If nothing else, the falling prices may indicate it’s the right time to buy more and continue dollar-cost averaging.
I could complain that the stock market is hurting my net worth and making my monthly reports seem like my financial state is getting worse, but I do keep buying more shares at lower prices through regular investing. I’ll just try to keep a positive attitude and keep my faith that it will pay off at some point.
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{ 4 comments… read them below or add one }
I’m in EXACTLY the same boat. Watching my net worth take a hit, but adding money in every two weeks at the lower prices. My aunt is in a panic. She’s afraid she’s going to lose it all. It’s always like this with her though. She doesn’t want to sell at a high because she’s afraid she’ll miss out on the even higher prices, but when it goes down she always panics and wants to sell……
I’m in the same spot, transferring weekly into an IRA.
I’m a little grumpy because I transferred a big chunk from bonds into a Vanguard ETF (Target Retirement 2035) about a month ago. I’ve lost about a hundred dollars per week since. It helps to realize you’ve got 25-30 years of dollar-cost averaging to smooth out the lows, but I sure wish I had waited a few more weeks for the transfer!
Having been through downturns before, I agree that they are good times to keep investing with a dollar cost averaging strategy. It can hurt for a time, possibly a long time, but any other approach – whether to sell or to buy or to hold or to stand aside – effectively involves an attempt to try and time the market. This is not something I generally feel confident in doing unless the over/under valuation gets extreme.
Unfortunately I maxed out my IRA at the beginning of the year, so I’ll have to wait until January 2007 to take advantage of lower prices — if they still exist then, of course. (Even if the market comes back to where it was at the beginning of 2006, of course, being able to buy stocks at similar prices two years in a row is a benefit from a cost-averaging standpoint.)