Saturday, March 15, 2008

I Am Putting More Money into Stocks

Yes. You heard right. The stock market is tanking and I am putting more of our money into it. In fact, three months ago I started making regular monthly stock purchases on the 15th of each month. I allocate our new investments in a way that re-balances our portfolio. Today for example, I invested our monthly purchase in... REITs. Those are down over 30% in the last 12 months, which means that even after today's purchase our real estate holdings are still below our target allocation of 8% - 10% of the portfolio. I invest our monthly lump sum in a single index fund each month, to reduce our trading costs. This creates a slight deviation from our target asset allocation, but it is too minor to care about.

While others are fleeing the market, I am sticking to my guns. I am under no illusion that the bear market is over. In fact, I believe that we will not see a true bottom to the market in 2008. However, I am smart enough to know that I cannot outguess the market, and I am not going to try. The market will rebound eventually, and our portfolio will be primed and ready to take advantage of the bounce back.

The key to long term returns is desciplined investing. I have a clear asset allocation plan, and I am sticking to it.

Have you been selling your stock positions? If so, I want to hear from you. Why are you selling? What are you planning to do with the money? Are you planning to get back in? If so, how will you decide when the right time might be? Leave me a comment below.

2 comments:

traineeinvestor said...

I have continued to buy this year. With inflation at 3.4% and rising (in Hong Kong) and deposits earning a bit over 1%, holding cash over the longer term is a losing game.

That said, I am begining to find the pain of watching my equity investments decline in value rather painful and am thinking of allowing the cash to build up for a few months at least.

TFB said...

I just bought a bunch last Friday. Although I haven't decided, I'm thinking of over-rebalancing by increasing my stock allocation by 5% for each 5% of market decline.