Surprise, Surprise!

Wasn't this week a nice surprise?  The DOW closed above 9,000 again!  Well, I'm not sure if "surprise" is the right word, but there were enough cynics to say that the collapse of the American dollar is forthcoming and a whole lot of other bunk that made this week almost like a moment of truth for them, in that their "sky is falling" heresy is a vast over-reaction.  In fact, my friend at work was spouting off those claims as early as Monday, and he had to shut up by Thursday's impressive close.

Cynicism definitely weighs more, which is how the markets fall faster than they rebound, but this road to recovery has gone amazingly smooth (albeit the real test will be that 11,000-14,000 range).  If you've taken notes & memorized everything I've said (or if you just read my May 8th entry), then my expectations might be a bit too conservative, which is fine by me!  I like being wrong when the end result is better than expected, especially when I have a large hedge against my expectations.

The real lesson to be learned is that the "all-in, all-out" approach is best saved for Vegas with the rest of the craps.  Proper investing is a (at times, delicate) balancing act with calculated exposure to all parts of the stock and bond markets.  While my expectations are that the DOW will be above 10,000 by the end of this year, I am not going to direct all of my new money into the Total Stock Market Index fund for a variety of reasons, including the fact that I believed bonds would experience above-average growth this year (highly unlikely given the market recovery, but not altogether impossible), the International Markets are recovering as strongly as (at times, stronger than) the domestic markets, and there is nothing moving this portion of our recovery along aside from the disproportionate freefall from the end of last year into this year.

My day to rebalance my 401(k) investments is August 11th, assuming I find it necessary next month to redistribute my assets, but I have not checked in a little while (geez, where have I been?  My rock-and-roll vampire lifestyle shouldn't disable me from staying up on these things) so I need to take a serious look at them this weekend or next weekend, and start honing in on what my options are.  Most likely, though, I will be making no (or limited) changes.  Most likely, I will rebalance my existing money and leave my incoming allocations alone.

Breaking News!

I couldn't help thinking of Mo Ansari when I got on CNN.Money.com right before the market closed to see the most unique "Breaking News!" that I've witnessed in my career: "The market will remain open until 4:15PM!"

The market had been facing downward since the opening, brought on of course by the jobs report, which was exactly what Mo Ansari said to expect, but keeping the market open the day before an observed holiday for 15 minutes was too bizarre.  We found out that it was due to "connectivity" issues, as in the freakin' New York Stock Exchange had computer problems!!  This is a first in my career, and I am going to start searching the financial websites to find out if it had happened before.

I had the presence of mind to set up an exchange into the Total Stock Market fund for the remainder of the money that I had planned a while ago (see 6/15 entry), thinking it might be the closest to 8,000 we're going to see again, but the market had already passed 4PM (its regular close) and the website did not provide me a guaranteed trade date.  Why?  Because Vanguard hates day-traders, which is what I was doing.  If you want to make an exchange, make the exchange.  If you want the lowest possible price, then go somewhere else because they're not going to help you!  While it served me no good, I had to respect it.  It protects long-term investors (including me) as a whole.

Then, it turned out that we stayed late to change the trade date on every transaction submitted between 4 and 4:15PM (with a nice little OT for the next payday) so I guess I should have gone ahead and dumped the money into it during that 15-minute grace.  If nothing else, it would have made for a good story!  But we'll see what happens Monday.  If the unemployment reports scared the market down 2.5% today, then I don't know what is going to give investors the confidence to buy on Monday (or at least throughout the whole week).

The Full Motley: Believe The Market

Mo Ansari had a real good show today!  I wish I could've heard more of it, but it was interesting to hear him talking about the markets in terms of politics, because he made the comment that they're not really as intertwined as most people think.  Not that the markets aren't intertwined to politics, but the part about people thinking.  Most people want the market to move in the way that their political thinking is going, but they don't.  You cannot will the markets into going down, or going up, because the markets are reacting to so many different factors all at once that attempting to predict the markets in advance is pointless.

My investment company Vanguard has nine "We Believe" statements, and I did a presentation on them this year.  I forget the exact statement, but my summary for one was "beating the market returns is not worth the effort or the risks involved," and it's true.  When the stock market as a whole averages 9%-11% over its lifetime, then you can just learn to expect that as a return, and do the simple things to keep pace with it.  Otherwise, beating the market becomes this full-time job where for every percent you outperform the market, there is an equal percent of under-performance, and which side you end up on is really just 50:50 chance.  That's where the phrase "let your money work for you" comes from.  If you're doing all the work, then you might as well just consider the gains a paycheck.  Then, good luck finding freetime to enjoy that bonus pay if you get any!  Chances are you'll lose those gains before that happens.