6 Things To Do While The World Ends

Kiplinger ^ | September 29, 2008 | Fred W. Frailey, Editor

[Uncle Miltie]

"6 Things To Do While The World Ends"

Well, one of them has to be F***.

[jacquej]

Got the name of a good boat?

[seekthetruth]

“The world did not end today. Yes, the market took a pretty nasty dive, but it will recover more quickly if we don’t allow Congress to once again put its nose in and “help.” The market will correct itself. Oil is down. Dollar is up. We just need to ride this out and let the teetering institutions fail and capitalism will prevail. We must continue to say no to this Socialistic bail out in whatever form comes next.”

I agree with you totally! Now if McCAin will only take the opportunity to lead and say the best thing to do is cut Capital Gains Tax and and let the market correct itself. He would win for sure in November if he did!

[BlazingArizona]

Clayton is about to retire. He lives in a small city in the South and figures he could live comfortably the rest of his life on his savings, which are mostly in the stock market. Now Clayton is beside himself that his savings are being set afire by the dithering politicians.

Clayton, meet with your neighbors. Make plans to fortify your town.

[AmericanMade1776]

The absolutely worst thing one could do is to sell stock in solid companies. Stock prices go up and down, but meanwhile they pay dividends, and while you are drawing those you wait til they go back up to sell. They will go up again.

[ikka]

The CDs would be FDIC insured, not sure about the AIG stuff.

[djf]

Great flick!

Mebbe I’ll watch it tonight...

[mlocher]

I am not a financial genius, but I always thought the closer you get to retiring, the more you want your nest egg in something like bonds.

Should I feel sorry for someone who is realizing the risk inherit in the stock market?

Bonds have been taking a beating because of the sub-prime market. Your feelings are your own. I will not impose my beliefs on your feelings. (smile)

[Opinionated Blowhard]

Even some bond pools that aren't in sub-prime are taking a beating because of their derivative strategies. No one should assume their “bond” fund is safe. Some tried to juice up the returns with derivative strategies that didn't protect downside as well as the managers thought and actually created risk in some scenarios. Some of those scenarios are here today.

[The Iceman Cometh]

Uhm, again, I am not the finance guy, but I thought you could buy bonds at fixed rates of returns, like municipal bonds.

What did I miss in 10th grade econ?

[mlocher]

What did I miss in 10th grade econ?

Wow, a product of our education system that understands bonds and the basics of our education system! (I am NOT being sarcastic.)

You are correct. Most small investors buy Bond Mutual Funds because they can diversify and because nobody really wants their money tied up in a 30 year bond. Mutual funds give liquidity. Nonetheless, mutual fund or not, the base price a person is willing to pay for a bond depends on today's interest rate (among other things). As interest rates drop, the base price of the bond increases and vice-versa in a normal market.

When small investors put money in a bond mutual fund, the mutual fund manager selects the investment tools. Many mortgages have been packaged as bonds and resold to bond mutual funds (hedge funds too). The value of the sub-prime mortgages are difficult to place a value on, and the price someone is willing to pay for the mutual fund will therefore drop -- more if the fund is heavily invested in mortgages.

I hope that helps answer your excellent question.

[supercat]

We may as well admit to ourselves that we live in a socialist country (although not as far gone as Europe & Canada) and resolve to do what we can to turn the tide. The bailout is going to happen because the big boys want it to happen, and they control Congress, not us.

We need to make more noise. We're slowly winning on Global Warming "Climate Change"; here things are compressed, but I still sense an increasing number of people are perceiving that the real "urgency" is "you need to act immediately, because the longer you wait the more likely you'll realize it's a scam."

[supercat]

I am not a financial genius, but I always thought the closer you get to retiring, the more you want your nest egg in something like bonds.

The irony here is that I suspect that bond funds are more dangerous in this market than many types of equities. If many of the purchasers of some type of bond also bought credit default swaps to "insure" it, any shakiness on the part of the "insurer" will tend to undermine confidence in the bond as well. Some companies' equities will become totally worthless as a result of their having bought toxic paper, but many other companies' equities might escape relatively unscathed.

[WVNan]

If I may, I would add to your list to remember that those who held on to their worthless stocks in the 30s eventually became quite wealthy. Some families, years later, would find some old stock certificates stuck away in a drawer, take it to wherever one takes old stocks, and found out that the certificates were worth a fortune. Just think, maybe we can make our grandchildren wealthy by holding out.

[GOP_Raider]

My grandparents have been in a three way panic for the past several days, and I made the suggestion that they should consider gold. Although I see in this thread further up that someone else suggested that already.

But I’m just the adorable grandson, what do I know?

[fortheDeclaration]

The world did not end today. Yes, the market took a pretty nasty dive, but it will recover more quickly if we don’t allow Congress to once again put its nose in and “help.” The market will correct itself. Oil is down. Dollar is up. We just need to ride this out and let the teetering institutions fail and capitalism will prevail. We must continue to say no to this Socialistic bail out in whatever form comes next.

Good to hear from a strong American woman.

[AZLiberty]

I’m waiting till the DJIA gets to 42, then it’s buy, buy, buy!

[roaddog727]

There you go!

Buy @42!

(I have a buy in @ .15.....) Yeah, I’m a low-life bottom feeder.......