Anyone liquidating their investments?

Mr. Athena is of the opinion that it’s a good time to move his investments (pretty much just his retirement SEP) out of the market and into a cash account. I’m not sure I agree with him - he’s pretty much doing the “buy high sell low” stuff that everyone tells you not to do.

On the other hand, things look pretty doom & gloomy. Things like this article make me wonder if he’s not right. Overall, he tends to be more skittish than I. I’m thinking I should just sit tight on my retirement funds and everything will sort itself out between now and 35 years from now when I might need the money.

So what’re you doing?

Standing pat. But then again, I have about 10 more years until retirement.

That would be inadvisable.

I’m getting ready to move a boatload of cash into my index funds, given that they’re quite cheap at the moment. I do this every time the market takes a big dump. Of course, it helps that I’m relatively young and saving for the long term.

Yeah, that’s kinda what I’m thinking - I like index funds, and they’re cheap right now. Which pretty much puts me and the hubby at opposite ends of the investment schema.

It’s my humble opinion that index funds aren’t particularly cheap right now. The P/E ratio hasn’t really changed up or down all that much from a year ago – right around 16-18. It’s all been a move driven by the downturn in earnings. So if earnings don’t improve I don’t see the index funds going up.

So since they don’t seem particularly cheap or overvalued in my mind I relative to a year ago I am staying put. That said, since the earnings are less relative to the economy and the companies capitalization it would seem that the risk AND reward would be higher now than before, since a small change in earnings could cause there to be none at all or double them.

I am using this spike in the Dollar to buy more foreign currency… Swiss Franc mostly.

I think it would be incredibly stupid to sell now and move into cash. Sell low, buy high? Sell into cash now then only buy back when it is ‘safe?’

Investments, no.

However, my bank is in serious trouble and I’m looking at closing my account and moving elsewhere (a credit union, probably). I know, I know, the problems with the bank are on the credit-and-lending side, not the savings-and-deposits side. However, I’m concerned that the average citizen won’t realize that, and will start pulling their accounts out of ignorance, thus precipitating a run on the bank, which could snowball, thus creating a problem on the savings-and-deposits side where one did not previously exist. While my deposits are of course insured and, in the long run, safe, I don’t want to take the risk of having things suspended and/or unavailable for some short transitional period after a bank failure while the details of recovering my cash get worked out. So I’m in the uncomfortable position of considering a technically unnecessary move purely for defensive reasons, and thus knowingly participating in and perhaps causing the very problem that I know doesn’t need to happen.

And even if that doesn’t happen, I have serious problems with some of the possible suitors mentioned in the article; I’d rather not wake up tomorrow to find my accounts are suddenly held by one of them.

I’m standing pat, and hoping that it’s the right thing to do. I’ve been watching the value of two IRAs (one of them a Roth) and two stock funds steadily drop in value over the last few months. I’m retired and currently living on a pension, but I’m counting on being able to draw on the investments if I reach a point where the pension is no longer sufficient for my living expenses, or if something unexpected comes up.

I am of the opinion that intra-state credit unions are safer than banks. My CU is conservative, and has never gotten involved with exotic financial 'instruments".
I’ll bet a LOT of execs at the trubled banks wish’d they had been as conservative!

I’m in that same situation: I’m starting to wonder if it’s possible to make money at a bank without charging those BS fees :mad:

Thirty-five years? If MrAthena is roughly that far from retirement as well, stay the course. Panic investing, because that’s what he is trying to do, never works out.

Stay the course. Also, start reading up now on prudent investing and retirement. Otherwise, his panic investing during the next 35 years will do far more damage than what is taking place right now.

Nah, he’s older than me. I’m 38, so maybe 35 years a bit long, it’d be nice to retire by 65 or so. But still, he’s looking at 15-20 years max. Hopefully less.

Personally, I agree with most of the posters here - selling now is kinda dumb. But like I said, he’s skittish, and he doesn’t like watching him $$ go down every day. So different risk levels and all that. I just wanted to get a sanity check that selling was not really the way to go right now.

With 20 years to go, I would say BUYING is the way to go right now.

On the radio an investment guy told the story of a client of his who sold everything after 9/11 (against his advice) - and then had to get back in after the market went up 500 points.

I don’t think we’ve hit bottom yet. We need our cash, but I’m seriously thinking of moving money from bonds into stocks to rebalance once it’s gone down a bit more. We’ve got a centipede here, and a bunch more shoes are likely to drop. We also need to see if this downturn hammers the broader economy.

People in Silicon Valley are happy that this crash, at least, isn’t our fault.

My guess is that the market will be lower than it is now at some point in the not too distant future, but I think it’s also a near certainty that it will be higher than it is now sometime after that. Anyone who sells long-term investments right now is insane. You’re far more likely to miss the first part of an upturn than you are to guess the exact bottom of the market and get your money in at the perfect time.

Look back at the Dow over the past forty years or so – the big dips in the past look pretty trivial now, so if you’d held you’d be just fine. However, imagine you sold everything at each big dip and got back in later – you’d be way worse off.

With 15 years to recover, it would be nuts for him to sell right now. If he was going to retire within the next six months to a year, I would at least consider it, but the market as a whole is almost certain to recover reasonably quickly and start going moving upwards again. It happens every time there’s a crash like this. That’s what makes long term investing such a sound strategy (as long as you’re diversified).

Once he gets within spitting distance of retiring - maybe three or five years out - and at a point where seems like the market is doing well, he should start moving some of the money over into bonds, and eventually into things like CDs. He’ll be grateful if/when this happens again and he actually needs the cash to live on.

I’m standing pat, by the way. All of my money is in my 401(k) in a variety of mutual funds, so I soothe myself with the thought that the $15K I lost this year will be back pretty soon, certainly long before I need it to retire with in 40 years. And in the meanwhile, the 4% coming out of paycheck (which is instantly doubled with the matching) is buying a lot more stock for the same amount per paycheck.

I have no US stocks in my portfolios at this point. I agree that selling right now after everything tanked is not the way to go, but I think Mr. Athena has the right idea about getting out of any high-risk stuff in the near future. I don’t think you’ve seen anywhere near the end of the problems (there’s a second wave of mortgages that are set to crash in about five years). When things recover a little bit, sell any stocks and move into more secure areas like money markets or GICs. Also make sure you are well-diversified, with no more in any financial institution than deposit insurance will cover.

Yes, there is a long time to recover still, but you’ll recover better if you park your 401K in a secure, 3% return while all the stocks tank than if you lose 20% and have to recover all that ground to start making money again. All the money I lost after 9/11 was recovered - in about five years. You could argue that that set my retirement funds back by five years.

If we’re talking about retirement investments that won’t be needed for 15-20 years, then my advice is not to watch the investments every day. Don’t ignore them, of course, but making drastic changes like going into cash at this moment isn’t a good idea.

I sold half of some of my larger positions, but that doesn’t mean in was necessarily the smartest thing to do - it was more so that days like yesterday would be a bit less gut-wrenching.