401K's a sinking ship? Options Anyone?

[smfcpacfp]

If I were still working I would definitely be maxing out my 401(k). If you are still fearful of investing in the stock market, then choose a money market option for a while.

However the best time to buy stocks is when all of the suckers are selling, usually near the market bottom. This is really the time to buy, not sell.

 

[smfcpacfp]

Two things to think about. If you retirement account looses 50% of its value, it must go up 100% to return to its pre-loss level. During the first Depression, the folks who did not sell their stocks had to wait until approx. 1954 until they regained their pre-Depression value. Of course, things cost more in 1954 than they did in 1929, so they were technically still at a loss.

If your accounts are down, at this point the only practical thing to do is hold on and wait, selling at a loss is just about the worst thing you can do unless you are reasonably sure your accounts are heading lower.

In January 1999 General Motors (GM) was valued at $87.00 per share of common stock, opening price this morning is $1.77 and I believe it will eventually go to $0.00. All common stock shareholder equity will be wiped out. So what do you do if you are holding GM? Take your $1.77 and run, hold on and hope it regains value or potentially watch it go to zero.

If you had an extra $10K in cash would you gamble on 5649.71 shares of GM?

We are in a worldwide economic crisis that is unprecedented. There are so many factors that are screwed both here and abroad that there is no way to predict what is going to happen and every attempt to "fix" something sends waves throughout the economy.

We (The United States) are bankrupt and continue to borrow, spend and print with abandon. Hopefully, through the grace of God, we will be able to claw our way back but it is going to be difficult and by no means certain.

Dave

When I read something like this I just shake my head. First, countries don't go bankrupt. It is a legal concept that a country creates to provide relief from debt for its citizens and businesses. Countries sometimes repudiate their debt.

The world economic crisis is hardly unprecedented, not even close. Some of the business cycles before the advent of central banks and instantaneous communication make this look like a mild recession.

Still it is always good to have a few doomday believers to entertain you. Do you have your guns loaded and your bomb shelter stocked?

 

[riptides]

Not to get political -

In regards to getting 401k funds, or for some of us 101k funds....

There was talk during the election of getting 10k out without taxes or penalty. Nothing has happened on that effort yet. It is time to call your representatives.

I could us some of my 101k to stimulate the economy. After all I am empowered, right? Or so they say....

I am most interested in getting out of the market and returning my entire portfolio to the old fashion ways of management. Let ME control my retirement funds. if I choose to invest in the market, let ME do it.

 

[QueBota]

Shaking your head is a good thing.

If you don't like the term "bankrupt" there are many others to choose from (Sovereign Default comes to mind). If your personal or business ledger (income vrs. expenditures, assets vrs. liabilities etc) was in the same state as that of the United States your situation would not be good.

I agree there have been many worldwide economic crises, but the creation of CDO's, SIV's, blatant abuse of the securitization of debt and Derivatives would classify the current crisis as unique and severe.

I would not call myself a doomday [sic] believer but I do believe the United States is in a precarious position and will require some thoughtful action and discipline to solve the numerous problems, both current and future, that endanger our fiscal stability.

I don't have a bomb shelter, I do have adequate supplies to see my family through a period of instability and yes I do believe in the Second Amendment.

If you have the time read a document on the Federal Reserve of St. Louis research site "Is the United States Bankrupt?", (http://research.stlouisfed.org/publications/review/06/07/Kotlikoff.pdf ) or read David Walker, the former Comptroller General of the United States, presentation to the Committee on the Budget, House of Representatives - 2007, on the status of the United States current and future fiscal situation (http://www.gao.gov/new.items/d07389t.pdf).

Mr Walker resigned his position, some say to advance his theories and for a bigger paycheck at a private Washington organization (Peter G. Peterson Foundation) , others maintain he resigned because he was personally opposed to the fiscal policies of the United States government. Everybody has an agenda.

Don't think you can do a poll on this site.

How many believe that the Federal Reserve is part of the United States Government?

Prepare for the worst and hope for the best.

Dave
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When I read something like this I just shake my head. First, countries don't go bankrupt. It is a legal concept that a country creates to provide relief from debt for its citizens and businesses. Countries sometimes repudiate their debt.

The world economic crisis is hardly unprecedented, not even close. Some of the business cycles before the advent of central banks and instantaneous communication make this look like a mild recession.

Still it is always good to have a few doomday believers to entertain you. Do you have your guns loaded and your bomb shelter stocked?

 

[kenmac]

If I were still working I would definitely be maxing out my 401(k). If you are still fearful of investing in the stock market, then choose a money market option for a while.

However the best time to buy stocks is when all of the suckers are selling, usually near the market bottom. This is really the time to buy, not sell.

This is the same thing he ( my F.P. says )....Do they teach all of you ( F. P'S) to say the same thing???? Now is the time to BUY,BUY,BUY.... I'm maxed out now....& it's sinking farther & farther behind.... I've got no choice but to stay now

 

[riptides]

...
I agree there have been many worldwide economic crises, but the creation of CDO's, SIV's, blatant abuse of the securitization of debt and Derivatives would classify the current crisis as unique and severe.

Blatant abuse should have been monitored accordingly. In fact in some cases it was. Enforcement of rules, regulations and laws should have been done.

...
I would not call myself a doomday [sic] believer but I do believe the United States is in a precarious position and will require some thoughtful action and discipline to solve the numerous problems, both current and future, that endanger our fiscal stability.

Again, enforcement should have been done. A lot of people dropped the balls or turned blind eyes away from fiscal responsibilities. Where is the accountability?

 

[2manyrocks]

This thread may have some value to maybe help someone figure out how to ride this mess out. Ain't nobody here selling investments I know of. We may look back and say, "I should have bought XXX when it was $2.73/share" but you've got to be in a position to bear the risk of doing that and you have to make some judgment of the risk versus the potential return of that particular investment. It's not an easy task.

Before continuing with the main topic of this thread, I want to turn for a second to something else.

If this thread turns political, Bird will shut it down, and that will be the end of that. I can flatly understand why this is the rule here because we can all find examples in websites elsewhere of all sorts of rude, insulting and bickering partisan posts that aren't constructive for anything and don't help anyone. We all want to avoid that here, and I appreciate so much the very practical and helpful information and advice that all of you contribute here every day on Tractorbynet.com.

When I was an economics major in the 70's, there was an ongoing debate whether John Keynes economic theories actually worked. The former chairman of the economics department told us one day that he taught Keynes theories because he had to. I guess we ended up being a bunch of Milton Friedman money supply students where I went to school because to us, the amount of the money supply at that time clearly affected jobs, interest rates and inflation. The St. Louis branch of the Federal Reserve had done several studies and the statistical analysis all pointed to the money supply as a key factor in economy stability.

In a roundabout manner, I am finally coming to the point that sensible control of the money supply is a cornerstone of economic stability. Summing up one academic quarter's worth of economics in one sentence, the money supply is affected by the deficit as well as the supply of bank credit and policies of the Federal Reserve. If the money supply is too small, it's recessionary. If the money supply is too large, it's inflationary. If it goes too far one way or the other relative to the economic production of the country, it causes economic problems. This is why economists are so very concerned about large deficits.

Having stated the economic theory (that doesn't tell you whether to buy XXX at $2.73 now or not, unfortunately), I probably need to shut up and thank all of you for your patience for putting up with me.

 

[ultrarunner]

I've got no choice but to stay now

I think a lot of us are in the same boat...

 

[dynasim]

2manyrocks

That would be a political post.

Your economics teacher was a simpleton, as were the supply/demand curves taught in Econ 101.

While the concepts taught in that class are important as a building block for understanding the bigger picture, those specific concepts completely ignore the secondary and tertiary causes, effects, and dynamics. People with political agendas will abuse a country that follows such action blindly. A recession is not the worst thing that can happen, and we forgot that.

Systems that maintain control by manipulating money supply cannot be easily fixed when they get severely out of balance.

People have manipulated the money supply to impose their political agendas, name the Chinese, the Europeans, OPEC, George Soros, and our own federal goverment. While it is possible to do what was done in the short run, it is unsustainable. Manipulating money supply may yield temporary prosperity, and is necessary, it cannot be the strategy for long term sustainable prosperity. Systems that motivate the human spirit are the only mechanisms that do that.

Chris

 

[LMTC]

2manyrocks

That would be a political post.

Your economics teacher was a simpleton, as were the supply/demand curves taught in Econ 101.

While the concepts taught in that class are important as a building block for understanding the bigger picture, those specific concepts completely ignore the secondary and tertiary causes, effects, and dynamics. People with political agendas will abuse a country that follows such action blindly. A recession is not the worst thing that can happen, and we forgot that.

Systems that maintain control by manipulating money supply cannot be easily fixed when they get severely out of balance.

People have manipulated the money supply to impose their political agendas, name the Chinese, the Europeans, OPEC, George Soros, and our own federal goverment. While it is possible to do what was done in the short run, it is unsustainable. Manipulating money supply may yield temporary prosperity, and is necessary, it cannot be the strategy for long term sustainable prosperity. Systems that motivate the human spirit are the only mechanisms that do that.

Chris

Ditto. As I understand things (which is somewhat minimally ), the opposite, or at least the alternative, to money supply manipulation is to allow failed/failing businesses to be gobbled up by successful businesses, digested, and their assets then formed into another business, hopefully reflecting the track record of the successful business that ate it rather than the record of the one eaten. This has been artificially prevented by the continued shoring up of failing ventures, and even prior to that was inhibited by the fact that many previously private sector functions were assumed by the public sector, thus often becoming less accountable to any shareholders.

At least that's how I think it works. Like many people, I'm locked into inaction at the moment because I see no better alternatives to staying the course at this point.