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The economy seems to be slowly healing and the stock market has been recovering well for the past year. Sooner or later those trends will come to an end. For the stock market that could be another year or two from now. Or there could be some other economic or political crisis that could end the recovery prematurely. When the positive trend ends, where should we put some of our money that is currently in stocks? Does it make sense to do a transfer to individual bonds or bond funds or do we go ultraconservative with bank accounts, money markets, CDs, or money in the mattress? If we do continue to see a recovery for another couple of years, we can expect many investors to move out of bonds and cash back into the stock market. Is that going to make bonds a better choice that we see at this time?
The economy seems to be slowly healing and the stock market has been recovering well for the past year. Sooner or later those trends will come to an end. For the stock market that could be another year or two from now. Or there could be some other economic or political crisis that could end the recovery prematurely. When the positive trend ends, where should we put some of our money that is currently in stocks? Does it make sense to do a transfer to individual bonds or bond funds or do we go ultraconservative with bank accounts, money markets, CDs, or money in the mattress? If we do continue to see a recovery for another couple of years, we can expect many investors to move out of bonds and cash back into the stock market. Is that going to make bonds a better choice that we see at this time?
Aghhh if anyone knew the answers to your good questions they wouldn't be posting them here for FREE but consulting with a high FEE. The biggest problem one MIGHT say is the herd mentality and the resulting bubble created as a result. It would seem that the problem of modern day investing is to much money chasing to few instruments and to many folks landing in the wrong one at the wrong time if that makes sense.
i actually had a money market break the buck..... its a year later and i still have money not released to us... i did get most of it out after the courts froze it and then controlled the dispersments but there is still a few bucks i may never see.
who ever thought a money market would go bust. plus the money frozen for months. thankfully it wasnt a core account for paying bills. thats why i only will use money markets by the biggest families like fidelity or vanguard etc from now on ...
Great post and info for folks to be aware of can happen. Thanks for sharing. I think this has become a great thread and people are getting a few heads up. I am moving minimal amounts of money into Fidelity Japan Small Company and Fidelity Leveraged Company Stock funds. I have had great/phenomenal success with them in the past before they crashed. What went up big went down big. I got in and out of Japan perfectly, Leverage not as smooth a landing. Decent but not as smooth. Japan back in the late 90"s doubled for me in a little over a year. I see possibilities again and they have started performing well and may be well suited for this market. Leveraged went from a Morningstar 4 0r 5 rated fund to a 2. Which shows you how things can change.
Here I am trying to understand where to move my money when the next financial crisis occurs and you are looking at high risk, small company Japanese stuff.
Here I am trying to understand where to move my money when the next financial crisis occurs and you are looking at high risk, small company Japanese stuff.
Will the next meltdown be global or local? Spread across all sectors are sector specific. How much do you make before the meltdown? Folks need to remember much of what they made prior to the bubble was asset inflation so when they lost part of it ok you wouldn't have made it without the bubble. I sold my house at 95% peak bubble and understand that what would sell for now is closer to the realistic price without the artificial inflation of cheap money and risky loans. I told my wife in late 2007 to be ready for a 20% bear correction and when it hit 20% didn't bash an eyelash. Now when it hit 25% and kept going that was another story. That being said be ready for a bear correction and keep your bucket one as just that( very low volatility with low return and risk). Japan and leveraged are part of my bucket 3. We are posting about different buckets at different times as Mathjk talks about. I like multiple funds more so than the average person would or should. Remember a 20% would take the market down to about 8800 are you diversified for that possibility? Bear markets are inevitable and your bucket one should be relatively immune against. Remember we can't time the market and we don't know how high the SP will go before it corrects.
Here I am trying to understand where to move my money when the next financial crisis occurs and you are looking at high risk, small company Japanese stuff.
This is an equity fund that is most definitely NOT an investment for a bear market. The Fidelity Dividend Growth Fund took a terrible hit last year.
If you want to make money in a bear market fund, you might want to evaluate some of the ones out there. Only question is what happens to your money in a bear fund during a bull market? How much Dividend Growth come back and does the price share count dividends paid during the town turn if any were paid? That's why the basket strategy. You can put your short term money in basket one with safe investments at a risk level you are comfortable with weighing the return. Baskets two and three can ride out the bear market.
If you want to make money in a bear market fund, you might want to evaluate some of the ones out there. Only question is what happens to your money in a bear fund during a bull market? How much Dividend Growth come back and does the price share count dividends paid during the town turn if any were paid? That's why the basket strategy. You can put your short term money in basket one with safe investments at a risk level you are comfortable with weighing the return. Baskets two and three can ride out the bear market.
If you don't have anyone to leave your estate to, is there any age or proximity to death, that buckets #2 & #3 should all become bucket#1?
If you don't have anyone to leave your estate to, is there any age or proximity to death, that buckets #2 & #3 should all become bucket#1?
That is a great question and one that has been touched on in previous threads. Eventually your time horizon compresses. Many financial experts tell you to plan until 94 however if you live beyond that what quality of life do you want if you still have your health. I will let Mathjk respond to you with his thoughts. Mine are based on my situation which is probably a lot different.
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