ETF Buying Mantra

Hi Evryone,

I'm new here and am eager to learn. I just wanted to kind of share my thoughts on ETFs.

I'm in this for the long haul. I'm 40 and still have a few productive years ahead of me (I hope).

My main thoughts are that it appears that many stocks uncluding ETFs are just beaten down already. I don't think it's the ETF's fault per say but just a general response to the market.

If you pick ETFs that you know are not going to tank, wouldnt it be safe to say that youre probably going to make money in the long run?

I know this is a rediculous generalization but I'm curious about everyone's thoughts.

Sorry if this is a totally newbie question.

Looking forward to hearing your thoughts,

Marty

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Originally Posted by Marty

If you pick ETFs that you know are not going to tank, wouldnt it be safe to say that youre probably going to make money in the long run?

I know this is a rediculous generalization but I'm curious about everyone's thoughts.

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Hi Marty -

The problem is, price is relative. C (citigroup) might have seemed cheap at $25 when it was half it's high ($50's) from 2007, but it then hit $10, $5, and eventually below $1.

The ETF FAS was about $25 in January and eventually went to $2 and change earlier this month, before rebounding.

So, just because a stock or ETF is low in price, does not mean it cannot go down more - and significatly more percentage-wise.

I agree that price is relative but knowing where the bottom lies is almost impossible to predict.

My question is, what if you did buy C at $5. We know now that you've lost money on it but if your confident that it will rebound, which really can't be said about C, you'll still make money.

I think that's what I'm wondering. If your confident that a stock will rebound, how do you estimate when to buy?

Are you willing to take a loss when you know it will go up at some point?

Thanks,

Marty

Marty, that was the mantra in the great bull market of 1982-2007. Buy the dips with very low volatility. Those days are gone for a long, long time.

Don't EVER buy a stock/ETF or whatever because the price is 'Low' or because of an article you read in mainstream press saying that it's sales are going to skyrocket. Price is just an arbitrary number that depends on earnings, share float, estimates, and a crowding herd mentality.

There are millions of books out there, but I suggest you'd start investing by purchasing any books written by the authors of Morningstar. Those books may be some of the best investment decisions one can can make.

Quote:

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Originally Posted by Marty

My question is, what if you did buy C at $5. We know now that you've lost money on it but if your confident that it will rebound, which really can't be said about C, you'll still make money.

I think that's what I'm wondering. If your confident that a stock will rebound, how do you estimate when to buy?

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I would think dollar cost average purchasing would be the best way to go, in that case.