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Looking at fund and stock charts is alarming as as many securities have seem to have gone up in price @ a 45degree angle, and some even greater than 45. Do you use a formula these days like buy when the security retreats to the 50 day moving average. Any other suggestions as to when to add to a fund holding or buy a new fund?
No guarantees, sorry about that. Whether or not you are "late to the party," it's never a bad idea to be prudent. In this case, that means dollar-cost-averaging into the funds you've selected. You have "X" amount to invest. Divide it into 4 or 5 or 6 portions. Invest one at a time, each month. In that way, the ups and downs of the Market will (hopefully) average-out in your favor, so you're not buying shares in one, single, big slug at precisely the wrong time--- at the share price's high-point. Average-out the cost of shares, and own more shares. .....Or just wait for a marked pullback. Better yet, don't try to time the Market. Have a plan, implement the plan. Stick to it. Make changes very seldom. You can't cover every base, don't try. Be reasonably diversified. Stick with your picks for a long time and let time be your friend----assuming your choices were good ones. Make a lot of changes, week by week, and Time becomes your enemy.
CHARLES, MAX, Looks like two good ways to approach the when to buy issue. I've been selling some bond funds and purchasing equity funds, and wondering whether to wait before adding more equity funds.
Charles is the Morningstar Market Fair Value Chart available only to premium members?
Reply to @golub1: I don't think the chart is for premium subscribers. M* reserves only the most frustrating and ill-supported features for its paying members...part of their new cruelty policy.
There are several ways to value the markets, and I wouldn't base a major investment decision on just one method ... especially, in the case of M*, where the methodology is proprietary and undisclosed.
Here, for example, is another method -- Gurufocus's global valuation/implied annual returns , which is based on the ratio of total stock market cap to gdp:
By this methodology, the U.S., Germany, Japan, Switzerland, and Mexico are essentially tied for the most overvalued markets on the planet, with implied annual returns going forward of ~ 2-3%.
I post this not to say Gurufocus is the be -all/end-all of valuation methods, but that valuation methodology is not an objective science.
Reply to @golub1: Did you click the link that Charles has given to you? It takes you to the M* web where this chart resides. It is available to all users.
I don't think you should try to value the market--too many variables. Professionally managed money has been trounced by passive investors since 2007. What you should do is invest an amount you are comfortable with investing. Are you able to withstand a 50% drop of this money if not invest a smaller amount until you are comfortable with such a drop. On the flip side if the economy grows then the money you do have invested grows with the economy (this is what many investors fail to capture because they are too busy trying to time the market). I know I may be unusual but if I buy a mutual fund I try not to ever sell a share!--that way my place in line is secure. I rebalance by investing more in the areas that are down until my preferred balance across all asset classes is achieved. I have a mix of active and passive funds invested in a Roth, 403B, state pension and cash.
Comments
Hi Ron. It is "All Rated Stocks," per M*. I should have included on chart. Here's link:
Morningstar Market Fair Value Chart
You can vary by other indices, like NYSE and NASDAQ, as well as other sectors. For example, here is one for Aluminum Industry stocks...left for dead!
Charles is the Morningstar Market Fair Value Chart available only to premium members?
Here, for example, is another method -- Gurufocus's global valuation/implied annual returns , which is based on the ratio of total stock market cap to gdp:
http://www.gurufocus.com/global-market-valuation.php
By this methodology, the U.S., Germany, Japan, Switzerland, and Mexico are essentially tied for the most overvalued markets on the planet, with implied annual returns going forward of ~ 2-3%.
I post this not to say Gurufocus is the be -all/end-all of valuation methods, but that valuation methodology is not an objective science.