Woohoo! My 401k is coming back to life!

[mook]

After losing half of its value during the economic meltdown, I'm ecstatic to see it regain about 80% of the losses. Thank christ I didn't touch a god damned thing when I saw how badly I was fucked back in January.

For those who invest more, I'm curious to see what people think of my allocation. Two years ago I moved everything so that:

50% is in the Vanguard 500 Index Fund (I figure Index funds are low cost and generally perform about as well as more managed funds)

20% in American Funds EuroPacific Growth

20% in American Funds Growth Fund Of America

10% in Longleaf Partners Small Cap

I'm only 36, so I figure risky is better at my age.

 

[BrianFromWA]

I didn't sell off anything, but I started buying more company stock when it was ridiculously low, now shifting back to int'l growth and small cap a bit. But I'm 32.

 

[Sedatedfork]

I got 80% recovery too this last quarter. I remember having like 15% losses. Last quarter alone I had like 12% gains.

 

[BLAZER PROPHET]

I'm afraid to look.

 

[crowTrobot]

sorry i wasn't in position to contribute to mine when the market was in the 6000s

 

[hasoos]

It's very important for folks to remember, that when investing, you don't actually lose money until you sell at a loss. When your accounts are down due to market conditions, just remain patient, don't panic, and wait. It will turn around, and if you are well diversified you will weather the storm.

My 401k and Roth IRA are doing great again.

But my investments in Ford and Bank of America when they hit rock bottom are doing even better. I am averaging 5% gain per day over the last several weeks. That's right. 5% per day.

 

[crowTrobot]

But my investments in Ford and Bank of America when they hit rock bottom are doing even better. I am averaging 5% gain per day over the last several weeks. That's right. 5% per day.

today is hurting your average : )

 

[Idog1976]

It's very important for folks to remember, that when investing, you don't actually lose money until you sell at a loss. When your accounts are down due to market conditions, just remain patient, don't panic, and wait. It will turn around, and if you are well diversified you will weather the storm.

My 401k and Roth IRA are doing great again.

But my investments in Ford and Bank of America when they hit rock bottom are doing even better. I am averaging 5% gain per day over the last several weeks. That's right. 5% per day.

This is true and my patience has similarly paid off. However, there is a high likelihood of a repeat of last fall as more unleveraging occurs thanks to our friend the OTC derivative market. As that incomprehensible wad of debt unwinds there will be a greater call for stimulus (in fact the calls for more stimulus are already happening) which will further undermine the dollar. I thought that Obama would get a green bubble going and invested in February of 2008 in green energy. That was a huge mistake. My precious metal mining funds not only have almost completely recovered, they also should sky rocket along with gold and silver when the next round of stimulus occurs. I was really hoping for a green energy bubble both for selfish reasons of gaining money and also for my son and future generations. I'm afraid that the green energy bubble may not occur as it looks like Cap and Trade of carbon is the next favored bubble of the financial elite. Green energy could still take off but I'm planning on selling most if not all of it this month and staying in cash and then will scoop up value after the next mega correction before all assets rise with out of control inflation.

PM me if you have any interest in what I'm saying. I LOVE to talk finance, economics and geo-politics.

P.S. if you don't have 10% of your portfolio in precious metals, preferably in a safe in your house, then you are exposing yourself to the ravages of the the mega perhaps even hyper-inflation that is coming. I don't store mine at home because I live in a questionable neighborhood but if I could I most definitely would.

 

[blazerboy30]

P.S. if you don't have 10% of your portfolio in precious metals, preferably in a safe in your house, then you are exposing yourself to the ravages of the the mega perhaps even hyper-inflation that is coming. I don't store mine at home because I live in a questionable neighborhood but if I could I most definitely would.

Why would I listen to the investment advice from somebody that can only afford a "questionable neighborhood"?

Just kidding. Sorry, I couldn't resist.

 

[barfo]

P.S. if you don't have 10% of your portfolio in precious metals, preferably in a safe in your house, then you are exposing yourself to the ravages of the the mega perhaps even hyper-inflation that is coming. I don't store mine at home because I live in a questionable neighborhood but if I could I most definitely would.

One thing you could do is have guns made of precious metals. Then you could defend your stash with your stash.

barfo

 

[Shooter]

It's very important for folks to remember, that when investing, you don't actually lose money until you sell at a loss.

Well, that's true, but very few people "sell" their 401(k) at a loss, or even think about doing so. The only reason you open a 401(k) in the first place is to leave your money in and let it build over time, regardless of market fluctuations. Only someone who was already retired and desperately needed the money would cash in a 401(k) when it was way down.

 

[Idog1976]

Why would I listen to the investment advice from somebody that can only afford a "questionable neighborhood"?

Just kidding. Sorry, I couldn't resist.

Why, because I'm not an overleveraged idiot living in an adjustable rate mortgage timebomb house? I actually save and invest what I own. I wouldn't keep that kind of loot in my house unless I lived ina gated community but I'm not there yet. I know lots of people who were making 80K+ just a year ago and now have lost everything. I know people who were worth a Million on paper just a couple of years ago in real estate who were over leveraged and got wiped out.

I called the dotcom bubble right and also this crash as well. I tried to get my parents to sell their house in 2006 and helped my dad retire that year and get his retirement locked in prior to the crash. I'm EXTREMELY fiscally conservative in my personal life (Green energy was my one risky investment as I'm young and need growth in the portfolio) so I live BELOW my means and save. It's served me VERY well thus far. Most people I know are far worse off then they were two years ago. My situation has improved.

 

[Idog1976]

One thing you could do is have guns made of precious metals. Then you could defend your stash with your stash.

barfo

The man with the golden gun. I like it. By the way Barfo I'm not a Republican just don't trust the direction either party is taking this government or it's currency. Just my opinion.

Here's a prediction for ya'll. There will be a massive crash equal to or exceeding the one last fall within the next 4months followed by more stimulus and unparalleled inflation. The crash and stimulus will happen no later then 12/31/09 and that will lock in future massive inflation. Just watch. The dollar is dead it just doesn't know it yet.

 

[BTOWN_HUSTLA]

The man with the golden gun. I like it. By the way Barfo I'm not a Republican just don't trust the direction either party is taking this government or it's currency. Just my opinion.

Here's a prediction for ya'll. There will be a massive crash equal to or exceeding the one last fall within the next 4months followed by more stimulus and unparalleled inflation. The crash and stimulus will happen no later then 12/31/09 and that will lock in future massive inflation. Just watch. The dollar is dead it just doesn't know it yet.

What's coming in the next 4 months?

 

[blazerboy30]

Why, because I'm not an overleveraged idiot living in an adjustable rate mortgage timebomb house? I actually save and invest what I own. I wouldn't keep that kind of loot in my house unless I lived ina gated community but I'm not there yet. I know lots of people who were making 80K+ just a year ago and now have lost everything. I know people who were worth a Million on paper just a couple of years ago in real estate who were over leveraged and got wiped out.

I called the dotcom bubble right and also this crash as well. I tried to get my parents to sell their house in 2006 and helped my dad retire that year and get his retirement locked in prior to the crash. I'm EXTREMELY fiscally conservative in my personal life (Green energy was my one risky investment as I'm young and need growth in the portfolio) so I live BELOW my means and save. It's served me VERY well thus far. Most people I know are far worse off then they were two years ago. My situation has improved.

Take a few deep breaths, relax, think of a happy place. It was a little poke for fun.

 

[Idog1976]

What's coming in the next 4 months?

Did you read what I wrote? Another market crash of a large sort ala October 2008.

 

[Idog1976]

Take a few deep breaths, relax, think of a happy place. It was a little poke for fun.

Sorry to over react, but lets say I'm not happy with my present living situation. I'm very cautious with taking on debt and feel the housing market has a ways to bottom before I want to buy. I also want to have a massive down payment so I can have better monthly cash flow once I'm locked into a mortgage.

 

[barfo]

Did you read what I wrote? Another market crash of a large sort ala October 2008.

I think he meant, or at least I would have meant, "why is another crash coming in 4 months?"

barfo

 

[maxiep]

The man with the golden gun. I like it. By the way Barfo I'm not a Republican just don't trust the direction either party is taking this government or it's currency. Just my opinion.

Here's a prediction for ya'll. There will be a massive crash equal to or exceeding the one last fall within the next 4months followed by more stimulus and unparalleled inflation. The crash and stimulus will happen no later then 12/31/09 and that will lock in future massive inflation. Just watch. The dollar is dead it just doesn't know it yet.

I agree. I had some IO product on a few of my rentals and refi'd them with fixed. You can't print money the way we have without it being worth less and the risk of it increasing.

 

[maxiep]

Sorry to over react, but lets say I'm not happy with my present living situation. I'm very cautious with taking on debt and feel the housing market has a ways to bottom before I want to buy. I also want to have a massive down payment so I can have better monthly cash flow once I'm locked into a mortgage.

I applaud those who truly live below their means. It's hard to do, especially when you see your friends and family live a higher standard on less money. My only advice is that you make these sacrifices worth it and invest in instruments that act as an inflation hedge. Otherwise the coming inflation may render your cash-strong position worthless.

Edit: I've seen blazerboy post here for a while, and I can assure you he was just poking a bit of fun at you. He's as good-natured as they come.

 

[Idog1976]

I applaud those who truly live below their means. It's hard to do, especially when you see your friends and family live a higher standard on less money. My only advice is that you make these sacrifices worth it and invest in instruments that act as an inflation hedge. Otherwise the coming inflation may render your cash-strong position worthless.

Edit: I've seen blazerboy post here for a while, and I can assure you he was just poking a bit of fun at you. He's as good-natured as they come.

If anything I've over invested in inflation hedging. I'm virtually certain there will be huge to hyperinflation sometime in 2010. I have planned accordingly. I just want to be in cash a bit for the fall when I think another crash in iminent as there is so much unwinding of crazy OTC derivative Credit Default Swaps that still needs to occur. Add to that all the toxic assets on bank balance sheets propped up by the mortgage guarantees, the purchases by the FED of junk paper from undisclosed financial institutions domestic AND foreign, cash for clunkers, long term liabilities (Social Security etc.) and outright monetization of the debt and it seems like mega inflation of a kind we've never seen is a lock.

On the other hand I still worry about catastrophic deflation if they don't monetize the 100's of Trillions (some say over a quadrillion per the Bank of International Settlements estimates a year ago) in the crazy unregulated shadow bank derivatives market. Frankly short of a real show stopper like the creation of a North American Union after inflating our way out of debt, I don't see how the "West" stands a chance against the BRIC nations that have actual built wealth the real way with blood, sweat and tears. Of course there's also the war option but is that really an option in a nuclear world?

That said my safety deposit box is pretty jammed full of Precious Metals because I think inflation is the only way out for the super rich and their minions in government. Obama will certainly want to go the inflation/spending route and if Bernake or the FED don't go along with that he might move against them. Jim Sinclar (www.jsmineset.com) who's been downright prophetic (see his 2006 formula!) believes there is a power struggle between wall street aligned "king makers" who put Obama into power and the "king makers" behind the FED. Sinclair if you don't know worked with Volcker after the Hunt brother's failed in their attempt to corner the silver market (another example of the danger of too much leverage).

I'm curious what do you see coming Maxiep and why?

 

[maxiep]

If anything I've over invested in inflation hedging. I'm virtually certain there will be huge to hyperinflation sometime in 2010. I have planned accordingly. I just want to be in cash a bit for the fall when I think another crash in iminent as there is so much unwinding of crazy OTC derivative Credit Default Swaps that still needs to occur. Add to that all the toxic assets on bank balance sheets propped up by the mortgage guarantees, the purchases by the FED of junk paper from undisclosed financial institutions domestic AND foreign, cash for clunkers, long term liabilities (Social Security etc.) and outright monetization of the debt and it seems like mega inflation of a kind we've never seen is a lock.

On the other hand I still worry about catastrophic deflation if they don't monetize the 100's of Trillions (some say over a quadrillion per the Bank of International Settlements estimates a year ago) in the crazy unregulated shadow bank derivatives market. Frankly short of a real show stopper like the creation of a North American Union after inflating our way out of debt, I don't see how the "West" stands a chance against the BRIC nations that have actual built wealth the real way with blood, sweat and tears. Of course there's also the war option but is that really an option in a nuclear world?

That said my safety deposit box is pretty jammed full of Precious Metals because I think inflation is the only way out for the super rich and their minions in government. Obama will certainly want to go the inflation/spending route and if Bernake or the FED don't go along with that he might move against them. Jim Sinclar (www.jsmineset.com) who's been downright prophetic (see his 2006 formula!) believes there is a power struggle between wall street aligned "king makers" who put Obama into power and the "king makers" behind the FED. Sinclair if you don't know worked with Volcker after the Hunt brother's failed in their attempt to corner the silver market (another example of the danger of too much leverage).

I'm curious what do you see coming Maxiep and why?

The derivatives issue is overstated, because each side offsets the other. Perhaps there's a trillion there--which is huge--but nothing completely catastrophic.

I see inflation, but not Weimar Republic-like. It will be closer to Volckler's first term. Most of my worth is tied up in real estate--residential and multi-family personally and commercial in terms of my partnership stake. RE is a reasonable inflation hedge, but not a perfect one. There's still some room to fall in residential and commercial has yet to feel the re-fi hit.

Other than that, currently I'm overweighted in equities. I jumped in with both feet earlier this year. I also own a fair amount of floating rate corporate bond product. I'd like to buy more MBS B-tranche, but I have too much exposure in RE as it is.

 

[Shapecity]

I fear we are headed toward debt-deflation.

Debt-Deflation
Main article: Debt deflation

Following the stock market crash of 1929 and the ensuing Great Depression, Fisher developed a theory called debt-deflation. According to the debt deflation theory, a sequence of effects of the debt bubble bursting occurs:

1. Debt liquidation and distress selling.
2. Contraction of the money supply as bank loans are paid off.
3. A fall in the level of asset prices.
4. A still greater fall in the net worth of businesses, precipitating bankruptcies.
5. A fall in profits.
6. A reduction in output, in trade and in employment.
7. Pessimism and loss of confidence.
8. Hoarding of money.
9. A fall in nominal interest rates and a rise in deflation adjusted interest rates.

http://en.wikipedia.org/wiki/Irving_Fisher#Debt-Deflation

 

[elcap15]

Sounds like some pretty sophisticated investors in here.

To the OP, I think you are a little overweighted in Large Cap US equities. You will be getting some overlapping with the Vanguard 500 and Growth Fund of America. Europacific is a great Int'l Lrg Cap fund. Since you are 36 and have a lot of time for this to cook, I would consider putting about 10-15% in emerging markets. This is where the real growth will be over the next ten years. If you like American Funds, The New World fund (NEWFX) is a great choice with a little less risk that the average emerging markets fund. If you like index funds than (EEM) is a good low cost choice that covers the whole emerging markets universe. More specifically, I think China (FXI) and Brazil (EWZ) are the best bets, with India (INP) also exciting.

 

[mook]

Sounds like some pretty sophisticated investors in here.

To the OP, I think you are a little overweighted in Large Cap US equities. You will be getting some overlapping with the Vanguard 500 and Growth Fund of America. Europacific is a great Int'l Lrg Cap fund. Since you are 36 and have a lot of time for this to cook, I would consider putting about 10-15% in emerging markets. This is where the real growth will be over the next ten years. If you like American Funds, The New World fund (NEWFX) is a great choice with a little less risk that the average emerging markets fund. If you like index funds than (EEM) is a good low cost choice that covers the whole emerging markets universe. More specifically, I think China (FXI) and Brazil (EWZ) are the best bets, with India (INP) also exciting.

Thanks for replying. Unfortunately, the ones you mention don't seem to be in my 401k. Here are my choices:

PIMCO Total ReturnView
Schwab Advantage Money Market FundView
American Funds EuroPacific GrowthView
Fairholme FundView
American Funds Growth Fund Of AmericaView
Dodge and Cox Stock
Vanguard 500 IndexView
Neuberger BermanView
American Capital World BondView

 

[Idog1976]

I fear we are headed toward debt-deflation.



http://en.wikipedia.org/wiki/Irving_Fisher#Debt-Deflation

I agree with you that this will occur. Where I disagree with you is on how the monetary authorities will handle the debt deflation scenario. I think they will opt to go out Weimar style rather then 1930's redux. They want money circulating again and have gone on record saying they want to goose inflation with lots of people calling for another round of Stimulus. Sooner or later the money the banks are holding will enter back into the system at which time the velocity of money effect will kick in with a loss in confidence in currency as the rest of the world diversifies away from the dollar with more call for an SDR like world reserve currency made of a basket of currencies (and possibly a slight weighting in gold). If the IMF doesn't do it likely an Asian financial group will promote an Asian regional currency.

That's how I see it shaking out. We simply cannot increase interest rates and taxes while reducing spending without running the risk of a massive social upheaval and violence. Far better to pay off our debt on the cheap and then replace it with a new regional or national currency much like Mexico did with the Nuevo Peso when the revalued there currency and shaved off a few zeros.