funds and the market plunge

Today was the worst day on the market since february. What is the kiplingers forum doing in light of this. Are you adding to our positions? or are you running for the door? or are you doing nothing?

For me Im doing nothing for now. But if it falls like 8% more I will throw some more cash in.

I am uncertain as to how this credit crises will play out though

Well, it's all about buy low, sell high, right? This is low.....

After pouring over the numbers I plan to do what I always do. Nothing.

Articledon

FWIW I don’t know you so you may very well be different, but in my experience when people say things like if the market goes down another 8% I’m going to get in. They don’t. They’re looking for the bottom, and no one actually knows where that is. If it actually does drop another 8% percent they think I need to see how low this will actually go. Then before they know it it’s up again and they are still on the sideline. If you have money that should be in the market then get it in. If it doesn’t belong there then keep it out.

Looking for the bottom’s and tops is the ill of most investors but especially amateurs…present company included.

I usually suffer from "never keep enough 'investable' funds aside because I always have to buy something" syndrome.

So, whenever there is a sizable drop, I either have nothing that I am willing to part with (due to losses caused by the drop), or nothing I am willing to part with because they are still doing well compared to everything else during market drops (I-bonds, corporate bonds, high-yielding stocks, long-term mutual funds).

Sigh.

As I pulled my money out way too early (last year about this time), I'm looking at this as an opportunity to get back in. I've learned my lesson to never 'time the market'.

I'm looking at this as an opportunity to get back in. I've learned my lesson to never 'time the market'.
but seriously... have you looked at what you just said?

It stinks and I PRAY that this is not part of a long-term trend but I'm also doing nothing. I was over-weighted in stock funds but didn't want to sell any (huge capital gains taxes on the non-IRA accounts) and this will ameliorate that a little. It also means I may be able to slow down on Estimated Tax payments.

If it gets really bad, it will be time to re-allocate by selling bonds or bond funds and buying more stock funds but I'm not there yet.

Blixet,
Yea, yea.. I know, but I need to get back in to stay. Getting 'priced out' as the market leaves me behind is risk as well.

For bjk7799,
This might be a good time to use dollar-cost-averaging and put some of that money back in now. Then incrementally add to it each month or each quarter, etc. That way if the market slides downward over an extended period, you don't have all your eggs in that basket on wheels rolling downhill, but can still take advantage of some good buying opportunities by having some of your money back in the market. And of course if the market continues its overall upward trend, you've gotten some pretty good deals on whatever you buy today (versus waiting too long and being priced out again).

As for me, I haven't touched my funds... sure, there'll be dips and lows along with the highs, but in the long-term it seems best just to leave it alone.

Rookie,
Yea that's exactly what I'm intending. I was waiting for the "10% correction" last time the market pulled back but it never made it a full 10%. I believe the DOW is down about 5% now from it's high of 14,000. If (and when) it hit's 13,000 I'll make a move. Alot of my non-retirement money went into CD's paying 5.6%. That's locked up for a few more months, but my 401K/IRA money can move back in. I may look at a balanced stock/bonds fund this time around. I would be happy to get money back in and forget about it. If I could get an avg of 8% till I retire I'd be happy.

IM not really trying to time the bottom. When it drops a certain amount I throw some moeny it, if it continues to fall I throw in more. I have some cash that I was scared to put in last month. good thing it was sidelined then. I will need this cash in the next year or so. So I would like it in the market if I could get it in at the right price.

After pouring over the numbers I plan to do what I always do. Nothing.

Articledon

FWIW I don’t know you so you may very well be different, but in my experience when people say things like if the market goes down another 8% I’m going to get in. They don’t. They’re looking for the bottom, and no one actually knows where that is. If it actually does drop another 8% percent they think I need to see how low this will actually go. Then before they know it it’s up again and they are still on the sideline. If you have money that should be in the market then get it in. If it doesn’t belong there then keep it out.

Looking for the bottom’s and tops is the ill of most investors but especially amateurs…present company included.

I know that to beat inflation stocks are 'must have' but can someone out there explain to me how the stock market is not a widely accepted pyrimid game.

By me buying in today, I'm hoping that you come along to buy in tomorrow. What is a share of stock REALLY worth?? answer: It's worth what ever someone is willing to pay for it. If nobody wants to own it then it is worth nothing (.com's). Because people have money to invest, they need to put it somewhere.. so the game continues..

I guess the same is true for anything (Real estate, gold). I guess it's all a gamble. Even CD's are a gamble. My money, "safe & secure", in CD's, has lost in a big way because of the sinking of the US dollar. I should have bought EUROS and put them under my mattress...

well underneath it all stocks signify ownership in an entity with assets and income or a great possibility of getting assets and income in the near future.

I know that to beat inflation stocks are 'must have' but can someone out there explain to me how the stock market is not a widely accepted pyrimid game.

By me buying in today, I'm hoping that you come along to buy in tomorrow. What is a share of stock REALLY worth?? answer: It's worth what ever someone is willing to pay for it. If nobody wants to own it then it is worth nothing (.com's). Because people have money to invest, they need to put it somewhere.. so the game continues..

I guess the same is true for anything (Real estate, gold). I guess it's all a gamble. Even CD's are a gamble. My money, "safe & secure", in CD's, has lost in a big way because of the sinking of the US dollar. I should have bought EUROS and put them under my mattress...

Rookie,
Yea that's exactly what I'm intending. I was waiting for the "10% correction" last time the market pulled back but it never made it a full 10%. I believe the DOW is down about 5% now from it's high of 14,000. If (and when) it hit's 13,000 I'll make a move. Alot of my non-retirement money went into CD's paying 5.6%. That's locked up for a few more months, but my 401K/IRA money can move back in. I may look at a balanced stock/bonds fund this time around. I would be happy to get money back in and forget about it. If I could get an avg of 8% till I retire I'd be happy.

What happens if the Dow reaches 13,200 then makes a move to 15,000? Again, it sounds like you are trying to time the market. Put a third of what you intend to invest this Monday. Pay attention to business news and get a feel for which direction the market may head due to events. If it moves a few more percentage points steadily in one direction (if over the course of a week or two - a possible market trend), consider putting another third of your investable funds. Wait another month if you want and see what transpires and consider putting the rest in.

You don't have to do thirds. Just don't sit there. Because, before you know it, the economy could shake whatever ails it at the moment and it is Q2 2008 with the market is headed for 15,500.

articledon, its not my money so keep that in mind. that said ...

if a client of mine said "I will need this cash in the next year or so." i would REFUSE to put it in the market (in ANY variable product). the fact is that the market is a roulette wheel for any period less than 5 years. i do not think a single professional who frequents these boards would say otherwise. put it into a 9 month CD or some other fixed short term cash instrument.

if in a year or so when you need the money you look at the market and realize that you could have made 15% you need to be good with that. you have an EQUAL chance that a year from now you could have lost 1/5th of the value of your accounts today.

I'm buying silver coins and stashing them in a safe deposit box!

Actually if you had put your money in a month ago you would be down about 1%. Barely a blip on the radar screen. Using the DOW which is what every one seems to be looking at. July 27 Dow = 13,265 June 27 DOW = 13,427. If that money has actually been sitting there since say January 3 2007 (DOW = 12,474) you would be up over 6%.

If 14,000 was too high of an entry point for you, and you get in now, will you get back out if it bounces back to 14,000 next month?

We’d all like to be able to get out before the declines and back in before the rise. I hate seeing money come off the board too. It helps me to know that it’s just a loss in profits, not in actual principle. I’ve been in the market for over 15 years (still just an amateur) and I can tell you in every account exactly how much money I put in, if appropriate how much the company put in, and how much is ROI. If I ever lost so much that it actually got into my contributions then I would truly hit the panic button. At his point it would have to be a total market collapse for that to happen. I may move in and out of sectors according to what’s going on in the world but take it out? Nope, ride baby ride.

If you have money that you will need in the next year or so it does not matter what the market is doing. Short-term cash does not belong in the market

I'm buying silver coins and stashing them in a safe deposit box!

If you look out your window, a black sedan should be pulling up any minute.

if in a year or so when you need the money you look at the market and realize that you could have made 15% you need to be good with that. you have an EQUAL chance that a year from now you could have lost 1/5th of the value of your accounts today.

Outstanding advice, 1!

This is in the spirit of a group of maxims that I pass along to clients:


Investment Truths

1. Over long periods of time, the following are true:
• Stocks will have a greater total return than Bonds, with greater risk
• Real Estate will produce a greater return than Bonds and less than Stocks, at a risk similar to that of Stocks.
• Bonds will have a greater total return than Money Market Funds and CDs, with greater risk
• Money Market Funds and CDs will have a slightly greater total return than inflation, with relatively no risk.
2. Time is the most important factor relating to an investment plan’s success. There is no substitute for starting early and maintaining regular contributions.
3. Diversification, among asset classes, sectors and tax treatment, is the second-most important factor relating to an investment plan’s success. Many successful investors have found low cost mutual funds and exchange-traded funds to be ideal for achieving diversification and favorable tax treatment.
4. Sometimes we will buy an investment that will immediately go down in value right after we buy. Other times we will sell an investment that will continue to increase in value after we’ve sold. And sometimes we will hold an investment too long.
5. The value of opportunities that you’ve missed will always exceed the value of those opportunities that you take.
6. Someone, or some group of people, will always have done better than you for a given period of time. Likewise, someone, or some group of people, will have done just as well as you, but with less risk, over a given period of time.
7. Past performance is no indication of future results. Money can only be made in the future – it is impossible to buy past returns.
8. The principal cause of changes in investment prices is a change in consensus expectation for the future.
9. With a financial advisor, you are not paying for tips, information, or secrets. You are paying for knowledge and reason applied to your specific circumstances. Investors who utilize an advisor have increased odds for success in investing. However, increasing your odds does not mean you will have 100% success.
10. Get used to uncertainty – like it or not, every investment decision is based upon reasoned guesses about the future.

thanks for the advice folks. I will try to resist temptation. You guys have been in this game much longer than I have so you know better than I do.

Jim, youve been in for 15 years and you still consider youself an amateur? Wow then what am I. Its been 3 years for me.

Since I have started, every dip in the market has resulted in a strong resurgence in the following months. feb 07, summer of 06, etc. thats just been my limited experiece. But I guess thats not always the case.

Ill keep the 20K in the savings account. I might still put 2500 or 5000 in if it gets tempting. 5000 wont deraill my plans if things dont work out.




Actually that is what happened. I was looking at the summer of 06 and looking at how much money I could have or should have made in the following rally that fall.
if in a year or so when you need the money you look at the market and realize that you could have made 15% you need to be good with that. you have an EQUAL chance that a year from now you could have lost 1/5th of the value of your accounts today.