Thursday, May 31, 2012

The Death of Equities? - Probably Not

"The world doesn't end often." - upbeat maxim shared in Barron's roundtable issue 1/16/2012

On August 13,  1979, Businessweek published the now infamous article, "The Death of Equities," which reported on the flight of individual investors from the stock market and how other types of investments were preferred over equities.  That article preceded the greatest ever bull market which began in 1982.  Recently, the Financial Times and The New York Times have both published articles about the flight of the individual investor from the stock market.

Like 1979, the stock market looks like a dangerous place to invest.   Personally, our retirement and taxable savings accounts are in cash, with the exception of my company stock and a small long short portfolio    I expect a significant drop in the market to happen.  (I originally thought the precipitous decline would happen in 2011, so I'm not predicting timing anymore :-)  However, after the next bear market, I expect it will be a great opportunity to get back into the stock market.

For our seven year old daughters UTMA account, I plan to make small purchases of dividend paying stocks as the market falls.   In our retirement accounts, I plan to start by reinvesting 10% of our cash after a 20% drop, and make subsequent purchase with each 10% drop.   By using this approach, I hope to buy at good prices and participate in (hopefully:-) the next big bull market.

For more on  Crossing Generations, check back every Thursday  for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2012 Achievement Catalyst, LLC

No comments: