Comments on: The Upside of Risk: Why Market Volatility is a Good Thing http://www.getrichslowly.org/blog/2007/10/11/the-upside-of-risk-why-market-volatility-is-a-good-thing/ personal finance that makes cents Sun, 08 Nov 2009 13:32:46 +0000 http://wordpress.org/?v=2.7.1 hourly 1 By: W.C. Varones http://www.getrichslowly.org/blog/2007/10/11/the-upside-of-risk-why-market-volatility-is-a-good-thing/#comment-100304 W.C. Varones Mon, 15 Oct 2007 04:22:49 +0000 http://www.getrichslowly.org/blog/2007/10/11/the-upside-of-risk-why-market-volatility-is-a-good-thing/#comment-100304 First, Glassman is an idiot, the author of a book called "Dow 36,000" at the height of the bubble in 1999. But I do agree that volatility is good for the small saver/investor (even if Glassman doesn't understand why). Volatility is great for dollar-cost averagers. If you're regularly investing in a 401(k) or other plan, you're buying more shares when they are cheap, and fewer when they are expensive. The end result is a lower average cost. I've been doing so with several funds over the past few years (BGEIX, RYOIX, SWTIX, SWINX, USPAX), and it's paid off handsomely. The more volatile, the better. First, Glassman is an idiot, the author of a book called “Dow 36,000″ at the height of the bubble in 1999.

But I do agree that volatility is good for the small saver/investor (even if Glassman doesn’t understand why).

Volatility is great for dollar-cost averagers. If you’re regularly investing in a 401(k) or other plan, you’re buying more shares when they are cheap, and fewer when they are expensive. The end result is a lower average cost. I’ve been doing so with several funds over the past few years (BGEIX, RYOIX, SWTIX, SWINX, USPAX), and it’s paid off handsomely. The more volatile, the better.

]]> By: » Weekly Roundup - Totally Unplugged Edition @ fivecentnickel.com http://www.getrichslowly.org/blog/2007/10/11/the-upside-of-risk-why-market-volatility-is-a-good-thing/#comment-100274 » Weekly Roundup - Totally Unplugged Edition @ fivecentnickel.com Sun, 14 Oct 2007 21:23:18 +0000 http://www.getrichslowly.org/blog/2007/10/11/the-upside-of-risk-why-market-volatility-is-a-good-thing/#comment-100274 [...] JD talked about why market volatility is a good thing. [...] [...] JD talked about why market volatility is a good thing. [...]

]]> By: BxCapricorn http://www.getrichslowly.org/blog/2007/10/11/the-upside-of-risk-why-market-volatility-is-a-good-thing/#comment-100211 BxCapricorn Sat, 13 Oct 2007 23:08:03 +0000 http://www.getrichslowly.org/blog/2007/10/11/the-upside-of-risk-why-market-volatility-is-a-good-thing/#comment-100211 Investing in stocks helps you escape from poor economic conditions in your home country. For the first time, citizens of China and Hong Kong can invest in U.S. equities. Very often, countries attempt to prevent capital from leaving the country by placing restrictions on foreign stock investment. SPDRS and ETF's now offer even greater varieties of specific types of investing. Stocks are risky, yes. Consider the freedom over your financial future that you have because of it. To take that first step in investment education, I suggest joining the American Assoc. of Individual Investors at www.aaii.com. Investing in stocks helps you escape from poor economic conditions in your home country. For the first time, citizens of China and Hong Kong can invest in U.S. equities. Very often, countries attempt to prevent capital from leaving the country by placing restrictions on foreign stock investment. SPDRS and ETF’s now offer even greater varieties of specific types of investing. Stocks are risky, yes. Consider the freedom over your financial future that you have because of it. To take that first step in investment education, I suggest joining the American Assoc. of Individual Investors at http://www.aaii.com.

]]> By: mark http://www.getrichslowly.org/blog/2007/10/11/the-upside-of-risk-why-market-volatility-is-a-good-thing/#comment-100125 mark Sat, 13 Oct 2007 07:45:18 +0000 http://www.getrichslowly.org/blog/2007/10/11/the-upside-of-risk-why-market-volatility-is-a-good-thing/#comment-100125 "The entire point of investing is attempting to gain an advantage over other people. " Well that's what it might have become to the majority of people who are in it ONLY for the profit. You know, the kind of people who won’t think twice about investing in tobacco, arms or oil industry; “if there’s money to be gained all is good”. But to me investing is never gaining an advantage over other people; that is not and never was my life philosophy. Yes, I invest to gain profit, but I invest responsibly in companies whose profit or service I support and believe in. And the profit I expect to get is based on the growth of the company I invested in, not on the market speculations. “The entire point of investing is attempting to gain an advantage over other people. ”

Well that’s what it might have become to the majority of people who are in it ONLY for the profit. You know, the kind of people who won’t think twice about investing in tobacco, arms or oil industry; “if there’s money to be gained all is good”. But to me investing is never gaining an advantage over other people; that is not and never was my life philosophy. Yes, I invest to gain profit, but I invest responsibly in companies whose profit or service I support and believe in. And the profit I expect to get is based on the growth of the company I invested in, not on the market speculations.

]]> By: Money Blue Book http://www.getrichslowly.org/blog/2007/10/11/the-upside-of-risk-why-market-volatility-is-a-good-thing/#comment-100093 Money Blue Book Fri, 12 Oct 2007 22:47:32 +0000 http://www.getrichslowly.org/blog/2007/10/11/the-upside-of-risk-why-market-volatility-is-a-good-thing/#comment-100093 The greater the risk, the greater the returns. I'm certainly not advocating risky investing but if a company always trades sideways, what favorable returns do people expect to get? I see volatility as opportunity. Always have cash around to buy those dips. -Raymond The greater the risk, the greater the returns. I’m certainly not advocating risky investing but if a company always trades sideways, what favorable returns do people expect to get?

I see volatility as opportunity. Always have cash around to buy those dips.
-Raymond

]]> By: The Dough Roller Roundup (Attending 15 Year College Reunion edition) | The Dough Roller http://www.getrichslowly.org/blog/2007/10/11/the-upside-of-risk-why-market-volatility-is-a-good-thing/#comment-100074 The Dough Roller Roundup (Attending 15 Year College Reunion edition) | The Dough Roller Fri, 12 Oct 2007 20:12:02 +0000 http://www.getrichslowly.org/blog/2007/10/11/the-upside-of-risk-why-market-volatility-is-a-good-thing/#comment-100074 [...] The Upside of Risk: Why Market Volatility is a Good Thing @ Get Rich Slowly [...] [...] The Upside of Risk: Why Market Volatility is a Good Thing @ Get Rich Slowly [...]

]]> By: handworn http://www.getrichslowly.org/blog/2007/10/11/the-upside-of-risk-why-market-volatility-is-a-good-thing/#comment-100069 handworn Fri, 12 Oct 2007 19:46:13 +0000 http://www.getrichslowly.org/blog/2007/10/11/the-upside-of-risk-why-market-volatility-is-a-good-thing/#comment-100069 Why put your money in such a volatile place as a greedy mind is, Mark? 'Cause though individual moods fluctuate, taken all around, human nature doesn't change. It's one of the most reliable things there are. The entire point of investing is attempting to gain an advantage over other people. That's what money is, an advantage based on how badly those other people want it. If everyone invested and did equally well, it would be a zero-sum game; no one would have any more advantage over anyone else than if no one invested. Low-risk-tolerant people are simply gaining advantage over those who don't invest at all. Why put your money in such a volatile place as a greedy mind is, Mark? ‘Cause though individual moods fluctuate, taken all around, human nature doesn’t change. It’s one of the most reliable things there are.

The entire point of investing is attempting to gain an advantage over other people. That’s what money is, an advantage based on how badly those other people want it. If everyone invested and did equally well, it would be a zero-sum game; no one would have any more advantage over anyone else than if no one invested. Low-risk-tolerant people are simply gaining advantage over those who don’t invest at all.

]]> By: rhbee http://www.getrichslowly.org/blog/2007/10/11/the-upside-of-risk-why-market-volatility-is-a-good-thing/#comment-100064 rhbee Fri, 12 Oct 2007 18:39:59 +0000 http://www.getrichslowly.org/blog/2007/10/11/the-upside-of-risk-why-market-volatility-is-a-good-thing/#comment-100064 under the category books. under the category books.

]]> By: rhbee http://www.getrichslowly.org/blog/2007/10/11/the-upside-of-risk-why-market-volatility-is-a-good-thing/#comment-100063 rhbee Fri, 12 Oct 2007 18:36:52 +0000 http://www.getrichslowly.org/blog/2007/10/11/the-upside-of-risk-why-market-volatility-is-a-good-thing/#comment-100063 I've just finished reviewing an excellent book on analyzing the market and learning the basics of charting. The book is a part of the Stikky reading series and is called Stikky Stock Charts. It is shows through a very unique teaching strategy a way of thinking about the market that strongly resembles the advice given above. You can find my review at www.financeisfun.wordpress.com. I’ve just finished reviewing an excellent book on analyzing the market and learning the basics of charting. The book is a part of the Stikky reading series and is called Stikky Stock Charts. It is shows through a very unique teaching strategy a way of thinking about the market that strongly resembles the advice given above. You can find my review at http://www.financeisfun.wordpress.com.

]]> By: rstlne http://www.getrichslowly.org/blog/2007/10/11/the-upside-of-risk-why-market-volatility-is-a-good-thing/#comment-100047 rstlne Fri, 12 Oct 2007 16:26:30 +0000 http://www.getrichslowly.org/blog/2007/10/11/the-upside-of-risk-why-market-volatility-is-a-good-thing/#comment-100047 In periods of high market volatility, my buying strategy is to place limit orders significantly below the current stock price in order to capture a dip. I typically set my limit order price close to a support level. That's actually how I managed to get in a few buys two days before Bernanke's surprise 0.5% interest rate cut. So yes, I have been using volatility to my advantage. In periods of high market volatility, my buying strategy is to place limit orders significantly below the current stock price in order to capture a dip. I typically set my limit order price close to a support level. That’s actually how I managed to get in a few buys two days before Bernanke’s surprise 0.5% interest rate cut. So yes, I have been using volatility to my advantage.

]]> By: mark http://www.getrichslowly.org/blog/2007/10/11/the-upside-of-risk-why-market-volatility-is-a-good-thing/#comment-100015 mark Fri, 12 Oct 2007 08:20:52 +0000 http://www.getrichslowly.org/blog/2007/10/11/the-upside-of-risk-why-market-volatility-is-a-good-thing/#comment-100015 "All that time, J&J has been the same company, doing business in the same global economy. But investor expectations — influenced by the effects of enthusiasm and fear — have at times boosted the stock and other times depressed it." Please re-read that again - slowly. What it says is that the stock (market) value has no real basis in company performance anymore, but is instead influenced on by moods of the stock investors. It's value is not based in real world! Get it? I know it's hard to swallow that, but is as true as it was during the 2000s DOT-COM boom. It's all a mind-thing! Why put your money in such a volatile place as a (greedy) mind is? “All that time, J&J has been the same company, doing business in the same global economy. But investor expectations — influenced by the effects of enthusiasm and fear — have at times boosted the stock and other times depressed it.”

Please re-read that again - slowly. What it says is that the stock (market) value has no real basis in company performance anymore, but is instead influenced on by moods of the stock investors. It’s value is not based in real world! Get it? I know it’s hard to swallow that, but is as true as it was during the 2000s DOT-COM boom. It’s all a mind-thing! Why put your money in such a volatile place as a (greedy) mind is?

]]> By: Mariette http://www.getrichslowly.org/blog/2007/10/11/the-upside-of-risk-why-market-volatility-is-a-good-thing/#comment-100010 Mariette Fri, 12 Oct 2007 04:08:37 +0000 http://www.getrichslowly.org/blog/2007/10/11/the-upside-of-risk-why-market-volatility-is-a-good-thing/#comment-100010 Patience is a key character trait we all need to cultivate if we want to invest in stocks. But most people are also fond of drama and that often overrides it as we get caught up in the moment, whether that's getting hyped up over a strong upswing or freaking out over the dips. Patience is a key character trait we all need to cultivate if we want to invest in stocks. But most people are also fond of drama and that often overrides it as we get caught up in the moment, whether that’s getting hyped up over a strong upswing or freaking out over the dips.

]]> By: brian http://www.getrichslowly.org/blog/2007/10/11/the-upside-of-risk-why-market-volatility-is-a-good-thing/#comment-99987 brian Thu, 11 Oct 2007 22:14:44 +0000 http://www.getrichslowly.org/blog/2007/10/11/the-upside-of-risk-why-market-volatility-is-a-good-thing/#comment-99987 My second-favorite thing about finance (other than enjoying money :-) is that there is an investment strategy available for every level of risk. On one extreme, you have the cash under your mattress that has 0% volatility but no gain (and a loss if you count inflation). Then comes Treasury Bills and money market for low-risk. Stocks are moderate, day-trading has more. And if you want the quickest, highest-risk "investment", you can gamble. 100% gain or 100% loss in 30 seconds. It is up to each person to decide what his or her own comfort level is, and invest accordingly. I agree with the author; don't whine about the system you are investing in, just change your investment. My second-favorite thing about finance (other than enjoying money :-) is that there is an investment strategy available for every level of risk. On one extreme, you have the cash under your mattress that has 0% volatility but no gain (and a loss if you count inflation). Then comes Treasury Bills and money market for low-risk. Stocks are moderate, day-trading has more. And if you want the quickest, highest-risk “investment”, you can gamble. 100% gain or 100% loss in 30 seconds.

It is up to each person to decide what his or her own comfort level is, and invest accordingly. I agree with the author; don’t whine about the system you are investing in, just change your investment.

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