Investment question: How would you protect your stock investments from another dot com burst?

[jinduy]

i'm all for long term investing, but events like the dot com burst can really really set you back for a while as well as shake you out of the market for good.

 

[mugs]

Don't invest in companies that have no intention of ever making a profit.

 

[novasatori]

diversification??

 

[dquan97]

easy: stop-loss order

 

[DaveSimmons]

Buy and hold a S&P 500 stock index mutual fund or ETF.

My fund shares from early 2000 (pre-burst) have been in the black for years now. They lost value after the burst, but nothing like tech stocks or tech sector funds.

It's OK to put money into a sector like tech or energy or real estate if you want, but if you're wary of risk I'd say at least half your money should be in the general market, with maybe another quarter in international index funds.

 

[intogamer]

I speculate that there will be a mobile com burst. Mobile communications FTW.

 

[alrocky]

an effective strategy to protect your buy n holds?

Buy & hold is an effect strategy.

My account zoomed ~40% in 2003

While the US represents half the world's trade-able stocks, 20-40% international seems the sweet spot. Diversification in broad market indexs and keeping sector allocation to 5-10% of your portfolio.

example of a 2 fund equity portfolio:
1) Total Stock Market Index Fund Investor Shares (VTSMX)
2a) Total International Stock Index Fund (VGTSX) or
2b) FTSE All-World ex-US Index Fund Investor Shares (VFWIX)

a 1 fund solution:
lifecycle retirement fund