What Goes Up, Etc...

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Mr_Incredible

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The stock market is high.

The stock market will fall.

How does one retain the value of stocks/bonds in a 401K?

Put whatever portion you wish to protect into the available money market fund?

What do you guys think that know more about this than do I?
 
Long term investing is key. If you want protection, it is at the expense of returns and may not even keep up with inflation. I have 35+ years until I retire and I plan on using the principle of dollar cost average investing to maximize my returns.
 
I hate watching value drop during a correction and am looking for a something that will assist.

Has anyone used this manuever?
 
Originally Posted By: Mr_Incredible
I hate watching value drop during a correction and am looking for a something that will assist.

Has anyone used this manuever?


No one can reliably time the market.

Beer, wine, spirits will assist.

Don't watch daily, weekly, etc movements. 20-30 years is a LONG TIME away. This is why you're investing now and SHOULD ride it out through ups and downs.
 
Dollar cost averaging is one hedge. You put in a dollar now, you get X shares. If the market tanks, you put a dollar in and get y shares. Over time, as all things appreciate, youve made out well..

Numerous studies have shown that those who just try to time the market, and even just miss a small number of the best blockbuster days, have substantially lower returns. If youre talking 20-30 years, youre too far off to take a real defensive stand, IMO.

If youre looking to do something, Id swap a small percentage into a good yielding income fund, so youll preserve that capital and keep making money off of it. Id never go all one way or another - which drives another aspect - how diversified are you?
 
You're assuming that you can time the performance of the stock market more effectively than can other market participants.
Has the stock market topped out, or are we in the early stages of another decade plus economic expansion?
I don't know, and there are signs that things could go either way.
You could liquidate your stock positions and move the money into a no-yield money market fund, thereby locking in your gains.
If the economy and therefore the market tanks, you can congratulate yourself for your prudence.
If we are on the cusp of a new economic expansion, you'll be kicking yourself for having bailed out and missed out on the big gains.
Now, you have a number of years until you retire, and the returns over time in stocks are real.
Having said that, I'd leave your money in stocks, although you might consider moving some into a fund concentrating on Asia, since that's where the rapid growth will likely be over the next decade or two.
OTOH, if financial assets are priced correctly based upon their return versus their risk, it may not matter which equity fund you select, since mutual funds are sold and redeemed at net asset value.
It might also be wise to look for funds with lower expense ratios, so that you're giving away less of your return in fees.
 
Many of the reasons cited above are why I like Index Funds. Nothing like owning all of the S&P 500. One company or sector has a bad day, but seldom do all of them. On any given day, some are up, some are down. Some days more are up than down. Other days it's the opposite.

Index funds provide diversity, low fees, and do better than 85% of the professional money managers out there.

I can set aside part of my portfolio to try to catch individual gains. But for the bulk of my equities, I'm going with various Index Funds, including but not limited to the S&P 500 funds.
 
Just like javacontour, I also like index funds. The chances that you can pick a managed fund with higher expenses that does better than an index fund is slim, then on top of that your expenses can be noticeably higher. Even if you stick with index funds, you still have a wide variety of funds to invest in. You can pick an S&P 500 fund, total market fund, small company fund, international fund, Asian fund, Euro fund, etc. In any case it should be tracking an index and the fees ought to be really low. Instead of 2-5% or more of the fund value going to the manager you can pay as little as .2-.4% in fees (going by memory here).

Being 20-30 years from retirement, you could probably set aside 10% to go into a more stable bond fund or something. Then once a year, adjust your funds back to the original % that you have been buying at. Lets say you put 50% in a SP500 fund, 40% in an international fund and 10% in a bond fund. Once a year you move the money around to get it back to 50/40/10. That way if you have a good year in stocks, you'll take some of the money you made and move it into something more stable to preserve your income. Then if you have a bad year, you'll be taking money out of the bond fund to buy stocks when they are low. It kind of forces you to sell high and buy low with a small % of your money. The rest is just left in the stock market where you count on it appreciating over the years. If you think you can time the market, think again. It only takes a few mistakes over the years to seriously diminish your returns.

I suggest you do some reading on how to invest for retirement. An oil website might not be the best place to do it although you will get advice.
 
^yes - the simple portfolio.

I like the bogleheads.org 3-5 fund portfolios or similar. Lots of options revolve around that similar philosophy and some good reading/research.

K-I-S-S

Unfortunately my 457 plan has limited options with low fees, so I had to go with 7 funds to do what I would pick for myself through Vanguard with 3-4 funds (and 1/4 the expenses!).
 
Originally Posted By: Mr_Incredible
I hate watching value drop during a correction and am looking for a something that will assist.

Has anyone used this manuever?


You should read Jim Rogers
http://jimrogers-investments.blogspot.com/
After attending Yale and Oxford University, Jim Rogers co-founded the Quantum Fund, a global-investment partnership. During the next 10 years, the portfolio gained 4200%, while the S&P 500 rose less than 50%. Rogers then decided to retire – at age 37

I found he tends to be very early.
In some ways like Buffett.
Buys what is way out of favor (what everyone hates)
Sells when everyone falls in love
 
Thanks, all.

I'm well allocated. DCA by monthly 401k additions. And index like crazy.

But when you see the market at 15,000 ft, headed for the deck with all four engines in flames, a parachute begins to look nice.

Understood it is market timing, and all the bad juju associated with that phrase. Wouldn't say I'd do it with the entire amount but don't like the idea of doing nothing with everything.

Just trying to verify from the knowledgeable if this does what I'm thinking it does...which is keep the monetary value while stocks are dropping faster than the national IQ.
 
Originally Posted By: Mr_Incredible
Thanks, all.

I'm well allocated. DCA by monthly 401k additions. And index like crazy.

But when you see the market at 15,000 ft, headed for the deck with all four engines in flames, a parachute begins to look nice.

Understood it is market timing, and all the bad juju associated with that phrase. Wouldn't say I'd do it with the entire amount but don't like the idea of doing nothing with everything.

Just trying to verify from the knowledgeable if this does what I'm thinking it does...which is keep the monetary value while stocks are dropping faster than the national IQ.


Just as an FYI the stock market has been climbing steadily since 2011. Is there some reason why you think it's tanking?
 
Originally Posted By: Mr_Incredible
Thanks, all.

I'm well allocated. DCA by monthly 401k additions. And index like crazy.

But when you see the market at 15,000 ft, headed for the deck with all four engines in flames, a parachute begins to look nice.

Understood it is market timing, and all the bad juju associated with that phrase. Wouldn't say I'd do it with the entire amount but don't like the idea of doing nothing with everything.

Just trying to verify from the knowledgeable if this does what I'm thinking it does...which is keep the monetary value while stocks are dropping faster than the national IQ.


Rogers
All-Time Highs Are Based On Money Printing
"I'm certainly not investing in the U.S., because the U.S. is making all-time highs based on money printing. The whole world is benefiting from all this money being printed, but there are better places than where the all-time high is." - in CNBC

Related ETFs: SPDR SP 500 ETF (SPY), SPDR Dow Jones Industrial Average ETF (DIA), PowerShares QQQ Trust ETF (QQQ), Market Vector Russia ETF Trust (RSX), iShares MSCI Japan Index ETF (EWJ)

Jim Rogers is an author, financial commentator and successful international investor. He has been frequently featured in Time, The New York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The Financial Times and is a regular guest on Bloomberg and CNBC.
 
Originally Posted By: AlienBug
Originally Posted By: Mr_Incredible
Thanks, all.

I'm well allocated. DCA by monthly 401k additions. And index like crazy.

But when you see the market at 15,000 ft, headed for the deck with all four engines in flames, a parachute begins to look nice.

Understood it is market timing, and all the bad juju associated with that phrase. Wouldn't say I'd do it with the entire amount but don't like the idea of doing nothing with everything.

Just trying to verify from the knowledgeable if this does what I'm thinking it does...which is keep the monetary value while stocks are dropping faster than the national IQ.


Just as an FYI the stock market has been climbing steadily since 2011. Is there some reason why you think it's tanking?



Not real soon, but eventually. Would like to find something within my toolbox that can lesson the hit. Market timing is occasionally obvious, and often indicated. Some amount would be allowable to test with.
 
It is only my guess, so corrections are welcome. Except the PopRivt, very few of us can invest with Rogers. Minimums must be quite a bit higher than what most of us can afford to invest.
 
Anyone who can foresee the future and time the market would have pulled out before the big crash and bought everything at the bottom (from real estate to stocks) and made out with so much $$ they'd be retired.
I'm sure a couple people may have pulled something similar to that off, but no one I know of.

Originally Posted By: JHZR2

Numerous studies have shown that those who just try to time the market, and even just miss a small number of the best blockbuster days, have substantially lower returns. If youre talking 20-30 years, youre too far off to take a real defensive stand, IMO.


Reiterating this wisdom. You should either be in or out. Too hard to keep going back and forth and come out a winner.
 
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