Time to get out of the stock market?
I'm not sure this is true. I'm fairly certain a self-employed 401k with Vanguard or Fidelity would allow you to put money into a CD. I don't know about corporate 401ks.
conandrob240 said:
you can’t put 401k $ in CDs though. However for my savings earning less than .5%, I am going to look into these. Thanks for the info!
Laddering CDs does make sense if you want safety and higher-than-money market rates.
Short-term bond funds are another option, but if interest rates rise, the bond funds' price will decrease.
One other note: Ally Bank offers a "no penalty" CD. I don't have one, but I think the way it works is that you're allowed to take the money out at any point without paying a penalty. The downside: The CD rate is somewhat lower than you can get elsewhere. The upside: If rates rise, you can pull the money and reinvest. (Of course, if you can get a money market rate equivalent, makes no sense to bother opening a CD.)
Smedley said:
True on cash. Nobody will get rich on cash returns but they have crept up to pay more than the pittance they were paying for many years.
I've been allocating money into CDs. The yield curve is flat which means you don't get paid much more for longer terms, which is fine with me. Synchrony Bank pays 2% on a 1-year CD, which isn't horrible -- I've been putting 1/12 of my CD allocation into one of those puppies every month, so I'll have 12 one-year CDs when I'm done. I think this is a good plan because it keeps things pretty liquid with maturities every month, and also each new one I start (and later, reinvest) goes in at the current (and generally higher) rate.
unicorn33 said:
I know several people who significantly reduced their holdings when Trump was elected (including one who sold short). Their timing didn't work out very well, to say the least.
There's a reason that index funds generally outperform managed funds over time: even the "experts" can't consistently time the market.
Just as an aside: Cash is not the worst place to be these days. Capital One money fund is paying 1.4%, Vanguard Prime is around 1.25%. Those rates are high enough to question the wisdom of CDs, especially in an interest-rate-rising environment.
Yes, roughly 1% against inflation--but if you have cash you don't want to put at risk, it's an option.
Also, just to be clear, it's not meant as an "investment"; it's simply a storage option for cash that you may need in the short term. It's safe and liquid.
ska said:
At those rates your investment is constantly losing real value.
Not that I have studied the Repub Tax Plan closely, but it will certainly boost corporate valuations, so there's that for at least the next 3 years... More importantly and for the longer term, in theory as a result of the tax plan corporations should have more cash to invest in capital spending making their companies more efficient and boosting long term profits. Companies not using the excess cash to invest internally will have more to dividend to shareholders, in theory.
Hey, the Dow took what, two weeks to go from 25,000 to 26,000. The economy must really be on fire!
Yes, the market has bought into the tax plan in a big way. I'm surprised at its legs, as I had thought it would be a "buy the rumor, sell the news" situation where stocks run up a bit in anticipation of the tax plan but then fall once it's signed. Wrong-o.
In terms of stock market cliches, two come to mind:
"Be fearful when others are greedy and greedy when others are fearful."
"Trees don't grow to the sky."
Of course, we might have considered the same two statements a year ago . . .
conandrob240 said:
Fair enough.
Getting out doesn’t mean that to me though. I certainly intend to get back in. Timing is everything.
Smedley said:
"getting out" to me means selling stocks and not being in the market anymore.
As for my friend -- s&p 500 has about doubled over past 5 years, whereas gold hasn't done much of anything. Given his age and income, i imagine the opportunity cost of his incorrect call is well into six figures.
In general, most people are lousy at timing and do better by staying the course. Of course you could get lucky.
I also tend to follow Burt Malkiel general rule of not trying to time the market spikes & valleys - just buy and hold for the long run.
My favorite investment vehicles are the "Target Year" retirement funds which automatically reallocate toward safer investments the closer it gets to the year of retirement. They are a fairly cheap way of taking the thinking out of managing one's retirement investments...
Two observations.
1) The poster who wrote that there is no single rule governing all investors, was absolutely correct.
2) The stakes may be different, but my rules are the same as those for a gaming table. If I sit down with $1,000.00, and I get to $3,000.00; I play on the last $1,000.00. Lose or draw on that $1,000.00, I really don't care. If I win, well, that's better.
One shouldn't expect "irrational exuberance" to keep driving market returns, any more than the turn of the cards will keep going their way.
Good luck to all in this market (in large part, driven by a man, who few of us like).
TomR
Our advisers who earn more, the more I earn and lose their fee in proportion if we lose have said over and over: Your plan is long term. It factors in good times and bad times... I really came close to pull back last January into some with less risk in the market and they encouraged me to stick tight...
So glad we have and at this point if there is a pull back, I've watched it twice before now grow back way more than what I lost.
If you have advisers, use them.
If you don't consider a fee based adviser not a broker.
This year has been something to behold...
Best Regards,
Ron Carter
@rcarter31-- I agree . . . up to a point. Advisers are not always right. They can provide good information and useful guidance, but the ultimate decisions are those of the investor.
u33, My wife and I discussed it. While we know much about music, phrasing, fundraising and community development, we know nothing about this. I looked for and found people I trust. So glad that wasn't Bernie! Had a friend in the theater who fell prey to him.
Sometimes, you just have to trust.
-Ron
of course, I had lost sight of this and forgot to go rebalance a few weeks ago. And there it all goes. A years worth wiped out.
For what it is worth........Fidelity will spend time with you to determine your risk tolerance
They will then put together a portfolio of mutuals..........including their own as well as many other investment firms........combinations also of cash and bond funds are included
For convenience you can add your own separate purchases..........however the portfolio items they
put together can be bought and sold only by them. As long as you authorize this. Basically a large part of
your holdings are on auto pilot
My favorite reading in Maine is Stephen King and Peter Lynch
So will Schwab. Or an advisor. We've found their fee a totally tolerable amount to justify our trust in their almost daily efforts to keep us in a good place. I would never suggest a "normal" person manage their own investments... A little learnin' is a very dangerous thing...
Waiting to see how far we've fallen tomorrow but after Friday's loss we were only back to where we were on Jan 3, 2018... We'll be farther back this time but just trust that the market is it's own rhythm and not that of the news or talking heads...
-Ron
It's true that the market was overdue for a correction, and this kind of action has to happen from time to time...but the swiftness and severity of this one is unsettling for sure.
My paper net worth was churning higher with the market for a very long time...most days it seemed to increase like $1-$4k...but I looked last night, I'm down $56k from the high last week. Ouch! And there's more to come I'm sure.
That said, no way am I selling into this. I'm not smart (or lucky) enough to know when to get out and when to get back in. I still have a 10-15 year investment horizon in front of me, I'm pretty sure it'll go back up sometime in that time frame.
Jumping in and out of the market is only for fools or those with deep pockets and proprietary trading systems. Keep a long-term strategy and it will be fine.
Eventually even wall street will figure out that the tax plan might have been good for large corporations, but is a disaster for the country. Trump has no trouble spending money and the republicans passed a bill that will increase the debt to new record highs with no end in sight. and the middle class, especially in the blue states will have to cut spending to deal with the large tax increase.
might take till April of 2019 but I think the market will remain unsteady for some time along with more corrections.
And Trump will continue to blame Obama.
And NJ now has governor who has pledged to spend more money and raise taxes.
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you can’t put 401k $ in CDs though. However for my savings earning less than .5%, I am going to look into these. Thanks for the info!