Stock Market

Remove all ads!

What do you think of the current state of the stock market?

As a FT employee with a company who has a dropping 401k plan I'm tempted to increase 401k contirubtion up to 10%. I know this increase now may seem like a stupid move as the market may continue with the downard spiral but I have a gut feeling the exta money put in now could pay good dividends within the next 5 or 10 years. My thought is I am basically trying to reduce the bleeding from what I currently have in my account.

Have others on here who are employed and have 401K plan thought about increasing their contribution while stocks are low?

As the old saying goes...Buy low, sell high....

 

Yeah, we are seeing panic in the market, hard-core panic selling, like nothing since the crash that led to the Great Depression. The smart money has already sold off the market, and as you suggest, waiting for the little guy to panic and sell off at a large loss. Then they jump back in again and buy-up all the bargains and the lowest prices. I don't think we have hit the bottom: I'm guessing about 78-7500, like where it was after 9/11. But I'm no expert, so only take this as a best guess. The credit market is the key. If they can get it moving again things will improve.

 

As for my current holdings, I'm bleeding cash. There is nothing for me to do but ride it out.
I look at this as a buy opportunity. Many quality stocks are currently undervalued. I will continue to buy.

 

There's not much to think about the current state. It's not doing well, obviously. Whether now's the good time to buy because stocks are low or now's the time to sell because stocks will get even lower is, let's face it, impossible to tell for sure. I've heard both theories being presented from people who know what they're talking about. I've thought about taking a risk with this but my stock market intuition is nonexistent and I don't really have that much money anyway, so it's a nonissue for me. I just hope things don't keep tumbling into a downward spiral.

 

Another $73 Billion lost on the Australian Share Market today... This isn't good...

 

MB: Actually, you want to buy when the market is down. This would be a reasonable time to increase your deduction. There is no way to be sure when the market hits rock bottom (obviously the best time to buy) but you'll certainly be buying low. Even the crash on Black Monday (and following days) completely recovered after two years. Those who bought while the stocks were down made a killing.

 

I agree with Bruno above me. Even if the market continues to go down, buying now is a deal. You may not get the best deal if it continues to go down from here, but if you've got the money to invest for 10+ years, now is the time to buy. If you're already in and don't need the money quickly, leave it in as there's no real point in selling at this point.

 

I hate to give any advice to anyone, since I'm no expert, but the current wisdom is not to do anything at the moment. The thing is that if the market continues to sink, it could be years before you break-even. But it's quite obvious that by now it's far too late to sell.

This guy is an expert, (Jim Cramer) and I read his stuff, since, even though he seems kinda crazy at times, he seems to know what's going on:

Again, let put a giant disclaimer on this, cause I'm no expert. I have a professional broker, who advises me, and she's very good. This is just food for thought....

http://www.cnbc.com/id/15838459

 

Depends how stable you think your pension plan is at all. If you think it might implode or go bust, then clearly you don't want to put anything into it at all. But if you think it is large and well diversified and you have the cash to spare, then increasing your contributions could be a good thing.

Remember though, that with the market being so low, your normal contributions are already 'buying low' and will be buying more shares than the same contribution did last year. So you don't really need to increase your contribution to benefit from the lower prices.

 

The thing to remember about Stocks is that they represent ownership of a company. When you hold stocks it means you own part of a company. AS long as company survives, you still have an asset. I think the reason the market is down is simply because people aren't confident in the survival of the company when the banks aren't there to lend them money. Some investors need cash for other purposes. Whatever the reasons, a bit of research could yield some nice profits for those with money to invest...

 

The people I feel sorry for in this mess are the people who are retired and withdrawing from thier 401k plans, or the people who were planning on retiring in the near future. The people who have problems are basically the 60+ crowd. I will probably have to continue working for another 40 years or so. (I have no thought of being able to retire at 65, and I think I'll be lucky if I can afford it at 70 - 75 seems like a more realistic number. Hopefully, I'll live to be at least 80 so I can actually "enjoy" retirement. Or maybe I'll work until I drop dead. Regardless, I have no plans to make changes to my 401k plan at the moment. I'll keep the 80% stock, 20% bond buying strategy that I currently have implemented. That said, I also have no desire to look at my quarterly statement that should arrive in my mailbox this week.

 

Well, it appears that Jim Cramer was right again about buying stocks today. The market is up like 700 points. On Friday, he suggested to buy back stocks, with some of the money (about 25 percent), that he had suggested to take out of the market last Monday.

 

Heh....I sold everything I had in stock a few months ago to pay for our Costa Rica trip, so I made a total gain of $300 as only a few of my shares had lost value.

Since then, my company's stocks have tanked big time. I have 5% of my gross income put into a holding account, and at the end of every quarter, they buy me shares of the company's stock at a 15% discount...so I'm in a good place right now.

Now what would be sweet is if National Semiconductor merged/bought my company...even though I hate National, my stock would go through the roof!

 

To better clarify my situation, I have contributed 6% of pay since October 2000 to my 401k plan with the company matching me 100% for the first 3% and $0.50 on the dollar for the next 3% of my contributions. To make math simple and easy to understand here is how the plan works for me.

If I make 100 a week and invest 6% or $6 the company would invest an additional $4.50 into my account, which is a total of $10.50.

I have been receiving this benefit since 2001 and have been investing 6% since 2000 until March this year when I increased my contribution to 8%.

I know that when you invest at a young age (35 or lower) you are investing for the long term, retirement. That being said and the fact I have over 35 years of work left I am seriously thinking about increasing my current contribution up to 10%, but I am waiting until the market reaches 7500 points or less to increase my contributions and my wife's contributions.

Seeing that I have been contributing now for almost 8 years I hate loosing over 10K in money within a short time; however, I know I am investing for the future and not now.

---------- Added 0 hours, 8 minutes and 21 seconds later... ----------

And the market is again crashing today; it may end up in the 7500 point range by the end of this week if the market continues down the spiral that started earlier this month.

---------- Added 0 hours, 2 minutes and 12 seconds later... ----------

This is why I purchased a rental property before I hit 30; I will have my property paid off before I retire and that will provide me a small income in addition to my 401k, pension plan, and social security benefits (if they still exist) when I retire.

 

@Munchkin

Well, you definitely have to keep on putting in at least the 6%. With your company's matching policy, it's free money, so you have to do that.

As for whether or not to up it to 10%, and waiting for the DJ to fall to 7500 to do it, well, that doesn't make a heck of a lot of sense to me. You're investing for the next 35 years - it will make very little difference if you buy your stock when the DJ is at 7500 or 8500 when you're looking at the kind of investment horizon.

What I'm saying is that it may be smart to up your contribution, but I would not set a DJ benchmark for when I would decide to do that. Heck, contributions only go in every two weeks, so even if the market dropped to 7500 today, you'd have no idea if it would still be at that point for your next contribution, or the one after that. I don't think it's ever a bad idea to save more, but if you aren't looking to retire for another 35 years, what the market is doing at this precise moment in time is not going to have any great effect.

 

I see your point Aldeth; however, I only increase my contributions never decrease. That is why I am considering increasing my contribution as I will be able to purchase more shares at the current prices and as the market rebounces the value of my new shares will increase my over all 401k networth.

Many of the articles I have read by experts believe that the lowest the markets should drop to is around 7000-7500, which would be a perfect time to increase 401k contributions for long term investing as the money invested today will grow 5 to 10 times its value in 20+ years, which would be perfect for those new to 401k or those who still have 30+ years to invest.

 

I understand your theory Munchkin. My point is that stocks are already low. So they are already at bargain prices. That they may go yet lower doesn't change the fact that stock purchased now or if the DJ falls another 1000 points are still going to make a hefty profit with that kind of investment horizon.

I'm obviously not in a position to tell you what you should do with your money, all I'm saying is that it makes little sense to try to pinpoint the exact bottom of this market decrease. Whether the bottom is 7000, 7500, or 8,000 stocks are already at good prices RIGHT NOW.

 

I do see your point and agree it is a great time to invest; however, I am all about numbers and for me once the market reaches 50% or less of it highest value than and only than will I add more to my contributions. Yeah it is lame but for some weird reason I have a gut feeling the market may go up and down a little here and there over the few weeks but come around Christmas or right before it maybe below 7500. That is when I will invest, and who knows it could drop even below that value after companies start providing their 4th or 1st quarter profits.

 

Hard to believe, but it's up almost 4000 points, since its lows in the Spring:

http://www.msnbc.msn.com/id/3683270/ns/business-stocks_and_economy/

 

I'm glad to see I'm not the only thread resurrector around here!

I wish I had money to invest. But first I need a real job . . .