Stock Market

[bogey21]

I suspect we've reached a bottom in stocks for a while, at least..

Hope you are right but I think there is close to 20% more to go on the downside.

George

 

[WinniWoman]

Yes, to the end, and hopefully long after that for my lucky beneficiaries! Utilities can be such cash cows that I expect to simply skim off the dividends and let the rest ride. I will wait on D until I've built up some of the others, and probably buy some water before that. The crisis in Flint drives home the necessity of water but I haven't looked into anything yet.

I also think the merger is a done deal when regs sign off. I can't think of any other hurdles.

I used to have a Water ETF, but I stupidly sold it- along with almost everything else- in 2009. Ugh!

 

[geekette]

American Water Company has spent the last 10-15 years buying up water companies.

Nice tip! The Dividend Champions spreadsheet shows many water utilities paying increasing dividends uninterrupted. Choose Excel or PDF.

http://www.dripinvesting.org/tools/tools.asp

 

[tompalm]

Hope you are right but I think there is close to 20% more to go on the downside.

George

Agree. The next stop is 1600 SPX. We will get a bounce there for sure. It might not go lower than that, but right now is a good time to unload some stocks if anyone is still holding them, because the market might go a lot lower than 1600. Never know where the bottom is.

 

[ace2000]

At this point, I'd be holding, if not buying - actually as I said earlier, I've been investing my monthly contributions into energy funds for the last three months.

I'm more optimistic than you guys are. However, if either of you are recommending this style of investing (trying to predict the market high points and low points), you're both crazy. One thing I've noticed on these TUG posts is that several always mention that they're currently on the sidelines - especially after the market is down - but they never seem to tell us when they have decided to get back in.

 

[geekette]

At this point, I'd be holding, if not buying - actually as I said earlier, I've been investing my monthly contributions into energy funds for the last three months.

I'm more optimistic than you guys are. However, if either of you are recommending this style of investing (trying to predict the market high points and low points), you're both crazy. One thing I've noticed on these TUG posts is that several always mention that they're currently on the sidelines - especially after the market is down - but they never seem to tell us when they have decided to get back in.

Agree here. Much has to do with strategy and view point. There is no advance notice on where the tops and bottoms are. I keep my money in.

I am a buyer in this market as a long haul dividend investor. Lower is fine, I contribute to my Roth all year long and enjoy bargains. I don't find a lot of bargains yet.

For those on the buy low/sell high plan, good luck. While I have no crystal ball, I think 2016 is going to be extremely volatile.

 

[Sugarcubesea]

I've got 13 years till I retire, I just hope that when I retire my 401K will be in an Up swing...

 

[PigsDad]

I've got 13 years till I retire, I just hope that when I retire my 401K will be in an Up swing...

So when you retire you are planning to cash out all of your holdings? When I retire I see myself needing my investments for 20-30 more years, so I don't see myself changing my portfolio mix that much.

Kurt

 

[lizap]

The problem is that for at least the next 10 years, the rate of return for stocks and bonds is likely to be quite lower by historical standards. We are within 5-7 years of retirement. I recently did a forecast of our retirement expenses and compared that to our income expected to be generated from our retirement assets. What I discovered is that we were taking unnecessary risks with our portfolio. We decided to de-risk a large portion of our portfolio and place the remaining portion in balanced funds. What I didn't want was to want to retire in 5 years and not be able to because the market was down 40% or so.

So when you retire you are planning to cash out all of your holdings? When I retire I see myself needing my investments for 20-30 more years, so I don't see myself changing my portfolio mix that much.

Kurt

 

[vacation.memories]

The problem is that for at least the next 10 years, the rate of return for stocks and bonds is likely to be quite lower by historical standards. We are within 5-7 years of retirement.

Any chance you can share exactly why you believe the next 10 years will be poor??

 

[vacationhopeful]

Any chance you can share exactly why you believe the next 10 years will be poor??

You see a recovery going on, as China crashes? Or is it the unstable Middle East? Or perhaps the 'oil' boom that has died in the middle part of US? Or up north in Canada ... where they get 60 cents US for each $1.00 Canadian?

In other words, WHAT recovery have you been living in?

 

[tompalm]

One thing I've noticed on these TUG posts is that several always mention that they're currently on the sidelines - especially after the market is down - but they never seem to tell us when they have decided to get back in.

For the record, there is a computer program called Sector Surfer that I use that is based on technical analysis. It uses trend lines with the priority being on the 50 day line below the 200 day line and how long it is there to determine when to sell or go to cash. Once the 50 day line turns up, it will send an email to buy your best performing mutual fund or stock. It is actually more complex with a lot of other data it uses, but if you are familiar with charts and trend lines, you can understand how it works. Yesterday, I received an email to go to cash, so that means to make the trade tomorrow on Feburay 1st and to get out of the market. You can go there and set up an account for free if you want. But to make it more applicable to your holdings, you need to input which funds your 401k has. If you work for Google, Apple, IBM, or a lot of other large companies, someone has already done that for you. The cost is $10 per month per strategy. Here is the web site.

http://www.sumgrowth.com/InfoPages/HallOfFame.aspx

I am more active and was out of the market since May 2015, but bought back in during October, only to sell out the first week of January 2016. I actually loss about 2 percent on those trades, but my fear is taking a loss like 2008 or 50 percent. I am holding 10 percent in oil stocks and selling calls against those positions, the rest is in cash. So selling now means taking a loss of 7 percent from the top, but nobody has a crystal ball and hits the top perfectly every time. The risk of going long is riding out the market should it drop 50 percent and waiting 3-5 years to get back to even.

I plan to enter several short positions as soon as the market rolls over and buy a little each day. The ETFs to do that with are SH, SDS, DOG and others. If the market sells off and drops below SPX 1800, the drop will be hard and fast. Once that happens, expect it to drop to 1600. If 1800 holds, it is possible the market will go back up and hit new highs. But, that is a long shot and it is only a matter of time before the Debt from QE being used all over the world catches up with us.

 

[lizap]

First, no one really knows what the market is going to do, myself included. Something is wrong when Japan goes to negative interest rates. At some point, there will be a price to pay for all this free money. I do a lot of financial reading; most noted financial gurus expect muted returns over the next 7 years or so. This is currently one of the longest bull markets in U.S. market history - bull markets do not last forever. IMO, the current data indicate that the downside risk of this market outweighs the potential returns. For us, this risk is too great; a significant drop could mean we might not be able to retire when we want to..

Any chance you can share exactly why you believe the next 10 years will be poor??

 

[lizap]

I agree - that is my fear as well (a drop that would be difficult for us to recover from in 5-7 years)..

For the record, there is a computer program called Sector Surfer that I use that is based on technical analysis. It uses trend lines with the priority being on the 50 day line below the 200 day line and how long it is there to determine when to sell or go to cash. Once the 50 day line turns up, it will send an email to buy your best performing mutual fund or stock. It is actually more complex with a lot of other data it uses, but if you are familiar with charts and trend lines, you can understand how it works. Yesterday, I received an email to go to cash, so that means to make the trade tomorrow on Feburay 1st and to get out of the market. You can go there and set up an account for free if you want. But to make it more applicable to your holdings, you need to input which funds your 401k has. If you work for Google, Apple, IBM, or a lot of other large companies, someone has already done that for you. The cost is $10 per month per strategy. Here is the web site.

http://www.sumgrowth.com/InfoPages/HallOfFame.aspx

I am more active and was out of the market since May 2015, but bought back in during October, only to sell out the first week of January 2016. I actually loss about 2 percent on those trades, but my fear is taking a loss like 2008 or 50 percent. I am holding 10 percent in oil stocks and selling calls against those positions, the rest is in cash. So selling now means taking a loss of 7 percent from the top, but nobody has a crystal ball and hits the top perfectly every time. The risk of going long is riding out the market should it drop 50 percent and waiting 3-5 years to get back to even.

I plan to enter several short positions as soon as the market rolls over and buy a little each day. The ETFs to do that with are SH, SDS, DOG and others. If the market sells off and drops below SPX 1800, the drop will be hard and fast. Once that happens, expect it to drop to 1600. If 1800 holds, it is possible the market will go back up and hit new highs. But, that is a long shot and it is only a matter of time before the Debt from QE being used all over the world catches up with us.

 

[John Cummings]

So when you retire you are planning to cash out all of your holdings? When I retire I see myself needing my investments for 20-30 more years, so I don't see myself changing my portfolio mix that much.

Kurt

When I retired totally 9 years ago I started to become less aggressive moving more to income producing investments. The worst thing you can do is get out of the market when it is down. That just locks in your losses. I am surprised by how many people actually do that.

 

[lizap]

It's important to determine how much income you will need to cover your expected expenses in retirement. Every person/couples case is different, but should not take any more risk than you have to, IMO. As you draw closer to retirement, capital preservation becomes relatively more important than growth; however, I am a firm believer that at least some portion of your assets should be invested in a conservative stock/bond portfolio even in retirement.

When I retired totally 9 years ago I started to become less aggressive moving more to income producing investments. The worst thing you can do is get out of the market when it is down. That just locks in your losses. I am surprised by how many people actually do that.

 

[tompalm]

When I retired totally 9 years ago I started to become less aggressive moving more to income producing investments. The worst thing you can do is get out of the market when it is down. That just locks in your losses. I am surprised by how many people actually do that.

What is the definition of being down. Some people see the market top in May 2015 and later in the year it is down 3 percent from that high and they say the market is down, so I am not getting out. Later it is down 7 percent and they say I am not getting out now. Few people can call the top at the right time and will always be down a little from the top. So when is the right time to get out.

The same can be said for buying in. In 2010, the market was goi g up and lots of people were afraid to buy in after the crash one year earlier. Nobody calls the bottom perfectly every time.

If fully invested and close to retirement don't be all in right now. It is good to be less aggressive in retirement, but for the people that are 100 percent in stocks, it is time to think about raising some cash.

 

[pedro47]

Question when you turn 70 1/2 years old and you starting taking the RMD from your variois IRA accounts., does this put you in a whole new tax bracket and how can you offset this situation?

 

[Conan]

Question when you turn 70 1/2 years old and you starting taking the RMD from your variois IRA accounts., does this put you in a whole new tax bracket and how can you offset this situation?

If you're still working, you can continue to make IRA, 401k and similar retirement contributions. Self-employed people can contribute and deduct up to 20% of what they earn. In effect you're taking money out via RMD and putting it back in via new contributions.

Of course, those additional deferrals will lead to larger RMD distributions in later years, but maybe by then you'll no longer be working.

 

[pedro47]

If you're working, you can continue to make IRA, 401k and similar retirement contributions. Self-employed people can contribute and deduct up to 20% of what they earn. Of course, those additional deferrals will lead to larger RMD distributions in later years.

I retired over ten year's ago.

 

[geekette]

Question when you turn 70 1/2 years old and you starting taking the RMD from your variois IRA accounts., does this put you in a whole new tax bracket and how can you offset this situation?

It can put you into a new tax bracket but keep in mind it's a progressive tax, only those dollars above last bracket will receive higher taxation, not your entire income.

One thing you can do is convert some IRA to Roth, paying the tax at that time. With market down, find a beaten up holding to move. You will pay tax on Market Value at time of transfer, then once in a Roth, no more taxes.

If you don't already have a Roth, it should be simple to establish one. Super Simple is to set it up same place as existing IRA. Note that converting from IRA to Roth is not an issue, but contributing to Roth in the normal way still requires earned income (ie a job or other wages). I don't think there is a problem creating a Roth past age 70, but check on that, there could be a rule on that.

 

[geekette]

So when you retire you are planning to cash out all of your holdings? When I retire I see myself needing my investments for 20-30 more years, so I don't see myself changing my portfolio mix that much.

Kurt

I read it as "get it out of the 401k" which I will do at soonest opportunity in order to invest in what I want vs confines of 401k plan.

Just a rollover.

I also plan to stay the course with 90%+ equities indefinitely, but it's different for div investors vs selling off to create income. I will retire on schedule no matter what the market is doing at the time. I will simply collect dividends to mm attached to portfolio for a year before retiring, in addition to sufficient funds in normal "non-investment cash" (ie checking, savings, emergency).

I am targeting April 2025 retirement as that is when I am 59.5. I'll retire earlier if I can.

 

[tompalm]

Question when you turn 70 1/2 years old and you starting taking the RMD from your variois IRA accounts., does this put you in a whole new tax bracket and how can you offset this situation?

The more money you are required to take out, the more it increases your taxes and it can change your tax bracket as it hits different levels of income. As far as off setting that, there are investments you can make to defer taxes, like depreciating business property, or real estate, but those are not always the best plans. Brokers will sell you a Limited Partnership, but those are usually terrible investments.

 

[pedro47]

Thanks Tompalm and geekette for the suggestions.

 

[Ironwood]

Buy and hold is dead, and don't let brokers convince you otherwise. It's a crapshoot where markets will be 5, 10 or 15 years from now, and you could find yourself in a multi year down cycle just when your need to start accessing your money. Many institutions, brokers and advisors want you to stay invested or at the other end of the scale...turn your portfolio regularly, as that's how they make money. If you are in cash or bonds, there is little in it for them.
There is plenty of sound rationale out there that for the next several years you need to be nimble. Be invested, but be prepared to go to cash or near cash for all or part of your portfolio quickly. If we see the kind of volatility we've seen in January, you don't want to sit eyes closed, while the Dow is down 500 points on successive days. So, don't get locked into anything you can't get out of quickly (at least by the end of the business day) and don't invest in illiquid securities. If you have a broker, discuss with him/her your need to be looked after when you make the call to sell. In an '08 meltdown, the biggest clients got looked after first.
I know....I'm a retired retail broker.