Congrats DOW!

[StageLeft]

Gradual movement of money into savings is being smart. A sudden and drastic shift into savings for the bulk of society isn't smart. That leads to depreciation and recession (or worse). We all knew that America had to start saving. But, we needed that shift to occur over a time span of a few years, not over just a couple of months.

Smart for the individual family is not always consistent with the economy; what's good for the goose isn't always what's good for the gander, thus it is smart for a concerned family to slash spending and financial outlay as much as they can to protect themselves. Their actions are irrelevant to everybody else's, despite making up a tiny, barely-measurable portion of the economy as a whole. Also known as the tragedy of the commons.

On a personal level, saving $2000 is smart. Saving $20,000 in hopes that you might become unemployed is not smart. You usually can do better in the long run investing that properly, even if you do lose your job.

Depends what bills are and how bad things get. I would say that going into the worst recession in a generation it's hard to overrate actually liquidity at this point.

 

[AdamK47]

We'll be over 8,000 by 3:30PM today. I can feel it.

 

[Miramonti]

Originally posted by: AdamK47
We'll be over 8,000 by 3:30PM today. I can feel it.

7k...very possible, 8k...I don't think so, lol.

 

[ja1484]

This crash could not have come at a better time. Just started my career two months ago. Getting my 401k started at the ground floor baby!

 

[ponyo]

Originally posted by: jjsole

Originally posted by: AdamK47
We'll be over 8,000 by 3:30PM today. I can feel it.

7k...very possible, 8k...I don't think so, lol.

8k today, it could happen like the 10% annual lifetime return people here were parroting when the market was going up.

 

[dullard]

Originally posted by: AdamK47
We'll be over 8,000 by 3:30PM today. I can feel it.

It did just make a 15 point recovery in the last few minutes. Just 1168 more points to go! If it happened, being up 17.1% in half a day's trading would be one of the biggest swings ever.

 

[nerp]

Originally posted by: jjsole

Originally posted by: Genx87
What, markets dont react well to govt expansion and 1.75 trillion dollar deficits? Say it aint so!

:roll:

They don't react well to the largest banks around the world going bankrupt and others losing billions, not to mention the world economies collapsing. At this point, the so called govt expansion and record deficit is a symptom not a cause.

DOn't bother. These people have magically decided that every single problem is due to Obama, even though he's been office for just over a month. Everything was perfect during the past eight years and now every reason why things aren't booming is because the country isn't in John McCain's hands. The solution to all our problems is tax cuts.

 

[dbk]

What would happen if billionaire investors like Warren Buffet and George Soros bought up gazillion shares??

 

[dullard]

Originally posted by: nerp
The solution to all our problems is tax cuts.

Exactly. With Bush's phased tax cuts now in full effect (to almost the lowest tax rates in the history of our country), one stimulus tax cut last year, and another stimulus tax cut this year, our economy is the best it has ever been! Wait, what?

 

[imported_Lothar]

Originally posted by: dullard
I've officially gotten in again today ($3000 traditional IRA, $2000 Roth IRA, $1000 private investment). My buy point was S&P 750, with the S&P at 718, I couldn't resist any more. Of course, since most of this is in a retirement account, I get the end-of-the-day price, and this drop could vanish by then.

Sure, I think it could drop more (6000 DJIA and lower 600s S&P is my current bottom estimate). But I just wanted to get my 2008 IRA all taken care of, my taxes in, etc. I may look back and think I was stupid for buying now, but i'm a heck of a lot better than if I bought this time last year.

Now to decide if I should fund my 2009 IRA soon, or should I wait. I can't fund it fully right now, so I'll likely wait a bit.

Why did you split your IRA?
Why not just go all Roth?

 

[Joemonkey]

Originally posted by: dullard
Generally, the rule is not to catch a falling knife. Don't buy at 8500 on the way down, but instead buy at 8500 on the way up. Even if it means nothing to your stock returns, you held onto that money for months more (gaining interest) and you survived a massive stress headache.

so, should I switch my 401k over to pure bonds then back to stocks when the market starts to recover?

 

[SSSnail]

Originally posted by: Joemonkey

Originally posted by: dullard
Generally, the rule is not to catch a falling knife. Don't buy at 8500 on the way down, but instead buy at 8500 on the way up. Even if it means nothing to your stock returns, you held onto that money for months more (gaining interest) and you survived a massive stress headache.

so, should I switch my 401k over to pure bonds then back to stocks when the market starts to recover?

I did that, with 50% in high yield and 50% in stable, and STILL LOSING!!!

 

[StageLeft]

Originally posted by: dullard

Originally posted by: AdamK47
We'll be over 8,000 by 3:30PM today. I can feel it.

It did just make a 15 point recovery in the last few minutes. Just 1168 more points to go! If it happened, being up 17.1% in half a day's trading would be one of the biggest swings ever.

And I would sell with a vengeance everything I have left in it.

so, should I switch my 401k over to pure bonds then back to stocks when the market starts to recover?

Yes, if indeed that is what the market does. Some kind of a bond or other similar fund will preserve cash, but you can research your 401k's various options.

I did that, with 50% in high yield and 50% in stable, and STILL LOSING!!!

Not as much, though. I did it with 1/3rd of my 401k at 10k dow and made 8% or so in that treasury bond I chose, then got out of treasuries a while ago before they started to drop again.

 

[dullard]

Originally posted by: Lothar
Why did you split your IRA?
Why not just go all Roth?

I figured that question may arise.

#1) I have a lot of expenses coming up this year. I'm getting married and paying for it all ourselves, I have to replace carpets and siding to sell my house since we have two houses, new suit, honey moon, etc. Having an extra $1000 now would really help out ($3000 * 33% total federal + state tax = $1000). It'll help out far more than the possible miniscule tax difference when I retire and I'm already wealthy.

#2) Without the IRA tax savings now, I wouldn't have been able to quite reach the full $5000 this year due to my expenses. I felt it was better to do $3000 in traditional and $2000 in Roth than to do $4000 in Roth.

#3) I'm using Vanguard which requires a $3000 opening deposit. Thus, I wanted to open it when I had the need for substantial extra cash in one year.

#4) So, from now on, I can add as little or as much as I want to the traditional IRA. It gives me the flexibility to plan for tax changes. If tax rates go down, traditional is better. If tax rates go up, Roth is better. I'm diversified in my portfolio, and now I'm diversified in tax planning. Most people do the math incorrectly and think that Roth is definately better, it can be better, but not necessarilly.

 

[dullard]

Originally posted by: Joemonkey
so, should I switch my 401k over to pure bonds then back to stocks when the market starts to recover?

Selling low is a risky manouver. True, you can make good money selling low and buying lower. But, that has got to be the most difficult of all ways to make money in the stock market. Buy low, sell high is easy. Sell high, buy low is also easy but a bit more risky. Sell low, buy lower is damn difficult. At this point, I think you may have missed the boat.

If you were to do it, you might do better with a short term move to money market funds. But realize, that money market funds are also risky. But you probably won't lose money like bonds have been recently.

 

[Hacp]

Originally posted by: dullard

Originally posted by: Lothar
Why did you split your IRA?
Why not just go all Roth?

I figured that question may arise.

#1) I have a lot of expenses coming up this year. I'm getting married and paying for it all ourselves, I have to replace carpets and siding to sell my house since we have two houses, new suit, honey moon, etc. Having an extra $1000 now would really help out ($3000 * 33% total federal + state tax = $1000). It'll help out far more than the possible miniscule tax difference when I retire and I'm already wealthy.

#2) Without the IRA tax savings now, I wouldn't have been able to quite reach the full $5000 this year due to my expenses. I felt it was better to do $3000 in traditional and $2000 in Roth than to do $4000 in Roth.

#3) I'm using Vanguard which requires a $3000 opening deposit. Thus, I wanted to open it when I had the need for substantial extra cash in one year.

#4) So, from now on, I can add as little or as much as I want to the traditional IRA. It gives me the flexibility to plan for tax changes. If tax rates go down, traditional is better. If tax rates go up, Roth is better. I'm diversified in my portfolio, and now I'm diversified in tax planning. Most people do the math incorrectly and think that Roth is definately better, it can be better, but not necessarilly.

How much does it cost to get married? 20 dollars at city hall is all you need..

 

[dullard]

Originally posted by: Hacp
How much does it cost to get married? 20 dollars at city hall is all you need..

Yes, but my life isn't about maximizing money. It is about maximizing the quality of life.

For us, that means a $5 fee to register a friend as a minister in an online church, ~$20 for the license, $1000 to take friends and family out to dinner (on several subsequent weekends to our favorite restaurants, no reception hall fees or decorations), $250 for stringed instruments, $$$ for rings (I'll keep that amount private, no need for the fiancee to ever find out), and $4000 for photography. The new suit I mentioned is for the wedding and for business later. Her dress is already paid for (it was a bridesmaid's dress returned to the store). I'd be very glad to skip the photography part, but with her family being so much into photography (one was a former professional wedding photographer), I lost that battle. I'd rather have a happy wife and happy marriage than that $4000.

 

[Joemonkey]

Originally posted by: dullard

Originally posted by: Joemonkey
so, should I switch my 401k over to pure bonds then back to stocks when the market starts to recover?

Selling low is a risky manouver. True, you can make good money selling low and buying lower. But, that has got to be the most difficult of all ways to make money in the stock market. Buy low, sell high is easy. Sell high, buy low is also easy but a bit more risky. Sell low, buy lower is damn difficult. At this point, I think you may have missed the boat.

If you were to do it, you might do better with a short term move to money market funds. But realize, that money market funds are also risky. But you probably won't lose money like bonds have been recently.

i wasn't going to move existing funds, just future contributions

 

[HannibalX]

Originally posted by: IHateMyJob2004
DOW is set to open under 7000 today.

No surprise there. It will continue to fall.

 

[ultimatebob]

Originally posted by: dullard

Originally posted by: Skoorb
That's called being smart. If you have to pay a mortgage and know that unemployment is quickly rising and you have low savings, you'll start saving money to try and cover any problems.

Gradual movement of money into savings is being smart. A sudden and drastic shift into savings for the bulk of society isn't smart. That leads to depreciation and recession (or worse). We all knew that America had to start saving. But, we needed that shift to occur over a time span of a few years, not over just a couple of months.

On a personal level, saving $2000 is smart. Saving $20,000 in hopes that you might become unemployed is not smart. You usually can do better in the long run investing that properly, even if you do lose your job.

Originally posted by: ultimatebob
So... do you think that today is going to be the bottom, or is it going to go a few hundred points lower?

Not that it really matters, I guess, since I can't afford to throw more money into the market and watch it sink again. I've already been burnt once when the Dow fell below 8,500 and I thought that it would rebound then. Oops.

No one really knows, of course. My prediction as stated above is DJIA 6000 and S&P lower 600s as the final bottom. Generally, the rule is not to catch a falling knife. Don't buy at 8500 on the way down, but instead buy at 8500 on the way up. Even if it means nothing to your stock returns, you held onto that money for months more (gaining interest) and you survived a massive stress headache.

I chose to get today in while the knife was falling since I have an April 15, 2009 deadline and since I wanted to get the stress of choosing when to get in off my back. Maybe I missed the true bottom, but I'll never really catch it at the true bottom.

For awhile there, 8,500 looked like the bottom. It went down to the 8,200 level a few times and bounced off of it... before finally crashing below 8,000 when Obama came into office.

So, yeah... timing the market is a fools game.

 

[TallBill]

Originally posted by: ultimatebob

For awhile there, 8,500 looked like the bottom. It went down to the 8,200 level a few times and bounced off of it... before finally crashing below 8,000 when Obama came into office.

So, yeah... timing the market is a fools game.

Yup, regular monthly investments for the win. My current budget allows me to max out my roth at $500 a month. For the last 2 months it'll go somewhere else.

 

[invidia]

I'm buying when it hits under 4000. I'm thinking that will be the bottom.

 

[imported_Imp]

Hurray for bond funds... damn 30% stock investment.

 

[miketheidiot]

Originally posted by: darkxshade
Sometimes I think market movements isn't about fundamentals as much as it's about psychology. Everyone, especially those who do not have a finance background in the stock market subscribe to the fear and buy into the hype. And when everyone tells each other that the sky is falling, they tend to follow the herd instead of doing the research themselves. That's why the markets move the way they do, one day the dow drops 600 pts, the next day it pops 400. Everything that happens is an over-reaction. I blame the media.

this is exactly the case, in the short run there are no rational markets

 

[cHeeZeFacTory]

I think the US needs another war to get us out of this recession. WWII got us out of the Great Depression, the "war on terror" got us out of the .com bust and the stock slump after 9/11.