As I write this at 1:00 PM on Thursday June 26th, the Dow Jones Average has gone down about 235 points to 11,576. Where it goes from here I will not speculate but I will make some comments:
At 11,576 this is a 2,600 point decline from the October 2007 high and represents a decline of about 18% from October 2007. Please read my other posts http://9simplesteps.blogspot.com/2008/01/stock-market-major-declines-since-1940.html on the average number of times per decade that the market declines by 20% or more (answer: twice). So, if we get there, this would be historically typical and not an anomaly.
To get to a 20% decline, the DOW would have to hit about 11,300. That does not mean that we would stop at 20% if we got there since no one knows. As I often say anyone can tell you a hundred reasons why the market went up or down yesterday but that is not helpful and only makes for entertainment and hype.
If you have any desire to change your stock allocations, please consider that the recovery time after selling low is longer than retaining your positions. If you really are concerned (and I hope not) then please reassess your time horizon. If you need the money tomorrow it should not have been in stocks in the first place and if you can avoid touching the now lower values then you will shorten the inevitable time to recover.
Finally, only 4% of the time have stocks not made more, on average during a 10-year period, than inflation. We just experienced one of those 10-year periods (1999-2008). The next five years following such an occurrence have proved worthwhile for those who waited. http://9simplesteps.blogspot.com/2008/03/market-recovery-times.html
Will it happen this time? I have no idea. Maybe. Maybe not.
An Introduction
Hi. Welcome to BourGroup and my blog. Phil
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.