The DOW now under 11500.....?

Question

i have some investments in a mutual fund that roughly mimicks the DJIA. Is it best to hold tight? How does this bear market compare with those in the past --- 100 years back say?

Answer 1

Do not panic and sell. The market will remain volatile until after the presidential election in November. Election years are always a little unpredictable; this one, perhaps, more than most.

Answer 2

As long as your investing for the long term you shouldn't have anything to worry about. History shows that the market always bounces back.

Answer 3

The Dow is stuffed full of financial stocks even though it is called an industrial average.  One of the failings of the Dow is that the managers of it liked to soup it up from time to time by replacing so so companies with hot companies.  At one time the financial stocks were hot and therefore they got included in the Dow.  AIG, AXP, BAC, C, JPM.   Sort of puts the Dow to a distinct disadvantage now.  Too bad they pulled U S Steel sometime ago.

This sell off so far is small potatos compared to past market corrections.  In my time the one from 1972 to 1975 was perhaps the worse. It actually ended in the first days of 1975. At the bottom there were some really good pickings to be had.  Berkshire Hathaway 38 a share down from 93 in 1973.  GE  32 down from 76 in 1973. McDonalds 26 down from 77 in 1973.

Of course the duzzey of them all was the crash of 1929.  In  3 months the Dow dropped from 381 to 198, a little less than 50% but it didn't stop there.  It continued falling until 1933.  

We have something to look foreward to.

Answer 4

Each of us have our own investing tolerance level.

A lot depends on your age, your willingness to take risks, your health, your job prospects, etc.

If you are young, I would say hold.  If you are retired, you may need to pull some out.   Young or old, if this horrible market is causing you not to sleep at night, then by all means pull out.

Only you can make the decision that is best for your circumstances.

Answer 5

I think of it this way. Am I actually losing any money? Think about it. Right now the stocks are pretty much in the "Blue Light" special mode.

Could the market go down further? Absolutely. Could the market bounce back up? Guaranteed.

Unless I'll be cashing the stocks I have in, I'm not worried about anything. The market will go back up just like everything else. How long will it take? I personally feel things will start leveling out and going back up after this election cycle.

Answer 6

Actually you now have a chance to pick up more shares for cheap. The market will recover we just don't know when.  If you don't need your market for the months ahead, you can add a little bit more everytime Dow drops 200 points. When the market recover, you will see a nice return.

Answer 7

In comparison to previous bear markets where the DJIA has sold of more than 20% in a day this is nothing. A a drop like that today would be like 2500 points down in one day. The flip side of this not so bad news is that the market can keep sliding like this  for some time.

Answer 8

Yes, of course you hold. The last thing you want to do is bail and lose your gains over the past few years. Better yet, buy more and average down.

How does this compare? So far, fairly mild considering we are not even in a Recession.