On the news last night they claimed that a US government default on 8/2 would cause a serious drop in the stock market. They further suggested that people consider moving their investments out of stocks and into safer things like bonds and money market funds, or gold.
I dunno, seems like a drastic step to me, but I guess it depends on how likely an investor believes the default to be.
What’s your plan? Will you be moving your money out of the stock market over the next couple of weeks, or are you gonna leave it out there?
Moving money around now. Also, one of my investments is my house and I’m making modifications to that. But they’re unrelated to the debt crisis. Most of my financial moves aren’t based specifically on the debt crisis either, but the general trends.
No, because I didn’t move them out of safe investments after the last crisis (I got half of my RRSPs into safe haven before the crash of 2008 - I’m half proud of that). I think we’re scheduled for the second wave of financial crises to hit in 2012, and I won’t be moving them until after that at the earliest. That said, I do have one RRSP in a slightly-less safe place, and I might move that one back.
I don’t have any investments in US stocks, and haven’t for a while. I don’t see that changing for a loooong time (you guys are not headed in the right direction).
Anyone on the news recommending this is just scare-mongering in order to spice up an otherwise dry topic.
Whether or not the issue will get solved by Aug. 2, this is still a short-term issue and therefore not something that should change anyone’s investment strategy. The other big problem with moving money out of stocks to avoid a stock market drop is that when Congress and the White House DO reach an agreement the market is likely to rally and you’ll miss the gains.
If everyone listens to that advice and moves their money out of stocks, of course the stocks will dive in value. That’s what we call a “tautology,” you stupid fucking news anchors.
If the stock market crashes a la 1929 in a couple weeks, I believe at least half the blame will lie with the news networks advising this strategy.
Probably not. I’ve already moved a bunch of money out of stocks and into bonds and real estate. The stock market is probably overvalued at this point and due for a sizable correction. Real estate is still in “buy low” mode (and will probably remain there for a year or two, but that’s not a concern for me).
I already moved my retirement money out of stocks in '08. Many other people kept watching their portfolio values dropping at a steady pace, returning little while still holding a high risk and did the same.
This is one of the basic reasons why the recovery is not happening. To invest in stocks is to invest in the future growth and prosperity of a business and to a greater extent, of the market in general.
Without real hope in business market inprovement it is wiser to park your money where it may make little or no interest rather to continue to watch that money evaporate in a sustained market decine. Currently the potential for business improvement is just not there. It is a hostile environment for investment.
The situation is not all about the ‘Big Bad Banks’ holding on to cash they could invest, it is all the little people doing the same thing too. The individual investor also has a significant impact.
My WTF? question is why anyone is still pissing money into the stock market at all?
The stock market will recover in the same way that the real estate market will recover. Long, slow, and only for those who can handle sustained long term losses. If you are 20 years old and want to see almost all the money you contribute to your 401k evaporate in hopes of long term gain, well, bless your heart! The stock market is waiting for you.
I’m not at all convinced the Repubs won’t play this game of chicken to the cliff’s edge and take the world economy with them. It’s either that or they capitulate to Pres and survive to see the egg on their faces. Taking a cash position for the next couple weeks. If I’m wrong and enough people do the same thing, then I anticpate a blue light special in the stock market in the near future.
I’m not at all convinced the President won’t play this game of chicken to the cliff’s edge and takes the world economy with him. It’s either that or he capitulates to the Repubs and survives to see egg on his face.
Actually Obama is ready to make numerous major deals ranging from 2.5 to 4 trillion in debt reduction. It’s the Republicans who have realized they backed themselves into a corner and are looking bad in this. Mitch McConnel is even ready to give up on the entire thing and give Obama complete control of the debt ceiling. There’s not much for Obama to capitualte too when the Senate minority leader is screaming “here please please just be in charge of it all!”
I’ve still got 20+ years until I retire. I ‘lost’ a lot of money in my 401k, but I am still putting in the same amount so I’m getting more shares at a lot lower price. In the last year and a half or so I’ve also seen a 22% increase of the value of my portfolio so I’ve ‘made’ quite a bit of money.
Money in stocks and 401s, at least to me, doesn’t really exist until I go to pull it out. Since I’m not pulling it out for 20 years then let the prices fall so I’ll own more shares, then when they go back up I’ll have more money.
I own stock too, have for 20-30 years, a lot bought when I was a child by my parents. I let the dividends reinvest themselves in the same stock. Now I have lots of those stocks and when the price is lower I get even more. When I go to sell them years from now I’ll have made a lot of money.
I see the same with houses too. I have a friend who owned a house he bought in the mid 1990s, he sold it in 2007 or so, moved into an apartment. He made 300k or so. He then bought a house, smaller and a lot cheaper, and only put 200k down on it. Now he bought a bigger house again but is really mad because he lost money on his second house. He can’t see though that he made a ton on the first one and he got his new house a lot cheaper. Had he skipped the middle step he wouldn’t have the 100k in the bank and might not have been able to sell his first house at all.
Seems to me that people look at how much they’ve lost in just this transaction and not how much they have made overall.
I assumed this was just a political move so that they could blame Obama no matter what the outcome. Any decision about this has a downside, and this way no matter what he does they can point fingers and say “hey, don’t blame us, we left it up to him and look what he went and did.”
Maybe, but it’s a move they made after months of relentlessly demanding that the debt ceiling couldn’t be raised without trillions of dollars of cuts or our nation’s economic future would be ruined even if we avoid default. It’s a pretty obvious about-face to at the last minute say “oh never mind, you can be in charge and we won`t make you cut anything”
You know, I actually thought about this angle before I posted (I know, I know, but some times I do reflect, just a little), and then I rejected it. Mostly for reasons Fuzzy Dunlop pointed out: Obama has made concessions, big ones, in an effort to be the first to compromise. In response the loyal opposition merely demanded more concessions without making any of their own. Both sides know if The Obamalama caves in, he’s done for.
