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Stock Market – I panicked :(

By Terry Savage on May 28, 2022 | Investments

I am 65 and retired. I have ~420K in my 401 and could not take all of the negative news and so I transferred 100% from Fidelity Retirement 2025 account to the Stable Money Fund. Yesterday and today (5/27/2022) the market seems to be rallying. I know you do not have a crystal ball, but would you suggest I stay with the Stable fund (until the inflation slows and the Ukraine war is resolved etc.), or should I acknowledge I made a mistake and get back into the Fidelity Retirement 2025 fund? (PS: I quoted you in the past whereas you acknowledged something along the lines you are not smart enough to know how to time it as to when to get out and when to get back in) I failed to heed those words.

Terry Says

Oops! That is what I have been warming about in recent columns — when I noted that the three things needed to deal with a bear market are: Danger (an assessment of how low the market could go); Duration (how long the market might stay low) and DISCIPLINE (the ability to stick to your plan)!!!

That’s why I always advise having some chicken money in the bank so you can sleep at night and NOT PANIC!!
(I’ve been doing this a long time and recognize that panic is a very real emotion — and it gets worse as you get older and have more at stake, like your entire retirement!)

I don’t know what to tell you right now. Honestly, I don’t. If you get back in as of this writing, you’ve “missed” maybe 1,000 points on the Dow. Given your stage of life and your tendency to panic, I might move 20% back in– and then another 5% on the 1st of every month, till you are 50% back in the market. That way, you’ll never buy the highs, and never buy the lows!

I suspect the market might go lower in the next year, but you do need some exposure to stocks to offset inflation down the road. If that sounds like “hedged” advice — you’re right. That’s the way I approach the market. Then I’m never completely happy, or unhappy at the end of the day. And I’m never tempted to make a move out of emotion.

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