Have we capitulated yet?

[FIREd]

Well, I assumed that the bonds would stay the same (yeah, right? ) and that only the equities would lose 45%. Try that. It's a little better.

That's what I did and even with 35% bonds/cash, still

Suze Orman just said on Larry King: Don't be surprised if we reach DOW 8000 pretty quickly!

 

[W2R]

That's what I did and even with 35% bonds/cash, still

Suze Orman just said on Larry King: Don't be surprised if we reach DOW 8000 pretty quickly!

Whew. That's worse than that idiot Cramer. I think he said 8200.

Let's see - - the market high was around 14000 and some, I think. So,

8000/14,000 = 0.57 or a 43% drop. A 45% drop would be 7700. To be honest, I don't think it is going there, or even to 9000, but if it does I think I am prepared.

 

[Gone4Good]

I'll call the bottom when Joe six pack is out of work, watching creditors cart off his big screen TV and screaming at his Congressman . . . "Why didn't you DO SOMETHING!!!!!"

 

[Zoocat]

Well, I assumed that the bonds would stay the same (yeah, right? ) and that only the equities would lose 45%. Try that. It's a little better.

But the market dropping, say, 30% is not the same as your portfolio dropping that much, especially if you are invested in mutual funds. So I don't know how you could figure that out. Not sure I really want to anyway.

 

[samclem]

But the market dropping, say, 30% is not the same as your portfolio dropping that much, especially if you are invested in mutual funds. So I don't know how you could figure that out. Not sure I really want to anyway.

It depends what stocks are actually in the mutual funds. Some mutual funds do hold (nearly) the exact stocks in the exact proportions that are quoted in the indexes (the "S&P 500" etc), and these mutual funds would be down 35% if the S&P 500 was down 35%.

Some mutual funds might do far worse than "the market." If the fund is concentrated in a sector that s doing poorly (e.g. financial stocks right now) then that mutual fund could conceivably be down a lot more than the market as a whole.

 

[Zoocat]

Well, I just checked my Vanguard Healthcare fund and it is down almost $6 a share. That's annoying. I thought that health care was a sector that would do well in a down turn.

 

[unclemick]

Well now - to paraphrase one of my posts from over at the Bogleheads forum.

Those Vanguard computers are rebalancing their little electronic hearts out to keep my Target Retirement asset classes up to snuff - while I'm watching football even.

Pssst - Wellesley = 4.69% SEC yield according to the VG website.

heh heh heh - not to worry party on! Of course my greed meter is starting to peg - mad money only of course. It's those pesky hormones. .

 

[W2R]

Oldbabe, I heard that every stock in the Dow was down today. I have heard it said that this downturn is unusual in that normally uncorrelated assets are sinking simultaneously.

Hey, UncleMick, my Wellesley gave me a nice dividend last week. pssst... Wellesley! and all that.

 

[jazz4cash]

It depends what stocks are actually in the mutual funds. Some mutual funds do hold (nearly) the exact stocks in the exact proportions that are quoted in the indexes (the "S&P 500" etc), and these mutual funds would be down 35% if the S&P 500 was down 35%.

Some mutual funds might do far worse than "the market." If the fund is concentrated in a sector that s doing poorly (e.g. financial stocks right now) then that mutual fund could conceivably be down a lot more than the market as a whole.

......should make for some very interesting managed vs. index discussions.

 

[audreyh1]

Well, I assumed that the bonds would stay the same (yeah, right? ) ....:

Unless your bond funds are invested only in treasuries, they've been hit really hard too by the credit crunch.

Audrey

 

[wildcat]

No we haven't IMO. Valuations still aren't that cheap. According to the ratings whores @ CNBC, we have just now closed in on the avg bear market % decline - 30%. Yeah.........

 

[harley]

It's interesting that Suze and others are saying that this isn't a good time to invest. I agree that things are going to be all over the place for a while. But if we hit Dow 8000 or S&P 1000 (or 900) or whatever, it seems to me to be a great time to be putting money in. Some will go in while things are still going down, but someday we'll be back in the 12000 - 14000 range again. I'd much rather be investing (money I won't need for a long time) now and in the near future than when the market is up again. If it takes 5 years to go back to 13500 from, say, 9000, that's a significantly better return than if I had invested in 2007. Am I being overly optimistic? Are we in the doldrums for decades?

 

[W2R]

Unless your bond funds are invested only in treasuries, they've been hit really hard too by the credit crunch.

Audrey

Yeah- - I know some of mine have done awfully lately. That's what I meant by using this "roll eyes" emoticon: but maybe it would have been clearer if I had just said it.

 

[ejman]

Ah, oui, do not pa-nique! Do not pa-nique!

I just heard that in the market crash of 1987, the market dropped 45% (not overnight, but in a brief time). I am not pa-niqu-ing but just computed what my portfolio would look like after a 45% drop in the market. Those guys had to be tough back then!

Not tough - just frozen with fear. I started investing January of 1987 and remember looking at a TV monitor just off a plane at the Kansas City Airport showing a 25% drop in the Dow (in one day!) and thinking wow 1929 all over again!

 

[Bestwifeever]

Always capitulate before you go to sleep

(what's the point of a revolution without general, general capitulation, capitulation, capitulation--Marat/Sade)

 

[2B]

Always capitulate before you go to sleep

(what's the point of a revolution without general, general capitulation, capitulation, capitulation--Marat/Sade)

First thing in the morning works too.

We're seeing a total credit lockdown. Banks won't lend to anyone. There isn't any faith that banks will be able to pay them back. I don't know where it will end but I'm convinced it is a self-fulfilling disaster. An effective break in creating value in performing mortgages will go a long way to fixing what's wrong.

Speaking of credit -- My CD from Silver State Bank (defaulted) has finally paid its dividend and the CD was also cashed out by the acquiring bank. The money is in my brokerage account.

 

[W2R]

First thing in the morning works too.

No comment! moving right along....

We're seeing a total credit lockdown. Banks won't lend to anyone. There isn't any faith that banks will be able to pay them back. I don't know where it will end but I'm convinced it is a self-fulfilling disaster. An effective break in creating value in performing mortgages will go a long way to fixing what's wrong.

What a mess. I am so lucky that I am older with no need to borrow. Younger people are really going to have to scramble, or borrow from the "Bank of Mom and Dad". Luckily, my daughter hasn't ever done that (yet).

Speaking of credit -- My CD from Silver State Bank (defaulted) has finally paid its dividend and the CD was also cashed out by the acquiring bank. The money is in my brokerage account.

I am so happy for you! Even though nobody has ever lost money from an FDIC insured account, still I would have thought it could take longer had they stepped in. I guess they don't have to if the bank was acquired. At any rate, you have the cash in hand, and what a relief that must be.

 

[Free To Canoe]

Was it Bernstein that said "diversification fails us when we need it most"?
Anyway, I have been trying to wean myself from market timing. So since I am ERed and completely invested, there is nothing to do but wait for the turnaround.

Free to Canoe

 

[ziggy29]

Oldbabe, I heard that every stock in the Dow was down today. I have heard it said that this downturn is unusual in that normally uncorrelated assets are sinking simultaneously.

That's a big reason why this one feels so sickening. In the tech wreck of 2000-2002, several equity classes went sharply higher (small caps, REITs, emerging markets, precious metals to name a few). As a result someone who had a diversified AA (and not overweight tech) didn't get slaughtered then because gains in these areas mostly offset losses in large cap U.S. stocks.

Contrast that to now, where nothing that's an equity asset class is avoiding the carnage.

 

[Sarah in SC]

I hated to wake her...

We call that playing coroner...

But yeah, capitulation is getting closer. This fiasco yesterday really got to some of our folks. Boss came back from lunch with a pint of Haagen Daz.

It is times like these that will serve to remind me that when retirement comes, I will have cash reserves for living expenses--it may mean that we live on less, but at least one of us will be sleeping.

 

[ziggy29]

It is times like these that will serve to remind me that when retirement comes, I will have cash reserves for living expenses--it may mean that we live on less, but at least one of us will be sleeping.

It certainly shows why the concept of having "buckets" could be useful. Any retiree who put 5-10 years of income needs into "safe" stuff is probably weathering this a lot more easily than someone who didn't.

 

[FinanceDude]

It certainly shows why the concept of having "buckets" could be useful. Any retiree who put 5-10 years of income needs into "safe" stuff is probably weathering this a lot more easily than someone who didn't.

Well, the old saying: "Cash is king" is probably appropo at this point.......

 

[audreyh1]

It certainly shows why the concept of having "buckets" could be useful. Any retiree who put 5-10 years of income needs into "safe" stuff is probably weathering this a lot more easily than someone who didn't.

Unfortunately the definition of "safe" has become A LOT more narrow.

Audrey

 

[TromboneAl]

When wondering whether we've hit the low, the phrase I listen for is "there's no bottom in sight," which also works for "have we copulated yet?"

And speaking of this, the police chief of a nearby town was recently indicted on charges of raping his wife while she was sleeping. She (a sergeant on the same force) said it happened hundreds of times. Ambien was involved. He was acquitted on those charges but convicted of other things.

 

[REWahoo]

Ambien was involved.

So it was a threesome?