Janus fun free fall-- advice?

Guess there's a price for not paying attention: I have a traditional IRA with two funds, Janus Worldwide and Janus Research :eek: Yes, I wish I was joking.

I'd really appreciate any thoughts on what to do now. The IRA has dropped in value from about $45k to $22k this year. I talked with an advisor at my bank who suggested riding out the downturn. My friend's advisor said he didn't like either of those funds and would get out of them now.

Despite my negligence, this IRA is very important. I'm 33, single, making only $35k a year, have no other pension or retirement plans, and there isn't any inheritance in my future.

Thank you very much for any help on this.

There are a lot of funds in the same boat. If you haven't noticed, stock markets across the world over the last year, approximately since Nov. 2007, have been steadily dropping, and crashing in recent weeks because of the collapse of the credit markets. It is probably too late to do much of anything, because it appears the markets are testing bottoms now. If anything, wait for the volitility to die down a bit, maybe in a few months, re-evaluate the fundamentals, and if things seem to have bottomed out, start buying more. At 33 you are young enough to wait it out most likely.

As for specific funds, there may be management issues your broker may have been referring to, as Janus Worldwide was involved in a scandal a few years back. I think Janus Overseas Fund is rated better than the Worldwide fund. Since developing countries are expected to lead the world out of recession, I would think international funds like that generally would be the best place to park investment money if you are going to risk it.

Of course, there are some apocalyptic types looking to see further worldwide economic meltdowns, and if they turn out to be right, then yeah, even at a loss you might be better off liquidating now. The problem is, the apocalyptic doom sayers also think even money market funds and t-bills may be unstable, so you'd be screwed in anything short of gold bullion in that case. I personally am not that pessimistic, but I was alert to the coming recession over the last year and only kept only 5% of my cash invested in an index fund, the rest in CDs and treasuries. I simply am looking for a definitive bottom to buy at this point. So far it is elusive, and I am no Warren Buffett, and am unwilling to take the risk to jump in at any point. You will probably have to see how Obama's economic policies pan out.

Historically there are general pre and post-election trends also, but I think we are in an extrodinarily unusual economic mess, so I would probably discount most traditional "rules-of-thumb" for when to invest. I suspect a great deal of deflation in the housing market must occur first before wages really catch up to how expensive homes have really become over the years, which would suggest quite a long time before things stabilize, but that is just my opinion. The problem is unemployement will continue go up as people realize how poor they really are and actually start saving money and not buy things. It is good for the long-term imo but bad for the short-term.

metro,

Thanks very much for the thoughtful reply. It definitely helps to get a sense of how someone with more experience looks at a situation like this. There seems to be many factors at play here and I'll begin studying to learn more about both the economic and political issues involved.

I'll also take a closer look at the specific funds I'm holding, including the Overseas fund.

To hold or not to hold seems to the immediate question. Month by month the funds are dropping in value, so it sure doesn't seem like they've bottomed out yet. The volatility/instability that you mention, along with what looks like a long road to recovery, has me leaning toward getting into a CD and at least earning 4% or so.

But perhaps this is short term thinking, and since I am in it for the long haul, maybe I could get a better return parking it in a good fund (or several funds) and riding this out. Or perhaps some mix of CDs and funds would be best.

Despite my dismay over the loss in value-- I worked and saved hard to make those IRA contributions-- this has been a good life lesson. Thanks again for your kindness and insights.