Market Getting Taken Apart (again)

[bootdaddy]

Gut check time people...this is going to be really ugly...

Gonna have to send mom some money...her 401k is going to a 101k!

With some luck we may find a meaningful panic bottom today...but there is no foreseeable news that will help this thing bottom.

Gold is in range here...other than that, run for the hills.

ouch.

 

[bootdaddy]

where's marginman?

 

[bootdaddy]

I just heard a guy on CNBC say that we have the smartest people in the world trying to solve the problem and it will get fixed...!!!

um...Mr. Market always wins and cannot be controlled...more and more futile government engineering simply adds panid to this market. Gov should stay out and just let the thing unfold (unravel). All gov spending now will just hamper any real or meaningful or needed growth in the future.

If your business is struggling, do you look for ways to spend more money??? No, you look for ways to spend less and get more from your current investments.

This is truly an historic event unfolding and many many books will be written about it...

 

[open72]

watching cnbc , i wonder if "today" will be that "day" ..

http://www.cnbc.com/id/27358270

 

[bootdaddy]

not as bad as it looked...my guess would be a massive bear market rally early next week following next selloff - but it won't last

it's almost as if there are no sellers left to panic out...and there are certainly very few buyers willing to step up before year end.

 

[MarylandMark]

So I went from 10% pre-tax to 16% pre-tax about 2 months ago.

I have 15+ years until I retire so figure regardless of how bad it gets (down 41% YTD so far) that it has to come back by then. Right?

 

[bootdaddy]

Ultimately the money on the sidelines will have to "live" somewhere. Problem is that the entire financial system is going through a systemic problem (too much leverage and the ponzi pyramid failed) and nobody really knows what model capital will take going forward...smells like a worldwide deep recession

Hearing Italy and Spain on bankruptcy watch - too much soverign debt. Brazil - 2nd failure in a decade coming quick.

EVERY asset class is being taken down.. Diamonds for example are down about 50%!!! Heard a story where a guy bought a $50 million diamond in NYC and store policy is full return/refund within 60 days...well the guy brought it a back and the company honored it and is eating God only knows how much $...

I did hear one interesting investment idea...Yale University Municipal Bonds yeilding 8-8.5% tax free and with Obama coming in with higher taxes could yield 12%+ tax free...oh...and they are guaranteed by and fully backed by the University's Endowment Fund!

15 years is a long time...stay conservative and go to the movies if the markets are "bothering" your mojo!

 

[getchasum111]

So I went from 10% pre-tax to 16% pre-tax about 2 months ago.

I have 15+ years until I retire so figure regardless of how bad it gets (down 41% YTD so far) that it has to come back by then. Right?

Whats up MM....going to be in your neck of the woods early next month....how far are you from Woodbridge Va....:26:

 

[MarylandMark]

Sounds good Chip! PM me the dates and what your schedule is like.

50ish miles by car; right across the river by boat. Seltzer and a few other BF/OSO/SOS'ers live over there as well that may want to come help drink the well dry.

 

[MarylandMark]

15 years is a long time...stay conservative and go to the movies if the markets are "bothering" your mojo!

I does suck watching it drop but I know/hope it is the best thing for my situation in the long run.

I'd rather buy a share of XYZ at $25 today even if I paid $50 for it last month because the hope would be it is worth much more than either if those amounts when I retire.

I'm already "making" 10% (avg tax rate I've paid on last 5 IRS returns) since I am buying with pre-tax money and my company matches me 82% of the first 6%.

When it went under 10K I bounced up from 10% to 16%- buy low right?

More millionaires were made during the Great Depression than any other time in history- my time is now! I hope...

15 years is a long time- has to go up some time right?

 

[open72]

td ameritrade...

 

[bootdaddy]

all I can say is be very very conservative...just because stocks are cheap is no reason they can't get cheaper (or yield more).

5000 on the dow is certainly possible.

some very smart people I know are in no rush whatsoever to do anything in the market...it's going to take some time and we are much closer to the beginning of this calamity than the end.

If you have to buy...just scale in little by little

my .02

 

[MarylandMark]

5000 on the dow is certainly possible.

Freaky that you said 5K- I had some thing about that in my post but deleted before posting...

I have said for about a year now that I want $10 fuel, 12% interest rates and the DOW to drop to 5K. My reason is for housing to drop and so I can buy on the cheap in my 401K.

I have cash down, great credit and non-contingent buyer. $350K house at 12% is the same payment as $600K at 6% but some time in the next 30 years I'd most likely be able to get a lower than 12% rate where if I paid $600K; that is what I owe.

I ask because I value your opinion. So what do I do with:

Current contributions:

Drop my 401K contributions to 0 until the bottom is reached? This is an auto-investment plan- I can't say the bottom is here, here is $10K so buy now.

Drop to 6% since the company matches me 82%? Doing this would be because the company matches me and it is pre-tax money so it would have to drop 92% for me to break even so to speak?

Keep it at 16% pre tax? Doing this would be hoping it recovers in the next 15 years.

What I have already invested:

Leave where it is; no reason to lock in my losses so just ride it out

Dump and head to a Bond fund paying around 3% but more importantly stopping the bleeding.

 

[open72]

all I can say is be very very conservative...just because stocks are cheap is no reason they can't get cheaper (or yield more).

5000 on the dow is certainly possible.

some very smart people I know are in no rush whatsoever to do anything in the market...it's going to take some time and we are much closer to the beginning of this calamity than the end.

If you have to buy...just scale in little by little

my .02

that's why i am just logging in the symbols ...prepare myself for the go ...yahoo and sandisk should have taken those offers:ack2:

 

[bootdaddy]

MM - I'm not sure what to tell you. If it were me, I would not bother to sell here (or lock in losses as you said)...just understand and accept it can go lower...maybe significantly lower.

Since the market is forward looking I would continue to sock away dough in 401k and let company match...the juciest part of the market should be over the next 6 months, maybe a year...and the money invested between now and then should do well over the long run 5-15 years.

What people have not figured out is that "the market" as we knew it is long gone and will never be coming back in its recent form. 30-40% of hedge funds are going under. The leverage bubble has burst and the implications world-wide will take time to play out.

Had a real deal wall street bud over tonight and he has ben buying GE...say 10,000 shares and selling calls against 5,000 shares, yielding 10% a month on the calls and if the stock bounces 15% he gets 5,000 shares called away, he still has 5,000 shares...but he doubts it will stay up 15% as it will settle down as they cut costs and restructure their business in "the new world"...and he plans on continuing to sell calls as they expire monthly...

GE should be standing no matter what happens...but it will take time to truly bottom and move higher on fundamentals.

Over time, (some) people are going to wonder why the hell they have been working so hard chasing "more" and question if they really need the expensive house (and all that goes with it)...and when that happens a lot of people will be downsizing and migrating to a more "European" work life...where people work more at what they want/enjoy doing, with some working harder but enjoying the "simple life" more...maybe we won't have as much stuff...but life will be simpler and maybe even healthier!

 

[open72]

GE was trading at around 40 a year ago , 17.89 current. ALCOA is another that is mowed down right now.

 

[Ratickle]

Current contributions:

Drop to 6% since the company matches me 82%? Doing this would be because the company matches me and it is pre-tax money so it would have to drop 92% for me to break even so to speak?

What I have already invested:

Leave where it is; no reason to lock in my losses so just ride it out

Do not drop below matching contribution level. Your actual return is higher than the match because it is pre-tax dollars. ie: You put in $1, company puts in $0.82, no tax on original $1 so Uncle Sam lets you keep the $0.25 to $0.50 he would have taken had you not invested through a 401K. Actual return on $1, over 100%.

Depending on where your money is, ride it out but make sure you are properly distributed. If you review, (Below this is a link to Vanguard Funds, I don't know what your choices currently are but this is similar to what you want to review.) your investments, and if they are not evenly distributed, move some around. You want to average a return of 11% over 7 year spans. That is the approximate doubling stage of investments and what the market has averaged over its life. History says it will get back there, but no guarantees. I believe you divide up into approximately 1/4 Cash or Gold type, 1/4 Bonds or Treasuries type, 1/4 Growth Stocks, and 1/4 Old Dividend Stocks Type.

There are others on here more qualified to tell how to divide and when, this is an approximate model to see where you may not be diverse enough and therefore got hammered a little too hard.

http://www.vanguard.com/us/FundsIndexOnly?WT.srch=1#hist::upperTB=perfTBI|lowerTB=avgAnnTBI

Here is a picture of the Wilshire 500. If you notice the average growth, then look at the couple of booms and busts, you will see it is very normal type growth except for the DotCom mess caused by phony crooks and the current housing mess caused by phony crooks. Until someone arrests and prosecutes these guys, it will happen again and again because they get rich by duping others out of money and get to keep it while all others pay. If someone can throw tens of millions of dollars at you for getting your company stock or growth to a certain level, the crooked power guys have zero problem doing it. Then there is no prosecution for fraudulent paperwork and statements.

It looks to me like the market has over-reacted a bit and passed the normal support mark but it should stabilize and grow some soon. If this was not an election year, it probably would have stabilized by now.

 

[MarylandMark]

If it were me, I would not bother to sell here (or lock in losses as you said)...just understand and accept it can go lower...maybe significantly lower.

Thank you! I'm fine with it going lower. I look at it that I have twice the buying power now as I did 12 months ago; if it goes to 5K I'll have triple the buying power than if it were still at 14K

and the money invested between now and then should do well over the long run 5-15 years.

The average return in the stock market is 10.4% yearly (?). So even if it only grows 1/3 of that (3.5%) a year for the next 15 years I'll still be ahead of the game on the shares I bought 10/08 when DOW was at 14K. The shares I am buying now and/or if/when it goes lower are the ones that I am going to get rich off of is the plan and why I raised my contributions higher

GE should be standing no matter what happens...but it will take time to truly bottom and move higher on fundamentals.

I think that is what keeps me going. McDonald's is still McDonald's right? They have been selling burgers for 50+ years and will be 50+ years from now; not some fly-by-night business without a business plan. I have 21 mutual funds with Fidelity to choose from; not a lot so some have losers without a doubt but thinkg/hoping overall the funds have a good mix of businesses. Clipper Fund is my worst fund down 48%- Berkshire-Hathaway, Costco, Harley Davidson, Proctor & Gamble but also has Am Ex, AIG, Merrill Lynch

Over time, (some) people are going to wonder why the hell they have been working so hard chasing "more" and question if they really need the expensive house (and all that goes with it)...and when that happens a lot of people will be downsizing and migrating to a more "European" work life...where people work more at what they want/enjoy doing, with some working harder but enjoying the "simple life" more...maybe we won't have as much stuff...but life will be simpler and maybe even healthier!

LESS IS MORE!!!

I sold my house in 6/06 for 2X+ what I paid for it 5 years prior and "stationary full timed" in to a RV for 2 years watching the housing market free fall. I sold my RV for 9% less than I paid for it after 2 years and my old house is worth 1/2 what I sold it for, if that.

I'm renting a condo now for about 70% what it cost the owner to own it and looking to get back in a house. I am looking for some thing about 1/3 the size of my prior house with 1/3 the associated bills.

Less is more was my motto while trailer trashing it up!

Thanks for the insight!

 

[MarylandMark]

Do not drop below matching contribution level. Your actual return is higher than the match because it is pre-tax dollars. ie: You put in $1, company puts in $0.82, no tax on original $1 so Uncle Sam lets you keep the $0.25 to $0.50 he would have taken had you not invested through a 401K. Actual return on $1, over 100%.

I typed up, ate and then hit post on above before reading your post.

I was thinking the same thing!!! I pay around 10% taxes so that along with the 82% match on the 1st 6% it is a no brainer no matter how low it goes.

Verizon uses Fidelity and we have 21 mutual funds to choose from.

Personal Rate of Return from 01/01/2008 to 10/24/2008 is -41.6%

Personal Rate of Return from 10/25/2006 to 12/31/2007 is +12 (will only let me go back 24 months)

Dow was 12,134.68 on 10/25/06 and 13,264.82 on 12/31/07 (which is around 9.5% so I did 25%+ better than the DOW)

 

[open72]

now this would have been the train to get on:drool5:

http://data.cnbc.com/quotes/twm