The Secret To Stock Market Success-Do Nothing

Well, not exactly.  First you have to do something by setting up your 401(k) regular contributions or Roth IRA or regular IRA contributions.  That simple, but necessary, process is all explained in Category 12--Investments, All You Need To Know.

Then just sit back and let it ride.  Then you get one of those gut wrenching market shakeouts like we have had over the last couple of weeks and you really get sick.  Because if only I had taken the money out in April and switched to a money market and then when the market starts back up I will flip out of the money market, back into stocks, tech this time, and I will make a fortune and be able to retire in six .... 

You get the picture.  Oh, if we could only time the market.  Some investors say they can.  Maybe but if they do they are probably pros doing it 60 hours a week.  For someone in your position with a long time horizon I don't think it is possible or necessary.

I don't think it is possible because you are doing other things like getting started in a career, thinking about where you want to live in the long run, can you afford a house, are you going to get married, have kids...and on and on.

Secondly, you don't have enough money to worry about.  If you have been contributing to your 401(k) or IRA and have only been working a couple of years, you have $10,000 max.  Unless you inherited a bunch of money in which case you have a fianancial planner so go yell at him or her.  If you are just an ordinary young person, you could hit every move just right and not have all that much more money in the bank.

So do nothing.  Here is how I did it---when the market is going up, I say great, will probably go further so better stay in.  When it goes down a lot I figure that it is too late to get out now, might as well just watch it go to zero and apply to Wal Mart.  Maybe I can work my way up to greeter. 

Then the market comes back.  Maybe not overnight but after awhile. 

So get your allocation and stick with it.  If it doesn't work in the long run, there is always Wal Mart.  But the market does work in the long run.  And ignore John Maynard Keynes.  He said we are all dead in the long run.  But some of us are closer to dead than others.  You are a long ways away.