Jim, Comment on buying strategy.
I also tend to be early and am learning the obvious lesson from that. WAIT.
The problem with waiting, I've found, is that it causes me to want to pick the ultimate bottom and jump in more or less with a full position. An alternate strategy that I'm using now is to buy small positions, even odd lots, over several months time to build into a full position. Doing this I don't worry about missing the upswing nearly as much, and still have the benefit of dollar cost averaging. Although I'm trying to force myself to stop averaging down, I think I'm going to have to live with this tendency and hope it doesn't hurt me too bad. The other side of the coin is that it encourages me to average up, something I'm more hesitant to do, but should help keep money flowing into my winners.
For me this works better and keeps me from building an "out-sized" position just because a stock keeps getting cheaper.
On market psychology/an alternate viewpoint: FWIW, I don't sense fear, but rather resignation to the volatility. Around the office people are losing big, but I don't hear anybody thinking of pulling their money out of the market. The general concensus is "you've gotta take the good with the bad." Perhaps because we watch things so closely, our tendency is to overestimate the importance of the markets to most people. For many the money they're saving is for 20+ years down the road and the ups and downs right now don't mean so much. I think the staying power of Joe Investor is likely to be stronger than expected.
Shane |
