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How far will you ride the market down ?
Old 03-02-2009, 04:05 PM   #1
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How far will you ride the market down ?

I'm pretty close to capitulation . This reminds me of being in a casino and thinking you'll get some of your losses back but you rarely do . So for me it's almost time to get out until sanity returns. I know some people have said they'll ride it down to zero but at what point do you say enough is enough .
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Old 03-02-2009, 04:09 PM   #2
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I did a little "reverse DCAing" on the ride down from 9000 to 6700. I now probably have less than 50% in stocks and I'm basically resigned to that part going to zero if need be.

If at some point it recovers, I'll let it ride for a while and then take it back down to a lower target AA (used to be 70/30; no more, probably 60/40 at most moving forward).

Had I been periodically rebalancing on the way down, I'd be more of a basket case. I'm in no mood to do ANY more rebalancing or "buying low" in my 401K. In fact I just took new Roth contributions and put them into a Ginnie Mae fund.
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Old 03-02-2009, 04:14 PM   #3
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Old 03-02-2009, 04:25 PM   #4
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I'm pretty close to capitulation . This reminds me of being in a casino and thinking you'll get some of your losses back but you rarely do . So for me it's almost time to get out until sanity returns. I know some people have said they'll ride it down to zero but at what point do you say enough is enough .
Its good to see this kind of thread starting as it probably means the bottom is near.
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Old 03-02-2009, 04:28 PM   #5
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Its good to see this kind of thread starting as it probably means the bottom is near.
Except that I've seen threads like this since November saying the same thing and they've all failed.

I don't think that contrarian dog is hunting on this trip...
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"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
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Old 03-02-2009, 04:29 PM   #6
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At least it will be entertaining!
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Old 03-02-2009, 04:30 PM   #7
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Old 03-02-2009, 04:33 PM   #8
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Fortunately, after retiring July 1, 2008, my wife and I now live in Tarma, Peru, in the High Central Andes. We can live on our pension and social security, and don't have to go into our investments yet. We'll be here for 14 more months and hope that by the time we return, when we need to start living on our investments, the stock market will have rebounded. So far we have lost about 20% of the value of our portfolio since retiring.
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Old 03-02-2009, 04:43 PM   #9
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Fortunately, after retiring July 1, 2008, my wife and I now live in Tarma, Peru, in the High Central Andes. We can live on our pension and social security, and don't have to go into our investments yet. We'll be here for 14 more months and hope that by the time we return, when we need to start living on our investments, the stock market will have rebounded. So far we have lost about 20% of the value of our portfolio since retiring.
Welcome Scott. Good job to only lose 20%!

Are you missionaries? Tell us a little about your environment?

Ha
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How much can you afford to lose?
Old 03-02-2009, 04:48 PM   #10
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How much can you afford to lose?

If you think the market will be substantially higher in 5-7 years and can afford greater portfolio losses in the meantime, you should leave your money where it is, and if possible, prepare to increase your equity exposure as prices fall. That's my plan. As equity prices decline I'm buying.

If you can't afford the loss, you should be leave equities now and invest in high quality low risk alternatives like TIPS.

Michael
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Old 03-02-2009, 04:49 PM   #11
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Leave it to HFWR to come up with some good music.

Been awhile since I heard some Jeff Beck.

Thanks!

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Old 03-02-2009, 04:54 PM   #12
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I've continued to buy all the way to zero.
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Old 03-02-2009, 04:54 PM   #13
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I have prepared myself psychologically to take it all the way down to DOW 4,000. Until then, I won't probably do too much rebalancing, though I will continue to add some money to my equity positions. My goal is to at least maintain our net worth at its current level (stable since 10/2007) until we get out of this mess. But even if we dip below 4,000 I won't be selling anything. I'll just stop buying.
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Old 03-02-2009, 05:00 PM   #14
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I'm seriously considering changing my name to Dawg62...
Were all Dawg's at this point. Some just won't admit it.

To answer Moemg question, I'm prepared to go to zero. I can't see riding it from 14k to where it is now and bailing.
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Old 03-02-2009, 05:09 PM   #15
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What Michael said.

Moe, if you capitulate now, what would you capitulate to? Both the value of stocks and bonds continue to decline. TIPS and CDs seem to be the only investments retaining their value.

Cd's are subject to inflation risk and aren't generating a lot of interest payments right now. TIPS go up and down, but do have the inflation factor covered.

But what else is there (besides the tin can in the backyard)?

I was planning on looking towards the end of March to see if I need to rebalance, but I've been keeping my portfolio at 50/50 since this started. I'm not very comfortable with what we've all been seeing, but I also feel to move to more cash would create a problem for me later on. I don't want to outlive my money, but I don't want to leave a lot at the end either.

I do believe we'll have several more (9-10) months of this. Until the government and the banks can demonstrate they have a handle on the financial safeguards and measures, I think the market will continue to sway between ups and downs. But that's just the stock market. I also think it's important to watch business and their ability to exist with limited credit.

It's frustrating, I know.

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Old 03-02-2009, 05:10 PM   #16
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Old 03-02-2009, 05:10 PM   #17
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At least it will be entertaining!
That was incredible!! Thank you, Ha, for bringing a smile to my face today.

Kids today just don't GET it but some of us sure do.

As for getting out, I don't see myself doing that. Like Dawg54 (and the other Dawgs) I suspect I will ride it to zero. Friday my AA was 60:40 instead of 55:45, and I had promised myself to rebalance if that happened. Haven't done it yet, though, and may not. Too chicken.
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Old 03-02-2009, 05:22 PM   #18
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Of course I was thinking about this today.
There is a saying that applies to what is happening: "The market teaches you to lose."
What that means is that we learned to "buy the dips", "buy and hold", "this time is different".

If/When the buy and holders get out - that will signal a bottom to me.

Having said all that; the plan I am formulating in my head is:
1. The money invested in stocks is dead money - I don't know where the bottom is and I don't need the money now. Yes, it hurts and I feel stupid about it. But I don't know if I sold now, what criteria I would use to get back in. So this money might be in the market for many years.
2.I have various ways of looking as my situation.
A. I have enough money in cash to last many years
B. I have 6 years to a very small pension (if the company survives) and 8 years until social
security - that should help.
C. Interest and Dividends almost cover my expenses so I'm treading water in some respect.

This is not easy to watch years of work, savings evaporate.

=====
I posted a link by a person that does technical analysis noting that he can see the s&p at 350 by mid to late 2010. I will be watching. If there is some sort of significant rally, I may sell my stock holding and see if his predictions occurs.

Currently, I still see Vanguard High Yield Corp. Bonds as a good investment.

Also, I think there will come a time when the US$ will peak and that would be the time to buy foreign currencies - Australian $, Canadian $, possibly Euro.

I'm not sure if any of my comment help anyone else but, I hope it does.
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Old 03-02-2009, 05:37 PM   #19
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But what if this really is the second great depression ? Are you willing to lose 90%?

Dow Jones decline rate mimics Great Depression | Business Tech - CNET News
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Old 03-02-2009, 05:57 PM   #20
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