Buying opportunity?


#1

So here it is, the long awaited correction. My hands are itching to trade, but I feel that another -10% is in front of us. I expect Nasdaq to go all the way to 6600pts.

Are you planning to profit from this? What to buy and when? Could this be a turning point for EM and Europe to finally stop under-performing?


#2

I used the previous dip of a couple weeks days ago to rebalance and buy more of the ETFs which were underrepresented in my portfolio according to my chosen asset allocation. I will probably buy a bit more tomorrow given that my yearly cash bonus is on its way. Nobody knows where the market is heading, and I sure you will find “experts” guessing in both directions…


#3

My strategy is to buy every month X and on correction/bear months 1.5*X. And that’s what I did yesterday and that’s what I’ll do next month and following month until I’ll run out of cash. :slight_smile:


#4

Interesting. Why 1.5x ? Why not more this time?


#5

I thought about the exact same thing.


#6

For no particular reason. It can be even lower next month so I won’t go all in, but on the other hand, it makes sense to buy more, as it’s cheaper than before, so I just came up with a number 50% more.


#7

I suppose we all have to buy twice this month… or wait… :slight_smile:


#8

I am planning to follow my written investment plan. This says to aim for (AGE-5)% in bonds and the rest in stocks. I invest new money immediately once it becomes available. Once per year I check if it is more than 5% from that target and if so make a trade to correct.

Having read the Bogleheads forum for a few years now I am convinced that making trades based on intuition and gut-feeling (“market timing”) would lose me money over the long term and so I don’t do it. This has the extra benefit that I don’t have to spend time following the news and placing orders and worrying about what the right move is.

So far so good!


#9

When I started I was planning to follow the same strategy, but then I learned that bonds don’t make sense in current environment, so I’ll keep cash instead until the economic situation improve for the bonds allocation. I’m not sure, if it can be called market timing or not, but even index investing promotors, like Burton Malkiel, suggest in current environment alternatives to bonds (namely high dividend stocks).


#10

When I started I was planning to follow the same strategy, but then I learned that bonds don’t make sense in current environment, so I’ll keep cash instead until the economic situation improve for the bonds allocation.

The downside I see is that you need to read the financial news and think about whether it is time to buy or sell bonds. That sounds a lot like doing unpaid work to me :wink:

I like to “set it and forget it” with the IEAG ETF. This way I will automatically have exposure when the situation for bonds improves in the future. Meanwhile it is paying enough to keep up with inflation. This feels like a low-effort and low-stress approach that keeps the money working for me.

I’m not sure, if it can be called market timing or not, but even index investing promotors, like Burton Malkiel, suggest in current environment alternatives to bonds (namely high dividend stocks).

Using high-dividend stocks as a substitute for bonds sounds pretty advanced to me. I’d have to invest a lot of time in reading the relevant Bogleheads threads before trying something like that myself. But lately I prefer to invest my money rather than my time :wink:


#11

Do you still have cash left? :smiley:

On a more serious note - how do you specifically identify correction/bear months? (e.g. 10-20% drop from previous month, something more complex?)


#12

I do because I invest less regularly these days - every second month. In any case, I don’t have strict rules and I don’t overcomplicate this because I don’t have time for that. I prefer to spent my time and mental energy on different things. I just log in once in a while to IB and buy. That’s it.