Stock Investing: Taking Your Money Off The Table Until Things Calm Down?

Like most articles you’ve seen about about the recent market gyrations, I think people with long-term investments should act like it and not do anything special. But really, the past several days was nothing compared to real fear and uncertainty. In early 2009, a phrase I heard often was “I’m just going to take some money off the table until things calm down. Why risk it?”

Well, here’s a chart from FiveThirtyEight.com comparing the results of a “cautious, play-it-safe” investor and the “do-nothing” investor:

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Imagine two people who each invested $1,000 in the S&P 500 at the beginning of 1980. The first one buys once and never sells. The second one is slightly more cautious: He sells any time the market loses 5 percent in a week, and buys back in once it rebounds 3 percent from wherever it bottoms out. At the end of last week, the first investor’s holdings would be worth $18,635. The second investor would have just $10,613.

Remember, the only two possibilities for the stock market are all-time high or a drawdown. The highs you don’t really feel. The drawdowns are quite painful. Here’s a nice chart from Doug Short illustrating the drawdowns since 2009. Lots of painful drawdowns, but during that time the market is up over 200%.

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This is also why financial advisors tell you to create an investment policy statement. That’s where you write down ahead of time “If the markets drop 10% in a week or two, I will do [action or lack of action] because [reason].” Then when the drop actually happens, you break out that piece of paper to remind yourself what the calm, rational version of yourself would have done.

Amazon Underground: 450+ Free Android Apps with Free In-App Purchases

amazonundergroundIf you have an Android smartphone or tablet, Amazon just released Amazon Underground, which adds a collection of 450+ apps which have agreed to be 100% free, including all in-app purchases. Amazon will somehow pay the publishers based on how much time you spend use each specific app. You pay nothing.

Looking over the list of available apps, I see an Office document viewer, a photo editor, a mobile PDF scanner, and a bunch of games. I don’t play games much so I can’t tell which are good, but I recognize a few like Cut the Rope, Angry Birds, and Fruit Ninja. There are also several Disney apps for those with young children. I don’t really understand why a Goat Simulator is the #1 featured app, but hey it’s free!

Free FICO Score from American Express Credit Cards

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This post provides updated information and instructions regarding the free FICO score that is available to American Express credit card holders. Background. In late 2014, American Express started piloting free FICO scores to select cardholders. … [Read the rest]

The Many Flavors of FICO Credit Scores

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Every week it seems there is a new way to get a free FICO score. Over the last 10 years, I'm pretty sure I've only paid for a FICO score once when I was paranoid about my first mortgage application. Why aren't they charging us $15 a pop anymore? … [Read the rest]

Robinhood App Review: Free Stock Trades With No Catch?

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Updated review in August 2015 to include new Android app, new order types, and more. Fintech start-up Robinhood wants to "democratize the financial markets" by creating a mobile-first brokerage that offers unlimited free trades with no minimum … [Read the rest]

Elizabeth Gilbert On Taking Back 30 Minutes A Day For Yourself

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Right this second, there are probably 37 different things vying for your time and attention. Are you letting the right things get through? Elizabeth Gilbert is best known for her bestselling memoir Eat, Pray, Love. In a recent Facebook post, … [Read the rest]

Expedia+ Voyager Card from Citi Review

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Expedia.com has revamped their in-house loyalty rewards program. Citi and Expedia have partnered on a new set of co-branded credit cards. How does the combo work out for us travelers? This review covers the Voyager version, which is the premium card … [Read the rest]

Expedia+ Credit Card from Citi Review

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Expedia.com has revamped their in-house loyalty rewards program. Citi and Expedia have partnered on a new set of co-branded credit cards. What does the combination mean for the frugal traveler? This review covers the standard, no annual fee … [Read the rest]

CoPatient: Helping You Answer “Is This a Reasonable Medical Bill?”

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High-deductible health plans are still growing in popularity. While these can be a great way to save on your monthly premiums, it also means that when you do have to visit the emergency room, you get to tackle nearly the entire bill instead of a … [Read the rest]

Data Breach Counter Tool: Exactly What Personal Information Has Been Exposed?

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The New York Times has come out with another neat interactive tool that provides a sobering count of both how many and what types of your personal information has been exposed to hackers. I like that they break things down as exposing your e-mail … [Read the rest]

Playing “Fill-In-The-Blank” Mad Libs with Financial Buzzwords

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After you spend enough time consuming financial media week after week, you start seeing patterns in the noise. I understand why of course, as creating content to feed the beast can get quite exhausting. But hopefully, by pointing out these out, … [Read the rest]

History of 0% APR Interest Rates + Who’s Carrying a Monthly Balance?

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From 2005 to 2007, a peek at my credit report might have revealed that I had over $30,000 in credit card debt. The good news is that I borrowed it at 0% APR and then immediately stashed it in an FDIC-insured bank account earning 6% interest at … [Read the rest]