I just rebalanced all my 401k to Money Market Fund yesterday, already YTD -29%, is that a wise thing? I have been receiving more disagreement than agreement. I just got the feeling the Dow is going below 8000 in the near future. But will watch for reentry point.
the way I look at my 401(k) is I won’t care if Dow is 8k or 9k or 12k, when I am 65 and the dow is 35k+.
I guess it is. It’s only wise if you get back in to at the right time, not after it goes up a lot of confidence is back in.
I think it’s fine. I think there’s still a lot more downside in the markets, so might as well preserve your capital until the markets start to rebound. Things are going to get worse before they get better.
market is selling good news retail investors are talking about selling out 401k participation rates just declined dramatically this month all world governments look impotent rate cuts are not generating any benefits no one is lending to each other a depression is a near certainty the entire financial sector of the world is shot sp500 down 6 days in a row time to book losses?
I rebalanced mine last night and moved my stuff out of MMF back to the risky stuff- it hit the books on the close today (was good for me that mkts were down today). I guess if you want to preserve your capital it is ok and then you could slowly build back your position as the markets go up (whenever that will be).
How does it matter? If a depression kicks in your capital will be worth toilet paper.
i think its a complete mistake if you have longer than 20 years to go until retirement. gotta remember dollar cost averaging baby! if you have the ability to accurately time the market, you wouldnt need to worry about losing 35% anyways
MFE Wrote: ------------------------------------------------------- > the way I look at my 401(k) is I won’t care if Dow > is 8k or 9k or 12k, when I am 65 and the dow is > 35k+. This was how I thought about 401k, so I didn’t make any change in 3 years, but then I realize it is not right. Now I wish I had rebalanced even mid this year.
I think it’s a wise thing. I’m 29-years-old and rebalanced mine last week into MMF. I’d rather preserve capital than to watch my investments continue the downward trend. If you pull-out now, you only need roughly a 50% return (assuming you’re down ~33%) to break even. If you stay in and that market drops even more, you now have A LOT more ground to make up. Although I have years ahead of me, preserving some capital now and jumping back in when things are good, I’m already ahead of the curve. Bottom line, I don’t mind missing out on several weeks of a turnaround, then to stay in this market and continue losing money… My 2cents
Agree with soxboys. i rebalanced to MMF but kept my contributions set up the same way so I figure i’ll get whatever DCA benefit might exist. I’ll eventually put that money back in, but want to be on solid ground before then we’ll see, we are probably all screwed the way things are going
I put my entire 401k in cash last summer—I put it back in aggressive stocks around the Bear Stearns collapse. At the time I thought I was a genious, but like everyone else I’m now down ~25%. I lighted up a bit (~10%) the day the bailout didn’t pass, regretted it at the time, but I guess it worked out. I might take another ten percent off the table later on this week.
trouble is, there’s no way to time the up move either. you go into cash, realize 30% loss now then you miss the (just for example sake) 10% updraft, and buy at end of it, thinking woo hoo i missed the bottom but caught the free ride up from the 3rd floor then the market does the double duper whopper slam you down and big scary ACTUAL depression dip (as opposed to the FORECAST depression right now), and you ride it all the way down another 50% way to make -80%
rohufish Wrote: ------------------------------------------------------- > trouble is, there’s no way to time the up move > either. > > you go into cash, realize 30% loss now > > then you miss the (just for example sake) 10% > updraft, and buy at end of it, thinking woo hoo i > missed the bottom but caught the free ride up from > the 3rd floor > > then the market does the double duper whopper slam > you down and big scary ACTUAL depression dip (as > opposed to the FORECAST depression right now), and > you ride it all the way down another 50% > > way to make -80% meh, -80 or -70, i’m crying for mommy either way
I personally believe it’s too late to sell now. You can rebalance without going for all cash (CPPI, …) if doing something makes you feel better.
Buy when stocks are cheap . . . I like James (and his books/articles), and agree with him - - COMMON SENSE OCTOBER 8, 2008 Now Is the Time to Think Long Term and Buy Stocks By JAMES B. STEWART http://online.wsj.com/article/SB122342570193613559.html?mod=googlenews_wsj “No two financial crises are exactly the same. There are times to be an observer, watching from the sidelines. And there are times to act. A week ago Monday, when the Dow Jones Industrial Average plunged 777.68 points, the Nasdaq Composite dropped through my latest buying target, which was 2025. So I stepped in with a list of banking stocks and did some buying. The next day the market rallied, rising above the 2025 threshold. I was pleased by gains in my recent purchases, but hardly euphoric. By Thursday the Nasdaq was below the threshold. My gains were wiped out. On Monday, the index dropped so much that it was time to begin thinking of the next buying threshold, which is 1750. So why am I buying when the market is plunging? When we’re in the worst financial crisis of my lifetime? The answer is simple: That’s when stocks are cheap. Regular readers know that I follow a disciplined system of buying on 10% declines in the Nasdaq, and selling at intervals of 25% gains. These are based on historical averages for corrections (an average 20% decline) and bull markets (an average 50% gain.) The goal is simple: Buy lower and sell higher. I never try to predict where the market is headed next. This is obviously a long-term approach intended for patient investors like myself. It’s important to distinguish this thinking from that of a trader, for whom a day is long term, and months, an eternity. Much as I respect my good friend Jim Cramer of “Mad Money” and enjoy his show on CNBC, we are fundamentally different in this regard. Mr. Cramer recently said that money you need in the next five years should be pulled out of the stock market. I’d say that money with a five-year horizon or less never should have been in the stock market in the first place.”
the sign i’m watching for now is for financials not to tank even on getting bad news. or a more visible massive 10% circuit breaker day for the broad market. other than that, we’re behaving as if its a countdown to zero, at 500 pts a day. as i said earlier - worst case, in 19 days, i will buy the whole US economy for 99 cents.
going to a money market fund after the market has already dropped 30% is absolute stupidity for anyone under the age of 70. and i bet you $1K if the dow goes to 8K you wont buy then because you will be scared s-itless again.
oskigo Wrote: ------------------------------------------------------- > going to a money market fund after the market has > already dropped 30% is absolute stupidity for > anyone under the age of 70. > You would of said the same thing a year ago? True/False. I won’t give advice to those who lost 30-40%. But I just know my neighbors had a house for sale. Wouldn’t sell at 500k because their other neighbors sold at 600k. They ended up getting 400k for “waiting”.
projectplatnyc Wrote: ------------------------------------------------------- > Buy when stocks are cheap . . . I like James (and > his books/articles), and agree with him - - > > > > COMMON SENSE OCTOBER 8, 2008 > > Now Is the Time to Think Long Term and Buy Stocks > > By JAMES B. STEWART > > http://online.wsj.com/article/SB122342570193613559 > .html?mod=googlenews_wsj > > “No two financial crises are exactly the same. > There are times to be an observer, watching from > the sidelines. And there are times to act. > > A week ago Monday, when the Dow Jones Industrial > Average plunged 777.68 points, the Nasdaq > Composite dropped through my latest buying target, > which was 2025. So I stepped in with a list of > banking stocks and did some buying. The next day > the market rallied, rising above the 2025 > threshold. I was pleased by gains in my recent > purchases, but hardly euphoric. By Thursday the > Nasdaq was below the threshold. My gains were > wiped out. On Monday, the index dropped so much > that it was time to begin thinking of the next > buying threshold, which is 1750. > > So why am I buying when the market is plunging? > When we’re in the worst financial crisis of my > lifetime? The answer is simple: That’s when stocks > are cheap. > > Regular readers know that I follow a disciplined > system of buying on 10% declines in the Nasdaq, > and selling at intervals of 25% gains. These are > based on historical averages for corrections (an > average 20% decline) and bull markets (an average > 50% gain.) The goal is simple: Buy lower and sell > higher. > > I never try to predict where the market is headed > next. This is obviously a long-term approach > intended for patient investors like myself. It’s > important to distinguish this thinking from that > of a trader, for whom a day is long term, and > months, an eternity. Much as I respect my good > friend Jim Cramer of “Mad Money” and enjoy his > show on CNBC, we are fundamentally different in > this regard. Mr. Cramer recently said that money > you need in the next five years should be pulled > out of the stock market. I’d say that money with a > five-year horizon or less never should have been > in the stock market in the first place.” i completely agree. now is the time to accumulate and i have been recently.