Don't contribute to the stock markets?

[Keyboard Ninja]

So Suze Orman says (on the Larry King show) that unless you are contributing to a retirement fund stay out of the market. I assume that a retirement fund can be either an IRA of some sort, TSP, or a 401k.

With reports that people are losing their life savings with their 401k tanking what reason would I have to contribute my money into anything other than a savings account?

Just for discussion only. I'm not going to shoot myself in the butt just yet

 

[innova]

Would you rather buy low or buy high? Future returns are tied closely to valuation at the time of purchase.

Nobody knows what the market will do tomorrow. Historically, it is more likely to go up than down. Recoveries start before bear markets end. To stop contributing would be to ignore voluminous chapters of academic research on investing that urges you to do exactly the opposite.

 

[Gardnr]

So Suze Orman says (on the Larry King show) that unless you are contributing to a retirement fund stay out of the market. I assume that a retirement fund can be either an IRA of some sort, TSP, or a 401k.

With reports that people are losing their life savings with their 401k tanking what reason would I have to contribute my money into anything other than a savings account?

Just for discussion only. I'm not going to shoot myself in the butt just yet

What she's saying is that you shouldn't be speculating in the market because you're likely to get killed in the short term (which is what speculating is). Any money you put into the market, now or at any time, should be money you don't need to spend for a very long time; preferably a 10 yr plus time frame. Some will say at least 5 yrs, but that's all up for debate.

People aren't "losing their life savings" unless they've sold and locked in those losses and won't get back in at these levels. If they had money in the market that they needed to use in the short term then they were not wise and that decision was made when the market was up and everybody was optimistic. Now they're panicking. Or they're just getting caught up in the very negative emotions that come in these kinds of markets.

Others will chime in with some good sage advice about buying when it's ugly and prospering from that discipline when things turn up again.

Buy low, sell high! But don't speculate and get burned.

 

[unclemick]

Hmmm - consider backing up the truck and buying the TSP equivalent of Vanguard Target Retirement 2040 or as close to it as you can get. Buy as much as you can.

Historical opportunities don't always come along this often. When tuna fish is on sale - buy tuna fish.

And for heaven sake - don't read books, watch investment tv, or waste lot of time 'overlearning' about investments.

Successful investing is about faith, persistence and time.

America is not going out of business anytime soon.

heh heh heh - if they do we'll have a lot more to worry about than investing. .

 

[Frugality_of_Apathy]

If I was putting any money in the market it would be in SDS until the DOW dropped below 8500.

Precious metals might be a good idea too since congress is attempting to inflate the dollar this week.

 

[Nords]

So Suze Orman says (on the Larry King show) that unless you are contributing to a retirement fund stay out of the market. I assume that a retirement fund can be either an IRA of some sort, TSP, or a 401k.
With reports that people are losing their life savings with their 401k tanking what reason would I have to contribute my money into anything other than a savings account?

I can't claim that past is prologue, but Dimson & Marsh's "Triumph of the Optimists" showed that over the last century in over a dozen countries, the only investment to keep ahead of inflation in the long term (a decade or more) is... stocks.

Suze's customers are usually deep in consumer debt and shouldn't be contributing to anything other than a 401(k) match until they get out of debt.

BTW Suze's portfolio is largely municipal bonds. She wouldn't recognize a stock, let alone a value stock, if it bit her in her assets.

When Suze was on Oprah the other day, probably making this comment, as soon as they went to commercial break Oprah actually called her investment guy to find out what her asset allocation was. She had no freakin' idea.

 

[W2R]

Hmmm - consider backing up the truck and buying the TSP equivalent of Vanguard Target Retirement 2040 or as close to it as you can get. Buy as much as you can.

Historical opportunities don't always come along this often. When tuna fish is on sale - buy tuna fish.

That would be the TSP's "Lifecycle 2040" (L2040) fund. I would do the same if I were in his shoes.

America is not going out of business anytime soon.

heh heh heh - if they do we'll have a lot more to worry about than investing. .

If American does go out of business, my portfolio is in big trouble! I don't think it will, though.

 

[ats5g]

I can't claim that past is prologue, but Dimson & Marsh's "Triumph of the Optimists" showed that over the last century in over a dozen countries, the only investment to keep ahead of inflation in the long term (a decade or more) is... stocks.

Which past shall we talk about. The 19th or 20th centuries? In the 19th century, both stocks and bonds in the US beat inflation handily. [only two centuries of data]. With LT TIPS offering return of 2.30% above inflation, I don't need stock stocks to beat inflation.

- Alec

 

[ziggy29]

If American does go out of business, my portfolio is in big trouble! I don't think it will, though.

If America went out of business, I suspect you'd be kicking yourself for continuing to work for the lifetime medical you would no longer be getting after the going-out-of-business sale... 8)

 

[freebird5825]

oh, if i had some extra disposable income right now...i'd be ALL OVER this fire sale on wall st. : but that's my answer for my situation.
YOUR stomach for risk will determine YOUR best answer here.
an idea...create a dream portfolio at M* or elsewhere and pretend you invested in the stock market right now. watch it for a month or two or longer. then decide. real data has a wonderful way of helping a person make logical decisions.
good luck!

 

[Canadian Grunt]

The Stock market is a gamble.

I put my faith in the government, economy, and long term history of the market.

Read a few books that emphasize boom and bust cycles to gain a better perspective on market hysteria. I recommend "A Short History of Financial Euphoria" by John Kenneth Galbraith for some insight.

This is the time to be fully invested. The best 30 days of a markets turn around has historically been the greatest portion of the recovery.

People have it backwards. I watch financial analysts promoting stocks that have already run up and advising safety as the market drops. We should be stockpiling cash when the market is high and dollar cost averaging when the market drops.

If you are an accumulator like myself; Buy, Buy, Buy!

No guts, No glory

 

[W2R]

If America went out of business, I suspect you'd be kicking yourself for continuing to work for the lifetime medical you would no longer be getting after the going-out-of-business sale... 8)

That's for sure. How about the fact that huge chunks of my portfolio are in treasuries? 8) And then there's the (admittedly tiny) pension, and SS, and the TSP, and my salary...

The way things have evolved maybe I have too many eggs in the federal basket.

 

[haha]

That's for sure. How about the fact that huge chunks of my portfolio are in treasuries? 8) And then there's the (admittedly tiny) pension, and SS, and the TSP, and my salary...

The way things have evolved maybe I have too many eggs in the federal basket.

Well, it's a basket backed by the taxing power of the US Govt and the prosecutorial power of the US Attornies and the police power of a state that has never been afraid to use it.

So I think you are safe.

Ha

 

[W2R]

Well, it's a basket backed by the taxing power of the US Govt and the prosecutorial power of the US Attornies and the police power of a state that has never been afraid to use it.

So I think you are safe.

Ha

I am pretty sure you're right. Besides, if the U.S. Govt fails then probably it would take the rest of the possible investment options down with it. But the thought has occurred to me (about too many eggs in a basket), being of a cautious nature. I am just aware of it, in the back of my mind, for now.

 

[Frugality_of_Apathy]

If the government takes out many more loans we might be subject to a hostile takeover from china who might just dissolve the government and put in it's own government. Not that there is any real chance of that happening, but it's a scenario where US could disappear without destroying the rest of the world's economies.

It's almost always a bad idea to have all your investments in a company you work for, even if the company is a government.

 

[Texarkandy]

Well, it's a basket backed by the taxing power of the US Govt and the prosecutorial power of the US Attornies and the police power of a state that has never been afraid to use it.

So I think you are safe.

Ha

That's the way I've got it figgered.

 

[Texarkandy]

If the government takes out many more loans we might be subject to a hostile takeover from china who might just dissolve the government and put in it's own government. Not that there is any real chance of that happening, but it's a scenario where US could disappear without destroying the rest of the world's economies.

It's almost always a bad idea to have all your investments in a company you work for, even if the company is a government.

They might get California - but I don't expect they'd get far beyond that geographically.

Heck! - they can have California & we'll call it even for all I care. (Of course we'd want to retain some offshore drilling rights off Cali & within 50 miles at that) After a few years it might be fun to visit there again.

Then perhaps NYC for the Saudis?

 

[Goonie]

So Suze Orman says (on the Larry King show) that unless you are contributing to a retirement fund stay out of the market.

What she's saying is that you shouldn't be speculating in the market because you're likely to get killed in the short term (which is what speculating is). Any money you put into the market, now or at any time, should be money you don't need to spend for a very long time; preferably a 10 yr plus time frame. Some will say at least 5 yrs, but that's all up for debate.

Anderson Cooper had her on last night to answer a few a questions. One question was (more or less), if someone had all their ducks in row (no debt, retirement accts. maxed, emergency fund in place, etc., etc.) and they had some extra money that they didn't need in the short term.....what would be a good thing to use it for? Suze said if they were willing to put it somewhere for the long term, then NOW would be a very good time to buy into the stock market, because just about everything is 'on sale'. (In her books and on her show, she normally is in favor of mutual funds over individual stocks, so I'd assume that's what she meant in this case also.) But if they're not able to leave it there for 5 or more likely 10 years.....don't even think about it!

 

[Nords]

If the government takes out many more loans we might be subject to a hostile takeover from china who might just dissolve the government and put in it's own government. Not that there is any real chance of that happening, but it's a scenario where US could disappear without destroying the rest of the world's economies.

Reminds me of Japan in the 1980s. Remember the hysteria over selling Rockefeller Center and Pebble Beach to Japanese companies?

By now I think they've either sold back everything at a loss or been foreclosed.

 

[ikubak]

Hmmm - consider backing up the truck and buying the TSP equivalent of Vanguard Target Retirement 2040 or as close to it as you can get. Buy as much as you can.

Historical opportunities don't always come along this often. When tuna fish is on sale - buy tuna fish.

And for heaven sake - don't read books, watch investment tv, or waste lot of time 'overlearning' about investments.

And listen to your unclemick!!

 

[Notmuchlonger]

Ive actually moved some out of fixed and bought some more funds. Ill admit my mistakes. Who knows maybe down the road it will have been the right thing to do

 

[Jeb-NY]

I move a few percent from cash to equity a couple of weeks ago. Of course now I'm more cash heavy than I was before I made the move, percentage wise.

Holding tight for now, plenty of cash to get through a fairly long Bear if I have to before I need to sell. Just need to decide if/when to move more cash into equity.

Jeb

 

[oma]

My portfolio has lost $60k from earlier this year - but I'm continuing to dollar-cost-avg into my TSP, Roth IRA - maximizing both. I'm optimistic that in 10-20 yrs, we'll look back at 2008 the same way we look at 1987.

 

[Jeb-NY]

I dollar cost averaged through the tech crash and it paid off well then. Now that I'm enjoying ER I have to decide how much of the cash reserve to dump into the game versus keeping my head under the covers.

Jeb

 

[John23]

Don't pay any attention to Suze Orman, or anyone on tv that talks stocks or finance.

She's like....Billy Mays with the handy switch! Honestly is there much difference between the two?

You're suppose to buy low, sell high. But for my own account and own money, I'm not in stocks or any index like the S&P.

Reasons...

-Huge bull market in the 80's and 90's. The biggest bull market in history. Stocks went up more than they should. Historically it takes a long time to work off excesses like that. This may be "a" bottom, but not sure if it's "the" bottom.

-Higher commodities, higher inflation in the future. Historically, not good for stocks. If bonds drop in price (increasing in yield), that can't be good for stocks.

-A lot of fraud and sham accounting, shenanigans in the late 90's mania. Options expense. Pension expense.

-Valuations could swing in the extreme opposite. Everyone said, xyz can't go any higher. At 40, 50, 60 times earnings in the late 90's.

Could be possible that valuations swing in the other extreme. Down to single digits, but no one wants to touch them. We haven't seen that yet.

-FED's out of control printing money. The fed's balance sheet, the US government's balance sheet have been horribly damaged. Adding trillions of dollars in debt. Has that ever been good for stocks?

The market has already discounted alot, but these moves should be telling you something.

And the international changes...china, india, asia..I dont know.

It could be a long trading range, post 2000, of 15 or 20 years. But have to make your own decisions.