Vanguard Windsor (Freaking out)

[arttillygirl]

I am 45 and watching half of our IRA tank. Do I dump it at it's lowest and go to Vanguard Star or something? It is so full of finance, Gm, etc that I don't know if I need to cut my losses.
Help.....

 

[Rambler]

Stay the course, it will come back, eventually, but what do I know. Just don't sell low and buy high...If you have cash to add...psssst Wellesley. That's where I am headed next, after adding more to BAC.

R

 

[W2R]

I have a little bit of Windsor, also, that I bought with my Roth IRA 2006 contribution. That little bit is getting littler every day! It has lost over 38% since November, 2006 when I bought it.

I can't bear to sell it at these awful prices. So, there it sits. The Amazing Shrinking Fund.

I agree with Rambler - - selling right now is probably not very advisable. On the other hand, I do expect that it will take a long time to recover. But then, what do I know? Very little. I do know that I won't need to get into it for 20 years or more.

 

[al_bundy]

back around 1990 the financials also had a nice crash and it took that sector a few years to recover after the general market recovered. this is normal. a lot of these businesses are run with too much risk and leverage. once every ten years things go bad and these guys either go belly up or sell for pennies on the dollar to the conservative companies like Bank of America.

if you go back 20 years and look up the 10 largest banks or financial companies, most of them aren't around anymore

 

[Rich_by_the_Bay]

I am 45 and watching half of our IRA tank. Do I dump it at it's lowest and go to Vanguard Star or something? It is so full of finance, Gm, etc that I don't know if I need to cut my losses.
Help.....

Do a little reading of the books recommended in the FAQs. The whole point about asset allocation is that some things are winners and some are losers, constantly changing over time. Diversification allows you to smooth this out since they kind of average out.

In tough times like this your balances will be down because virtuallyl everything is down. As long as you are getting your "fair share" of the market there is little more to do.

If all you owned was GM, for example, then you should be freaked out. Otherwise, just be patient.

 

[FIREd]

It looks like many dividend-paying, value funds in general (including Windsor) have been clobbered since last year. I have read that there might be 2 reasons for that: 1) value funds typically invest in financials and "mature" industries that have been hurt either by the credit crisis or by the boom in oil prices. 2) People are selling them in advance of the Presidential election (people expect Obama to win and since he is proposing to increase the tax rate on dividends, people are moving away from dividend-paying funds). Don't shoot the messenger, I am just paraphrasing what I read in the press.

(FYI: The latter argument was used to explain why DVY was down much more than the overall market since early June)

 

[RonBoyd]

“Some investments do have higher expected returns than others. Which ones? Well, by and large they’re the ones that will do the worst in bad times.”

William F. Sharpe Nobel Laureate in Economics, 1990, Stanford Professor of Economics, as quoted in Money Magazine’s July, 2007 issue

 

[laurence]

I own Vanguard Value Index Fund in the form of VTV ETF, and it's been clobbered lately as well. Just keep reinvesting those dividends, this too shall pass.

 

[mickeyd]

Hey ag,
Welcome here.

I don't know if I need to cut my losses.

Don't lose sleep over it and continue to fund your IRA. Unless you are going to retire soon, think of it as a long term deal. If you have the proper asset allocation, you should be able to get through this little rough patch and you will be better for having gone through it W/O panicking.