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Should mutual funds just be left alone now?
Old 09-23-2008, 08:43 PM   #1
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Should mutual funds just be left alone now?

The mutual funds were left in their normal account with a brokerage firm--although we have lost some money, of course, as expected (13.25% loss from the 3 year high--plus the 4% I am adding in for inflation for the past 3 years = 12% totaling 25.25% I figure I lost overall that I normally would have made minimally).
Since they have not been pulled out so far, would you suggest just leaving them in until they turn around again?
And has anyone read when the turnaround is expected to come or is this still up in the air? All I have read is 2009 is supposed to be rough like now, but I haven't read when there is to be an upswing in all this gloom.
I have not been keeping up with all this due to one major tragedy after another here the last 4 months, so I am totally behind the eight ball with my financial reading. Hopefully, all will stay calm for, at least, another 6 months (I hope), and I can play catch-up.
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Old 09-23-2008, 08:52 PM   #2
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Sorry for your string of tragedies, OF. Having missed the financial news, of late, should not be considered as a "bad" thing. Check your risk tolerance and asset allocation, then go back to ignoring the financial press. And good luck!
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Old 09-23-2008, 09:03 PM   #3
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I am assuming that probably your investments are long term investments that you planned to keep for 10-20 years or more.

Naturally when it comes to mutual funds that are mostly stocks, you want to buy low and sell high. Probably you should just sit tight. It doesn't sound like you have lost as much as some people, luckily. If you need to, you could rebalance but otherwise I think a lot of us doing nothing.

If we sell, we would be selling low and that is not a good thing.
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Old 09-23-2008, 09:20 PM   #4
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Sorry for your string of tragedies, OF. Having missed the financial news, of late, should not be considered as a "bad" thing. Check your risk tolerance and asset allocation, then go back to ignoring the financial press. And good luck!

Sorry for your troubles and listen to the great advice from HFWR !
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Old 09-23-2008, 10:54 PM   #5
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If you 'stay the course', you're making a prediction regarding how the future is going to unfold. If you make a change, you're also making a prediction, presumably a different one. Since no one here has a crystal ball, I don't see how anyone can answer your question.

It is well known that following the herd is bad investment strategy (in general), so when folks here recommend that you 'stay the course', they're probably really just reminding you not to follow the herd. This doesn't mean that a change in your portfolio isn't warranted if your current prediction of how the future is going to unfold has changed since you last reviewed your investment strategy.

Good luck!
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Old 09-23-2008, 11:05 PM   #6
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My mutual fund accounts are there for the long haul.....at least 10-12 more years or longer......therefore I'm just letting them ride. I have much more pressing issues to contend with than worrying over those accounts right now.....such as "What the heck am I having for breakfast tomorrow morning?".

Plus for my own peace of mind, I cheat a little if I see the daily numbers in Yahoo Finance.......if the numbers are in Red I ignore them.....if the numbers are in Green I calculate how much money I made that day, and jot it down a scrap of paper! Any time I glance at that paper all I see is that I'm making money! Last Thursday I was up an average of 43.5 per share.....and Friday was even better at an average 58 a share. I didn't observe any green numbers yesterday or today, so I have NO clue what the numbers were.

That probably sounds pretty goofy....but hey.....what do I know? I'm just a happy-go-lucky Goon!
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Old 09-24-2008, 01:26 AM   #7
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So, I can assume NO dire predictions have been made regarding mutual funds (like finding out tonight that my Money Market accounts might be in danger by keeping them all at one bank...nothing like a little panic to have me writing this at 1:30 am and up instead of sleeping)? That's a relief.
And, yes, I am aware that one of our board members wrote he lost $450K on his financial stocks or mutual fund accounts (poor fellow).
And, yes, I am in for a longer haul, and hope I don't have to withdraw from any accounts at least for the next ten years minimum.
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Old 09-24-2008, 07:39 AM   #8
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it is really tough to "stay the course" in rollercoaster times like this. my solution was to pick up one of my investing books (Tobias 2002 revision of "The Only Investment Guide You'll Ever Need" in this case) and re-read it to reinforce the need to look at the long term strategy. he uses a lot of humor in his writing. that helped me a lot!
hang in there...
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Old 09-24-2008, 09:38 AM   #9
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my solution was to pick up one of my investing books (Tobias 2002 revision of "The Only Investment Guide You'll Ever Need" in this case) and re-read it to reinforce the need to look at the long term strategy.
I thought that was a very good read also!
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Old 09-24-2008, 10:54 AM   #10
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It is on my reading list, thanks.
My attitude towards the stock turned around when I started listening to Warren Buffet and thinking that I wasn't losing money--but buying stock cheaper now. Now, at least, I can sleep at night about the stock.
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Old 09-24-2008, 11:17 AM   #11
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The mutual funds were left in their normal account with a brokerage firm--although we have lost some money, of course, as expected (13.25% loss from the 3 year high--plus the 4% I am adding in for inflation for the past 3 years = 12% totaling 25.25% I figure I lost overall that I normally would have made minimally).
Since they have not been pulled out so far, would you suggest just leaving them in until they turn around again?
"That depends."

If you're happy with the asset allocation, and if you're happy with the expenses of the funds, and if you're happy with the brokerage, then there's no reason to mess with the status quo.

But if this market has made you decide to change your asset allocation (for example, to reduce volatility or sector risk) then this is a great time to buy replacements. If you want to reduce your fund expenses then this would be a good time to buy their cheaper equivalents. (Bob Clyatt's WLLM 2nd edition workbook has a spreadsheet to help calculate the annual savings of lower expenses.) And changing brokerages may be able to be done with an "in kind" transfer that doesn't require selling any of your current holdings.

Another advantage of swapping losing mutual funds for cheaper replacements now is that any tax losses could offset much of the capital gains at a time when cap gains taxes are the lowest we're ever likely to see. In other words, if you're worried about the tax impact of overhauling your ER portfolio, now is one of the best times to minimize the taxes. Of course this isn't an issue with tax-deferred accounts.

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And has anyone read when the turnaround is expected to come or is this still up in the air? All I have read is 2009 is supposed to be rough like now, but I haven't read when there is to be an upswing in all this gloom.
I have not been keeping up with all this due to one major tragedy after another here the last 4 months, so I am totally behind the eight ball with my financial reading. Hopefully, all will stay calm for, at least, another 6 months (I hope), and I can play catch-up.
I bet we still have another year or two of "muddle through"... the good thing about skipping the last four months is that you've avoided several gut checks filled with drama & angst. Now you have the choice of catching up, or not.
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Old 09-24-2008, 01:54 PM   #12
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Doing exactly what you say, Nords...just staying in the market and not getting scared or sweaty over it. But definitely reducing costs, switching firms and getting it more organized. But staying in the market. No money in my mattress or under the bed for me. That's really what I mean by staying the course.
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Old 09-24-2008, 09:01 PM   #13
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I may have to return my secret decoder ring, but I say there's nothing wrong with adapting to circumstances, as long as you do it in a rational way. I dropped my allocations of emerging markets, real estate, and commodities from 10% to 5% about a month ago. That money went to MM and a ST bond fund. It's safe there, right?
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I would follow the herd
Old 09-24-2008, 09:33 PM   #14
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I would follow the herd

as long as the rancher is Warren Buffett and the cow is Berkshire Hathaway....
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Old 09-25-2008, 07:58 AM   #15
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I thought that was a very good read also!
Tobias' discussions about budgeting still crack me up.

a quick question...i remember seeing a thread about good investing (sane methods not the get rich quick variety) books to read somewhere on the forum. i did a search on "investing books" and got too many hits.
anybody know where that reading list is? i want to treat myself to a new book or two or three. my local library collection is pretty slim in that dept.
thanks!
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Old 09-25-2008, 09:09 AM   #16
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Last week I sold a Janus foreign fund for $X that I should have dumped a long time ago and spread $3*X around 4 Vanguard stock funds including $X back into Developed Markets Index to get back my foreign balance. Still over weight in cash and bonds for my original plan but having a hard time convincing myself to move any more cash right now. My procrastination has saved me a lot on the downside so far.

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