Signup to receive email updates




or follow our RSS feed

Blog Archives

490 Total Posts

follow our RSS feed

Blog Banner

Plan Well, Retire Well

Saving and investing your money

Is it a good time to buy stocks? Real estate? Anything?


Last week at a workshop I was giving, one of the participants asked me if it was a good time to buy stocks. This is what I know for sure:

  • This is a better time to buy stocks than it was a year ago, when the Dow was at 13,000. Right now, stocks are about 35% lower than than they were then.
  • This is a worse time to buy than it was the first week of March, when the Dow hit its 52-week low of 6470. Stocks are about 30% higher now than they were then.

But is this a good time to buy? Who knows! That's the nature of the stock market. As Burton Malkiel stated in the title of his book, it's "A Random Walk Down Wall Street." Today does not predict tomorrow. We can guess, we can try to look for indicators. But no one really knows.

So what's an investor to do?

For that question, I do have an answer. Do the same things that you should have been doing a year ago, or 10 years ago. Follow the boring, tried and true investment strategies:

  • Dollar cost average
  • Diversify
  • Keep an emergency fund so you won't be forced to liquidate investments at the wrong time.
  • Determine an appropriate asset allocation for yourself.
  • Rebalance to maintain that asset allocation.

Want to know more about sound investment strategies? Visit the Choose Investments section of our website, Plan Well, Retire Well: Your How-To Guide at www.RetireWell.uiuc.edu.

As I'm fond of saying in my workshops, investing is like horseshoes. In the game of horseshoes, you can score points by either throwing a ringer, meaning that your horseshoe lands encircling the stake (3 points) or is within a horeshoe's width of the stake (1 point). If you try to throw ringers, you can easily end up with nothing. Many games have been won by just consistently throwing "close shoes". In investing, consistently getting "close" will also probably garner you better results over time than trying to pick the winner. Therei s one difference between horseshoes and investing. In horeseshoes, practice and skill will increase the likelihood that you can throw ringers. But it's much less clear that the same is true of investing!



Please share this article with your friends!
Share on Facebook Tweet on Twitter

COMMENTS



Email will not display publicly, it is used only for validating comment