83 Replies Latest reply on Sep 1, 2015 7:44 AM by BoBraxton

    pay no mind to the Market

    BoBraxton

      Over the many years I have observed that near the end of a Quarter (such as now), the market (investment as reflected by indexes) is even more unpredictable. I have learned to look but otherwise to ignore what is going on. I suspect that those investment advisers that focus largely on short-term (read current quarter) results and doing some buying and selling to re-balance to give themselves the best picture of how they are doing (to attract new investers).

        • Re: pay no mind to the Market
          MyR Community Manager

          BoBraxton, thanks for starting a discussion thread!

          • Re: pay no mind to the Market
            zebrasenior

            Yes, I have noticed the same and though I am no market guru, I focus instead on the year so far and the remaining 3 months till its close.

             

            A great reminder to all.


            Thank you

              • Re: pay no mind to the Market
                Art

                I would advise to not bury your head in the sand. Be aware of what is going on in the investment world and how it affects your investments. The current market instability should have everyone's ears perked up and eyes wide open. Be alert.

                  • Re: pay no mind to the Market
                    JerryD

                    I agree. The stock market has been on a very, very long run. What goes up in the market can and will go down. Unless one is willing to take a roughly 40% loss like the recent 2008-2009 market that took years to recover, I  would advise one to monitor, monitor, monitor and also to refine that buy/sell strategy.

                      • Re: pay no mind to the Market
                        BoBraxton

                        Someone (a president) advised "trust but verify." In my case, my motto is "monitor but trust" (the market). One factor is how much one expects (another factor is time horizon - for me this is year-to-date and most recent twelve months). About five years ago (or was it three years ago) I decided that expecting more than about 1.9% (one point nine) return per year on invested retirement funds was unsupportable. In the recent volatility (swings) the year-to-date made a dive from 12% (year to date) down to below zero % and as of yesterday has rebounded up to 5% year to date. The most recent 12 month figure is even more impressive. I monitor but personally am comfortable with the hypothetical (could very well be real) 40% "loss" since for me there is no actual loss without selling. I have never initiated a sell in reaction / response to what the market is doing (especially when falling). As long as I had earned income, a falling market was an incentive to maintain and even increase (except we always maximized what we were allowed to invest) because lower share price meant adding a lot more shares than when prices had been at their peak. I sleep well.

                        • Re: pay no mind to the Market
                          smaneck

                          The ones who really lost out during the recession were the ones who panicked and took their money out of the stock market. During the years 2008-2010 I was investing every dime I could into my retirement funds, in part because my investment dropped about 50% and I was no longer sure I would have enough to retire, and in part because this seemed like a great buying opportunity. The result was my portfolio has quadrupled since 2008 and I now have investments in real estate outside my retirement funds. After the market fully recovered I started to re balance my portfolio, but since bonds weren't worthy anything, I set up a solo401K and began to buy real estate with it. Not REITs, real brick and mortar houses. 

                            • Re: pay no mind to the Market
                              JerryD

                              Not sure I agree in a broad statement that those that lost were those that took out money in the 2008-09 period. Depending on the volatility of the investment and its predictability, this is not true and was not in my case. In the particular TC investment I was heavily invested in, those that hung in there just got back to even a short while ago.

                               

                              But it sounds like you are still accumulating whereas I am retired. I no longer have work-related income to help with living on investments so we are taking a much more defensive approach.

                               

                              I too saw the 2008 downturn in equities as an opportunity based on the previous 2 or 3 drops and invested in equities. This decision has gotten around 14% compounded returns since, although I feel that the gains are getting iffy now. Doing this was based on the wisdom of Warren Buffett to be basically a contrarian.

                                • Re: pay no mind to the Market
                                  smaneck

                                  Yes, I am still accumulating and never accumulated more aggressively than I did during the recession. Those who *had* to take money out were at a distinct disadvantage. As I mentioned in another thread my mother avoided this problem because she would keep at least a couple of years of distributions in bonds or other 'save' investments and she used those during these years. I follow the Buffet rule was well and am now diversifying now because I feel the market is overheated. I am therefore putting a lot of my investments in real estate. I figure the income stream from that will protect me from having to take money out of equities at the wrong time.

                                    • Re: pay no mind to the Market
                                      canthony

                                      Do what you will, the end result will be the Govt. taking at a minimum of 50% of all your savings and holdings real estate included to pay for its social programs.  No stopping it unfortunately.  I know this a Doom and gloom,  but just listen to the President.  Saw a news clip about how parents are struggling to send their kids to college, meanwhile a second home at the beach, smart phones for all, it is a

                                      I want society”

                                        • Re: pay no mind to the Market
                                          smaneck

                                          It was the government who paid for my college education that allows me to make all this money. Personally I don't begrudge the taxes I pay, nor the social programs that allowed me to get where I am.  But like everyone else, I shelter what I can. Truth is taxes have never been lower than they are now.

                                            • Re: pay no mind to the Market
                                              canthony

                                              I don’t understand why you shelter.  Isn’t that hypocritical?

                                                • Re: pay no mind to the Market
                                                  Chrysalis

                                                  Why would it be hypocritical? I don't mind paying the baker $3.00 for a loaf of bread, but I'm not going to pay him $5.00 if I don't have to. If he tried to charge me $5.00 I'd shop around and find a cheaper baker. That's my right and my responsibility. Unlike bread, taxes are a monopoly so I can't shop around for a cheaper rate but I can know the law and use it to pay my fair share and nothing more. That also is my right and my responsibility.

                                                    • Re: pay no mind to the Market
                                                      canthony

                                                      Would you pay the baker $3.00 if the person in front of you just paid $1.50 because he doesn’t have a college education, but he pays using his $100/mo smart phone.  He/she gets into their brand new car because they are entitled.    Go get a job like your mom and pop.

                                                        • Re: pay no mind to the Market
                                                          JerryD

                                                          Sounds like stories a friend tells about people on welfare (not students) when he works for his sick brother-in-law so that he can be treated at the VA. Of course, they also have the cash needed to pay for the cigarettes and liquor they buy.

                                                          • Re: pay no mind to the Market
                                                            smaneck

                                                            I don't know what planet you live in that poor people get to drive new cars. And yes, I will still pay the baker $3.00 for a loaf of bread without begrudging the person in front of me who gets it free with their food stamps. I feel blessed I don't need those food stamps. As for their cell phones, the government program which gives poor people cell phone service. does not give them smart phones. These phones are limited to 250 minutes of calls a month and text messaging. You don't get internet access or any of that fancy stuff. Phones may sound like a luxury, but if you are looking for work they are a necessity.

                                                        • Re: pay no mind to the Market
                                                          smaneck

                                                          Not at all. It is the government who establishes these tax shelters and they do so to encourage certain behaviors. For instance the government allows us to tax shelter our money for retirement because they want us to save for retirement. Nothing wrong with that.

                                                            • Re: pay no mind to the Market
                                                              canthony

                                                              Govt. isn’t stupid, they want a big portion of your retirement money back.  Think you will ever get all the $$ you paid into SS.  I’d have to live to be 110 years old.   Also being older than most of you folks, nothing was free in Penna.  You paid your own way.  Didn’t have a car until I was out of college for two years,  bought all used books or barrowed.  Worked on a farm every summer and saved every cent I could, sorry I have no feelings for the entitlement generation, just an old foggey.  Go get a job like your mom and pop did.

                                                                • Re: pay no mind to the Market
                                                                  vacref

                                                                  I hope no one falls for that 110 year old claim. It's numerically impossible under the SS system, unless maybe you work and contribute till you are 95. I just turned 80 and have already collected more in SS than I paid in over 45 years.

                                                                  That's just the kind of crap that Limbaugh and his ilk spew out, knowing that most of their anti government fans will lap it up without caring about facts.

                                                                  • Re: pay no mind to the Market
                                                                    smaneck

                                                                    And in some ways they will get back the taxes on much of what I put in retirement because when I take it out they will be able to tax not only what I put in but earnings of all the years since. That is why a lot of people put their retirement funds in Roth IRAs. They would rather pay the tax going in than taking out. Point is, that is a choice we make. And yes, I expect to get every penny of what I put into Social Security and more, unless I die before I'm 75.  I'm close to 60 and according to SSA records the combined contribution of my employer and I is about 125K. If I take social security at 62 (which I don't plan to)  I would receive $1200 a month. What other annuity does that? Go to the TIAA-CREF retirement calculator and see what they give you in an annuity based on a  125K investment. And keep in mind, Social Security put me through college in the first place! Now could I have done better if I invested in mutual funds? Probably, but my risk would be higher. I consider Social Security what it was meant to be, insurance. As far as I can tell it is the best paying annuity out there.

                                                                    BTW, I didn't have a car until I was 24.  And yeah, I bought used books too. Know what? Most students still do. It's easier than ever to do that thanks to the internet. . Either that or they buy ebooks which are even cheaper. And yes, they work jobs during summers, etc. just as I did. But unlike me when they graduate they will face a mountain of debt whereas when I graduated I owed $300 in student loans which I paid off almost immediately.

                                                                     

                                                                    In California education was either free or cheap if you were satisfied with a state school and most of us were. I don't think they would have gotten a better product if they paid more. *We* were the entitlement generation. Why begrudge the next generation what we got?

                                                                    • Re: pay no mind to the Market
                                                                      yanushkevich

                                                                      Problem is the mentality of most folks today, other than seniors born before WWII.  We did that to our kids and they did it even more to theirs (our grandkids).  We made them feel entitled.  CA Anthony, if these folks had to live like we did, they would literally starve, they would not know what to do to survive, cannot live without TV or a telephone like we did, never mind a car.

                                                                       

                                                                      We wanted the best for our kids and we raised a generation of self entitled instant gratification and selfish folks, and their progeny is even worse.  The silver lining is that the whole world is following in your footsteps, God help them if they ever have to be poor again!

                                                                • Re: pay no mind to the Market
                                                                  JerryD

                                                                  Government "paid for my education". Hmmm. Must be an old person like me. I too own most of my success in life to my education. However, it ain't true any more! Whereas I could work 10-12 hours a week during the school year and summers at the university for $1.25/hour, pay all of my tuition and books and have enough left over for considerable beer drinking while living at home, that formula is TOTALLY impossible these days. We insisted that all of the kids work for their own spending and car if they wanted it, there is no way that they paid for the college expenses, and it is getting worse.

                                                                   

                                                                  That said, I am not convinced that approaches like lottery income in our state for students with a minimal grade point average and even remedial requirements and the Obama proposal for junior college for anybody are ever going to work either. In the vast number of cases, success in college is hugely dependent on some level of discipline and results in high school. IMHO just letting anybody have a "free" or more correctly heavily subsidized college education will just water down that certification. The best thing that I saw on giving everybody a chance was my local engineering college admitting locals with less than stellar grades on the theory if you can hack it we'll give you a chance. As an example, I probably was an example of the late-achieving male who went from so-so high school grades to pretty good college performance.

                                                                    • Re: pay no mind to the Market
                                                                      smaneck

                                                                      I think most of us are baby boomers here.

                                                                      I'm from California and when I started college, community colleges there were entirely free. I paid for my books and an $8 student health fee. Before Reagan became governor even four year state colleges were free. Tuition at the University of California was $600 a year and if you had an SAT score of over 1100 you got a state scholarship which covered it. And yes, I could live comfortably on $300 a month. Probably more comfortably than you since my father was disabled and Social Security covered dependents in college as well. I don't believe my education was 'watered' down just because it was free or cheap. Certainly not in comparison to what I see in Mississippi!

                                                                        • Re: pay no mind to the Market
                                                                          JerryD

                                                                          Your "free" education was back before the feel-good, politically correct environment where you probably had to earn your grades. From the recent evidence, an "A" isn't an "A" like we had to earn and many require remedial math and language courses worth nothing but pass/fail. In fact to get an "A" at the university when I attended, the requirement was A (93-100), B (85-92), C (78-85), D (70-77), although most grades were on a curve. But I did get the highest grade on one test, which wasn't all that high, but I did have to retake the test with all the rest.

                                                                           

                                                                          Going below a 2.0 average meant academic probation with a promise of expulsion if you didn't maintain a "C" average. Mine was a term school which meant finals every 12 weeks and in the first two years you probably had an hour test in most core courses every 2 weeks. I typically carried 17-20 credits with a couple of 14 or 16 credit terms. Some of my engineer friends could carry 20 credits with several multi-hour labs that granted only 1 credit. Does that sound anything like the 12-15 credit SEMESTER schools we have now?

                                                                            • Re: pay no mind to the Market
                                                                              smaneck

                                                                              Um, I want to the University of California at Santa Cruz for my bachelor's. This is where Berkeley sent its eccentrics. We had no grades at Santa Cruz. As for the breakdown of grades you list, I've only seen that in high schools in the South, never in higher education. And mind you, I've been a professor for twenty five years.

                                                                              Going below a 2.0 still puts you on probation. You'd have to do much better if you were studying engineering.

                                                                              As for the number of units carried, in my experience that is going up, not down. 12 units per semester always made you full-time at most institutions, although if you are going to graduate on time you would need to take at least 15. Now, at the historically black college where I teach (Jackson State) I see ill-prepared Freshman students taking 17 and 18 units. As for remedial courses, they had to be taking on *top* of this crushing load. I just shake my head, because we are setting them up for failure.

                                                                                • Re: pay no mind to the Market
                                                                                  JerryD

                                                                                  Well, the grade levels I displayed are from an engineering university, one very, very far from the South. When those levels applied was much, mush longer ago than 25 years too.

                                                                                   

                                                                                  Since you are a prof and understand semester schools, please explain to me why somebody in a term school had to take probably an 18-19 credit average load (that's 6 or so 3-hour classes - and don't forget the lab hours that were greatly ignored in credit hour counts) which equates directly to the number of classes and hours in class are anywhere equivalent to 12-15 semester hours (that's 4 to 5 3-hour classes). In my naive mind the semester concept was created for professors who only want to give and grade a paper or mid-term and maybe the same at the end of the course. Just to come clean, my school has now switched to semesters.

                                                                                   

                                                                                  PS: Maybe you could also explain how a college can give no grades and then communicate the progress that the student achieved during their college career.

                                                                                   

                                                                                  PPS: And all of us pretty much graduated in 4 years or we were bait for the draft. As I recall, I graduated with over 200 credit hours. And I lost a 5 credit-hour class in which I had an "A" because I could graduate with fewer credits on a new catalog.   :-))))

                                                                                    • Re: pay no mind to the Market
                                                                                      smaneck

                                                                                      By "term" system do you mean the quarter system? We had that at Santa Cruz but we were limited to taking three five-hour classes per quarter. You had to get special permission to take a fourth class. I think my students would do better with a quarter system. I don't know any professors who base grades only a midterm or final. In my World History class they have four exams per semester, three papers and online exercises every week. Mind you I have up to 200 students each semester and no graduate assistant. I grade all those papers myself.

                                                                                       

                                                                                      As for Santa Cruz having no grades, we had written evaluations instead.

                                                                                       

                                                                                      We are not that far away in age. Minimum wage was $1.25 an hour while I was in high school, and by the way minimum wage would have to be $10 an hour to buy the equivalent today. The Vietnam War ended my first year in college.

                                                                                        • Re: pay no mind to the Market
                                                                                          JerryD

                                                                                          Yes, the correct term should be "quarter" system. I just got used to saying a new "term".

                                                                                           

                                                                                          Just reviewed my college transcript hidden in the genealogy stuff. Not counting physical ed classes which were a guaranteed 1-credit "A", if you attended, I typically took 4 to 6 "real" courses. Every quarter except a summer class contained at least one 4 or 5 credit course. For the 13 quarters I took classes, except for the summer class and a 14 hour quarter, all had 15 to 20 credit hours with10 quarters having 5 to 6 classes and another quarter with only 4 courses, always exceeding the 15-hour limit with 3 classes that you described.

                                                                                           

                                                                                          I know that my first (high quality) job out of college paid just under 3 times the minimum wage (not my highest offer). Doing a back of the envelope calculation with a current $7.50/hour minimum wage and a quick guess at the current salary from my school in several computer-related areas, I get a current post-college wage close to 4 times the minimum wage. Somewhat better, but not out-of-sight.

                                                                                           

                                                                                          PS: I congratulate you and your colleagues on your progress-checking of your students during the semester. My limited experience and that of the kids does NOT verify this as a standard level of testing.

                                                                            • Re: pay no mind to the Market
                                                                              Chrysalis

                                                                              I agree with smaneck-- I don't mind paying my taxes. I like having streets and streetlights and pot holes filled and public libraries and garbage collections and police and fire services and food for the hungry and...and...and... What I hate and what destroys societies is graft, greed and corruption but those are related to a society's mores and (tax supported) judicial system not to its tax rate.

                                                                               

                                                                              But I also agree with smaneck that I will take every dollar of legal deductions I can.

                                                                  • Re: pay no mind to the Market
                                                                    BoBraxton

                                                                    exactly (absolutely). While my "mix" of investments may be in negative territory (year-to-date), when measured over the past twelve months it is a rate with which I am quite content. Volatility (to whatever degree) in the "market" is what makes gaining (or losing) money possible; however, there is no actual loss (or gain) - except on paper - until a sale (or purchase) is made. We have been retired three full years and I see these (investments) as always "long term." We also already went through the 2007 to current times - amusement park ride - and so far have lived to "tell the tale." Volatility means not only going down (and down and down) but also, as an example, a movement upward of 0.8% or even a lot more in a single day. That is a market I cannot afford to be Out Of even for that one day.

                                                                      • Re: pay no mind to the Market
                                                                        Art

                                                                        Bo, you are so wrong that there is no actual loss or gain. Look at your account balances the day after a big market swing, either + or -, that is your actual balance whether you take or leave, it may be on "paper" but it is your real time balance. It's actual money lost or gained.

                                                                          • Re: pay no mind to the Market
                                                                            BoBraxton

                                                                            I do look - daily. However, what I see is different: the number of shares. This "never" goes down and in fact because I instruct to re-invest dividend payments, four times per year the number of shares actually increases. Ironically, when the share price is high, fewer shares get added. Therefore, personally I am never distressed (quite the opposite) with a falling price during those four times. Since re-investment and when the dividends get credited are automatic (I do not control) then I have learned that whether share price is falling or share price is rising therewith to be content. This goes all the way back to age 15 and 16 the summer I began carpentry work full time 60 hours per week (six days, 10 hours per day) at $1.00 per hour. By my second summer, I had $1,000 in savings (and loan) paying 4% interest. Another experience (about quarter of a century ago) was getting scammed by relative of a close friend for $16,000 which I realized I would never get a penny from. This taught me that I can experience a substantial (for me) loss and not only survive but thrive - by tolerating and seeking a very modest risk. My personal philosophy is that in the market if I am content to accept the increase (rise in dollar value) I should be willing equally to accept the decrease (fall in dollar value). Otherwise, perhaps long-term investing would not be the place for me - but it is (for now).

                                                                      • Re: pay no mind to the Market
                                                                        canthony

                                                                        If you are ready for a 40- 50% loss in your 401 at 70 years old, god bless you.  This Administration just kicks the can down the road.  Sooner or later the can will go off the cliff.  I'd be wary.

                                                                          • Re: pay no mind to the Market
                                                                            BoBraxton

                                                                            Before retirement my spouse and I already had Roth IRA going back to when that option was made available.

                                                                            At that time we rolled over all our Traditional IRA accounts / funds into Roth, paying the resulting federal income tax liability over four year period - from funds outside the actually IRA funds. At the time of retirements three years ago, likewise we rolled over each of our 403(b) accounts / funds into a Traditional IRA (roll-over). In addition, each of us has a small taxable investment in a fund folks might call a small part of our "Emergency" fund (outside any retirement investments).

                                                                            • Re: pay no mind to the Market
                                                                              canthony

                                                                              The can just got kicked down the street again.  This time it is loaded with oil.  Big fish will eat the little fish.  Who will pay, Senior citizens will take the brunt.  The government wants our money and they will get it.  99% politics.

                                                                            • Re: pay no mind to the Market
                                                                              Chrysalis

                                                                              I am not an investment counselor and I have no particular knowledge of the stock market. But through 30 years of investing I have been able to outperform the market by about 5% per year-- my average return is 12% per year for the last 10 years (which includes >20% last year and this year). So what I am doing works for me. And what I do is get out of the market when times are bad and get back in when things start to look up.

                                                                               

                                                                              When I first started with TIAA-CREF we only had 2 choices, the annuity (TIAA) or the mutual fund (CREF). So, yes, you put your money in the market and let it there, like it or not. But about 15 years ago the law changed. Now we have 15 or 20 different mutual funds we can invest in as well as a Money Market fund to use when we want to "sit out" of the market for a while. My husband's company also offers him 15 or 20 investment choices.

                                                                               

                                                                              What I do is carefully analyze each fund's performance over the last year, 3 years and 10 years and compare it to the SP500. I insist on investing in funds that perform AT LEAST as well as the SP500. That narrows the field down a lot. I also look at the management fees and the fund managers (crucial information) and some other stuff. When I find one or two funds that have been doing well for the last year or two, I put my money there. Then I carefully watch the market. I accept losses of 1%-2% without concern. More than that I get concerned. At 5% I sell the fund and move the money into the money market fund if I haven't done so already. I usually let at least a month go by, often 2 or 3 months, as I continue to watch the market and see if it's starting to increase. When things look promising, I again analyze all my investment options (I don't necessarily go back into the funds I was in before) and choose one or two for investment.

                                                                               

                                                                              Using this strategy, we got out of the market in 2007 just before the market crashed thereby protecting all of our assets. We stayed out for over a year and got back in in late 2008, just as the market started to increase. We rode the wave up. We usually get out of the market in early October and stay out until the usual October "correction" is passed. This year we got out just before the market fell by 8%. Then we jumped back in just as the market turned around and gained 10% so we are up 10% instead of 2%.

                                                                               

                                                                              I don't always call it "right" but I've called it right often enough that we have doubled our investment in the last 7 years without making any additional deposits. The idea of "invest it and forget it" is simple and convenient but not the best way to grow your retirement fund. That's the whole point of having many different mutual funds to choose from-- check how they are performing compared to the risk level you are comfortable with and invest in the best. And being able to go online and move your money yourself means that you never risk losing all of your money, or even half. If you're down by 5% (or whatever limit you choose) just log on to the TIAA web site and move your money out of the market.

                                                                               

                                                                              In early 2008 when the market had been going down far and fast for several months, my husband told some co-workers that we got out of the market and put the money in a money market fund. Not only did these colleagues not know they could move their money themselves, but even after he told them they STILL did not move to protect their money so they lost another 25% that year. They had been raised with the mantra "you don't lose anything until you sell" and they were paralyzed. Those people who just "let it ride" through the years are just now at the point of recovering from their 2007-2008 losses; we have doubled our investment during the same time frame.

                                                                               

                                                                              I understand that there are people who are unwilling or unable to mess with the stock  market. There are some people who have so much money that they don't have to worry about maximizing their assets. But "invest it and forget it" is NOT good investment advice. After all, if that was the best way to invest, what would stockbrokers do with themselves all day?

                                                                                • Re: pay no mind to the Market
                                                                                  BoBraxton

                                                                                  I apologize because I can see that my spouting off could be interpreted as investment adivce (for others). Mostly my intention is (like yours) to share experience(s) - also, largely talking to myself (aloud). I suspect that something important to many people is the ability to sleep well and to be content (or better) with actual performance in relation to expectations. My expectations are quite modest by comparison.

                                                                                    • Re: pay no mind to the Market
                                                                                      Chrysalis

                                                                                      Bo, you have nothing to apologize for. Your advice (or experience or whatever you want to call it) is to be very, very conservative with your retirement funds, invest for the long term in solid-performing funds, then let the market do its thing. Over time there are more ups than downs so your investment will be safe. That is good advice for some people and it is exactly what we have heard again from almost all stockbrokers and investment advisors. So no, you are not wrong.

                                                                                       

                                                                                      What bothers me is that ours is the first generation who is not only encouraged but required to fund our own retirement-- and that retirement is getting longer and longer with more and more catastrophic medical expenses. Throughout human history, senior citizens did not expect to maintain their own home; they expected to live with relatives. Once they developed a serious illness-- infection, cancer, heart problems-- they usually lived 6 months or a year; they didn't have antibiotics, bypass surgery or kidney dialysis. 

                                                                                       

                                                                                      Our parents' generation suffered through the depression and WWII but then they participated in the roaring 50's, 60's and 70's. The US was the only industrialized country still standing after WWII and we had to supply the materials for all the other countries to rebuild. So for 25 years our economy was booming and most people had decent incomes, pensions and retiree medical benefits. My mother gets 2 pensions and a major discount on her health insurance. She never had an IRA or 401k. She did not trust and never invested in the stock market. Between her 2 pensions plus Social Security and Medicare she can support herself. She used her retirement savings (she did have some CDs) for travel and nice clothes and redecorating her home. I think that's great. I'm all in favor of it.

                                                                                       

                                                                                      But our generation was encouraged to move all over the country following our dreams-- be it education or a job or better weather or a lover. Families are now scattered all over the country and adult children no longer expect Dad or Mom to be living with them in their final years. Most pensions and retiree medical benefits are gone and we're lucky to still have Social Security (even though the Congress disconnected the COLA from the actual cost of living last year). So we have to invest in a retirement fund. We have to save a lot and we have to work with it to get it to grow as much as possible. The retirement picture is going to be even more bleak for our children.

                                                                                       

                                                                                      So I don't think that the old advice about being ultra conservative with your retirement funds and "invest it and forget it" is really the best way to go any more. We're going to NEED that money and we're going to need a lot of it. Rather than ignoring the stock market, we should be teaching ourselves and our children how to invest, how to identify good risk/reward funds, how to allocate our assets among different investment styles, etc. Don't roll over and play dead with the market. Instead, learn how to work with the market to maximize your returns. If you don't do it yourself, nobody else will do it for you.

                                                                                        • Re: pay no mind to the Market
                                                                                          JerryD

                                                                                          "So I don't think that the old advice about being ultra conservative with your retirement funds and "invest it and forget it" is really the best way to go any more." I totally agree. I call this "Monitor, monitor, monitor!". If an investment is not performing, then protect principal and if possible find a conservative alternative until things pick up. Although, I personally would not be as sensitive to a "dip" as you seem to be.

                                                                                           

                                                                                          Regarding the T-C money market, it has done absolutely nothing for a couple of years. Maybe it will in the future after interest rates rise above near-zero. It is a possibility for short changes in strategy so as to protect principal. I have used the IRA TIAA Traditional to park money for a few years. This is not something to trade in and out of.

                                                                                           

                                                                                          Also, rather than just looking at the S&P 500, we used the big  dip in 2008 to buy equities, a little of Warren Buffet's contrarian strategy of not following the crowd. I would generalize that approach to looking for "opportunities" which may be rare but can be profitable if one doesn't run and hide without looking for "bargains" or potential upsides. Buying bonds in a significant interest rate reduction like the Fed has forced on us a few times in recent years could be another opportunity.

                                                                                        • Re: pay no mind to the Market
                                                                                          PAULMAC

                                                                                          Bo,

                                                                                              You are correct.  I have invested for over 40 years.  The old adage "Buy low, Sell high"  works.

                                                                                          If the entire system tanks, then our $$ could not buy anything anyway.  I jumped at the opportunity

                                                                                          to switch from a State pension system to TIAA.  My logic = there will always be some professors somewhere

                                                                                          in this country contributing to TIAA.  Made lots of $$ with CREF transfers monthly = options have now

                                                                                          changed.  I do not need to carve a new path thru the bamboo forest.  I just mimic Warren Buffett's

                                                                                          portfolio in a microscopic way.  I don't know if I am flattered or upset with him, but he bought out 5

                                                                                          companies over the last ten years in which I had investments.  My motto = If you do nothing to help

                                                                                          yourself, your costs to live today will double in 18 years and you will be hurting.  Rule 72 = average 4% increase

                                                                                          in cost of living every year even though the government might say otherwise.  You can always change automatic

                                                                                          dividend re-investments to a check.  Less book work when you sell.  Just my 2 cents worth.  

                                                                                            • Re: pay no mind to the Market
                                                                                              BoBraxton

                                                                                              I worked full time in higher education ending the last of June 2009 (eleven years). First my employer had another outfit (with which I was and am very happy) and when they switched to TIAA-CREF, employees were able to keep and continue in the original. My choice was to do so 50 - 50. The Quarterly Retirement Portfolio Statement I just received estimates 4.3% Personalized Rate of Return. I am happy with that (for the portion that remains). The rate for fourth quarter has an estimate of 1.1%

                                                                                              My Asset Allocation Summary shows 89% Guaranteed, 11% Multi-Asset

                                                                                              For my own purposes of estimating, I used the former dollar figure to calculate two things:

                                                                                              1) 5.2% Reductions (the amount TIAA-CREF paid me in 2014) - essentially it goes toward Federal withholding

                                                                                              2) 4.8% Gain - based on the "Guaranteed"

                                                                                              In my mind this is sort of keeping even with inflation, which I think is great.

                                                                                              I am content.

                                                                                          • Re: pay no mind to the Market
                                                                                            Chrysalis

                                                                                            Just a brief follow-up to this discussion. I heard on the news this morning (January 2, 2015) that the markets had another great year; the S&P 500 was up 11.4% for 2014. My TIAA investments were up 23.2% for the year. So, while I do not believe in "day trading" I do believe in moving your money in and out of the stock market so as to protect your assets. It may not be everybody's cup of tea, but it works for me.

                                                                                              • Re: pay no mind to the Market
                                                                                                JerryD

                                                                                                You say: "I do believe in moving your money in and out of the stock market so as to protect your assets". I totally agree, although my frequency may differ from yours. I am absolutely against buy-and-hold and depending on asset allocation to protect me by "averaging" returns across classes of investments. If you look close, that didn't work very well in the 2008-09 drop.

                                                                                                 

                                                                                                I prefer to protect principal (Warren Buffett likes that too) and look for opportunities. They don't happen frequently so patience is needed. At this point, I have the rest of our lives to look and no time left to recover from large loses.   :-)))

                                                                                                  • Re: pay no mind to the Market
                                                                                                    JerryD

                                                                                                    Could be. At our stage of life though we are not too much into sectors. The preserving principal principle (yes, that was intended :-)))) ) is the by far most important driving force of our investments. I look for broader "opportunities" like stocks way over-sold or the Fed trying to cut interest rates (neither of these will happen very soon IMHO). This approach is coupled with the use of very predictable investments that allow exit and entry without principal loss.

                                                                                                     

                                                                                                    Using these conservative investment approaches, we have surprisingly been able in the last few years to far exceed my earnings while working. All of those years "chasing" performance along with the unavoidable stress have been replaced by DISCIPLINE, PATIENCE and SPENDING CONSTRAINT.   Good luck though!!   :-))))

                                                                                                    • Re: pay no mind to the Market
                                                                                                      Chrysalis

                                                                                                      Jerry, I suggest that you keep your eye on oil and gas stocks. The reason the price of gasoline is so low these days is that OPEC has decided to flood the market in an attempt to destroy all the North American oil companies who are producing lots of shale oil and natural gas. This new domestic source is helping to free our economies (and our armies) from dependence on OPEC oil and Arab politics.

                                                                                                       

                                                                                                      Our domestic oil companies borrowed a lot of capital to finance exploration, mining, liquification and transport because they expected to make lots of money from shale oil and liquified natural gas. Instead, the bottom dropped out of the oil market and they are foundering. Therefore, gas and oil company stock valuations are way down this year-- some by as much as 50%. One of these days OPEC's solidarity will break down, oil prices will start to rise again and I think that the future of these companies will be considerably brighter.

                                                                                                       

                                                                                                      "Dumping" (i.e., selling a product at a loss in order to drive the competition out of business) is not a new tactic. It is often supported by foreign governments via subsidies and price fixing. Look at what happened to our steel industry in the 80's when Japan decided to dump steel on our markets ("What American steel industry?", you may ask. Precisely my point.) I think that our government should act quickly to prop up our domestic oil companies. Our national security as well as our economic health depend on it. Of course, if Saudi Arabia has bought enough senators and congressmen, our oil industry is doomed.

                                                                                                    • Re: pay no mind to the Market
                                                                                                      FrugalDude

                                                                                                      Wow Chrysalis ?

                                                                                                      How did you do that 23% while the S&P only grew 11% this year.  I mean you doubled your return ???

                                                                                                      How's that possible ???

                                                                                                        • Re: pay no mind to the Market
                                                                                                          Chrysalis

                                                                                                          Frugaldude, that's what I have been trying to say. The only thing I do differently from most people (the only thing I can do differently) is that I am not patient when the value of my investments starts to decrease. I see no benefit in staying invested during a downturn. If you look at the market's ups and downs over the past year you will see a couple of times when there were some significant downturns-- April, August and October being the main ones. When I see what I think is a downturn coming I sell my funds and put the money in a money market. Then when the market seems to heading back up, I reinvest. Yes, I might miss some of the initial upswing, but at my stage of life I'm more interested in protecting principal than in squeezing out every point of growth. Similarly, if I invest in a fund that was doing well but is not doing well now, I sell it and buy something else. As they say, "Past performance is no indicator of..." Using this system I hang onto my gains and increase my assets by a few percent most quarters. If you eliminate the negative numbers, the positive numbers add up quickly. My TIAA contract allows me to make 11 online transfers a year. I see no reason why I shouldn't use every one of those free transfers if it helps to increase my assets. Nobody pays me for the unused transfers.

                                                                                                            • Re: pay no mind to the Market
                                                                                                              canthony

                                                                                                              There is no right answer so it would be wise and correct to keep one’s good fortune a private matter.  No need for the ??!!, A-a-.c-c-!! and leave it to the philosophers amidst us.  This doesn’t impress.

                                                                                                              • Re: pay no mind to the Market
                                                                                                                JerryD

                                                                                                                I certainly agree with your statement: "at my stage of life I'm more interested in protecting principal than in squeezing out every point of growth". But your actions are more like a trader. Is that exhausting? How much time does it take?

                                                                                                                 

                                                                                                                I used to do that kind of stuff. I even wrote some pretty sophisticated software to track progress and outcomes. I got tired and the stress was no fun either. Whereas the stock market is a bit drab recently, the last time I checked, my investments in 3 different TC equity accounts are doing around 14% compounded annually since I made the investments in 2008 with no trades. I am however starting to watch these closely since protecting principal has a higher priority for us at this stage of life than gains.

                                                                                                                 

                                                                                                                FrugalDude, doing well for a year or 2 in a strong market is doable, but doing that for years is quite difficult. In my decades of investing, 15% compounded annually has been my golden goal, very rarely maintained for long periods. My current goal is 8.5% compounded annually while never losing any principal. That's based on my personal 5% real return and 3.5% inflation assumption. At this rate, we could double our real worth in the years we have left with discipline and even better if we exceed that modest assumption. But to each their own approach. Just be sure you understand your assumptions and buy/sell execution rules. And monitor, monitor, monitor!  GOOD LUCK!!!!    :-)))

                                                                                                          • Re: pay no mind to the Market
                                                                                                            yanushkevich

                                                                                                            Hi Chrysalis,  this is my personal point of view on your comments.

                                                                                                             

                                                                                                            I tried timing my personal investments and lost every time.  Have been with Tiaa-Cref going on my 45th year.  In the beginning,  we could not get out of Tiaa Cref, and  we certainly could not even park our money into a money market fund.  all we could do is transfer to Tiaa and if you switched to Tiaa, you were stuck in Tiaa.  How things have changed, yet other than some company mandated contributions to Tiaa in my first two years, I have stayed otherwise 100% Cref.  Looking back at 1972, even bought some Cref shares for around $7, they are over $350 today!

                                                                                                             

                                                                                                            I have to say  I do pay mind to the Market, but never on a daily or even monthly basis, an annual basis is soon enough.  If I had put all my monies into Tiaa instead of Cref, I definitely would be much worse off.  Without ever moving my Cref monies, I still managed to make better than ten percent since I retired (Dec. 1990);  so while I admire your prescient moves, I think staying with the Market is totally acceptable, at least it worked very well for me.  Of course I had some wild rides, but I lost money only on the distributions I took when the Market was down, not on my capital.

                                                                                                             

                                                                                                            A colleague of mine told me a long time ago, if Cref collapses to zero, then your Tiaa won't be worth much either, and  the entire economy shall be in shambles.  But if inflation rages, your Tiaa may not be worth much, but your Cref has a chance to ride it out.

                                                                                                              • Re: pay no mind to the Market
                                                                                                                Chrysalis

                                                                                                                I think it's a wonderful world and we are all very fortunate! We all have money to invest, we have quite a few options for how to invest it, we each get to pick our own investment styles, and best of all, we all think we made the right choices and we all seem to be happy with how things are turning out for us. Isn't that neat??!!

                                                                                                                 

                                                                                                                H-m-m-m. On second thought. Maybe all this means is that no matter who you are or what you do nothing makes any difference.   A-a-c-c-k! I'll leave this one to the philosophers among us.

                                                                                                                • Re: pay no mind to the Market
                                                                                                                  BoBraxton

                                                                                                                  I do appreciate very much your perspective (long-term). As I recall, 1990 was a memorable year. Whatever we had invested / saved up to that point certainly took a hit. I remember because we were about to switch some of our traditional IRA into Church bonds (local congregation where my spouse was senior pastor for 27 years). You have 19 years on me from my last day of work for pay and about 21 years more retirement years than I have (going into our fourth year).

                                                                                                                    • Re: pay no mind to the Market
                                                                                                                      yanushkevich

                                                                                                                      Happy to share my personal experiences, Bo, by no means is this advice.  I just get very upset when a lot of smart people I know still turn to financial advisers, when they should be doing the math themselves.

                                                                                                                       

                                                                                                                      Paying commissions to a mutual fund or to a financial adviser only detracts from your own gains.

                                                                                                                       

                                                                                                                      As far as investment choices, companies or businesses are like houses, you can buy the mortgage on the house and be like a bank or you can buy the house.

                                                                                                                       

                                                                                                                      Bonds are like the mortgage on the house, they will never make much money for you, unless you play with interest rates.  Shares in a company on the other hand is like buying the house, it may appreciate or may not, but as the property becomes more and more desirable, there is a chance to make significant gains.

                                                                                                                • Re: pay no mind to the Market
                                                                                                                  NC Professor

                                                                                                                  John Bogle, the founding father of Vanguard Funds, gave some good advice:  Don't worry about market fluctuations over the months of the year.  Instead, decide on a single date during the year (Jan 1 for instance) and on that date, examine your financial condition.  Decide what accounts to sell, and what ones to keep; then carry out your decision.  By the way, he was against day trading, but encouraged holding on to good investments for the long term. 

                                                                                                                    • Re: pay no mind to the Market
                                                                                                                      BoBraxton

                                                                                                                      For each Quarter (end) I create a letter-size file folder (Tab) - for example, the most recent, 2014 Q4 and this is where I put my quarterly statements (and other papers resulting from my transactions). Mostly I wait and observe (and monitor). The Washington Post most days also gives me the Index and its movement. Weekly I get to see the change (index) from one year ago. Other times I watch change year-to-date. There is little to nothing I can do about Index movement / fluctuation and personally I am content to move up and down with the sea level(s).

                                                                                                                      • Re: pay no mind to the Market
                                                                                                                        yanushkevich

                                                                                                                        Just read your comment professor, please see my comments back to Chrysalis, I believe we are on the same page and I was just a humble engineer, much less a financial guru.  Just used some common sense!

                                                                                                                      • Re: pay no mind to the Market
                                                                                                                        BoBraxton
                                                                                                                        1. 2015.01.11 Sun

                                                                                                                        this was the week

                                                                                                                        bond market

                                                                                                                        is giving

                                                                                                                        a message

                                                                                                                        2

                                                                                                                        ahead

                                                                                                                        sees the

                                                                                                                        market

                                                                                                                        3

                                                                                                                        day-to-day

                                                                                                                        sharp changes

                                                                                                                        in prices

                                                                                                                        4

                                                                                                                        total

                                                                                                                        percent

                                                                                                                        fall-ing

                                                                                                                        5

                                                                                                                        below

                                                                                                                        the two

                                                                                                                        percent

                                                                                                                        6

                                                                                                                        up stocks

                                                                                                                        headed

                                                                                                                        back then

                                                                                                                        7

                                                                                                                        seven

                                                                                                                        hundred

                                                                                                                        billion

                                                                                                                         

                                                                                                                        8 ‘a wash

                                                                                                                        total

                                                                                                                        offset

                                                                                                                        decline

                                                                                                                        9

                                                                                                                        try not to

                                                                                                                        confuse noise

                                                                                                                        with wisdom

                                                                                                                        • Re: pay no mind to the Market
                                                                                                                          vacref

                                                                                                                          For the most part I have followed the invest in solid funds and leave it alone model. I do make one strong exception to that though, when it comes to withdrawals for my RMD (Required Minimum Distribution). There I follow the market pretty carefully.

                                                                                                                          I like to withdraw 50-75% of my RMD sometime early in the year when the market has gained at least a few % over the end of year closing. There's no guarantee of that happening of course, but it does most years. 2008 was a particularly bad year for that, but happily congress decided to waive the required withdrawal that year.

                                                                                                                          I then watch the rest of the year to withdraw the remainder when there's a substantial gain for the year. Again, no guarantee, but it happens sometime during most years.

                                                                                                                          I realize that's rather subjective, but it''s worked very well for me.

                                                                                                                          Over the past 12 years I've made a 20% withdrawal for a property purchase, and withdrawn my RMD for 11 years now, which has accumulated about another 40% of my capital. Overall my total 403b and IRA funds have increased by a modest 10%, while withdrawing about 60%. And I guess I should mention that I've not added to the accounts in all that time. I'm quite content with those results.

                                                                                                                            • Re: pay no mind to the Market
                                                                                                                              Santhi

                                                                                                                              I see this makes sense. If market grew too fast or more than the average then take a withdraw there. Thanks I will do the same.

                                                                                                                              • Re: pay no mind to the Market
                                                                                                                                Chrysalis

                                                                                                                                That sounds like a well-reasoned and effective strategy. Thank you for the suggestions.

                                                                                                                                • Re: pay no mind to the Market
                                                                                                                                  yanushkevich

                                                                                                                                  interesting article in today's Christian Science Monitor about excesses of Wall Street:    Wall Street is a threat to the American middle class - CSMonitor.com  .

                                                                                                                                   

                                                                                                                                  Robert Reich a former democratic secretary of Labor wrote this article, and it rings true.  Still  Wall Street has been good to a lot of us out here in the Retirement Wasteland.  So do we kill the goose that lays the silver eggs because we begrudge the golden eggs it dispenses to the big Enchiladas?

                                                                                                                                   

                                                                                                                                  Personally I would rather ride that train than be left at the station.  Your comments are welcome.

                                                                                                                                    • Re: pay no mind to the Market
                                                                                                                                      smaneck

                                                                                                                                      No one is talking about killing the goose, only regulating it.

                                                                                                                                      Why shouldn't I, as a stockholder for instance, have a voice in how much the CEO gets paid?

                                                                                                                                        • Re: pay no mind to the Market
                                                                                                                                          yanushkevich

                                                                                                                                          Civil Service is a highly regulated business, I mean they have rules for everything and the pay is not the greatest.  Just look at the Secretary of Defense or a Four Star General's pay and compare it to that of a CEO at a 2000 person company.  Yet the SecDef or the general are in charge of millions of people.

                                                                                                                                           

                                                                                                                                          The progress made by Civil Servants and Military equivalents in furthering technical know how or manufacturing savoir faire is abysmal, when compared to what public or private companies can achieve.  Even government labs solicit the help of private industry!.

                                                                                                                                           

                                                                                                                                          As far as CEO pay, some of it is based nepotism or who you know, but a lot of the rationale for increasing CEO pay is to give the managers in the lower echelons the incentive to work harder and longer hours, in order to take that CEO job away from the incumbent.

                                                                                                                                           

                                                                                                                                          Just as I don't begrudge T/C and other mutual fund companies from making money off me, I do believe a rising tide lifts all boats, and over time the Market is a rising tide, provided most CEO's are doing their job.  When they screw up like Mr. Steinhafel of Target fame, they get fired and someone else steps in.  Now regarding golden parachutes, Mr Smanek, I totally agree with you there.

                                                                                                                                    • Re: pay no mind to the Market
                                                                                                                                      BoBraxton

                                                                                                                                      Upon further reflection, I am concluding that I should have given this the topic / title "do not confuse the Noise (of the Market) with Wisdom."

                                                                                                                                        • Re: pay no mind to the Market
                                                                                                                                          canthony

                                                                                                                                          Sounds good to me.

                                                                                                                                              • Re: pay no mind to the Market
                                                                                                                                                canthony

                                                                                                                                                Just pay mind to the number of good, interesting jobs the Govt. is supposed to be expanding.  Here, waiters, dishwashers jobs are a plenty.  urprising how many college grads end up with these jobs.  Meanwhile technology is passing them up each month they stay in the jobs.  I wonder what the data would show per major, how many graduates are working in their chosen profession and at what salary, say 2-3 years into employment.  Read a statistic of the great number of entering college freshman can’t read above a sixth grade level, so they spend probably a year learning what they should have learned in high school.  Something is wrong somewhere.  I have a hard time trying to figure it out.  Could it be that nobody can fail anymore, or maybe the schools need much more teacher’s assistants, maybe the college football coaches making 8 times what the Dean makes creates an imbalance, interesting solutions may be discussed.  How about having a SBC college degree at a four year college after you receive your BS degree at a four year college.    What a ponderous box.

                                                                                                                                                 

                                                                                                                                                 

                                                                                                                                                 

                                                                                                                                                Best pay mind to the market if you are getting close to retirement or are retired.  I think the monkey throwing darts at the DOW chart is quite reliable.  It will be what the Govt. wants it to be.

                                                                                                                                                  • Re: pay no mind to the Market
                                                                                                                                                    JerryD

                                                                                                                                                    "... SBC college degree at a four year college after you receive your BS degree at a four year college ..." What does that mean????

                                                                                                                                                     

                                                                                                                                                    I just visited the web site at the quite small engineering university I attended (I am NOT an engineer) and eye-balled the "average" salary of 3 different computer-related curriculum graduates. Ball-park it looked like $61,000/year. I have heard the President note several times that they place 93% of graduates - got jobs, went on for advanced degree, joined the military. They have 100's of employers travel several times a year to this remote school just to compete for the graduates.

                                                                                                                                                     

                                                                                                                                                    Could it be that way too many going for a "college degree" are just making poor curriculum choices, not studying enough (Do students even go to class on Fridays any more?) and having too much fun on either Mom and Dad's dime or foolishly racking up huge debt while taking 5-6 years to finish? I researched and posted elsewhere that in my college days at this then quarter university, I, like most others, took 5-6 courses in each of the 3 quarters, graduated with over 200 credit hours and did it all in 4 years. As I often observe, "You makes your choices and you pays the price", unfortunately, for way too many these days.

                                                                                                                                            • Re: pay no mind to the Market
                                                                                                                                              BoBraxton

                                                                                                                                              Don't time it - except in stand-up comedy.

                                                                                                                                              • Re: pay no mind to the Market
                                                                                                                                                BoBraxton

                                                                                                                                                We have been back from Kenya two nights and it seems the Market has gone down all week. I had already set up automatic purchases and these lower prices are, for me, good news (when buying new shares).

                                                                                                                                                • Re: pay no mind to the Market
                                                                                                                                                  MOAM

                                                                                                                                                  I try to dollar cost average to bring my initial cost down anytime I can.

                                                                                                                                                  • Re: pay no mind to the Market
                                                                                                                                                    BoBraxton

                                                                                                                                                    2015 September update - I notice that July near Washigton, D.C., the total rainfall was two inches or more short of usual. Also, the Market has taken somewhat decline, euphemistically (and truthfully) called "volatility." So, praying for more rain in these parts! Also, looking at things over the long, long term / haul, the year (2016) of U.S. Presidential election,, Market tends to be lack-luster - until the general Election is decided. Then those who are investors relax a bit and allow things to "happen" once more. For my next trick, I will decipher pigeon entrails (virtual of course and metaphorical - no animals were harmed).