I am really getting sick of watching my nest egg (401k) disappear. I really think the market is only going to continue to go down. I don’t buy into Obama’s spending spree one bit! The most distressed I ever saw Clark Howard was when he was talking about how stupid it was to borrow money from the US tax payer to pay off bad debt. And the market just keeps sinking.
So, my question is this… is it a good idea to move 100% of all of my mutual funds into a money market/ stable value fund (within the same plan - I am not taking any distributions) until the economy shows solid signs of improvment? Or do you think we’re already close to the bottom?
Probalby depends on how old you are. If you sell now, you’re basically selling at the bottom (or near to it – I suppose we could be at dow 5,000 soon). Buy high/sell low doesn’t really get you anywhere.
I’m in the same boat as you, fwiw, but I’m only 37, so I have plenty of time for it to recover.
IMO, it’s the worst time to do this. You haven’t actually lost any money in your mutual fund until you sell it. I don’t know of too many economists who don’t think there’s going to be a recovery at some point. So, if you keep the money in the mutual fund, then it should eventually recover. If you sell now, there is no way you can ever recover that loss. Whether or not you put new money in is a different story, but there’s no way in hell I would sell at this point unless I absolutely had to.
I’m about your age (40). I am just thinking thing are going to get a lot worse. I can easily see my accounts losing another 20-40% in the next 12 months. If I could jump out now and move it all back in 12-18 months from now, I think I could really benefit. I have never treated my 401k as trading account, but we all know that if we did this 12 months ago - we’d all be better off. Bottom line - I think it’s going to get A LOT worse!!! I hope I am wrong.
You haven’t actually lost any money in your mutual fund until you sell it.
Good point. I’ve been telling people that for years, but now I see nothing but doom and gloom. The funny thing is - I’ve spent the past 10 years in working for mutual fund companies! But in the IT department.
as bearish as I am, now is not the time to sell IMO. They probably announce another short sell ban (not that I think short selling is the root of this problem at all), or put the uptick shortsell rule back in place, and maybe there is some new mark to market news coming up. At this point I’d wait to sell but I think you your thoughts are good, that’s what I’ve been trying to tell people for a long time now.
Edit: With a fund keep in mind that you are getting the price of its assets per end of day. So you definitely have to keep that in mind, at least I would, if you try to to time your market exit. Better a day early than a day late but I would definitely let it rally some first.
IMO, it’s the worst time to do this. You haven’t actually lost any money in your mutual fund until you sell it. I don’t know of too many economists who don’t think there’s going to be a recovery at some point. So, if you keep the money in the mutual fund, then it should eventually recover. If you sell now, there is no way you can ever recover that loss. Whether or not you put new money in is a different story, but there’s no way in hell I would sell at this point unless I absolutely had to.
While I agree there that it probably not worth it to sell, it IS possible to re-buy on the upswing. You may not be able to time the upswing perfectly, but all you are really gambling is whether you can mitigate further losses by getting back in early enough on the recovery. We aren’t talking about accounts where you have to worry about fees, you are talking about 401ks that make it very easy to move money between investments through rebalancing.
People keep telling you now is not the time to sell, but as I see it you aren’t selling, you are just taking (made up number) $100k and switching it from stocks to a money market fund within your 401k program. Yes?
My personal view is that this isn’t a horrible idea. I think you should take a look around at what various segments of the financial world are predicting. If typically Bullish and Bearish analysts are saying things will be bad for another 2 years, you may want to consider reallocating your portfolio.
But I think you should also take a look at what your stock investments are in. Heavily financial since you work for a mutual fund company perhaps? Whatever you are in, I bet there are funds available to you that are retaining their value better than what you present own.
Lots of people would say now is the time to be contrarian. If everyone is selling fnancials, you might want to pick some well managed financial stock funds and go that route. Hard to say.
The standard Slowtwitch line is to seek out a reputable financial adviser, one that charges hourly. You can rarely go wrong with this route. Have then look over your portfolio, discuss your long-term plans, and then get some recommendations.
I’ve been heavy on CDs with my personal non-401k assets for about 2 years now. My 401k portfolio has obviously been hit. But I got into some decent CDs, have been making money there, and will slowly get back into the market. I’ve presently got a dollar cost averaging set up too; got cash in a money market that is monthly being put into the market in a well balanced set of funds.
A buddy of mine and I at work have decided (in a totally joking manner) to ignore the $ value of our 401k and just look at total number of shares owned. Now we’re all smiles as twice a month we’re buying more and more and more shares!
If I was you I would move to something “stable” for the short term. I did this a while ago and while I’m not making 10%+ growth I am not losing my shirt either. Once things stabilize I will certainly be playing the game again but not for now.
If I could jump out now and move it all back in 12-18 months from now, I think I could really benefit. I have never treated my 401k as trading account, but we all know that if we did this 12 months ago - we’d all be better off.
If we had ALL jumped out of the market 12 months ago the market would be very different right now.
If you don’t really know whether you want to be conservative or aggressive why not try a mixture. Put your current contributions into a cash/money market account instead of stock funds. That way you don’t take the loss on your previous shares but you don’t throw good money after bad.
That way if the market and our economy are like that of Japan’s back in the 90’s, you will at least have saved up all that money instead of losing half of it while the economy sinks for such a long period of time. 2% return a year beats losing 5% a year. Pretty soon it will add up to some real money.
Assuming you have a long time horizon, make a decision about a plan and stick to it. You can go ahead and sell at a 13 year low if you want, with the S&P P/E ratio at a 25% discount but 5 years from now you’ll be kicking yourself.
and you know things will be oh so much better 5 years from now how? Are you the same type of person that was ‘buy at 9k! there have never been so many bargains!’. I think nowadays you can get better odds in vegas than in the market… at least in vegas you can actually run some solid math/probabilities behind things, while the stock market is basically running on feelings.
and you know things will be oh so much better 5 years from now how? Are you the same type of person that was ‘buy at 9k! there have never been so many bargains!’. I think nowadays you can get better odds in vegas than in the market… at least in vegas you can actually run some solid math/probabilities behind things, while the stock market is basically running on feelings.
why would anyone be stupid enough to buy ETFs in this market?
there definitely were bargains when the dow was at 9k.
why?
THE DOW ONLY REPRESENTS 30 COMPANIES OUT OF THE ENTIRE STOCK MARKET.
this thread is a veritable gold mine of proof as to why you should never read slowtwitch for investing advice!
