Should I get out of the Stock Market?

Leveraged ETFs don't work over longer periods of time -- say months for sure but maybe even weeks during periods of hyper-volatility (i.e, March 2020) -- because of time decay. You have to buy more-expensive futures contracts and sell lowe-priced near term futures.

You also have a math problem: lose 50%, gain 50%, you're still down 25%.

That said...IF YOU KNOW WHAT YOU ARE DOING...and can't or don't want to raise cash (maybe you have a taxable account)....you can buy inverse ETFs and/or inverse leveraged ETFs and use them to hedge.

I used to use them alot in 2005-09 and the only time I went "short" against the market was in November 2009. Made a quick 8% on portfolios in 2 days using the leveraged ETFs.

Funds run by perma-bears like David Tice in the 1990's and 2000's could not be held profitably for more than a few months for the most part. That's what I meant.

 

Log in or Sign up to hide this ad.

Intel went public in 1971. It might have just been an aftermarket purchase.

 

Thanks for the update GoldFinger. It may have been, I was told it was the release of their IC chips. My girlfriends father was an instrumentation design engineer for McDonnell Douglas at the time, working on the YC-14 project.

 

Bear funds basically go to zero real quick in a bull market. Then if you get a downturn like you were expecting you don't have anything to grow. They need to be strategically restocked to make any gains. Yes, mine has been a loser, but as I said my stack is my actual retirement. I simply stay as diversified as possible.

 

Stocks go up, and stocks go down. Even DOW 30 companies can crash and burn, like GM, GE, and Sears. I bought stocks during the tech bubble and they lost a lot of money for me. Gold has done me much better.

 

You answered your own question: you bought during a BUBBLE. That's a no-no.

Stocks do best over time. Gold and gold stocks have been terrible long-term investments.

 

You're right that stocks do best over time, at least nominally. During currency debasement that doesn't necessarily equate to more value though.

I think gold has done well over time though. I've often heard that in ancient Rome an ounce of gold would buy a nice toga, whereas today it will buy a nice suit. Since the dotcom bubble crash in 2000 gold has been about on par with stocks which is impressive for a non-productive asset, and mainly illustrates the loss of buying power in the USD since then. Gold simply preserves your buying power. One hopes that stocks will grow that, but with so much leverage it remains to be seen what the real value there is.

I don't view gold or silver as an investment. They are money by US Coinage Act definition. The FRN as fiat currency is the investment we are all holding due to wage earnings and tax requirements. Whether one prefers precious metals, stocks, or whatever, holding cash longterm is certainly the worst play even though having cash in a downturn is definitely good to have so you can buy on the cheap.

 

Stocks have far outperformed gold. Gold spikes every now and then and then comes back down and if you buy anywhere near the peak on the way up it often takes you decades just to get back to even. Stocks can also provide returns such as dividends metals provide nothing

 

You only invest what you can afford to LOOSE... Put $1.75 in passbook savings, EVERY week for 40 years, account will have excess of one million dollars.. Info obtained from Readers Digest... On a personal aspect, I believe portfolio should be 10-15% silver koins.. Canada Maple Leaf $5 face value is a favorite of mine

 

And that's why you don't turn to Reader's Digest for financial planning advice.

I can't even remember the last time I heard the term "passbook", and I had one as a kid. But today's interest rates for that kind of account are way below 0.1%.

By my calculations, $1.75 a week over 40 years is about $3600. 0.08% annual interest, even compounded daily, would increase that to... about $3660.

To turn $1.75 a week into a million dollars over 40 years, you'd need an interest rate of 19%. Even at the peak of the early-1980s interest-rate spike, I don't think a simple savings account offered interest that high.

 

I agree to stay as diversified as possible. All of us, with the benefit of hindsight, would be millionaires at a minimum. Given we do not possess the gift of foresight, I believe in diversification. Like with hedging, you will never be 100% right if you diversify, but the game is to not be 100% wrong. With retirement funds, my main goal in life is to not have to eat catfood. I am sorry if that is a disturbing analogy to anyone, but when I grew up I literally heard stories of this, and it is a great motivator to me to do without today so me and my family will be better off long term.

 

Passbooks always offered 5.25 percent, (maybe 5.5), as this was some kind of "max" the Feds allowed in the 1970s. Money markets got popular as they were able to offer more about this time frame, since they were not under the control of the same Fed regulators.