I have set the poll up to allow for multiple selections. There are three parts to my poll. Please vote in each section.
My exposure to the stock market was through my retirement account. I could choose from several mutual funds. I transferred all but $25,000 to a fixed account that earns a pitiful 3.25%. The remaining 25K (who knows could be less on any given day) is in two funds, a domestic mutual fund and an international. I’m trying to think of that 25K as lost so that I may be pleasantly surprised some years from now if the market recovers.
I’m no financial wiz. My decisions were made on gut feelings but could expressed by
I think there’s a chance of economic recovery if the Christmas season is decent.
With gas prices approaching summer highs, I don’t think consumers are going to spend a lot this Christmas.
There won’t be any meaningful regulation of the stock market. Therefore staying invested in stocks is little more than gambling.
My retirement account is 100% in stocks, and I think it’s a fairly silly move to pull retirement money out of stocks right now unless you’re close to retirement. You’re basically falling into a “buy high, sell low” mentality. Retirement is a long-term investment – don’t try to time the market, don’t focus on short term trends. Dollar cost averaging will make up for the money you lose in the short term when it takes a dip.
The Fed is almost single handedly supporting the mortgage backed securities market, and the longer term effects of quantitative easing are yet to be seen. The value of bank holdings are still uncertain (not to mention all the crap that they aren’t being forced to bring onto their balance sheets). Without the government implicitly, or in some cases explicitly, backing the financial sector, we’d be back below Dow 10k. It wouldn’t surprise me if the US stock markets go sideways for years while all the crap is slowly dealt with. IMHO, the assumption that we will see earnings and growth similar to that seen the last decade isn’t realistic. That environment of super-leveraged balance sheets loaded with debt won’t be back for quite some time - which is a good thing.
I suppose my view on the US stock market is this:
1-10 years: unknown (pessimistic)
11-20 years: unknown (more optimistic further out)
20+ years: higher (optimistic - gotta believe in human progress! )
Yeah, I’m curious why someone would choose now (or the recent past) to divest from the stock market. By my rough math, the S&P is up about 40% since March after the beating it took last year.
Exactly! Which begs the question, if you’re not back in now, how will you know when to come back in? Do you wait until “everyone” knows things have recovered, i.e. it’s on the news and the Dow is back up to 14,000 to buy back in? Do you never invest in stocks again?
Famous, overused quote by Warren Buffet: “Be fearful when others are greedy, and greedy when others are fearful.” From a retirement savings standpoint, the longer the stock market is in the toilet when you’re young, the better – you’re getting a huge discount on everything you buy. Ideally, you’d like the Dow to drop to 5,000 right now and sit there for ten years while you make regular contributions to your 401(k). Everyone would go on and on about what a terrible investment stocks are (and they would be, for the short term), but it would maximize your final value when they do recover.
While I have most of my retirement money in the stock market, I would absolutely love to know what fixed account is giving you 3.25%. Is it guaranteed 3.25? How long must you keep your money in the account? Sadly that is actually a decent rate.
I actually started investing small amounts last year about this time. I have gained almost 80% overall in my main portfolio and have only lost money on one stock in that account. I have a second account that I am futzing around with day trading with. Two of my stocks have gained almost 250% (Ford and Retail Ventures Inc). My only regret is that I didn’t have much money to get in with. My experience is probably not typical.
The largest lump of our retirement is in stocks. Sure, it took a beating, but I tried to be optimistic about getting a good deal while things are down.
I am a former state government employee. I could have stayed in a secure but boring job until I was 53yo and then retire. I wanted to change careers. As a government employee I participated in a 457 retirement account(tax deferred with no penalty for early withdrawal). When I resigned from my job, I had 4 years of cash on hand. I am aware that if you are 5 years out from needing your money that is invested in stocks you should be moving into a less volatile investment. I intended to. Really I did. But I waited a bit too late. I currently have 2 years cash on hand. It will take years before/if I am ever to be successful in this different career path. I will need to tap into the 457 account. I simply am not confident that the stock market will recover significantly within 2 to 10 years.
Other than the 25K I still have invested, I never intend to invest in stocks again. I am vested in a government pension plan. The pension is the cornerstone of my retirement plan.
I’m not sure who can participate in this fixed account. My state contracts with Nationwide to manage their 457/401A retirement accounts. The rules, as I understand them, to the fixed account are
No more than 15% of the aggregate amount in the account can be withdrawn in a given year FOR INVESTMENT PURPOSES. So if me and all other participants feel the market is in for a rally and we all try to move out of the fixed account, it is possible that only the first few will be able to move back into stocks.
Your entire investment is available for disbursement at any time. That is, your investment is not subject to the 15% rule for withdrawal purposes.
I welcome any comments on my financial strategy. But I was hoping to tap into the wisdom of the masses with the poll. I was hoping to create a SDMB economic indicator. 24 participants hardly seem enough to qualify as “the wisdome of the masses”. I guess I don’t get to chose whether people participate. I hope you guys are right about the economy nearing recovery. I really do.
Previous to last year, I had all my investments in index funds, largely because I was too lazy to do the necessary research for investing in individual equities. When the market was really taking a beating last year, luckily I had some extra cash laying around, so rather than add it to my index funds I decided to open a brokerage account (Ameritrade) and try out this whole stock thing.
I looked for blue-chip (or near-blue-chip) companies that had taken an unfair loss in share price, and had a relatively low P/E ratio and/or high historical dividend yield. I ended up investing in the following companies in March of this year:
Home Depot: Up 0.29%
Coca-Cola: Up 22.04% (!)
Citigroup: Up 18.32%
ADM: Up 11.34%
Alcoa: Up 40.85% (!!!)
Wyeth (now Pfizer): I haven’t figured it out with yet with the share swap, but it was up 20% while it was still Wyeth.
I’m doing dividend-reinvestment and adding regular buys monthly now, in addition to the continued investment in my index funds (where DCA has worked out great.)
OK, with this time frame, it’s perfectly reasonable for you to stay away from stocks. Frankly, you should have never had more than a fraction of your retirement fund in stock in the first place, once you were that close to wanting to tap into the money. Conventional wisdom says you should gradually shift more and more money from stocks to less volatile investments like bonds the closer you get to retirement, to avoid exactly the situation you’re in. Same goes for diversification – although technology may be going through the roof, you should be pulling money out of it on a regular basis to rebalance your portfolio, not dumping more in.
It’s hard to do this, though, when the stock market is performing well – it feels like you’re wasting money not having it all in stocks, or in the sector that’s going nuts. I think this is why the targeted retirement funds are a good idea for a lot of people, as they rebalance toward lower risk stuff for you automatically as you near retirement.
I’m about 91% stocks (broad indexes), 9% bonds. My goal is to be about 15% bonds within the next few years, but I’m sort of stuck with my available 401k options. All the funds except the S&P 500 really suck, and I don’t want to hold bond funds in a taxable account. So my portfolio keeps drifting toward a higher stock allocation. At some point, I need to pull out a spreadsheet and figure out which of the following options (1. keep doing what I’m doing, slip toward more stocks, 2. put some taxable money in bonds, 3. put some 401k money into crappy bond fund) is least bad, but I’ve been lazy.
If anyone is in a similar situation and wants to offer advice, I’d listen.
I moved half of my stocks out of stocks and into money markets just before the big crash last year (I read “Crash Proof” and listened to him, but didn’t get quite all of it moved before the crash). The money markets were a guaranteed ~3% return. I have since moved my money from safe into almost as safe, but I’m not moving it any further, and I haven’t invested in US stocks for a long time and I won’t be any time soon (all my stocks are Canadian or world stocks). I’m not making huge returns, but I’m not losing ground, either. I’ll move it back into higher return stuff when all the drama is over.
Where most of our investment money is, however, is in Jim’s employer - an employee-owned company that had returns of 65% on employee-owned stocks last year. Yes, you read that right. They are so financially secure that they don’t need the employee stock money; it’s just used as bonus incentives for employees (like the big cheque we received last year based on how many stocks we had purchased). This year won’t be as big, though, for the obvious reasons.
Just a reminder - the second wave of sub-prime mortgages is due to hit next year, I believe it is. We’re not out of the woods yet.
I am almost purely in options - I trade verticals. No appreciation but (if done properly - which is of course the big challenge) it generates regular (hopefully) cash flow.
My plan was to find an investment strategy that would allow me to replace my income, and that is repeatable on a monthly basis.
Its tricky - but if you are careful, the stars are all in alignment, the economy quits freaking out one way or the other, and the sun rises in the west, you can do it!
I’m 30+ years from retirement, and I agree. My whole pension fund is in stocks, and I figure that each pound I pay in now is buying more stock than it was a couple of years ago, which is A Good Thing.
(And never mind that my pension fund was worth less at the start of 2009 than at the start of 2008, despite my having paid several thousand into it…)
Over the past several years I was saving up for a mortgage downpayment so I was heavily invested in bonds and GICs (CDs for US types). I finally cashed those in along with most of my equity holdings to make a 20% downpayment on a house back in Aug. 2008 at a very favourable below-prime rate.
2 months later the economy nearly collapsed but I suffered zero losses. My timing was impeccable but I can’t claim any credit for market insight. It was pure luck on my part.
Since the crash, I’ve concentrated on making as many payments on the principle as I can and have stayed out of stocks almost entirely (currently less than 10% of my portfolio). Sure, I missed out on the rally of this past spring and summer but, since current market prices don’t appear to be supported by any solid fundamentals, I wouldn’t be surprised if we’re in for a steep correction. Only time will tell.
