Dow zooms up 619 points, 3rd biggest gain ever

[progree]

17. To the long-term investor, it is just noise. It may cause me to have to rebalance at the end

Last edited Wed Aug 26, 2015, 11:58 PM - Edit history (1)

of the year. Otherwise, I don't give a hoot what it does tomorrow or next month.

To the long term investor, the stock market makes new all-time highs every so often, and never makes new all-time lows.

The long-term investor NEVER SELLS on the dips. Au contraire, one is supposed to BUY on the dips. (I don't do that either, though, although yearly portfolio rebalancing and dollar cost averaging has that effect to some extent).

Long-term investors generally don't try to time the market. Even full-time professonals don't do well at that. Rather, dollar cost averaging and rebalancing to maintain a pre-determined balance between stocks and fixed-income investments provides a significant measure of buy low / sell high, according to innumerable studies (see AAII Journal published by the American Association of Individual Investors).

Anyway, right at the moment (after Wednesday's close), the S&P 500 is down 8.9% from its all-time peak of 2131 reached on May 21. That's not even a correction (which occurs between a 10% and 20% loss).

There have been 25 market corrections or worse in the 50 years ending December 2014. Despite all the teeth-gnashing, crises, impending crises, and conspiracy theories, stocks have somehow managed to do considerably better than bonds over that period.