Market Sucks
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[quote=Borker Boy]Does anyone else find themselves just sitting and laughing at this market?
A 300+ point "up" day doesn't affect me in the least anymore because I know we'll give it all back the very next day.[/quote] I don't laugh.However there is nothing better after a big market loss than driving home in my new Mercedes Benz E350!
This is worse than 2002. In 2002 , deep down, even tho investors blamed it on their broker, they knew they were being aggressive and speculating.
Today, old people and conservative investors are losing their safe money, in the form of FNM PFD and LEH PFD. Its really horrible. Brokers who felt they were doing the right thing for their clients are being destroyed, and the clients are getting crushed without even investing for growth. Lets hope the Lehman announcemnt tomorrow turns things around. This is just a really bad situation with no winners, and plenty of lawsuits to come.[quote=Sportsfreakbob]This is worse than 2002. In 2002 , deep down, even tho investors blamed it on their broker, they knew they were being aggressive and speculating.
Today, old people and conservative investors are losing their safe money, in the form of FNM PFD and LEH PFD. Its really horrible. Brokers who felt they were doing the right thing for their clients are being destroyed, and the clients are getting crushed without even investing for growth. Lets hope the Lehman announcemnt tomorrow turns things around. This is just a really bad situation with no winners, and plenty of lawsuits to come.[/quote] That's how I feel about it...in that the safe money isn't so safe. What might go down 7% in a bad market is down 15%. It does suck, big time. What feels really bad too is when clients wanted to be in CD's in their late 50's about to go into retirement. And us, advisors, convinced them to have some equity exposure to keep pace with inflation, so we put them in a balanced portfolio of mutual funds and they're down 10-15%. It makes my stomach churn.Just as an added comment, I personally own MF’s that were flat in yesterdays three hunded point up market and today with the market down 280, were down 4.5% and 6% respectively. I repeat that - Mutual Funds that are down 6% in one day. Surely, the world is upside down, something is very wrong.
Likely had big positions in Fannie Mae or Freddie Mac - care to tell us what funds?Just as an added comment, I personally own MF’s that were flat in yesterdays three hunded point up market and today with the market down 280, were down 4.5% and 6% respectively. I repeat that - Mutual Funds that are down 6% in one day. Surely, the world is upside down, something is very wrong.
The funds were FSLAX - Fid Adv Leveraged Company Fund, and Janus Forty.
I called the funds - wasnt fannie and freddie, that hit would have occured on Monday. They are both heavy in commodity stocks, energy, ag, materials. Both still believe longer term they go higher. One of them said they dont see as much of a slowdown in China as people believe, and a slowdown in China is what would make them cut back on those areas.Generally speaking, its going to be tough doing business the next couple of months. People are scared shitless of the stock market, and while many are pissed at their current advisor, that will be an opportunity to bring in assets, but it will be tough putting a lot of the money to work.
In addition, the whole pfd business is shot for a while. Thats big busienss for a lot of us.Sportsfreak … on a persoanl note , I am not as confident in the growth in China as we have seen in the past. In addition , politics are always a Wild Card in China. I agree that they ( Chinese ) have a vested interest in maintaining the staus quo BUT with their government it does pose some unique challenges.
This will be a great thread to look back on in about two or three years. Hope fully sooner as I to am getting very sick of this market!
I know it would be going against what we shouldn't do, but would anyone consider re-allocating some equity funds to bond funds for your clients within a couple years of retirement at this point in the market?
Currently they are at about 70/30, but a 10 or 15% higher allocation to bonds might take out some of this volatility, especially as things just don't look very good anywhere. One of the clients I'm thinking about is down around 12% YTD, which is close to my threshold for them and I'm pretty sure it is for them too. Problem is he'll be retiring at 59 in 2 years so he needs some equity exposure. Any perspective on this? It's just a terrible time right now and doesn't appear to be getting any better anytime soon.Snags…I would definitely be contemplating a reallocation. I do admit many of my clients are typically in Conserative Funds , Commons , Preferreds and Bonds. I/they may have missed some of the big moves upwards but have not experienced the big moves downwards. Just my approach. BTW two years is not a long time.
[quote=snaggletooth]Here’s something you can use:
On October 9, 2002, the market hit its bottom with close to a 3% drop in the day. Over the next 12 months, the market returned almost 33%. If you waited just 1 month to return to the market, November 8, 2002, by October 9, 2003, you would have only gotten about 16%. So half of the return for the next year after the bottom in 2002 occured in the first month.[/quote] Snaggletooth, Great info, where did those statistics come from? I'm looking for a source to quote. Even though we all know how we should be acting, human nature is going to let the fear emotion win out over the greed emotion in situations like this. But, we have to remember the advice, " The way to make money, is to be greedy when other people are being fearful." I'm not saying we are at the bottom of the market, but I'm willing to make a bet that we are much nearer the bottom than we are to the top.Buying opportunities!!! A quality company down ie. 20- 25% screams " look at me ". You and everyone else knows that the quality company has the resources and market to continue.
[quote=exEJIR][quote=snaggletooth]Here’s something you can use:
On October 9, 2002, the market hit its bottom with close to a 3% drop in the day. Over the next 12 months, the market returned almost 33%. If you waited just 1 month to return to the market, November 8, 2002, by October 9, 2003, you would have only gotten about 16%. So half of the return for the next year after the bottom in 2002 occured in the first month.[/quote] Snaggletooth, Great info, where did those statistics come from? I'm looking for a source to quote. Even though we all know how we should be acting, human nature is going to let the fear emotion win out over the greed emotion in situations like this. But, we have to remember the advice, " The way to make money, is to be greedy when other people are being fearful." I'm not saying we are at the bottom of the market, but I'm willing to make a bet that we are much nearer the bottom than we are to the top. [/quote] I had read that Oct. 9, 2002 was the bottom, so I plugged in the dates in historical quotes on BigCharts for the different timeframes. I don't think it includes dividends, but you get the point.Snags - I certainly wouldn’t be moving into bond funds at close to the bottom of interest rates, that could be jumping right into the fire . Is he going to need to start drawing upon the portfolio for income at 59 or will there be some time before that’s needed? I typically have someone within 2-3 years of retirement in a 50-50 allocation if they are going to need to draw from the portfolio. I like lots of protection in a down market and lots of ability to provide funds without having to sell into a down market. Unless there were unusual circumstances (client doesn’t plan on ever needing funds from the portfolio and will leave it basically intact to heirs) I wouldn’t have a 57 year in an allocation any higher than 53% equities.
With new clients who are too heavily invested in the market right now, I'm having them ride it out for now and when things are a little better in the market, THEN we'll make the changes to the allocation, assuming the equity portion is diversified and not in scary or crazy stuff. You may think it's a terrible time now, but I'm starting to get funds invested over the next 3-6 months that we've had sitting on the sidelines for the past 6-8 months. I like to buy when there's a saleGood observations OldLady. On a personal note, I had one of my own Strips just come due about two months ago and sitting in Money Market. Parking in the Short Term Parking Lot…and I am convinced some good opportunities will present themselves near term. Likewise for my clients.