For the average investor you can’t, and shouldn’t, think like a day trader. I am a youngish guy. I have a lot of time before I retire so my investing outlook is extremely long term. I put the majority of my funds into my 401k and my wifes Roth IRA as long term investments for our future. i am not a day trader, or really an investor by any means. I have only recently opened my first non-tax advantaged investment account. Even this one account is still a long term investment in my mind, I am not trying to turn a quick buck it is still a relatively long term investment for me.
What gets me is these huge swings in the market. Don’t get me wrong, they are real bad but how do they really affect your outlook. I had a conversation with a relative the other day about that crazy drop in the market that seemed to scare the pants off of everyone. He and I looked at it the same way. 1.) it was a fluke and 2.) we both missed out on an opportunity to make some quick money. While that was an exception this recent recession fits the same play for me.
Like I said I am still youngish so at this point it is actually beneficial for me to have the markets hitting new lows. Last time I checked it is better to buy things when they are cheaper an sell them when they are higher. Right? Sure you may have bought some of it back when prices were high but now they aren’t and you are still buying. At the height of the markets we saw the DOW reach 14,000+ which then dropped to 6,600ish. We all bled a lot during those months but for those of us who didn’t give up we were buying into a market valued at half of what it was. My confidence in the US economy is pretty high so to me this kind of situation is an unfortunate occurrence the presents unprecedented opportunity.
I know there is probably some people out there who disagree with my though process. They are probably much closer to retirement and lost a ton of money. That is why general wisdom is that the older you get the safer you make your investments. Moving more and more away from stocks and more and more into bonds. The idea here is to keep your money safe as it gets closer to time to need it. I won’t say I buy 100% into it but it makes good sense right. You don’t just want that money to be there when you retire, you need it to be there. The people whose retirements were hurt the most by the recession were those people closest to retirement who were riding the high of the market and not thinking of the possibilities. The biggest thing to remember about investing, saving, living, working, and any decision you make is to remember.. it depends. Everyone’s situation is different so don’t buy into the hype, or think because my neighbor is doing it it must be right. You need to do what is right for and comfortable for you.