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DOW down to 7500

February 18th, 2009 at 03:17 pm

My dad, a former stockbroker who now works for a mutual fund company, called me yesterday afternoon. He said the DOW was down to 7500 and he wanted to add $1,000 to my son's 529 account. He asked me to go ahead and make the purchase and he would send me a check. Thanks, Dad!

It's funny that he's always preached dollar cost averaging, but now he calls me up when the DOW has a big dip and tells me to "buy low". I can't figure him out.

I guess procrastination is once again in my favor. When the stock market had its big fall in October, to 8500, I had $14k sitting in cash within my various IRAs. I invested $10k, and thought I'd wait a month or so with the remainder to see if we got another dip. Then I promptly forgot about it. So now I've got $4k still sitting there and I think I'll invest. Who knows, with the bad economy the DOW could go even lower but I'm not going to wait.

It pains me to realize I still don't have a plan in place to know WHICH fund I want to buy. Guess I'll call my dad again and see which one he recommends.

If only we had our taxes done. I set aside 40% of my consulting income with evey paycheck for taxes. I ran through a quick online calculator and it looks like our effective federal tax rate is going to be about 20%, and we'll only owe a couple thousand this year. So I may have as much as $10k available to put in our IRAs. (We don't qualify for ROTH.) It would've been nice to invest it now, while the DOW is low, but I guess if the DOW goes lower it will be nice to have money to invest then.

3 Responses to “DOW down to 7500”

  1. Broken Arrow Says:

    I think I can understand your father's rationale.

    As a rule, market timing is an exercise in futility, because it relies on the inhuman concept of knowing the future.

    However, a big dip like today's isn't an unknown quantity. It's known. It's not trying to divine the future. It's what's happening right now.

    Now, trying to figure the reasons behind why the dip is much tougher, but in the end, a dip is still a dip, and like stumbling across a huge clearance sale, it wouldn't hurt to take advantage of it.

    I've also bought in as well.

  2. Aleta Says:

    I agree with you that dollar cost averaging is better in the long run, but on days like yesterday, buying on the low can be good too. I added some money to my retirement account.

  3. baselle Says:

    I did something very similar. Since I still have a job and am contributing to a 403B, I changed the new money I put in to 90% equities. (I was about 40% equities before the crash). I began this in October and I have made up my losses.

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