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How many people here have panicked because of the stock market?

post #1 of 18
10/27/08 at 6:00pm
Thread Starter 
I know quite a few here do have employee plans (401K, etc), IRAs or invested in the stock markets. Have many of you made any changes to your plans because of the performances?

I don't know that much about the stock market in general, but I do work for a 401k type plan, and our 3 stock funds offered track the S&P 500, Wilshire 4500, and EAFE index. Needless to say, their returns have been pretty sickening the last 12 months. There is also a guaranteed fund that has no risk of loss, and a bond fund that has little risk and has been doing pretty good lately.

I am amazed at the amount of calls we get from people who have had HUGE losses in the value of their retirement acct because they were in the stock funds, and suddenly want to sell everything and move it all into the secure fund. I'm not allowed to give advice because I'm not a financial advisor, but I try to point out that the "value" of their stocks have dropped but they still have the same number of shares that they had before. Plus, each contribution received is purchasing more shares at cheaper prices so when the market starts to improve they will see a quicker increase in their acct value and it is possible they can make that money up. The only way they definitely "lose" that money is to sell the shares now. They just don't seem to understand that.

I didn't work there until 2005 and had NO interest (or investment) in the stock market before that, but checking the historical returns the stock market took a huge hit in 2000-2002. Did everyone panic this much then too?
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post #2 of 18
10/27/08 at 6:03pm
I was more "gee, look what they've done now" than panicky. I didn't even get around to checking on my 401k till a couple days ago. It is down, but I figure that it will come back up; or not. Life happens
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post #3 of 18
10/27/08 at 6:04pm
I wasn't panicky...I ain't got nothin to loose!!! lol...
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post #4 of 18
10/27/08 at 7:07pm
DH*s 401K took a big hit, though her never had a lot of money in it. He cannot get out of it, unless he quits. He just submitted the paperwork in order to stop contributing to it.

His parents lost far, far more--most of MIL*s 401K. She lost about $50,000 in 1 quarter. They are at retirement age, too--not good. I really worry about them! On top of that, she hasn*t worked in 2 weeks--she is an OB/GYN nurse, and no births are imminent, it seems.


I only lost a few hundred in my deferred compensation program (we do not have a 401K). I wne online the other day, and transferred that 1 mutual fund into something safer.

Despite no paycheck last week for DH, we have been lucky in October, so far. They laid off 2 people at his workplace, but he thinks he will be safe. However, all of this stuff worries me--what is going to happen to the economy in the next few months? Is this a harbinger of something very bad?
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post #5 of 18
10/27/08 at 8:03pm
Since I have a long way to go until I'll retire, I'm not that worried about. Being a federal employee we can participate in the Thrift Savings Program. There are a number of funds you can put your money in to. I moved all of mine to the G fund, since it's the lowest risk.

http://en.wikipedia.org/wiki/Thrift_Savings_Plan
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post #6 of 18
10/27/08 at 8:12pm
No since I yanked all the $$ upon Moms death ( no tax issues ) ... from jan to march she lost 40000 $
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post #7 of 18
10/27/08 at 8:17pm
Itta told me we lost some money.
But i really did not know we had that much to lose. I dont really pay attention to this type of stuff.

i guess i should, but it puts me to sleep
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post #8 of 18
10/27/08 at 8:51pm
Advice from my friend who is a financial analyst: don't even look at your statements right now. Buying high and selling low is the absolute worst thing you can do. He actually suggested to buy some stocks that are very undervalued with high promise of returning to true value in the near future.

However, my company just announced this morning that they are being bought out by another and they are looking for "synergies" between the companies to reduce their costs. That means lots of layoffs in about a year. Time to start looking for a new job now.
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post #9 of 18
10/27/08 at 9:08pm
I was amazed at how much three of my investments went down. I contacted my financial advisor and told him my concern because I was planning on moving money in about a year, but I can't unless it goes back up to where it was. This may delay my getting a house until the economy starts to turn around.

I have been buying stock as usual. I am about to put more money into my money funds which have not lost anything. So that is just where I am saving at this point. I try not to look at my investments.

After all...buy low, sell high. It has to turn around eventually and when it does, it comes back big. If I sell now, I will truly lose thousands and that isn't worth it in the long run.
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post #10 of 18
10/27/08 at 9:28pm
Quote:
Originally Posted by calico2222 View Post
I am amazed at the amount of calls we get from people who have had HUGE losses in the value of their retirement acct because they were in the stock funds, and suddenly want to sell everything and move it all into the secure fund. ...... Did everyone panic this much then too?
First to respond to the question at the end of your OP ---- I've been through several bad markets. My first experience was the crash of Oct, 1987. As I was very new to investing I made all the usual mistakes and had some nice tax losses to carry as deductions for about the next four or five years. When you read about market cycles, it's very typical for the public to panic and sell everything at a loss. That's when those who have money and are able to buy do buy more and so the rich end up getting richer. It's known as "transfer of wealth."

This time around seems to me to be much worse that either 1987 or 2000/2001. Both in terms of the psychology, the underlying issues, and the degree to which the markets and the public react. However, that doesn't invalidate the market cycle, it just makes it a larger swing that will take longer to work out.

When I read a post like this I find it reassuring, knowing that if we're at the point in the cycle where everyone is throwing in the towel and is willing to sell no matter how much is lost, I start believing that the end is near. But only time will tell.

I do feel for those who need to start drawing on their retirement accounts within the next five years, though. That's probably not going to be enough time to make it all back up. When I look at my own investments, at the end of the week last week, I'm back to where I was in December, 2005. Remember, when you have a loss of 30%, it takes a 43% gain to make it back to even.
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post #11 of 18
10/30/08 at 9:50am
Our IRA's have lost a pile of money, about 40%. On the other hand, we have about as much now as we put in when we closed out our 401K's from a previous employer.

I've bought all the way down, solid companies that are way underpriced. If you have time to do research, one way to figure out what to buy is to look for large stock purchases by company executives. We worked for one company that back around 2000 was down to it's book asset value, and the executives were buying like mad.

The key to getting rich: Buy when nobody wants to buy, and sell when nobody wants to sell.
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post #12 of 18
10/30/08 at 1:16pm
Didn't I just hear that the Feds just cut interest rates again? Isn't it now down to 1%, lowest since 1958?

Good grief, it won't be long until we have to PAY to save money, forget about interest on savings.
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post #13 of 18
10/30/08 at 2:38pm
My 401k is pretty dismal, but hey, I don't need it for a good few decades yet. Luckily we are pretty recession proof. Poor as dirt, but SO isn't losing his income and my job is pretty safe too.

The last recession-- early 90s-- is when my dad quit his job as a commodities broker, and I do know the worst of what recession means. But we made it through that sort-of okay, so I don't imagine I won't make it through this.
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post #14 of 18
10/30/08 at 2:41pm
Yup, the Fed cut another 50 basis points. Here's some more gibberish:

(The Fed Funds rate since 1954 with recessions highlighted in gray. The recession we're in hasn't been made official yet, but four of the five indicators have been in recession territory since December 2007).

From the Federal Reserve Bank of St. Louis http://research.stlouisfed.org/fred2...DFUNDS?cid=118



Just FYI, as of Monday night, here are the year-to-date numbers for the major indices:

Dow Jones Industrial Average: -38.4%
S&P 500: -42.2%
NASDAQ: -43.2%
Russell 2000: -41.5% (Indicates performance of small cap stocks)

The market had a HUGE "relief rally" on Tuesday, and was up again today. So as of this afternoon, here's how the markets are doing:

Dow Jones Industrial Average: -30.8%
S&P 500: -35.0%
NASDAQ: -36.0%
Russell 2000: -32.9%

Laurie
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post #15 of 18
10/30/08 at 3:28pm
Quote:
Originally Posted by mrblanche View Post
The key to getting rich: Buy when nobody wants to buy, and sell when nobody wants to sell.
I'm hoping you're right, because I've been gritting my teeth and buying. I remember saying to myself in 1987 that "if this ever happens again" that's what I would do.
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post #16 of 18
10/30/08 at 3:31pm
Quote:
Originally Posted by LDG View Post
Just FYI, as of Monday night, here are the year-to-date numbers for the major indices:

Dow Jones Industrial Average: -38.4%
S&P 500: -42.2%
NASDAQ: -43.2%
Russell 2000: -41.5% (Indicates performance of small cap stocks)
I guess that means I should be happy I'm only down 34.8%?? (I can still laugh about it, I guess that's a good sign)
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post #17 of 18
10/30/08 at 3:36pm
Quote:
Originally Posted by coaster View Post
I'm hoping you're right, because I've been gritting my teeth and buying. I remember saying to myself in 1987 that "if this ever happens again" that's what I would do.
I think I mentioned it here, but I talked to a truck driver back in about 1998, give or take. He said he kept buying Wal-Mart all the way down on that day in 1987. Since then, Wal-Mart had doubled in price and split 3 times and doubled again. He said sucking it up and buying that day made it possible to retire 5 years earlier.
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post #18 of 18
10/30/08 at 3:58pm
Quote:
Originally Posted by coaster View Post
I guess that means I should be happy I'm only down 34.8%?? (I can still laugh about it, I guess that's a good sign)
Well, that's how a money manager would phrase it in a letter! So yup, you're beating the market!

Laurie
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