vania-janet/multiturn-rag-retrieval-data huggingface dataset:
Consider how much money he makes from dividends off that purchase alone and if he were to currently believe Wells Fargo was overpriced, he could keep the cash and buy something else he believes is cheaper. In these cases, dividends automatically build cash cushions post buying and many value investors believe that one should always have cash on hand. This second point is a little tricky because it can involve risk assessment: some investors believe that high dividend paying stocks, like MO, won't experience the huge declines of indexes like the SPY. MO routed the SPY in 2009 (29% vs. 19%) and these investors believe that's because it's yield was too desired (it feels safer to them - the index side would argue ""but what happens in the long run?""). The problem I have with this argument (which is frequent) is that it doesn't hold true for every high yield stock, though some high yield stocks do show strong resistance levels during bear markets."
Might want to cross-post to /r/financialindependence;  I'm in a similar situation like yours. The problem is that working hard and really hustling it lost a lot of it's primal motivation because the utility of extra money isn't there.   You have to be intrinsically motivated to achieve it, or gain enough satisfaction from the other factors that comes with it (power, ego, etc.). If none of these are super-motivating to you, like it was for me, then you need to find something that is a lot of fun to you, but at the same time still very challenging and the outcome is not certain.   For me it turned out that it was active investing. I can scale it up or down as I please (ie: spend 10 hours on it in a day, then spend no time on it for a day) - there's no employees and no customers, so no schedule I have to keep or person I need to keep happy.   It takes a while to find that, so you just have to give things a go. However, the difference between a hobby and this is that it's A) a challenge and B) you can actually lose. At least for me, that makes it so much more interesting compared to playing computer games, which I also enjoy very much but get bored of if I spend too much time on it.
You shouldn't be picking stocks in the first place. From New York Magazine, tweeted by Ezra Klein: New evidence for that reality comes from Goldman Sachs, via Bloomberg News. The investment bank analyzed the holdings of 854 funds with $2.1 trillion in equity positions. It found, first of all, that all those “sophisticated investors” would have been better off stashing their money in basic, hands-off index funds or mutual funds last year — both of them had higher average returns than hedge funds did. The average hedge fund returned 3 percent last year, versus 14 percent for the Standard & Poor’s 500.  Mutual funds do worse than index funds. Tangentially-related to the question of whether Wall Street types deserve their compensation packages is the yearly phenomenon in which actively managed mutual funds underperform the market. Between 2004 and 2008, 66.21% of domestic funds did worse than the S&P Composite 1500. In 2008, 64.23% underperformed. In other words, if you had a fund manager and his employees bringing their skill and knowledge to bear on your portfolio, you probably lost money as compared to the market as a whole. That's not to say you lost money in all cases. Just in most. The math is really simple on this one. Stock picking is fun, but undiversified and brings you competing with Wall Streeters with math Ph.Ds. and twenty-thousand-dollars-a-year Bloomberg terminals. What do you know about Apple's new iPhone that they don't? You should compare your emotional reaction to losing 40% in two days to your reaction to gaining 40% in two days...  then compare both of those to losing 6% and gaining 6%, respectively. Picking stocks is not financially wise. Period.
"Here's an answer to a related question I once wrote. I'm reposting here. I can, but it takes a significant amount of time. I'll do a short version which unfortunatley might leave more holes than you like. Basically, traders don't want to barter because it is hard to find the person with precisely the goods you want who wants to trade for the goods you have. Thus the need for ""coupons"" that represent value in a marketplace. Then you need to decide who gets to create coupons. If too many can issue them, problems arise, and no one trusts the coupons will be good later. Eventually you want one large bank/nation/trader to be able to issue them so everyone has the same level of trust in them, and you don't have the economic inefficiencies of many coupon issuers. Next, the number of coupons needs to be enough to facilitate trade. If the amount of trade increases a lot, and the number of coupons doesn't increase similarly they become worth more, and people start to hoard them. This causes deflation, which causes less investment, which causes less growth, which hurts everyone in the long run. If there are too many coupons added, this causes inflation, which causes people to spent them quicker instead of holding them. For reasons I won't cover here slight, predictable inflation is much better than deflation, so remember inflation is slightly preferred. Note that inflation is often caused not by the number of coupons but by external price changes. Now, for a modern economy to do well, somone has to watch the economy, measure it carefully, and add/subtract coupons into the system as needed. Coupons, like all money, have no real value (whatever that means), but only have value because the holder expects to be able to trade them *later* for goods and services. You cannot eat coupons, use them for shelter (usually!), or wear them, but you want to trade them for such needs. The same is true for paper money, gold, stones, or almost whatever money system one uses. Money in all these forms is merely an IOU tradable for future goods.
"There are several brokerages which have lower minimum deposits (often $500) and allow purchase of index ETFs. I won't name them to avoid advertising. The best way to find out is to go to your bank, and ask to see a financial advisor. Then explain your difficulty to the advisor (who should caution you about the issues with investing such a small amount) and ask for advice on where to find a suitable broker. Also, sometimes banks offer services where you can buy shares of a fund through your bank account. This is probably not ""as good"" as the brokerage (performance may be not as good, fees may come out higher), but especially for small amounts and for convenience, this may be easier. Again, you should inquire at your institution."
"You have heard the old adage ""Buy low, sell high"", right? That sounds so obvious that you'd have to wonder why they would ever bother coining such an expression. It should rank up there with ""Don't walk in front of a moving car"" on the Duh scale of advice. Well, your question demonstrates exactly why it isn't quite so obvious in the real world and that people need to be reminded of it.  So, in your example, the stock prices are currently low (relative to what they have been). So per that adage, do you sell or buy when prices are low? Hint: It isn't sell. Yes. Your gut is going to tell you the exact opposite thanks to the fact that our brains are unfortunately wired to make us susceptible to the loss aversion fallacy. When the market has undergone a big drop is the WORST time to stop contributing (buying stocks).  This example might help get your brain and gut to agree a little more easily: If you were talking about any other non-investment commodity, cars for instance.  Your question equates to.. I really need a car, but the prices have been dropping like crazy lately.    Maybe I should wait until the car dealers start raising their prices again before I buy one. Dollar Cost Averaging As littleadv suggested, if you have an automatic payroll deduction for your retirement account, you are getting the benefit of Dollar Cost Averaging. Because you are investing the same amount on a scheduled interval, you are buying more shares when they are cheap and fewer when they are expensive. It is like an automatic buy low strategy is built into the account. The alternative, which you are implying, is a market timing strategy. Under this strategy, instead of investing regularly you try to get in and out of investments right before they go up/drop. There are two MAJOR flaws with this approach:   1) Your brain will work against you (see above) and encourage you to do the exact opposite of what you should be doing.   2) Unless you are clairvoyant, this strategy isn't much better than gambling. If you are lucky it can work, but because of #1, the odds are stacked against you."
(After seeing your most recent comment on the original question, it looks like others have answered the question you intended, and described the extreme difficulty of getting the timing right the way you're trying to. Since I've already typed it up, what follows answers what I originally thought your question was, which was asking if there were drawbacks to investing entirely in money market funds to avoid stock volatility altogether.) Money market funds have the significant drawback that they offer low returns. One of the fundamental principles in finance is that there is a trade-off between low risk and high returns. While money market funds are extremely stable, their returns are paltry; under current market conditions, you can consider them roughly equivalent to cash. On the other hand, though investing in stocks puts your money on a roller coaster, returns will be, on average, substantially higher. Since people often invest in order to achieve personal financial stability, many feel naturally attracted to very stable investments like money market funds. However, this tendency can be a big mistake. The higher returns of the stock market don't merely serve to stoke an investor's greed, they are necessary for achieving most people's financial goals. For example, consider two hypothetical investors, saving for retirement over the course of a 40-year career. The first investor, apprehensive Adam, invests $10k per year in a money market fund. The second investor, brave Barbara, invests $10k per year in an S&P 500 index fund (reinvesting dividends). Let's be generous and say that Adam's money market fund keeps pace with inflation (in reality, they typically don't even do that). At the end of 40 years, in today's money, Adam will have $10,000*40 = $400,000, not nearly enough to retire comfortably on. On the other hand, let's assume that Barbara gets returns of 7% per year after inflation, which is typical (though not guaranteed). Barbara will then have, using the formula for the future value of an annuity, $10,000 * [(1.07)^40 - 1] / 0.07, or about $2,000,000, which is much more comfortable.
"A lot of people have already explained that your assumptions are the issue, but I'll throw in my 2¢. There are a lot of people who do the opposite of long term investing.  It's called high frequency trading.  I'd recommend reading the Wikipedia article for more info, but very basically, high frequency traders use programs to determine which stocks to buy and which ones to sell. An example program might be ""buy if the stock is increasing and sell if I've held it more than 1 second."""
These statements aren't necessarily contradictory. In the first case, investors are bearish because they anticipate selling in the future (because all the interested buyers have bought, so all that remains in the short run are people willing to sell and therefore drive down the price).  In the second case, the trend is strengthened because the increase in volume indicates that the price movement interested a lot of traders. The trend could be bullish or bearish.  The statements aren't contradictory because the second case could very well lead to the first case. For example, if an increase in price is coupled with an increase in volume, this could indicate that the positive trend is strengthening (second case). Traders are becoming more interested in the price move, so they buy.  However, once all of the traders who are willing to enter the market long do so, we're in the first case. Investors realize that all of the traders who were interested in buying have bought, so they become bearish because they expect selling to start soon.
Since no one else mentioned it, there are sometimes amazing deals that require being the first person to take advantage of them. I'm not talking about black Friday sales, I'm talking about the woman who decided to sell the Porsche (she had bought for her cheating husband) for $1000. You might not run into those types of deals often, but having liquid investments will allow you to take advantage of them instead of kicking yourself. I just bought some real estate with some of my emergency fund that needed several months before I could properly finance it due to some legal issues with the deed that needed to go through court because there was a deceased person on the title. I will make far more on the deal when it's done than I ever could have made with that money invested in the market.
"This question is predicated on the assumption that investors prefer dividends, as this depends on who you're speaking to. Some investors prefer growth stocks (some which don't pay dividends), so in this case, we're covering the percent of investors who like dividend paying stocks. It depends on who you ask and it also depends on how self-aware they are because some people may give reasons that make little financial sense. The two major benefits that I hear are fundamentally psychological: Dividends are like mini-paychecks. Since people get a dopamine jolt from receiving a paycheck, I would predict the same holds true for receiving dividends. More than likely, the brain feels a reward when getting dividends; even if the dividend stock performs lower than a growth stock for a decade, the experience of receiving dividends may feel more rewarding (plus, depending on the institution, they may get a report or see the tax information for the year, and that also feels good). Some value investors don't reinvest dividends, as they believe the price of the stock matters (stocks are either cheap or expensive and automatic reinvestment to these investors implies that the price of a stock doesn't matter), so dividends allow them to rebuild their cash after a buy. They can either buy more shares, if the stock is cheap, or keep the cash if the stock is expensive. Think about Warren Buffett here: he purchased $3 billion worth of shares of Wells Fargo at approximately $8-12 a share in 2009 (from my memory, as people were shocked that be bought into a bank when no one liked banks). Consider how much money he makes from dividends off that purchase alone and if he were to currently believe Wells Fargo was overpriced, he could keep the cash and buy something else he believes is cheaper. In these cases, dividends automatically build cash cushions post buying and many value investors believe that one should always have cash on hand. This second point is a little tricky because it can involve risk assessment: some investors believe that high dividend paying stocks, like MO, won't experience the huge declines of indexes like the SPY.
There are multiple factors at play that drive stock price movements, but one that can be visualized is that stocks can be priced relative to other (similar stocks).  When one stock price goes up without fundamental changes (i.e. daily market noise/movements), it becomes slightly more expensive relative to it's peers.  Opportunists will sell the now slightly more expensive stock, while others may buying the slightly cheaper (relatively) peer stock.    Imagine millions of transactions like this happening throughout each hour, downward selling pressure on a stock that rises too fast in value relative to it's peers or the market, and upward buying pressure on stocks that are relatively cheaper than it's peers.  It pushes two stocks towards an equilibrium that is directionally the same.    Another way to think of it is lets say tomorrow there is $10B in net new dollars moved into buy orders for stocks that comes from net selling of bonds (this is also partly why bonds/stocks are generally inversely related).  That money goes to buys stocks ABC, XYZ, EFG.  As the price of those goes up with more buying pressure, stocks JKL, MNO, PQR are relatively a tad cheaper, so some money starts to flow into there.  Repeat until you get a large majority of the stocks that buyers are willing to buy and you can see why stocks move in the same direction a lot of times.
"One reason is that it is not possible (at Vanguard and at many other brokerages) to auto-invest into ETFs.  Because the ETF trades like a stock, you typically must buy a whole number of shares.  This makes it difficult to do auto-investing where you invest, say, a fixed dollar amount each month.  If you're investing $100 and the ETF trades for $30 a share, you must either buy 3 shares and leave $10 unspent, or buy 4 and spend $20 more than you planned.  This makes auto-investing with dollar amounts difficult.  (It would be cool if there were brokerages that handled this for you, for instance by accumulating ""leftover"" cash until an additional whole share could be purchased, but I don't know of any.) A difference of 0.12% in the expense ratios is real, but small.  It may be outweighed by the psychological gains of being able to adopt a ""hands-off"" auto-investing plan.  With ETFs, you generally must remember to ""manually"" buy the shares yourself every so often.  For many average investors, the advantage of being able to invest without having to think about it at all is worth a small increase in expense ratio.  The 0.12% savings don't do you any good if you never remember to buy shares until the market is already up."
Used in our daily activities goes out the house and acquire different things which our family wants. But since the economy isn't doing well these days, thinking about the High dividend stocks is important. One factor that must be taken into account could be the expense.   If you're accustomed with buying what you see without even looking at the package price, you better customize the way you live your life. Perseverance is incredibly essential for you to be able to find the high dividend stocks. If possible, you need to seek a cheaper alternative on the pricey items you used to purchase. Be patient and save cash!
Also, to correct a basic misunderstanding, selling happens all of the time, and does not inherently drive the price down. There are by definition an *equal number of sales to purchases*. What drives the price down is *the people buying being willing to pay less*. EDIT: as another aside, a point I have made elsewhere and seems suitable to make here: flash crashes, whilst causing panic, are again something only the professional intra-day trading community are likely to be affected by. Their very name implies so. The reason being that anybody investing based on the *long term investment potential* of a company will only benefit in the temporary drop in price, as they can purchase more of the company at a bargain price. Any intelligent investor will not be fazed by the drop in price, as price has *no bearing on a company's real value*, and stocks do tend towards this value over time, whatever happens over the short term. The only case in which it could is if the company owns a large portfolio of stock that itself devalues dramatically that they intended to sell and as a result experience cash flow problems. This is so incredibly unlikely with a flash crash as to be ignored."
Mutual funds (that are not exchange-traded funds) often need to sell some  of their securities to get cash when a shareholder redeems some shares. Such transactions incur costs that are paid (proportionally) by all the shareholders in the fund, not just the person requesting redemption, and thus the remaining shareholders get a lower return. (Exchange-traded funds are traded as if they are shares of common stock,  and a shareholder seeking a redemption pays the costs of the redemption). For this reason, many mutual funds do not allow redemptions for some period of time after a purchase, or purchases for some period of time after a redemption. The periods of time are chosen by the fund, and are stated in the prospectus (which everyone has acknowledged has been received before an investment was made).
Very wealthy people usually have an investment manager who is constantly moving money between investments and accounts. They hold cash (or cash equivalent) accounts for use in a near-term buying opportunity, for example if they believe certain stocks will go down in price soon. This amount can vary from under 1% (for a money manager with no intention of any short-term trading) to over 20% (for a market pessimist who expects a huge price reduction shortly).  In rare cases they will also hold significant cash because of a planned large purchase, but there's almost never a reason for that to exceed 1% of their net worth.
crank out expensive shares when markets are frothy Corporations go public (sell their shares for the first time) in market conditions that have a lot of liquidity (a lot of people buying shares) and when they have to make the fewest concessions to appease an investing public. When people are greedy and looking to make money without using too much due diligence. Think Netscape's IPO in 1995 or Snapchat's IPO in 2017. They also issue more shares after already being public in similar circumstances. Think Tesla's 1 billion dollar dilution in 2017. Dilution results in the 1 share owning less of the company. So in a less euphoric investing environment, share prices go down in response to dilution. See Viggle's stock for an example, if you can find a chart. issue debt Non-financial companies create bonds and sell bonds. Why is that surprising to you? Cash is cash. This is called corporate bonds or corporate debt. You can buy Apple bonds right now if you want from the same brokers that let you buy stocks. mutual fund investor Bernstein is making a cynical assessment of the markets which carries a lot of truth. Dumping shares on your mom's 401k is a running gag amongst some financial professionals. Basically mutual fund investors are typically the least well researched or most gullible market participants to sell to, influenced by brand name more than company fundamentals, who will balk at the concept of reading a prospectus. Financial professionals and CFOs have more information than their investors and can gain extended advantages because of this. Just take the emotions out of it and make objective assessments.
Investment banks don't have to buy anything. If they don't think the stock is worth buying - they won't. If they think it is - others on the secondary market will probably think so too. Initial public offering is offering to the public - i.e.: theoretically anyone can participate and purchase stocks. The major investment firms are not buying the stocks for themselves - but for their clients who are participating in this IPO. I, for example, receive email notifications from my brokerage firm each time there's another IPO that they have access to, and I can ask the brokerage to buy stocks from the IPO on my behalf. When that happens - they don't buy the stocks themselves and then sell to me. No, what happens is that I buy a stock, through them, and they charge me a commission for the service. Usually IPO participation commissions are higher than regular trading commissions. Most of the time those who purchase stocks at IPO are institutional investors - i.e.: mutual funds, pension plans, investment banks for their managed accounts, etc. Retail investors would probably not participate in the IPO because of the costs, limited access (not all the brokerage firms have access to all the IPOs), and the uncertainty, and rather purchase the stocks later on a secondary market.