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I did all the right things and I have lose near 60% of my money. I 600k is now 300 k...mostly from MF stocks that. Tomorrow morning I think i just will get out of this and call it a day. I think the system is falling a part and it this market will go much lower. Anybody want to talk me out of this??
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Anybody want to talk me out of this??

No. You need to protect yourself. You need to be able to sleep at night.

As for what I expect, I have calculated that:

"The market is highly likely to drop another 20% to a P/E10 level below 11. The market could easily drop another 50% to a P/E10 level below 8. This would be well within historical norms."

Odds are that being out of the market won't hurt you. Later, you can ease back into the market at more favorable prices.

Reference:
January 2009 Stock Allocations
http://www.early-retirement-planning-insights.com/January-20...

Have fun.

John Walter Russell
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No. of Recommendations: 7
....Reference:
January 2009 Stock Allocations...


Be very careful with this link, he was referring to his own web site and in the past there has been a LOT of discussion about his dubious work. Just have you have apparently gotten burned following the MF stock picking you should be skeptical of all postings on the internet that purport to be able to predict the future.

... I did all the right things...

Are you sure?

Did you have the bulk of your retirement money in a well diversified portfolio of mostly low cost index funds with an appropriate amount of bonds?

I’m not a big fan of Jim Cramer on “Mad Money” but I have to give him credit because the few times I have watched his show he has always be clear that the type of investing that he promotes is strictly for your extra “mad money” that you can afford to loose.

... I did all the right things and I have lose near 60% of my money. I 600k is now 300 k...

That is painful but unless you invested a lump sum last fall then I suspect that you are measuring from the market high, not what you actually invested. You need to imagine that you could go back in time and invest in a money market fund instead. Most likely you will still be down, but not nearly by 60%

.... Anybody want to talk me out of this??....

If you move to 100% cash right now you are really making a huge bet on the dollar and inflation. If things get even uglier then diversification might be a better choice than betting everything on the dollar.

There are a lot of ways to go to a more conservative position than to go to all cash.

My crystal ball is broken so any speculation by me about what will happen would be pretty worthless. Just be very careful about longer terms bonds and bond mutual funds. They will be hurt severely if interest rates rise or the dollar falls sharply.

Greg
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If you want to go to cash you run the risk of loss because of inflation. Look at this chart and you'll see there there is much to lose here too. That's death by a thousand unseen cuts to your cash portfolio. Watty's advice is right on!

http://www.dshort.com/inflation/inflation-chart.html

Hockeypop
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I don't think anyone can tell you what to do. If you can't sleep at night, you need to lighten up on stocks until you feel comfortable. As has been pointed out, cash carries an inflation risk, so nothing is 100% safe.

I look at last year's losses and ask myself what happens if 2009 is a repeat of 2008? I don't think it will be but I'm not expecting the big rebound some predict either. My current asset allocation says I should be buying stocks now but I'm not. I think the normal rules have been suspended by the markets so I'm sitting tight until I see some stability. I own equities and I own fixed income. When I look at the long term, my equities have very good potential for appreciation. But I could have said that about AIG, Lehman, or Citi a year ago.

IOW, it's anybody's guess where we go in the next year. I'm still sleeping at night so I'll live with my asset allocation. I'm just trying to avoid CNBC and their screaming extremeists. If I need market analysis, I'm watching Bloomberg.
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The question is what can you learn from this. The obvious lesson is that long term buy and hold is a mistake. Do not make that mistake again. When you buy a stock or fund you need to know under what circumstances you should sell it. Look at the chart every day, and take action when necessary.
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What do you men by "know when to sell?" Better put, say a person owns all funds, and they do rebalancing quarterly. Are you saying that is when they seel to lock in their gains, or do they go whole hog and sell out of a fund when it has reached it's perceived peak?

Timing is impossible as we all know. Are you saying buy and rebalance or buy and sell?
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I don't want to put words in anyone's mouth, but I believe joelxwil will tell you that he actively trades mutual funds based on technical charts and signals. So, yes he advocates buying and selling, not blindly holding.

I believe he said that he went to cash during the early part of, if not before, this meltdown. Maybe he'll be kind enough to tell us when he gets back into equities. :-)

-drip
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Timing is impossible as we all know.

That posters doesn't think so.

PSU
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I believe he said that he went to cash during the early part of, if not before, this meltdown. Maybe he'll be kind enough to tell us when he gets back into equities. :-)<?I>

You can read his blog. While he writes with confidence here, he will sound indecisive at times on his blog.

PSU
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I wrote this article for joey2509.

It begins:

Comfortable with $300K

"Has your nest egg fallen in half, from $600K to $300K? Even if so, you will be able to retire in comfort. Depending upon your situation, this could be today or it might take a decade, but not longer."

http://www.early-retirement-planning-insights.com/Comfortabl...

Have fun.

John Walter Russell
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So, he actively trades MF? Why?
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Joey, you do not say how old you are and what your time frame is till retirement.

You are not alone in your losses. You might want to diversify your investments into some Money Markets, bonds and equities. You might want to stick with equities right now that pay out dividends. Try to find funds that are five star - Morningstar.com rates funds.

Times are difficult. Fixed income is bringing very little earnings, one wonders which companies to trust to buy their bonds. Dividend companies are cutting dividends.

But if you are still young enough, don't stop investing. Just invest smarter.

Birgit
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What do you men by "know when to sell?" Better put, say a person owns all funds, and they do rebalancing quarterly. Are you saying that is when they seel to lock in their gains, or do they go whole hog and sell out of a fund when it has reached it's perceived peak?

Timing is impossible as we all know. Are you saying buy and rebalance or buy and sell?


There are a lot of different ways to trade. Here is one:

(1) Start with a large list of stocks with allegedly good fundamentals. You can subscribe to the Kirk Report, or use the lists on MSNBC, for example, or others. The list should be at least 1,000 long. It should be well diversified in different ecomonic sectors

(2) Rank the stocks by taking the ratio of the 21 day EMA to the 34 day EMA.

(3) Decide how many stocks you want to hold: 10, 15, 20, etc. In general, the more stocks you own the less volatile and also the less profitable the system. Buy the top ranked stocks, providing that (a) the 21 day EMA is above the 34 day EMA

(4) Hold until the stock is no longer highly ranked. If you are holding 10 stocks, sell if its rank is below 25, for example. For other number of stocks to hold, increase the number in proportion. Also sell if the 21 day EMA is below the 34 day EMA.

(5) Whenever you sell, buy the top ranked stock you do not already hold.

All of this is end-of-day based trading. That is, you rank and decide what to do based on the closing prices.

There is nothing special about 21 and 34. Lots of other numbers work very well.

This is a description of a FastBreak system which I have backtested extensively, and with a number of different lists of stocks. The results are excellent. You can do a similar thing with ETFs.

You can see what the software is like at http://www.edge-ware.com/

On the other hand, you do not need the software. You can simply scan the list of stocks and look for those which meet the criteria I have listed. Or, there are other criteria which work well. Moving Average Crossovers, EMAs, and MACD histograms work in combination. But I do not have the ability to back test those things in combination.

And no, timing is not impossible. For the system I have described, you can look at the chart of the equity curve generated by the system, and decide to be in or out of it based on the technical analysis of that curve. Again, you need software to do that.

Nothing works all of the time. There will be losing trades - in that system about 45% of the trades lose money. But they do not lose much and the winners more than make up for that. Similarly with the timing - not all of the signals are going to be good, but they will limit your losses and maximize your winning streaks.

Diversification is not particularly desirable. You need a diversified list of candidates, but you want to pick the winners. Check with some people on the Mechanical Investing board - they have systems which play sector rotation.

Also, look at Faber's paper: http://www.cambriainvestments.com/Private/uploads/GTAA%20Fab... - I think his trading is not sufficiently sophisticated, but the principle is good. There are people following that on the Mechanical Investment board also. And speaking of timing, these guys are 80% cash and 20% bonds at this point. Not a bad idea at all. Better than losing 60%.
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Well, that is quite the mechanical strategy. Now I just need the seed money to get it going. ;-)
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I assume that you have been investing on a regular monthly basis while the market has gone down, getting more and more shares at lower and lower prices, effectively reducing your average cost.

Right?

What's your time frame?

MZ4
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I may have missed it, but how OLD are you?

When do you plan/want to retire?

We had less than 300K when we retired, several years ago, and we made out okay -- living carefully. (And it different times, I grant you!) Today, that has shrunk a LOT, too, but now we at least have Social Security to lean on. Depending on your age, you may have some, too.

Panic is a bad thing. Be careful before you leap in ANY direction.

Vermonter
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Well I am still in this and not really sleeping well but thought I will try to hold off for a while. What has really scared me is that I read about how historical PE is much lower during different periods and how we are still trading very high - some articles said we would have to go down 30% to reach these pe's...very scarey stuff
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The way I look at it, companies are still worth money. Dow will not go to 0. Remain calm, all is well (quote from Animal House) Just dont do anything rash.
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