In article <Nv6dnRheJ9T0FETbnZ2dnUVZ_uWlnZ2d[at]comcast.com> ,
joetaxpayer <joetaxpayer[at]nospam.com> wrote:

- quote -

Yea. My wife had a hard time with that when we discussed the (paper)
loss in my retirement IRA of over $100,000 between 7/15 and 8/15. I
still don't think she gets that even with that hit, I still had a 7.5%
gain since the beginning of the year - and it is only September.

Overall the year doesn't look too bad.

--
-Ernie-

Sandra Loosemore wrote:

- quote -

Just one more thought on this - if he's a young investor, which it seems
he is, better that he learn about volatility, and understands the
potential for a swing of 5% (or more) in a given month while his account
is relatively low in dollars. If he can't get used to it now, he won't
be able to handle this when the 5% equates to $50K or $100K.
I remember how sick I felt when the market crashed in 87, and the
dollars involved were minimal in hindsight. I (and Mrs Taxpayer) got
through the crash of 2001-3 and the current bounce off the high without
losing a night's sleep.
JOE

"HW \"Skip\" Weldon" <skip5700removethis[at]hotmail.com> writes:

- quote -

But this is explicitly his *401K plan* he's worried about. Yes, the
OP has a short-term focus, but this is a case where he *should* have a
long-term focus. He didn't indicate his age or how close he is to
retirement, but I got the impression he's fairly young and new to
investing.

- quote -

OTOH, letting long-term retirement assets sit in a money market fund
is risky, too; because of inflation, you might not end up with enough
money to actually retire on.

-Sandra the cynic

HW "Skip" Weldon wrote:

- quote -

Not necessarily. It could indicate a long-term investor who doesn't
understand how markets work. "What if I put my money in and it drops
20%?" "I don't that to happen!"

The way to find out the person's horizon is to ask.




Brian

--
If televison's a babysitter, the Internet is a drunk librarian who
won't shut up.
-- Dorothy Gambrell (http://catandgirl.com)

HW "Skip" Weldon wrote:

[...]
- quote -

In a 401k? By design 401k's are heavily weighted toward long term.

- quote -

He only asked about using the MM fund to sit out the month of September
due to dire predictions of volatility, the implication being after that
he would jump back in. Market timing in the retirement plan, IOW.

- quote -

With all due respect, people's "comfort levels" generally aren't
challenged often enough. Many if not most investors would be most
comfortable with their heads firmly esconced in the sand. Coming to
this forum or another source of advice is the first step beyond comfort...

-Mark Bole

On Mon, 27 Aug 2007 04:04:51 -0500, Chu Rey <blablababa[at]yahoo.comwrote:

- quote -

Despite all the great advice in this thread, we are missing a key
point: This OP is not a long term investor. Note his concerns above
about "this unstable, volatile market." To me that indicates a
short-term focus.

IMO advisors should help him to understand that and focus on something
that would be comfortable to him. In fact he mentions later that
perhaps he should use a Money Market fund, something with which I
completely concur.

The best advisors help people achieve their goals comfortably, even if
it conflicts with what they as advisers believe.


-HW "Skip" Weldon
Columbia, SC

Chu Rey wrote:

- quote -

Volatility has risen recently, but realize, that volatility itself isn't
bad, 1995-2000 say volatility (as measured by the VIX index) rose as the
market was heading higher.

- quote -

I saw no reply to the request for clarification on this. How is the
money invested? Are you loaded on your company stock, or are you
properly diversified?

- quote -

July 31 - S&P 1455
Aug 31 - S&P 1477 as I write this.

Depending how you are diversified, you may not be up the same 1.5%. But
if as you wrote, you actually lost a 'big chunk', I'd be concerned.

- quote -

Before today, August was still at break even, so I don't know what
crashes you reference. The August low of 1404 was 3.5% below the July 31
close. As Sandra has written, and I concur, if the swings keep you up at
night, you need to reduce your stock holdings. But keep one thing in
mind, you can't have it both ways. As I posted on my blog
http://www.blog.joetaxpayer.com/?p=13 volatility rises due to swings up
as well as down. From that blog post, see the link to MoneyChimp which
offers a calculator showing how over the long run, volatility for longer
time periods decreases. Of course it's one thing to understand this
intellectually, and another to actually sleep soundly.
If it helps, we were at 1220 exactly two years ago. Up 21% (plus
dividends) since then. In the last 12 months we are up 13%.

There will always be data coming out, always some reason to avoid being
in the market. Time is on your side. Even the real crash of 87 was just
an opportunity to continue to buy into your 401(k) at bargain prices. No
one would argue with a dealer offering them a brand new car at 30% below
dealer cost, if you are young with decades of investing ahead of you,
these drop offer you the chance to buy the same funds for less money.
JOE

"Holy Moses" <Holy[at]Moses.com> wrote in message
news:5jiq0oF3tp2cpU1[at]mid.individual.net...
- quote -

Historically speaking, stocks are risky and volatile in the
short term. For periods over about 15 years, the risk and
volatility have been low. Historically speaking...

I think this tool explains it well:
http://moneychimp.com/articles/rando...me_horizon.htm

- quote -

They are competing for (a) investors' cash, which I think is
a good thing; it's market action at work, generally
speaking; (b) the purchase of stocks and bonds and variants
(selling short, derivatives, blah blah), which is still
market action at work. Granted some funds have questionable
theory behind them, and some investors will lose their
shirts. Arguably this is a part of market action (weeding
out the weak in a few ways).

- quote -

If you mean that many funds mimic, for example, the S&P 500
index, this is no surprise. Many specialized funds are still
available and I doubt they run particularly in tandem.

If you have more than one citation for your claim above, I'd
be interested in reading them.

- quote -

It seems to me today presents a greater diversity of sector
blah blah choices for funds, and at competitive prices, than
ever before. More international funds are surely available
today than in the mid-1980s and mid-1990s, for example.

Have you examined the average loads and annual fee of
various types of funds today vs. ten years ago vs. twenty
years ago?

On Aug 28, 7:51 am, "Holy Moses" <H...[at]Moses.com> wrote:
- quote -

Total disagree on the "alarm" and "should not be happening". It should
be happening because it's always happened. In a market downturn, all
equity classes usually go down although perhaps at different rates/
degrees. It's a rare case where large growth goes down dramatically
but small growth keeps gaining. Looking through the last 35 years of
real return, the only anamolies I see are 77-78 and 98. 77-78, large
caps took losses while small kept on going and the reverse happend in
98. Otherwise, everything went down in tandem all other years. Where
stock diversification benefits is on the upside -- stock asset classes
can grow at different rates during short periods.

wyu wrote:
- quote -

there has never been a time in the last 50 years of stock market history when so many
hedge funds, sovereign wealth funds and other black ops types of funds were competing
for resources, nor has there been so many systems acting in synchronicity with each
other. many economists are noting in their research with some alarm how much funds are
performing in tandem, which should not be happening if they are truly diverse and with
different strategies

true diversity with human intervention happened last in the 80's and early 90's, after
that control has been given to a much more narrowly focused set of programs and
centrally controlled resources.

On Aug 27, 2:04 am, Chu Rey <blablab...[at]yahoo.com> wrote:
- quote -

To give you a perspective on this correction, my stock portfolio
returned a nifty 16.2% in 1998. During the months of May, July and
August, the returns where -2.5%, -2.8%, -14.9%. If I had panic'd and
sold asap after that 14.9% drop, I would have missed out on another
+65% before the true bear market started mid 2000.

The past few months? -1.1%, -2.4%, -1.6%? This is not a correction.
This is NORMAL market fluctuations. The reason why stocks return more
than bonds over long periods is because there is RISK and VOLATILITY.
Higher returns don't happen without risk.

"Chu Rey" <blablababa[at]yahoo.com> wrote
- quote -

How long do you plan to leave your money invested? Only
those investing for the long term should put their money
into stocks and stock-based mutual funds.

Good for you for asking questions. Next time, do it before
you make a major move with your money. Right now, you have
some reading to do to get a handle on what it means to own
stocks; how stocks have performed historically; how the past
does not guarantee the future, but certain aspects of world
populations and economies suggest stocks remain a good bet
for the long run. Lurk here for the next year or so.

On Aug 27, 2:04 am, Chu Rey <blablab...[at]yahoo.com> wrote:
- quote -


Coulda woulda shoulda. If we can predict the future we wouldn't be
wasting our time posting on an ng. Who knows what will happen in
Sept? Your contributions are trimmed during every correction, and
your contributions are raised during every market move up. One of the
biggest mistake investors make is trading in and out of the market.
If you are contributing a set amount every pay check you shouldn't be
worried about every market move.

The best thing you can do is to make sure your portfolio is balanced.

Time is your friend.
I have an IRA account which for verious reasons I only contributed
from 1984 to 1990.
Its been through about seven serious market corrections, but is about
six times
larger than the contribrutions. I rarely change its holdings.
Another account which I sold equities during the 2001-2002 didnt fare
as well
because I was too slow slow to detect the rebound.

On Mon, 27 Aug 2007 04:04:51 -0500, Chu Rey <blablababa[at]yahoo.com> wrote:
- quote -

Those pundits are no better than dart throwing apes at predicting the
market. I never pay any attention to pundits, personally, just because I
have no time for "white noise" that comes from them.

To have at least a portion of savings in cash like assets (such as
money market) seems like a good idea, however.

i

On Aug 27, 4:08 am, Sandra Loosemore <san...[at]frogsonice.com> wrote:
- quote -

Thank you. It's the comment dollar cost averaging and buying low when
the market is down.


======================================= MODERATOR'S COMMENT:
Please trim the post to which you are responding. "Trim" means that except for a FEW lines to add context, the previous post is deleted.

Chu Rey wrote on [Mon, 27 Aug 2007 04:04:51 -0500]:
- quote -

I can't tell from your vaugue and confusing sentence, but if you have
your 401K all in your company stock, that's a bad thing.

Chu Rey <blablababa[at]yahoo.com> writes:

- quote -

This is your 401K plan -- you should be concerned about movements of
the market over a period of 20 or 30 years, not what's going to happen
next month. 20/20 hindsight is great, but nobody can really predict
what the market is going to do next. Plus, many 401K plans and mutual
funds have policies in place intended to discourage attempts at
"market timing" or frequent trading in and out of funds.

One of the good things about regular investments in a 401K plan is
that it's a form of dollar-cost averaging. You make the same dollar
contribution every month, but when the market is down, you buy more
shares than if the market is up. So, instead of worrying about losing
money during a correction, you should look on it as a buying
opportunity.

Finally, you might want to check whether your asset allocation is
appropriate for your age and personal risk tolerance. Younger folks
are often encouraged to put their retirement money 100% into equities,
but 15-20% bonds will do a lot to dampen volatility without affecting
your returns very much. If you are the type who would panic and sell
everything in a market downturn, you'll do better in the long run if
you can find a mix that lets you sleep at night instead.

-Sandra the cynic

There's a lot unfolding in this unstable, volatile market. I have my
saving invested in the 401K, my company. During August we fellow
employees lost a bit of money. I was watching the business channel
last week. The pundits mentioned all these financial events that will
take place during September. One being the Feds and interests rates.
That there will be announcements from many sectors. Housing, energy,
banks, and so forth. They listed specific days in this coming
September that would have an affect on the market. I couldn't quit
follow the conversation. However, their talk was less than
enthusiastic. I already lost a big chuck in August with the market
crashing. Now I wonder if I shouldn't move all the mutual funds into
the Money Market -and wait until September passes? I mention this
because had I pulled my money out on August 1 into the Money Market I
would have been insolated from the series of August crashes. Our 401k
allows 12 transaction per year. And here comes September with the
pundits suggesting another series of 'corrections'. I'm not
experienced. All I know is my contributions are 'trimmed' during every
'correction'.
Thanks for any advice.