I don't really understand Wall Street. If the Dow and Nasdaq continue

[Maddy McCall]

to free-fall, what will happen? What will be the effect that those of us here in Hometown, USA will feel?

Will people make a run on banks to withdraw money? Would that be a wise thing to do? Empty savings accounts for cash at hand?

Thanks to all who respond.

[kentuck]

1. No problem for banks and credit card companies....

They just paid the Congress to protect their asses...They will get theirs.

[blondeatlast]

2. No run on the banks, but people may start withdrawing their IRAs

and such. Hubby's IRA lost $4000 over the last two days last week alone.

Big money types will recover from this, but the middle and working classes are going to be hit hard in their IRAs, and they will be very angry.

[Doctor_J]

3. What do you mean by "middle and working classes", bal?

Just curious. What do you think the cutoff will be for the people who are insulated from, let's say, DJIA @ 8K? You lost $4K since Wednesday, so the 401K must have a fair amt in it - will you sruvive a 20% drop, or will you be forced to liquidate some things?

I am trying to get a macro feeling for what's going on. I haven't checked my investments this week - too depressing. But we're about to liquidate some things and wonder if we should just put them in CD's for awhile - till the electorate comes to its collective senses.

[blondeatlast]

18. Our combined income is less than 100K and we live in a relatively

low cost of living area.

We had already planned to liquidate it, so this is a particularly bad time for it to happen. But we surely don't care to lose anymore!

[TahitiNut]

9. Small "investors" are those who eat the crumbs on the equity table.

I'm becoming more and more convinced that ordinary people who buy into (high overhead) simple positions in the equities markets are the cannon fodder for the huge ownership interests who can afford to play upside/downside games and burn off the ablative of the small investors. It's like a narcotic - convincing the slaves to "invest" in the plantation and participate in the greed-based Ponzi game of profiting from the labor of others. What "others"? When labor hands over more of their money to the owners, they just invest in longer whips and stronger leg irons. I'm a HUGE fan of owner-operated businesses ... and am becoming more and more appalled by the myth of some 'entitlement' to the fruits of another's labor.

There's a huge difference between "capital preservation" (investment of accumulated savings to preserve its current value) and the notion that "money makes money": that some investment has an inherent "right" to grow like a cancer.

Why does wealth have a far, far higher (systemically-created) entitlement to accumulate more wealth than labor???

[democracyindanger]

89. I just started considering that last week

Don't have much, so I haven't lost much, but lately I'd be better off if I stuffed it in my mattress

[Massacure]

4. The stock market gives companies a chance to borrow money.

They use that money to do various things related to their company, and in turn you get a share of the profit. If people don't invest, then they basically don't have any money to expand. Even worse, if people withdraw their shares, then they have to fork out money.

[TahitiNut]

8. Please, let's not confuse the bond market with the stock market.

Let's not conflate investments in loans with investments in equity ownership. A loan yields a specific return for a specific limited duration. An equity is a gift that keeps on taking. Love comes and love goes, but herpes is forever. Equity is the herpes in the economic system.

[sweetheart]

72. Although, there is a credit knock on effect

If your stock is up, your ability to borrow against that good credit is
well used... so in effect, the poster is correct in saying so.

The bond market is a secondary market anyways, and not relevant as a
"source" of capital. When a market tanks, it tanks correlated credit,
and, if companies are not prepared for it, this cycles back and further
erodes the equity price.

[TahitiNut]

5. Under one viewpoint, it can be regarded as good for labor.

While this is MY over-simplified view (IANAE), the economic motivation to confiscate a share of the wealth created by labor is proportional to the effective market capitalization. When the market value of a share of stock falls, so does the market capitalization. The same net operating earnings then result in a lower P/E - or (it's inverse) higher investment yield.

According to the "theory" taught in high school and community colleges, the price of a stock will rise or fall according to the degree to which the workers of a company create profits for the owners. But profits are also increased by reducing expenses - one of which is labor compensation - or by increasing prices of the products and services. But this dynamic works two ways. When market prices are driven higher by "greater fool" dynamics or by systemic forces (e.g. huge funds that're forced by regulation or by-laws to invest in equities), this creates a "thumbscrew" effect. The business is pressured to increase revenues (price times volume) or decrease expenses (typically labor rate times workforce size).

Driving down the labor costs has the partial cascade effect of reducing the market for products and services since workers are also members of the market.

But when the market prices go down, the pressure on labor to produce profits is reduced ... depeding on the expectations of 'return' (ROI).

IMHO, we've pretty much gone beyond the (healthy) limits of driving down labor costs. Currently, the average Net Operating Profits for the S&P500 are about double the average labor compensation. What does this mean? It means that the average worker in an S&P500 corporation is only receiving about one-third of the value created by their labor. All the rest of the value created is going to the various esoterica of "ownership."


IANAE = I Am Not An Economist

[Cats Against Frist]

88. Wow. Isn't that like indentured servitude, or something?

Hairdressers renting from a small, local chain owner come off with a better percentage than that.

Wow.

[TahitiNut]

90. Yep. But those shops are usually owner-operated.

Owner-operated businesses are usually nowhere nearly as predatory or exploitative as corporations, imho, even when the owner's an a***ole who has insanely high expectations of riches from retailing Ho-Ho's and Twinkies.

My dad was a barber and my stepmom was a 2-shop beautician. While I sure didn't approve of the skimming they did, they worked their butts off. Especially compared to the corporate franchised chop-shops that burn through the untrained high-school graduate hair-mowers, I'll take a conventionally-licensed union shop every time.

[Mend]

6. I don't own stock but I know several people who

retired under Clinton and are now back to work including my mechanic and my vet. I know a woman and her husband who retired six years ago with a million dollars. They were told to switch it from the state retirement system to an investment bank because the state only paid 4%....they have lost all their money, he is back at work, and they are trying to file for bankrupcy due to large medical bills put on credit cards.

[Mend]

43. they had their money with Morgan Stanley.....eom

[theboss]

68. This sounds dubious

If they were ins a state retirement system, I would assume that they were state employees and had health insurance. (Although I'm not sure why a vet and mechanic would be state employees).

And I don't know any financial planner who would advise a retiree to keep all their money in the stock market. If they had a million dollars, they could have invested in a few low-risk areas and generated a comfortable retirement on the interest alone.

Why on earth would your friends put their entire retirement in the stock market?

[Mend]

87. the vet and the mechanic were not the couple....

this is two other people, husband and wife, who transferred their joint retirement funds out of the North Carolina state system to Morgan Stanley because, as they said, the state system only paid 4 per cent. They thought they would do much better in a private retirement plan. I know of other people who also lost tons of money investing with Merrill Lynch, etc.

[MindPilot]

7. I'm kind of a financial moran too.

I've never had any real understanding of how all this works mostly because I have absolutley no interest in the financial games people play. I've always looked at the stock market like a bingo game for the rich, and the attempts to distingish it from regular gambling as rather silly. Who else rings a bell when they start & stop work?

I'm just a guy working for a salary so it doesn't affect me in slightest whether the Dow is up or down or how the dollar stands against the yen.

I always thought the down times were good for people with 401k--what are they called, mutual funds--because then your regular contribution would buy more stocks since they were cheaper. But with the market going down does that mean all the money I put in is simply gone?

[NNN0LHI]

11. I know someone who believes in the myth that more shares are what counts

He actually does have a lot more shares now than before. But all those shares combined are now worth about 25% of what the fewer shares he owned were worth 4 years ago. Yet he still keeps telling himself (and anyone else who cares to listen) that he is doing better now. Go figure.

Don

[MsTryska]

12. He's absolutely right....

he is in a better place now, because WHEN his stocks go up, and they will - he will be making that much more money, and having it compound over time.


The thing i keep seeing here is people who look at investments in the now, and think of all the money they are losing, as opposed to people who think of investments as the future and see how much they can make over the long term.


those are the people not panicking and using these dips as a chance to buy more. Buying stocks are no different from any other shopping. you looks for good product that will last you a long time, and you want it at a bargain price. The beauty is that stocks don't spoil or go out of style, so you can buy as much as you can, and hold it for as long as you want to.

[NNN0LHI]

13. Except he is way past when he wanted to retire now

His retirement will consist of being carried out feet first on a stretcher from his place of employment. He will never live long enough to recoup his his losses. He has a great retirement plan but chances are he won't live long enough to collect his first retirement check now. Dying on the floor of a factory is no way to enjoy ones "golden years" if you ask me.

Don

[MsTryska]

14. No it's not....

and truth be told, he shouldn't be in the market now in any case.


He should have been out of equities entirely several years back and in safe, low-interest areas - whether that be bonds, or simply cash.


This is what drives me nuts - people blame the market itself because of other people's missteps, and quests for bigger rewards, when they have no business floating that much risk.


It's not the Market's fault or the Governments fault, or the Companies' fault that he can't see the forest for the trees. It's his own damn fault.

[NNN0LHI]

15. And how many others should not be in the market right now...but are?

I advised him to bail when Bush took office in 2001. He thought I was talking crazy then. Now it is too late for him. Its all or nothing now. He thinks he can't afford to retire now when in fact he can't afford not to. I hope you don't find yourself in the same position some day.

Don

[sandnsea]

19. I tried yesterday

Some people just do not get that you can do everything right, but if you happen to be at a certain age when the stock market makes its "correction", you are fucked. And the only way to try to get back to where you had planned to be is to stay in the stock market, or make some stock changes, and hope it goes back up. But when you look at the long stretches where stocks don't go up, then you know there will always be people who make nothing in the stock market. Or worse, who lose everything.

It's a little disconcerting that anybody would think there's a guaranteed way to invest in the stock market, when every real economist says there's not.

[MsTryska]

23. you're missing the point.

no one would say the stock market is a guarantee and no here has said anything close to it.

what those who are confident in the market are saying and have been saying all along is educate yourself, and watch your investments. Be Patient and aware of what's going on with your investments and the market in general.


there is no excuse for getting taken to the cleaners if you are doing those things.


and for all the stories people have of this one or that one lost their shirt - i can give examples of people who were jsut fine - my own folks included. My mother taught me darn near everything i know, and still fosters my knowledge, and she's lived by these same lessons. Watch, wait, and learn all you can. And most importantly - know when to get out, according to your goals, not the market.

[sandnsea]

29. Contradictory, isn't it?

If there is no guarantee in the stock market, then one can't possibly educate one's self enough to guarantee they won't be taken to the cleaners.

Besides, I'm not talking about being taken to the cleaners, I'm talking about the way the market works. It has ups and downs and there will always be people who end up devastated by a down. Just like there will always be people who are just fine. What I find condescending in your posts is that you seem to ignore the long history of very wise people who have lost everything.

But I wonder, did your parents go into gold back in 1999 or so? Because people who really understood investment cycles, would have. And I haven't heard you mention that once.

[MsTryska]

33. I'm not sure....

I'll have to ask my mom - i know my best friend did and he's still as loaded as he always was, but truth be told he's been in gold since we graduated college and we were just talking about that at lunch the other day.


and i don't think it's contradictory at all. You can't guarantee the market, but you should be able to guarantee yourself. And yes - i do ignore those who've lsot their shirts, because, fact of the matter is - you did something wrong in order to lose your shirt - you either were playing in a game you shouldn't have bene playing, too too much risk, when you shouldn't have been, or you got too greedy. The only thing i can learn from the sob stories is what not to do.

But my true learning comes form those who have been successful, and what those common themes are, and putting that info into practice.


And those themes aren't buy this stock, or sell that one....they are meta issues - patience, vigilance, restructuring periodically, maximizing your risk when you can afford the luxury and doing that in a disciplined and controlled way, minimizing it at all other times.

[sandnsea]

34. Good luck to you

You probably won't add this to your learning, but my experience is that anybody who thinks they know everything never does.

[MsTryska]

36. you seem intent on giving me a lecture.

i'm not sure why - i learn from those smarter and more successful than me - i don't claim to know everything, but i'm willing to learn as much as i can - i know what i'm doing, i'm comfortable with the consequences of my actions, yet you seem intent on wishing me the worst.

I know i shouldn't care about a random stranger on a message board's opinion, but why are you spending so much energy trying to pull me into your own negative outlook?

[sandnsea]

40. You're flying high

Excuse me, it's just my motherly nature. The one thing I've always noticed about Republicans is that they never get anything until it smacks them square in the face. They are always ready to sneer at somebody and blame them for whatever problem they have, everybody else is just stupid or weak. But when some unforeseen crisis hits them, THEN they understand. I'm not saying you're a Republican, just pointing out that particular trait.

All I'm suggesting is that you temper your "I know what I'm doing" just a bit, because nobody ever has all the answers. And I have a tendency to believe that truly wealthy people have better things to do then spend time on a message board, so I'm guessing you're not there yet.

And when I said 'good luck to you', I meant that. I don't wish you the worst by any stretch. I do wish you a little humility though.

[MsTryska]

42. I'm far more humble than you

would know from a message board.

and no - i'm far from wealthy - i've even claimed bankruptcy in the past - however, i've learned from my past mistakes, i've learned form the mistakes of those around me, and i learn the most from those who've done far better than i have.


I also understand personal accountability - and it's soemthing i have learned from having to be acocuntable for my actions. And one thing that is clear to me, is very few people are willing to be held accountable for their own failures. That doesn't mean i don't believe those people should be cared for, or left to rot - but make sure you hold yourself accountable for your actions.

you reap what you sow. And i'm trying to sow as many positive and good things for myself as i can.

[sandnsea]

48. It's true

You can't reap unless you sow. So one does have to sow. But one can't control every circumstance that allows there to be something to reap. And sadly, some can't even control whether they're allowed to sow. Some don't have the intelligence to sow. Some sow, get sick, and then can't reap. Some sow and reap, only to have their reaping stolen or devalued in some way. All sorts of things happen in life. People often did absolutely nothing to cause their own failures.

But they get up the next day and go out there and sow again. That is the part that should be recognized and praised, not the pointing of fingers at some preconceived notion of irresponsibility and failure.

[MsTryska]

49. Then let's praise the getting up and out to sow again....

but don't dump on those who still sow, even where others may have failed.

and don't use those other people's failures as examples for anything other than their failures.

[sandnsea]

52. You're doing the dumping

And insisting stupidity and irresponsibility are the cause of failures. Maybe the unpredictability of life is just too scary a thought for you so you have to concoct a mythology for success. But there still isn't one.

[MsTryska]

53. stupidity and irresponsibility account for a lot of

alleged failures.

it's true. and it's also true that unpredictable events account for the failures that are left. (i've experienced both kinds)


so what?


either way shit happens. all you can do is be prepared for it.

[sandnsea]

59. That is just unbelievable

You filed for bankrutpcy, yet you sit in judgment on people who are stupid and fail and aren't prepared.

[NNN0LHI]

65. Thank you for getting to the bottom of this story

I agree. That is just unbelievable. I had a feeling something didn't seem right here. And here I thought I was listening to someone who was prepared for everything. Anyone who has filed for bankruptcy pays more for everything from car insurance to mortgage interest rates. I guess there really is something to that misery loves company stuff. Thank you sandnsea for getting to the bottom of this story.

Don

[Name removed]

67. Deleted message

Message removed by moderator. Click here to review the message board rules.

[MsTryska]

66. I'm the one sitting in judgement?

I'm speaking realistically. From having been there. I know I screwed up, and I can tell you exactly where I screwed up. I’m also willing to take responsibility for that screw up and not make the same mistakes again.


Yet you all of a sudden think I’m some idiot because I’ve claimed bankruptcy. And you can’t see where I would possibly be a little bit more clear-headed, and understand personal accountability.


Thanks for the judgment with the steaming side of hypocrisy.

[NNN0LHI]

70. Your words: "I'm like a boy scout - always prepared."

Apparently you were not as you say always prepared if you needed to file for bankruptcy.

Don

[MsTryska]

71. I "AM" prepared.

meaning in the now. building off of what i have learned from THE PAST.



do you honestly believe people can't learn form mistakes?


do you really believe that one bad move, and people are forever lost?


how pray tell can you possibly call yourself any sort of liberal?


i'm frankly disappointed in you.


for all the crying and moaning on behalf of the downtrodden and screwed over, when you are faced with someone who's come through the crucible of their own making - you have no respect for that accomplishment and worst of all – you sit in judgement like that person can not possibly be anything other than a screwup, who hasn’t learned anything.


Again – fuck you.

[NNN0LHI]

74. You come here talking shit like you are Warren Buffett or something

But for some strange reason you either can't afford or are not interested in donating 5 bucks a month to help keep this site going.

And yes, I do think you are probably living in your parents basement and mooching off of them too.

Don

[MsTryska]

75. Actually you have no idea

But you are chockfull of assumptions aren’t you? And still judging.

10% of my money does actually go to charity – and unfortunately Rwandans, Doctors without Borders, and Iraqi orphans along with the Democratic Party have gotten my donations so far this year (and it’s just barely the 2nd quarter). I actually do plan on giving to DU – it just has to wait until my next round of donations. (I actually budget this stuff – crazy I know)

Sorry I’m just not charitable enough for you. As for what my life maybe like – don’t stick your foot in it. I live on my own, take care of myself, send my folks money i owe them as I have it – pay all my bills and do it all without relying on credit. So there you have it – if for some reason you need to see receipts to convince yourself that one can go bankrupt and not be totally shiftless, I have them , so just ask. In closing – thanks for the judgments – do you have no conscience whatsoever, or are you just intent on winning arguments – no matter what they say about you and your values?

[sandnsea]

76. Oh get over yourself

YOU are exactly the point the rest of us are trying to make. I gave you ample opportunity to move off of your stupid and irresponsible line. The post below where somebody else at least admitted people can be fleeced in the stock market through no fault of their own, and that has to be part of stock investment consideration. You could have showed some empathy there and admitted you weren't being entirely fair. But you didn't.

Nobody is sitting in judgment on the financial circumstances of your life. But you haven't learned the most important thing you should have in your bankruptcy. Whether people get into difficulties through their own mistakes or being screwed over, they don't deserve somebody else sitting in judgment and saying tough luck bub, you're stupid and irresponsible and not prepared. But that's what you did.

You talk about accountability?? Be accountible for your ATTITUDE too. YOU were stupid and irresponsible. First and foremost, that doesn't mean that's the case for everybody else. But it also means that other people who do something stupid or irresponsible deserve the same kind of empathy and respect that you are NOW in a tizzy about not getting. You can't say YOU don't deserve judgment, but turn around and call everybody else names and dismiss their problems with "it's their own damned fault".

It's not your financial situation, it's your attitude that I object to. Yes, I am judging that and have moved from thinking you're young and a little full of yourself to you're just holier than thou.

[MsTryska]

77. then you have been listening to anything i've had to say.

people get themselves into situations - many times because they are stupid and irresponsible. sometimes because of situations beyond their control. Most often a combination of both.

that's one issue. and it needs to be accepted.



second - that issue has nothing to do with whether this or that will happen to anyone else - and it doesn't become a blanket rule for ALL people at ALL times. - This is what i have been trying to say for the last week.


lastly - just because this or that happens to someone regardless of whether it's their fault or soemone else's - they should have a safety net to catch them. but i don't think anyone is arguing that.



so why exactly are you so mad at me? because i say people are responsible for their own actions? they are. full stop.

[sandnsea]

78. Still, contradictory

You started off with posts telling everybody exactly how to invest in the stock market and if people just do it the way you tell them to, then they won't have any problems. And if people do have problems, it's because they're stupid and it's their own damn fault.

You twist into contortions to hold on to that idea, while trying to throw out a few bones because I think you realize you were a bit simplistic or overbearing in our original approach. But, you just can't quite say, yeah, I was a bit full of myself there. There really aren't guarantees in the stock market or life, sometimes things really are out of one's control. No, you insist that there is a formula that will always work if one isn't stupid or irresponsible.

Even now, when you finally admit most situations are a combination of mistakes and things beyond one's control, you can't let it go at that. You have to add the little caveat, people are responsible for their own actions. Which is right back to the idea that if people have problems, it's their own damned fault.

People are responsible to do the best with what they have. They are not always responsible for the outcome and what they have is not always enough to generate a financially successful outcome. To look only at a supposed failed outcome, and say it's their own damned fault, isn't a fair reflection of whether anybody was stupid or irresponsible or worked hard or anything else.

I'm sure you made as many right decisions before your bankruptcy as you did wrong ones. Just like everybody else. One of the keys to success is interpersonal relationships and getting the best from working relationships. That requires identifying attributes and building on them, not arrogantly telling people they're stupid and it's their own damned fault something didn't work out. I admit, I'm terrible at it, so you don't have to point that out to me either.

Perhaps a better approach would have been, after alot of mistakes, I'm doing such and such and it's working for me so far. If your financial advisor isn't having you do such and such, you might consider finding a new one.

[MsTryska]

79. Point by Point....

"You started off with posts telling everybody exactly how to invest in the stock market and if people just do it the way you tell them to, then they won't have any problems. And if people do have problems, it's because they're stupid and it's their own damn fault."



~~~~I started off telling everybody - and i was not the only one - tried and true methods for mitigating their risk. This has been common investing knowledge for decades before i got into the market. Namely - if you are near retirement and need your money, do not have it in equities - have it where the risk is lowest. Not only is this common knowledge - this is common sense. So yes - if you haven't done that - it is your damn fault. Pick up any book, speak to almost any good broker, or look in any company 401K guide it will tell you the same thing. if you have not done this i can only surmise a few things:

1. You really do think you are smarter than everyone else. (stupid)

2. You are not paying attention to your accounts (irresponsible)

3. You don’t really need that money so whatever (more power to you.)


"You twist into contortions to hold on to that idea, while trying to throw out a few bones because I think you realize you were a bit simplistic or overbearing in our original approach. But, you just can't quite say, yeah, I was a bit full of myself there. There really aren't guarantees in the stock market or life, sometimes things really are out of one's control. No, you insist that there is a formula that will always work if one isn't stupid or irresponsible."


~~~~i'm not sure what you're point is. You went from "everybody loses in the market" - to "you'll lose in the market" to "you suck because you went bankrupt".


"Even now, when you finally admit most situations are a combination of mistakes and things beyond one's control, you can't let it go at that. You have to add the little caveat, people are responsible for their own actions. Which is right back to the idea that if people have problems, it's their own damned fault."

~~~~~yes. people are responsible for their own actions.

"People are responsible to do the best with what they have. They are not always responsible for the outcome and what they have is not always enough to generate a financially successful outcome. To look only at a supposed failed outcome, and say it's their own damned fault, isn't a fair reflection of whether anybody was stupid or irresponsible or worked hard or anything else."


~~~~you're first sentence in this paragraph sums it up exactly. People are responsible to do the best with what they have. This means caring for your investments, being watchful, not taking foolhardy risks, and knowing when to cut your losses and get the hell out. If you can't be counted on to do this for yourself - you have no business being in the market, much less complaining when it bites you in the ass.


"I'm sure you made as many right decisions before your bankruptcy as you did wrong ones. Just like everybody else. One of the keys to success is interpersonal relationships and getting the best from working relationships. That requires identifying attributes and building on them, not arrogantly telling people they're stupid and it's their own damned fault something didn't work out. I admit, I'm terrible at it, so you don't have to point that out to me either.

Perhaps a better approach would have been, after alot of mistakes, I'm doing such and such and it's working for me so far. If your financial advisor isn't having you do such and such, you might consider finding a new one. "


~~~~as for this - you're right i'm very direct and straight to the point - and it can be offensive - but i won't pull any punches.

if you are doing it wrong and it's putting YOU at risk, i'm going to let you know, and i'm going to tell you to educate yourself first, and i'm going to tell you to pull your money out and put it someplace safe until you know what you're doing. I'm not gonna handhold, or mollycoddle. If you expect gentle prodding that's not gonna happen - especially when you are putting YOU at risk - that's what you pay your broker to do. i don't operate that way.


People who can accept cold truth accept it with grace. And adjust accordingly. People who can't usually get their knickers in a twist.

[sandnsea]

80. But YOU are supposed to get empathy

That's rich. I hope there are people who are kinder than you when your next bubble pops. Whatever bubble. Because everybody has bubbles that pop, be it financial, emotional, health, whatever. Nobody gets through life pain free.

And, for the record, I never said everybody loses in the market, you'll lose in the market, or that you suck because you went bankrupt.

I understand people that can't get through life without a rigid set of economic and social dogma to live by. Like I said, for many people it's just too scary to contemplate anything being out of their control.

Cheers.

[MsTryska]

81. I have empathy.

perhaps you're missing something.


Saying "you screwed up" means nothing other than "you screwed up".

I think you're taking what i say and applying your own filter to it.


There is nothing inherently wrong with screwing up. it happens.


And when people screw up they pay the consequences for that. That is something out of my power or your power to control.


So what are you arguing about here?


what is it exactly that you want me to say?

I can only say what's true for me. And from my perspective people have screwed up adn lost everything they had in the market. I don't intend to be one of those people, no matter what. There are plenty of mistakes made along the way, that are easily avoidable. It's jsut that simple.


Do i feel bad that they have to work past their retiremtn - sure of course i do. But that doesn't negate the facts. Those are immutable.

[sandnsea]

82. As often as not

someone didn't screw up. Which you have admitted to, then taken back, then added caveats to, then taken back again. You can't seem to make up your mind. But your preference seems to be to fall back on the myth that other people are stupid and irresponsible, and you are now above such stupidity. For one thing, you're not, nobody is. More importantly, as often as not, it isn't ones own stupidity that causes problems. I know you have a hell of a time with that concept, doesnt make it any less true.

In fact, I read a study a few years ago. Successful people actually don't blame themselves for circumstances outside of their control. Unsuccessful people blame themselves for everything.

[MsTryska]

83. thanks for the intended ad hominem attack....

you've slung a lot of them at me so far, so what's another one i guess......


in any case - i don't think i've changed my stance even once.



people are often stupid and irresponsible.


soemtimes things happen that are out of people's control.


a combination of these factors can lead to ones demise.



to me investing in the stock market is a willful activity. it's soemthing you choose to do. If the market rises you make a profit. if it falls, you lose a profit. it's up to you howeve,r to decide how much you are willing to lose.


So the what the market does may not be under your control - how you respond to that is unequivocally up to you.

why is this so difficult to accept?


to me what we are arguing here is akin to me saying i like to drive my car, and you jumping down my throat saying "there's this guy who rolled his SUV going 100 miles an hour and he flew out of the car because he wasn't wearing his seat belt and you just watch out young lady because that could be you, so you shouldn't drive - it's unsafe!"


i'm telling you it's not going to be me, because a. i drive a hybrid.

b. i don't drive at unsafe speeds.

and c. i wear a seatbelt.


this whole hting is ludicrous - and i can only chalk it up to you not fully understanding how investing works, and thinking that all risk is the same and tantamount to losing your shirt.


I've been consistently trying to telly ou that that is just not so. There are peltny of people who exercise common sense, and do jsut fine for it.


that being said, this is my last contribution to this conversation. we'll jsut have to agree to disagree.

[sandnsea]

84. No

It's like reminding my daughter that she can be doing everything right and some drunk can come flying out of nowhere and smack her. Which actually did happen, except it wasn't a drunk it was a guy whose brakes failed. Oh, and it happened again the weekend of her bridal shower. Her fiance had someone spin out of control and hit him head on. The failings of the insurance company and the auto repair shop caused them problems for three months. They're lucky neither of them were permanently injured. Lucky. Not wise or prepared or responsible. Lucky.

You just keep thinking people can control everything in their lives. I'm telling you it is just not so. And my experience is that arrogance in thinking that it IS so contributes to as many failings as anything else.

[sendero]

62. I dunno...

... nothing personal but I don't find investing in a rigged game to be "sowing" anything.

Most of what passes for stock market investing in this country is basically gambling. Corporations are real good at making sure you don't have objective information at all. Even if a company is good, they can be blindsided by macroeconomic events such as energy prices and other uncontrollable events.

The game is to keep you trading because that is how they make their money.

Personally, I think "sowing" would involve investing in yourself, starting some kind of business or something like that.

At least then, you have something like a chance. In the stock market at the present time, you are just playing a casino where the pit bosses have run amok.

[oneighty]

55. I have TIAA/CREF

Said to be among the best. It took a terrible hit in 2001 and has not recovered. Nothing I can do about it either. Nothing.

180

[natrat]

64. what a load : there is a whole generation that have lost big

stock market makes a few winners and more losers plain and simple

[MsTryska]

69. define "winning" and "losing"

As it relates to the stock market?


For all your “winners” and “losers” there are people who have quietly made nice interest returns on their money over the long term – more than they would putting it in a bank.

[northzax]

39. I am constantly amazed

by the number of people who will invest in something they don't understand, simply because it 'looks good.' Over a 20 year time frame, a well diversified protfolio should in almost every case, have returns above inflation+interest. Part of the deal is that, in exchange for higher potential returns, you do assume a higher potential risk. If you want to be 'safe' put all your money in the bank, it's guaranteed, and only pays a few percent, if you're lucky. The fact is, you wouldn't buy a house without doing research, you wouldn't buy a car without doing research, hell, you wouldn't buy a ski jacket. but people put all their future money into markets that they don't understand. Never invest money in the market you will need in the next five years. Never invest money in anything except widely diversified (SPDRs, blue chips. index funds) that you can't afford to lose. Don't go to Vegas with the rent money, don't put everything you own into Enron. (yes, I lost money in the past week, I have no idea how much, and frankl,y I don't care. it's money I don't need for 35 years. I will wait untl July and do my standard 6 month review of my portfolio, perhaps reallocating money among fund then. I don't however, own very many individual stocks, I actually know that I don't have the time or inclination to follow everything about a company and predict what's coming down the pike. So I don't invest in them. I'll never make a killing, nor should I ever take a beating.) Honestly, our entire system depends on the free flow of capital in the markets, if that fails, the money you took out and stashed under your mattress is useless. You have to think long term, if you can't, and if you can't look at a week like the one we just had without shrugging it off, YOU SHOULD NOT OWN STOCKS. it's actually that simple. the market is not entertainment, it is a tool. It can bea powerful tool, but like all powerful tools, if using it makes you uncomfortable, if the thought makes you lose sleep at night, then you shouldn't be using it.

We have created this myth that everyone can invest in the markets. And there are tools that allow almost everyone to do so (you can start a DRIP or an IRA for $25/month, most people, but not all, can spare that, if they choose to make the changes to their life)

Yes, there will always be people who get fleeced. Yes, crime can take the best of organisations down, and the money with them. Diversified portfolios will be hurt, but not destroyed by that.

I don't want to sound snobbish, I'm not a banker or a trader, just a guy who applies common sense to his savings plan. You win some, you lose some. If you don't understand it, don't buy it untill you do. have a plan and stick to it. diversify. Following those rules, very, very few people will get fleeced in a pure market. But we have this mythology of the Market as apanacea for all financial ills, weget stock tips from out dentist, or a guy at a cocktail party. so people get hosed. sucks.

[sandnsea]

41. No problem with that

That's a rational approach. You admit there's risks and people can get fleeced, and not have been stupid or done anything wrong. You acknowledge not everyone has the money to invest, but I'd suggest to you most people actually don't. But that would take busting the myth of the number of people who earn less than $25,000 a year and whether they were properly purchasing insurance, getting health checkups, etc. It isn't the investing in the stock market I was objecting to, it was the arrogant notion that if people lose money it's always their own fault. Which would lead one to conclude that there's no excuse for anybody to not have invested, if you only lose money due to your own stupidity. Nobody thinks they're being stupid, until it's too late.

[MsTryska]

44. I know i never said that there aren't risks and that people don't get

fleeced - the gentleman uptop essentially said the same thing i have been saying for the past few days.

yet he's right - i'm arrogant?

[sandnsea]

45. You said

People are stupid if they lose everything. Don't quite know how else I'm supposed to interpret that.

[MsTryska]

46. yes.

and to refer back to the gentleman's comments:

"If you don't understand it, don't buy it untill you do. have a plan and stick to it. diversify. Following those rules, very, very few people will get fleeced in a pure market. But we have this mythology of the Market as apanacea for all financial ills, weget stock tips from out dentist, or a guy at a cocktail party. so people get hosed. sucks. "


this is what i mean about the people who are stupid - for whom it's their own damn fault.

[sandnsea]

51. You missed the rest

Which was that knowing that people get hosed is part of the deal. When it isn't their fault. Which I think you still don't get.

[MsTryska]

54. It is their fault tho.....

that's the part you're not getting.


it's your fault when you don't educate yourself before taking risks.


it's your fault for thinking you can somehow beat the market.


it's your fault for not re-arranging when things don't go as planned and minimizing damage.


all of that rests on no one but you.

Who would you have be responsible for these msitakes? the companies? they've got their own issues. the market itself? it's an unthinking unpredictable beast. the president? he's not putting these people's money in the markets (well not yet anyways) they are.


by taking accountability away from people all you do is weaken them.

the stock market is a risk. It's meant to be played as a managed risk, because of the rewards that come with it. if you don't understand that it's risky and that soem days you win, some days you lose, you have no business being in it. And you will get fleeced.

[sandnsea]

60. See #59

That's all I have to say.

[Jose Diablo]

27. And Bu$h wants to put SS in the stock market???

Bu$h knows better than this, he just wants to allow his buddies to rip everyone else off.

[MsTryska]

21. not likely.

I'm 30 years ahead of my retirement, and i've got it planned by decade. I don't ever intend to be in the position of literally gambling my retirement at 55.

[NNN0LHI]

22. One unfortunate accident and you could be retired tomorrow

Get in a car accident. Slip in the shower. Fall off a ladder. Then what?

Don

[MsTryska]

24. Then my disability insurance kicks in.

and if you think i wont be investing soem of that as well, then you haven't been listening. I'm like a boy scout - always prepared.

heck my mom did that very thing with my parents retirement when my dad became disabled. They lived beneath their means, and she invested hte maximum into their IRAs. And they are still fine today. And all this happened through the 90s boom, and the 2002 bust.

[NNN0LHI]

31. How long does your disability keep paying you not to work?

What happens if your your disability insurance ends and you need to cash out of the market to pay medical bills and the rent and your portfolio at that time is worth 20% of what you have invested in it?

Don

[MsTryska]

35. Disability insurance stops paying when

you are either 65 or eligible for social security - i'm not sure what the rules are these days - in my Dads case it was 65. Just in time to start tapping into the retirement accounts.

and if my portfolio is only worth 20% of what i invested- something has gone horribly awry. namely i screwed up somewhere.

[NNN0LHI]

47. You are very fortunate

There are not many people who have that kind of disability insurance. Most that I know of have limits on them. And I don't know anyone who has disability insurance that have increases each year to keep up with the cost of living. Where I worked someone could collect one year of disability for each year of service. But that was locked in at the amount when someone became disabled. So if someone became disabled this year and was getting $500.00 per week they would still be receiving the same amount in ten or twenty years while the COLA continued to rise every year. You can afford to play the market in your situation. Good luck.

Don

[MsTryska]

50. Thanks. Yeah....that's the one thing about disability

that bothers me - and that it doesn't allow for cost-of-living.


That's one of the many things i've learned form my parents tho - to always carry your own disability insurance (above and beyond that provided by the job). It truly can be a lifesaver.

[Yupster]

30. It's not a matter of who's in office

It's a matter of when you need your money.

If you're within a few years of retirement, you should have little of your money at risk in the market.

If a person retires with $ 1 million and lost it all in the market, then that person proved the old adage of how a fool and his money will soon be separated.

If you retire with $ 1 million, then you can get $ 5,000 a month interest in bonds paying 6 % interest.

Or you can put $ 800,000 in bonds to get you $ 4,000 per month and the other $ 200,000 in stocks to maybe try to grow some more money.

[Zynx]

37. Finally, an intelligent post!

Gah, will people stop complaining about how the market sucks because they did (or know someone who did) something no financial advisor could possibly recommned without losing his license?

Short term investing is dangerous as hell even IF you know exactly what you are doing. And the risk goes up as you seek larger returns because there's generally a reason everyone isn't already invested in this particular stock and it is fully valued.

The time to start planning your retirement is in your twenties and thirties, not your fifties.

[MsTryska]

38. Thank you!

i feel like i've said this a million times in each and every thread about stocks lately, but all i get is people wishing me ill and telling me how sorry i'll be when i end up liek their worst case scenarios.


there's no magic or bad ju-ju in the market - investing for retiremnt is not a mystery or gambling - there is a method to the madness.

The market is an unpredictable beast, but your path to retirement savings should be as predictable as you can make it.

[Donailin]

86. A million dollars?Everyone's talking about money I don't even dream of.

Choice: twenty five dollars on new sneakers for daughter or twenty five dollars on IRA or CD, or twenty five dollars for someone who got cancer and has no insurance

Choice: saving for the future or praying to God to meet today's needs

Choice: live for the future or live for the moment.


"Do not store up for yourselves treasures on earth, where moth and rust consume, and where thieves break in and steal; but store up for yourselves treasures in heaven where neither moth nor rust consumes and where thieves do not break in and steal. For where your treasure is, there your heart will be also."

I'm just sayin' . .

[enid602]

16. risk management

That's why most financial experts suggest that your retirement portfolio should shift more toward bond mutual funds and CD's as you age. Stocks pay off over the long term, whereas bonds and CD's grow only gradually, and are much less risky. As I 50 year old, I currently have 60% in bond mutual funds, 30% in stock mutual funds, and 10% in CD's, which is about what is recommended. Under no circumstances would I invest in individual stocks, which I see as way to risky.
Since *'s 2nd term began, I've been worried about the dollar, and have transfered 40% of my holdings (being careful to maintain the same bond/equity/CD ratio) to international (90% European, Japanese, Canadian, Australian and 10% Latin American) holdings. Although rare, these funds are available for sale here in the US, so you don't have to withdraw from your IRA and incur penalties and additional taxes.

[MsTryska]

25. How has the Foreign Bond market been woking for you?

I'm starting my Roth Ira when i finished with my carnote in the next few months.

I'm in my 30s, and there's a mid-cap value fund and an RWIT fund that i'm planning on putting into it - But i've been curious about the Foreing Bonds as well - for hedging against the dollar. I was thinking gold to hedge, but it's still too expensive per oz to make much sense.

[enid602]

56. foreign bonds

I put most of my foreign bond money into T Rowe Price's foreign bond index. They invest 85% of the fund into non-US, developed world (Euro, Canadian $, Yen, Australian $, Singapore $, etc) AAA-rated corporate and sovereign bonds. It's just been holding steady the past two months; the euro has depreciated from $1.39 to $1.28 temporarily, due to the European and Japan's central banks trying to save the dollar. This decrease has been offset by the fact that foreign bonds (ironically) pay higher interest than their US counterparts.
I think the dollar's in trouble over the next 2 to 3 years, however, and foreign currency appreciation plus some nice interest could make for a pretty sweet yield. Remember, I'm still 60% invested in US bond and stock mutual funds, so if the dollar appreciates over the long term, I'm covered.
I also invested a small portion of my foreign bond $$ in Mainstay's high income foreign bond, which invests in more risky Latin American and developing world bonds. This investment decision was based on conscience, as I especially approve of what Lula and Kirchner are doing in South America. Remember, Latin America's traditionally crushing foreign debt is denominated in dollars, and when the dollar goes down, they win big time. Most Latin countries' central banks have already diversified their reserves out of dollars, so it's cheaper for them to make debt payments. Furthermore, Brazil and Argentina's massive agricultural sectors put them in a good position to sell beef to the Chinese, who have plenty of money to buy from South America. Nice to know where are dollars are going.

[sendero]

61. Sure, they WILL go up..

.... it might be next month, next year or next decade or even longer, but they will go up.

Stocks always go up eventually but let's dispense with the myth that they will go up in time to do any particular person any good.

[Tux]

10. I have money

That I dumped into CDs. Are those safe? I don't want to mess with them and plan on getting enough so MAYBE I could retire when I wanted or just use it as additional income.

[MsTryska]

28. What interest rates are you getting?

If it's 4 or 5% then yes, keep them there, and ladder them so that every 3 months you have one coming available to put elsewhere should you choose to.

if they are not 4 or 5% then roll them over when they come due to a higher interest rate - or jsut toss them into a money market account.

(depends on the amount, whether it's IRA cds, etc)

[enid602]

57. CD's

Most investment houses and 401K plans offer something usually called a short-term income fund, which constantly buys and sells CD's. As interest rates in the economy go up and down, so does the yield on the fund, making your investment much less risky. Again, the idea is to invest in funds rather that individual bonds, stocks and CD's.

[K-W]

17. Stocks are more important for what they represent

If the stock market keeps dropping it will mean that corporations arent projecting profits. If corporations arent projecting profits, the people who own large shares of the coroporations, the wealthy and the banks, will start cutting thier losses. Reinvestment will stop, and the elites will turn off the economy, because they are the only ones with access to the switch.

It would mean a depression. A complete breakdown in capitalism.

So yes, it would indeed lead to runs on the banks amongst other things.

[ComerPerro]

20. This is when you start to hear "The President doesn't control the market"

The same asshats who were kissing Bush's ass over a one point increase will now say that he has no control over the declining prices.

[elehhhhna]

63. He sure kept it jacked up by promising all that Soc Sec $$$ though--

and now that THAT market bail-out scheme has died, stocks are correcting downward.

[neebob]

26. I don't know what will happen, but I like to think on the bright side

If it goes down too far, it'll fuck up the plan to privatize Social Security.

[Yupster]

32. The first place the stock drops are noticed is in places like restaurants

There are many retired people who live on their bond and CD interest and dividends and also their stock dividends.

Let's say a person has $ 1 million in investments, say $ 700k in bonds and $ 300 k in stocks and they take $ 2,500 out per month.

Now their stock portfolio drops from $ 300 k to $ 200 k.

Even though that doesn't change their income producing bonds or CD's, the person may still tell his broker to reduce his check to $ 1,500 per month to keep his account from falling so fast.

If enough people do this, the restaurants start noticing fewer older people coming by.

Things can spiral down when the stock market drops.

The other quick notice is the government. When the tech stocks were going nuts in the late 90's, the government was taking in tens of billions of capital gains taxes that they hadn't anticipated from all the profits being made on stock sales. That's why each time the budget defecit was announced, there would be another happy surprise of 10-20 billion a quarter.

Once the market goes down, those surprise checks stop flowing in to the government.

[enid602]

58. capital gains

I didn't think of that. A drop in government revenue, leading to even higher deficits. Just goes to show that a thoughtful administration should not piss away a surplus (by cutting taxes for the wealthy and starting phony wars), so they have something to fall back on when times get bad.

[Junkdrawer]

73. Just separating more Boomers from their retirement nest eggs...

before they retire.

See Also: Social Security Reform...

[Zerex71]

85. Just so you know

The stock markets are all driven by computers and their software. There are a multitude of software triggers of all kinds to keep the market going, so it's not likely that the number is just going to plummet all by itself -- but that doesn't mean it's inconceivable. It's just that the software monitors the numbers and tweaks things here and there to try and prevent a full-on catastrophe.

As an example, if you notice how on Friday it crept down near the 10,000 mark, and since we live in the age of the whore media's obsession with "psychological benchmarks", it's not likely the markets would have "let" the number go below 10,000. But this is partly speculation.

At any rate, I always remind people that no one is going to make it big in the stock market unless you're already a major player. Joe Blow who reads Fortune magazine and thinks he's getting all these great tips and so forth to make them a "savvy investory" is just full of crap, especially once he realizes whatever paltry pittance he's going to make "on paper" probably equals the amount he's shelling out to some publishing company hoping enough fools read their ragazines.