401K blues...

[Tonegeek]

It just sunk in how much money I have lost (or has been stolen) from my 401K. I am a basket case and don't know if I can even work today!. I have been pumping extra mony into this thing every paycheck for 8 years. I never saved any money when I played music for a living so I thought i needed to catch up once I got a "real" job. I should not even have bothered. I could have started my own business with the money i have lost (build/repair amps, recording studio, HVAC service, etc.), doing something I really enjoy instead of working for a big company. I dont even know who to blame. I guess i must look in the mirror since my money was in mutual funds and I could have parked it in cash instead. I am not sure cash is even safe though. I am convinced corporate greed is the cause of this meltdown. I have always felt that corporate profits is the only thing sacred in America and that our political system has been corrupted to serve that end. Politicians are bought to pass laws favorable to corporate interests. Politicians could limit outsourcing, ban shoddy imports and regulate risky loans, but they don't because someone paid them not to. Notice that the corporations are getting the bailout money, but not guys like you and me. Banks get help, but not the homeowner/investor/skilled worker. I think the banks, the car companies and all these fu*ckers that made bad business deals should not be bailed out. That's the only way I see that they will learn not to do this shit again. Meanwhile I lose my life savings but the companies I invested in get a bailout. Guess I have some lessons to learn also. Pain is a good teacher. No different than getting zapped with 450 volts DC. You learn...

[billyz]

I feel your pain. Everyone I know has lost a boatload this last year. If you have 10 years or more till retirement you should be ok. If you are still fully invested in the market it might be best to stay the course, The biggest returns come right at the beginning of the next leg up. I believe we are in for a long period of Doldrums though. Now is the time to do research on where you should be invested for when the market turns around. Personally, I watch the 52 week moving average, when this market crosses up it's 52 week average that is when I will get back in. It will probably be a mix of Emerging markets, Brazil, possibly China, oil, and Dow components or S&P.

It may turn out that now is the perfect time to invest, and if you already are invested and keep investing you have lowered you cost basis. And as the Bible says, you should diversify among 7 different baskets, you never know which one will be a winner or loser. That could include Real estate, Stocks, Collectibles, a Business.

[skyboltone]

Billy Z has of course made some good points. I want to emphasize staying the course. Don't go to cash now. If you already have then you gotta go to work on doing some basic technical analysis and buy back in on dips. A look at the chart shows that we are headed for a test of the 7300 level of last month. I don't believe it will drop too much below that level. That's the time to get back in. Market timing requires real discipline and watching. If today's trading looks like it will end below 8000 I'm going in for another 10%.

I saw the collapse coming and got my 401A into all cash when the Dow was at 11600. I now have begun to buy back an equity position. So far I'm back in about 25% with an average by in of just under 8000 (Dow) by watching the charts and timing based on pretty simple principles.

Remember, with 401 mutual fund buys you get the end of the trading day net asset value price. What this means is that even if you have an intra day low of 6000 on the Dow, it can all change in the last half hour. I try to be near my computer during the end of the trading day. I'm using a mix of three fund types. Small cap, Large cap and Value. With a third in each. If and when the market returns to 11600, I'll make about 45% on the turnaround. As Billy said, this one may take awhile. While we may see eye to eye, on the car company bailout; do some math on treasuries over time vs stocks over time and you'll see that you can never retire without market participation. The banks were FORCED by congress to take risky mortgages. That is and will be proven over time to be the real problem here. Industrial America is pretty healthy. Except in the Energy sector. Congress has STOPPED self sufficiency in energy. Repeatedly.

Forget emerging markets, they will be the last to recover. And remember there is never just one cockroach. It's far easier to lie cheat and steal in the third world than it is here.

[briane]

yep, stay the course. I am in the same boat, but figure its worth so little now that getting out really wont get me anything else. If it eventually goes back near where it was, then I will fare ok, and essentially get out what I put in.

Right now I second the thought of cash, or low return money markets. Just as long as the investment is not losing, I dont really care if its gaining a lot.

I'm with you on bailout's. When mom & pop go out of business, who's going to help them, you, or me? Were just in the habit of rewarding bad decision making and idocy with huge returns under the auspice of helping the industry. Where were the people doing the bailouts when all the dumb decisions were made and someone should have said no more?

taking advantage of others should not be rewarded with huge profits, just because you could not take 'enough' advantage of the sheep.

[M Fowler]

I am staying the course as well and have been before it got worse. Today I was discussing all the layoffs around my town that is hurting so many families. Companies now inaddition to layoffs are doing away with the fringe benefits (or is that French) , insurance, 401k, stock options and lowering wages to keep them employed. I am sincerely lucky my wife and I are working.

Mark