While some panic selling will lower market prices overall, I see it as a short-term decline. After some shaking out, once normalcy returns, prices will go back up, unless the GOPee really f*ck everything up. I'd say hang tight, don't panic, ride out a decline if you're in a position to, and look for opportunities to buy cheap assets. Nobody ever got rich buying high and selling low. I don't know your situation, or your tolerance for risk, but I would urge holding on and looking for opportunities to buy in the next months. If you need that IRA money in the next couple months, cashing it in now might be a good move, but otherwise, just hang on for the ride. It may be spooky and scary, but profitable.

That's what we've essentially decided to do -- we'll probably stock up on essentials, though, just in case. lol

Well, I'm a bit calmer today, thinking we may not be trading toilet paper for food in three weeks. lol I did speak with our guy and he pretty much suggested what you did.

Thanks again for your information.

It will be interesting over the next few days, that's for sure. 9 days to go to the brink, as it were, so it will be fascinating to watch, if nothing else.

All the very best.

Things are never as bad, or as good, as people tend to think.


The reason the Dow and the S&P got so low (in 2009) in the first place was because people were panicking, perhaps rightly so, and it just kept going down and down.

But it doesn't always do that. Just as trees don't grow to the sky and their roots don't go down to earths core.

Anyway...

The answer to your question "What is the best thing, given all the information, that people in our situation should be?" is, in my opinion, "Patient".

It really depends on what your assets are in that IRA. Are you mostly in Mutual Funds? If so, you should bear in mind that Mutual Funds perform best for a holder of them over the LONG TERM. Trading into and out of them is ill advised, REGARDLESS of what the market is doing.

Are you mostly in individual stocks or bonds? If so, then you might consider taking profits on any that you have large gains in, as that would be a common and logical move. But under no circumstances is it logical to sell under a panic scenario any more than it is to buy heavily when market euphoria sets in. As the saying goes, when everyone is running for the exits and there is blood on the floor, that's when the smart investor stops, turns around and heads back inside. Conversely, when everyone has their heads in the clouds and is buying like crazy, that is the time to be more careful.

Looking back at the time frame from late '07 to early 09', do you want to know what the perfect play was?

Selling equities and going to long bonds.

If you had sold every equity position you had in or around September of 2007 and bought 30 year Treasury Bonds, held those for a year and sold them, you would have seen a 45% gain when everyone else was losing their shirt.

Why?

Because recently issued 30 year paper back then had a coupon of 4.5% and they were selling for between 96 and 98 cents on the dollar. If you had held them from Sept. of 2007 until December of 2008 when the yield bottomed out at just over 2%, you could have sold each one of those bonds for $400 MORE THAN YOU PAID FOR THEM. Not only that, but would have been paid $45 in interest on each one for the pleasure of holding them. Not long after that, Ford Motor Company stock bottomed out at less than $1.25 a share (it actually got to $1.01/share during one trading session, then started shooting back up). If you had taken the proceeds from the sale of the bonds and bought Ford, well.... Ford peaked at over $18 back in January of 2011 and is currently trading in the $16 range. If you had started with $100 grand in the above scenario you could sell your Ford stock and retire. (You would have over $1.5 million today)

Of course, hindsight is ALWAYS 20/20

Unfortunately, that will not be the case this time because it will be precipitated on a Treasury default so if we have a crash the market on treasuries will crash along right with the stock market, that is, if all hell breaks loose.

The thing to do in that case would be to watch the yield on Treasuries and when it is through the roof (as in way above 5% on the ten year, for example), buy the bonds like there is no tomorrow. When things get back to normal, those will have gone up in value as the yield settles back down.

But I doubt all hell will break loose. No one, and I mean NO ONE, including the fucking Koch Brothers wants to precipitate a world wide depression, and that is what could happen if the Treasury is forced to default. OK, Maybe fucking Ted Cruz would like it, but no one that is in charge or that has any brains at all wants it.

If your holdings inside your IRA are indeed "conservative" as you said, then it is likely within your risk tolerance. If you can't tolerate any risk, then you shouldn't be an investor. If you can, then, as I said above, be patient.

More important than ANYTHING I have said however, is that you are able to sleep at night. If you think it is best to go to cash because that will make you more comfortable, then that is what you should do, and don't let anyone tell you otherwise.

But don't do it merely because you are in a panic. Do it because it makes sound financial sense for YOU.

(I deleted, edited and re-posted for personal reasons)

>>If you can't tolerate any risk, then you shouldn't be an investor.

This describes me to a tee. I cannot tolerate any risk as I have no means to replace what I have because I cannot work any longer due to my health. The stress of investing (in the stock market that is) makes me feel quite sick and I hate being pinned to the TV all day watching it go up and down, up and down. I get zero sleep which is not at all good for me.

I heard of a man's grandmother the other day that had her entire wealth invested in the market in 2008 when it crashed.

She went from being a millionaire to being worth just over 100,000K very fast. She is too old to recover her losses so there she sits today with the money still "invested" but certainly not recovering to where it was as it is not possible for it to recover $900,000.00 in a few years. I personally believe that a person in their 90s (and 80s and 70s for that matter) have no good business to be done with Wall Street as they have no way to recoup big losses given their age.

So, yeah they got "us" alright ... "us" being those at the very brink of retirement after having worked for 40+ years. How convenient for some out there eh?

Impeccable timing indeed!

something happened that kept the U.S. stock market from opening that day. In fact, the market stayed closed all week and didn't open until the following Monday. When it did open, the market dropped a lot, and by the end of that week had lost about 14% of its value.

All of those losses were recovered in thirty days.

You might want to call your guy and discuss this with him. Chances are he'll tell you to stay put, especially if your investments truly are conservative.

Over the years I keep on hearing of people who sell everything and just keep the cash. Usually the sell at the bottom of the market, locking in losses, and if they want to get back in it's going to cost them a lot more. Steady, long-term investments are usually a safe bet. But do talk to your guy. He knows a whole lot more about you and your situation than any of us here.

the Dow-Jones, the standard marker for the stock market, has risen 400 points in two days.

common wisdom that the market is going to crash.

I do realize that it goes up some days, down some others, never quite staying the same. Still, I sincerely doubt there will the horrible downturn that so many seem to gloat in anticipation of.

Last edited Sun Oct 13, 2013, 08:40 AM - Edit history (1)

We can hope against hope that some progress will be made tomorrow or Monday.

http://money.cnn.com/data/premarket/?iid=MKT_Sub

the Dow is down all of 2 points.

Once again, those who predict the worst case scenario turn out to be fear-mongers.

Believe me, I'm breathing easier today.