Not going to be liquidating, but I’ve been planning for a couple of weeks to move about 10% of my stocks into bond funds (as part of my long-term asset allocation plan, not due to any market speculation). It feels foolish to do it right after a significant drop, but I think I should probably follow through with it, if only for the personal precedent it will set for me.
I already know someone who’s pulled all their money out of WaMu.
Shit…my Credit Union has only even offered DEBIT CARDS for 2-3 years now.
I liquidated enough to tax loss harvest $3k off my income for this year, but I’m still invested for what I sold (bought another index fund with those proceeds, so I’m still in the game). Bought additional index shares as well, I have a long investment horizon.
I know it seems kind of obvious, but if he does not like seeing his investments lose value every day, get him to tune out the financial news. The easiest way to stay sane is not to get out at the bottom but to ignore the noise. Encourage him to check his portfolio maybe once per month or once per quarter. He can spare himself the heartache and take a more lomg-term view.
Heh. I like your ideas in theory but heck if I can get him to do that. I’ve managed to stave off the liquidating for a few months now, but now that he’s done it, he’s got a thousand reasons why it was the right thing to do.
Meanwhile, I get to tell him every day how much mine are going up.
Ain’t marriage grand? 
When stocks are rising, does he sell?
What principle is he using?
Part of my retirement income is a large investment fund (I’m diversified 
, with two separate pensions and Government Bonds).
The fund has dropped 10% in capital value in the last year. 
However my investment manager and myself agree that things will be fine in 3-5 years (and the income from the fund is still coming in.) In fact I recently bought some more units, since they were reasonably cheap.
Stocks are cheap right now. Hell, he should be putting more into mutual funds.
If you’re 35 years away from retirement you have a high tolerance for risk. Sit tight, things will get better.
Apart from predicting 9/11, what could you have done differently? Pulled it out immediately after the crash? By the time you know things are tanking, it’s already too late to do anything other than ride it out.
Besides, if you keep adding to your 401(k) regularly during the down years, dollar cost averaging means that you’ll end up ahead when the market gets back to its original point, because you bought at a discount for five years.
… and it looks like I sold at the bottom. Again:)
As nearly all of the previous posters have said, stick with it if you are far from retirement. Dollar costs averaging works over the years. I lost my ass during the dot com busts and then again during 9/11 but I decided not to panic. Today, even with the market taking a large dump, I’m still way ahead. I have a pretty good stock broker as well which doesn’t hurt.
I had intended to sell off my Google and Apple stock in order to start a business. With the market the way it is, I am not sure that’s a good idea.
Sticking with it for now. I may have to cash out one retirement account after the unemployment checks stop flowing, but otherwise I’m in it for the long haul.
My ING Direct CD’s and savings have been climbing steadily despite all the financial turmoil. They have no fees I’ve ever had to pay, but on the other hand, they don’t have much in the bricks-and-mortar way of convenience, like their own ATMs or paper checkbooks. Still, just today, they started offering an 18-month CD at 4.5%. I moved a chunk of cash into one of these.
My 401(k), on the other hand . . .
I heard a great line today from one of the investor gurus:
You only get hurt on a roller coaster if you jump off.
I’d do what I am doing - learning about economics, researching, keeping my ears and eyes open, and putting my RRSP (401K to you guys) in much lower risk funds. You can’t predict what is going to happen, but an informed investor can make good, educated guesses, like I did with my RRSPs when I moved them to a safer fund before this last crash. I don’t think things are getting better in the US any time soon; I won’t have US stocks in my portfolio until things are definitely firmed up again. I understand what people are saying about riding things out, but there’s a line between riding things out and throwing good money after bad. My investment money is parked in lower return, low risk funds right now. The volatility is no longer affecting them. From the long-term prospective, I don’t see anything wrong with that, either. I have time for lower return funds to accumulate. I can also move them back to higher risk, higher return funds any time.
I used to believe the investment advisor line about riding it out - I don’t anymore. I think a lot of people are going to lose every cent of their investments in the next decade or so. I am trying to not be one of them. The bottom line for everyone is to keep their risk level where they are comfortable with it.
I’m following Lawrence Kudlow’s advice, which is to buy an index fund of US stocks, hold onto it until you need the money, and then put your energy into things where you are competent. Thank God I followed that advice this past week.
I have no numbers to cite, but I believe that often the biggest stock market gains come right after a big drop. So by withdrawing from the market right now, you might miss out on some profits.
That understandable. The problem is that you cannot, in no way what so ever, predict when things will be firmed up again. And when the time occurs when most “experts” agree that things are firmed up, you will have missed out on the ride up and will have bought high. Would you get excited about a car you want to buy, going up $500 a day, all the while thinking, “wow! that must be a really hot car for it to increase in price like that!”? If so, you will have bought at the wrong time. When things are hot again, it’s too late.
One thing you should probably seriously consider is having him make a plan and stick to it.
Weeks like yesterday will bring out every single doom and gloomer. Yet, the market ended the about where it started out. Make a decision when you want to sell a particular investment if it goes up to a certain price or down to a certain price. With stocks, there are several types of orders that you can place which will trigger automatically. Buy high and sell low and follow the herd are two of the most common mistakes that people can make.
A plan might look like this. I’m buying stock xyz at 50 dollars. If it goes down to 30, I"ll sell all of it because I’m not going to catch that falling knife. If It goes up to 80, I"ll sell half of it and lock in the profits which I"ll use to diversify my portfolio. The second half I will now sell if it goes up to 100 or down back to 50.
The other one I heard is “Don’t just do something; stand there!”
I’m standing pat. I’m about 25 years away from retiring.