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Author: dswhite One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76397  
Subject: Should my first investment be AFTER Y2K? Date: 10/25/1999 10:58 AM
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So my former company folded, and I rolled my 401(k) and all its really bad funds into a money-market IRA at my bank for temporary safekeeping. Now I'm ready to make my first "real" investment (where I can actually choose good investments for a change!) Since I'm still a young-ish Fool (26) and entering the investing world for the first time, I thought an S&P Index Fund (VFINX) for my IRA might be a good place to start (and hey, maybe end too!)

But Y2K has brought up a question for me. The question is not "Is the market going to crash and burn, and should I therefore stick with my money market account?" I'm firmly convinced that the stock market is the best place for me to be, especially given the long time I have till retirement.

No, the question is "What will other people be doing with their money to prepare for Y2K? Will the stock market decline because everyone else has pulled their money out of the market for safekeeping? And if so, how can I take advantage of that"

If the market declines over December-January, my guess is that it'll be from investor fears rather than from technological failures. And if stocks, especially tech stocks, drop temporarily, my guess is that they'll come back up as people realize that there is life (and working technology) after Y2K.

Yes, I know:
- market timing is generally a Bad Thing - being out of the market at the wrong time can have serious consequences for the growth of your portfolio.

- since I'm hopefully talking about an IRA that will be around for 40 years or more, the effects of what happens in the first few months will probably be minimal.

But I wonder isn't is possible that this might be the exception to the "no market-timing" rule? Given the fixed date of Y2K and all its inherent problems (real or imagined), can't we assume that at least some investors will be jittery and pulling out of the market? Might this be the one calendar date in a millenium where you can say with some degree of confidence "The market will very likely be down in late December, then higher in late January" ?

And if so, should I wait till January to roll my money market IRA into VFINX?

Opinions welcomed. Thanks!
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Author: x4a54 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14759 of 76397
Subject: Re: Should my first investment be AFTER Y2K? Date: 10/25/1999 11:25 AM
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If you're nervous , you probably should wait.
I wouldn't have said that six months ago, but now
we're so close.... what the heck?

______
Will the stock market decline because everyone else
has pulled their money out of the market for safekeeping?


a Lot already have... they were SOME of what happened
last week... but there's no telling how many more will,
or when those folks will get back in.

But I wonder isn't is possible that this might be
the exception to the "no market-timing" rule? Given the
fixed date of Y2K and all its inherent problems (real or imagined), can't we assume that at least some investors will be jittery and
pulling out of the market? Might this be the one calendar date in a millenium where you can say with some degree of confidence "The market will very likely
be down in late December, then higher in late January" ?


*i* can't say for sure..
it *seems* like it's a once in a lifetime event, attached to
a precise date, but we still don't Really know --what
will happen and what people will do (y2k'ers are also
worried some about 2/29/00... they were also worried
about 9/9/99).

in the end, if you'll sleep easier, Wait (and stay here
learning more about the ways of the Markets)

good luck

jp


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Author: DrBob2 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14761 of 76397
Subject: Re: Should my first investment be AFTER Y2K? Date: 10/25/1999 11:48 AM
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dswhite wrote:

Should I wait till January to roll my money market IRA into VFINX?

----------

You need to be comfortable with what you do with your money. You might try dollar cost averaging, easing money into the market a bit at a time rather than all at once. Depending upon how much you have and the minimums for the mutual fund, you could invest in four equal amounts in November, December, January and February.

This strategy would involve rolling your money over into a Vanguard money market fund first and then making transfers each month. At any rate, you should probably start the rollover process as it can take awhile.

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Author: dgthepiper Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14762 of 76397
Subject: Re: Should my first investment be AFTER Y2K? Date: 10/25/1999 12:03 PM
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Might this be the one calendar date in a millenium where you can say with some degree of confidence "The market will very likely be down in late December, then higher in late January" ?

The Y2K 'problem' is really a question of Psychology. The world is not going to end, and the markets will not crash as a result of some uncontrollable force. What you're really trying to do is predict what people are going to do as a result of their fears. That is anyones guess.

The thing to remember that any reaction without a change in fundementals will correct itself once people realize the sun came up on Jan 1. Personally, I'm ignoring the whole Y2K thing and continuing to make investment decisions as if nothing unusual was going to happen (which I believe is the case).


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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14771 of 76397
Subject: Re: Should my first investment be AFTER Y2K? Date: 10/25/1999 1:35 PM
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The official Foolish advice is that events such as Y2K are irrelevant for the long term. Therefore, keep making regular investments in your chosen stock strategy regardless.

But personally, if you are convinced that Y2K will make a difference, I would play that strategy. To do that, keep your money in money markets (somewhere) until you are convinced the market has bottomed and then buy in.

I too do not believe Y2K will have much impact, but if it does, the bottom will likely be sometime after the first of the year. If there is big news of Y2K problems on Jan 1, the bottom could take a while until the magnitude of the problem is know. If there is not news on Jan 1, speculators will conclude it was a hoax and the recovery from those who had held back or cashed out funds will start with a roar right after the first of the year--maybe even a little before.

Market timing is always a guessing game--the reason Fools hate it, but yes, if you guess correctly, there is a payout.

Good luck to you.

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Author: zay34kc3 Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14787 of 76397
Subject: Re: Should my first investment be AFTER Y2K? Date: 10/26/1999 8:24 AM
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If it were me, I'd invest rationally, i.e., put it all into a S&P500 fund and not worry about Y2K.

Why? Look at the DJIA or S&P500 since inception. Let's take the Dow in this century as an example. We've seen 2 world wars, the rise and fall of communism in Europe/Russia, the development of atomic warfare, several brushes with all-out nuclear war (Cuban missile crisis and other ones not reported in great detail), an S&L scandal, an "Asian flu" crisis, AIDS, "global warming", a major depression, the 70's gas crunch and recession, etc., etc. For every event, we've found people who said it would herald the end of prosperity (and/or the world). Yet, if I look at the Dow, it's always gone up. Yes, there's a big crash in 1929, but that was caused (in part) by other factors not listed here.

In short, I would suggest you not worry about the doomsayers. Sure, something bad could happen, but the market will recover, if it's affected at all.

BTW, just to make you more worried, if the gold-nucleus smashing experiment scheduled for November goes wrong, it will create a black hole.....and then you won't have the opportunity to worry about Y2K....;^)

zay34kc3

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Author: dswhite One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14794 of 76397
Subject: Re: Should my first investment be AFTER Y2K? Date: 10/26/1999 10:17 AM
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Thanks for the replies, Fools. I'm leaning towards just forgetting about Y2K and investing as if it was business as usual. IF I decide to wait till early- or mid-January to start investing, then it'll be 3 months before I can start investing. :-( And who knows; maybe the gains the market will make from now till mid-January will more than offset any dips that occur because of Y2K fears.

Maybe I'll try it both ways - start investing in an index fund for my IRA now, but hold off on my first non-IRA, non-401(k) investments till January. I'm considering Microsoft and maybe Cisco as my first investments; seems like if anything dips during Y2K (for good reason or not), it'll be tech stocks.

Thanks again! It's nice to have helpful, knowledgable people reading and posting. With that kind of help, I'll be on my way towards Foolishness before too long...



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Author: AngelMay Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14807 of 76397
Subject: Re: Should my first investment be AFTER Y2K? Date: 10/26/1999 4:44 PM
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(y2k'ers are also
worried some about 2/29/00... they were also worried
about 9/9/99).


Hi JP:
Why are people worried about 2/29/00 any more than they would have been worried about 2/29 in any other year?

AngelMay

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Author: JAFO31 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14814 of 76397
Subject: Re: Should my first investment be AFTER Y2K? Date: 10/26/1999 8:41 PM
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AngelMay:

<<<<(y2k'ers are also worried some about 2/29/00... they were also worried about 9/9/99).>>>>

"Why are people worried about 2/29/00 any more than they would have been worried about 2/29 in any other year?"

There will not be a 2/29/00. The general rule is that years evenly divisble by 4 are leap years, but that rule is not entirely accurate, so, IIRC, there is an exception that years also evenly divisble by 400 are not leap years.

Fount of odd trivia. Regards, JAFO

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Author: tmackfool Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14818 of 76397
Subject: Re: Should my first investment be AFTER Y2K? Date: 10/26/1999 10:12 PM
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There will not be a 2/29/00. The general rule is that years evenly divisble by 4 are leap years, but that rule is not entirely accurate, so, IIRC, there is an exception that years also evenly divisble by 400 are not leap years.

Fount of odd trivia. Regards, JAFO


Actually, there will be a Feb. 29, 2000. It falls on a Tuesday. The rule is that centenial years (1700, 1800, 1900, etc), although divisible by 4, are not leap years, unless they are also divisible by 400. So 2000 is, in fact, a leap year.

Taylor

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Author: JAFO31 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14820 of 76397
Subject: Re: Should my first investment be AFTER Y2K? Date: 10/26/1999 11:09 PM
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tmackfool:

<<<<There will not be a 2/29/00. The general rule is that years evenly divisble by 4 are leap years, but that rule is not entirely accurate, so, IIRC, there is an exception that years also evenly divisble by 400 are not leap years.

Fount of odd trivia. Regards, JAFO>>>>

"Actually, there will be a Feb. 29, 2000. It falls on a Tuesday. The rule is that centenial years (1700, 1800, 1900, etc), although divisible by 4, are not leap years, unless they are also divisible by 400. So 2000 is, in fact, a leap year."

If Taylor is correct, then I had it completely backward; my well must have run dry.

Thanks for the correction.

Feeling Old, JAFO



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Author: x4a54 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14826 of 76397
Subject: Re: Should my first investment be AFTER Y2K? Date: 10/27/1999 2:18 AM
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>>>>>>>Actually, there will be a Feb. 29, 2000. It falls on a Tuesday. The rule is that centenial years (1700, 1800, 1900, etc),
although divisible by 4, are not leap years, unless they are also divisible by 400. So 2000 is, in fact, a leap year.

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Author: AngelMay Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 14830 of 76397
Subject: Re: Should my first investment be AFTER Y2K? Date: 10/27/1999 9:00 AM
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>>>>>>>Actually, there will be a Feb. 29, 2000. It falls on a Tuesday. The rule is that centenial years (1700, 1800, 1900, etc),
although divisible by 4, are not leap years, unless they are also divisible by 400. So 2000 is, in fact, a leap year.


JP: I still don't see how this is any different than software encountering this situation in any other year. If the software could handle it in 1996 (if that was a leap year -- I didn't check) why wouldn't the software be able to handle it in 2000? Or am I understanding this wrongly? Are you just saying that people worry about everything involving Y2K, including this?

AngelMay

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