L2040 all the way, baby!

I wait until stocks plunge after a huge bubble. When everything is going to fail. When it's not worth it to stay OUT of the stock market, because at that point, telling yourself your money is safe in a bank, or whatever, it doesn't really matter if it's not in stocks. Because when it gets that bad, if it gets any worse, everything is worthless anyway--your money in the bank, your bonds(payable in a certain, now worthless currency), etc., it's all going to be Mad Max. THAT is when you invest. If lots of action is taken and future generations burdened to delay reality, your stocks will rocket up. If not enough is done, you haven't lost any more than you would have if all your money was in a bank, and you can enjoy Thunderdome knowing you took the only route with a possible upside.

1) Index funds
2) re-balance once a year or so picking the month based on the tax situation.
3) Never ever put money I intend to spend in the next few years into anything other than cash and gov't securities.

The only reason I have any money these days is that I followed David Swensen's 2003 advice about this stuff.

Anything else for an individual investor that isn't a full time pro with awesome resources is a sucker's game of chance.

Or you could just start a bank?

did this post come from Nigeria?

@sleze69: And I thought I was the only fed here...

As an independent investor, you have an advantage being small: all your trades are "noise" so you can move without anyone noticing. On the other hand, by the time you get any information, you're too late.

1) Treat stock like toilet paper: don't get attached to it.
2) Think of "holding" as a "buy" decision. If you wouldn't buy it right now, SELL!
3) Don't diversify too much. Buy only a few stocks, if they aren't growing, see step 2.
4) Buy on a rumor, sell on the news. See step 2. The market is emotional, the price has rumors factored in. By the time the news hits, pros are reaping their profits. See step 2.
5) Buy a stock only if it at least down 10% off its 52week high.
6) NEVER buy a stock when it's close to 10% from its 52week high.
7) Sell a stock after you've made 10% or more profit. You are participating in a huge Ponzi scheme, you just don't know when it will collapse again. See step 2.
8) Keep 10% or more of your portfolio in cash. When you go below 10% cash, sell your worst performers. See step 2.
9) If your stock drops more than 5-10% in a day or 2, see step 2.
10) Prefer stocks with dividends & companies that make profit. Stocks are all cyclical, buy & hold is not a strategy for making money, It's a strategy for the lazy who want to make others rich.

In my experience the market tends to overreact and then over-correct.

I'm trying to figure out how to financially benefit from people who believe 2012 will bring the end of the world. Any advice on that front?

@Eric1285: Yeah. I dont quite get the "underreact" point either. I mean, stock market panicks more than democrats in august.

@JohnQPublic: Sign a contract with them, that when the rapture comes, and you get left behind, you can have their cars.

@INsano: Or invest in hair care products - Tina Turners 'do requires some serious upkeep.

@JohnQPublic: You could always offer to take care of their animals once they are gone?

My advice? It's September. The trough was in March and the market has undergone an amazing rally in the past six months. At this point, be aware that everyone already knows the worst is likely past. If you're just getting back in now, you missed the rush.

@INsano: That is the exact strategy put forth in the new book, "Wise Investing for Future Growth" by Economic Professors Master & Blaster.

In fact if you aren't back in, now is a lousy time to do so. The market is at a correction point. Stocks have recovered massively, but the companies need to do better before they can really appreciate further.

I just got out. If I miss on some minor gains, meh.

Skipping a 15 to 20% loss: Priceless.

@pb5000:

I emailed that guy congratulating him on his awesome idea, then asked tongue-in-cheek if anyone had purchased that insurance. His response is as follows:

"I'm sorry to have to tell you this ... but yes, we have had a number of clients contract for our services.
Hallelujah!"

Active trading is not worth the effort for 99% of Americans, and on top of that, it can be a pretty expensive hobby. Just stick to index mutual funds or index ETF's, and you'll get to keep all your money AND your time.

@vastrightwing: #1 through the first part of #10: "time the market." 2nd part of #10: "trust me, timing the market is better than buy & hold, because i say so."

thanks for the chuckle =)

Now is still a decent time to buy, but finding the right ones requires more research. I look for a combination of things: dividends, historical performance, company news, Warren Buffet news, and a few other things. Being a decent poker player can make up for bad decisions.

@INsano: I would want to dump that Mad Max money into some ammo, guns, self defense tools, etc.

Oh and if Mad Max taught me anything it would be to find and secure lots of petro, and preferably a tanker to store it in. Then just setup a base and keep all intruders out.

@GuidedByLemons: 1 - 10 only if you have the stomach for it. They always tell you to diversify and to "invest" long term because it benefits the brokerage firms when people keep their money in there. If you hold long enough, your nest egg will go to zero. The pros all market time. It's a fact. Of course, they prefer that you don't; it makes it easier for them. Buy a mutual fund and hold it.. never sell it. Stocks are not what they appear. This is VEGAS! Stocks are not investments anymore. They stopped being investments years ago when Goldman lowered their IPO standards. It used to be in order to go public a company had to make a profit 5 years in a row. Now a company only has to have an idea and a website.

@Michael Belisle: The Ponzi game has started again. I like how the "feds" are telling everyone to start playing again by officially annoucing that the recession has ended. This is code for let the party start again! Woo Hoo!

@starrion: Market timers either have to be quicker or smarter than everyone else. Volatility rewards the long-term investor who does nothing but add funds over 20-30 years.

@vastrightwing: No, broad index funds do not go to zero.

@GuidedByLemons: True. I meant that if you hold on to a stock long enough, it will eventually go to zero. My point is mostly that the industry wants you to always buy and hold, yet the pros don't behave this way. Mutual funds suffer from low returns because they diversify all the gains out of them and the rules make it hard for portfolio managers to effectively make money. Then you have management fees that eat into your return. Index funds will follow the market for sure and you can still trade them. Take a look at Rydex funds. These are little known tradable funds, some even go up in a bear market. In any case, I believe the entire financial market has turned into gambling (aka Ponzi scheme). This is OK, just be aware that's what it is. I'll go one step further and say the U.S. economy is insolvent, we can thank the Chinese for allowing us to party this long. My only question is how long the Chinese are going to keep allowing us to go more in debt. My bigger fear though is the massive new taxation we are getting with the new health care tax and the carbon tax and trade scheme being cooked up right now. The ride is just beginning.

@JohnQPublic: Liquor, cigarettes and ammo is my plan. You're covered either way.

People who believe the Mayans were right will buy beforehand. If they actually were right (as opposed to saying "man carving these calendars in stone is really hard work...why don't we stop at 2012 and update it later") will buy after the apocalypse.

Also, after reading The Road, it seems having a couple cans of tuna fish on hand might not be a bad idea...

I know, firsthand, about half a dozen people who made literally hundreds of thousands of dollars during the market volatility of October-December 2008. I myself made thousands (had much less to invest at first). Every trade was a no-brainer: we were basically printing money. One of us made nearly $50,000 in about 30 minutes.

Heck, looking over our fantasy portfolios we actually could have made 8-10 times what we did in the same period had we been even more "greedy" and invested in those additional stocks and commodities: as per the Warren Buffet statement - "Be greedy when others are fearful".