Market bounces

[Broken Arrow]

I completely agree with what is being pointed out here, that by the time you see recovery, you could have already missed out on some of your portfolio's biggest gains....

There is a lot of money waiting on the sidelines right now, and they're all waiting to see who will take the first plunge before following suit.

This is strictly just my personal opinion, but I don't think we have seen the bottom yet either.... We still have a housing glut, unemployment is still high, we are still going through bailouts, Fed interest rate just hit 0% with Bernanke talking tough about "more drastic measures", and Obama is still planning a massive second stimulus package. And the market is being surprisingly upbeat about all this? Well, I can see why, but if you think about it, none of this points to an economy that has fundamentally shifted towards recovery. All this points to efforts to try to stop a wagon that is still slipping backwards.

Ah, but the problem for me is, how do I know how far it will slip and for how long? And that's assuming that I am correct that it will slip some more to begin with. So, rather than worry about timing the bottom somewhere, I simply stay the course and keep contributing as I already have been and leave it at that.

Fact is, most stock investments at this level is already pretty dirt cheap. So, if it goes down some more, I will be buying it at an even more discount, and if it doesn't, I didn't miss the train. At least that's how I choose to look at it.

[tripods68]

I watched El-Erian of Pimco CNBC today, he said the rest of 2009 will be weak. The market bounce will be a prolong U shape. I tend to agree especially if you take into account the 2nd wave of Alt-A, ALT-B, and ARMs resetting foreclosures, high unemployment, and people spending less. The bailout package given to companies has changed the rules/regulations which make the market more unpredictable and create distortion. The V shape will not happen, if anything DOW might go down some more.

[cptacek]

I don't think the only problem is the fear of losing money in the market or going through the ups and downs.

There are other rreasons people stop investing. Lay offs were imentint at my dh's work a few months back so suggested he decrease his 401K contributions (btw the company gave up the match a couple years ago due to declining profits)
I did not decrease his amount due to fear of the market. It was to stock pile even more cash in case a good job did not come soon.
ALso for the first time ever we are not paying extra on our mortgage. WE owe very little on it so it's not a big deal, but we always paid $300 extra and did a couple dump payments on occasion.
I elected to stock pile more cash b/c of the job situation.

I dropped my 401(k) contributions from 19% to 4% (the match) when we got engaged because I knew the money needed to go to the farm. The money is still technically being invested, just not in stocks.

I agree with your reasoning, btw.

[FrugalIII]

Well, I stopped my Roth IRA contributions all together near the end of this year. My situation is that I'm only 6 years away from retirement. My IRAs have lost about 40% in value this year. I'm afraid to invest more because my time horizon is so short. If I were 20 years younger, I'd be in all the way. So now I'm just hording cash in my GMAC MMA making over 3%. Hope I'm not being overly cautious.

[disneysteve]

Well, I stopped my Roth IRA contributions all together near the end of this year. My situation is that I'm only 6 years away from retirement. My IRAs have lost about 40% in value this year. I'm afraid to invest more because my time horizon is so short. If I were 20 years younger, I'd be in all the way. So now I'm just hording cash in my GMAC MMA making over 3%. Hope I'm not being overly cautious.

Why not just continue to fund the Roth to benefit from the tax shelter but put the money in a money market account? Keeping it in a taxable MMA doesn't really make sense when it could be tax-free. Even if you needed the money before you retired, you can always withdraw contributions from a Roth without penalty.

[jIM_Ohio]

All these people predicting a long bear of some sort...

T Rowe sent another mailing today (T Rowe investor magazine) and it mentioned that bears are getting shorter and shorter (the last 2 have been 10 months or less). They suggested the current bear started in July, 10 months means we have about 4 more months of buying at the lows before the rebound.

[disneysteve]

All these people predicting a long bear of some sort.

I'm hoping prices stay down for another 6 months or so. That's how long it will take me to max out our Roths for 2009.

[GREENBACK]

I'm hoping prices stay down for another 6 months or so. That's how long it will take me to max out our Roths for 2009.

I agree DS. I'm looking at maxing out early in the yr.. It's still a big discount sale even if were wrong about a rebound this year. I want as many shares as possible before the eventual rebound.

[Broken Arrow]

I agree as well.

I won't retire in at least another 30 years, so uh, it won't hurt my feelings if the market decided to stay low for a while.