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Watching the evening news... oh Dear God the stock market is down again, some 2 percent?
Followed by DOWN 87% !!! says the screen
Well, the voice technically says while showing a RED DOWN TREND of an 87% falloff!!! over ALL OF 2016!!!! that the "accuracy of January in predicting the year's performance is 87%..."
First off... Graphs 101...
AXES MUST BE NAMED. A Chart conveys zero useful information unless the axes are labelled.
One presumes we are showing "Dow Jones Average" vs... time?
Or, not. No way to tell, really.
Neither axis is labelled. Nor has numbers.
Time [presumably the X axis] might be hours, or days, or years, millenia, or... since inception.
Y axis might be DJIA, or any similar indicator, or none at all.
The Y axis zero might be miles down off the bottom of the chart, and the chart is showing a God-awful DOWN [-ish, really] trend that is really only a tiny percentage of the actual total. Without labelling and NUMBERING the axes, there is no telling. FEAR MONGERING at its best.
Once in a while I hear the Dow cited on the news on the way home, and I usually do a quick calculation for what is that, really, percentage wise? It varies day to day of course like usual. One day I noticed a trend, because they rubbed it in... DEAR GOD the DJIA is DOWN 3% in ONE SINGLE DAY... it's the end of the World As We Know It.... how can this happen, do we need to just kill all the old people right now, etc.
Then, a few days later.... the DJIA -rises- 3% in a day... and the news just puts the figures on the screen, with NO commentary whatsoever, not even a mention that it such a HUGE percentage for a single day.
Anyhoo I went and visited my 401(k) and saw everything down lately, even the best choices, and moved accordingly. Not that I believe any of that will ever be mine to spend anyhow. We do have wars to run and whatnot, after all.
I guess I really expected better presentation of facts from a national news program. Why I expected that, I do not know. A guy can dream, right?
Last edited by Octania; January 7th, 2016 at 07:23 PM.
For every action there are thousands of reactions. Just turn on the TV and listen to all the opinions, one of them is always right, just not all the time.
I have been nervous about the market for a while. I dropped my entire 401K to stocks and bonds several months back when it was at a high. Even though it has come down since then I don't think I am moving it back any time soon. If it looses another 8 to 10% I may reinvest it back to where I had it.
You are WASTING valuable time even turning on the TV....it's all BS. For every so-called "expert" that says one thing I can find another "just-as-qualified so-called expert" to say the exact opposite is going to happen.
These financial "news" channels, etc are just another form of packaged entertainment......QUIT wasting your time watching them. They have nothing to offer but attention getting snippets (ie - made for ratings) to try and get you to worry.
And Eric - you are making one of the biggest mistakes anyone can make (especially at your age)......thinking you can "move in and move out" of the market and enhance returns. Why in the heck would you sell after FURTHER LOSSES??? Do you possess the crystal ball that will tell you when to "get back in"??? (answer is - NO, you don't nor does anyone else).
This will probably be another volatile year with all the crazy gyrations and events that are brewing around the world.....AND....REALIZE it will all be utilized by the media to create "stories" in an attempt to grab your attention. Make their attempts feeble and futile and turn the crap off.
I know it is not a good idea. I was burned so bad in 2001 and again in 2009 area that I almost don't even want a 401K or in the market at all. Both times my investments went to a lower point than I had contributed to it all these years. I would have been better off not being in it at all other than for the employer match. I have grown to not trust it at all and feel comfortable getting out when it was high even though it was not a good idea.
Even though the value of your holdings went down in 2001 and 2009 you did not lose any money unless you sold the holdings. If you kept them, the value came back up. That is the key of long term investing.
The other thing to note is that, by continuing to invest, when it's down, you'll be getting more shares with each dollar you buy, which will then go up more when it recovers.
The other thing to note is that, by continuing to invest, when it's down, you'll be getting more shares with each dollar you buy, which will then go up more when it recovers.
I know that also. Even with this not being a good idea, If I put it back in the funds I had it in before I would be money ahead now. I don't have a crystal ball telling me what the market will do and this is the first time I ever done this. good idea or bad I am ok with what I did.
Start looking at 10-15 year trends of the stock market, and quit looking at daily returns. It's like knowing you are on a cross-country trip, but your route is likely to head every direction at some point.
Once the market is down, and you try to get out, you've lost. When you are in a holding strategy, it's only a paper loss. Unless you need your money, just wait. And as mentioned, getting an employer match is already a great return on your money right out of the gate.
Yeah. I just looked at mine. I've put in the maximum allowed pre-taxes for 9.5 years now, and the value of the fund is @150% of that. Of course, not all the money has been in there since the beginning (there's an integration calculus equation I could do for that, but I don't care all that much to get an exact rate of return), but, spitballing the old 7% is double your value in ten years, I think I'm getting about 4% to 5%.
"I think I'm getting about 4% to 5%.
Most importantly, it keeps me from spending it. "
That's what bothers me.... if at best you "investment" is gaining 4-5% annually... then your purchasing power is growing by that amount... minus inflation.
I reckon by the time any sort of retirement might happen for me, the monthly income, at best, if it still exists, will cover rent... on a trailer down by the river... and some food. Not real good food, and not a lot of it.
Looking at a Mecum Auction, it looks like [as long as there are still rich kids around that need toys] a better investment would be unrestored prewar motorcycles. Keep the "patina" from getting altered, and sell when need be. Not much storage required. Or, NOS parts for collector vehicles.
The idea of not having any travel now and low budget everything and crappy old cars in order to have some later.... only works out well if at "later" there is some sort of return.
I would like to see a documentary on the folks that lost their savings so that Madoff could be richer. What they had before, how that was going to pan out, and how things stand now.
Last edited by Octania; January 11th, 2016 at 09:38 AM.
>He hawked a record of super stable returns under ALL market conditions
>He did not discuss many details with his clients regarding HOW he achieved these stable returns.....when questioned by some he told them he wouldn't accept their funds, or in the case of those whose $ he already had, I believe he told them to take their money back.
If one looked at what he was claiming to do and had knowledge of historical returns AND THE NATURE OF THOSE RETURNS (ie - returns are "lumpy" over any given period of time - volatility) then what he was selling would be seen as "too good to be true". And we all know the rest of that saying.
He was shrewd (at least while it lasted).....he didn't promise HUGE returns which would have been a much bigger red flag....but, anyone who promises/claims the return levels he did (I recall reading it was something in the 10% or a bit higher range) and claims he does it during good times and bad without any detailed explanation of HOW these returns are supposedly achieved should be viewed with a large amount of suspicion.
Sidenote: In a prior career our firm was presented with something similar. I can't say it turned out to be a fraudulent deal but what was presented to us was a sales pitch that these folks would take our invested $ and use it to purchase some notes (ie debt). Their claimed return level, at the time, was around the 10% area BUT the big red flag was when we questioned them harder on the nature/type of instruments they were buying and the supposed low-risk nature of the instruments and returns. It didn't make sense in the interest rate environment we were in at the time (early to mid '90's). We heard later it was pretty much BS. Also - we got a lot of "himming and hawing" when I pushed them to explain the type of paper they were proposing to buy.....we didn't nail down any one factor that made us call "BS" on it...instead it was the overall vagueness/evasiveness of their answers when we got down to more detailed questions. When people are vague, especially when you KNOW they have a detailed knowledge of a given proposal...RUN LIKE HELL!!
I think the reason Madoff was able to pull this off for so long was his pitch of returns that sort of fell into place with the number everyone's thrown around as the long term historical return rate for equities (lets call it 10%). Not claiming to "shoot for the stars" was probably used by him as a "counter-measure" type sales pitch.....he wasn't as crazy as some of these fraudsters that run around claiming much higher returns (and usually accompanied with a claim of low risk).
There was one guy that apparently for many years had gone to some of the authorities and questioned Madoff's claims (can't remember his name).
I think the guy that was complaining to the authorities saw the red flag as Madoff's claimed "smooth/consistent, year after year" returns....in all market conditions. I think he was also looking at some historical trading data from the options market (where Madoff may have made pitches that part of his strategy involved the use of options along with the actual stocks)....if Madoff had been hedging his stock positions with options the volume data would have reflected his options activity during certain periods. Apparently the options volume data was nowhere large enough during the periods he "should have" been doing this....another red flag. I don't remember 100% if that guy was showing the data to the authorities OR if it was looked at much later after the whole deal blew up and someone saw the lack of supporting options volume then.
The insanity in it all must have been his/their efforts to generate the fake statements,month after month, quarter after quarter and year after year, to send to their investors.....they must have had some "system" figured out to make it all look plausible but can you imagine the complexity? That takes a devious mind (or minds) for sure.
Final sidenote: When the whole Madoff affair was exposed the press, etc kept throwing around figures like "$50+ billion stolen", etc....MORE BS....those high numbers NEVER EXISTED except on the faked statements. The trades that supposedly generated the profits to get to the high numbers NEVER WERE DONE. People were claiming to lose money/profit that was NEVER created. The actual losses were MUCH lower.
Interesting stuff for sure and one thing's for sure.......it'll happen again and again for years and decades to come. Charles Ponzi is probably keeping a seat warm for him when the time comes for him to join the crowd in the "Financial Crimes" section of Hell!
Last edited by 70Post; January 11th, 2016 at 11:41 PM.
I put most of my stocks in a retirement account/money market account back in May when the Dow was at 18200. Also reduced my contribution to about 1%. I follow the news but dont watch TV. You wont get news from the TV. This will be another 2008 crash so I'd stay out til it bottoms out and that's just a guess where the bottom is. But it wont be above 10,000. I also moved my bonds a week before the interest rates were raised and stopped contributing to stocks and bonds completely. It's time to hold.
If you are able to contribute equally to the matching fund offered by your company/ employer you can't hardly loose. You start off doubling your contribution. One would have to have a pretty sorry portfolio to lose with a 100% matching funds.... Tedd
My company does not do anywhere close to 100% matching. I anticipate the government trying to screw the middle class, as always, with increased taxes on any area where the average guy has a little success, like what My442 says.
It's an up day today. Find that high and get out before it falls again. You can expect at least one up day per week while it's falling. My442 is correct.
Start looking at 10-15 year trends of the stock market, and quit looking at daily returns. It's like knowing you are on a cross-country trip, but your route is likely to head every direction at some point.
Once the market is down, and you try to get out, you've lost. When you are in a holding strategy, it's only a paper loss. Unless you need your money, just wait. And as mentioned, getting an employer match is already a great return on your money right out of the gate.
So true.
The people I know who actively trade their retirement accounts, based on tips and talking heads, end up poorer in the end.
January 7th, 2016, 06:18 PM
