Better than the 700 last time I checked

10/6/2008 3:36:49 PM

Quote :

"Eh? I'm protecting my gains to this point."

How much gain could you possible have at this point? I'm still going to keep investing. With a horizon decades away I'm not too worry, just sucks to keep that net worth keep going down.

10/6/2008 3:37:05 PM

Quote :

"Cowboys: I was ridiculued for this thought process."

The tax consequences still make it a bad decision. You'd be out at least 10% of your original investment by year's end due to the penalty you'd owe the IRS in April. This is on top of the rest of the income taxes you'd owe.

Down 8% now, a month later, versus down 10% immediately?

Reshuffling your 401(k) goodies is more intelligent than a cash-out, even if the volatility scares you into moving into low-yielding conservative funds.

But why would you do that?

A 401(k) account is for retirement assets, not rent money. You're not planning to retire in the next half year are you? The next decade?

You should probably re-examine your investment objectives. Your time horizon is a bigger key to what makes your decision and other comments confusing.

You refer to the current returns on a 2045 fund, for example. Lifecycle funds, especially targeting dates that far out, are not designed to produce short-term returns. In the current environment, the owner of shares of a 2010 fund may have a legitimate gripe about the fund being heavily invested in the S&P, but not a 2045.

[Edited on October 6, 2008 at 3:38 PM. Reason : ...]

10/6/2008 3:38:04 PM

Quote :

"How much gain could you possible have at this point?"

The "gains" I am referring to is the 15% loss that I haven't taken since I moved my funds.

Quote :

"The tax consequences still make it a bad decision. You'd be out at least 10% of your original investment by year's end due to the penalty you'd owe the IRS in April. This is on top of the rest of the income taxes you'd owe."

No, no, no. Maybe I wasn't clear when I posted it, if so I apologize, I moved it from a 2040 fund to a stable value fund, still under the 401k umbrella. The stable value is essentially cash (been gaining like .01% a day since I moved it).

[Edited on October 6, 2008 at 3:40 PM. Reason : a]

10/6/2008 3:38:44 PM

Loss in value or real dollars?

My point is that you wouldn't take a loss unless you decided to sell for one. If you don't need to cash in an investment in the account until you retire -- which is the idea of a 401(k) -- it's current return isn't important, and certainly nothing to panic about.

Contributing tax-free to an S&P fund--even heavily--as it declines makes a lot of sense. You're buying more equity in huge companies while they're historically cheap and while you're young enough to afford fluctuations in present value. This is, quite literally, a fire sale to end all fire sales.

The global economy will recover eventually, right? Even if it takes 30 years?

I'm willing to bet you that 30 years from now you'd rather have invested more in the S&P 500 while it was extremely cheap than after any recovery to "fix it" had taken place.

[Edited on October 6, 2008 at 3:50 PM. Reason : ...]

10/6/2008 3:40:39 PM

What about the gain you'll miss out on during the rebound?

10/6/2008 3:42:29 PM

If my 401k that was in the 2040 was at 50k when I moved it to the stable value, it is still at 50k. Had I left it in the 2040, which is heavy in the S&P, it would be down nearly 7500 at this point. Sure, it's all on paper, and if I leave it in the stable value as the S&P heads back north, I fucked myself. But I have a feeling I'll be able to get back in near enough to the bottom that I will have avoided the massive sell off and got back in before it heads back north.

Quote :

"What about the gain you'll miss out on during the rebound?"

I'm just going to quit replying to you because you clearly aren't reading anything I type. If that is the case, please let me know so I don't have to waste my time.

[Edited on October 6, 2008 at 3:43 PM. Reason : a]

10/6/2008 3:43:02 PM

i haven't moved any of my 401k money because at this point i'm buying low...

i also just quit looking at it because everytime i did i would cry a little inside... besides i'm not planning to retire for quite some time.

10/6/2008 3:44:56 PM

It still sounds like you're just trying to time the market. I mean, how do you know you'll get in before the rebound?

10/6/2008 3:45:27 PM

I should stop looking. This is me inside.

10/6/2008 3:46:17 PM

if he gets in now he'd be better off. this only applies if the timing ends up working out


i suck at timing

10/6/2008 3:47:54 PM

back up over 10,000

10/6/2008 3:55:14 PM

Heh. He's gone.

10/6/2008 3:55:21 PM

10/6/2008 3:58:07 PM

Quote :

"If my 401k that was in the 2040 was at 50k when I moved it to the stable value, it is still at 50k. Had I left it in the 2040, which is heavy in the S&P, it would be down nearly 7500 at this point. Sure, it's all on paper, and if I leave it in the stable value as the S&P heads back north, I fucked myself. But I have a feeling I'll be able to get back in near enough to the bottom that I will have avoided the massive sell off and got back in before it heads back north."

I heard this entirely too many times when I did this shit for a living.

Historically speaking, "I have a feeling" does not have a high ROI on the NYSE. The earlier you learn this, the more profitable your investments will be.

If you've moved out of that fund into the Stable Value, you already have fucked yourself. You've been purchasing shares of the S&P for however long you've been contributing (hint: while the price was undoubtedly much higher) and have just sold them cheaper than they've been in about 5 years.

That is how you lock in a loss. Buy high, sell low. Not a great strategy.

10/6/2008 3:58:51 PM

^

10/6/2008 4:01:37 PM

^^ that's exactly why i haven't gotten out...

i'm just gonna roll with it and see how things go.

10/6/2008 4:06:08 PM

^^^ i don't know why that isn't glaringly obvious to people, but it just doesn't seem to click most of the time.

10/6/2008 4:17:32 PM

Yeah I keep telling myself its the bottom for like 2 months and buying in only to see it fall more, if we all knew where the bottom was we would all be rich now wouldnt we

10/6/2008 4:24:55 PM

yeah, same here...i just remind myself not to talk myself out of buying at a good time on the chance that i might get a better time

if that better time comes and i have money available, i just keep pulling the trigger

10/6/2008 4:32:47 PM

Cramer nailed it today.

If you need it in the next 5 years, GTFO the Stock Market.

This, BTW, is what any responsible financial advisor would tell you anyway.

10/6/2008 4:38:38 PM

well, durrrrr

if you needed it within the next 5 years, it shouldn't have been in the stock market to begin with

10/6/2008 4:41:03 PM

Yep, while I would feel a lot better if I was just now putting the same amount in buying at these prices, I feel that in time my losses will turn into gains, although I wont complain about breaking even at this point either lol

10/6/2008 5:14:45 PM

Quote :

" But why would you do that? A 401(k) account is for retirement assets, not rent money. You're not planning to retire in the next half year are you? The next decade? You should probably re-examine your investment objectives. Your time horizon is a bigger key to what makes your decision and other comments confusing. You refer to the current returns on a 2045 fund, for example. Lifecycle funds, especially targeting dates that far out, are not designed to produce short-term returns. In the current environment, the owner of shares of a 2010 fund may have a legitimate gripe about the fund being heavily invested in the S&P, but not a 2045. "

In an economic enviroment like this, the question is, WHY WOULDN'T I DO THAT? All you guys have done is rehash old standard arguments of buy/low sell/high, can't time the market, etc etc etc. I haven't yet seen one of you attempt any sort of analysis on where the economy is headed. To the contrary, I've seen a lot of you make decisions that make me think you are actually just gambling with play money and not actually attempting to make rational decisions.

Quote :

" You refer to the current returns on a 2045 fund, for example. Lifecycle funds, especially targeting dates that far out, are not designed to produce short-term returns. "

Ok, do you think this recession we are already in is only going to last a few weeks, or much longer? I'm not daytrading my 401k. I moved it out once, looking to move it back in once.

Quote :

" Contributing tax-free to an S&P fund--even heavily--as it declines makes a lot of sense. You're buying more equity in huge companies while they're historically cheap and while you're young enough to afford fluctuations in present value. This is, quite literally, a fire sale to end all fire sales. "

None of this is news to me.

Quote :

" The global economy will recover eventually, right? Even if it takes 30 years? "

Did you read anything I wrote? I fully expect it to recover. The additional 10-20% hit I hope to avoid when compounded at the historic rate of return will be worth 300k+ when I retire.

Quote :

" I'm willing to bet you that 30 years from now you'd rather have invested more in the S&P 500 while it was extremely cheap than after any recovery to "fix it" had taken place. "

Again, did you read anything I wrote. How am I being attentive enough to avoid a 15% swing in an index with a US and most likely a global economy heading for a slowdown, but I won't be attentive enough to see when all the gnashing is done?

Quote :

" It still sounds like you're just trying to time the market. I mean, how do you know you'll get in before the rebound? "

I'm not sure how precise you think I am trying to be in "timing" the market. I thought I made it clear in multiple posts what I was trying to accomplish. Hell, even if I get in at even the slightest glimmer of hope, it will still be well before we pass the point where I got out. I win. I'd have to literally be asleep at the wheel to miss the recovery. Let's look back in time for an example of how this might play out. Go to the S&P for 2002-2003. Let's assume am at June 21st, 2002. The market has been shocked by 9/11, all the news is quite a bit negative, the dotcom bubble has mostly popped and it has already hemorraged nearly 30%. I'm pretty late to the game, but I still decide to move it out at around 990. I'd have literally a year worth of studying the market to miss the swing back up. If I was even more studious, I might could get in anywhere in that time period and get an extra 10-20% gain out of my money on the ride back up. And, for a real kick in your pants, I could have left the shit in the stable value for this entire time, and we'd almost be right back where we were in the summer of 2002. If you've read enough about this bull we've had since then, you'd note that this has been one of the weakest recession recoveries we've had in this country. Then, when you factor in wage gains didn't meet pace with productivity gains, and we were using our homes as a big credit card which lead to fake growth, and energy and inflation have been for the most part rampant in the past year, AND couple all that with the horrendous job loss news AND a financial sector in lockdown, well, it just doesn't take a leap of faith to think well break back through 1000 for the S&P in the very near future. It's at that point I'll be looking for any sort of glimmer of hope and I'll lock back into my 2040. And, if it goes down another 10% from there in worse than mild recession (not an outside possibility at this point), oh well, I'm still 20% to the better once it recovers from the point I originally got out at on 9/12/2008. Please, I'd love to see some of your analysis to the contrary on why this is such a terrible thought process on my part. It isn't like this is a volatile stock that can move 10,20,30,40% in days that I am trying to time.

Quote :

" That is how you lock in a loss. Buy high, sell low. Not a great strategy. "

Again, it would be great if you'd read what I post, let me know if you aren't bothering so we can stop wasting everyone's time. I already stated I sold low, I'm going to buy in lower.

Quote :

" Cramer nailed it today. "

Yikes, talk about a contrary indicator. This very well could mean we are due for a short term rally.

10/6/2008 5:29:24 PM

tl;dr

WORDS

10/6/2008 6:34:02 PM

picked up some AAPL stock today at $89.50

10/6/2008 8:02:19 PM

what kind of negative %s are we all seeing? 33% here atm

10/6/2008 9:11:45 PM

50%

10/6/2008 9:15:56 PM

what kind of day is it going to be?

10/7/2008 8:34:14 AM

BAD

VERY VERY BAD

[Edited on October 7, 2008 at 8:38 AM. Reason : (I'm saying this because I'm always wrong--maybe that'll help everyone lol)]

[Edited on October 7, 2008 at 8:39 AM. Reason : oh, and -31% right now]

10/7/2008 8:38:30 AM

The shitty market has been doing wonders for the exchange rate

10/7/2008 8:39:07 AM

-39.84%

this is the first month in which my net worth was lower than the previous month... i dont think im going to look at quicken again for a couple of weeks

10/7/2008 8:42:17 AM

10/7/2008 8:47:41 AM

^^^ haha yea i have been looking at that saying any losses i have now will be off set when i study abroad and my money is worth 50% more

10/7/2008 9:24:12 AM

lol

Quote :

"MassEmails: In an economic enviroment like this, the question is, WHY WOULDN'T I DO THAT?"

Because you don't need the money this instant.

::sigh::

I feel like I'm right back in the old office again...

Quote :

"MassEmails: All you guys have done is rehash old standard arguments of buy/low sell/high, can't time the market, etc etc etc."

The veracity of our fundamentally sound financial advice isn't diminished just because you used the term "rehash." Selling lower than you bought and trying to time the market like Ms. Cleo really won't do you any favors.

Quote :

"MassEmails: I haven't yet seen one of you attempt any sort of analysis on where the economy is headed."

Down for awhile followed by a recovery.

Happy?

Quote :

"MassEmails: Ok, do you think this recession we are already in is only going to last a few weeks, or much longer? I'm not daytrading my 401k. I moved it out once, looking to move it back in once."

Certainly longer than a few weeks. By definition, a recession has to last at least a quarter.

The mistake here is that you ever moved money out of stocks in the first place. It's as if you taxed yourself for whatever the fall in value was worth for no reason other than unmitigated panic.

If you're feeling especially masochistic, do some simple math to help you understand the epic financial disaster that decision was. Take whatever loss you took for that drop in value when you exchanged into the Stable Value and compound that at 7% over thirty years. The result is the cost of your impulsiveness and insistence on a market timing strategy in a 401(k) account.

What would I know though? I've only spent most of my career as a FINRA Series 7 & 66 licensed broker...

Quote :

"MassEmails: None of this is news to me."

Then tell me, smarty pants, why would you sell during a fire sale?

Are you at least contributing to the S&P fund?

Quote :

"MassEmails: The additional 10-20% hit I hope to avoid when compounded at the historic rate of return will be worth 300k+ when I retire."

Please walk me through your calculations here.

Also explain how you're taking a "hit" if you leave your money in the S&P fund in your 401(k) and continue contributing to it as if nothing was happening.

Quote :

"MassEmails: How am I being attentive enough to avoid a 15% swing in an index with a US and most likely a global economy heading for a slowdown, but I won't be attentive enough to see when all the gnashing is done?"

Look, I'm trying to be nice about this, but your post reflects almost a complete ignorance of how risky investments (like stocks and their indices) behave and how to profit from that behavior.

How have you avoided the 15% swing in the S&P 500 index?

You've done exactly the opposite: selling out after the downward swing in value.

Quote :

"MassEmails: I'm not sure how precise you think I am trying to be in "timing" the market."

Quote :

"How am I being attentive enough to avoid a 15% swing in an index with a US and most likely a global economy heading for a slowdown, but I won't be attentive enough to see when all the gnashing is done?"

Quote :

"I already stated I sold low, I'm going to buy in lower. "

You're trying to call bottom.

10/7/2008 12:07:49 PM

Quote :

"Certainly longer than a few weeks. By definition, a recession has to last at least a quarter. "

Two quarters of negative GDP growth

And I don't think we're technically in a recession....yet. We haven't had one negative GDP quarter, have we? (This one will be, I'm sure)

....and don't waste your time explaining stuff to MassEmails. Let him do his thing.... he'll learn, maybe.



[Edited on October 7, 2008 at 12:25 PM. Reason : ]

10/7/2008 12:20:15 PM

Two quarters of negative growth signal the start of a recession.

It only takes one quarter of flat or positive growth to end it.

10/7/2008 12:27:05 PM

eat me

10/7/2008 12:29:12 PM

down another 200+ points so far today

10/7/2008 1:39:16 PM

Quote :

"You're trying to call bottom."

and to the rest of the gamecat post.....

look, this isn't that hard. Cowboys/MassEmails isn't trying to "time the market", in an active-trader's sense, or day-trade with his 401k. He's just trying to avoid some losses, which yes, would otherwise be unrealized losses if he just leaves it alone for the next 30 years. But what's he's done now has basically 0 risk. He moved out of 2040 on it's way down, and as long as he moves back into 2040 at any point before it hits that spot again, then it's a net-gain. It's not likely that overnight without him noticing, it's going to jump 10% higher than when he moved out.

Yes, there are "potential losses" everywhere, since he probably got out as 2040 was on the way down, and he probably won't buy back in at the very bottom. But who cares. again, as long as he buys back in sometime, even now, he's still goign to come out ahead

10/7/2008 3:45:47 PM

Quote :

"Two quarters of negative GDP growth And I don't think we're technically in a recession....yet. We haven't had one negative GDP quarter, have we? (This one will be, I'm sure)"

actually, no, that's not the technical definition. That's just the common-media definition. There's actually wiggle-room built into the definition so it can be declared subjectively if necessary
http://www.nber.org/cycles/recessions.html

Quote :

"A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. "

10/7/2008 3:48:32 PM

Quote :

"He moved out of 2040 on it's way down, and as long as he moves back into 2040 at any point before it hits that spot again, then it's a net-gain."

Lets say the fund was at $100 when he moved it out and then $90 when he moved it back in, then yes, it is a net gain, but if I've been buying the entire time I may have an average buy price of $85, which would be a higher net gain.

10/7/2008 3:53:18 PM

Dollar Cost Averaging FTW

10/7/2008 4:12:13 PM

I need to n00b this thread up for a bit. Can someone tell me what is the difference between Wall Street and Main Street that they are always referencing on CNBC? I always assumed Wall Street reference was basically the stock market (could be wrong) but what the hell is Main Street?

10/7/2008 4:32:17 PM

Quote :

"but what the hell is Main Street?"

it's just the latest cliche used to refer to "normal people" and the businesses we frequent, or maybe the small businesses we or our parents and friends run.

i.e. Stock trading happens on "Wall Street", but you and I go grocery shopping and go out to dinner on "Main Street". It's not literal. It's just meant to illustrate how an overall financial crises or bad economy will trickle down from New York Bankers to normal people with normal jobs

10/7/2008 4:34:48 PM

wall street = rich ppl
main street = average/poor ppl

10/7/2008 4:35:30 PM

lol down over 500 points, lame. 650+ point swing today just another day in wally world.

10/7/2008 4:40:08 PM

thanks for your answers guys!

10/7/2008 5:02:01 PM

Quote :

"Lets say the fund was at $100 when he moved it out and then $90 when he moved it back in, then yes, it is a net gain, but if I've been buying the entire time I may have an average buy price of $85, which would be a higher net gain."

Im far from being knowledgeable with this stuff but this was the way I was thinking too. After doing some basic math (excel ftw), anyway you look at it it seems it would require him buying in very close to the bottom to see any gains over people who continued buying in. And the closer he came to buying back in near the prices he got out at, the farther BEHIND he would actually get when compared to people who bought in the whole time. Thats what the math says to me.

[Edited on October 7, 2008 at 5:06 PM. Reason : ]

10/7/2008 5:06:12 PM

^ It's easier to grasp with charts, but that's the deal.

10/7/2008 5:32:43 PM