Lost $150k to Investment, Where to go?

[redgtxdi]

Originally posted by: mugs

When was the last 30 year period when the DJIA didn't increase an average 5.75% or more per year?

2000-2030 😎

I kaum fraum deee fuchaa (Arnold smilie here)

 

[Slew Foot]

Pretty damn good to have invested 150K in 5 years in the first place.

 

[CTrain]

Shennanigan.
Prove me wrong.

 

[jpeyton]

Invest in the next bank that's on the verge of failing. Then sell once they get bought out by a bigger bank.

 

[NoShangriLa]

I understand your pains.

I'm down more than 40% of my hard earn money in my investment adventure at the moment as well, and I'm holding on till after the election.

PS. I'm currently enroll in an investment course at the local college.

 

[Jeff7181]

This is what happens with long term investments... they go up... they go down... in the end you'll be ahead if you've made intelligent investments.

 

[Kenji4861]

Originally posted by: redgtxdi

Originally posted by: kranky
If your investments lost $150K, it makes a big difference whether you started with $160K, or $1 million.

What were you invested in? Individual stocks, or mutual funds?

This.

HUGELY vital to the determination of how to answer such a question!!

I invested in mutual funds / stocks.. probably about $300k total. Now it's only $150k in there.
Made some terrible picks yes.

 

[Agentbolt]

I'm confused. Are you 5 years into the workforce? So you're...what, 27? And you had 150k in there (at least)? That means you were putting in an average of 30 grand a year.

Either A)

You mentioned having worked for the past 5 years because you were retired/out of work for an extended period of time, and recently went back to work, which means you're thinking of retiring again soon. in this case, you need a financial advisor IMMEDIATELY, not a bunch of ATOT helpful hints.

or B)

You're actually 27, in which case, bullshit, fuck off and die. Enjoy playing headgames with the staggering % of ATOTers who somehow believe the ludicrous claims people here make about how much money they're making in their mid 20's. Likely they only do it so no one will call BS on THEM when they claim to have made 200 grand at the age of 17, but still. Get a life and stop jerking us around.

 

[Kroze]

I don't even wAnt to look at my account right now. It's so depressing.

 

[RichardE]

Originally posted by: Agentbolt
I'm confused. Are you 5 years into the workforce? So you're...what, 27? And you had 150k in there (at least)? That means you were putting in an average of 30 grand a year.

Either A)

You mentioned having worked for the past 5 years because you were retired/out of work for an extended period of time, and recently went back to work, which means you're thinking of retiring again soon. in this case, you need a financial advisor IMMEDIATELY, not a bunch of ATOT helpful hints.

or B)

You're actually 27, in which case, bullshit, fuck off and die. Enjoy playing headgames with the staggering % of ATOTers who somehow believe the ludicrous claims people here make about how much money they're making in their mid 20's. Likely they only do it so no one will call BS on THEM when they claim to have made 200 grand at the age of 17, but still. Get a life and stop jerking us around.

300 Grad over 5 years is 60 grand a year. If you come out of college working in a professional field making 75-80 grand a year after taxes all that means is you keep living like a college student for the next 5 years when investing everything else.

Not everyone in the US is a "born again, red blooded consumer!", some people actually do save.

 

[BlahBlahYouToo]

Originally posted by: RichardE

Originally posted by: Agentbolt
I'm confused. Are you 5 years into the workforce? So you're...what, 27? And you had 150k in there (at least)? That means you were putting in an average of 30 grand a year.

Either A)

You mentioned having worked for the past 5 years because you were retired/out of work for an extended period of time, and recently went back to work, which means you're thinking of retiring again soon. in this case, you need a financial advisor IMMEDIATELY, not a bunch of ATOT helpful hints.

or B)

You're actually 27, in which case, bullshit, fuck off and die. Enjoy playing headgames with the staggering % of ATOTers who somehow believe the ludicrous claims people here make about how much money they're making in their mid 20's. Likely they only do it so no one will call BS on THEM when they claim to have made 200 grand at the age of 17, but still. Get a life and stop jerking us around.

300 Grad over 5 years is 60 grand a year. If you come out of college working in a professional field making 75-80 grand a year after taxes all that means is you keep living like a college student for the next 5 years when investing everything else.

Not everyone in the US is a "born again, red blooded consumer!", some people actually do save.

well, the OP lives in NOCAL (cupertino, menlo, san jose region) paying about ~1600/mo. in rent, bought a TSX, then G35c, then an RL.

so unless he's making well over $150k at google straight out of college, not spending a dime on other luxuries or going out, i don't see how this is remotely possible.
i mean, i know google pays well, but still... is the spoofee/eBay/CL padding the income that much?

$150k gross = $90k net annually
$1.6k rent = $20k annually (assuming no roommates)
$300k over 5 years = $60k avg per year

that means you have about $10k per year left over, and that doesn't include insurance, gas, food, other living expenses.

not calling shens on the OP, but how were you up $300k? did you get a nice inheritance or win the lottery or something? or were the market gains during the past 5 years that incredible?


edit: nm, i'm stupid. google stock options. that explains it all now. up over $800 at one point and then took a beating recently.
i would say hang in there and do not sell. it's unrealized losses until you've sold.
i took a huge beating on my index funds as well, but i'm holding onto them.

 

[SoundTheSurrender]

Who says he works at google?

 

[BlahBlahYouToo]

google does 😉

 

[Nitemare]

Put more money into it. When the I/T stocks crashed awhile back they reovered within a year.

 

[Agentbolt]

Originally posted by: RichardE

Originally posted by: Agentbolt
I'm confused. Are you 5 years into the workforce? So you're...what, 27? And you had 150k in there (at least)? That means you were putting in an average of 30 grand a year.

Either A)

You mentioned having worked for the past 5 years because you were retired/out of work for an extended period of time, and recently went back to work, which means you're thinking of retiring again soon. in this case, you need a financial advisor IMMEDIATELY, not a bunch of ATOT helpful hints.

or B)

You're actually 27, in which case, bullshit, fuck off and die. Enjoy playing headgames with the staggering % of ATOTers who somehow believe the ludicrous claims people here make about how much money they're making in their mid 20's. Likely they only do it so no one will call BS on THEM when they claim to have made 200 grand at the age of 17, but still. Get a life and stop jerking us around.

300 Grad over 5 years is 60 grand a year. If you come out of college working in a professional field making 75-80 grand a year after taxes all that means is you keep living like a college student for the next 5 years when investing everything else.

Not everyone in the US is a "born again, red blooded consumer!", some people actually do save.

THank you for proving my point. :roll:

 

[Sukhoi]

Originally posted by: BlahBlahYouToo

Originally posted by: RichardE

Originally posted by: Agentbolt
I'm confused. Are you 5 years into the workforce? So you're...what, 27? And you had 150k in there (at least)? That means you were putting in an average of 30 grand a year.

Either A)

You mentioned having worked for the past 5 years because you were retired/out of work for an extended period of time, and recently went back to work, which means you're thinking of retiring again soon. in this case, you need a financial advisor IMMEDIATELY, not a bunch of ATOT helpful hints.

or B)

You're actually 27, in which case, bullshit, fuck off and die. Enjoy playing headgames with the staggering % of ATOTers who somehow believe the ludicrous claims people here make about how much money they're making in their mid 20's. Likely they only do it so no one will call BS on THEM when they claim to have made 200 grand at the age of 17, but still. Get a life and stop jerking us around.

300 Grad over 5 years is 60 grand a year. If you come out of college working in a professional field making 75-80 grand a year after taxes all that means is you keep living like a college student for the next 5 years when investing everything else.

Not everyone in the US is a "born again, red blooded consumer!", some people actually do save.

well, the OP lives in SOCAL (cupertino, menlo, san jose region) paying about ~1600/mo. in rent, bought a TSX, then G35c, then an RL.

so unless he's making well over $150k at google straight out of college, not spending a dime on other luxuries or going out, i don't see how this is remotely possible.
i mean, i know google pays well, but still... is the eBay/CL padding the income that much?

$150k gross = $90k net annually
$1.6k rent = $20k annually
$300k over 5 years = $60k avg per year

that means you have about $10k per year left over, and that doesn't include car payments, insurance, gas, food, other living expenses.

not calling shens on the OP, but how were you up $300k? did you get a nice inheritance or win the lottery or something? or were the market gains during the past 5 years that incredible?


edit: nm, i'm stupid. google stock options. that explains it all now. up over $800 at one point and then took a beating recently.
i would say hang in there and do not sell. it's unrealized losses until you've sold.
i took a huge beating on my index funds as well, but i'm holding onto them.

Uh that's not socal.

 

[BlahBlahYouToo]

Originally posted by: Sukhoi

Uh that's not socal.

big duh on me, nocal.

 

[sammyunltd]

You should not invested into high risk sh*t.

Go with bonds, treasury bills and safe sources of revenues. Heck, go with ING Direct or something like this.

 

[Mark R]

Treasuries
Foreign (developed) government bonds
Cash /Money market funds


You should be able to do most of these within a conventional retirement account without withdrawing and paying the tax penalties.

The vast majority of your funds should be in safe assets - treasuries, and if you think the US$ is going to hell in a hand basket, diversify a bit by buying UK gilts (UK£) and various European governmetn bonds (Euros). There are plenty of mutual funds and ETFs that will do just that.

Don't listen to BS like 'investing is for the long run'. Your priority when investing should be preservation of wealth. Profit and/or income should be secondary. If your money is currently in stocks, then as you have found out, your capital is being rapidly eroded. What you need to do is consider the risks? Stocks are in a period of increased risk - uncertainty over sub-prime, bank failures, etc. Possible recession looming, etc. Are you prepared to tolerate any more losses? If not, you should discuss changing to a safe investment during the troubled period. If you had held tech stocks in 2000, having bought in 1998, you investment would currently be showing a 0% gain for the 10 year period - and youd be about 10% behind having had your money in cash or treasuries.

Don't forget, that you can do the opposite once the troubles look like they subsided - so while you might not buy stock at the bottom, you may buy fairly close. You lose out on some of the gains of the stocks, but you hold them at a less risky time.

An alternative, depending on the strengths of you convictions on the market, is a 'bearish' fund, that can invest your money in 'short selling' or other inverse investments - such that you obtain a profit if the stock market falls. There are plenty of mutual funds that offer this type of investment strategy. But such a fund is not without risk, and has higher management fees, and as such is speculative.

 

[mshan]

I would recommend purchasing the following two books from Amazon:

- Eric Tyson's "Personal Finance for Dummies"
- John Bogle's "Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor"
- a premium membership to Morningstar.com ($125 / year, slightly cheaper with 3 year membership) is highly recommended

Here's a superb succinct treatise on long term investing: http://selectedfunds.com/pdf/SFSuccInv2Q08.pdf

You are young, so you should be 100% stock mutual funds (no bonds or money market funds in your 401K now), and it really is probably too late to sell (individual stocks is totally different story because bad one can easily go to zero; diversified stock mutual funds much much less so)

You need to study your investment choices and see if there are better options in your 401. You have x amount of capital now (don't think how much you lost, think what is best way to deploy capital I have right now going forward), and you have to think about where you are going to get the best returns, for your level of risk taking, and possibly trade up to better funds in your 401K (sell bad fund and buy better one on same day. You can also dollar cost average by doing incremental exchanges, rather than all at once).

92% of your long term returns are going to be do to your strategic asset allocation(mix of stocks bonds and cash), so you really should be thinking all stocks funds. Also don't try and time the market, because if you missed just the 50 best days over the last 20 years, you would have underperformed stock market as a whole by 50% or so.

Good Luck!

 

[mshan]

Here is posting I tried to link above (92% of your long term returns):

"According to Ibbotson & Associates, asset allocation accounts for nearly 92% of your overall portfolio performance, with investment selection accounting for only 4% and market timing accounting for less than 2%. All other factors account for less than 2%. This clearly shows that how you allocate your money may actually be more important than the individual investments you choose." Link

Probably more valid for someone with a 10 - 20 year + time horizon, rather than someone gaming the market over the next year or two, but nonetheless avery, very valid insight...

If you a trader who can consistently shift to cash equivalents before every significant market downturn, then be fully in stocks before every significant upturn, more power to you.


For the rest of us, there is tremendous opportunity cost ot pursuing such a radical tactical asset allocation plan:

"From 1982 to 2001, the S&P 500 gained a 11.8% per year. Had you invested $10,000 at the beginning of this timeframe, you?d have $93,075 if you keep your nerve through the ups and downs and stayed in the market. In contrast, these are the returns if you jumped in and out and even slightly mis-timed the sometimes dramatic recoveries from the bottom:

If you missed the 10 best days, you?d have $56,044
If you missed the 30 best days, you?d have $28,144
If you missed the 50 best days, you?d have $15,780

Considering that there are roughly 250 trading days in a year, this means that missing out on the best 0.02% of the investing days over this 20 year period (i.e., the best 10 of 5000 days) would?ve reduced your total return by nearly 40%! In contrast, if you?d sat tight throughout, you?d be sitting pretty right now.

And keep in mind that this time frame extends halfway into the 2000-2002 burst of the dot com bubble, and also includes the Black Monday crash of 1987 when the Dow Jones Industrial Average dropped by nearly 23% in a single day. Thus, while it covers and overall strong period for stocks, it?s not an especially atypical timeframe."

Obviously doesn't mean you don't have to pay attention to details of every individual investment (quality mutual fund with average annual returns of just 1 - 2 % over the market as a whole is going to create a lot more wealth, i. e. actual dollars, than the stock market as a whole), but just don't miss the forest while tunnel visioning in on a particular tree.

edit: if you still hold good individual stocks that have gone down significantly just because the market as a whole is down so much, it might be better to at least hold them till market as a whole recovers somewhat, because, as individual stocks (vs. diversified mutual fund with many stocks in it), it's upward moves will be more dramatic. If you can't sleep at night, just start reverse dollar cost averaging out of them on any dramatic up day. But if an individual stock was a dog, still is a dog, and is likely to be a relative dog when the markets moves upward in a sustained way, you should just think about tax loss selling, and move into a quality diversified mutual fund for the long term. And definitely don't think you will just hold the stock till it gets back to break even. Nasdaq almost doubled off of it's eventual bottom off 1300 or 1500, and people who bought near the top (5000) were still almost 50% underwater 7 years later!!!

 

[AlienCraft]

Originally posted by: Mark R
Treasuries
Foreign (developed) government bonds
Cash /Money market funds


You should be able to do most of these within a conventional retirement account without withdrawing and paying the tax penalties.

The vast majority of your funds should be in safe assets - treasuries, and if you think the US$ is going to hell in a hand basket, diversify a bit by buying UK gilts (UK£) and various European governmetn bonds (Euros). There are plenty of mutual funds and ETFs that will do just that.

Don't listen to BS like 'investing is for the long run'. Your priority when investing should be preservation of wealth. Profit and/or income should be secondary. If your money is currently in stocks, then as you have found out, your capital is being rapidly eroded. What you need to do is consider the risks? Stocks are in a period of increased risk - uncertainty over sub-prime, bank failures, etc. Possible recession looming, etc. Are you prepared to tolerate any more losses? If not, you should discuss changing to a safe investment during the troubled period. If you had held tech stocks in 2000, having bought in 1998, you investment would currently be showing a 0% gain for the 10 year period - and youd be about 10% behind having had your money in cash or treasuries.

Don't forget, that you can do the opposite once the troubles look like they subsided - so while you might not buy stock at the bottom, you may buy fairly close. You lose out on some of the gains of the stocks, but you hold them at a less risky time.

An alternative, depending on the strengths of you convictions on the market, is a 'bearish' fund, that can invest your money in 'short selling' or other inverse investments - such that you obtain a profit if the stock market falls. There are plenty of mutual funds that offer this type of investment strategy. But such a fund is not without risk, and has higher management fees, and as such is speculative.

:thumbsup:
Anyone who recommends you go 100% into a risky scheme (such as the stock market) is a GAMBLER, not an INVESTOR.
Planning for the future means KEEPING that money and not transferring your wealth to a broker or other commission based parasite.
There is a real good reason they give that disclaimer about "stocks being subject to risk, and read and understand the prospectus before investing, blah blah blah".

 

[mshan]

There is a big difference between an individual stock and quality diversified stock mutual fund (even a so so mutual fund that lags the market by a point or two per year is probably going to outperform bonds as a class over time because stocks >> bonds > cash).

And if his 401K mutual fund choices are Fidelity funds, those are probably just quasi-index funds that make contrarian sector bets to slightly outperform market as a whole by overweighting sectors they think will do better than average going forward, and underweighting sectors that they think will tank for the foreseeable future (they have so many billions of dollars of assets under management that really that's all they can do). Will Danoff of Fidelity Contrafund I think is skilled at managing those tens of billions of dollars in FCNTX, but I don't know what other options are in his 401K; I doubt any of them have a risk of going to zero unless the U. S. is about to enter a new medieval Dark Ages.

And there is also a big difference between beta (stock market volatility) and true risk (permanent loss of capital).

Not being 100% portfolio of quality, diversified stock mutual funds at his age, if building wealth for retirement, and not getting rich quickly is his goal, being scared into too conservative a strategic asset allocation means leaving a lot of money on the table down the road (he just doesn't know it yet)...

 

[ICRS]

You should have invested your money in MRB PAC bonds. These are safe and secure. Right now they demand a high interest rate from investors so you should be abe to get atleast 6% after tax. Because they are PAC bonds they are safer than other paper.

 

[Kelemvor]

Definitely don't take it out. You haven't lost any money until you sell yoru stocks or withdraw your funds. Now is the time to keep buying more since prices are down. If this is a 401k type thing, dont' stop putting in your money as now you get more per dollar so when it goes back up you'll end up with more.