I saw the economy crashing in 2007. I wished I could convert my 401k to cash, but I didn’t know how. I could have nearly tripled my retirement savings. Now I have instructions on how to do it. In a few hours I’ll be at my desk and I’ll have access to them.
Given Trump’s track record of failed businesses, should I pull the trigger now? Or wait until the inauguration?
I would think in the short term just the opposite.
US overnight equity markets are down on the limited trade and are probably going to price in that full discount for uncertainty tomorrow.
But nothing has changed in the fundamentals so tomorrow might represent a buying opportunity.
The UK markets regained their post Brexit losses in 36 hours.
The Australian equities market regained most of the early “Trump16” losses by the end of today’s trading.
Today would probably be about the worst possible time to convert your 401K to cash. I see this is similar to the Brexit situation. There will likely be a short-term reaction today, and the markets will be way down. This low price is what you will sell at. Over the next few weeks, they will normalize back up, and you will have lost 2% or something of your retirement without recovering it. If anything, I would buy today.
If you really think that this portends bad long-term financial news (something I don’t have an opinion on right now), there will be plenty of time to sell in the coming months.
Buy low, sell high. If the market crashes and you panic sell you’re doing exactly the opposite of that. If we do indeed tank, take advantage of that and buy on the dip. IIRC, the market always falls around election time and rebounds soon after.
In addition to agreeing with the majority in the thread, are you quite sure about this? Because if you are assuming you could have sold just before the crash and then bought back in at the bottom in order to get to that result, it’s a lot easier to do that with hindsight. Even if you are basing it on the fact you foresaw further economic trouble and selling at a defined point, you still have the issue of buying back in.
For example, if the S&P 500 falls by 5% today, and you sell, who’s to say it won’t bounce by 10% tomorrow? It’s almost as likely to do that as fall a further 5% (for example).
Final word of caution: if, against the advice of the thread, you sell today, note that if you hold mutual funds you almost certainly won’t be getting a live price. In other words, the price your sales will be struck at will be either tonight’s closing prices, or perhaps even tomorrow’s - and the market will have moved again by then. Mutual funds are designed to be held long-term, not used to try to second-guess short-term market fluctuations.
I’ll echo what Dead Cat and also add that Mr. Athena did exactly this in 2007 - converted his 401K to cash. I left mine in the market. Fast forward a few years, and we both ended up where we started. Mine had dipped a bit, but recovered plus a little more. His stayed even (obviously). Unless you have a ton of high-risk stocks in your 401K, I doubt converting to cash is necessary assuming you don’t plan on retiring in the immediate future.
I sold my remaining stocks last night, as they will return a profit from past activity, regardless of what happens today. What happens during the week is another story. The eventual repeat of 2007/08 during this administration is almost a certainty, IMO. Free market economics is not a viable option. When Congress and the idiot in chief repeal Dodd-Frank, and the remaining controls over Wall Street come off, it will be carnage.
If I had thought about it last night instead of this morning I would have shorted a few of them. But since I haven’t shorted stocks for so long I’m out of practice and scrambling now will probably just cost me more, but looking at the chains there’s a lot of contracts set for January.
I don’t follow stocks, but currencies have already started to recover.
There are four stages to the Trump transition. 1) blather in the campaign about he wants to do, 2) blather after he has won about what he really wants to do, without risking votes, 3) put his money where his mouth is after inauguration, and 4) see if the congress/army lets him do anything.
Each of the four will have its own attendant crises and panics.