#MGoMoney: The Market & Your 401K/Investments

Submitted by UMProud on

The Bear has is awake it seems and he is pissed off.

Are you worried about your investments, not worried at all, have already cashed out, or happy that you can buy more at lower prices?  Are you retired, close to retirement or a few years/decades away?  What kinds of funds do you own in your 401k?

 

MGoBoard
Other
401k

M-Dog

February 9th, 2018 at 6:02 PM ^

I posted this in one of the other threads:

The correction is a good thing. 

Prevents a future bubble crash which is painful as hell.

It's necessary medicine that we need to take.

Some perspective . . . I've lost half my money in the stock market twice since 2000, in the span of only eight years. 

Yet I've tripled my money since then.

Markets go up and down . . . on their way to going up over the long term.

Joined: 07/06/2008

MGoPoints: 257385

uminks

February 10th, 2018 at 2:54 AM ^

instead of an investor you would have tripled double the amount you had after the 2008 crash. There are a lot of chart statistics you can use to keep out of bear markets. Odds are we will have a big bear market crash in the next 5 years. I use to be an investor until the tech bubble and the 2001-2002 bear market. I got out before the 2008 bear market. I got out after this market crossed the 50 dma using a 3 month time frame. Since I'm only 10 years away from retirement, I need to stay out of bear markets because I may not have the time to recover.

Joined: 11/10/2009

MGoPoints: 32040

M-Dog

February 10th, 2018 at 3:36 AM ^

As a "trader" you have to be right twice:  When to get out, and when to get back in.

Every gambler, er trader, will brag about that time he got it right and made a big score.  But he won't tell you about all those times he didn't.

I know, I used to be one of those guys. 

I have some glorious stories.  Like MicroStrategy at $16 that went to $660 split adjusted in 15 months. 

But there were also a lot of losers and slow bleeders.  Like Homestore.  Like Lucent.  I didn't like to think about those. 

Now, I don't guess.  I dollar cost average a diversified portfolio of no load index funds, and I stay in.  I have no idea when the market is going to go up or down on any given day, nor do I care.

The most amazing investment statistic I ever heard is this one:

Since 1980, if you missed just the 10 best trading days, you only made half as much return as you would have if you did not miss those trading days. 

There have been around 10,000 trading days since 1980.  If you missed just the 10 best ones, you lost half your potential return.

Wow.

If you missed the 30 best days, you only made 20% as much.  You missed 80% of your potential return.  By missing just 30 days out of 10,000.

Moral of the story:  It's more important to be in the market when it goes up, than it is to be out of it when it goes down.

 

Joined: 07/06/2008

MGoPoints: 257385

BlueMan80

February 9th, 2018 at 6:04 PM ^

And have been shifting assets from stocks to bonds for the last 20 years. I’ll offer one piece of advice that worked well for me: periodically lock in your gains. My company’s stock split twice in the 90s. Each time I took the value of the split and shifted that to bonds. I’d pay attention to the market cycle and as highs were reached, I’d take previous gains across my portfolio and shifted them to bonds. My 401k plan offered a reasonable bond option. Above all, stay diversified. Small cap, large cap, value stocks and global with U.S. and foreign funds. Index funds are good. While I had invested in company stock, it was not the dominant share in my portfolio. When the market crashed in 2008, it was bad news, but I faired much better than most. When the market recovered, I was back to even in just over a year because I as holding a significant share of bonds. When I left a company, I rolled my 401k over with an investment manager I chose many years ago. Don’t leave your money in a 401k when an investment manager can get you into a significantly broader set of investments.

Joined: 01/21/2011

MGoPoints: 13097

Der Alte

February 9th, 2018 at 6:06 PM ^

Some 401(k) funds were pushing 10% over where they were supposed to be. This is a textbook correction. Economy is strong, earnings are strong, Apple has enough cash on hand to buy half the world and will use it to buy back shares. Market will straighten itself out and we should be back in good shape by March -April, just in time for the spring game. Go Blue!

Joined: 07/30/2010

MGoPoints: 1925

BlueWon

February 9th, 2018 at 6:53 PM ^

and lookng to open some call ratio backspreads on some beaten down sectors Monday if the volatility ETN's are stable.

Will probably hedge those trades with put ratio backspreads on the S&P.

Joined: 04/10/2015

MGoPoints: 3940

Blueblood80

February 9th, 2018 at 7:29 PM ^

Bitcoin is what all the young fellas are doing. You can get rich over night. Didn’t you know?! Man, I wish these get rich quick things were around 20 years ago.

Joined: 11/14/2016

MGoPoints: 3269

ska4punkkid

February 9th, 2018 at 9:04 PM ^

Umm no. Who would be attracted to volatility?? They are attracted to the technology and use cases and recognize the massive long-term earning potential of getting in early. As I said I’m describing 80% of the crypto community that actual knows about the space. I assume 20% have come into the space in the last 6 months trying to get lucky and really don’t know much about it. This is why the market goes down but doesn’t get wiped out. The ones who know are holding their ground while the noobs are selling off. I guess we’ll talk more in 2020. We’ll compare the crypto market with the Dow or S&P 500, your choice. Loser buys tickets to an M vs Osu game.

Joined: 07/09/2015

MGoPoints: 11925

Blue4U

February 10th, 2018 at 8:47 AM ^

At first I traded stocks then moved into the Forex market.  Now I trade futures.  I don't envision myself trading cryto's anytime soon.  Big reason why I won't trade them is you can't short them.  My theory is if you can't trade the momentum (both up and down) then it's not for me.  I make more money faster shorting the market than going long.  I actually left my job at the Post Office with 20 years in to do this full time and that was in 2008-2009.  Haven't looked back and don't regret it.  

Joined: 09/13/2011

MGoPoints: 4616

Blue4U

February 10th, 2018 at 3:25 PM ^

Good to go then.  I don't trade crytos so I may be outta the loop on that.  I strictly trade futures so Bitcoin futures offered on CBOE and CME aren't shortable.  I have a friend that trades options and crytos (Bitcoin and ETH) and he's always giving me his shorterm analysis on where they're headed. lol  If you were in on crytos early, hats off to you.  I find it interesting where these are all headed and how this technology is gonna play out.  

Joined: 09/13/2011

MGoPoints: 4616

Blue4U

February 10th, 2018 at 8:16 PM ^

When trading stocks generally one would buy and then sell at a higher price ideally.  When shorting a stock, you sell the stock first then buy it back ideally at a lower price.  During this process your broker credits your account with the sale price of the instrument you're trading and then with that amount you buy it back to close out the trade.  This process is very risky because there is no limit you can lose while shorting.  In other words, shorting can lose you more money than you originally invested in the trade. 

Also, in order for one to short, your broker has to have shares available to loan you.  This is why crytos aren't shortable.  Brokers don't have large pools of say bitcoin on hand to loan you.

Joined: 09/13/2011

MGoPoints: 4616

Arb lover

February 10th, 2018 at 4:42 PM ^

Even if the fundamentals are logically in your favor, shorting hot stocks/investment items is really only a decent move when you are betting on a black swan or other total market changer, as retail investors are very fast to buy even moderate dips on many of these, and retail exuberence can bolster crappy investments well past your guestimated time before crash. 

Joined: 11/26/2017

MGoPoints: 6915

Blue4U

February 10th, 2018 at 6:51 PM ^

You're coming at this from an investor's point of view.   Daytrading and investing are 2 entirely different beasts.  I'm in trades anywhere from 1 to 5 minutes so I strictly play the momentum moves.  I understand your sentiment as an investor but daytraders and scalpers make a living off shorting the market every day.

Let me also add that if one is gonna trade for a living (mind you I didn't say invest) then that person needs to be able to be productive in a down market and most importantly, be flexible.  Shorting is just another way to make money in the markets.  It's been my experience most retail investors do not understand the concept of shorting so they simply dismiss it as too risky.  Which is fine with me because while they"re losing money in a move down, I'm profiting from it.

Also, I fully understand buying the dips.  In a traders world it's called pullbacks and retracements.  Moving averages, pivot points and Fibonacci numbers are just a few of the many tools traders use to find these levels.  Most retail investors couldn't even tell you what Fibs or pivots are or how to use them.

Joined: 09/13/2011

MGoPoints: 4616

Arb lover

February 11th, 2018 at 11:09 AM ^

If you are playing momentum only and in it for movement over a few minute, you do more than just day trade. It's more common to hear people talk about shorting when say they are buying puts over a week or few months, and trying to sell once a dip happens, so I apologize for giving you basic advice that you are well aware doesn't apply.

Joined: 11/26/2017

MGoPoints: 6915

Indy Pete - Go Blue

February 9th, 2018 at 7:56 PM ^

I am in 401(k), 457(b), 529, and 'backdoor' Roth IRA.  Also, for the motivated and active investor, tax-loss harvesting can help the bottom line as well.  The Roth IRA is amazing b/c it grows tax free, forever, as long as you do not withdraw until your late fifties.  If you are not allowed to do Roth IRA due to income, you may legally do a traditional IRA for you and your spouse, and then convert to Roth the same calendar year (a.k.a. backdoor Roth IRA).  There is a somewhat famous financial guru who loves to say, "Roth IRAs are better than sex". 

Taxes are still relatively low compared to historical levels (i.e. 50s through 80s).  Taxes are, unfortunately, likely to go up in the next 10-30 years given historical norms and increasing debt levels.  Anyways, it sounds like we have some well-versed and savvy investors on this blog; no suprise at all!

Joined: 01/23/2018

MGoPoints: 156847

socalwolverine1

February 9th, 2018 at 11:14 PM ^

The economy is strong, but the market is extremely volatile, and cryptocurrencies are in a category that is beyond volatile, not sure a word has been 'coined' for it yet. 

I'm someone who absolutely hates having to micro-manage retirement funds, so now that I'm ten months away from retirement I'm very happy to report that my wife and I are grandfathered-in to old fashioned pensions + social security + our retirement funds (401K, 403B) + 35 years of CA home equity...we'll be fine, but if everything goes to shit we'll move in with one of our adult kids!

Joined: 10/08/2012

MGoPoints: 1235

Cali Citrus Man

February 9th, 2018 at 8:36 PM ^

I knew when deep state crimes got exposed last Friday that they would exact revenge.  They don't like their corruption in public view.  Lots of people unfortunately saw this coming.

Joined: 09/23/2017

MGoPoints: 2852

KC Wolve

February 9th, 2018 at 8:41 PM ^

I’m 39 and while it sucks to see the amount go down, in the end I am just buying at a lower cost basis. Now, for those stocks I own outside of my retirement accounts!!!!!!!

Joined: 10/09/2010

MGoPoints: 12674

jimt1023

February 9th, 2018 at 8:53 PM ^

Far enough away from retirement that I view this as a chance to buy cheap.

Concerned for my father who is struggling to care for my mom with Alzheimer’s. Luckily he’s got my grandmothers house which he can sell if things get really bad.

Joined: 04/14/2010

MGoPoints: 666

DonBrownSoda

February 9th, 2018 at 8:57 PM ^

Lost $27k since Feb 1. But made $18k in Jan. But it’s all retirement so in it for the long haul. This correction was expected and necessary. Hopefully holds inflation and rates at bay. Those are much bigger issues than a correction.

Joined: 09/13/2017

MGoPoints: 1279

Sopwith

February 9th, 2018 at 9:48 PM ^

I have a plan to induce some old guys buy heavily in advance of the Agriculture Dept's citrus report, short the contracts as the price gets pumped up, and then cash in when the report hits showing minimal damage to this year's crop from the cold winter, thus causing prices to plummet. 

Looking good, Billy Ray. Feeling good, Louis.

Joined: 06/29/2010

MGoPoints: 61039