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Because of buyers like you, I was able to get out of this declining market and sell off my stocks before this downturn got *really* ugly. It's impossible to sell anything - even stocks - unless someone is out there buying.
My financial advisor has been urging me to buy, buy, BUY, and I'm staying out until my "gut" tells me it's time to get back in.
Paper losses/paper gains are not imagined; they're real. It just means you haven't converted those losses/gains into spendable federal reserve notes YET. Feels a lot like cashing in your poker chips to me.
Excellent post. It's long past time to hedge your holdings, to be conservative, to 'take chips off the table'. The trend is clearly down at present. After a massive run up over the past two years, and actually over the past 10 years since Feb 2009 -- there's plenty of reason to think we have further to fall.
I'm 50% in cash. I'm not running from all stocks -- utilities should be pretty rock solid - but you are on the right track RosemaryT.
“Paper” losses are real losses. All you have to do is look at U.S GAAP to see that.
Investable Asset values moving up or down aren’t adjusted for in the current year P&L with a gain/loss, but they do run through “other comprehensive income” (OCI). In other words, it’s a below “the line” Adjustment that still effects your equity on the balance sheet.
The losses still happened in the real world whether realized or unrealized. Recognition...or recording the gain/loss is based on your intent. But your intent to hold or sell doesn’t change what happened in the real world. Your net worth still changed. You could theoretically never recover that money. Say for example...you held 100k of JCP stock when it was $97 a share. You might be waiting a long time for those “paper losses” to go away.
And yes, my 3 retirement accounts are down 5 to 15 percent overall. It’s very disheartening to me because it’s not like I’m giving up years of gains. This is my baseline capital that I contributed. It sucks watching 3k vaporize when I watch our money so closely with couponing or credit card rewards.
But...as Mathjak has pointed out before, it doesn’t get easier when you’re older and start seeing multiple years of max contribution limits vaporize.
Excellent post. It's long past time to hedge your holdings, to be conservative, to 'take chips off the table'. The trend is clearly down at present. After a massive run up over the past two years, and actually over the past 10 years since Feb 2009 -- there's plenty of reason to think we have further to fall.
I'm 50% in cash. I'm not running from all stocks -- utilities should be pretty rock solid - but you are on the right track RosemaryT.
Thanks so much, BeerGeek. Thank YOU. My late husband left me with a financial mess and I'm trying to make a whole lot of tough decisions with very little background in the stock market. (My background is in real estate.)
I've got some invested in Dominion Resources right now, and it's done well for me. I'm holding onto that and some Amazon and a few other small bits. I am so grateful that I took the big money out of the other stuff.
And yes, my 3 retirement accounts are down 5 to 15 percent overall. It’s very disheartening to me because it’s not like I’m giving up years of gains. This is my baseline capital that I contributed. It sucks watching 3k vaporize when I watch our money so closely with couponing or credit card rewards.
But...as Mathjak has pointed out before, it doesn’t get easier when you’re older and start seeing multiple years of max contribution limits vaporize.
Yup. I'm a widow living on a very, very modest income and I scrimp and save and sell stuff on eBay and rent a room in my home. I'm so grateful that I sold when I did. You summed it up beautifully. It's painful to save a buck here and there, and then see thousands go "poof" in a stock market.
Thanks so much, BeerGeek. Thank YOU. My late husband left me with a financial mess and I'm trying to make a whole lot of tough decisions with very little background in the stock market. (My background is in real estate.)
I've got some invested in Dominion Resources right now, and it's done well for me. I'm holding onto that and some Amazon and a few other small bits. I am so grateful that I took the big money out of the other stuff.
Thanks again for your kind words.
my wife was a widow prior to our marriage .
she learned the hard way about taking on individual company risk vs broad based funds when she bumped in to 2000 and was crushed . not knowing much she trusted the broker at her bank to tell her what to do . he put her in individual stocks which never came back . the broad based market only runs in cycles and has volatility risk .
i think any individual stocks are a bad idea for a widow . you not only have to deal with market volatility but now you took on a very serious risk which is individual company risk too .
today in retirement broad based funds are the only way we would deploy our portfolio money that generates our income . it is hard enough just dealing with market volatility without adding additional layers of risk by betting on the whims and outcome of individual companies . the time to swing for the fences is before losing the money or guessing wrong does serious damages . .
back in the 1970's con ed our local utility was on the verge of bankruptcy when oil prices sky rocketed .
Last edited by mathjak107; 12-23-2018 at 07:10 AM..
That's the rub. The posters here probably vary widely in age. I'm almost 60, and I don't want to wait 10+ years for this market to rebound. Or 6 years or 20 years. We don't know where this market is going, and I'd rather sit it out, and enjoy the next two decades of my life, rather than stressing out about the stock market.
This is very dangerous thinking. If you have a 20 year time frame history has shown us that stocks far outperform bonds or cash.
Sitting it out because it doesn't "feel good" is a common mistake investors can make in times like this.
i got the impression she was not thinking of returning for decades . so yeah while i agree it is a silly thing to do , she could take a 25% pay cut and do okay with just fixed income .
nothing i would ever recommend to anyone to do but fixed income does have a high success rate at 3% or less .
Yup. I'm a widow living on a very, very modest income and I scrimp and save and sell stuff on eBay and rent a room in my home. I'm so grateful that I sold when I did. You summed it up beautifully. It's painful to save a buck here and there, and then see thousands go "poof" in a stock market.
You can sit comfortably in cash for a year or two, but if you are a bargain hunter you should keep an eye out for the bottom. Just don't be in a hurry to buy back in. There is no way to predict what the market will do. Stocks could continue to slide for two years, or they could turn around tomorrow. There will be momentary blips as speculators cover their short positions and engage in profit taking. A time of great uncertainty like this is not time to buy unless you have money to lose. The big hedge funds make money no matter what the market does, but you have to have a lot of money to even get into the game.
That doesn't mean you shouldn't go shopping. Well established, well managed mutual funds can make money for you, but not while the market is dropping and interest rates are rising.
Shopping for a mutual fund involves getting a prospectus from multiple funds, then reading and comparing carefully. They all have different strategies, and each strategy yields different results, depending on the economy and market conditions. Once you have narrowed the field to half a dozen potential funds, sit and wait until things stabilize. If you buy a mutual fund while stock prices are low, you can be richly rewarded in gains as the market recovers. Being conservative does not mean being a deer in the headlights. Shop for your future. Look at growth funds, value funds, and income funds. Once you have an idea of what things cost and what they return, you will know a bargain when you see it.
That said, if you are 60 you will see at least a couple more downturns like this one. We have had a 10 year uninterrupted run-up in share prices, and it's unlikely you will ever see that again in your lifetime. Even so, a 35% gain in the next 5 years would not be surprising. It would be a shame to leave that on the table.
and you can be sure most of the gains will come in big up days , with most of the juicy gains early on . miss em and you can ruin the whole year . markets really have very very very few influential days . most of the years gains are centered around very few days .
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