I do all my own investing and I’ve done pretty well. Made enough profit to pay off my house and my car and I keep a close daily watch on my stocks. Not rolling in dough or anything, but I don’t want to see my modest nest egg go down the drain.
I know - on a daily basis - a great many people involved in the markets. None of them are planning to get out entirely. Many of them are planning to put more into it if panic selling sets in and people begin dumping equities.
I moved my 401K into safer investments starting Monday and have already avoided a downturn. Did it in July of 2008 as well and don’t regret not losing 25-50% of my retirement fund like a lot of my co-workers did. Still lost, but only about 2% which to me is a wash when compared to how bad it could have been.
As I posted on the other thread, I am in cash as of two days ago. If the market tanks during the debt limit crisis, I get back in at a discount. If not, I will lose a few percentage points of profits I could have picked up when market jumps on the news that the debt limit thing was resolved.
Since I consider the downside at this point to be much bigger than the upside, it makes sense to wait it out in cash. For me.
This makes no sense unless you assume I never got back in. I sat it out with low risk investments and got back in right about where I left with only added monies from my weekly paycheck. I loss 2% and got back in when my co-workers were down 25-50% so “on paper” I started out ahead “on paper”. You act as if this “on paper” thing isn’t real money, it is if you cash it in on that day which is how people “keep score”.
Basically what I plan on doing with my measly 401K; sit it out until the mess with congress and the stock market is settled and then go aggressive again. Of course with a 401K this means at least 30 days on bench.
If you got back in at the same place you got out, you’re doing better than most people, but I doubt you did much better than a percent or so in your safer investments. Trying to time the market is a silly idea for anyone who isn’t a pro.
It isn’t silly when the congress is acting stupid. You can pretty much guarantee that the market will react badly to what the idiots don’t or finally half assed decide to do. The proof is in the bottom of line of each individuals account, not in some generalized statement that there is nothing an individual can do so they might as well throw their hands up in air. Those are the same people that lost their ass last time.
Congress doesn’t listen to the calls people make or how much more in donations the other party clams to have gotten. They pay attention to the market indicators, plan on how to maximize their personnel profits since it’s OK for them to do insider trading and then decide. The only vote that people like me have is when we shift our retirement investments in mass like many people are doing now. Nothing at all silly about it.
I’m not convinced you understand the difference between an unrealized and a realized gain. You didn’t really do any better than anyone who just stayed in the market. I honestly don’t think you get that.
Easier said than done. Do not forget that any investment that is less than 12 month old will be subject to a short-term capital gains tax which is your ordinary tax bracket (including the gain) for that year as opposed to the long-term rate of 15-20% (assuming your stock sale is profitable)
I’m just pointing that at present the only way for middle class earners like myself to earn a decent rate of return on our investments, or at least one that beats inflation, is by going with the market long term. I keep about 30k in emergency money in bank account with TD Bank. I think it earns half a percentage point in dividend income if that. Meanwhile, we have about 600k in the market in direct savings in a TD Ameritrade account and expect about 20k plus in dividend income alone this year. It would make no sense to put our savings in T-bills or in a bank savings account.