<p>It’s hard to admit that, at this point in time, it would have been better for us to keep the money in our mattress. I’m doing my own version of “sleeping” which involves a combination of denial and dark chocolate. </p>
<p>This too shall pass, yes? I hope!</p>
<p>Excellent article re: current economic events</p>
<p>[The</a> End]( <a href=“http://www.portfolio.com/news-markets/national-news/portfolio/2008/11/11/The-End-of-Wall-Streets-Boom]The”>http://www.portfolio.com/news-markets/national-news/portfolio/2008/11/11/The-End-of-Wall-Streets-Boom)
by Michael Lewis</p>
<p>pug: Hershey’s Dark Chocolate kisses…yummmmmm</p>
<p>Great article, Toblin.</p>
<p>The problem with sleeping until the bottom occurs is you may never wake up.</p>
<p>Depressing times. Very depressing.</p>
<p>the emperor has been naked for a while. People have finally noticed and the jig is up.</p>
<p>Carolyn, you are so negative today.</p>
<p>5500 is the next low to test.</p>
<p>I wonder if I should buy some cheap stocks now ? 
Am I a fool or what ?</p>
<p>I sure wish I had not funded IRAs for 2008 last January :(</p>
<p>Oddly enough, I’m glad that we weren’t saving even more. Several years ago we took several big trips - at the time it was wildly extravagant. But maybe that was money well spent, b/c if we had invested it, it would be gone.</p>
<p>Great article by Michael Lewis. Now I want to read Liar’s Poker.</p>
<p>NortheastMom2–We’ve been saving our money, but have a chunk we never managed to put anywhere but in the bank. (The usual inertia/inaction towards our finances.) We felt pretty smug that it wasn’t in the market. Now we’re hoping the banks stay solvent! :eek:</p>
<p>Just sent the link of Lewis’ article to my son. What a great read.</p>
<p>I have a possibly naive question, but anyway…</p>
<p>The consensus of this thread seems to be that stocks will continue to fall–down to 6000, 5500, etc. If you believe that, why not move out now, and move back in then? What is the reason for staying and watching your savings continue to shrink?</p>
<p>I understand the part about needing to be in when things start to rise, but if you believe they are still going to fall, why not step aside and wait?</p>
<p>This is a sincere question, not a criticism. I’m kinda ignorant on the whole stock market/ economy field, so I know there’s a lot I don’t know, that the financial people around here do.</p>
<p>Northeastmom2 I agree. We saved and saved primarily by being frugal. I thought we were doing the prudent thing. I valued “saving for a rainy day” rather than become part of the credit culture. But, by saving so much, we had much more to lose. We even invested “wisely” (or so we thought), by diversifying assets, and keeping at least 6 months income readily available. A large percentage of the savings was gone… “poof” in a matter of a few months! Perhaps it would have been better to share more, or even spend more by choosing a more expensive home, college, trip, whatever, and enjoyed it more along the way? (I know this is a good lesson for health, as that too could be gone in a matter of minutes)</p>
<p>Quite honestly, I’m not particularly happy right now about all the talk of bail-outs. Those who bit off more than they could chew (whether by greed, ignorance, financial misguidance, etc.) are to be bailed out of their mortgages – but stay in their large homes? Those financial institutions who screwed up, are to be bailed out? Companies like the auto industry who have been very slow to update are asking for help? We are being asked to save more, but the savers are not the ones being rewarded here. Does our 401k get bailed as well? I’m guessing not. Instead, I’m sure taxes will go up, despite what the candidates promised. They certainly have not gone down in my lifetime.</p>
<p>In reality, I know we are very fortunate compared to world standards. And my hope is that ultimately the crisis will make us all bend in the right direction. Hopefully we will start placing a higher value on education, the environment, and our children’s heritage, etc., and less on what we buy.</p>
<p>toblin: Thanks so much for posting the Lewis piece. Wow!</p>
<p>Credit default swaps and collateralized debt obligations were critical building blocks in the doomed House of Cards. From the article, these passages pretty much sum things up:</p>
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<p>I think it’s like watching a train wreck. Also, remember even 2 weeks ago when the DOW was at 9000, the talking heads were still saying to hold on and wait - a turn around is imminent. It’s hard to know the bottom of the market - cashing out now could mean missing a big run-up (or so they say…) It’s hard to time the bottom of the market to buy back in. (etc)</p>
<p>Also, it’s psychological. As long as the assets aren’t sold - it’s all a paper loss. As soon as you’ve actually sold the asset, it’s a realized loss. </p>
<p>For money in 401k accounts, it’s harder to move that money around - the safest fund available may be a bond fund - and since those have not decreased as much, you’re essentially selling low (a stock fund) and buying high (the bond fund which is at normal-ish valuation)</p>
<p>However, for money outside of tax-deferred accounts, it can make sense to sell and realize a loss (which is tax deductible) then move it into another similar investment (as long as it’s not a wash). (This is not investment advice - trust me you don’t want me managing your money !)</p>
<p>I’m hoping in 20-25 years the 401K rebounds !!!</p>
<p>Okay, fair enough. Let me ask another question. If it’s at, say 8000 now, and you expect it to go to 6000 (as people here seem to be assuming) wouldn’t it make sense to sell low, and buy lower?</p>
<p>totally depends on how dedicated you want to be and what kind of stomach you have…we are just continuing to buy at lower and lower levels (through automatic purchases in retirement accounts)…I do not have the inclination to sell (usually ever unless I need the money soon), but I always have the inclination to save more…so, no, I do not have that “trader” mentality that would necessitate a “sell” here…more of a buy and hold investor where I re-adjust occasionally.
Not saying this is necessarily the correct strategy though; we are in unchartered territory…</p>
<p>Okay, that makes sense. But, do you have to be much of a trader (in fact, maybe less of one than you are) to say, well, this is gonna keep going down. Why don’t I just step out for a moment, and come back in nearer the bottom.</p>
<p>I get that no one knows what the bottom is, but the sense of this thread seems to be that we are not at it yet. Wouldn’t it just be two moves, one out, one back in?</p>
<p>I get the feeling that everyone is being stoic because pulling out of stock is unpatriotic, or something, so everyone is allowing their losses to increase. Or at least, that’s the message I think is being sent out. Again, I know I’m asking naive questions. But I’m puzzled by how this is working for everyone.</p>