money. I've made a few bucks here and there this month, I'm full time working so can't do too much. My Google group friends trades every day and all of them are net positive for this month, some are doing amazingly well even.

So I guess my point is, yes, if you never learned how this current market works, then it will feel like hell, like you are drifting at sea, carried by the winds and waves without any direction.

DON'T be like that. You have the power. Invest in an education.

[rfdrfd]

Here's a chart of 1920 to 1940. You'll notice four crashes of at least 35%.

http://stockcharts.com/freecharts/hi...a19201940.html



Long term means the same thing it always meant. There's no evidence the internet has done anything to the economic cycle.


And even if the economic cycle has sped up, so what? When I began investing I knew that I would be doing it for many decades and would go through a number of crashes. Why would it make a difference if there were a couple more?

Over the long term growth in the stock market will closely correlate to growth in the economy. Over the short term movement in the stock market will be a random walk.

Think of the profits people who shorted the markets got ? At least 35% like you said.

[cjottawa]

Think of the profits people who shorted the markets got ? At least 35% like you said.

...or the folks who bought in at the bottoms, instead of panic selling.

[TheRed]

Sooner or later, everyone will feel this way, it is because NONE of us have ever been taught how to invest. And every book that's been written doesn't really tell you the truth. Diversification is a fancy way of saying: We really don't know or want to tell you how to make money in the market, so just pick a wide variety. So if one goes down, the other goes up."

Translated loosely, that means you'll break EVEN. Depending on how much % you pick on the one that's going up.


I started wondering what the heck my financial "advisor" is doing when after 10yrs, my mutual fund is up $500. WTH? And others are actually negative.
- they only tell you to buy, and never to sell
- didn't they see the 2008 crash?
- don't they know WHEN is a good time to buy? or Sell ?

So, that's what I seeked out education on how the market really trades. And so far, I liked what I've found and learned from my school. The main thing none of us know how to do (without real education) is MARKET TIMING.

YES, you MUST do market timing. And yes, it IS possible. Also, everyone needs to learn to put in stop losses. LONG term investing doesn't mean, for the first 5 yrs, I can let it go to negative 12%-20%, because in 10 yrs, it will come back. HOW DO YOU KNOW?? Really??? Even if its breakeven, so you've wasted 5 yrs. Answer : market timing and stop losses.

Volatility in these markets is how people make money. I've made a few bucks here and there this month, I'm full time working so can't do too much. My Google group friends trades every day and all of them are net positive for this month, some are doing amazingly well even.

So I guess my point is, yes, if you never learned how this current market works, then it will feel like hell, like you are drifting at sea, carried by the winds and waves without any direction.

DON'T be like that. You have the power. Invest in an education.

Indeed. Market timing is important, and learning between the ranges is important too looking at the standard deviaton (or volatility) of the stock so you can know what to put stop loss accurately at. Also, profit-taking technique is important as well by setting limit sell. Whats the point of taking advantage of volatility when you start at say $50 and it takes a hike to $70 in a week and then dived to $30? If you only put in stop loss, you are not taking advantage of volatility and instead is just losing. When you put in stop loss and limit sell, you can be sure that your trade will be profitable.


Example:

1.) With stop loss and sell limit; ranges of $20.
Today: $50, stop loss at $40, sell limit at $65.
1 Week: climbed to $70, sell limits kicked in at 65, profit 15.
2 Week: dived to $30, no cares, no worries; a buying opportunity instead of panicking
Trade session income: $15

Set the stop loss and sell limits accurately by calculating the probability of the ranges of the highs and lows in short term by using volatility measures


2.) With just stop loss
Today: $50, stop loss at $40
1 Week: climbed at $70, you happy but take no action coz u think it'll go higher next week anyway
2 Week: dived to $30, stop loss kicked in at $40, its almost you have traded just to have a loss of $10; panicking because you just made a loss on this stock and reluctant to trade this stock again
Trade session income: -$10
The volatility wave just passed on you and you missed it!

So the key is in market timing, ranges, stop loss, and limit sell
Does my techniques above actually a good idea?

[FunSave22]

YES, you MUST do market timing. And yes, it IS possible.

Evidence please. And real evidence, not anecdotes.

Every single study that I'm aware of on market timing shows that over the long term no one, or almost no one, can successfully time the market. It really is as simple as that.