Financial News

[Cknolls]

I've done pretty well with it in the past. I always err on the side of caution, because even if I miss an upswing in the markets, I'm earning 3% a year, which is a lot better than losing 5-10% in a week.

 

 

Congrats to you! Very wise move... You saved yourself a percent or two and even more because it will take that much larger of a move to the upside to make up for all the losses incurred today'. Kudos!

[caulfield12]

Who is saying the US economy is growing 3.5 - 4% per year. I've never seen any sort of growth figures that high. That would be insanely strong growth for a country our size. Maybe you and I are thinking of different metrics from a growth perspective?

 

Aren't the quarterly updated GDP numbers coming out this week (Thursday)?

 

For some reason, I was under the impression that the rate would be relatively robust, although most yearly numbers are still in the 2.0-2.5% range, more or less.

[caulfield12]

Congrats to you! Very wise move... You saved yourself a percent or two and even more because it will take that much larger of a move to the upside to make up for all the losses incurred today'. Kudos!

 

17 of the last 48 times there was a 5% correction, it continued downwards to 10% or greater...so the odds are roughly 35-40% IF you can time it right.

 

On the other hand, it bounced back positively even more frequently.

 

Now it just depends on what you sold exactly, transaction/brokerage fees...cost to get back into the market again, if you looked at it every occasion you attempted to "time" the market and how much money you actually were able to save versus an approach of dollar cost averaging (or even doubling your investments in the midst of a correction of 5-10% or more waiting for a bounce back long-term).

 

It's not easy to do.

 

Bill Miller of Legg Mason famously beat the S&P Index for 13 consecutive years (Value Trust/LMVTX) and became one of the most reputable managers in the game...yet the combination of 2001-2002 and 2008-2009 did such a number on him that he was relieved of his position and in fact the name of his fund became so poisonous it had to be changed to Clear Bridge Value Trust.

 

In a different way, the same thing has happened to Bill Gross of Pimco Total Bond Index...hubris in thinking you can time the market consistently, well, we all know what happened to Icarus.

[cabiness42]

It's a goernment retirement account. There is a fixed rate fund, government securities fund, and a few stock funds and I can move any percentage of my account among the funds with no transfer fees.

[Y2HH]

17 of the last 48 times there was a 5% correction, it continued downwards to 10% or greater...so the odds are roughly 35-40% IF you can time it right.

 

On the other hand, it bounced back positively even more frequently.

 

Now it just depends on what you sold exactly, transaction/brokerage fees...cost to get back into the market again, if you looked at it every occasion you attempted to "time" the market and how much money you actually were able to save versus an approach of dollar cost averaging (or even doubling your investments in the midst of a correction of 5-10% or more waiting for a bounce back long-term).

 

It's not easy to do.

 

Bill Miller of Legg Mason famously beat the S&P Index for 13 consecutive years (Value Trust/LMVTX) and became one of the most reputable managers in the game...yet the combination of 2001-2002 and 2008-2009 did such a number on him that he was relieved of his position and in fact the name of his fund became so poisonous it had to be changed to Clear Bridge Value Trust.

 

In a different way, the same thing has happened to Bill Gross of Pimco Total Bond Index...hubris in thinking you can time the market consistently, well, we all know what happened to Icarus.

 

There are many instances of people beating the S&P500 Index for a span of years -- but it's never sustained. Given enough time, the S&P500 ALWAYS wins, which is why I simply invest my 401k into that, and a foreign index.

 

[southsider2k5]

There are many instances of people beating the S&P500 Index for a span of years -- but it's never sustained. Given enough time, the S&P500 ALWAYS wins, which is why I simply invest my 401k into that, and a foreign index.

 

This. Totally this. Find the SP500 fund, use that as your main investment long term. Pick some other funds if you like for the rest.

 

If you have extra money to invest, do what you want with that money. I am about to take on some lottery tickets in long term crude oil options. Make sure it is money that you can afford to lose.

 

Historically NO ONE beats the SP, especially once trading fees are included.

[Cknolls]

17 of the last 48 times there was a 5% correction, it continued downwards to 10% or greater...so the odds are roughly 35-40% IF you can time it right.

 

On the other hand, it bounced back positively even more frequently.

 

Now it just depends on what you sold exactly, transaction/brokerage fees...cost to get back into the market again, if you looked at it every occasion you attempted to "time" the market and how much money you actually were able to save versus an approach of dollar cost averaging (or even doubling your investments in the midst of a correction of 5-10% or more waiting for a bounce back long-term).

 

It's not easy to do.

 

Bill Miller of Legg Mason famously beat the S&P Index for 13 consecutive years (Value Trust/LMVTX) and became one of the most reputable managers in the game...yet the combination of 2001-2002 and 2008-2009 did such a number on him that he was relieved of his position and in fact the name of his fund became so poisonous it had to be changed to Clear Bridge Value Trust.

 

In a different way, the same thing has happened to Bill Gross of Pimco Total Bond Index...hubris in thinking you can time the market consistently, well, we all know what happened to Icarus.

 

 

 

I dont think Bill Miller timed the market. I think he stayed balls in in 2008 and was b**** slapped for doing so....different animal

[Cknolls]

Opportunities are made up easier than losses....

[southsider2k5]

Markets erased what had been a 600+ point gain before the open, and had stayed around 300 points to the plus side for most of hte day in the last hour+ of trading to finish down slightly on the day.

[caulfield12]

http://finance.yahoo.com/news/troubling-tr...-214700529.html

 

Here's an interesting theory on the QE/monetary policy side of this whole mess...will use it with my students.

[Chisoxfn]

http://www.bloomberg.com/news/articles/201...lary?cmpid=yhoo

 

Given tihs is a large makeup of the forum demographics...thought you might find this article interesting.

[southsider2k5]

http://www.bloomberg.com/news/articles/201...lary?cmpid=yhoo

 

Given tihs is a large makeup of the forum demographics...thought you might find this article interesting.

 

 

A whole lot of the younger generations have no belief in social security being much of an option by the time they retire.

[StrangeSox]

A whole lot of the younger generations have no belief in social security being much of an option by the time they retire.

Yeah, that's sort of a self-reinforcing belief. Plus, pretty much no pensions these days.

[Jenksismyhero]

http://www.bloomberg.com/news/articles/201...lary?cmpid=yhoo

 

Given tihs is a large makeup of the forum demographics...thought you might find this article interesting.

 

Yeah I was like that for like 2 years.... before I bought a house and had a kid.

[Chisoxfn]

A whole lot of the younger generations have no belief in social security being much of an option by the time they retire.

I think I liked the article because it summed me up. I also don't ever think of myself as a millennial but I am glad...I'd rather be called a millennial and then a Gen Xer

 

And your comment above, absolutely sums me up. I have zero faith / belief social security will be around and I wish the youth around the country would rise up and support wholesale reform that might actually ensure some of us get something for everything we pay into. I've also long been a proponent of me managing my own retirement (vs. paying it into the social security black box), but I also completely understand why it is a horrible idea, because I've seen how most people manage their money and it is deplorable and sad. And for all I know, I manage my money deplorably (and am just too ignorant to realize it).

[StrangeSox]

FWIW, SS will still be around when we all retire unless we actively decide to abolish the program. It'll only be able to pay something like 80% of the benefits its supposed to starting somewhere around 2035-2040 if no changes are made, though.

[southsider2k5]

I think I liked the article because it summed me up. I also don't ever think of myself as a millennial but I am glad...I'd rather be called a millennial and then a Gen Xer

 

And your comment above, absolutely sums me up. I have zero faith / belief social security will be around and I wish the youth around the country would rise up and support wholesale reform that might actually ensure some of us get something for everything we pay into. I've also long been a proponent of me managing my own retirement (vs. paying it into the social security black box), but I also completely understand why it is a horrible idea, because I've seen how most people manage their money and it is deplorable and sad. And for all I know, I manage my money deplorably (and am just too ignorant to realize it).

 

Oooh look, new Iphone!

[StrangeSox]

Oooh look, new Iphone!

you want that apple stock in your 401k portfolio to rise, right?

[Balta1701]

FWIW, SS will still be around when we all retire unless we actively decide to abolish the program. It'll only be able to pay something like 80% of the benefits its supposed to starting somewhere around 2035-2040 if no changes are made, though.

However, because Social Security benefits go up faster than the rate of inflation under the idea that if the whole country becomes more wealthy senior citizens should share in those benefits, the benefit payout rate after that 20% cut will still be greater than it was in ~2007 (I'm not sure how it would compare to today, probably still higher than the current rate, but last time I ran the numbers personally was in the "privatize it!" debate from 2007).

[StrangeSox]

However, because Social Security benefits go up faster than the rate of inflation under the idea that if the whole country becomes more wealthy senior citizens should share in those benefits, the benefit payout rate after that 20% cut will still be greater than it was in ~2007 (I'm not sure how it would compare to today, probably still higher than the current rate, but last time I ran the numbers personally was in the "privatize it!" debate from 2007).

I think it's more based on the fact that seniors' living expenses grow faster than the economy as a whole, at least as long as health care costs climb faster than the economy. That was the argument I remember against the "chained-CPI" proposals a couple of years ago.

[Chisoxfn]

you want that apple stock in your 401k portfolio to rise, right?

Damn right I want my apple stock to keep climbing.

 

PS: I have only paid for a phone once...I always just do the free be and I'm hoping I'll be able to get my new iphone for free.

[cabiness42]

Moved all of my retirement account out of the markets Friday.

 

Still not regretting this decision.

[Y2HH]

Still not regretting this decision.

 

It's easy to not regret such a decision if you look at the market in week long increments, but that's not how retirement investing works for a reason.

 

I'll care in 25-30 more years, and not until then.

[NorthSideSox72]

Still not regretting this decision.

Probably half the people who smoke will never have serious health problems as a result. Doesn't mean it was a good risk-reward decision.

 

I'm glad you got lucky, but make not mistake, that is what happened. I'd buy back in right now if I were you.

 

By the way, not sure if it is occurred to you, but your gains are only partially made by price increases. I assume you have stocks in your mutual funds that pay dividends? By selling, you'll lose at least one cycle of those dividends across the board.

 

[Y2HH]

Probably half the people who smoke will never have serious health problems as a result. Doesn't mean it was a good risk-reward decision.

 

I'm glad you got lucky, but make not mistake, that is what happened. I'd buy back in right now if I were you.

 

By the way, not sure if it is occurred to you, but your gains are only partially made by price increases. I assume you have stocks in your mutual funds that pay dividends? By selling, you'll lose at least one cycle of those dividends across the board.

 

Also have to keep in mind the loss of dollar cost averaging that occurs over time in 401k investing...I've been buying through my 401k from 2005 until now, which means I bought through the highest of highs and the lowest of lows, not to mention the dividends made along the way.

 

Which is why these retirement accounts MUST be viewed as VERY VERY long term investments. You buy throughout decades, not days.