Too risky to put extra funds in the market?
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Anonymous
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I have a pile of cash I'm sitting on and was going to dump it into the market and selected a number of stocks that appealed to me. Goal is long term holding, not short term. But then I looked at the stock history and was shocked to notice how steady the stocks were up till about 2016 and then it completely soared. Microsoft is a good example. It was fairly flat between 1999 and 2016 but jumped from $55 in that year to $400+ today! Same pattern for other tech stocks. The run up in the last few years is staggering.
Now I'm a bit worried. This can't be sustainable. I'm not changing any of the automatic monthly contributions aka 401k/Roth but realistically the market must come down at some point, no? Or flatline for a steady 15 years? |
Anonymous
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If you’re investing for the long term, choose an ETF or mutual fund that has holdings you’re comfortable with and get into the market.
If you cannot stomach any risk whatsoever then put it into a HYSA or CD ladder at least. |
Anonymous
| If you have a big pile of $ you might use dollar cost averaging. |
Anonymous
Widen your lens: https://www.macrotrends.net/2324/sp-500-historical-chart-data No one knows what the stock market is going to do except on average it tends to go up because companies retain some of their earnings to grow their businesses and/or release them as dividends. It may not go up at the same pace as before. There could be a crash. But on average it will still go up. Individual stocks will vary far more widely and can lose all their value. If you're nervous, put it in a high earning cash position and dollar cost average it into an index with a smaller percentage going into a selection of individual stocks |
Anonymous
| I had the same dilemma. I invested in BITCOIN, semiconductors and spotify. All have strong demand headwinds for the next 2 - 5 years. |
Anonymous
| Buy Nvidia. Or spread the money between Nvidia and all the magnificent seven (maybe not Tesla). |
Anonymous
NVDA is vertical right now. That never lasts. |
Anonymous
| Upward growth has to be fueled by something. At the moment and for the next few years it will be AI. |
Anonymous
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Because of recency bias, everyone will tell you that you have to plow it into the market “as long as you’re in it for the long-term.”
They apparently don’t know that for approximately 45 of the last 100 years, T-bills actually outperformed the S&P 500 (not in 45 individual years, but over several multi-year periods whose duration totals 45 years). In other words, at any given time, it is essentially a coin toss as to whether one is better off putting one’s money in stocks or T-bills. Here is an example of one such period. In 1966, the Dow first touched 1,000. Stocks then basically went nowhere for 16 years, with some massive crashes along the way — Buffett said the 1973-1974 recession had the best deals he ever saw in his life — and the Dow touched 1,000 again for the last time in 1982. Moreover, that of course was after the massive inflation of the 1970s, meaning that the shares of the Dow at 1,000 bought much less in 1982 than they did in 1966. Sixteen years seems pretty “long-term” to me and a long wait just to finally have the chance to outperform the guy who just kept his money in the bank. Given that it’s basically a coin toss at any given time whether one should buy stocks or remain in cash, I don’t see how anyone can look at the craziness going on in the stock market and decide they want to participate. |
Anonymous
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Stock are high because of all the money printing, not only because the companies are so great.
They are doing fine, plus election year- more money printing. They got to go up just to keep up with inflation. Edge against inflation? Bitcoin. How much money are we talking about? Pick 9 stocks plus B and good to go. B - "Best crypto asset. There is not second best crypto asset.". |