Took my balance in my 401K program out of all stocks, bonds

[rhody]

I just took my balance in my 401K program out of all stocks, bonds, and corporate stock funds and put the into FIXED. I never thought I would see this day happen, but what I see (not happening) in Washington in addressing the debt limit gives me cause for concern.

IMHO, it is better to have my shares converted to cash and invested into a fixed income fund, than to risk another major nosedive (this time with no rebound on the other end) like we had a few years ago. Someone else who I know and respect did the same thing yesterday. Are any of you making similar moves with your retirement funds, or doing other things to protect your investments ?

Rhody...

 

[Borg]

My wife and I did the same thing a week ago for the same reason.

 

[lisab]

I'm nervous too, but staying put. I have a good 15 to 20 years to go before I will start pulling money out of my retirement accounts...sigh .

 

[rhody]

My wife and I did the same thing a week ago for the same reason.

Borg,

The total is up to three now here at work and will report if the numbers climb in the next two weeks. Three in one day, including myself is significant. Some people are clueless and will panic if the stock takes a big nose dive. People I care about have been warned, in the end their decision's not to dump the stock will prove wise or foolish, let's see how this all plays out.

Rhody...

 

[rhody]

http://www.cnn.com/2011/OPINION/07/21/gergen.no.way.debt/"

Several days ago, I would have put the odds on option (b) at better than 50-50; today, sadly, I reckon the odds are less than 50-50. In other words, the prospects point increasingly toward a default. Let us hope that is not the case. No one can be sure of the near-term financial consequences, especially if Congress then acted quickly to reverse itself, as it did over the Bush bailout in 2008. But a default, however short, will definitely fuel a growing perception in the world of America in decline.

Not coming a reasonable compromise because of extreme entrenched positions... on both sides is what has me most concerned... I can't say it more simply or clearly than that...

Rhody...

 

[Borg]

Borg,

The total is up to three now here at work and will report if the numbers climb in the next two weeks. Three in one day, including myself is significant. Some people are clueless and will panic if the stock takes a big nose dive. People I care about have been warned, in the end their decision's not to dump the stock will prove wise or foolish, let's see how this all plays out.

Rhody...

My wife and I got burned on the last one in October 2008. We were on a cruise in the Med and couldn't do anything other than watch the news. I thought about getting out before we left but didn't want to pay the taxes. The losses ended up being far worse than any taxes.

We are going on vacation again next month and don't want to end up in the same 'boat' as last time. I understand that there's no correlation but, it seems like the market always drops when we go on vacation. Lately, the areas that we visit have also been hit by disasters within a few months after we leave.

 

[turbo]

I'm staying put, because I'm already well-diversified. If my mutual funds take another dive, oh, well. The IRA has bounced back sufficiently from the last loss to convince me that my allocations are good enough to withstand a major disruption.

 

[Borg]

I'm nervous too, but staying put. I have a good 15 to 20 years to go before I will start pulling money out of my retirement accounts...sigh .

I have a while to go for retirement also. We're just moving the money to safer funds in the retirement accounts. And, I didn't change the new contributions - they still go into S&P Index Funds.

We will eventually get back in but, for now, I don't want to be involved with the silliness that's going on in Washington.

 

[rhody]

http://money.cnn.com/2011/07/21/news/economy/Debt_ceiling_states/"

NEW YORK (CNNMoney) -- Just the threat of a federal default is prompting California to get a $5 billion loan to make sure it can pay its obligations.

States around the nation are drawing up contingency plans in the event that federal policymakers don't resolve the debt ceiling impasse by Aug. 2. They are preparing for chaos in the municipal debt markets and delays in federal payments for Medicaid, education and other services, which could happen if the federal government defaults on its obligations.

California, for instance, planned to sell $5 billion in revenue-anticipation notes in the bond market in late August. Now, Treasurer Bill Lockyer plans to get a bridge loan so the state can have cash on hand in case the markets are in turmoil and the state is unable to borrow. It would repay the bridge loan once it sells the notes.

Rhody...

P.S. Sadly, in our state this is off everyone's radar (radio talk shows usually lead the way), but so far have been fairly quiet, a few rumblings yesterday, but it doesn't seem to have gotten everyone's attention, yet...

 

[Jimmy Snyder]

I follow the stocks, but I don't invest in them. I just make mental bets. That way, if the stock goes down I don't lose any money, I just lose my mind.

 

[Gnosis]

As I could sense it coming, I forewarned colleagues roughly a year prior to the collapse of the .com’s and the Enron fiasco that occurred roughly 10 years ago and I suggested that they instead pay down the principles on their mortgages. Most scoffed, quickly declaring my suggestion a poor financial decision on my behalf, as they felt they could make a killing per their and the employer’s 401K contributions and various 401K investment options.

When the vast majority lost the better portions of their 401K investments a year later, they whined at work almost daily about how they had lost their shirts and now they wouldn’t be able to retire, but I hadn’t lost a cent, just as I had stated would be the case. In fact, I was steadily getting closer to paying off my mortgage, just as I had suggested to others. By 2006, after a total of just 8 years, my mortgage was paid off. I lost nothing and saved far more than I could have ever gained via any 401K especially during that volatile period.

Unlike my know-it-all colleagues, I didn’t scoff at their 401K investment decisions, as it was their choice to freely make. I simply realized the volatility associated with their choices and I’ve never agreed with the considerable penalties of withdrawing your own financial contributions. In any case, many afterward stated that they wished they had followed my suggestion rather than having simply outright lost everything as they had, but of course, such is a meaningless wish. Such is the nature of hindsight.

Speaking from experience; through these difficult economic times, it’s a delight not having a monthly mortgage payment. Even low paying job positions allow for a comfortable lifestyle when there’s no monthly mortgage to pay. Naturally, I don’t expect anyone to alter their existing plans based upon my success story. I merely offer as much for those who are perhaps considering doing the same. I have no regrets whatsoever, as it’s nice to own my home free and clear.

I offer one last thought…

The United States has never been in worse shape than it is at this point in time and it hasn’t gotten any better for the 20 million Americans unemployed for several years now, no fault of their own. The jobs simple aren’t there. 20 million people didn’t simply ban together to quit their jobs, for if they had, there’d be roughly 20 million job vacancies, but clearly there isn’t. These are the least of all times to trust ANY financial institution with the handling of one’s finances and/or investments, financial institutions that the taxpayers bailed out, only to have these money grubby parasites foreclose on millions of taxpayer mortgages, as though possessing no sense whatsoever of good conscience…

 

[khemist]

When people think the worst of the market, it makes a bull run.

 

[dlgoff]

I'm not too money savvy but this bothers me.

 

[lisab]

I'm not too money savvy but this bothers me.

I'm not too savvy either, Don, but I smell a bubble.

 

[turbo]

I'm not too savvy either, Don, but I smell a bubble.

Almost every day, there is a full-page ad in the newspaper advertising that some "road-show" outfit (certainly not affiliated with the PBS show!) will be camped out in a local motel room and will pay "top prices" for your gold. During the 1979-80 gold blip, a picker that I know did the same thing. He dumped the gold at market price every single day, because he knew that it wasn't going to last, and he didn't want to be left holding a lot of gold when the crash came.

 

[khemist]

If gold/ commodities drop, where does the money go? Bonds, stocks, and mutual funds.

 

[Jack21222]

When people think the worst of the market, it makes a bull run.

Nice platitude, but I don't know that it's useful here. There are *always* people that think the worst of the market. Sometimes, those people are right, sometimes those people are wrong. The market cares little of what people on the internet think about it.

 

[turbo]

If gold/ commodities drop, where does the money go? Bonds, stocks, and mutual funds.

Gold prices are quite volatile, and it is not a good idea to "invest" in gold. If for some reason you have a lot of gold around, now would be a wonderful time to cash out.

 

[khemist]

Nice platitude, but I don't know that it's useful here. There are *always* people that think the worst of the market. Sometimes, those people are right, sometimes those people are wrong. The market cares little of what people on the internet think about it.

True, but when people on the internet think the market is going to do something, it sometimes means that all the bad/ good news has been priced in already.

Once you get homeless men telling you to invest, its time to get out, and vise versa.

@turbo-1: I never said to invest in gold. I agree it is a stupid investment (unless you bought it at the right time, obviously). What I am saying is that if money leaves commodities where will that money go? It most certainly won't stay as cash...

 

[Jack21222]

True, but when people on the internet think the market is going to do something, it sometimes means that all the bad/ good news has been priced in already.

Are you comparing people on the internet, a set which basically includes everybody, to homeless people? It's as if you're saying "By the time it reaches the internet, it's gone as far as it can, that's the saturation point." That's the opposite of reality. The internet is usually the first stop, right after a person's brain. As soon as a person thinks it, it goes up on their blog, or a forum post.

 

[Jimmy Snyder]

Once you get homeless men telling you to invest, its time to get out, and vise versa.

Can someone help me with the vice versa part? When women with homes tell me to get out, it's time to invest?

 

[rhody]

Just leave a thread for a few hours, and boom, all kinds of personal opinion, lacking verifyable research creeps in. Can we present information/arguments, etc... based on a link and possibly a quote or two in this thread as I have tried to do with most of my posts. Then, you are free to intrepret and discuss it as you wish.

Rhody...

 

[turbo]

Just leave a thread for a few hours, and boom, all kinds of personal opinion, lacking verifyable research creeps in. Can we present information/arguments, etc... based on a link and possibly a quote or two in this thread as I have tried to do with most of my posts. Then, you are free to intrepret and discuss it as you wish.

Rhody...

No quotes, but all my IRA funds are rolled over from tax-advantaged 401Ks that I participated in over the years with several employers. If I liquidate those funds, the taxes will beat the hell out of me. I need to ride it out until I am of an age to start cashing out without the penalties that I would incur today.

 

[rhody]

No quotes, but all my IRA funds are rolled over from tax-advantaged 401Ks that I participated in over the years with several employers. If I liquidate those funds, the taxes will beat the hell out of me. I need to ride it out until I am of an age to start cashing out without the penalties that I would incur today.

It wasn't any thing you said in this thread turbo...don't worry, be happy...

Rhody...

P.S. if you want to discuss what those laws are and how much (tax wise) they will beat the crap out of you, I would like to hear that for sure.

 

[Jimmy Snyder]

No quotes, but all my IRA funds are rolled over from tax-advantaged 401Ks that I participated in over the years with several employers. If I liquidate those funds, the taxes will beat the hell out of me. I need to ride it out until I am of an age to start cashing out without the penalties that I would incur today.

You can sell stocks within an IRA without tax consequences. You only pay taxes when you take money out of the IRA.

 

[turbo]

You can sell stocks within an IRA without tax consequences. You only pay taxes when you take money out of the IRA.

Thanks. I should have contacted my adviser at Principal to clarify that. Still, I am liquid enough to ride out problems with the stock market. Maybe if the loons make us default, the Fed will have to start paying realistic interest rates and my MM funds will actually start earning interest again.

 

[Borg]

You can sell stocks within an IRA without tax consequences. You only pay taxes when you take money out of the IRA.

Most of what I sold last week fell into this category. Only a small part wasn't so our tax bill won't be that bad.

 

[turbo]

Most of what I sold last week fell into this category. Only a small part wasn't so our tax bill won't be that bad.

All of my IRA is in money-market accounts and every bit of it came from untaxed contributions to 401Ks, rolled over to the IRA. I don't mix after-tax money with before-tax money, to avoid tax complications.

 

[Borg]

All of my IRA is in money-market accounts and every bit of it came from untaxed contributions to 401Ks, rolled over to the IRA. I don't mix after-tax money with before-tax money, to avoid tax complications.

All of my accounts are separate as well. In fact, I don't know how you could mix the money. As far as I know, you can't add after-tax money to a 401K or IRA. And a Roth has limits for how much you can contribute each year. But, as Jimmy said, as long as the money doesn't leave the account, you can allocate the money in the account however you want.

 

[Jimmy Snyder]

I got out today. I sold off all my old Enron shares, and the last of my remaining Tyco shares. Lehman Bros, Borders, Worldcom, and Global Crossing too. I hated to dump Conseco, but I wanted to make a clean slate of it.

 

[Proton Soup]

i'm not really sure how gold would crash. seems like for that to happen, the dollar would have to go way up in value. but we all know that is not going to happen any time soon. and every time we borrow more money and run up the debt, the value of the dollar gets thinner and thinner.

Jim Rogers is a commodities guy, and he was recently saying he's sitting on the sidelines now and has a bunch of his wealth in euros. some dollars, but lots of euros.

 

[turbo]

Gold is a finite commodity and it WILL crash soon. If you have any substantial holdings, now would be a great time to bail out because it will soon be untenable, especially if you bought within the past year or so.

 

[rhody]

Well, let's let play out whatever events will, then return to this thread a few months or perhaps a few years from now, and see how many of us are doing face palm's. It will be interesting to see what my stock closes at 4 pm EST, when it is sold. Then, I can check back in months from now to see if I made a bad or good decision.

Rhody...

 

[rhody]

FYI. An update, a few more at work jumping on the bandwagon (100% out of stock) as well, and a few others who have taken some funds out of stock, but not all.

For your review: http://firstread.msnbc.msn.com/_news/2011/07/21/7136433-four-thoughts-on-the-debt-ceiling-fight"

Rhody...

 

[khemist]

If the US does default, how will this effect the market? Who will the government owe money to and how will they pay them back? I am guessing if they default they will not have to pay them back, but the strength of the dollar will not do so well.

 

[turbo]

If the US does default, how will this effect the market? Who will the government owe money to and how will they pay them back? I am guessing if they default they will not have to pay them back, but the strength of the dollar will not do so well.

If the US defaults, its bond rating will fall, making it very expensive to borrow money to service existing debts. If this happens, we should remember who forced the default, and send them back home as soon as possible.

 

[khemist]

I see. How do you think this will effect the stock market?

If bonds are expensive, where will people put their money?

 

[turbo]

I see. How do you think this will effect the stock market?

If bonds are expensive, where will people put their money?

If the US bond rating falls, the US will have to pay more interest to get people to buy Treasury Bonds, so people who are skittish about stocks but still fairly comfortable with US solvency can get into the bond market.

 

[khemist]

nvm i misread.

 

[Ms Music]

Well, let's let play out whatever events will, then return to this thread a few months or perhaps a few years from now, and see how many of us are doing face palm's.

I am sure *I* will be doing a face palm. I always do the wrong thing... I never thought our government would/could default. The next few months should be interesting.

 

[rhody]

I am sure *I* will be doing a face palm. I always do the wrong thing... I never thought our government would/could default. The next few months should be interesting.

Ms Music,

No you won't if you have stocks in any type of 401K or IRA, and your plan allows you to sell the stock and move it to fixed funds, there is still time. Obviously, you should look at the stock price before you do. It made sense for me it because the price of the stock was up before I sold them.

Rhody...

 

[Containment]

I thought people in this forums where rational beings this thread makes me wonder 0_o

 

[Drakkith]

I thought people in this forums where rational beings this thread makes me wonder 0_o

Well, you can contribute to the thread, or you can keep posting insults for no reason.

 

[Willowz]

I wonder what kind of news you should expect to see gold drop dramatically.

 

[rhody]

This is my personal opinion. Most people I work with do not idenfity with the far left, far right, or tea party, yet, they long for someone, anyone who really represents their views when it comes to local, state, and federal representation when it comes to business and fair taxation. They, myself included see the chaos that is caused about not backing off extreme positions in order to further their agenda, and insure their stay in power coming the next election cycle.

We see this tragic comedy playing itself out day after day before our eyes. This time, there are tremendous short and long term consequences of not acting wisely and fairly, it will affect everyone in this country, everyone. I believe my decision to get out of all stocks is justified. In the end cooler, rational heads must prevail, or this country is in for some dark days ahead.

P.S. edit: http://www.reuters.com/article/2011/07/25/us-usa-debt-idUSTRE7646S620110725"

Rhody...

 

[rhody]

Scroll to the bottom of this http://www.bbc.co.uk/news/business-14282351" for debt ceiling chart, and how Congress and the Senate were stacked from 1980 - 2010. It seems the amount of debt is changing rapidly, first under Bush Jr., further accelerated under Obama. Puts things in perspective now, doesn't it ?

Rhody...

 

[Ivan Seeking]

Scroll to the bottom of this http://www.bbc.co.uk/news/business-14282351" for debt ceiling chart, and how Congress and the Senate were stacked from 1980 - 2010. It seems the amount of debt is changing rapidly, first under Bush Jr., further accelerated under Obama. Puts things in perspective now, doesn't it ?

Rhody...

Of course the important number is the debt-to-GDP ratio, which was still about twenty percent worse after the depression and WWII.

Obviously much of Obama's spending can be attributed to the economic collapse. There is no excuse for Bush until his last year. In fact, we were in the black under Clinton, but under Bush and Republican control the debt skyrocketed in a thriving economy.

 

[rhody]

Scroll to the bottom of this http://www.bbc.co.uk/news/business-14282351" for debt ceiling chart, and how Congress and the Senate were stacked from 1980 - 2010. It seems the amount of debt is changing rapidly, first under Bush Jr., further accelerated under Obama. Puts things in perspective now, doesn't it ?

Rhody...

Of course the important number is the debt-to-GDP ratio, which was still about twenty percent worse after the depression and WWII.

Obviously much of Obama's spending can be attributed to the economic collapse. There is no excuse for Bush until his last year. In fact, we were in the black under Clinton, but under Bush and Republican control the debt skyrocketed in a thriving economy.

Ivan,

I winced when I used the word "accelerated" in my post above. I knew it would stir controversy. Regardless, the apolitical, pragmatic, realist side of me says we need to put our differences aside and address the issue fairly (which may be impossible) or suffer as a country (which is very possible). I promised myself I would never get political in my posts. Sadly, I find myself dragged kicking and screaming into it. This issue is too important to approach with anything except a clear (apolitical) head.
Rhody...

 

[Ivan Seeking]

Ivan,

I winced when I used the word "accelerated" in my post above. I knew it would stir controversy. Regardless, the apolitical, pragmatic, realist side of me says we need to put our differences aside and address the issue fairly (which may be impossible) or suffer as a country (which is very possible). I promised myself I would never get political in my posts. Sadly, I find myself dragged kicking and screaming into it. This issue is too important to approach with anything except a clear (apolitical) head.
Rhody...

No controversy on my part, just a clarification. In order to keep the debt in perspective, the debt-to-GDP ratio is what matters. The debt alone has no absolute significance.

Yes debt has accelerated but understandably so under Obama given the greatest economic crisis since the depression. That is what a government is supposed to do in times like these. But the debt needs to be checked and some hard decisions need to be made. I think all rational people on both sides of the aisle understand this with painful clarity. The partisanship comes in when one claims this is not true.

What is true is that we are balancing debt concerns with economic recovery. This is not a one-dimension problem. Massive spending cuts or poorly targeted tax increases could actually make the debt worse by stifling the ailing recovery. Growth in the GDP has to be weighed against spending cuts and tax increases.

 

[rhody]

No controversy on my part, just a clarification. In order to keep the debt in perspective, the debt-to-GDP ratio is what matters. The debt alone has no absolute significance.

Massive spending cuts or poorly targeted tax increases could actually make the debt worse by stifling the ailing recovery. Growth in the GDP has to be weighed against spending cuts and tax increases.

Ivan,

Bingo, we agree in principal at least, Can it be done by August 2nd ?

http://www.washingtonpost.com/business/economy/house-senate-leaders-unveil-dueling-debt-limit-plans/2011/07/25/gIQApnm1YI_story.html" One plan needs to loose a Showdown at High Noon...

Rhody...