Please tell me you too are getting clobbered

[Prashun Patel]

in the market...

I thought I was in very conservative investments. But even that's failing me now...

I've lived through enough of these times to know that making investment changes during tumultuous times is a bad idea, but I guess misery just loves company.

Anyone???

[Jim Becker]

I'm not in the market outside of the managed fund my 401K is in and that's long-term and gets more conservative as I get closer to retirement age. The "buy" price is lower at the moment, so I'm getting more shares from my payroll deductions. The current volatility is concerning, but also offers opportunities to "buy low" for folks who are willing to carefully select what they believe will benefit over time. So to my thoughts, the volatility is more of a pain/opportunity for traders and savers will be less affected long term. Of course, things happening in "that subject we cannot and shall not discuss" could become a factor over the the next year or so, too.. ;)

[Ken Fitzgerald]

The ease at which people can trade today and their lack of confidence is what creates the volatility. I am very conservatively invested and I am doing fine for both the long term and the short term.

[Mike Wilkins]

I have been trying for years to get my wife to stop going into panic mode each time she hears unpleasant news about the financial sector. She really gets testy when her rollover account gets hammered. I keep trying to tell her that this is only temporary, that the market will come back. And she says that I don't have much patience.

[roger wiegand]

Keep repeating... a diversified portfolio of index funds...

Lousy returns on a (my) historic scale, but at least slightly positive. Wondering hard whether, despite it being such cheap money, it would be better to pay off the mortgage than keep the money in stocks and bonds. Selling when the market goes down always seems like such a bad idea though. Dollar cost averaging over the decades has worked very well, but getting close to the end of putting money in and need to think about taking it out.

[Myk Rian]

I put my bucks into savings bonds. Still getting 4-6% on them.

[Al Launier]

I have been trying for years to get my wife to stop going into panic mode each time she hears unpleasant news about the financial sector. She really gets testy when her rollover account gets hammered. I keep trying to tell her that this is only temporary, that the market will come back. And she says that I don't have much patience.

Mike I really understand your delima. I've always been a bit of a risk taker knowing that risk/reward is not for everyone, yet I also realize the "nothing ventured - nothing gained" aspect of investing. I felt that way during the 2008/2009 the crash & felt we should stay put as the market would recover. Yet, after days & weeks of listening my wife's hysterics I caved. I couldn't put up with it anymore. So, we sold despite anticipating the normal rcovery one should expect - if patient enough. Bottom line: we lost ~ $1/4 M. Since then we've gone drastically conservative, changing our portfolio mix to 10% equities/90% bonds.

We are seniors, she 69/me 73, and have barely realized recovered our losses since then. Yet life is better/smoother with less "volitility" in our household. Fortunately we have more than adequate funds to last our lifetimes & leave a bundle for our daughter when we pass on. Yet, with the potential for increased interest rates, bonds may now become the alternative liability. So, depending on your ability to weather financial storms, and family harmony, decisions unfortunately become not only very personal, but very difficult. If you are so inclined a "Wealth Manager" may help with the decision process - it has helped us.

Best of luck to all in the market!

[Brian Henderson]

I have been trying for years to get my wife to stop going into panic mode each time she hears unpleasant news about the financial sector. She really gets testy when her rollover account gets hammered. I keep trying to tell her that this is only temporary, that the market will come back. And she says that I don't have much patience.

The market always comes back, you have to invest for the long term. It's usually people staring only at the moment that cause these dramatic swings in the market.

[roger wiegand]

I find it very helpful to only look at my 401K statements once every other year when we do any necessary rebalancing among investment types. In the middle of that right now.

I've also been fortunate to have an excellent fee-for-service financial advisor. He gets paid by the hour-- provides advice only and doesn't ever touch his client's money-- and so has absolutely no incentive to sell high fee products. Those "free" financial advisors who are so eager to help you are most decidedly not free. Their resistance to having to take a fiduciary role would be a laugh, but for the harm they do.

[Steve Peterson]

I am inclined to just ride it out instead of panicking and selling at the bottom. Even as I get closer to retirement age, I don't see much reason to have more than around 25% in bonds. Even after I retire, I expect that a large portion of the money will be invested for 10 to 20 years before I take it out. I want that portion to grow faster than inflation and stocks should be the best way to do this.

Steve

[Paul Lawrence]

... Yet, after days & weeks of listening my wife's hysterics I caved. I couldn't put up with it anymore. So, we sold despite anticipating the normal rcovery one should expect - if patient enough. Bottom line: we lost ~ $1/4 M....

Sell low; buy high hasn't worked for many folks. "Wife's hysterics" are another complete topic. Just sayin'.

There is a certain mindset that is needed to divvy in the "market." Those without that mindset should find someone with that mindset. They will charge for that service, but not as much as you lose without the right mindset.

[Tom Stenzel]

I'm not doing that swoft in the market but am holding firm. Or am I putting my head in the sand like an ostrich? Not too clear on that myself.

Lucky thing it's only money. Just think how bad it would be if it was something valuable!

-Tom

[Jim Tobias]

You only realize losses(or gains) if you sell. Hang on for the long term. If you are diversified, there is no reason to panic, just have patience.
When the market turns down, I do not look at my personal investments because I don't want to see how bad it may be.......sort of like not wanting to look at a Dr. work on an injury. I wait until the market recovers and then check in to see the impact. And I am IN retirement!!


Jim

[Rick Potter]

I don't even want to try to be a market maven, my small investment is in a fund (Vanguard), which has been pretty steady for 20 years. Mine is a mixed fund, and has done pretty well.

[Chris Padilla]

About the only thing I'd like to warn everyone about is junk bonds. Even some 'good' companies are going be downgraded to junk bond status (BB or lower). AAA, AA, A, and BBB are considered investment-grade. The bond market is easily 100x larger than the stock market. It is the real driver of things.

When a fund holding such bonds gets downgraded into junk, they must sell because by law they cannot hold such rated bonds. So if ANY of your funds are holding iffy bonds, you should seriously consider getting out.

So what is the main driver? Well, there are 3 of 'em as I see it:

(1) Oil. Oil prices are too low for the investments many energy companies made when oil was trading at $100+ and they borrowed BILLIONS to fund exploration. With oil below $60, they cannot pay back the money they borrowed. These loans are coming due this year and into the next 2-3 years. There will be many defaults. Oil supplies, even if everyone maintained output (which is very high, BTW), will take a couple years to get low enough to move oil prices back up. The energy sector is a mess in short.

(2) Car loans. The amount of sub-prime loans being offered is going up and eventually, these will have default issues. Car loans topped over a trillions dollars in debt recently. It has never been so large in recent history.

(3) Student loans. The online universities have BY FAR the largest amount of debtors compared to bricks 'n mortar universities. Students are graduating 100k-200k in debt and can't get jobs. There are even ways for the students to legally NOT have to pay their loans back. I won't go into the politics of that.

So in a nutshell, the credit integrity of the US is in bad shape as it is around the world. Toss in the fact that many countries are purposely devaluing their currencies and things just keep getting worse.

Sitting on a decent amount of cash is a good idea. Buying solid stocks at bargain prices is also a good idea...which is what you can use that stockpile of cash for. Cash is good. Don't be afraid sit on it for a little while.

And I've managed to tread water in my 401(k) but I do actively move in and out of various stocks. I have about 25% of it in cash right now.

[Wade Lippman]

I am inclined to just ride it out instead of panicking and selling at the bottom. Even as I get closer to retirement age, I don't see much reason to have more than around 25% in bonds. Even after I retire, I expect that a large portion of the money will be invested for 10 to 20 years before I take it out. I want that portion to grow faster than inflation and stocks should be the best way to do this.

Steve

Absolutely the right approach. The market is down maybe 10% from its peak, but it is still triple what it was in 2009.
It is like the sea; the tide comes in and goes out, only a fool fights it. Unless of course you are psychic.

[Dennis Peacock]

What I need is money.....so I can play in the market. :)

Oh well, maybe next time I'll be born rich instead of good looking. :D :D

[Brian Henderson]

Absolutely the right approach. The market is down maybe 10% from its peak, but it is still triple what it was in 2009.
It is like the sea; the tide comes in and goes out, only a fool fights it. Unless of course you are psychic.

Unfortunately, there are a lot of people who think they can play the market for quick profits when the stock market is a long-term waiting game. It doesn't matter if the market goes up or down today, it matters what the historical averages are over 20-30 years. There's this weird belief that everyone should be in the market, that day trading is how people make money. That's ludicrous. If people are particularly risk averse, they have no business at all being in the market, their money should be in a safe, protected investment. Of course, safe, protected investments are also low return, but at least your money is safe. The stock market is for people willing to take a risk for potentially larger returns on investment. And it doesn't take a psychic to see things going the wrong way, it only takes being intelligent and paying attention. I lost nothing in the 2008 crash. I saw it coming and moved my money elsewhere. Lots of people saw it coming. I also didn't get screwed in the dot.com bubble. The market isn't rocket science, there's a certain degree of luck, but a lot of it is just paying attention and not expecting short term gains over long term investments.

[Pat Barry]

Stocks and bonds, and in fact all investments, are run by and for the big guys. We are on the tail of the dog. I'm just along for the ride, like the flea at the tail of that dog. We can only hope the dog is headed in a direction that is good for us.

[Wade Lippman]

And it doesn't take a psychic to see things going the wrong way, it only takes being intelligent and paying attention. I lost nothing in the 2008 crash. I saw it coming and moved my money elsewhere.
You got lucky. It could just easily gone up another 50%.
I sold all my bonds and bought stocks on the very day the market hit bottom in 2009. I got lucky. Made a lot of money, but it was just a matter of getting lucky; it could have continued going down and I would have looked like a fool.

[Michael Weber]

A rising tide lifts all boats. There is a reason I am mostly out of the stock market and think that a "buy and hold" stratagy as preached by mutual fund companies may not be realistic in the future. I'm a famous idiot and more often wrong than right, especially about macro trends, so not stating my thinking least I embarrass myself.

[Steve Peterson]

There's this weird belief that everyone should be in the market, that day trading is how people make money.

Maybe some people can make money by day trading. I am really good with numbers, but I would be very unsatisfied because I would feel like I am not adding any value to society. Every dollar earned by day trading comes at the expense of someone else losing money. With the rising tide theory, everybody makes money, but then everybody's money is worth slightly less. At the end of the day, the world is not any better after a day trader makes his money.

Steve

[Ken Fitzgerald]

Well....we may be the tail on the dog but.....the most recent survey I read dated 4/15/2015 stated that 55% of American households are invested in the stock market. It's a big tail!:D

I began investing in a 401K in the late '70s. After my forced retirement in 2011 due to deafness, I began making some sizeable withdrawals to cover some very expensive dental work and that 45 year delayed grand honeymoon my wife of 47 years and I enjoyed 2 years ago. I have gotten back a good portion of what I invested over the years and still have a sizeable amount producing interest.

Of course there are those who would have said I was over insured when I paid for disability insurance through my employer 24 years. Then I awoke deaf in 2010, was forced to retire and collected on that disability insurance until I turned 65. That $8 a month premium turned out to be a fantastic investment!

The professional investment people with whom I have discussed investing have all said pretty much the same thing. Find a method of investing with which you are comfortable and stick with it.

Having cash under mattress isn't completely safe and it doesn't keep up with inflation.

Nothing is black and white. Do what is right for you.

If you aren't comfortable investing! That's okay too!

Death is the only thing guaranteed in this world.

[Bill McNiel]

Prashun,
I too have been "clobbered" over the last year to the tune of about a 4.5% loss in my rollover account. This money was supposedly invested conservatively but I would be way ahead had I just put it in a Money Market Fund. I have never believed in the Stock Market, I see it as gambling with sharks giving the advice. Fortunately for my wife and kids the majority of "my" money is in real estate. The reality now is that my woodworking commission income is used to pay bills rather than fund trips and toys.

I have always wished that Birth Certificates came with expiration dates, I don't want to die leaving a million dollar estate not do I want to wake up at 75 relying on Social Security and the dole.

[Brian Elfert]

I haven't bothered to look at my 401K balance as I can't do anything about it. The market is down about 10% and I am not certainly not in a panic about it. The market is still up something like 100% since 2009.

It is funny how high oil prices push the market down and how low oil prices also push the market down. A lot of oil producers borrowed a lot of money thinking that $80 oil was here to stay.

[Rich Engelhardt]

I put my bucks into savings bonds. Still getting 4-6% on them.
Details man - - details - - -please don't keep me in suspense!

Where are these bonds & can anyone get in on that or are they something you already had?

I'm drawing 4.5% on an ancient life insurance policy I had that went into effect prior to some IRS change that was made a few years back.
My agent tried in vain to contact me to let me know that as long as the new IRS rules hadn't gone into effect, I could dump as much into that as I wanted.
After the rules changed, things were different.
I ignored all the calls and messages from the agent - - like a fool, but, you know how that goes. An insurance agent hounding you seldom wants to deliver good news....


Anywho - back to the bonds....


I haven't bothered to look at my 401K balance as I can't do anything about it.
That's sort of risky.
You can keep an eye on things and if it looks like a real down period is headed your way, you may be able to shift all your money into "holding".

Stocks and bonds both went into free fall back in the early part of 2011.
I had 100% of my 401 in bonds - playing it "safe".
The bonds started to hemorrhage, so I quickly shifted 100% of my 401 into a money fund.
For 6 months I made nothing - - but - - for 6 months I also lost nothing.

Had I not shifted that money out of the bond fund, I would have lost a bundle.

[Brian Elfert]

That's sort of risky.
You can keep an eye on things and if it looks like a real down period is headed your way, you may be able to shift all your money into "holding".


If I could predict the stock market I would be a billionaire overnight. My 401K is invested in a target date fund. If the market tanks again like 2009 it is also likely that it will go up in the next 20+ years. How many people sold in 2009 and lost big as the market went back up another 100%?

[George Bokros]

Death is the only thing guaranteed in this world.

Not quite, taxes are guaranteed also!!

[Wade Lippman]

Not quite, taxes are guaranteed also!!
Actually they aren't. If you don't sell stocks with unrealized gains, they go through your estate untaxed. No one ever has to pay taxes on the gains. (well, assuming your estate is under $11M)

I got screwed horribly by a financial manager who every year would sell about half my stock and buy others. He only preformed about as well as the market (which, considering he got 1% for his efforts, is better than most) but left me with a big tax bill in years the market went up. So So So happy I got rid of him. Now I don't sell anything up unless I also sell something down to eliminate the taxes. I am a firm believer in the efficient market hypothesis, so one is as good as another.

[George Bokros]

Actually they aren't. If you don't sell stocks with unrealized gains, they go through your estate untaxed. No one ever has to pay taxes on the gains. (well, assuming your estate is under $11M)

True, if it passes in your estate however if you need the money at some time in retirement you do have to pay the tax man. The only way to have no tax bill is if all of your gain is in a ROTH IRA

[Rich Engelhardt]

If the market tanks again like 2009 it is also likely that it will go up in the next 20+ years. How many people sold in 2009 and lost big as the market went back up another 100%?
Yes - - but - - some of us were only short timers at that point.
There was no "tomorrow" for some of us.
Say the market goes up again in 20 years & you're all set to get out in two more years.
Then it tanks again & you're left with - - nothing to show for all your years of savings.
You'd have been a lot better of just blowing the money on expensive vacations and having a good time.



If I could predict the stock market I would be a billionaire overnightAs would all of us....
However, depending on your 401 plan, you should have different options where you can allocate the money you have inside the plan.

My plan had, stocks, bonds and money funds.
Stocks were risky, but, had the highest gains - and highest losses. Bonds were less risky, but, less profitable. Money had no risk - and no gains.

[Chris Parks]

The market always comes back, you have to invest for the long term. It's usually people staring only at the moment that cause these dramatic swings in the market.

My long term might be ten years and yours 30 years due to age so that philosophy falls over for older people.

[Brian Henderson]

Yes - - but - - some of us were only short timers at that point.
There was no "tomorrow" for some of us.
Say the market goes up again in 20 years & you're all set to get out in two more years.
Then it tanks again & you're left with - - nothing to show for all your years of savings.
You'd have been a lot better of just blowing the money on expensive vacations and having a good time.

But that's why, when you start being risk averse, you need to pull your money out of the market and put it into safer investments. Sure, the amount of money you'll make will go down dramatically, but it isn't something that you can lose. Lots of people want to make all the money you can in a risky investment while having no risk. It doesn't work that way.

[Brian Henderson]

My long term might be ten years and yours 30 years due to age so that philosophy falls over for older people.

As you get older, you need to move your investments to a safer place, where you cannot lose that much money. The time to make big profits is when you are young. The time to be safe is when you are old. Far too many people fail in both.

[Rich Engelhardt]

But that's why, when you start being risk averse, you need to pull your money out of the market and put it into safer investmentsThat's exactly what I said above.........

But also, I mentioned that back in early 2011, both the stock and the bond market went into free fall.

I had been "playing it safe" by having 100% of my 401 in bonds - as I was near retirement.
When the bonds started to lose value, I shifted everything 100% into money market.

The money market paid 0 but - it also lost 0.

My response was to Brian when he said he never looks at his 401 because there's nothing that can be done.
Had I taken that approach it would have cost me plenty.

[dennis thompson]

As you get older, you need to move your investments to a safer place, where you cannot lose that much money. The time to make big profits is when you are young. The time to be safe is when you are old. Far too many people fail in both.
I think the idea that as you get older you need to move into "safer" investments is one that I hear many times and, in many, but not all cases is correct. Other things have to be taken into account. For example if you have just enough to get by in retirement you surely should be in safer investments but suppose you are say 72 years old and have a $5- $10 million portfolio, surely you can afford to take more risk, i.e. stocks, than someone with a $1 million portfolio.

PS I am getting clobbered too, I am getting pressure from my wife too who, every time the market goes down she wants us out, I keep explaining to her markets go up (when this is happening I don't hear complaints) and markets go down

[Brian Elfert]

My response was to Brian when he said he never looks at his 401 because there's nothing that can be done.
Had I taken that approach it would have cost me plenty.

It it not that I can't do anything. I choose not to do anything. Sure, I could move all my funds into a bond fund. How foolish would that be if the market starts climbing and sets new records within a year? An awful lot of people locked in their losses in 2009 by selling at the bottom and missing out on on the gains. I have 20+ years to retirement and the market will probably go up and down several times during that time. I just let the money ride in a target date fund that has a pretty low expense ratio. My 401K lost money in 2009, but it has all been gained back.

AS I said before, I could be a billionaire overnight if I could predict the market.

[Wade Lippman]

That's exactly what I said above.........

But also, I mentioned that back in early 2011, both the stock and the bond market went into free fall.

I had been "playing it safe" by having 100% of my 401 in bonds - as I was near retirement.
When the bonds started to lose value, I shifted everything 100% into money market.

The money market paid 0 but - it also lost 0.

My response was to Brian when he said he never looks at his 401 because there's nothing that can be done.
Had I taken that approach it would have cost me plenty.

All bonds and you are in Ohio? VOHIX (an Ohio Municipal Bond Fund) started 2011 at 11.6 and ended at 12.3, while paying 4% tax free dividends.

[Larry Frank]

I am retired and so my investments are on the conservative side.

We have been using a good financial advisor for a long time and it has very useful. There are so many things I did not know in getting ready to retire.

One rule my advisor has constantly repeated is not to panic sell. If your investments are properly made for your situation, then there is no need to think about panic selling but you may need to periodically rebalance it. My wife and I have been saving for retirement for many years even in very lean times. Sometimes it was only a small amount but still something.

I saw a quote in the paper today from Isaac Newton after he lost a bunch in an investment.

"I can calculate the movement of the stars, but not the madness of men"

[Brian Henderson]

I think the idea that as you get older you need to move into "safer" investments is one that I hear many times and, in many, but not all cases is correct. Other things have to be taken into account. For example if you have just enough to get by in retirement you surely should be in safer investments but suppose you are say 72 years old and have a $5- $10 million portfolio, surely you can afford to take more risk, i.e. stocks, than someone with a $1 million portfolio.

PS I am getting clobbered too, I am getting pressure from my wife too who, every time the market goes down she wants us out, I keep explaining to her markets go up (when this is happening I don't hear complaints) and markets go down

It depends on how much you're willing to risk. To put that entire $10 million portfolio into something risky would be foolhardy, but to do it with a million? Sure. If you lose it, you're not eating cat food. Never risk more than you're willing to lose.

People need to understand that the stock market is a long term investment. It is going to go up and it is going to go down, but historically, it has always gone up more than it has gone down, even with big crashes. The market today is a lot healthier than it was after 2008. In another couple of years, it will have recovered from the recent decline and then some. That's how it works.

[Chris Padilla]

I would say, Brian, that the market is far LESS healthier than in 2008. The Fed with all QE going on didn't let the normal cycle of credit busts happen but instead let it go on longer than normal and now the credit market is a monumental mess and when the defaults start coming in, it isn't going to be pretty.... Just look around the world: governments are printing money like there is no tomorrow and negative interest rates are showing up more and more. No...the market is far LESS healthier I think.

[Steve Peterson]

It depends on how much you're willing to risk. To put that entire $10 million portfolio into something risky would be foolhardy, but to do it with a million? Sure. If you lose it, you're not eating cat food. Never risk more than you're willing to lose.

It would be foolish to invest 100% of your money in a single asset class. Someone with $10 million could have 10% of their money in "safe" investments with the other 90% in diversified stocks. They could withdraw $100K per year for 10 years while they ride out a stock market downturn.

The situation is completely different when you are retired and only have a few hundred thousand in a retirement account.

Steve

[Art Mann]

Anyone who characterizes a 10% drop in any of the stock indices as getting clobbered probably should not trade in individual stocks very much.

Unless you plan to buy and hold individual bonds until they mature (no mutual funds), they can be just as risky as stocks - especially long term bonds.