401K question

[LACamper]

I'm thinking we're due for a major correction... Anybody else feel this way? The market is doing great while the economy isn't. I'm debating going into money market for a while. Thoughts?

 

[cajun_64]

I was never a big fan of trying to time the market. How long do you have until retirement?
The only answers will be a matter of opinion. Data can be found to reflect either side. The question is: What, my friend, are you comfortable with?

I quit trying to play or time the market. I decided on a slightly higher average of bonds to stock ratio for my age, and just letting that roll untill i get closer to retirement.
YMMV

 

[blitztech]

Bonds move inversely of the interest rates. Interest rates are as low as they can get so bonds will only go down. This is an EXTREMELY bad time to get in to bonds.

I would say the market is due for a correction though. If it were me and I was just about to get in to the market I would leave 50% of my money in cash so that I could buy when the market does dip and lower my average cost of whatever it is you're getting in to.

Don't try to gauge the ups and downs of the market. You'll typically be better off investing for long periods of time. Day trading is extremely difficult. Swing trading is a little easier.

Most advisors are so worried about losing money and getting sued that they will put you in overly cautious funds so be wary if your advisor is zero risk type of person. You should talk to a few though and then research what they've told you before picking one. This is especially true of 401k advisors that work for the company that you do.

One last note. The bigger a fund is the harder it is for that fund to make money. Very large funds move the market when they move money and therefore its very difficult for them to make as much as a smaller fund. Smaller funds that can short sell are a good starting point. Look at the fund managers track record before picking them.

 

[LACamper]

I'm about 40/60 bonds and equities right now. I'm in my mid 40's. I have no problem with some risk and understand the long term goals. I'm just expecting a major correction... and toying with the idea of shifting everything to the money market fund for a while.

The market is doing great right now, which I don't understand. I guess this is despite everything going on in the US? High unemployment, massive tax increases coming, health care problems...

I see a correction coming but wonder if I'm better off being in equities or out with the weakening of the dollar.

Looking for input...

 

[joey9139122]

Go to google.com/finance , pull up a trend of the S&P500 and do a 10 year trend

 

[blitztech]

I'd just drop the bonds and move all bond money to cash if I were you and that's what you're expecting. You are probably thinking correctly about a correction, but the market does this a lot. After it corrects then put that cash money back in and lower your cost. When it rises you'll be even better off

 

[cajun_64]

I'm about 40/60 bonds and equities right now. I'm in my mid 40's. I have no problem with some risk and understand the long term goals. I'm just expecting a major correction... and toying with the idea of shifting everything to the money market fund for a while.

The market is doing great right now, which I don't understand. I guess this is despite everything going on in the US? High unemployment, massive tax increases coming, health care problems...

I see a correction coming but wonder if I'm better off being in equities or out with the weakening of the dollar.

Looking for input...

Look at it this way. if you move it now, worst is you miss out on some profits but don't lost anything.


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[LACamper]

^ Almost. With inflation I'm loosing buying power by keeping it in cash. If there's another crash how will the fed react? Another QE? We can't lower interest rates any further than they are. Do you go all into the market to keep pace with inflation and play the long game?

 

[cajun_64]

^ Almost. With inflation I'm loosing buying power by keeping it in cash. If there's another crash how will the fed react? Another QE? We can't lower interest rates any further than they are. Do you go all into the market to keep pace with inflation and play the long game?

Oh I agree with you over all.
You can analyze it and research it to the point of losing your mind. The only right answer will be seen in hind sight.

I chose to try and protect some of my assets with the corporate AA and A bonds, not treasuries. If the market does have a major correction at some point, I will try to transfer back more into securities at the lower rate. Of course I may still lose if it drops more.

This is only what I opted to do so I wounldn't go crazy trying to figure it out. Now I just need to stick to my decisions.
I wish you much luck and some peace with your endeavors.


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[Cartophilus]

^ Almost. With inflation I'm loosing buying power by keeping it in cash. If there's another crash how will the fed react? Another QE? We can't lower interest rates any further than they are. Do you go all into the market to keep pace with inflation and play the long game?[/QUOTE

IMO trying to time and second guess interest rates is even harder than trying to time the market. Remember that Japan's version of our ten year Treasurys has been yielding in the half percent neighborhood for over a decade.

 

[Malachi]

i just took a loan out with my 401K, bought some land, and building a house. figured that would be better than waiting it out.

 

[Broke]

^ Almost. With inflation I'm loosing buying power by keeping it in cash. If there's another crash how will the fed react? Another QE? We can't lower interest rates any further than they are. Do you go all into the market to keep pace with inflation and play the long game?

I'm new here but I'm a financial planner and economics professor. QE can be achieved in many different manners and we have the brightest monetary minds in the country working on this. You also say that the economy is doing poorly. But is it really? We have rising retail sales, manufacturing orders, a rising stock market and increasing consumer confidence. Oh and GDP which is growth of the economy is around 1.5%. That's not bad. And everybody seems to focus on jobs. But the problem is that unemployment is a lagging economic indicator which means it's the last thing to come around. Think about it like this: If you had to lay off half of your employees, do you run out and hire them back when the first signs of a good economy pop up? No. You hire them back when you absolutely have to. The economy is ok and will be ok, pending any further issues.

 

[Lafsnguy]

My problem is I don't think any of the underlying problems with our economy have been fixed. The market is a bubble just waiting to bust. The mention of tapering QE sent the market falling. We won't be able to continue QE forever. When they actually have to stop the market is going to correct and interest rates will rise. They already are rising. The inflation number they are throwing around is bogus. The housing market is shaky at best and only because interest rates were at record lows. They have spiked along with the 10 year treasury bonds. There is no way we are paying back 17 trillion in debt. It'll get interesting once everyone wises up to this.

 

[Nomad.2nd]

I'm new here but I'm a financial planner and economics professor. QE can be achieved in many different manners and we have the brightest monetary minds in the country working on this. You also say that the economy is doing poorly. But is it really? We have rising retail sales, manufacturing orders, a rising stock market and increasing consumer confidence. Oh and GDP which is growth of the economy is around 1.5%. That's not bad. And everybody seems to focus on jobs. But the problem is that unemployment is a lagging economic indicator which means it's the last thing to come around. Think about it like this: If you had to lay off half of your employees, do you run out and hire them back when the first signs of a good economy pop up? No. You hire them back when you absolutely have to. The economy is ok and will be ok, pending any further issues.

LOL.... Riiiiight

Tell me, what's the growth WITHOUT the government $85 Billion injections.
(what, Zero... How about that!)

And that's DEBT...Gonna hurt us in the future

 

[Broke]

LOL.... Riiiiight

Tell me, what's the growth WITHOUT the government $85 Billion injections.
(what, Zero... How about that!)

And that's DEBT...Gonna hurt us in the future

Well then what is the growth without General Motors or Wal-Mart? You can't discount the fact that it is still production. I get what you are saying but we've done this before and we will do it again. I don't believe we can pay off our debt but does anybody really believe that anyway?

 

[Lafsnguy]

The government doesn't produce anything. The crushing debt will be the undoing of this country. They will not stop printing money and piling on more debt. People must believe that it will eventually get paid back because they keep buying treasury bonds. All it would take is for people to lose confidence and the house of cards could come tumbling down. It's a giant ponzi scheme and once the people getting hosed figure it out it will collapse just like all other ponzi schemes.

 

[Broke]

I think I'm too new here to get into a discussion about the economy. I have almost no posts and zero credibility at this point. I don't want to be that guy. I'll just stick with the gun stuff for now I guess. Sorry.

 

[Nomad.2nd]

I think I'm too new here to get into a discussion about the economy. I have almost no posts and zero credibility at this point. I don't want to be that guy. I'll just stick with the gun stuff for now I guess. Sorry.

No need, it's not that kind of place.

Now I'm not trained in economics, but I DO know that our economy is set up so that it NEEDS constant economic growth.

SO when you have 'growth' which is 100% fake, and is meerly digging us deeper into debt... it's worse
than fake, (Because as you said, no one believes we can pay it off.)

And THAT is a problem.

We are OK till other country's manage to move sideways till they can do without us. (Markets in India for chinese goods etc)... when that happens... it's going to be a rough time to be an American.

 

[Lafsnguy]

I think I'm too new here to get into a discussion about the economy. I have almost no posts and zero credibility at this point. I don't want to be that guy. I'll just stick with the gun stuff for now I guess. Sorry.

No hard feelings. Just a simple discussion.

 

[the dubshow]

I used all my savings to buy dinar. I'll be a billionaire when the Iraqi currency reevaluates. And citi bank just opened up shop there.