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People selling at Dow 6500. Were buying at 14000
Old 03-06-2009, 02:17 PM   #1
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People selling at Dow 6500. Were buying at 14000

I am still going to continue to $ cost into stock and bonds. The market is not always a good barometer of the health of the economy. When stocks were trading at 14000 in the dow, the real economy was rotting. Now at 6500 when we finally have exposed the rot and are trying to clean things up, everyone is getting out. Classic market herd mentality (sell low, buy high). I wish I had more money to invest.
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Old 03-06-2009, 02:23 PM   #2
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Classic market herd mentality (sell low, buy high).
Are you channeling the spirit of the late, grate great CFB?

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Originally Posted by cute fuzzy bunny View Post
Everything gets cheaper and goes on sale, everyone runs for the exits. Everything gets overpriced and stupid looking, out come the checkbooks and everyone gets excited.
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Old 03-06-2009, 03:00 PM   #3
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If you won't need the money for at least 10 years, I'd say that's a good plan. If you will need the money before then, it's rash speculation.
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Old 03-06-2009, 03:06 PM   #4
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In this situation, many think we may be headed for Great Depression 2. If so, we could head much lower. I'm not saying that is where we are headed. God I hope not. But I know nothing about nothing. So I'm sitting on what I own with no guts to buy anything.
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Old 03-06-2009, 03:59 PM   #5
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I'm waiting for everybody to stop wondering if we've hit the bottom. When people start asking, "Stock market? What's that?" - Then I'm a buyer.

Speaking of stock markets, something weird is going on in the indexes. The normal "-" sign is missing and replaced with a weird looking "T" that looks like this "+". And the numbers are green instead of their normal red. How strange. I wonder what it means.
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Old 03-06-2009, 04:03 PM   #6
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I am hoping that there is some truth to the old adage that when everybody elsle is scared, its the time to be greedy. For better or worse I am still putting money into the market.
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Old 03-06-2009, 04:26 PM   #7
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Ditto, still buying at a small but steady monthly rate into VWAHX. The long range plan to build that into a long term TE income generator is almost complete.
I'm almost ready (May or June) to switch that new money over to some of my stock funds.
The question is - domestic or international stocks? My gut feel is go domestic. Any comments are welcome.
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Old 03-06-2009, 04:46 PM   #8
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Ditto, still buying at a small but steady monthly rate into VWAHX. The long range plan to build that into a long term TE income generator is almost complete.
I'm almost ready (May or June) to switch that new money over to some of my stock funds.
The question is - domestic or international stocks? My gut feel is go domestic. Any comments are welcome.
Same here, I clench my teeth and keep adding money to my stock positions every month (I personally favor domestic right now, but I still buy some international just in case the USD goes sharply lower), but any "extra" (tax refunds, bonuses, etc...) goes to high quality munis (VWITX and VWSTX) to build longer term TE income.
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Old 03-06-2009, 05:13 PM   #9
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Ditto, still buying at a small but steady monthly rate into VWAHX. The long range plan to build that into a long term TE income generator is almost complete.
I'm almost ready (May or June) to switch that new money over to some of my stock funds.
The question is - domestic or international stocks? My gut feel is go domestic. Any comments are welcome.
What does your plan say? Mine has 45% domestic, 35% foreign and I replenish to stay within about 5% of those numbers. Takes your gut out of it. It is best at digesting food.

DD
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Who me worry?
Old 03-06-2009, 05:41 PM   #10
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Who me worry?

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Originally Posted by lightwaves View Post
I am still going to continue to $ cost into stock and bonds. The market is not always a good barometer of the health of the economy. When stocks were trading at 14000 in the dow, the real economy was rotting. Now at 6500 when we finally have exposed the rot and are trying to clean things up, everyone is getting out. Classic market herd mentality (sell low, buy high). I wish I had more money to invest.
I guess it depends where this chart is heading:





Me? I've been putting money into the market (ouch), but still have some cash on the sidelines...and trying to keep myself from committing too much capital. Especially since I know that if one were to go "all-in" at -55% and we didn't bottom until -90%, that you would lose 77.8% (not 35%).
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Old 03-06-2009, 08:32 PM   #11
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Ditto, still buying at a small but steady monthly rate into VWAHX. The long range plan to build that into a long term TE income generator is almost complete.
I'm almost ready (May or June) to switch that new money over to some of my stock funds.
The question is - domestic or international stocks? My gut feel is go domestic. Any comments are welcome.
I am doing a similar plan. However, I have been funding VWITX. The long term returns really don't justify going out in maturity and duration on muni's (just take a look at what happened last year to VWAHX and VWITX). I'll give up a little yield to protect the principal. I may start funding a taxable index fund (or PRPFX) to use in addition to the munis. However, this is the taxable money that I will use in retirement (probably 10 years from now) prior to the 401k and Roth IRA monies so I don't want to take a lot of risk with it.
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Old 03-07-2009, 04:15 PM   #12
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What does your plan say? Mine has 45% domestic, 35% foreign and I replenish to stay within about 5% of those numbers. Takes your gut out of it. It is best at digesting food.

DD
when I FIREd, I chose a 50/50 AA because I am a chicken and a coin tosser.
Stocks: 12% international, 38% domestic (of entire portfolio).
Bonds: Mix of munis, EE and I bonds, some corporates (from balanced funds). DCA to munis only was at rate of $400-$1000 per month since 2007, as I could afford it. I cranked it up to $1K during 4Q08. Couldn't resist!
I'm now back to $700 per month.

2008's market migrated my mix to 44/55.
I made a minor exchange (5%) as a damage control move to make that 40/60 AA for 2009-10. Current international is approx 7%, lower than the 10-15% I usually want. I can actively buy more VEURX shares or let it ride. Undecided.

So...2 months from now is when I will switch my monthly DCA over to stock funds. The muni dividends will then cover my property taxes as needed.

When the recovery happens, and it will, the AA will rebalance itself to somewhere near 50/50 again. If not, I redirect my DCA $ accordingly.
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Old 03-07-2009, 04:25 PM   #13
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I am doing a similar plan. However, I have been funding VWITX. The long term returns really don't justify going out in maturity and duration on muni's (just take a look at what happened last year to VWAHX and VWITX). I'll give up a little yield to protect the principal. I may start funding a taxable index fund (or PRPFX) to use in addition to the munis. However, this is the taxable money that I will use in retirement (probably 10 years from now) prior to the 401k and Roth IRA monies so I don't want to take a lot of risk with it.
I'm taking a look at VWITX and/or VWSTX vs VWAHX. I will watch any fund for 6-12 months before I make any changes.
VWAHX posted a -10.45% loss for 2008, but was paying better dividends. Classic tradeoff. I do watch my unrealized losses very closely. It is recovering this year, slowly.
My VWAHX is a very special purpose fund for me - NYS property taxes kill my immediate cash flow 3x a year. I'm very tired of that. Eventually, I want this muni stake to cover more and more of my living expenses so I can have more fun or be in a better position to combat any future out-of-control inflation.
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Old 03-07-2009, 07:43 PM   #14
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I'm taking a look at VWITX and/or VWSTX vs VWAHX. I will watch any fund for 6-12 months before I make any changes.
VWAHX posted a -10.45% loss for 2008, but was paying better dividends. Classic tradeoff. I do watch my unrealized losses very closely. It is recovering this year, slowly.
My VWAHX is a very special purpose fund for me - NYS property taxes kill my immediate cash flow 3x a year. I'm very tired of that. Eventually, I want this muni stake to cover more and more of my living expenses so I can have more fun or be in a better position to combat any future out-of-control inflation.
Eventhough it was a bit of data mining I looked at VWITX and VWAHX long term returns. Beginning with a 500K investment in 1-2-1994 (15 years ago) I have calculated each funds monthly distributions and capital losses/gains. For VWITX you would have distributions of 70.69% and as of Friday your account value would have been $479244. For VWAHX you would have distributions of 79.45% (9.06% - $45300 more than VWITX) and your account value would have been $426685. So even with the higher distributions on VWAHX it didn't make up the loss of principal. Some things to look at though - VWAHX just had its 2nd worse year ever (NAV wise), how important is your prinicpal value to you and what is the better buy today?
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Old 03-08-2009, 06:42 PM   #15
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Eventhough it was a bit of data mining I looked at VWITX and VWAHX long term returns. Beginning with a 500K investment in 1-2-1994 (15 years ago) I have calculated each funds monthly distributions and capital losses/gains. For VWITX you would have distributions of 70.69% and as of Friday your account value would have been $479244. For VWAHX you would have distributions of 79.45% (9.06% - $45300 more than VWITX) and your account value would have been $426685. So even with the higher distributions on VWAHX it didn't make up the loss of principal. Some things to look at though - VWAHX just had its 2nd worse year ever (NAV wise), how important is your prinicpal value to you and what is the better buy today?
TY for running the numbers.
I'm FIREd and age 50 right now. I have steady and safe income independent of my retirement portfolio.
NAV fluctuations - I'm looking at 2008 performance as a product of the huge mess, not as an indicator of long term performance. Time will tell.
Long range plan: Letting VWAHX ride for at least 15 years before I do any serious withdrawals.
Very near term...I am very close to earning and plan on withdrawing about $4200 of the VWAHX dividends per year for property taxes.
Variable 1: NYS is cutting their education budget in real time, so I'm probably looking at even higher school taxes very soon. If that happens, I can dip back into my income and be temporarily budget stretched 3x a year.
Variable 2: VWAHX dividends. Will the dividends cover my annual property taxes? Right now, the answer is yes.
I have to time test this plan before I can say it's not working.
If the NAV on VWAHX takes another 10% drop as it did in 2008, without recovery, then I will probably switch over to VWITX.
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Old 03-08-2009, 07:15 PM   #16
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Well, I bought on Feb 20 and Feb 23 and I'm already down over 10% on those.

I'll warn you before I buy again.
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