Actually, believe it or not, I got out of the original trade in the first post on the same day I posted this with a small gain. It was one of my few winning trades in the last year or so.
Unfortunately, the 100 shares of USO (oil ETF) I bought a few months ago at $50 is now under $24. Good thing I didn’t continue with my plan to dollar-cost average into 500 shares. That would have been bad.
My 401(k) is still getting schlammered. I had originally thought the DOW would only go down to 10K. Now it’s looking more like 5K. We may see the same 90% decline in the stock market that was seen in the Great Depression, but instead of happening in a year or so, it could take 10 years thanks to the political jokers in charge.
Some legendary investors have been creamed in this stock market: Jim Rogers (commodities have done worse than stocks), Warren Buffet (is he getting too old?), I’m sure many others.
I recently read the book Fooled by Randomness. The author makes some great points about how dollar-cost-averaging into the U.S. market was a winner, but dollar-cost-averaging into most other markets (Imperial Russia, etc) would have made a person broke. It’s really made me rethink my DCA strategy in my 401(k).
It was also interesting to read about all the traders who happened to hit upon successful strategies that would last a few years and then it seems like they would all end up blowing up in less than a week. BOOM! Outta’ the trading business.
I’ve picked up some other investing books recently. I plan to move to a much shorter-term strategy outside of my 401(k). I figure it’s better to take a small short-term gain (or loss) than a large long-term loss.
