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  • ryanruiz100 ryanruiz100 Sep 4, 2008 12:32 AM Flag

    For those who invest based on emotion

    vestavius, if it is your retirement fund, and you don't plan on touching it for 40 years, I don't see the harm. That is my opinion though. I have 100% of my IRA (roughly half my retirement savings) in CGMFX and 100% of my 401k (my other half) in Lord Abbet Small Company Value through work. How has this worked out? Pretty good! I also have 100% of my taxable savings in CGMFX and I'm feeling the pain there. However, I look deep down inside myself and understand investing can be emotional. My taxable CGMFX is not just some money I'll need 40 years from now, it's a down payment on a house, a business, a flashy new car, POWER! And if my holding in CGMFX goes down, my power and dreams go down with it. My IRA or 401k, however, is so far in the future that it doesn't affect me.

    It is important to look at long term charts. It's real easy to look at a chart of, say, GE since 1980 and see just how much money you would have made over the years, you'd be rich! But to hold through all the thick and thin, the ups and down over the years, is a totally different story, one little blip in recent history that causes you a lot of turmoil and unhappiness wouldn't even show up in a chart of GE 10 years from now. It's always important to put things in context. Best of luck.

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    • Very well worded, I'm in it for at least 5-10 years, or until Heebner retires. It's not money I need within that time frame, probably money I won't need for a couple decades. It's not 55% if you count my 401k, more like 35% if you count that. Since the 401K is much less risky stuff (funds that are basically low risk mutual funds), I sort of feel I can go more risky on stuff out of my retirement fund.
      I almost wish I could lock my account so that I wasn't allowed to touch it based on emotion. And I think anyone who honestly thinks that CGMFX will never, in 5 years, get back above 62 is kidding themselves. Accepting the losses now is pretty much a bad move I think, especially considering the markets about to go in an upswing over the next year, and all Ken has to do is find another couple winners, like he's been doing for decades.

      • 1 Reply to vestavius
      • I just checked and my "personal rate of return" for my 401k (the total % return not including deposits) is -.5% YTD. If it was -50% YTD it wouldn't affect me. Same for CGMFX in my IRA. I requested a statement in the mail so I could possibly move some of that money into a Financial Fund but I'm not sure if I will. It's the first time I saw my acount balance in 9 months. I truly have a "Warren Buffet" mentality when it comes to my retirement savings. I'm 31. I don't understand what's to be so upset about for money you won't touch for a decade or more. It's literally a waste of time to check the account balance. Now, for my taxable money, it's like the difference between night and day. I get on here, I check CGMFX's holdings, check the daily NAV. I get emotional about it.

        All I can say is if you don't plan on touching the money for 5+ years, it is a waste of time to check the daily balance. It won't do any good, there's no better place to put your long term money, and bumps along the way are inevitible. If I could have the same mindset for money I build up for things other than retirement (money I save up after taxes), I'd probably be a very wealthy person by now. Emotions get you to do the exact opposite of what you should do in investing. It's greed that puts you in investments that are too risky, and it's fear that causes you to sell out at a loss.

        There was this guy a while back on this board that said he was selling CGMFX because Heebner has lost his mind and was another Bill Miller, so he sold all CGMFX and he bought a bunch of energy/ommodity stocks the next day. He gloated that he was up about 3% that day and said he made the right decision because CGMFX was down that day. The next day, I checked, and all the stocks he listed were down heavily.

        It's emotions that convinced him that Heebner was another Bill Miller, or that Bill Miller is destined to underperformance and losses from here on out, and it's emotions that get him wrapped up in 1 days' trading activity, he's wrapped up in the moment, and being led by Mr. Market, making something out of the daily fluctuations, letting daily price changes persuade him and lure him to buy/sell because he was upset about the last tick. If you don't need the money for 5+ years, get a friggin hobby, get a good job and focus on your career as means of making money, not trying to get rich in the stock market overnight. Because you cannot get rich in the stock market overnight, unless you do it by sheer, dumb luck. Invest for the long term.

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