NTWH, bookluvr made some very good advice which people who understand stocks would agree with. Unless you are a pro who is managing a mutual or hedge fund, the best thing to do now is to look the other way and at some point decide where you might want to buy back in for the ride back up.
Bookluvr, I think you are out of line with the last part of your post. The reports on the news when the DOW drops 3000 pts on one day would spread much more panic than any discussion here.
It's only beyond your control if you leave it out of sight and out of mind. The people that are selling and buying everyday on the stock market clearly don't think it's beyond their control. They are talking control.
I have. The stock market has always been fluid. It fluctuates. If the market crashes, oh well... It is what it is. At this time, it would be best to not even think or worry about it. Out of sight, out of mind. There's really no need to spread panic to others for something that's beyond their control. People have committed suicide during the Depression Era. Learn from that.
I exited the stock market a few years before I was near retirement. I was in it only because my nurse pensions were invested in it. I could choose low risk or high, but could not choose to exit. I am not the kind of person who could ever get a 6 or 3 month notification that I had lost money. Or lost principle. I have long thought that this market was inflated wrongly because many companies that got bailouts used them to buy stocks, to artificially raise their own stock prices. Overall in the last years, if you have been invested long term you have likely done quite well; I hope so. There is certainly nothing to do about this now. The country is shocky and frightened. Try not to act out of fear. Were you young this would perhaps be a good time to buy. Try not to torment yourself about things you cannot change; you couldn't have seen this coming. Many are in the same boat. Think of all suffering out there; I know someone where both people lost jobs, a young couple who just bought at San Francisco inflated prices before this and now fear job losses. There are people with not a penny who will lose jobs. Hunker down. Stay healthy.
It's all paper? That's just a cliche fed to retail customers to mollify them. Stock market soma.
Stocks are an asset. An asset has value. That value goes up and down. A loss is a loss. Period.
"Investors commonly justify poor investment decisions because of paper gains or losses. Consider these three examples
1. Although an investor officially recognizes a transaction when he or she sells the investment security, or covers a short position, many investors believe they haven't lost any money in a sinking investment because they haven't yet sold it. Even though there is no capital loss for tax purposes, there is still a loss in value. Keep in mind that a 25% loss in value on paper still requires a 33.3% gain on the remaining value just to break even. The odds that the investment will make money go down when paper losses mount"
We aren't done yet. I think before this recent round of selling ends we will hit the 2008 high. Another lost 10 years. Good news for you people that were regretting selling in 2008 and didn't buy back in. Your chance is probably coming up soon.
Just hang tight. Nobody needs 20 or 30 years of retirement savings all in one day. It is spread out over your lifetime. You aren’t going to spend it all in one day. The market will rebound. It always does. Remember it’s all just on paper!!
My financial advisor agrees with what Warren buffet said. We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful. Hang tight, don’t do anything differently than you are already doing. Leave your money alone.
I'm curious to hear what he has to say. I hope you are open to considering more than the "stay the course" cliches often handed out to calm retail investors down. Many "pros" got out in January. Some were wondering why people are riding the waterfall down today on the financial networks. The "smart money" was told to get out in January. I should have listened. I didn't. Now it's too late to do a flush out strategic sale. But it's not too late to do some tactical trading. Here is a celeb market mover talking about it right before the big fall started.
With all that said, there is nothing wrong about buy and hold if your time horizon is 30-40 years and you just don't want to think about it. When a young person asks me what to do, I often advise them to put money regularly in a SP500 index fund and then don't look at it for 40 years. I'm assuming that since they are asking that they have no interest in doing any better. With active trading, they can do better. But the SP500 is a decent way to go. It's "safe" as these things go. If the SP500 crashes, the economy is trashed anyways. It's annual return over the last 10 years is 11.04%. That's decent. Comparatively, the L2020 fund you are in had a 5.94% annual return.
As I said on Friday, it was a classic short squeeze. That leads to head snapping rallies during a bear market. The same thing happened in 2008 on the way down.
I knew today would be bad. I was still shocked it was as bad as it was. We aren't done. I'm going into 2008 mode. I'm going to play the volatility. Sell the rips then buy back during the dips. Which in this decline, is the very next day.
The stock market has never failed to recover in the last 100 years. Knowing that the market goes up and down but the trend is always up over time, and not reacting to things based on emotions is smart and prudent. That being said, if anyone is retiring or retiring soon, then the volatile market is not a good place to put one's money if said money is needed in the near future.
Needtowashhair, are you still up all night worrying about the stock market? Everything will be fine. It always is. It will rebound in the future. You don’t need all of your money today.
Karsten. I just read your last post. The first thing I concluded was that you don't read very carefully. Exactly what did I say that if you had listened to would have cost you money? The second thing I concluded is that you contradict yourself. You say the the financial fundamentals are as good as they were three months ago. Then in the very next sentence you say the market was in need of a correction. Both can't be true. The FED clearly disagrees with you or it wouldn't have injected all that money into the system this week and will do so every week for the foreseeable future.
I am late to this thread, but having read through all the comments tonight here is what I have concluded: I am happy that needtowashhair is not my investment advisor. I have a lot more money now than had I listened to her, and will have more money in future. First of all, the current drop is based on emotions, the financial fundamentals are as good as they were three months ago.
Second, the market probably did need a bit of correction, but five years from now stocks will be well up from where they are now. Its not fun to watch this, so you don't watch it. Its like being in an airplane with lots of turbulence. You know the plan will eventually land safely as they most always do, but its not fun to experience.
I guess I don't know how soon you need the money, but can assume you don't need all of it right away. Things will be fine. 2008 the market crashed and people lost big on paper and it was tough emotionally, but since then the market grew way more than it was before the 2008 crash.
My first bout of this kind of anxiety was the 2001 tech bubble, and since then learned things bounce back. I don't even look at my stock and 401K but feel assured that over t ime they will be fine.
GardenArtist, the trade war can be ended as quickly as it was started. The President could end it today. He ordered it. He can end it. The Chinese have already said if we stop, they'll stop. There are no trading agreements that stipulate those tariffs. It's all executive action.
In most cases, production hasn't moved. Many Chinese sourced goods are still sourced out of China. For a long time, companies absorbed the tariffs. Lately, they have been passing them on to the consumer. Some companies have moved, but many were moving their production out of China anyways. China isn't a cheap producer anymore. Other countries are cheaper.
It's simply not that easy to move production for a lot of things. It requires a tech base. A tech base that in today's world is uniquely Chinese.
Classic short squeeze. I was watching the action the last hour live. That's automation in action. Unfortunately it doesn't mean anything. We are still down over 300 points over the last 2 days. Some of the biggest rallies happen as the market falls. There were some head snapping rallies during the 2008 fall.
"The trade war is the only thing we can get rid of easily."
I'm curious how this can be done "easily." Trade agreements are in place, but equally as important, manufacturing sources have shifted; plants have been shuttered and others built elsewhere. I.e., trade has substituted for in country manufacturing on extensive levels.
Production doesn't ramp up quickly w/o resources in place.
What are your thoughts on "getting rid" of a trade war "easily"?
I think we are down about $ 700k. But that's in our taxable accounts, Roth IRAs and spouse's 401k which he won't need to tap for another 14+ years (at age 72.) He's still working. And our taxable and Roths are not part of our retirement income planning at all. We intend on gifting those to our daughter. So we can wait it out since those are funds we did not count on for retirement income anyway.
I moved all my 401k funds to a guaranteed 5% return fund available through my former employer (I'm now retired.) I did that late last year when I kept hearing "recession coming." I have SS (taken at age 66,) a cost of living indexed pension from my former employer and I took an RMD from my 401k this year. So that provides enough for us to live on. Spouse will also have a pension and will take SS at age 70. We did buy LTC insurance for both of us about 10 years ago, so that helps if we need it. We also eliminated all debt.
I asked our financial advisor what to do in September 2008. He said ride it out. We are glad we did.
Needtowashhair your portfolio has gone up 400 percent in the last 10 years??? You are doing GREAT!!! Financial advisors say to only take out 4 percent of your retirement funds a year so that you don’t run out of money. Like I said before, the statements are only paper. Unless you are already 95 years old you don’t need all of your money now. It will rebound. It always does.
If your scared needtowashhair, you can always put money in a one year or 3 year or 5 year or 10 year CD so that you will never lose any money and so you can sleep at night.
It's only beyond your control if you leave it out of sight and out of mind. The people that are selling and buying everyday on the stock market clearly don't think it's beyond their control. They are talking control.
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Stocks are an asset. An asset has value. That value goes up and down. A loss is a loss. Period.
"Investors commonly justify poor investment decisions because of paper gains or losses. Consider these three examples
1. Although an investor officially recognizes a transaction when he or she sells the investment security, or covers a short position, many investors believe they haven't lost any money in a sinking investment because they haven't yet sold it. Even though there is no capital loss for tax purposes, there is still a loss in value. Keep in mind that a 25% loss in value on paper still requires a 33.3% gain on the remaining value just to break even. The odds that the investment will make money go down when paper losses mount"
We aren't done yet. I think before this recent round of selling ends we will hit the 2008 high. Another lost 10 years. Good news for you people that were regretting selling in 2008 and didn't buy back in. Your chance is probably coming up soon.
https://finance.yahoo.com/video/why-anthony-scaramucci-defensive-position-171721864.html
With all that said, there is nothing wrong about buy and hold if your time horizon is 30-40 years and you just don't want to think about it. When a young person asks me what to do, I often advise them to put money regularly in a SP500 index fund and then don't look at it for 40 years. I'm assuming that since they are asking that they have no interest in doing any better. With active trading, they can do better. But the SP500 is a decent way to go. It's "safe" as these things go. If the SP500 crashes, the economy is trashed anyways. It's annual return over the last 10 years is 11.04%. That's decent. Comparatively, the L2020 fund you are in had a 5.94% annual return.
I knew today would be bad. I was still shocked it was as bad as it was. We aren't done. I'm going into 2008 mode. I'm going to play the volatility. Sell the rips then buy back during the dips. Which in this decline, is the very next day.
I'm up all night changing diapers. What are you doing up all night?
Second, the market probably did need a bit of correction, but five years from now stocks will be well up from where they are now. Its not fun to watch this, so you don't watch it. Its like being in an airplane with lots of turbulence. You know the plan will eventually land safely as they most always do, but its not fun to experience.
My first bout of this kind of anxiety was the 2001 tech bubble, and since then learned things bounce back. I don't even look at my stock and 401K but feel assured that over t ime they will be fine.
In most cases, production hasn't moved. Many Chinese sourced goods are still sourced out of China. For a long time, companies absorbed the tariffs. Lately, they have been passing them on to the consumer. Some companies have moved, but many were moving their production out of China anyways. China isn't a cheap producer anymore. Other countries are cheaper.
It's simply not that easy to move production for a lot of things. It requires a tech base. A tech base that in today's world is uniquely Chinese.
https://www.cnbc.com/2020/03/05/coronavirus-apple-microsoft-google-look-to-move-production-away-from-china.html
The trade war could end tonight with a stroke of a pen.
"The trade war is the only thing we can get rid of easily."
I'm curious how this can be done "easily." Trade agreements are in place, but equally as important, manufacturing sources have shifted; plants have been shuttered and others built elsewhere. I.e., trade has substituted for in country manufacturing on extensive levels.
Production doesn't ramp up quickly w/o resources in place.
What are your thoughts on "getting rid" of a trade war "easily"?
I moved all my 401k funds to a guaranteed 5% return fund available through my former employer (I'm now retired.) I did that late last year when I kept hearing "recession coming." I have SS (taken at age 66,) a cost of living indexed pension from my former employer and I took an RMD from my 401k this year. So that provides enough for us to live on. Spouse will also have a pension and will take SS at age 70. We did buy LTC insurance for both of us about 10 years ago, so that helps if we need it. We also eliminated all debt.
I asked our financial advisor what to do in September 2008. He said ride it out. We are glad we did.