The Future is Partially Unknown
In the Fidelity Investor Community, there is a question that appears from some investor every time the stock market is in a painful downward trend. The question is always something along the lines of, “When will we see the bottom?” The thinking of those who are sitting on cash is that they want to buy investments when we hit bottom. There is real treasure to be gained when that happens. No one can really answer that question with certainty. Some will claim they can, but their success is only temporary.
The other question appears when the market gets into what we call a bubble. When prices go higher-and-higher, the question often is, “Where is the top?” A related question is, “When will the bubble pop?” The reason this question is asked is the investor wants to sell before everyone else does. This is also an unanswerable question.
A Better Set of Questions
It is better to ask questions related to specific investments. For example, if all stocks fall 3-4% in one day, and you have stock in a company that is a dividend champion, or if you own dividend growth ETFs, then any day the market declines 3-4% is a good day to buy. “But,” you ask, “how much should I buy?” That is another unanswerable question. However, my response usually is, “buy a bit today and see what tomorrow brings. If the market continues to go down, buy a bit more. If you think you want 100 shares of company XYZ, buy 25 shares on a down day. Then look for another opportunity to buy another 25-50 shares. Repeat until complete.
As a general rule, I am buying when others are selling, and I sell covered call options on my existing investments when everyone is in a buying frenzy. During all of this, dividends continue to roll into our accounts.
This image shows all of the investments that I bought yesterday using buy limit orders. The investment for our grandson George is for one share of The Hershey Company. He is doing a report in school about Milton Hershey, so I asked him if he wanted to own a part of HSY. He said he would like that.
Be mindful that just because I buy an investment doesn’t mean you should too. However, if you were to send me a csv file of your current positions, I could make some recommendations. There is no charge for my opinions and recommendations.
What I do Know About the Future
Investments can be forever if they are based on something more than your own limited knowledge and wisdom.
“For the simple are killed by their turning away, and the complacency of fools destroys them; but whoever listens to me will dwell secure and will be at ease, without dread of disaster.” Proverbs 1:32-33 ESV
“Let not your hearts be troubled. Believe in God; believe also in me. In my Father’s house are many rooms. If it were not so, would I have told you that I go to prepare a place for you? 3 And if I go and prepare a place for you, I will come again and will take you to myself, that where I am you may be also. And you know the way to where I am going.” Thomas said to him, “Lord, we do not know where you are going. How can we know the way?” Jesus said to him, “I am the way, and the truth, and the life. No one comes to the Father except through me. If you had known me, you would have known my Father also. From now on you do know him and have seen him.” John 14:1-7 ESV
I agree with you Wayne but I am trying to pay a lot more attention what i am buying. I set what i think a good price and then re-think it again. I bought 1000 MPW for 17.9 and not sure if I will ever get VYM for 105.
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