the economy.. a history lesson

[PhillyKev 0]

For the most part, the baby boomers won't be in the market all that much at that point anyway. They'll be moving their investments from stocks to less volatile investments as they approach retirement age. But it will be a gradual transition, not a sudden sell off.

Unless the people you know who lost money at the end of the 90's cashed out right then, they didn't really lose money either. They may think they did because they saw a stretch of declines, but the market has already recovered from the tech burst. And in fact, if they were still investing during the decline they'd be even better off because they were purchasing at reduced rates. The market is currently at the level as the end of '97. So unless they did ALL of their investing between 98 and 2000 they didn't lose money overall, they just didn't make as much as they would have if they cashed out at the peak.

And as far as the common investor these days, for the most part, it's people with 401k and other automatic investment plans that goes directly into their portfolio. The majority of people ignore their retirement funds and just keep putting money into it. And that's the best thing you can do.

Personally, for my retirement investments I look at it once a year and rebalance to the desired weighting. I may shift a couple percentage points overall from foreight to domestic stock or vice versa. Or move a little from junk bonds to a REIT. But for the most part I just move cash between the funds to put it back to my target allocations and then leave it alone for another year while contnuously contributing in the same ratios throughout the year.

[storm1977 0]

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For the most part, the baby boomers won't be in the market all that much at that point anyway. They'll be moving their investments from stocks to less volatile investments as they approach retirement age. But it will be a gradual transition, not a sudden sell off.

Unless the people you know who lost money at the end of the 90's cashed out right then, they didn't really lose money either. They may think they did because they saw a stretch of declines, but the market has already recovered from the tech burst. And in fact, if they were still investing during the decline they'd be even better off because they were purchasing at reduced rates. The market is currently at the level as the end of '97. So unless they did ALL of their investing between 98 and 2000 they didn't lose money overall, they just didn't make as much as they would have if they cashed out at the peak.

And as far as the common investor these days, for the most part, it's people with 401k and other automatic investment plans that goes directly into their portfolio. The majority of people ignore their retirement funds and just keep putting money into it. And that's the best thing you can do.

Personally, for my retirement investments I look at it once a year and rebalance to the desired weighting. I may shift a couple percentage points overall from foreight to domestic stock or vice versa. Or move a little from junk bonds to a REIT. But for the most part I just move cash between the funds to put it back to my target allocations and then leave it alone for another year while contnuously contributing in the same ratios throughout the year.

Your right, most people didn't LOOSE money, they lost potential wealth. It is close to the same thing, however, if you are planning your retirement and plans for the future revolve around what your paper worth was.

They did make money, however, 60% of what was held was lost!

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Sometimes it is more important to protect LIFE than Liberty

[PhillyKev 0]

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They did make money, however, 60% of what was held was lost!

Well, yeah, they didn't make the maximum profit by cashing out at the absolute peak. But if you can figure out how to know when that is, I know some people who will hire you. No one knows when the peak is or the bottom. You can't look at investments in the stock market that way.

As a matter of fact, if you take a 30 year period and some how magically were able to buy only at the bottom dips and then sell at the peaks and continue that process for 30 years, you'll do pretty damn good. But if you miss JUST ONE of those cycles, more than likely, you'll end up with less at the end of that period than someone who just left the money alone.

Market timing is for suckers. The key is leave it there as long as you know you don't need the cash now. As you get closer to retirement, slowly move from volatile to safer investments. The majority of people understand that now.

Also one of the hot items these days are Allocation Funds. You invest in a fund that's set up for a 30 year outlook for example. It's a single mutual fund diversified across different types of investments. At the beginning of the funds life it starts out high risk high return. As it ages the funds are automatically moved to safer stocks by the investment manager.

[storm1977 0]

Again I agree, but with the market the way it was, these people at there age should have gotten out od high risk and switched to bonds or something.... There was no reason at 55-60 yrs old there money should have been where it was. However, with the market booming it is tough to pull your money out.
You just keep telling yourself 1 more year.... 1 more year....

I can predict the ups and downs.... I simply call Ms. Cleo and she tells me

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Sometimes it is more important to protect LIFE than Liberty

[rmsmith 1]

Well, I know worker productivity has increased over the years, and that younger people are better educated today leading to higher incomes. Unfortunately, consumer debt is too high, savings are too low, pensions are in deep trouble, healthcare costs are out of control, housing is hyper inflated, and the demographic storm of 80-million babyboomers retiring hasn't made landfall yet. All the ingredients for a nasty economic cocktail and terrible hangover are on the table, yet neither party's leadership or their current priorities reflect the depth of these problems. On the other hand, I'm way out of my depth concerning economics, so I may be over reacting. Maybe I should just get out that Capitol One card and live the life I deserve!