401K - I did a scary thing

[Wild Cobra]

A few days ago, I transferred all but 5% of my 401K from stock funds, to bond funds. I left my contributions all in stock funds, but I wanted to take the risk out of my current holdings. I wish I had made this decision much earlier, when I though about it, but I was late at pulling the trigger. Mid 2015 would have been the beast time to do so. As it stands, my stock funds lost around 16% since then. That's a huge chunk on money. Reading different experts, I suspect the best time will be at least three month away before I go convert back to stocks.

I should have followed the stocks closer. My mistake.

Pro: I shielded myself from farther drops in the market.

Con: We are already at bottom, and I can harm my position more by getting in om growth late.

I hate gambling. I hate the way politics muddy the facts.

[DarrinS]

My 401k is eating a bag of dicks in 2016. :depressed

[Bender]

I've been reallocating to more bond funds for the past year or so.

[InRareForm]

Why not vanguard target funds?

[Bender]

I'm not crazy about target funds. I do have a small chunk in a Target 2025 fund, and it has done fairly well the past few years.

[Wild Cobra]

My stock funds did great until June. They gained as a share price a factor of three since 2009 till June 2015. I only hope I made the right choice. I usually ride these stock price roller coasters out, but this time, I'm worried.

[Wild Cobra]

My 401k is eating a bag of dicks in 2016. :depressed

So did mine, and I'm afraid it will slip farther. That's why I moved my current holdings to bonds, and kept my current contributions in stocks. At least as I buy cheaper and cheaper, when it rebounds, my current investments can likely double in value.

[Bender]

it's usually bad form to get in and out of the market....

[Wild Cobra]

it's usually bad form to get in and out of the market....

I agree. That's why this is a scary choice for me.

[Wild Cobra]

The market took a rather large drop in August. We were assured by the experts it was temporary, but then it took another serious drop at the end of 2015. I have little trust of any expert these days.

[CosmicCowboy]

Why do you think bond funds are safe? Bonds work inversely to interest rates and their value goes up and down just like stocks. With interest rates at historical lows where do you see he upside in bonds? On top of that, you can guarantee that every big bond fund owns Puerto Rico tax free bonds whose value will more than likely become zero in 2016 for a big hit to their portfolio and fund holders.

[rmt]

I just leave mine where it is and hope that the market recovers. If, one area is high (sell on a day when the market is up), I'll re-allocate to something cheaper (buy on one of those 300 point DOW drop) but I'm reluctant to take any loss - as long as I don't need the money.

[Bender]

I'd like to retire within a couple years. I don't want to go thru another 2008/09. If you look at the 10-year charts of most good fixed income funds, you see a slow steady rise, even during 08/09.

I have a bunch in div-paying stocks too.

[hater]

:lol anyone depending on their 401k alone for their retirement is a complete lunatic :lol

[rmt]

:lol anyone depending on their 401k alone for their retirement is a complete lunatic :lol

Depends on how much is in that 401K.

[Wild Cobra]

Why do you think bond funds are safe? Bonds work inversely to interest rates and their value goes up and down just like stocks. With interest rates at historical lows where do you see he upside in bonds? On top of that, you can guarantee that every big bond fund owns Puerto Rico tax free bonds whose value will more than likely become zero in 2016 for a big hit to their portfolio and fund holders.

The only upside to a well mixed bond fund is they are far less volatile than stocks. They don't just drop 5% value of so in a day.

[Wild Cobra]

Depends on how much is in that 401K.

Yep.

More than 20 years of allocations at the full 15% and compound interest yields seven figures rather easily.

I'll still (hopefully) have SS when I retire too.

[Wild Cobra]

Both the Dow and S&P 500 have dropped since I pulled the trigger. I'm becoming more comfortable with my decision.

[pgardn]

My 401k is eating a bag of dicks in 2016. :depressed

You have not lost anything until you cash out. That's the way I would look at it.

Honestly, dollar cost averaging is the only way to go if you don't have the time.
I don't think anyone on here is an expert, so if you use big market timing moves, you can get burned badly.
And if you play the game long enough you will get burned.

I am still doing rather dangerous things by buying during what I think are panic periods now. I have been lucky. My horizon is longer than the vibe I'm getting from others though.

[pgardn]

Why do you think bond funds are safe? Bonds work inversely to interest rates and their value goes up and down just like stocks. With interest rates at historical lows where do you see he upside in bonds? On top of that, you can guarantee that every big bond fund owns Puerto Rico tax free bonds whose value will more than likely become zero in 2016 for a big hit to their portfolio and fund holders.

This is not necessarily true. There is only one year, 69, when both Stocks and bonds died at the same time. The vanilla bond funds are still out there. You must be referring to unconstrained bonds that are sold as income generators for those on fixed incomes. Vanilla bond funds can be used to shelter.

[Big Empty]

Thats the right idea sport, sell low buy high. If u think oil will rebound at some point, try etf USO. If u really want to gamble then the triple levereged etf uwti. I know the outlook on it is low and thats good, but eventually oil will go back up by some means.

[pgardn]

Both the Dow and S&P 500 have dropped since I pulled the trigger. I'm becoming more comfortable with my decision.

And you will become frustrated when you fail to re enter at the right time and reap the benefits. People talk big about this kind of stuff all the time when they have actually had their asses handed to them. I like listening to older folks who have seen failure and admit so. People who have truthfully made mistakes and explain them are very useful.

[Wild Cobra]

You have not lost anything until you cash out. That's the way I would look at it.

So true. One reason why this was so hard of a decision for me. Some years back, my next door neighbor and I discussed 401k's. He was panicking and I explained to him the stock values would return, and currently (those years back) that all his current buy-ins were buying shares and lower and lower rates, which would pay off when the values returned.

He took my advice, and thanked me when the stocks returned.



Honestly, dollar cost averaging is the only way to go if you don't have the time.
I don't think anyone on here is an expert, so if you use big market timing moves, you can get burned badly.
And if you play the game long enough you will get burned.

Yes, time is relevant for long term returns. I haven't made but minor changes of my 401k finds since 2009, and that was nothing more than changing the allocation to different stock funds. In early 2009, because of the economy, was the last time I had all my funds in bonds... for more than a year. I missed my bottom fishing by a few days, but it paid off well.



I am still doing rather dangerous things by buying during what I think are panic periods now. I have been lucky. My horizon is longer than the vibe I'm getting from others though.

I think buying when it is cost averaging while others are selling is best. While prices are dropping, you are buying shares cheaper and cheaper.

[Wild Cobra]

And you will become frustrated when you fail to re enter at the right time and reap the benefits.

Yes, I will if this backfires on me. I suspect one or more more dips before I will enter back into stocks. I hate this, because I haven't bothered watching stock or hype for several years, and I hate spending time from life to watch it. I went back into stocks last time on 3/9/09, after moving to bonds on 6/25/08. That paid off real well for me, but it was a gamble then, and is a gamble now.



People talk big about this kind of stuff all the time when they have actually had their asses handed to them.

And I just might have my ass handed to me. As the thread title says: "I did a scary thing."

[CosmicCowboy]

This is not necessarily true. There is only one year, 69, when both Stocks and bonds died at the same time. The vanilla bond funds are still out there. You must be referring to unconstrained bonds that are sold as income generators for those on fixed incomes. Vanilla bond funds can be used to shelter.

When in the past has the market gone down when interest rates were essentially zero?

[Wild Cobra]

CC, do you have a valid point?

A mixed bond fund is very stable. They are a safe place to park money that effectively doesn't grow. Individual bonds often have problems, but not well managed bond funds by well paid managers in Fidelity, Vanguard, etc.

[CosmicCowboy]

Silly me. Those Goldman Sachs guys were smart motherfuckers. You have to trust in the well managed funds.

[CosmicCowboy]

In 2014 oil field related bonds looked just safe as safe could be. The frack boom was built on bond money. Oil will never drop to $30.

[Wild Cobra]

Cherry picking the abnormal.

Are oil bonds "well mixed?"

[SnakeBoy]

I moved a lot of my money over to a tax exempt long term bond fund last year. I'm happy I did and getting a ~4% tax free interest rate isn't so bad imo. I don't think you made a mistake or did anything "scary". At some point I'll move that money over to an index fund when I think we are near a bottom.

Then again...fuck if I know what's going to happen.

[Wild Cobra]

Then again...fuck if I know what's going to happen.

That's the problem. The future is very hard to predict.

[Winehole23]

Oil will never drop to $30.it's basically at $30 right now and has been as low as $27 this year.

do you think this is the floor for oil prices?

[CosmicCowboy]

it's basically at $30 right now and has been as low as $27 this year.

do you think this is the floor for oil prices?

guess I should have put it in blue

my point was that with bond funds chasing yields in a low interest environment you can be pretty sure that a lot of funds are holding shale related bonds that seemed super safe at the time with $110 oil but will very well default at $30 oil.

[rmt]

Go gold miners! I had bought some near its low and it's taken off recently. Unfortunately, I also tried some oil and that keeps going down.

[rmt]

Off-topic - but since this thread isn't politics either - saw Motown (the musical) last night. Very good - especially the Stevie Wonder and Michael Jackson acts - kid has a great voice - of course, nowhere near the real thing (performance-wise).

[CosmicCowboy]

Go gold miners! I had bought some near its low and it's taken off recently. Unfortunately, I also tried some oil and that keeps going down.

I will be shocked if gold continues to climb. lMHO with the current deflation n commodities it's more likely to drop a lot.

[rmt]

I will be shocked if gold continues to climb. lMHO with the current deflation n commodities it's more likely to drop a lot.

I bought it when it dropped a lot - almost near the bottom. I'm gonna ride out the climb. When it inevitably turns, I'll sell, wait for another big drop day and put it back into S&P 500. The rise is probably only because the Fed will be reluctant to raise rates with the stock market down and yo-yoing like this. It's only to feel like I'm doing something and pick up a little gain.

[Wild Cobra]

Well, so far, I have staved off greater than a $12k loss of my 401k since I went to 95% bonds and 5% stocks. Would have a little more if I went all bonds. not bad for a week. I wonder what the next week will do.

[RandomGuy]

I bought it when it dropped a lot - almost near the bottom. I'm gonna ride out the climb. When it inevitably turns, I'll sell, wait for another big drop day and put it back into S&P 500. The rise is probably only because the Fed will be reluctant to raise rates with the stock market down and yo-yoing like this. It's only to feel like I'm doing something and pick up a little gain.

Timing markets is a fools game, IMO, unless you have a LOT of time on your hands.

Buy. Hold. Collect dividends.

[RandomGuy]

With most of the world approaching deflationary reflection points, i.e. Japan, Europe, etc, gold just holds no attraction. Rather have interests in a functioning business.

[SnakeBoy]

Timing markets is a fools game, IMO, unless you have a LOT of time on your hands.

Buy. Hold. Collect dividends.

Having a single strategy is a fools game IMO. Why not take a diverse approach?

I break my money up into 4 categories:

Emergency Money: 6 months living expenses that just sits in a mm account
Retirement Money: Majority of my money invested in a mixed SEP IRA fund. Your recommended buy,hold,collect dividends...and enjoy the tax advantages...time frame of decades.
Long Term Money : Time frame of years but not decades. I move this money between index & bond funds. It doesn't take a rocket scientist to tell when there is a market correction on the horizon and it takes about 2 minutes to move money from one fund to another. It's not necessary to nail the absolute market peak/bottom to come out way ahead.
Gambling Money: Small percentage of my money that I bet on individual stocks looking for large short term gains. Sometimes I nail it and make huge gains and sometimes I get my ass kicked. This is a set amount of money and when I make big gains the profit over the set amount gets moved to the retirement or long term category. When I bet wrong it's up to me to find a better stock to get back to the set amount (I never move retirement/long term money to this category). All in all this is my best performing category. At this point if I do something really stupid and lose every penny I'll still be ahead of what the retirement/long term funds have delivered but too risky to bet my entire future on my psychic abilities to guess wtf an individual stock is going to do.

[RandomGuy]

Having a single strategy is a fools game IMO. Why not take a diverse approach?

I break my money up into 4 categories:

Emergency Money: 6 months living expenses that just sits in a mm account
Retirement Money: Majority of my money invested in a mixed SEP IRA fund. Your recommended buy,hold,collect dividends...and enjoy the tax advantages...time frame of decades.
Long Term Money : Time frame of years but not decades. I move this money between index & bond funds. It doesn't take a rocket scientist to tell when there is a market correction on the horizon and it takes about 2 minutes to move money from one fund to another. It's not necessary to nail the absolute market peak/bottom to come out way ahead.
Gambling Money: Small percentage of my money that I bet on individual stocks looking for large short term gains. Sometimes I nail it and make huge gains and sometimes I get my ass kicked. This is a set amount of money and when I make big gains the profit over the set amount gets moved to the retirement or long term category. When I bet wrong it's up to me to find a better stock to get back to the set amount (I never move retirement/long term money to this category). All in all this is my best performing category. At this point if I do something really stupid and lose every penny I'll still be ahead of what the retirement/long term funds have delivered but too risky to bet my entire future on my psychic abilities to guess wtf an individual stock is going to do.

+1

Exactly what you should be doing. A mix of funds with different time frames and risk profiles, each tailored to a specific amount.

Buy hold and dividends is a long term saving strategy most appropriate for a good chunk of retirement funds.

[RandomGuy]

I will be shocked if gold continues to climb. lMHO with the current deflation n commodities it's more likely to drop a lot.

Heh, you beat me to it. Another +1

[rmt]

Having a single strategy is a fools game IMO. Why not take a diverse approach?

Gambling Money: Small percentage of my money that I bet on individual stocks looking for large short term gains. Sometimes I nail it and make huge gains and sometimes I get my ass kicked. This is a set amount of money and when I make big gains the profit over the set amount gets moved to the retirement or long term category. When I bet wrong it's up to me to find a better stock to get back to the set amount (I never move retirement/long term money to this category). All in all this is my best performing category. At this point if I do something really stupid and lose every penny I'll still be ahead of what the retirement/long term funds have delivered but too risky to bet my entire future on my psychic abilities to guess wtf an individual stock is going to do.

Exactly except I use leveraged ETFs - not individual stocks - mostly US financial (because they'll bail out the banks) - play the ups and downs - mostly on market fears and over-reaction. Don't usually mess with commodities but gold miners was SO low. Now, how low can oil go?

[SnakeBoy]

Exactly except I use leveraged ETFs - not individual stocks - mostly US financial (because they'll bail out the banks) - play the ups and downs - mostly on market fears and over-reaction. Don't usually mess with commodities but gold miners was SO low. Now, how low can oil go?

Yeah I do etf's as well as individual stocks. Just whatever catches my eye. ETF's are definitely a safer way to go and I'll probably start sticking to them primarily. At 49 I'm becoming more & more risk adverse. The only time I messed with commodities was gold back in '08/09 but that was a no brainer back then.