Need advice on math behind fund shifting

[DrSnacky]

In 2008, I resisted bailing out of the C, S and I Funds because I thought people were panicking and did not want to “buy the loss” if I did not get back into the C, S or I funds in time when they rebounded. However, in mid 2008 I began putting all newly allocated funds into F and G but kept existing money in hemoraging C, S and I. I now (finally) believe that the stock market will remain in a down or level state for an extended period of time (at least one year or more) and recently switched most of my existing money to F and G as well to avoid further losses.

Assuming that the G and F funds will produce approx 4% annual increase and that the C fund drops, say 25% in that same year but then will begin to come back up which is a better option for me:


Leave existing funds in the F and G (thereby making modest gains but avoiding large losses) but putting future allocations into C fund to take advantage of extremely low share prices and absorbing the losses for the next year. By getting "more bang for my buck" in the C Fund I will reap more benefit when it does rebound.
Keep both existing funds and future allocations in the F and G for the next year. When stock market begins to rebound switch back into C fund. I realize I won't be able to switch at bottom, but as long as switch is before C fund share price returns to where it was when I got out I will be better off.
My wife and I disagree - not on investing principles or what we think the market will do, but on the math involved. So assume that my assumption is correct; which would be the better course of action? Who has some even better advice?

[tsptalk]

Welcome Doc! I vote B - assuming you are watching the market regularly. Otherwise, A.

[Steadygain]

Wow - it's really good to have you on board and those are very good questions.

I'd say the most important part of your whole senario (which is very complete and well expressed) is 'My Wife and I".

If you hang around this MB for any length of time you'll find the women here are incredibly beautiful - in many ways... sweet as can be..very smart (I mean incredibly smart)... very independent..frequently challenging themselves (beyond most of us guys).. and also have wonderful sense of humors, are thoughtful, deep and engaging...and most of all have wonderful dispositions...

I tell you this because I don't hesitate to 'catch' their vibes here on this site and have fun with them and enjoy them - and that goes for all kinds of guys as well...

BUT TO ME - The most important thing is Harmony with your wife and making sure that you understand exactly where she is coming from and really honoring her.

I was in the exact same position as you and in 9/08 told everyone I'm going to G Fund to prevent further LOSS and mostly to honor my wife (because she is ultra safety and always will be).

NO ONE HERE KNOWS where the END will be - the REAL BOTTOM. I agree that prices are excellent but if we go down another 20% then you'd be better off letting contributions go to G Fund and largely staying there. This is what I told everyone here at the beginning of the year 'That it's ridiculous to go fully in C/S/I when it's going down at least 20% - because when things do turn around then they will have to make at least 20% to break even. I haven't lost a penny and every dollar will buy at the REAL BOTTOM.

Anyway - your very BEST BET is to make sure you're showing the honor, love, and respect your wife is due. And I don't say this as a wimpy type of thing (or being a push over... or whatever) I say it as a REAL MAN thing and knowing 'Sensing her trust - and admiration - and appreciation for you 'looking out for her' goes way beyond the uncertainties of the Markets over the next 6 months

PEACE MAN - GOD BLESS

[Eagle_Addict]

[B]NO ONE HERE KNOWS where the END will be - the REAL BOTTOM. I agree that prices are excellent but if we go down another 20% then you'd be better off letting contributions go to G Fund and largely staying there. This is what I told everyone here at the beginning of the year 'That it's ridiculous to go fully in C/S/I when it's going down at least 20% - because when things do turn around then they will have to make at least 20% to break even. [COLOR=indigo]I haven't lost a penny and every dollar will buy at the REAL BOTTOM. [/COLOR

Now, the Million Dollar Quaetion, and the flaw in your logic......when is THE BOTTOM...How will YOU know that the BOTTOM is what you think it is??? By the time you realize what the BOTTOM truly is (or was), the market will be up 12-15% and you will then, maybe, hesitate, waiting to see if it drops again??? So, bottom line, How can you say that "EVERY DOLLAR will buy at the REAL BOTTOM"??

Thanks, ea