The stock market and you, can someone explain?

[Ranchero50]

Please, not politics. Hoping someone can help me understand what is coming in the next 6-12 months. I read the news stories and it doesn't make much sense from a business standpoint. I undserstand the govt. budget is going to sink the country but what happens in 6 months?

Two years ago I stopped putting money into my 401k after watching it drop every 2 years and barely raise to the original level before dropping again. Figured ever sense that a lot of the problem was all the 401k money floating around the markets created a lot of the problems we are seeing now.

Comments welcome.
Jamie

[fordman]

fear is the number one way to lose money. smart investment are key. the place i used to work had an option as to where to invest your 401k money in. you could play it safe and get very little return. such as bank loan stock. or you could go for the risky investments and maybe make cheese loads of money on your 401k. i myself have invested in real estate. i may not make it though because i t got ripped off. its along story. i have no idea where i am going to pay the money for being ripped off at. so there are always risks. you just have to decide where to make them. maybe yo uneed a mind reader to know what the future holds. i say just survive and do what you can for now. christmas will pick up business like you wouldnt believe. but then it will all fall apart come jan and feb winter heat bills. the spring is always great for making money. rightnow they say invest in gold.

[Ranchero50]

Well, survival mode has been angaged for a couple years now, a real eye opener this morning was noticing a 1lb bag of Lays potato chips were $4.29, so the $120 a week grocery bill is up over $150 and it's hitting the bottom line. My concern is what will the stock markets crash cause businesses. Read last week that companies are hoarding cash vs. hiring and upgrading equipment.

Jamie

[fordman]

truly. it is a lot fo scare tactis from those companies. because they are listening to the bad news. and not remembering that people alway sbuy stuff. they have to do it to survive. gas prices and costs to manufacture their goods has cost them sending their costs up . and then there is the shipm,ent of those products to the local stores. and that is where we all get hit. several months ago. we went to the store. and we had to pay our bills. so we took and boguth mainly prepared frozen meals. soem tv dinners. and some pizzas. we made it for a whole week for 30.00 for the two of us. we did that for two - three weeks. it got old fast. but we got our bills paid. contiue bying when you want something. becareful what you buy. lays is really overpriced anywhere. but they do have sales. thats when to buy that kind of stuff. but we are back to eating whatever now. and the bill has ate up my wifes paycheck again. plus i am startign to want to changewhat i eat . because i dont feel good with what we have been eating. i feel more like fish and chicken. i really dont want anymore hamburger. i really only liek bacon ham and sausage. i dont like any other pork at all. pork steaks make me sick . or it takes nasty. i cant remember. but i wont let my wife buy it anymore. plus we have had two buthered pigs in the last two years. so we have more farm tasting pork than i can handle.

buy stuff on sale only. cut back on snacks when you can. its like smoking. cut back when you think you can. you can break the habit. i just cant get my wife to quit smoking so i can quit smoking.

[fireguywtc]

Okay, in no way did the money that was in 401k programs and the like create the economic problem that exists. The inverstors that handle that money are to blame. Like fordman said, it is all about fear. I also don't feel that the govt. budget is dragging the economy, but the idea that the leadership is weak will have a negative impact on the economy.

If you can afford it, I would never recommend pulling money out of 401k or any other retirment programs if you are years away from retirement. Everyone that is investing must think about the long term in this case. If you are currently investing, you are getting a good deal on all the stocks and are able to buy at a larger volume of stocks. The longer this lag in the economy continues, the longer you can buy stocks at a lower price. Though for that time it will appear that your 401k is doing little to nothing. But in the long term when the economy does start growing again (and it will), all those stocks that you were purchased at a lower price will start growing a lot. It is difficult to imagine, but if you are a long way from retirement, this down turned economy is a good thing.

[70_F100]

It is difficult to imagine, but if you are a long way from retirement, this down turned economy is a good thing.

I was hoping to retire in about 7 years, but that doesn't look like it's going to happen.

I guess your post is good news, because with the economy tanking and being unemployed for a full year, I'm now a long way from retirement.

At least I'm back at work and making a decent (although lower) salary now, and things are looking much better.

[Andy Man]

Please, not politics. Hoping someone can help me understand what is coming in the next 6-12 months....>SNIP<

Comments welcome.
Jamie

Hi there Jamie...IMHO. to get a feel for what is coming financially, it may help to understand what has changed. Used to be, for A very long time, one of the big rules for investing was, "sell in May & go away". Over the summer the market would slowly decline until early fall when buying opportunities reversed the cycle. Come year end there was another round of selling in order to cash in on profits or lock in losses. All that changed with the entry of huge hedge funds. Now the pirates rule! These huge hedge funds, along with the investment houses (which even now control the physical warehousing of commodities), drive up, way past actual values, the price of stocks and stuff like oil. Then when a cover presents itself, en-masse they sell out their positions and rake in tremendous profits. By which they suck the life out of individual investors. Next, they rinse & repeat. Will the market go up? The pirate's profits depend on it.

Now, the Food companies have joined the pirate brigade. They downsize package weights while keeping the package looking large. Today the one pound coffee can is 13 ounces, the half gallon ice cream is 48 ounces, the half gallon of OJ is 59 ounces, the one pound can of veggies is 14 ounces, and so on. In true pirate spirit, along with giving us less, they jacked up the prices big time making huge profits.

Until these companies are punished instead of being rewarded, expect more of the same. That's what's coming...

[Ranchero50]

Bill, I see it that 15 years ago there were limited jobs with retirement funds, then when the 401k hit every walking monkey could dump a portion of their paycheck into wall street. I'm pretty sure the only guy getting rich is the guy moving your money around.

The bad thing I saw about the 401k plans I have is the return included what you were putting in so your 401k gained $2500 in a quarter but you put in $2600 including a company match so wall street didn't gain your 401k any money, you just put it in an account for some jackleg to gamble with. So even when you were losing money hand over fist the books only showed a slight loss.

As I said, my 401k's are mixed of conservative and aggressive investing and they barely break even. Luckily I only put $16k into the first one and it's been on it's own since 2000. I think I'm around $12k last time I got mail on it.

The whole buy when it's low mentality does not affect a 401k at all. You are not buying or holding stock, just putting your money in a fund that MUST move money for good or bad.

I'm more interested in what businesses and govt will do about the debt markets being so screwed up.

Jamie

[woods]

Ya know, it's kinda funny (in a sad way). They nailed madoff for a ponzi scheme. Basically...the money is not there if everyone wanted their money because it's being passed around.

What if everyone of Bank of America's customers showed up tomorrow and everyone wanted to take out all their money? It's not there. So, a ponzi scheme is okay as long as it's done on a big enough level, with enough important people backing it up.

This next part you will have to take with a grain of salt, because I'm a bit of a nut job. I would be just fine if the whole friggin thing came crumbling down. This greed and fancy math is destroying us. If it finally just wheezed out it's last breath, maybe we could get back on the right track again with a restructure. I personally see nothing wrong with getting back to a more simplistic lifestyle. Most of us are way too dependent on others. This causes massive fear and weakness.

Back to the point...It will take a huge crash in the not too distant future. The guys who said the housing boom would collapse (and had it down to almost the exact date that it did) are now saying that it will crash. These cats are pretty smart, very few actually listen to them though.

[MrMajestyk]

If what we experienced in 2007-2009 was a “normal” recession, we should have bounced back strongly by now. But, it was not a normal business-cycle type recession. Instead, some people are calling it a “balance sheet” recession, in which over-indebted consumers (and governments) TRY to reduce their debt and spending, This reduction in demand has helped keep a lid on economic growth.

The United States accumulation of debt is unsustainable, my biggest concern is the U.S. government, particularly the Federal Reserve, is about out of bullets when it comes to using monetary policy to jump start the economy and printing more is not going to help !

If you can sit tight do so, I personally do not see anything in the next six to twelve months
to change my 'neutral' or 'sideline' position


[Political rhetoric removed to ensure reader safety]

[fordman]

well from what i read. we dont actually owe china money. china bought government bonds as an investment. and now they arent getting the return they think they should be getting so they are complaing. but the balance sheet thing is right. everyone is trying to pay off and reduce. so nothing is going as it should.

[cdeal28078]

So you are saying the present administration is trying to payoff our debt and stop spending? I will admit I don't watch the news much at all but I didn't get that impression. I keep seeing that deficit clock in Times Square I think it is and those numbers are flying by and in the Trillions! Every read that little story about what a Trillion is? I will scare the heck out of you when you realize how much our Government is spending everyday.
http://www.chrismartenson.com/crashcour ... h-trillion
A stack of Thousand dollar bills will be 67.9 miles high to be a Trillion dollars! Stacked not end to end! Cannot fathom it
clint

[fireguywtc]

In short, I don't think govt. or business is going to do much of anything in the next six months to a year. The only thing we will hear from the govt. is the announcements of who and what will be cut from spending as they figure out what they want to cut.

Lets just all try and remember that the fear and stigma of our current situation was also shared by our ancestors during the great depression. Are things different? Sure they are. But things will get better as long as we keep working and not giving up. That means a lot of things, but I would encourage everyone to do what they can and to educate and participate in govt. as much as they can. It IS important.

[Whateverman]

Ever seen "Zeitgeist"? 'splains alot
http://www.youtube.com/watch?v=4Z9WVZddH9w

[flyboy71]

As I said, my 401k's are mixed of conservative and aggressive investing and they barely break even. Luckily I only put $16k into the first one and it's been on it's own since 2000. I think I'm around $12k last time I got mail on it.

The whole buy when it's low mentality does not affect a 401k at all. You are not buying or holding stock, just putting your money in a fund that MUST move money for good or bad.

I'm more interested in what businesses and govt will do about the debt markets being so screwed up.Jamie

Im in the same boat. I gained a lot in the first 10 years or so of mine then changed jobs rolled it over and the last 5 have sucked. I have moved most of mine to bond funds for the short term. Im still not seeing a benefit. It really depends on what percent you have going into agressive and conservative funds. It also depends on how diversified the agressive funds are too. Very few are giving decent returns. Im always the sucker who sees a good performing fund, jumps on board and then it tanks bad. I cant win.

I started my own personal investment and Im doing better there than my 401k. I should have rolled my 401k over into an IRA when I had the chance.