There's an observation I've made that I'd like to discuss and see if anyone else feels the same way.

When the economy is in a slowdown or in the chitter, ask any real estate agent "How's business?"
EVERY one of them will lie and say:
"Oh I'm soooo busy, I can hardly keep up, there's MORE closings NOW than 2 years ago!, Well, I gotta run back to the office, I have a client waiting"

It pisses me off because they try to play this headgame with everyone.

I know the market is for crap, they know it, and they know that I know it.
Why can't they be honest?

They just want to keep up false pretences so it instils false confidence in people. Ego maybe? They are protecting their livelihood, even if it means they must lie in order to do so.

Now you take my theory of "false confidence BS" to the market and let's talk to my financial advisor.
These guys are just as bad with the bs.

Now you might say "Well Habibi, you're not very trusting, are you?"
You bet your *** I'm not, because 99.9% of the people in the world have an agenda and do things only because it serves their purpose.
It's not anyone's fault, it's just the way life is set up.

I wrote to my financial guy this morning to say "Hey, wtf is going on, I haven't heard from you, give me an update ****!"
The silence has been deafening if you know what I mean.

So here's part of a reply he sent me:

Moving it out right now would be the worst move to make. This is a global downturn like the world has never seen. The companies you have in your portfolio are solid. You portfolio will bounce back. The $XXX.XX that you are putting in a month right now is buying you larger amounts then it did before.

Any way you look at it. Now is the time to buy. Honestly, don't let the media sway you from your goals. We have a plan and if we stick to it. You will have more money then you thought at the end. I know it is hard to see right now and being down 14% is a tough pill to swallow but if you consider the fact that there are many people who are down 30+% and the S and P is down 25%, and I have watched the DOWE drop by 20+% in a matter of a week so you are ahead of the market right now which is where you want to be.

Do you think anything could ever happen where these guys would say "Hey, lets put your money into a fixed-rate GIC until this blows over?

I don't think this is an option for them.
Getting back to my real estate agent example, I don't think anything would ever compel these guys to err on the side of safety.

Of course they want to keep guys like me in the fund because if we pull out, they got nothing but their peckers in their hands.

I don't know a lot about this stuff, are you guys staying the course? Anyone thinking of bailing and cutting your losses? I'm considering it, contrary to what my advisor tells me.

Habibi

 

On the real estate side, Market Psychology plays a big part in local markets. When people are afraid to buy, prices plumit.

So the local brokers don't want to be a part of driving the market down. Especially since most of them own homes. If you had a way of finding out what they are actually doing (buying or selling) instead of saying (BUY BUY BUY) you would have a better idea of their true feelings.

On the financial advisor side, I think most of them truly believe that 'dollar cost averaging' (buying a little every pay check or every month) is a time proven strategy for a LONG TERM investor. Plus they get a little piece for themselves every time you buy.

If your horizon has shifted to a shorter term where there is less chance that the market can recover your losses before you need to start living off the investment, man, that's where you need more than the generic advice.

I feel really bad for recent retirees or people who planned to retire soon. This is the worst possible scenario, IMO.

 

I trust our ED Jones advisor, he's a people-person. My mom has our financial advisor's son in one of her classes and she saw him last week at parent/teacher conferences. Mom went running to him whining and crying and all he did was hug her, tell her that things suck, and the best thing to do is not to make a single move right now.I guess that's reassuring. At least he didnt lie

As far as retirements go, that stuff is hitting close to home. My dad is 58 and has most of his retirement through Merril Lynch. He's sweating but he believes the market will rebound over time.

 

My financial advisor is a pretty good guy which I trust but I also think at the same time if it was wise for me to pull he would not tell me to. He cannot tell all of his clients to pull out because he would have nothing left.

 

It looks like his letter is one of those template letters that you just fill in the name to whom it is addressed.

I generally do not trust anyone w/ my money. Would you use your buddy's $20 the same way you would use your own? IMO hell no, there would be a round of beers for the whole bar if that were the case.

This is the effect "Financial Advisers" have with your money. Sure it is not as blatant as buying a round for the bar but if they loose your money what are they going to say, "Oops, sorry. My bad" Then you're left in a serious pinch. Their name protects them. They are only there to advise and any decisions made on their advice are yours to make. When you loose your money they are only going to say "You could have said 'No'".

I have taught myself a lot of how to manage my own money and it keeps me in control. I will only have myself to blame for my financial decisions.

 

Put your money under your mattress. There's a better rate of return. - Og

 

That's exactly my point. They don't want to give anyone any excuse to reduce their offer. I suppose they think everyone is stupid and they try to take advantage of that.
There is the honest one out there, although very rare to find.

Realtor's share the same pedestal on the food chain as people who sell cars.
Some people might not like my blanket statement, but I speak in generalities.I know the odd "decent' person exists, but there are a lot rarer than we think.


I agree, especially for people who've been planning it down to the "last thousand" to estimate their retirment properly, and then 14% of their loot has vanished.
It would really suck because I'm sure some people who were planning on retiring now have to remain at work for an extra (X) years until they can afford to go.

 

My FA said that, yeah, things look pretty bad right now. Have patients, it'll rebound.

And look on the bright side, while we're patiently waiting, you can get that third job you've always wanted.

 

He has valid points. If you bet against the US economy, you will lose.

It WILL bounce back, it is simply a matter of when.

He is also correct in the fact that you can buy much higher volumes of stocks when the market is down.

I took a finance class last semester with a professor that works at Deutche Bank. He personally manages around $160,000,000 of private investments. The guy was so bright it was scary.

That said, he always laughed and joked at how people pull out of markets when it is low, and jump in when it is high. The EXACT opposite of what a smart investor does. You will do yourself no favor to pull out of the market now (It's already way down) and try and jump back in later (when it goes back up).

But hey, it's your money

 

That's what I was thinking too.
I called my guy today and said I was willing to lose 33%, I told him if it ever gets to that point, take the rest and lock it up into something safe.

Right now I think it's down 14%, so there's still lots of wiggle room for him / the market to make a recovery, and if it doesn't, at least I'll keep 67% safe.

I wish I understood this stuff better. The way I see it, whenever someone (like me) loses 14%, there must be someone, somewhere at the other end 'making' that 14%. Am I wrong with my thinking?

I know someone is making out like a bandit, and since it's not me, who is it? I'd like to invest in whatever it is they are investing in.

I'm still learning though, maybe one day I'll have a better grasp.

 

There's no way I'm bailing out right now. As a matter of fact I'm going to increase my contribution to my 401k. Currently I put 22% of my salary back for retirement between my retirement and IRA's. I'm going to increase that to 25% at least.

The way I look at it is I'm going to load up while the market is down. It may go lower and may stay bad for a year or two, but it's going to go back up. When it does I will have bought low and the benefits will be greater in the end.

As Dave Ramsey says, "Your retirement acct is like a roller coaster. You will only get hurt if you get out. There will be ups and downs, but as long as you stay in you won't be hurt". This is the worst time for those who are planning on retiring soon. For me I have 25 or 30 yrs before I retire, so I'm putting in as much as I can. Mine is all pretax anyway so it benefits me now and in the end.

 

I guess the big question is: How low can it go?
I might double my monthly contributions like what s2Krn was saying.
As much reading and research I've done, there's nothing in history that even comes close to what's going on now, so it makes it hard trying to navigate through uncharted waters.

It's only money anyway, at least if we lose our asses in this thing, some of us still have our health right?


Hopefully in a couple of years we'll look back on this day and laugh.

 

I've heard wags speculating the DOW will dip to 8500.

Basically, look at your early 2004 retirement account balances and expect to see those numbers again.

Note: I am not an informed professional, this is just wild guesses from various friends who watch some of the financial shows like Jim Kramer, etc...

 

for 15 years i rode the stock market with my retirement account, up and down without worry. i knew in th long run i'd gain.

about six months ago i took a slight dip and thought i'd been rolling the dice long enough.
i moved 100% to govt securities.
only made peanuts since but, i didn't lose a dime.

i did it because i was 30 months from retirement.
i dumb lucked missed taking the hit, which i figure would have been about 50-75k.

i was just stupid lucky.

 

In the stock market yes... on a motorcycle no.