It really depends on how long you have until retirement.

Having said that, I feel that the market is going to hit bottom somewhere around 2-3K in the next 2 years. If you leave it in stocks, you're going to get killed. I would recommend putting it in a bond fund if you can. I moved mine last January when the market fell about 1000 points from stocks to bonds.

The stock market may have a few bear market rallies, but there is too much downward pressure in general to leave it in stocks.

Most of the markets' 300 point drop yesterday was foreigners taking their money out of the market. This will all happen in waves.

 

Went back and read some of these posts...The money has already been 'lost'. Taking it out and moving it to something safe like bonds is not losing you more money.

Why stay in a stock market and lose more money?

 

He hasn't lost 1 penny. But if he sells it he will loose a lot of money.

Just like you don't earn anymoney on a stock unless you sell it.

Unless he needs the money it's stupid to take it out. He's only 39. The only good reason to take the money out is if he dosen't expect the market to recover before he's 60-65.

 

The money is lost. It's not just on paper. Before I could move mine last year, I had already lost over 2K.

You're assuming the market is going to skyrocket again like it did during the .com and housing bubbles. Those days are gone.

I'm 36 and mine will be staying in bonds until I see solid job growth and foreign capital back in this economy.

 

IDK much about bonds. I'll have to research.


I'm not sure I quite understand what you mean by "he hasn't lost one penny" . Quite the contrary. I've lost over 50% of what I had since Jan 08'. I don't need the money now but seeing over half of it disappear in a year makes me a little nervous I guess. Like I said earlier, I just want to stop the bleeding, ya' know? I'm sure eventually the market will recover but how low will she go?

 

Let's say I bought 1000 gallons of gas at $3 a gallon last year I spent $3000. Right now that gas is only worth $1500. However I still have 1000 gallons of gas. If I keep the gas and don't sell it until gas is worth 3.25 a gallon I can sell it for $3250 and make $250. But if I sell it now I will loose $1500.

You don't loose the money till ya sell it!

 

Also take for instance my GM stock. I bought some at $4.269 a while ago. However I also bought some at $2.07, $1.73, and $1.889. So I averaged a buy price of 2.40 or so. Now the stock only has to get above 2.40 to break even.

If you stop investing now your stock will have to get above the original price for ya to break even. If you keep buying low, you will lower your average buy price.

It's called cost averaging or something like that.

I don't need the market to skyrocket again, I just need it to level back out.

 

Say you make an adjustment to your investments today. For instance, you move it all into money markets. Low risk, low returns. Doesn't fluctuate like small, mid and large US equity investments do. So now you have all your 401k moved to the money market account. Tomorrow the market sees 450 point increase. The next day it goes up again 300 points. But since all your 401k is in money markets you lost out on that jump. Which means you lost out on getting back some of what you lost with the latest down spiral.

If you move it into low risk investments you better watch the market carefully so you can get it back in before it surges. I'm not one to watch the market that closely and hit or miss upswings. Like I said, I have over 20 years before retirement. Probably more like 30 years. I have faith in the US worker to turn this country around. If it fails, it fails. I'm riding it out. Just my .02.

 

My retirement is managed by Vanguard, so when I switch between their Primecap fund and their more conservative bond funds, there is no tax penalty.

If you cannot move between a stock fund and bond fund without incurring a tax penalty, you may want to talk to a financial advisor about your options. Just don't expect to make the huge returns in the market in the future. It's all about preservation of wealth right now.

 

When the market goes down over an extended period, there are always little blips up. Look at any chart of the delcine during the depression. There were many days that the market gained.

The 'big picture' is looking pretty bleak for the next few years, maybe longer.

Many large retailers are likely to fail over the next two years; that means more lay offs, more empty buildings, more new constrution put on hold, more headlines depressing the market psychology, etc...

The US auto industry is on the ropes and facing possible government take over, with the taxpayers getting stuck with paying pensions and health care benefits for people who have not worked in years.

The government is acquiring large stakes in banks and insurance companies, with taxpayer dollars. There is no sign they will stop at banks and insurance.

The government is likely to take over the health care system in the next 3 - 8 years.

It looks like the courts and lawyers may get to decide how much money defaulted borrowers owe on their mortgage, and what interest rate they need to pay. Bad news for the banks and taxpayers, who will need to make up those losses.

There is concern that the Executive Branch is intentionally running down the economy, to increase the call for more government intervention and centralizing of power in Washington DC.


I could go on and on, but the writing is on the wall: Investors are not happy.


On the good side, people are saving more money now. On the bad side, it is only because they are afraid to invest it or spend it.

 

It is looking bleak right now.

I do agree that if you are expecting to need your money in the next few years it would be best to move it into money markets or someother safe fund. But if you have 12 or more years to go ride it out.

I feel the markets will recover in 5 years or so but if you don't think they will recover before you need the money, then by all means pull out.

 

Well said. And if I had under say 5-7 years before retirement the stock market is the last place that nest egg would be.

 

Exactly, but if you have 20-30 years till retirement now is a great time to buy!

If you can afford to still.

 

Well, it is not a great time to buy if the market goes down another 50% in the next 24 - 36 months.

Dollar cost averaging is not always the best way to preserve your wealth in a falling market, especially if the market might not come up for a long time. It might take decades for the market to return to 3Q2007 levels.

BTW, one of the only reasons there are not more sellers right now is the fear of tax consequences for liquidating a tax deferred retirement account.

People who thought they were going to retire in 5-7 years will now be working much much longer, maybe at lower incomes than they used to make.

IMO, the misery caused by this market decline has largely not been felt yet.

And the possibility of the federal government using this crisis to take more control scares the crap out of me and millions of others.

Buckle up, it's going to be a bumpy ride.

 

If we don't start a heavy industrial base investment today, our dollars are going to be worthless soon anyway. We need to find people with good industrial ideas and make investments in them, and quit playing with the other countries so much. Isolationism is going to have to be a part of our future. Otherwise, we will always be dependent on imports. The instability of other governments are what is killing us, and we the people are allowing it to happen. I realize that is just common sense, but there seems to be little of that around these days.