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Dave’s Investment Blog » Blog Archive » Should you be investing in the stock market now?
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Should you be investing in the stock market now?

Should you be investing in the stock market now? Should you withdraw some of your investments from the market? When will anyone know that the stock market has stopped going down? You’ve lost so much money, do you stand frozen in fear?

Most investors are asking these questions today and many more. If you have a question I haven’t listed, send it to me. I will do my best to give you an answer that will help you make money.

Should you be investing in the stock market now? How long will you have the funds invested for is the most important factor in determining the answer to this question. If you are planning on investing for 5 years or more, now is a great time to invest in the stock market. You are buying at price levels from 7 years ago.
Your risk tolerance is the next important factor on investing in the market now. Can you tolerate large price swings in the value of your investments? If you can jump right in, you will be very happy with your courage and wisdom of investing at these incredible values. If you can’t tolerate large price swings, buy a zero coupon US government bond that matures in 14 years. You could buy one that matures in less time but you won’t be able to invest as much in the stock market. The bond will provide insurance for your principal that you are investing. The bond should cost about 50 cents on the dollar. So you will put 50 cents in a U.S. Government guaranteed bond which will be worth a dollar 14 years from now. The other 50 cents place in the stock market. In 14 years, if you get the average rate of return in the stock market, your initial 50 cent investment will be worth $2.01 or it will have grown by 400%. Your total $1 investment would be worth $3.01, growth of 300%.
Let’s say you are investing $50,000. $25,000 will purchase a government bond that will be worth $50,000 in 14 years. You purchase one of the portfolios on DavesFavs.com with the other $25,000 and follow the changes you receive through your email. In 14 years, your $50,000 could grow to over $150,000 and your initial investment of $50,000 is protected by the U.S. Government.

Should you withdraw some of your investments from the market? If you sell now, you are selling low and you probably bought higher. It is impossible to make money buying high and selling lower. If you sell now, you are giving your future profits to another investor. If a person knew when to sell, they would have sold in October 2007 and they probably would be buying now or two weeks ago when the bottom was successfully tested. They don’t ring a bell at the top of the stock market and they don’t sound the all clear sign at the bottom of the market. They only time we will KNOW the market has bottomed is when the prices are HIGHER and the prices stay HIGHER.
If you need the money to live on over the next five years, you need to take it out now. It doesn’t matter if the market is high or low, only money that you won’t need for the next five years should be invested in the stock market.

When will anyone know that the stock market has stopped going down? We will KNOW the market has bottomed in hindsight! I believe the stock market in the United States has begun the bottoming process. If the lows that were touched in October 2008 hold, the bottom will have been set. We will and I will KNOW the market has bottomed 3-6 months from now perhaps. We will KNOW it after the fact.

You’ve lost so much money, do you stand frozen in fear? No you tack into the wind. You take advantage of the situation. Don’t let the situation take advantage of you. Maintain your asset allocations and trade up! If you can take a loss for tax purposes and move into a better company, do it.

3 Responses




  1. Hi - Just stumbled across your site and have enjoyed looking through it. I’ll be coming back soon for another look. Keep up the great work.




  2. Strange… I just came across your website by looking for ‘financial spreadbetting’ on Bing. But I don’t see any posts about that subject on here?

  3. Dave




    You’re right, it’s strange that you came to this blog while searching on financial spreadbetting. Thanks for visiting.

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