Posted on 10/09/2008 1:00:23 PM PDT by prolifefirst
Markets bounce at their lows, always. They are testing to see if that is the actual trading low. Now if you expect to catch the very bottom, then your expectations are way above mine.
My priority is to hold on to the nest egg I already have. When I see what appears to be the bottom then I’ll take maybe 5% and test it. Don’t get greedy!
I totally understand, we just got our quarterly report today and had lost more ground. Scary stuff. You can catch it back on the upswing, if you’re so inclined.
“Buy high, sell low!”
If your stocks go up, SELL! If your stocks go down, DON’T BUY.
Bailing now is a bad decision if you are young or middle aged. If you are near retirement and you have no other source of retirement income, you probably felt you had no choice. But for younger folks, I think it is a buying opportunity. America will come back. It always has.
Good point - and no expense ratio...
You know what they say: past experience is not indicative of future performance.
For your sake, I hope this move works out for you. And I understand that only you know your circumstances, including when and how badly you need the cash.
That said, I do want to speak out against panic. Nothing will ruin us faster than collective panic.
This problem was created over several years and it will take several years to unravel. Right now the Treasury is planning to spend about $50B a month to buy toxic paper-—but it has yet to make it’s first purchase. If it takes $700B to finally do the job, that right there is over a year. And that’s with no bumps in the road.
Also Paulson has made clear that the rescue package was in NO WAY intended to preclude further bank (and other) failures. It was only to stabilize the market within certain minimum parameters, while, within those parameters, the market sorted itself out, however ugly that would be.
In short, most people need not react to the day by day volatility at this point.
When people stop withdrawing funds from the market and putting it into demand accounts (M1).
Excerpt:
It should also be noted that M1 is soaring. Although, this is not a good measure of of overall money in the system, because it is too narrow and only includes such items as physical currency and demand deposits, i.e., checking deposits. It is a good measure of fear in the system, since the money now flowing into demand deposits is money that was in money market funds and bond funds. 12 month annualized M1 growth was only at 1.8%. The recent Fed release shows 3 month annualized M1 growth at an amazing (given the Fed hasn't been pumping money into the system) growth of 11.7%--based on the thirteen week average data assembled by the Fed.
Thus, M1 is truly measuring the fear in the system. Watch for a slowdown in M1 growth to indicate that fear is subsiding.
http://www.freerepublic.com/focus/bloggers/2101830/posts?page=1
Okay - I’ll jump in for some advice. I’m thinking of of cashing in most of a mutual fund that is now at about the same price I put into it years ago. (Down almost 40% since last year though). I need some cash to pay my end-of-the year taxes so they can be used to bail out the fat-cat fund managers and illegals with their bad mortgages.
Do I take the “loss” on the fund (from its highs - but break even from when I bought it) - or do I tap into my home equity loan that is on standby at the bank (5% rate as I recall - I haven’t had to ever use it). It would only be for a month or two once some of my clients pay?
I’m not a finance wizard, but here’s a point I heard from a smart guy on CNBC today that might be worth thinking about.
This guy said, and several of the traders on the show agreed, that the market could “pop” up 1,000 points at any time in the next days or weeks.
They based this on the fact that the “little guy” (not their term, but you know what I mean) down the investment food chain was panicked and moving out money. OTOH, they said that the Fed rate cut was going to reduce the interest on cash (as apparently it is) until it got too painful for the “big guys” to stay out of the market.
Then as those larger value investors start putting a toe in the market, more investors will follow.
The bottom line is: that since the bear is not based on value, but on market distortions of liquidity, it would be very easy to miss a rally.
P.S. Do whatever it takes to make sure your clients pay. I have friends with a small business who are starting to see “good” customers unilaterally deferring payment or “forgetting” to pay, “the check is in the mail” for the last two months, etc.
Your ps: I was just thinking about that as I was typing it - if business gets tough I’m probably low end on the food chain for getting paid. In my 12 years of business I had one client not pay (he messed up on his part of the project and his client didn’t pay him). So I’ve been lucky - so far.
Thanks for the advice on the bump that we may see.
My late Mother also warned me about the stock market when I put some money in mutual funds about 15 years ago. She was right. I don’t even bother to check the markets any more, but my last quarterly statement said I lost $9,000. I wrote that stock market money off long ago.
But at some point people will think they are worth more and prices will rise.
Buying shares of fundamentally sound companies when the price is low is how one makes money.
But a stock price doesn't go low, it matches what most people think is the future profit making prospects of the company. So yes you can get a lower price but you're buying shares in a less valuable company so you're not getting ahead. If a stock price seems low to you, you are probably not seeing something that others in the market do. The main way stock investments pay off is buying into a company that has a convincing case for improving fundamentals in the future. Buying "cheap" stocks based on the what the price was last week is not how it's done. People who use their grocery shopping skills to buy stocks usually get burned.
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