Good Financial Advice – Yahoo! Finance

This is a very good video on “Long Term Investing” by Aron Task and Henry Blodget. You should listen to it more than once to get all the important but subtle points.

Vodpod videos no longer available.

Money Fleeing the Market at Rate Typical of Bottoms

Posted Oct 22, 2008 12:47pm EDT by Aaron Task in Investing, Recession

As the market struggles to find its footing, debate is raging over whether the kind of panic typically associated with market bottoms has occurred in recent weeks.

It’s too soon to judge whether a sustainable bottom has occurred, “but there is a bit of capitulation going on,” says Liz Ann Sonders, chief investment strategist at Charles Schwab & Co.

According to Sonders, outflows from mutual funds in the first two weeks of October exceeded the record $75 billion of redemptions set for the entire month of September.

Breaking things down further, the most dramatic outflows have come from assets tied to commodities like oil and gold, as well as emerging markets, which have suffered even more dramatic declines than the Dow and S&P.

That level of “I give up, get me out”-type activity — which is also evident in massive redemptions from hedge funds – is typically associated with market bottoms. Conversely, mutual fund investors were most bullish at the market’s peak in early 2000.

To be clear, Sonders isn’t a market timer or declaring the bottom has been established. Her message remains unchanged: have a plan, stick to it, stay diversified and periodically rebalance. But when panic – or even just fear — is in the air, it’s probably too late to go to cash, which may feel “safe” but typically proves to be a long-term loser after adjusting for inflation, she notes.