Stock Markets

[jq26]

These markets are treacherous. Anyone with the stones to trade into this? I have just about given up. Its always hard to tell, but the economic indicators are pointing to a LONG trough here. Could retest Nov '08 lows.

The two big X factors imo are:

1) the biggest Treasury bubble in history (When does it burst, pushing trillions out of treasuries and into other asset classes, collapsing the dollar and boostng prices of stocks & commodities)

AND

2) What type of stimulus is next? Seems the gov't has decided that they'll mortgage the future at all costs and prop up a market that wants to fall.

I don't know where its going next but it ain't lookin' good. CMBX spreads have spiked again. If you are an AA rated company, you pay LIBOR + 21%. This essentially means that the securities market is closed (see the collapse of REITs as I write this). Citi is collapsing and bringing down other banks with it.

[scorch]

My broker gave me a few free trades which I have been thinking about taking advantage of. The problem is figuring out which stocks to go with.

[matthewscott]

I'm still investing in my 401k and getting the company match. I'm trying to not look at the account and keep telling myself that I'm young and I shouldn't stop now.

[Ravenous Wolf]

I don't know where its going next but it ain't lookin' good.

Warren Buffet and those who have money think that right now is the greatest thing since sliced bread because they actually have liquid cash to buy things up. And it is pretty cheap to buy up stock in good companies.

[jq26]

I'm still investing in my 401k and getting the company match. I'm trying to not look at the account and keep telling myself that I'm young and I shouldn't stop now.

I totally agree with you guys. In 2008, I SERIOUSLY cut back expenses and managed to max my 401k out to fed limit. With employer match included my 401k went UP last year. I plan on doing this again this year. Buying at these levels for retirement seems like a no-brainer. Also opened and funded a 529 for junior (he's 8 months), so 4Q '08 was a decent time to fund that as well. Eventually, we'll rebound. Just don't know when.

I am a bit concerned that large companies are startng to collapse. GE appears next. They are basically taking on debt to continue to pay that chunky dividend. I think its dangerous. And look at many of the multi-billion dollar REITs holding much of the country's real estate. They are literally collapsing under their own weight. Bank of America needs gov't cash and Citibank is insolvent (shareholders are about to find this out in a hurry).

The next thing to watch out for are MASSIVE layoffs. Many of these mega-bank mergers that took place in 2008 actually closed in January '09. And the first thing they need to do to survive is make massive deep cuts. The financial sector is way too big- even after the layoffs in 2008. We could see a million layoffs in January '09.

I just think its going to be an ugly year. I keep hearing about a turnaround by the middle of the year. I'm thinking things will look better closer to 2011.

[That Girl]

These markets are treacherous. Anyone with the stones to trade into this?

Trade? No. I have my money in low-risk, very slow growing stocks anyway. I don't intend to touch it for a couple decades. But I personally wouldn't fool around with trading and trying to second-guess the currently very scary market. I'm not touching a thing for the time being until the months go by and we start to see how this all shakes out.

[andres99pony]

I'm still investing in my 401k and getting the company match. I'm trying to not look at the account and keep telling myself that I'm young and I shouldn't stop now.

haha, that's how I see it.........every 2 weeks that I look, seems like the balance is the same........my 401(k)'s rate of return was -33% last year.

[swirlgirl]

haha, that's how I see it.........every 2 weeks that I look, seems like the balance is the same........my 401(k)'s rate of return was -33% last year.

The thing with 401ks is that a lot of people didn't do anything when the markets began to fall and they lost a large percentage of their money. They should have moved their money into a safer fund within their 401ks. Most programs have a money market option that could have been used to protect the current value. Even a bond fund would have been an option. When things are better, the money can be transfered back into a growth fund, emerging markets, etc.

[matthewscott]

The thing with 401ks is that a lot of people didn't do anything when the markets began to fall and they lost a large percentage of their money. They should have moved their money into a safer fund within their 401ks. Most programs have a money market option that could have been used to protect the current value. Even a bond fund would have been an option. When things are better, the money can be transfered back into a growth fund, emerging markets, etc.

Agreed. However, I wish there was a way to say if the stock or fund goes down by X% then sell. I got too busy to watch the stocks and I lost a bunch in 2008 that I shouldn't have.

[Amerikaner83]

I'm still investing in my 401k and getting the company match. I'm trying to not look at the account and keep telling myself that I'm young and I shouldn't stop now.

Me too. I"m losing money now, but I'm still doing it. The lower stocks go now, the more we buy. the more we buy the better off we are when we retire Assuming of course that the stocks are up 40 yrs from now

[swirlgirl]

Me too. I"m losing money now, but I'm still doing it. The lower stocks go now, the more we buy. the more we buy the better off we are when we retire Assuming of course that the stocks are up 40 yrs from now

Some people are losing 30-50%. Are they going to be able to recoup all of that? Perhaps. But the thing that worries me is that the market is going through some serious changes. This is not a normal slow down.

We have yet to hit bottom on the mortgage crisis or on the rising unemployment. Then, it will take some time for the market to feel the effects of high unemloyment. There will be more retail, restuarant, and media chains closing. Then factor in the effect of the closing of 1 or 2 of the big 3 auto companies.

It's hard to use standard investment wisdom in this current enviroment.

[jq26]

The key here is not to change anything and buy with both fists if you are in the accumulation phase (most of us are). Sure, the market excesses will be worked through, but buying now will reap rewards in the future. You're buying companies with ridiculous PEs below book value. Anyone under 50 years old should be cheerleading for the Dow to hit 5000. You're looking to accumulate shares at LOW prices not HIGH prices. Then let the markets do their work over time. This is when real wealth is built. Same thing happened in the early 80s.

[debtmamma]

Nothing to add to the thread but I wanted to say Congratulations on Jr to JQ!

[jq26]

Hey thanks debtmamma. He's 8 months already!

[debtmamma]

It goes by fast doesn't it!!!! Stop blinking ok?

[matthewscott]

The key here is not to change anything and buy with both fists if you are in the accumulation phase (most of us are). Sure, the market excesses will be worked through, but buying now will reap rewards in the future. You're buying companies with ridiculous PEs below book value. Anyone under 50 years old should be cheerleading for the Dow to hit 5000. You're looking to accumulate shares at LOW prices not HIGH prices. Then let the markets do their work over time. This is when real wealth is built. Same thing happened in the early 80s.

Agreed, well sort of. If the dow goes down that much then we lose our jobs then we'll have much more to worry about than the 401k.

[LewisAllen]

Hey come on, It is not possible to say that anyone can move into stock market without any experience or more knowledge about stock market, Is it?

However, you have given two major factors which influence stock market in common, but there are various site factors too

[Chester P. Dexter]

This is where you put the little spam icon, right?

[Freak]

The key here is not to change anything and buy with both fists if you are in the accumulation phase (most of us are). Sure, the market excesses will be worked through, but buying now will reap rewards in the future. You're buying companies with ridiculous PEs below book value. Anyone under 50 years old should be cheerleading for the Dow to hit 5000. You're looking to accumulate shares at LOW prices not HIGH prices. Then let the markets do their work over time. This is when real wealth is built. Same thing happened in the early 80s.

How refreshing! I feel better all ready... I keep telling myself the same thing.

[Magdalen77]

The key here is not to change anything and buy with both fists if you are in the accumulation phase (most of us are). Sure, the market excesses will be worked through, but buying now will reap rewards in the future. You're buying companies with ridiculous PEs below book value. Anyone under 50 years old should be cheerleading for the Dow to hit 5000. You're looking to accumulate shares at LOW prices not HIGH prices. Then let the markets do their work over time. This is when real wealth is built. Same thing happened in the early 80s.

I keep wishing I had more extra money to invest. Some good companies are going dirt cheap right now.

[jq26]

The best advice I was ever given: Buy real estate when everyone agrees you'll never make money in real estate. Buy stocks when everyone agrees you can never make money in the stock market. Seems if we're not at this point yet, we're pretty darn close...

[Chester P. Dexter]

An actual friend of mine has actually begun cashing in her children's savings accounts and buying silver coins with them. She has bought safes and has talked about burying coins in the yard. She has talked about purposely going into debt so she'll be better positioned when currency collapses. She has talked her husband into cashing in his 401K and eating penalties to turn the proceeds into silver. She has even thought about selling their house and doing the same.

Needless to say, I'm moderately/severely worried about her mental health.

But - has the point of maximum pessimism been reached? My friend is an otherwise largely sensible person (but I should disclose that she has been listening to ultra-conservative talk radio more and more lately.)

[jq26]

My old boss did something similar except he started hoarding metals 10 years ago. Last year when silver hit $22 per ounce and gold was +$900 per ounce, he cashed it all in, bought a 25 acre farm with cash, quit his job, and lives off the land. I talked to him last week. He's the happiest I've ever heard him. I too thought he was a little cooky but he got the last laugh.

[jq26]

Did we just see a bottom yesterday? It certainly felt like it. Everything not nailed to the floor sold off. One example: Honeywell beat the street yesterday and affirmed 2009 estimates. They have a P/E of 7 and will continue to pay a 4.2% dividend. Honeywell opened slightly higher then got crushed. Many "safe" plays got slaughtered yesterday too- my pharma stocks got trimmed by 4%. And I feel bad for anyone holding commodity stocks. MOS (fertilizer) lost 16% alone. Pull up a five day chart of XOM. That is one of the ugliest charts I have ever seen!!! And XOM now has a 5% weighting in the Dow. Can you say 'indiscriminate selling'?

[Chester P. Dexter]

I don't have to say it, I felt it!

As for MOS, my son holds one share. It doesn't upset him too much when it goes up or down, but he did inquire about it yesterday. He asked if $38.00 was good, and since we bought it at $37.19 on Jan. 28th, I told him it's doing OK.