Richard Schmitt is an Adjunct Professor teaching retirement planning at the Edward S. Ageno School of Business at Golden Gate University in SAN FRANCISCO BAY AREA. Putting into practice his history as a figure’s guy in a global looking for the methods to stop working, he developed “401(k) DAYTRADING” as a much better method for individuals to manage their retirement savings in an uncertain market.
Lately his word has been growing through features on Fox Business, ReutersTV, TheStreet, Business Talk Radio, KMA, and KCBS, among other mass media outlets. Having proved helpful in the pension plan industry since the source of 401(k) programs, Mr. Schmitt has aided companies in the look, execution, and administration of 401(k), 403(b), 457, and other pension savings plans for over 25 years.
Before becoming a member of academia, he managed commercial payment and advantage plans for a couple of the largest U.S. Silicon Valley. He also offered other Fortune 500 companies’ pension programs as a senior consultant at major international consulting companies. He is a Fellow of the Society of Actuaries, an associate of the American Academy of Actuaries, and an Enrolled Actuary. Let us know what you think about this interview by getting into your responses in the comment section below. Neither Stockerblog nor the interviewer nor the interviewee are rendering tax, legal, or investment advice in this interview. No investment advice is indicated or implied.
But how to know at which level to buy and how much to buy? Typically, throughout a market crash, most stocks drop a maximum of around 60%. Obviously this ongoing company will need to have strong basic principles and a good history of profits. A bad company can lose everything and go bankrupt during a crisis.
Knowing the stock price of good companies drop a maximum of 60%, we can separate our war chest into 2 tranches to buy first at 30% drop and the second at 50-60% drop. Or we can divide our war upper body into 3 tranches to choose the first at 20% drop, the second at 40% and the 3rd at 50-60% drop.
With this, we will always buy something throughout a market crash or modification and at least make a good revenue. It is better than aiming to predict the exact low of the marketplace and finish up not buying in any way which most people do. Many finish up looking forward to the stock price to go lower and scared that the stock price will continue to fall.
The psychology of the state of mind stops one from buying shares at a minimal. Technical analysis may also be one way to steer us on our access buy price. By looking at charts, we can know how much a stock falls during a market crash typically. Below shows the chart of the company called OCBC bank in Singapore. 4.14. That is clearly a 56% drop.
7 plus in only 3 months. You would have made a profit if you dared to buy during the crash. At the year 2000 dotcom bubble crisis If we look, this stock also dropped around 56%. If we had used the same strategy, we would have made a profit also. Let’s take a look at another company, Singpost. This is also a well-balanced company with strong basic principles.
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In the 2007 financial meltdown, this stock has fallen about 53%. Applying the same technique to buy first at 30% drop and the second at 50% drop, the same profit would apply. There are cases where the stock price of an organization is cyclical in nature as seen in the company SIA(Singapore Airlines) below. This stock fell 60% through the 2007 financial crisis. For cyclical shares, we can still deploy the same strategy of shopping for in 2 or 3 3 different tranches but it will be futile to hold the stock throughout if you don’t invest solely for the dividends only.
The stock price of these cyclical companies fluctuate up and down a lot and goes in a sideways fashion. A lot of the right time, it’s easier to sell it off for some income before the next crash comes. There are many other things to consider when buying a stock and each stock may behave differently.