RE: Here's hoping you didn't miss the bottom of the market...

Flagpole, your long-term advice is good, but I think you're taking a general/long-term rule and applying it to an outlier situation. Your advice is akin to saying it is always a good time to buy a house. There is a difference between timing the markets and recognizing and making a risk adjusted decision. The first, I agree is almost impossible. The second, I think you discount too much. By not giving any credence to the second, it seems to suggest there truly aren't people that understand the economy better than others.

As an example, I have a good friend that is by far the smartest guy I know. He laid the very issues we're dealing with out at least as far back as early 2007. I am not saying he can time the market (and in fact he lost some money in short positions that he bailed on too soon), but the market did eventually catch up. I listened to his advice and he convinced me whatever the market did the risk was too high for my preference. I remain about 25% in the market in my 401k, but the rest is in the safest (and I'm hoping that is actually safe) option available. My 401k was down 2.8% last year and is down 3.6% through Friday. I know you'll say that was just luck, but to me there is a place for risk management even in a 401k or other long-term account. Your advice is spot on 99% of the time, but we are/have been dealing with a 1% scenario the past 18 months or so.

Just curious. How many people reading this thread have lost more money in the market since October than they have made working? Is it that bad yet?

The Dow has been as low as 6871 today and we still haven't hit bottom.

There are a lot of economic announcements due this week and Bernanke faces a Senate panel tomorrow.

young and not ready to invest wrote:

Just curious. How many people reading this thread have lost more money in the market since October than they have made working? Is it that bad yet?

I haven't lost anything because I haven't sold anything. I'm not going to retire for AT LEAST 30 more years, so I don't really care what my retirement accounts do this year...or even this decade.

By the way, if you're young and not investing (especially as cheap as so many securities are right now), you're missing out on the opportunity of a lifetime.

Any young person who isn't investing is a fool, regardless of what the markets are doing. This is because of one simple thing...compounding. Every year you wait to start, you're foregoing finance's most significant mathematical advantage.

funny! wrote:

I do find it funny that, so often, when Flagpole is in the middle of another one of his ego-driven, self righteous rants, someone so often reminds him of this little gem.

I find the redudancy of your redundancy funny.

How soon until the Dow hits zero?

I came across this. It's interesting to see what stocks Buffett owns and what positions he has recently added.

http://warren-buffett-portfolio.com/

I posted this in its own thread, if you would like to ask me a question go ahead. But I recommend all investors on Letsrun leave the market for now, and return in April. This is not the time to buy and Hold, this is the time to get out of the market and come back in at a lower price a month from now.

.......

Dear all Letsrunners, as you know I have made several financial calls over the past 20 months or so and many of them have come to pass. Every month I will compose a thread for that month giving you a financial map so to speak so you can chart your own way out of the current predicament this country, and the world economy are facing. If you want to as me a question, ask me on the thread.

In the coming weeks there will be several major news stories that break concerning several different industries. Recently the Federal Government moved more Gold to Fort Knox for safe keeping. This is being done for several reasons; a large unknown entity is rumored to have purchased fake Gold Bullion from an Asian source. The same Asian source was believed responsible for the Kenyan Gold scandal a few months back in which Kenya unknowingly purchased impure Gold. This same source was never publicly identified, but it is believed to originate from China. Many major funds and businesses, and individuals have purchased gold since from this same source. This is only a rumor, but it is likely that the fake gold scare will become more prominent soon.

In addition, experts have predicted a major bank failure. As you know many of our nation's largest banks are underwater on many different assets, loans, and obligations. It is uncertain which large bank will go under, but it will be massive in scale. There are simply too many bad assets, and not enough government relief.

Good luck Letsrunners.

fisky wrote:

I came across this. It's interesting to see what stocks Buffett owns and what positions he has recently added.

http://warren-buffett-portfolio.com/

Warren Buffet lost more money last year than he ever has. His stewardship in this crisis is poor, he doesn't understand the nature of this financial situation and what it will do to the rest of the worldwide economy.

He also said the economy will be in shambles for the rest of 2009 and probably long after. If you are going to quote him, quote him right:

Hypothetical:

If Bank of America failed, and you had one of their credit cards, who would you have to payoff? Federal govt.? another abnk that bought them out? If they completely went under and didn't have a buyer, to whom would you owe the debt?

also does anyone else think internet chats about the financial situation are perpetuating the bad times: ie fear begets fear?

Here's an interesting piece on Buffett. As I suggested previously, people confused Buffett's brain with a bull market.

http://globaleconomicanalysis.blogspot.com/2009/03/warren-buffett-loses-his-way.html

also young wrote:

I haven't lost anything because I haven't sold anything. I'm not going to retire for AT LEAST 30 more years, so I don't really care what my retirement accounts do this year...or even this decade.

By the way, if you're young and not investing (especially as cheap as so many securities are right now), you're missing out on the opportunity of a lifetime.

This is correct...on all fronts. Nice post there "also young".

uh huh wrote:

Hypothetical:

If Bank of America failed, and you had one of their credit cards, who would you have to payoff?

The holder of the note.

A bump in case you missed it.

Sagarin wrote:

Here's an interesting piece on Buffett. As I suggested previously, people confused Buffett's brain with a bull market.

http://globaleconomicanalysis.blogspot.com/2009/03/warren-buffett-loses-his-way.html

uh huh wrote:

Hypothetical:

If Bank of America failed, and you had one of their credit cards, who would you have to payoff? Federal govt.? another abnk that bought them out? If they completely went under and didn't have a buyer, to whom would you owe the debt?

also does anyone else think internet chats about the financial situation are perpetuating the bad times: ie fear begets fear?

Typically, the Government has a "buyer" who takes over the bank. Take a recent example: On September 25, 2008, the United States Office of Thrift Supervision (OTS) seized Washington Mutual Bank from Washington Mutual, Inc. and placed it into the receivership of the Federal Deposit Insurance Corporation (FDIC). The OTS took the action due to the withdrawal of $16.4 billion in deposits, during a 10-day bank run (amounting to 9% of the deposits it had held on June 30, 2008).[7] The FDIC sold the banking subsidiaries (minus unsecured debt or equity claims) to JPMorgan Chase for $1.9 billion, which re-opened the bank the next day."

Yes, you are still responsible for paying off the CC.

More importantly, there are major problems with the world and US economy. Message board discussion won't be material when our own can't "jawbone" the markets to back.

Uh, if BAC failed all hell would break lose.

There are huge numbers of BAC bank accounts, if there were to be some sort of bankrun at those, it would be...

I don't know how to describe it, but you don't want to see it.

Canspo,

You are correct I will say that your small loss in stocks was luck...because it was. Sure you decided to move things around, but you got lucky with the timing. In 2005 my uncle wrote a book about the second depression coming in...2007. So, what did he do? He took all his money in stocks and put them in safe vehicles...in 2005. Well, he lost out on the run up from then until October 2007, and that was a HUGE run up. How much in dividends did you earn during that time? Not as much as I did. How many shares have you snatched up during that time? Not as many as I have. The immediate future for stocks doesn't interest me this far away. You still now have to guess correctly on when to get back in the market. When are you going to do that? I'm sure you'll tell us a couple years after the fact that you got back in at the right time. Well, good for you...really. If you are good enough to do that, then more power to you. I fully admit that I can not do that; not sure why I get labeled as arrogant when so many of you all seem to know when to get in and out of the market even though expert after expert says you can't accurately predict this. I also find it funny how so many of you are quick to call Warren Buffett lucky or just that he's a product of a bull market. That is complete BS. He's been the head of his company for 44 years! He's the best investor historically ever, and yet some of you have the gall to rip on him because he had a bad year?! EVERYONE had a bad year.

You say my advice is correct 99% of the time but that right now (during the 1% time) it is incorrect. What exactly is incorrect about my advice right now? You want people to sell all their stock NOW? That would be against my advice. Ok then. Go sell your stock and GUARANTEE a loss...that's what you do if you sell now. Sorry brother, but that would be the wrong thing to do.

I do find it funny too how so many of you are so worried about the losses you've incurred (oh no, and few thousand dollars for most of you...big deal). If you are doing the things you SHOULD be doing in the ORDER that you should be doing them in, then you wouldn't be worried.

1) Debt free but for a house?

2) 3-6 month emergency fund in a liquid account?

3) 15%+ going to retirement accounts (401k, Roth IRA and equivalents).

4) Educated so that you are employable or skilled enough to do your own thing?

Statistically people who invest in the stock market...still have debt other than mortgage debt (when they shouldn't)...they invest in individual stocks when they shouldn't (you should own your house outright first with no other debt and then also have the 15% going to retirement accounts before dabbling in individual stocks), they chase market peaks and valleys hoping for a big score, and they own either too few stocks (NEVER less than 5) or don't spend enough time on each one (one hour a week per stock in research) or they have too much in a specific sector (should have no more than 20% in any one sector).

IF you are 10+ years away from retirement and are putting 15%+ in retirement accounts, don't have any debt except for a mortgage that is no more than 25% of your take home pay, then you shouldn't give a crap about a falling market. I have more disposable income today and even less debt (because I've continued to pay down on my house) than I did in October 2007, and even a bigger emergency fund, because I upped it a couple months to be prudent. That's where others should be -- you'd all sleep a lot better.

Sagarin wrote:

A bump in case you missed it.

Sagarin wrote:

Here's an interesting piece on Buffett. As I suggested previously, people confused Buffett's brain with a bull market.

http://globaleconomicanalysis.blogspot.com/2009/03/warren-buffett-loses-his-way.html

We got it Sagarin. Dude, people incorrectly label me as being arrogant when they really should be looking at you. Man, you and Peeps know better than Warren Buffett. That's OUTSTANDING! How do you get that inflated head of yours through the doorway each day? Honestly...think about what it is you're saying. You know better than Buffett. Must suck then to know that you could have formed a company worth billions and become one of the wealthiest people on the planet...if only you had applied your knowledge! Holy Crap! The arrogance you are displaying right now is unbelievable.