Heading under 10,000 on the way!

[easysurfer]

You sounded like all market timers are losers.

Don't some win big and retire early?

(I wasn't one, but then I am not smart. )

Didn't imply all are losers. I'm sure some have "hit the big one" timing the market. But studies have shown that overall trying to time the market is a losing strategy.

http://www.investopedia.com/articles/trading/07/market_timing.asp

 

[FUEGO]

You had to say it, didn't you?
Dow at 9845 as I write.

We are still 1345 points away from Stevie's projection. That's a drop of about 450 points a day over the next three days. It COULD happen...

In the meantime, this is a great buying opportunity. You guys still have plenty of dry powder, right?

 

[Birdie Num Nums]

With my ER starting Saturday, I am putting 100% of my last paychecks and severance into my 401(k). SO, I am hoping the market remains "down," or goes further down as I am buying. Only later, when I am selling to pay for future expenses, do I hope that the funds I am buying today are much highrer.

 

[CuppaJoe]

....

In the meantime, this is a great buying opportunity. You guys still have plenty of dry powder, right?

Are those knife cuts on my hands?

 

[Alan]

With my ER starting Saturday, I am putting 100% of my last paychecks and severance into my 401(k). SO, I am hoping the market remains "down," or goes further down as I am buying. Only later, when I am selling to pay for future expenses, do I hope that the funds I am buying today are much highrer.

I don't understand how you can do that. I could only put 20% per paycheck up to a government mandated maximum. (~$25k).

 

[W2R]

I don't understand how you can do that. I could only put 20% per paycheck up to a government mandated maximum. (~$25k).

At my former job, I could have any dollar amount regularly subtracted from my paycheck and put into the TSP (401K). Once the total for the year was over the government mandated maximum that you mentioned (for me, $16,500+$5,500 over 50 catch-up) , obviously no more could be taken out of my paychecks.

So, even though I retired on November 9th and not December 31st, I was still able to fully contribute to the TSP for 2009. My biweekly contribution was higher than it had been in 2008, in order to accomplish that, and consequently my take-home pay was smaller in 2009 than 2008. The 20% you mention was a limitation imposed by your employer, not the federal government - - I contributed the full $22,000 and never made a 6 figure salary in my life.

I seriously thought of working a few months into 2010 so that I could contribute an additional $22K (for 2010), by contributing essentially all of my pay to the TSP and living off investments instead of paychecks, but I am glad I didn't.

At my work we had an employer match, so (unless a person was retiring) it was beneficial to spread the TSP deductions throughout all paychecks if possible. There was no match unless the employee had a certain amount or more deducted from the paycheck that pay period. Of course, after I retired I no longer got the matching contributions but that is why I tried to have a contribution deducted from every paycheck.

 

[Lakedog]

I don't understand how you can do that. I could only put 20% per paycheck up to a government mandated maximum. (~$25k).

The limit on a per paycheck basis was done away with a few years ago for fed employees -- only limit now is the annual amount. I retired in March (2008) and contributed the majority of my salary that year to reach the annual limit to TSP during those 6 or 7 pay periods.

 

[Alan]

At my work we had an employer match, so (unless a person was retiring) it was beneficial to spread the TSP deductions throughout all paychecks if possible. There was no match unless the employee had a certain amount or more deducted from the paycheck that pay period. Of course, after I retired I no longer got the matching contributions but that is why I tried to have a contribution deducted from every paycheck.

My employer also had a match, but it continued after you had maxed out, which was very nice as you didn't have to worry about timing the contributions throughout the year.

At my former job, I could have any dollar amount regularly subtracted from my paycheck and put into the TSP (401K). Once the total for the year was over the government mandated maximum that you mentioned (for me, $16,500+$5,500 over 50 catch-up) , obviously no more could be taken out of my paychecks.

That was a nice feature to have.

I am interested in BNN's situation though as he states he is a high earning employee so by May he is surely close to the $21K maximum - I know that I used to max out by end of May with my 20% / paycheck contributions.

 

[NW-Bound]

The limit on a per paycheck basis was done away with a few years ago for fed employees -- only limit now is the annual amount.

So, even the gummint realizes that people need to satisfy their [-]market timing[/-] contrarian investment urge, to lump their contribution into periods of despair.

 

[W2R]

I am interested in BNN's situation though as he states he is a high earning employee so by May he is surely close to the $21K maximum - I know that I used to max out by end of May with my 20% / paycheck contributions.

True - - someone making well over $100K would bump up against the maximum if they contributed 20% of every paycheck to their 401K for five months. But I don't see how this is relevant to BNN's comment.

Correct me if I am wrong, but I believe he said, "I am putting 100% of my last paychecks and severance into my 401(k)." I don't see where he said he was putting 100% of ALL of his 2010 paychecks into his 401K. The obvious assumption might be that he didn't contribute much at all in the first 3-4 months of 2010, and increased his contributions at some point.

The 20%-of-each-paycheck limitation you mention was imposed by your particular employer and not by all employers, and is not a government requirement as far as I know. I cannot see any relevance whatsoever of your company's policies to BNN's comments. I believe the federal percentage limitations on contributions were eliminated some years ago.

 

[NW-Bound]

A contrarian investor is often seen as someone courageous, and often wise. It does not carry a bad connotation as a market timer. But let me ask you, doesn't being the first imply that one is also the latter?

 

[antmary]

Yes, I've noticed a lot of this lately:

YouTube - dog & cat friends

Al,
That's too cute!

 

[ESRwannabe]

We are still 1345 points away from Stevie's projection. That's a drop of about 450 points a day over the next three days. It COULD happen...

In the meantime, this is a great buying opportunity. You guys still have plenty of dry powder, right?

I shifted money around. I have been able to pull out three months living expenses to cash while also increasing my dividend yield from around 3.20% to 4.10%, and also increasing the "quality" of the yield, i.e. the stability of the yield and the likelihood of dividend growth went up a lot.

I sold off my value index and moved to individual stocks. The value index with 400+ stocks in it is safer in some ways and less safe in other ways. I primarily moved to blue chip stocks, no more than 5% of my principal in any one stock.

I also used about half of the value index that I sold off and put it into the europe index, raising my dividend yield on it to 3.97%. It would have been nice to have waited longer on that but oh well. When I sold off the value index I still had a small capital gain.

I'm very happy with the way that turned out. I now have roughly one year living expenses in cash, and a higher, better quality yield. I'll get another pay check real soon and can put another $2k in.

For my taxable account my dividends amount to $4,161.92 per year based off of last year's payouts. All of my individual stocks raised divs this year so it is actually higher. The wild card is the europe index which I have a substantial percentage in. I plan on continuing to add essentially all my monthly investment cash to it for this year. Usually, $2k a month.

I looked at the top 100 stocks in the europe index and I believe that the payout will not decrease much. I am confident that ten years from now I will look back and be glad to have bought at these prices.

 

[Leonidas]

A contrarian investor is often seen as someone courageous, and often wise. It does not carry a bad connotation as a market timer. But let me ask you, doesn't being the first imply that one is also the latter?

Not really. IMO a contrarian is more like a value-investor who looks at individual issues, industries or sectors and sees bargains where the markets have badly beaten down a particular stock, industry or sector. They take a longer view and see bargains in things to buy and hold as long as the fundamentals of what they're buying don't change. Uncle Warren is a good example of a contrarian, I think.

A market timer cares less about bargains, and more about when the market will wake up to its mistakes. He/she is just making bets on how and when the opinion will change. I think of George Soros as a market timer because he looks at the fundamentals, but is making a bet on being ahead of the crowd more than spotting bargains that he wants to own.

A contrarian looks for the markets' mistakes on valuing things he owns, or wants to own. A timer is trying to understand where the markets have made their mistakes and the time and direction that the herd will turn.

 

[easysurfer]

A contrarian investor is often seen as someone courageous, and often wise. It does not carry a bad connotation as a market timer. But let me ask you, doesn't being the first imply that one is also the latter?

Hmmm..a trick question? I'd say, yes, they both try to time the market, but in different directions.

I'll take a stab at it. I'd say the difference..

The contrarian does the opposite of what he/she thinks is the markets direction whereas the timer does what he/she thinks the market is headed.

In other words, the market timer tries to correctly time the market while the contrarian tries to do the reverse (outsmart the direction of the market).

 

[FUEGO]

I also used about half of the value index that I sold off and put it into the europe index, raising my dividend yield on it to 3.97%.

The wild card is the europe index which I have a substantial percentage in.

I looked at the top 100 stocks in the europe index and I believe that the payout will not decrease much. I am confident that ten years from now I will look back and be glad to have bought at these prices.

I am wary of the dividend payout on the europe index. I think European companies generally focus less on maintaining dividend consistency over time (like US stocks do) and are more willing to pay out a higher proportion of what they earn each year and just accept that the div will be variable. It does have an excellent 12 month dividend yield however.

 

[Bestwifeever]

[mod hat on]Please note it is possible to claim to be a contrarian investor in such a way that one does not provoke other investors and steer the discussion away from the topic and off the rails away from thoughtful congenial commentary.[mod hat off]

 

[audreyh1]

Now people just don't sound that scared!

Audrey

 

[ESRwannabe]

I am wary of the dividend payout on the europe index. I think European companies generally focus less on maintaining dividend consistency over time (like US stocks do) and are more willing to pay out a higher proportion of what they earn each year and just accept that the div will be variable. It does have an excellent 12 month dividend yield however.

That's true. However, on the plus side, the div payout went down 30% last year already and the earnings have been good this year, like they have been in the US multinationals.

Even if the payout goes down a lot I will be better off because my div yield on the value index was only 2.73% and that fund has no consistency at all in regards to the div. So, even if the div payout on europe index goes down another 30% I'll have a div yield of 2.78%. So, I have more safety in the payout now. If it goes down 30% again I break even div wise from where I started.

 

[FUEGO]

Even if the payout goes down a lot I will be better off because my div yield on the value index was only 2.73% and that fund has no consistency at all in regards to the div. So, even if the div payout on europe index goes down another 30% I'll have a div yield of 2.78%. So, I have more safety in the payout now. If it goes down 30% again I break even div wise from where I started.

If the Euro stays where it is, I would expect the dividends to drop around 15-20% from last year just due to foreign exchange. A one euro dividend payment last year provided $1.40-$1.45 in USD. Today you get $1.22.

Probably not a bad dividend play either way though.

 

[Birdie Num Nums]

I don't understand how you can do that. I could only put 20% per paycheck up to a government mandated maximum. (~$25k).

I just started contributing to my 401(k) this January, for this job I started only last summer. I was contributing only about $800 every two weeks. I was expecting to be at this job for another 2-5 years, but decided a couple of months ago to ER instead due to a number of reasons that all gelled together. So, I still had a ways to go before I hit the maximum allowed for a 50-plus-year-old for the year. My employer says I can have 100% of each remaining paycheck go to my 401(k), up to the annual max. It looks like I'll have about another $15,000 or so remaining that will all go to the 401.

 

[Alan]

I just started contributing to my 401(k) this January, for this job I started only last summer. I was contributing only about $800 every two weeks. I was expecting to be at this job for another 2-5 years, but decided a couple of months ago to ER instead due to a number of reasons that all gelled together. So, I still had a ways to go before I hit the maximum allowed for a 50-plus-year-old for the year. My employer says I can have 100% of each remaining paycheck go to my 401(k), up to the annual max. It looks like I'll have about another $15,000 or so remaining that will all go to the 401.

That is perfect. Until W2R responded, I had not known that some employers allowed you to put up to 100% of your salary into your 401(k). In our case DW's firm only allowed a max of 20% (same as my employer). If she could have contributed up to 100% then we could have been contributing a lot more every year into her 401(k).

Once again, all the very best on your upcoming retirement, which is now in spitting distance

 

[NW-Bound]

Hmmm..a trick question?

Yes, it is.

... Uncle Warren is a good example of a contrarian...

...I think of George Soros as a market timer because he looks at the fundamentals, but is making a bet on being ahead of the crowd more than spotting bargains that he wants to own...

Yes, both are very good examples of different styles of investing. Buffet is certainly a long-term investor, while Soros is a trader. Both make good money, and heck, I would listen to them both. One thing for sure: they are NOT arrogant and do not claim to be right all the time, and know not to make a victory dance based on just one good trade. Rich as they are, they know to stay humble.

[mod hat on]...does not provoke other... off the rails away from thoughtful congenial commentary.[mod hat off]

Not just market plays, but how about other subjects?

I have been shamelessly pushing French music... Did that tick off anyone? Hey, I try to balance that with some American music too, you know. In fact, I am sure I post more American music than French songs.

PS. Maybe one of these days, I will post a song in my native language.

Nah! People won't understand to appreciate it anyway.

 

[NW-Bound]

So, the market turned around and ended up nearly flat today. An "intraday reversal", or something like that, as traders like to say.

Anyone here bought at the day's low, and want to brag? I myself have been busy with a yard project, and have not bought nor sold anything in a few weeks. My last few trades were "buy, buy, buy", and I have not made money yet. Want to buy more, but either have to go on margin, or cash out my I-bonds and pay tax. So, in a way, I am out of ammo, although only (yes only) 72% in stocks.

 

[Dawg52]

Anyone here bought at the day's low, and want to brag?

Wish I could, but I was playing golf.