Going All Cash in 401k

[2177V]

You could make this same post/argument every day for the past 25+ years. What makes today special?

What makes today's debt special compared to the past is based on the following opinion by Jim Roger who is a famous international investor with a new worth of $300M:

https://www.kitco.com/news/video/sh...w.kitco.com/news/video/latest?show=Kitco-NEWS

Jim Rogers and I share the same bearish views: The USA is in debt and investors should be concerned after 2019.

The USA has been #1 in the last 25+ years so other countries have "confidence" in the USA to pay back the debt. This is what you have been observing.

However, unless the USA can manage their debt better by reducing spending, then there may be a "tipping point" when other countries may lose "confidence" in the USA who is now following the same path as Greece, Italy and Japan.

Once foreign investors pulls their money out of the US stock market or bankruptcies occurs around the world, it may get ugly. As Jim Rogers stated, a domino effect can occur and before you know it, it is too late.

What is the bottom line IMO? Be very very careful. Do not assume the high government debt will have zero potential impact on the stock market and your investment.

 

[USGrant1962]

What makes today's debt special compared to the past is based on the following opinion by Jim Roger...

I literally laughed out loud. Jim Rogers is what is known as a "permabear" and HAS been making the same prediction for 25 years.

 

[NW-Bound]

I don't know if Jim Rogers is a permabear or not, but I thought he was a billionaire.

Hmmm... $300M now? Maybe his investments in commodity and raw material did not work out well.

But that does not necessarily mean his current prediction is wrong.

 

[Dtail]

When has Jim Rogers predicted a good outcome and what is his rate of prediction success?
I predict we will have a recession in the next 30 years......

 

[NW-Bound]

I don't follow Jim Rogers' investment advice, but his autobiography books on world traveling experiences were good read.

I have not heard much about him for quite a few years. But then, I no longer watch CNBC, nor have access to the channel.

 

[Go-NoGo]

I literally laughed out loud. Jim Rogers is what is known as a "permabear" and HAS been making the same prediction for 25 years.

+1

Here are Jim Roger's "predictions" :

2011: 100% Chance of Crisis, Worse Than 2008: Jim Rogers
https://www.cnbc.com/id/45219555


2012: Jim Rogers: It’s Going To Get Really “Bad After The Next Election”
https://moneymorning.com/ob/jim-rogers-its-going-to-get-really-bad-after-the-next-election-2/

2013: Jim Rogers Warns: “You Better Run for the Hills!”
https://www.cnbc.com/id/100600824


2014: JIM ROGERS – Sell Everything & Run For Your Lives
https://www.cnbc.com/id/100600824


2015: Jim Rogers: “We’re Overdue” for a Stock Market Crash
https://www.profitconfidential.com/stock-market/jim-rogers-were-overdue-for-a-stock-market-crash/

2016: $68 TRILLION “BIBLICAL CRASH” Dead Ahead? Jim Rogers Issues a DIRE WARNING
https://www.silverdoctors.com/headl...m-rogers-predicts-68-trillion-biblical-crash/

2017: THE BOTTOM LINE: Legendary investor Jim Rogers expects the worst crash in our lifetime
https://www.businessinsider.com/the...worst-crash-our-lifetime-henry-blodget-2017-6

Even weather forecasters get it right sometimes - Jim Rogers, not so much.
But even a stopped clock is right twice a day, and when the next recession hits, Jim will say "I told you so" - conveniently forgetting he was wrong every other time.

 

[RobbieB]

Gas bag

 

[ncbill]

What makes today's debt special compared to the past is based on the following opinion by Jim Roger who is a famous international investor with a new worth of $300M:

https://www.kitco.com/news/video/sh...w.kitco.com/news/video/latest?show=Kitco-NEWS

Jim Rogers and I share the same bearish views: The USA is in debt and investors should be concerned after 2019.

The USA has been #1 in the last 25+ years so other countries have "confidence" in the USA to pay back the debt. This is what you have been observing.

However, unless the USA can manage their debt better by reducing spending, then there may be a "tipping point" when other countries may lose "confidence" in the USA who is now following the same path as Greece, Italy and Japan.

Once foreign investors pulls their money out of the US stock market or bankruptcies occurs around the world, it may get ugly. As Jim Rogers stated, a domino effect can occur and before you know it, it is too late.

What is the bottom line IMO? Be very very careful. Do not assume the high government debt will have zero potential impact on the stock market and your investment.

IIRC there are U.S. states with larger economies than most countries.

U.S. dollar remains the world's reserve currency...nothing has come along to replace that, not even the Euro, even though plenty have tried to come up with an alternative.

And don't forget the enormous regulatory power the U.S. has with regards to international monetary movements...make the U.S. mad enough and they'll boot you off SWIFT (i.e. no access to electronic monetary transfers) like they did with Iran.

 

[pb4uski]

I literally laughed out loud. Jim Rogers is what is known as a "permabear" and HAS been making the same prediction for 25 years.

I laughed out loud too. Jim Rogers is a joke.

 

[ItDontMeanAThing]

But now I’m at that magical point where I could retire based on what I have now, according to Firecalc. So I thought it’d be good to have a bird in the hand at this point, instead of leaving it alone, having us go to war again or something causing a stomach-turning plunge, and then having to wait anxiously for months or even years for my balance in that account to return to where it is now.

About a year before I retired I acted on my belief that the hardest thing to recover from, both financially and emotionally, is a large drop early in retirement of the value of your investments. Plus I believed 'Bulls make money, bears make money, pigs get slaughtered'. Went from about 85-90% in stocks to about 50% (memory is hazy) in retirement accounts. In my taxable account, I went from ?? to 85% MMF and short term bonds of the highest quality. A year later the 2008 global economic meltdown occurred. I hadn't attempted to time the market. I did great avoiding being a pig by taking half of the bird in hand. Retired in Nov. 2008.

One thing I learned in my 20s was it's very easy to criticize an investment move out of the market when it's someone else's money.

 

[CardsFan]

I went all cash at Y2K. I thought that the date related meltdown could be real. As it turned out, I timed the all cash conversion to hit a downturn. Didn't time too well getting back in though.

My boss and I had similar 401k balances when I went all cash. He was ahead by $100k when I got back in.

I'll never do that again.

Yeah, its "easy" to know when to get out. But the real trick is "when to get back in".

The last time around I thought (briefly) about going all cash. Dow was down about 20% at that time. But then the question was always, When do I but again?

Thankfully, I stalled long enough to not do anything.

 

[joeea]

Jim Rogers and I share the same bearish views

How long have you two shared these views?

 

[2177V]

Jim Rogers has a net worth of $300M. How much net worth do you have?

People has missed the point that the USA debt was $11 trillion 10 years ago and it is now $22 trillion and still climbing. The USA is getting close to Greece, Italy and Japan. IMO, this is not sustainable.

I just reallocate my portfolio to be more conservative because I made enough money during the bull market in the last 10 years. My portfolio is now about 25% stock, 25% short term bonds and 50% CDs and cash and my annual retirement income is 6 figures plus. I want to keep this way. This is called capital preservation. If the USA debt was decreasing or even stable then my portfolio would be much more aggressive.

I already have tickets to go to Waikiki for an entire month and I want to have a good time surfing on a long board at age 68 without having too much of my money in the stock market. I will also be shopping for a vacation condo in Waikiki so I can covert some of my wealth into real estate. If the market do crash during my retirement, then I will be the one who has the last laugh.

 

[copyright1997reloaded]

Jim Rogers has a net worth of $300M. How much net worth do you have?

People has missed the point that the USA debt was $11 trillion 10 years ago and it is now $22 trillion and still climbing. The USA is getting close to Greece, Italy and Japan. IMO, this is not sustainable.

I just reallocate my portfolio to be more conservative because I made enough money during the bull market in the last 10 years. My portfolio is now about 25% stock, 25% short term bonds and 50% CDs and cash and my annual retirement income is 6 figures plus. I want to keep this way. This is called capital preservation. If the USA debt was decreasing or even stable then my portfolio would be much more aggressive.

I already have tickets to go to Waikiki for an entire month and I want to have a good time surfing on a long board at age 68 without having too much of my money in the stock market. I will also be shopping for a vacation condo in Waikiki so I can covert some of my wealth into real estate. If the market do crash during my retirement, then I will be the one who has the last laugh.

You are missing the point. Someday, these predictions will be correct. ALL BULL MARKETS END BADLY. My point is that it is very difficult to predict when that will happen. As you can see from the posts regarding Jim Rogers track record, IT ISN'T EASY TO PREDICT THE WHEN.

I happen to like Jim Rogers, but he has been wrong. He even moved to Singapore with his children so that they would learn Chinese because he believed in the ascension of SE Asia over the United States, and I can understand where he is coming from.

I am not foolish enough to think that we can't have another 2008/9 or much worse (e.g. a repeat of the great depression). I can assure you that I am 'hedged' in ways you haven't even thought about in terms of bad scenarios and to be (at least a little bit) prepared for them.

When the US Debt hit $10 Trillion, there were plenty of people saying the end was near, that the debt wasn't sustainable. Here we are 2X and yet the world hasn't come to an end. So again, what makes $22 Trillion THE magic number that makes THIS the time?

I'm glad you have the money to spend a month in Hawaii, good for you. I'd rather spend my time on ski's than on a surf board (mostly because I can't surf )

Something to think about: When the SHTF in terms of too much debt, how will the US Treasury and Federal reserve handle it? Hint: The US Debt is denominated in US Currency, so they can pay it off. This is unlike Greece or most other countries whose debt is denominated in US $ or some other non-home currency. This is THE major difference.

If/When the US debt becomes unsustainable, the debt would be paid causing a massive increase in the money supply and likely a large dose of inflation.

Given that, how will your CD's, short term bonds, and cash look? Answer: Your buying power (in terms of goods and services and especially goods from other countries) will be negatively impacted.

What I am saying here is that hiding in fixed/cash/CD's will likely not be a safe place if the massive US debt goes critical.

 

[CaliKid]

I usually ask my dog to throw darts at a dart board. That has always guided when to buy and sell stocks for me.

 

[RobbieB]

I look where the dog takes a pee.

If she heads to the left, I know stocks are good. If off to the right I should be more conservative and buy bonds.

 

[dirtbiker]

Jim Rogers has a net worth of $300M. How much net worth do you have?

People has missed the point that the USA debt was $11 trillion 10 years ago and it is now $22 trillion and still climbing. The USA is getting close to Greece, Italy and Japan. IMO, this is not sustainable.

I just reallocate my portfolio to be more conservative because I made enough money during the bull market in the last 10 years. My portfolio is now about 25% stock, 25% short term bonds and 50% CDs and cash and my annual retirement income is 6 figures plus. I want to keep this way. This is called capital preservation. If the USA debt was decreasing or even stable then my portfolio would be much more aggressive.

I already have tickets to go to Waikiki for an entire month and I want to have a good time surfing on a long board at age 68 without having too much of my money in the stock market. I will also be shopping for a vacation condo in Waikiki so I can covert some of my wealth into real estate. If the market do crash during my retirement, then I will be the one who has the last laugh.

Unless you're planning an early demise, it's when, not if, the market will crash. The market will crash. It always does. A perpetual bear market is unsustainable. People get greedy, forget the last big bear market and overbuy. Eventually there is a tipping point. The market crashes due to people being too foolish to just stay the course. Then people realize the stock market can be bought at a major discount, and the next bear market starts again. Some people sell high and buy low. Some sell low and buy back in when the market gets higher. The wisest keep their money invested and buy as they can during a downturn, realizing that only luck times a market.

Remember there are always the fools that sell at the bottom of a market crash. I'd much rather be the fool that buys at the top then sells at the bottom.

 

[RxMan]

I look where the dog takes a pee.

If she heads to the left, I know stocks are good. If off to the right I should be more conservative and buy bonds.

I’m about to take one of our dogs out for a final bathroom break before bedtime. I’ll keep an eye out for which way he goes.

 

[USGrant1962]

Just a small pile-on for Jim Rogers. Googling "Jim Rodgers Bear Market" results in 13 MILLION hits...

Anyway, I know a bear market is coming and as an Early Retiree I am nowhere near 100% equities. Changing your asset allocation based on your stage of life is appropriate. But I have no idea when a bear market is coming and don't pretend to, so I count on my AA to handle it.

vchan2177, your 25/75 AA is actually in on the very conservative end of the "normal" range for a 68-year old. But early retirees are at huge risk of inflation over the long term (which many predict is the result of the debt problem) and need equities for growth.

 

[2177V]

You are missing the point. Someday, these predictions will be correct. ALL BULL MARKETS END BADLY. My point is that it is very difficult to predict when that will happen. As you can see from the posts regarding Jim Rogers track record, IT ISN'T EASY TO PREDICT THE WHEN.

I happen to like Jim Rogers, but he has been wrong. He even moved to Singapore with his children so that they would learn Chinese because he believed in the ascension of SE Asia over the United States, and I can understand where he is coming from.

I am not foolish enough to think that we can't have another 2008/9 or much worse (e.g. a repeat of the great depression). I can assure you that I am 'hedged' in ways you haven't even thought about in terms of bad scenarios and to be (at least a little bit) prepared for them.

When the US Debt hit $10 Trillion, there were plenty of people saying the end was near, that the debt wasn't sustainable. Here we are 2X and yet the world hasn't come to an end. So again, what makes $22 Trillion THE magic number that makes THIS the time?

I'm glad you have the money to spend a month in Hawaii, good for you. I'd rather spend my time on ski's than on a surf board (mostly because I can't surf )

Something to think about: When the SHTF in terms of too much debt, how will the US Treasury and Federal reserve handle it? Hint: The US Debt is denominated in US Currency, so they can pay it off. This is unlike Greece or most other countries whose debt is denominated in US $ or some other non-home currency. This is THE major difference.

If/When the US debt becomes unsustainable, the debt would be paid causing a massive increase in the money supply and likely a large dose of inflation.

Given that, how will your CD's, short term bonds, and cash look? Answer: Your buying power (in terms of goods and services and especially goods from other countries) will be negatively impacted.

What I am saying here is that hiding in fixed/cash/CD's will likely not be a safe place if the massive US debt goes critical.

You missed the point that I will be converting some of my wealth into Real Estate using my cash so I am ahead of you. I have been a landlord before and i know how to manage rental properties. I can rent to Hawaiians or rich Americans who will likely be unaffected by the downturn because rich Americans are very smart people who know how to protect their assets.

I do agree that Jim has a bad track record so perhaps that was a bad example. What is relevant is how the USA handle the debt. Do you really think the Republicans and the Democrats will agree on addressing this issue? Most likely outcome: Nothing is going to happen.

I have been in the stock market long enough to know that foreign investors buy US stocks because it is currently a good investment. However, once they lose confidence in the USA, they will pull out in a heartbeat. Foreign investors do not use a buy and hold strategy. If they believe another country's stock such as China, Germany or Brazil will have better return than the USA, you will see a drop in the US stock market.

Does the USA have the ability to pay off the debt simply using US dollars? I disagree with your point because if they do that...how would foreign investors will think about their US treasury bonds which are now balancing the books and funding the US debt? Hint: They probably will sell all of it and the foreign exchange rate will be terrible for the USA.

You also appear to believe the US dollar is "invincible" but the US dollar is only as good as the perceived value behind it. The US dollar was #1 for the last 40 years because the USA has the #1 economy in the last 40 years. However, this may be changing. This is why there are some countries are thinking about using the Chinese Yuan as the new world currency because the USA is heavily in debt.

All of this is my opinion. This is why my portfolio is now 25% stock, 25% short term bonds and the rest in cash and/or real estate...if I can find a good fee simple property to buy in Hawaii next month. At my age, I need to enjoy my life. There is less joy in a large number in my portfolio and more joy having property in Hawaii that I can either rent or live in.

 

[Animorph]

If I was really worried about the U.S. debt I wouldn't be in U.S. dollars for sure. One of the big hazards of all cash (of the same country). Real estate might do better, but who knows. At least you'd have a place to stay. Off the top of my head foreign stocks and bonds might be nice, though already part of my AA.

 

[timbervest]

+1

Here are Jim Roger's "predictions" :

2011: 100% Chance of Crisis, Worse Than 2008: Jim Rogers
https://www.cnbc.com/id/45219555


2012: Jim Rogers: It’s Going To Get Really “Bad After The Next Election”
https://moneymorning.com/ob/jim-rogers-its-going-to-get-really-bad-after-the-next-election-2/

2013: Jim Rogers Warns: “You Better Run for the Hills!”
https://www.cnbc.com/id/100600824


2014: JIM ROGERS – Sell Everything & Run For Your Lives
https://www.cnbc.com/id/100600824


2015: Jim Rogers: “We’re Overdue” for a Stock Market Crash
https://www.profitconfidential.com/stock-market/jim-rogers-were-overdue-for-a-stock-market-crash/

2016: $68 TRILLION “BIBLICAL CRASH” Dead Ahead? Jim Rogers Issues a DIRE WARNING
https://www.silverdoctors.com/headl...m-rogers-predicts-68-trillion-biblical-crash/

2017: THE BOTTOM LINE: Legendary investor Jim Rogers expects the worst crash in our lifetime
https://www.businessinsider.com/the...worst-crash-our-lifetime-henry-blodget-2017-6

Even weather forecasters get it right sometimes - Jim Rogers, not so much.
But even a stopped clock is right twice a day, and when the next recession hits, Jim will say "I told you so" - conveniently forgetting he was wrong every other time.

He's STILL at it
Jim Rogers warns of severe economic downturn and forecasts grim future for Japan

https://www.japantimes.co.jp/news/2...urn-forecasts-grim-future-japan/#.XTEj8PJKi70

 

[2177V]

I'm glad you have the money to spend a month in Hawaii, good for you. I'd rather spend my time on ski's than on a surf board (mostly because I can't surf )

l.

Can't surf?

Here are some free lessons from a surfer dude.....

Photo 1 illustrate a guy on his stomach while surfing because this is the first step in learning. The guy standing up is wearing a European life jacket because surfers must look "cool". Note how small and gentle the waves are in Waikiki so a wipeout is no big deal. Waikiki is famous for beginners.

Photo 2 illustrate the second step by surfing on your hands and knees. Note the open smile on the girl when she does this.

The final step is to stand up, If you do, you will be a "surfer for life". Surfers will always remember the very first time they stood up. It like being re-borned.

Photo 3 illustrates a european life jacket which looks like a tanktop. No surfer wear a USCG approved life jacket because it looks like you are on the titanic. A European life jacket is classified as a floatation device and not a life jacket but you can can kick, that is all you need to avoid drowning if you are not a good swimmer.

This is why I am buying property in Hawaii instead of having a large number in my IRA. I know how to live well.

 

[pb4uski]

Jim Rogers has a net worth of $300M. ...

No one was disputing that Jim Rogers was rich. Just because he is rich doesn't make him right.. there are many who are not calling for a perma-bear that are much richer... but that doesn't make them right either.

I agree that the national debt is a concern, but as it is it is less than 6x governmental revenue so it isn't irrepairable but it could get worse if action isn't taken... it just isn't an imminent threat.

 

[NW-Bound]

Ray Dalio of BridgeWater Associates is also concerned about high government debts, liabilities, and actions of central banks in countries around the world and not just the US.

There's a thread here on this forum about Ray's recent writing on this. Basically, Dalio suggested adding gold to one's portfolio.

For what it's worth, Dalio's net worth is $18.7 billion.