Question:

Does anyone have any comments /advice regarding staying in the stock market/mutual funds or getting out?

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Would investing in money markets or bank CD's be better in this economy than waiting it out with the volatile stock market?

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  1. The economy doesnt make any difference.  Its what your risk tolerance is that matters.  If you have a long time horizon, ten years or more, and well diversified, which mutual funds are.  Then stay in and keep dollar cost averaging.


  2. We are down about 20% now. I think most of the fall has happened but that doesn't mean it can't fall more. If you have stayed in until now, now is not the best time to get out.  

    In an average Bear market another 5% down would be typical. It could be 10%. But then the recoveries recapture all that and more.

    What I would suggest is that you move money slowly, very little at a time, to an income fund or a bond fund to plan for the time you will want to draw on it and to reduce volatility.

    If you can set up an automatic transfer of a small amount each month to a more stable income fund.

    But it all depends on all sorts of factors and most are personal to you, such as your total net worth which defines your risk ability and the plans you have for the money and when and how you intend to use it.

    For the most part you are too late. The majority of retail investors will make the absolutely the wrong move. They get out at the bottom when they should have stayed and buy at the tops when they should have been selling.

    That is how we get the highs and lows. At tops and bottoms the majority is always wrong.

    That is why I suggest doing it slowly and mechanically, not emotionally.

    Good Luck

  3. It is surely a difficult decision to make. If you are not ready to see any losses for the next months/quarters, then going out maybe a good alternative. However, money markets are not the best choice either, the reward is usually below rate of inflation.

    The most important thing now I think is to protecting your capital. And you should be ready to get back to equity markets when the bottom is clearly reached (we are still far from that, and you risk to lose most or all your money in the process)

  4. To completely offer an honest and intelligent answer one would need to know what you have your money invested in now, when you want to draw down your investments for retirement or reinvestment and what your cash inflow currently is.



    If you have income coming in that your wondering if you should add to your current investments or not I would say buy. buy, buy!! Buying at low prices is a good thing. No one can predict the bottom and top of any stocks rise and fall. Buying top name strong companies stock at deflated prices is how the rich get richer.

    Buying a stock when it is high and going higher is safe but limiting. Of course if you are bottom fishing with mediocre stocks hoping to catch a ride I would  advise against it.

    In general ( again this may not fit your particular situation) buying blue chip stocks when they are off by 20% which most are right now is a joyful time for people with money to invest. They are not going into CD's or money market funds. Even if the dip continues you are still in a good position for the future. Continue to buy as they go down.

  5. I think you should consider some preferred stocks that give a better return than c.d.s and some insulation from the declining markets that may continue for another month, week, or day.  Nobody knows.  I am selling to diversify; but the last preferred stock I owned was in the late 1980s.  Gosh that seem like an eternity ago.  Sixty is not that old; but, it is important that you sleep well at night.   I would hesitate to jump into utility stocks.  But preferred stocks instead of common stock, no attempting to talk down to you, would seem appropriate.  I sincerely wish you the best and it a good time be careful and defend your assets.  But, CDs leave me a little numb as not being the best you can do.  Do what makes you feel comfortable.  If you are in New York you are going get better professional advice than if you live in the backwater like me.  I am older than 60 so, kid, do what makes you feel safe without going entirely to cash.  Good luck.

  6. Since you are approaching (or at) retirement age, you need to be on the conservative side.  Look for conservative mutual funds (balanced funds are good) or invest in CDs.

  7. Given your age and your propensity for security, short term cd's may be your best choice at this time.

    Money market funds are generally safe investments.  However, they also invest in "investment grade" debt securities.  Until 2007, that would have included CDOs which have recently soured with the subprime debacle.  Who knew the ratings agencies could be so wrong?

    Your safest bet would be a short term CD provided it is backed by some sort of credible deposit insurance.  You don't want to invest $100K into a regional bank, have that regional bank go under, and be left with no protection.  The current concern is that some regional banks are at risk of going out of business as the financial sector consolidates.  

    The reason I say short term CD is that most financial watchers are expecting the Fed to raise its rate from the current 2%.  If so, you will see CD rates likely climb as well.  You don't want to be earning 2% on your money when you can roll over the CD and earn 2.5%.  If the equity markets do improve, you can also look at cashing out a portion of the CD and investing some proceeds back into the market.

    Again, if you want to stay conservative, you may want to stay away from bond funds.  Everyone is expecting the Fed to raise rates to fight inflation.  Bond prices generally move in opposite direction to interest rates.  Thus, you do face the risk of suffering capital loss on investing in bond funds at this time.  Furthermore, like money market funds, bond funds too invest in "investment grade" debt instruments.  Depending on who you listen to, the debt crisis may or may not be quite over yet.  Hopefully, the worst has past - but one can never guarantee such an event.

    It's good that you are honest with yourself in assessing your risk tolerance.  Too many people overestimate their risk tolerance and wind up in trouble.

  8. well being your sixty you should be invested in more bonds than stock anyway so with your mutual funds stay in the same fund family example:The Hartford... but just use a more conservative fund... best!

  9. you need to talk to professionals like a brokerage firm or your local bank has an investment department that can give you advice----i'm in a mutual fund and i'm staying

  10. If you don't like risk, what are you doing in the stock market in the first place? Whatever you do, do not follow the heard mentality. Do not get out when everybody else is getting out. Funny you didn't consider this when the market was flying high. Why is it whenever the market has crashed everybody wants out and when the market has surged everybody wants in? I'll wager one thing you're considering is buying gold now that it's run up to near $1,000. If yo want to lighten your risk, consider selling on the next market surge, not now. Good luck to you.

  11. this is the poorest environment to ask about your money.

    the collection of dumb here is outstanding.

    that said, i believe the consensus is that the market still has not finished it's decline yet.

    however, when it does, probably not before next year, possibly longer, it's likely to rise very fast.

    the most money to be made is in that first rise.

    the numbers are not on your side, however.

    suppose you invest $100 and lose half.

    you're down to $50.

    now suppose you make half back.

    you're up to $75.

    somewhere i read that if you could only know one thing about the market, it should be when to sell.  that would more than make up for any other mistakes you might make.

    so the real answer is i don't know.  i'd not be buying stocks today.  but i'd not tie my money up in long term CDs either.  sorry.

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