RaleighCraps
RaleighCraps
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January 13th, 2015 at 9:03:52 AM permalink
I am trying to figure out ways to preserve my IRA (401K) accounts given the current markets.
YES, I do know that trying to time the markets is not a recommended play, and many who try it, don't fare as well as they could have otherwise.
But I just can't see where investing new money in stocks right now is going to work out in the short term. We have been on a 7 year bull run, yet our economy seems as stagnant now as it was 5 years ago. Layoffs are as common now as then. Even though the jobless numbers appear to have gone down, I'm not sure they are accurately accounting for the many people who have been out of work so long they have given up even looking. Many of the pundits I read are saying a pull back is inevitable, although some of them were saying that last year, and that was not a pull back by any means..... The global economy is more tightly coupled now, than it was in years past, so the old play of US market down, foreign markets up, is not really available any longer.

The bond market does not look very attractive, with interest rates so low, the bond values are going to get killed as interest rates rise, which they have to do pretty soon.

So as I see it, equities are not safe, world markets are not safe, and bonds are not a good play. Real estate has been on a tear, so that will likely pull back as well, if the markets start to tumble. Energy used to be a nice place to hide, but since oil started this free fall, and the Saudi saying oil will never go back to $100 a barrel, what will happen in the energy sector? Natural gas supplies are going to be saturated when Marcellus Shale reserves come on-line.

So what are your thoughts for investing? What to do?
Always borrow money from a pessimist; They don't expect to get paid back ! Be yourself and speak your thoughts. Those who matter won't mind, and those that mind, don't matter!
100xOdds
100xOdds
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January 13th, 2015 at 9:11:16 AM permalink
if you're gambling, then try this:
wait till oil hits bottom, then buy double long
Craps is paradise (Pair of dice). Lets hear it for the SpeedCount Mathletes :)
odiousgambit
odiousgambit
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January 13th, 2015 at 9:27:36 AM permalink
Gordon, you know I harp on 'TINA' - "there is no alternative" and I think this is what is going on with stocks. We see sharp, stunning declines, then the next day all back up again, right now nearly all time highs again.

For example, over the years I have put a ton into bonds, more than I wanted to going by the advise you get for someone my age. Now, I am selling those bonds. I've had the vast proportion in short-term funds, so what happens is they turn it over a lot, eagerly maybe in current conditions, so the fund generates capital gain distributions while staying at the same price and paying less and less in dividends. So I look at it now knowing I have received the capital gains already and the [as I write 1.92% 10 yr rate] of dividends start to suck more and more [usually something less than the 10 yr in these funds]. Take a look at your bank accounts to see how much you like these kind of rates. Meanwhile there is a big guessing game as to when the Fed will make sure interest rates go up. That is inevitable too and will cause pain in even short term bond capital [certainly ending any gains]. The really seemingly better grounded pundits were predicting higher rates some months ago [also to show how 'nobody knows nothing']

I plan to hold a big percentage in bonds but for now as long as I catch the rates going down even further I sell more, sometimes just leaving it in cash.

TINA = everything else sucks even more.

TINA will end too. What will be the circumstances? Certainly not rates going down!

PS: just to make it clear, I sell some of my bonds, not all of my bonds. And these are ETF funds.
the next time Dame Fortune toys with your heart, your soul and your wallet, raise your glass and praise her thus: “Thanks for nothing, you cold-hearted, evil, damnable, nefarious, low-life, malicious monster from Hell!” She is, after all, stone deaf. ... Arnold Snyder
98Clubs
98Clubs
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January 13th, 2015 at 9:49:58 AM permalink
If you're a six-digit or better investor, get dividends 4-5% on a good chunk of it. Plenty of HQ-stocks to chose from, but get some divi's.

MO, KMI, D, O, T, VZ, etc
Some people need to reimagine their thinking.
RaleighCraps
RaleighCraps
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January 13th, 2015 at 9:52:13 AM permalink
Quote: 100xOdds

if you're gambling, then try this:
wait till oil hits bottom, then buy double long



http://www.marketwatch.com/story/oil-above-100-never-again-says-saudi-prince-alwaleed-2015-01-12

Saudi prince says oil will never again go above $100 barrel. If the prince is right, where will oil end up?
Always borrow money from a pessimist; They don't expect to get paid back ! Be yourself and speak your thoughts. Those who matter won't mind, and those that mind, don't matter!
98Clubs
98Clubs
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January 13th, 2015 at 9:55:22 AM permalink
My rule of thumb Gold/20.
Some people need to reimagine their thinking.
RaleighCraps
RaleighCraps
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January 13th, 2015 at 9:55:51 AM permalink
Quote: 98Clubs

If you're a six-digit or better investor, get dividends 4-5% on a good chunk of it. Plenty of HQ-stocks to chose from, but get some divi's.

MO, KMI, D, O, T, VZ, etc



If a pull back occurs, those divi's are not going to cover the underlying drop in the stock price. Get a 4% divi, but lose 20% in the stock equity. Of course, the divi is real dollars, and the 20% drop is only a paper loss, unless you have to sell. But if you have to wait for a couple of years for the stock to get back to your purchase price, those are wasted years. Am I looking at this wrong?

edit: In addition, if there is a pull back, they could cut divi's as well, leaving you with a lot less coming in.
Always borrow money from a pessimist; They don't expect to get paid back ! Be yourself and speak your thoughts. Those who matter won't mind, and those that mind, don't matter!
RaleighCraps
RaleighCraps
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January 13th, 2015 at 9:58:38 AM permalink
Quote: 98Clubs

My rule of thumb Gold/20.



I assume this is for the price of oil?

So at $1200 an ounce, oil will be right around $60 / barrel ?
Always borrow money from a pessimist; They don't expect to get paid back ! Be yourself and speak your thoughts. Those who matter won't mind, and those that mind, don't matter!
AZDuffman
AZDuffman
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January 13th, 2015 at 10:04:03 AM permalink
Even at my age I have moved most of my stock investments (50% of IRA, 100% of short term) into utilities mutual funds. My logic is that they have steady income like a bond but there is some growth as population and energy growth continues. The two I am in have been at 10-20% return the past few years.

Get the heck out of most stocks, the market is being fueled by a printing press. The parallels to 2006/7 right now are scary. My thinking right now is auto loans will start to go bad the next 12 months. That was part of the start of it last time.
All animals are equal, but some are more equal than others
98Clubs
98Clubs
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January 13th, 2015 at 10:06:32 AM permalink
Quote: RaleighCraps

If a pull back occurs, those divi's are not going to cover the underlying drop in the stock price. Get a 4% divi, but lose 20% in the stock equity. Of course, the divi is real dollars, and the 20% drop is only a paper loss, unless you have to sell. But if you have to wait for a couple of years for the stock to get back to your purchase price, those are wasted years. Am I looking at this wrong?

edit: In addition, if there is a pull back, they could cut divi's as well, leaving you with a lot less coming in.



The problem here is that bonds will do worse compared to inflation. And that the local bottom for divi's occurred in Oct. '14. If you chart the six divi's listed since Oct. 10, 2014, you'll see the current problem with divis... some are ALREADY up 15% (edited from 20) on price. Thats a game-changer for some. So I see your point.
Some people need to reimagine their thinking.

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