Washington Mutual Seized by the US Govt.

[IMST]

Seattle Times Reports WaMu Seized (http://seattletimes.nwsource.com/html/businesstechnology/2008203093_webwamu25.html)
Washington Mutual's banking operations have been acquired by JPMorgan after federal regulators seized the bank following 10 days during which nervous depositors withdrew nearly $17 billion.

I have used this bank since I was a kid. My first checking account was there. I've always liked their service. Unlike other banks available in my metro area, they didn't seem eager to screw me at every turn. JP Morgan Chase holds my deposits now, along with my mortgage. Time to diversify. Key Bank just finished pissing me off when they misrepresented a tiny account I was putting there as a hedge against delays in FDIC money should this occur.

And my football team's behind. I'm having a **** day.

[Highly Selassie]

I also had my first bank account with WaMu, through their School Savings program. I still have a few hundred US$ in an account with them. My parents have significantly more than that with WaMu, and they hate JPMorgan Chase, so I expect them to "diversify" as well.

[The Central Scrutinizer]

Seattle Times Reports WaMu Seized (http://seattletimes.nwsource.com/html/businesstechnology/2008203093_webwamu25.html)


I have used this bank since I was a kid. My first checking account was there. I've always liked their service. Unlike other banks available in my metro area, they didn't seem eager to screw me at every turn. JP Morgan Chase holds my deposits now, along with my mortgage. Time to diversify. Key Bank just finished pissing me off when they misrepresented a tiny account I was putting there as a hedge against delays in FDIC money should this occur.

And my football team's behind. I'm having a **** day.

"Diversify" into what, exactly? Banks are banks are banks. They're all the same.

[Kittyclaws]

I was actually at the local WaMu meeting with my investment services rep when the email regarding the JP Morgan take-over came through. There was a palpable sense of relief in the staff, a general feeling of "thank god we've been bought by a good company-this could have been so much worse." The rep told me there had been fears about a break-up of the company's services, closure of branches, etc.

I've been banking with WaMu for years. They hold my mortgage, checking & savings accounts, and investments (a modest amount). I've tried Key Bank & left when they wouldn't cash a check for me because I wasn't considered a customer as I only had a savings account with them. I also bank with US Bank, mostly because they were one of the first to offer online services and bill-pay. I don't plan to move my WaMu accounts at this point.

[Skeptic Ginger]

I have all my cash on hand in WAMU. So far the web page shows no changes. My son was concerned the FDIC didn't have the cash on hand to cover our accounts but I see no reason to be concerned. If they can propose 700 billion to patch the financial system, I can't imagine Congress would not vote the funds to cover FDIC insurance payouts. So for now, I'm just considering my accounts as business as usual.

When the dust settles or if some bank offers the convenience and interest rates then I'll move the money.

Right now I'm very annoyed. My son started college last year. That makes us one of the families using his college stock fund now and we can't just leave it in the market until things recover. Already his $76,000 fund is down $10,000. On the one hand there is more money than we started with. But on the other hand I stress every day about taking it all out before it loses even more money. I don't want to contribute to the idiotic panic selling. But everything fell apart again regarding the bailout and with WAMU failing I can see the stock market plunging another 500 points tomorrow morning.

What really pisses me off is after the mortgage industry screwed up, now the self serving incompetent politicians are going to make it even worse. Ask the constituents if they want to bail out Wall Street and they say no. Ask them if they want measures to protect mutual funds and they say yes. And the bailout does both.

McCain is so worried about winning the election he comes in and suddenly the fix is stuck with every one bickering again. Bush has some gall asking for unchecked authority for Paulson. And he is so incompetent selling the need for the plan to the public. The news media does nothing to present the real facts.

I'm taking the college money out of the market first thing tomorrow. It contributes to the problem but what else can I do?

[Miss_Kitt]

RIP to WaMu, once Washington's hometown bank, now stumbling banking behemoth.

I was in the banking industry in the 80's and early 90's, and I remember WaMu going into Maximum Expansion Mode. A lot of us privately opined that buying all the California-based, commercial banking companies would rebound badly. For one thing, it diluted the WaMu Board with a lot of people who had run their prior bank so badly it need to find a merger partner...but I digress.

Au revoir, WaMu, and to those with funds in it, unless you're over $100K in one account, don't sweat it. This deal was managed by the Feds specifically to keep the FDIC from taking a big hit, but if that problem were to arise, it is covered.

Like lots of you, I'm seeing my 401-K go south at an astonishing rate, but at least I have a long enough lead time to retirement to not be too worried. And--I know this sound weird--we bought a house we can actually AFFORD, on a mortgage that is fixed-rate, and don't have other installment debt.

What is amazing about this is that it was carried off with such precision, timed to minimize market impact. Usually bank seizures take weeks to unwind, but of course doing that with an entity the size of WaMu would generate panic.

Fasten your seatbelts, folks, it's going to be a bumpy ride until at least 2010.

Regards, MK

[egslim]

Right now I'm very annoyed. My son started college last year. That makes us one of the families using his college stock fund now and we can't just leave it in the market until things recover. Already his $76,000 fund is down $10,000. On the one hand there is more money than we started with. But on the other hand I stress every day about taking it all out before it loses even more money. I don't want to contribute to the idiotic panic selling.
In your case I definately would, because you need the money now and in the near future. The golden rule for risktaking is: "Don't do it, unless you can afford to lose." Stocks are currently so volatile that short term investments basically amount to gambling right now.

Personally I keep my money in stocks where it is, because I won't need the cash for the foreseeable future. So I'm confident I can ride it out eventually, but that's a luxury you don't seem to have.

[Francesca R]

Au revoir, WaMu, and to those with funds in it, unless you're over $100K in one account, don't sweat it. This deal was managed by the Feds specifically to keep the FDIC from taking a big hit, but if that problem were to arise, it is covered.JP Morgan bought the entire deposit base so no FDIC money is needed, and accounts over $100k are also acquired and safe.

It is not taking the unsecured debt of the company and is not touching the subordinated debt, the holding company or the non-bank subsidiaries. So it is rough for most investors in the company.

What is amazing about this is that it was carried off with such precision, timed to minimize market impact. Usually bank seizures take weeks to unwind, but of course doing that with an entity the size of WaMu would generate panic.One suspects they are getting used to it. JPM wanted to buy WaMu before for $7 billion but was rebuffed by WaMu's CEO, who was expelled a few weeks ago. Now JPM gets it at a fraction of that. It is unusual for this not to wait until a weekend, but apparently the news leaked out anyway, and the politicians are still arguing in DC.

[Francesca R]

I'm taking the college money out of the market first thing tomorrow. It contributes to the problem but what else can I do?If you did not want to liquidate a dropping fund then the alternative is to borrow at a fixed rate instead, and leave the fund there. However, I guess borrowing from a bank is rather crazy right now, and it amounts to a bet on the stock market until you have to pay it back.

[OMGturt1es]

We had just opened an account with WaMu last week. We knew they were hurting for business. Too bad so may folk just withdrew their savings, despite the FDIC backing.

[drkitten]

We had just opened an account with WaMu last week. We knew they were hurting for business. Too bad so may folk just withdrew their savings, despite the FDIC backing.


Why "too bad"? I think it makes sense if you're concerned about the bank's viability.

The money I keep in a savings or checking account is the money I expect to need soon, since the ROI is so low. If I didn't expect to need the money for a while (my rule of thumb is "within the next year") it would be in a higher-yield account or more likely the stock market for really long-term money. But money in the bank I have access to immediately.

Unless the bank goes toes up, in which case the government will eventually bail me out via FDIC. But how long will that take to process? If the car throws a shoe tonight I have enough cash in the account that I could get a replacement tomorrow, but only if I have access to that cash. If the government operates on usual government scales, I'd not be surprised if it took several months before the paperwork were sorted out and I had access-as-usual to my money.

Under those circumstances, I'd rather keep the cash in my mattress --- to which I have immediate access --- and risk losing the 1% or whatever the savings rate is. Especially since it's easy enough to open a new account at the branch of Anything-other-than-WaMu that's just across the street, and I'll get almost the same rate.

[OneShotKi11]

Im upset that the media didnt cover this as well as it should have. I felt like there was no warning to this collapse up until it actually happened.

Now i will admit that i know very little as to how these things work, but i figured with all my reading and watching the news this wouldnt have been an overnight surprise for me.

Is there anyway to check on your bank to see if the same problem is occurring with it like WAMU.

[Maus]

JPM was up about 9% today. They got a heck of a deal.

-Maus

[Gazpacho]

"Diversify" into what, exactly? Banks are banks are banks. They're all the same.
... except for the different locations, the different products, and the different customer service experiences when you show up at a branch.

[dudalb]

We had just opened an account with WaMu last week. We knew they were hurting for business. Too bad so may folk just withdrew their savings, despite the FDIC backing.


At the moment, Morgan/Chase taking it over would give me a more secure feeling then the FDIC.

[IMST]

"Diversify" into what, exactly? Banks are banks are banks. They're all the same.

Except they're not. I've had good experinces with WaMu and terrible ones with Key, BoA and some little local thing in Los Angeles. It also is just an unpleasent gut reaction to the idea of having one institution in charge of ALL my finances. I will feel more comfortable with more than one firm handling my money/debt.

[drkitten]

Is there anyway to check on your bank to see if the same problem is occurring with it like WAMU.

Depends on how accurately they report stuff. There are sites online --- http://www.bankrate.com/brm/safesound/ss_home.asp is one of them --- that will purport to tell you if your bank is potentially in trouble or not.

But I have no idea how accurate it is. After all, Enron looked good until the accountants started telling the truth.

[balrog666]

JP Morgan bought the entire deposit base so no FDIC money is needed, and accounts over $100k are also acquired and safe.

It is not taking the unsecured debt of the company and is not touching the subordinated debt, the holding company or the non-bank subsidiaries. So it is rough for most investors in the company.

One suspects they are getting used to it. JPM wanted to buy WaMu before for $7 billion but was rebuffed by WaMu's CEO, who was expelled a few weeks ago. Now JPM gets it at a fraction of that. It is unusual for this not to wait until a weekend, but apparently the news leaked out anyway, and the politicians are still arguing in DC.


"WaMu bank failure biggest in U.S. history"

Congress better hurry, the Fed just shot a hostage. - FDRAllOverAgain

;)

[dudalb]

It's a shot across the bow, that's for sure.

[Skeptic Ginger]

If you did not want to liquidate a dropping fund then the alternative is to borrow at a fixed rate instead, and leave the fund there. However, I guess borrowing from a bank is rather crazy right now, and it amounts to a bet on the stock market until you have to pay it back.
This makes no sense.

I sent in the stuff to transfer the money to the WAMU JP Morgan account. :rolleyes: Turns out the withdrawal is fixed daily at 4pm. If I wait a week the electronic account I set up today means I could withdraw the money the same day but it would still be at whatever rate the account was at 4 pm Eastern time. I can't use the electronic account for a week. This way the form gets there Monday via the mail. Hopefully that will be one of those bounce days based on the promise of a bailout.

There's no way to safely bet on the best time to withdraw the funds. But I can open a new account if things stabilize.

Other than the college issue, I'm not too worried. My house is paid off and nurses worked even during the Great Depression. My business has not slowed at all.

[Francesca R]

This makes no sense.What doesn't? The idea is, if you don't want to exit the stockmarket at this point, use cash instead. If you don't have cash, borrow it (with the caveat that borrowing isn't the easiest thing to do, but with a house paid off it's not the hardest either).

Do what you like of course, but you're unlikely to be a forced seller of stocks if you really don't want to be.

[Skeptic Ginger]

You are saying borrow money for my son's current college expenses adding interest expense to the gamble the stocks are going to go up? That is not a good economic plan. If it were then everyone should borrow money and invest it.

[Francesca R]

Depends on what leverage you want. I certainly "borrow" money to invest (by means of a margin account). But it depends on your own circumstances and objectives. No plan fits "everyone". I am not advising you but pointing out an alternative.

If it is not auitable for you, then some financial advisor might have suggested to you that it was a poor idea to leave a soon-to-mature investment in the equity market right up to the last minute. It is normal lifecycle planning to shift it into low risk assets well in advance of redeeming it.

[rjwould]

Too funny.

WaMu CEO that was hired 17 days ago got a $20m payoff (http://www.foxnews.com/story/0,2933,428641,00.html).

Alan H. Fishman.

[The Central Scrutinizer]

You are saying borrow money for my son's current college expenses adding interest expense to the gamble the stocks are going to go up? That is not a good economic plan. If it were then everyone should borrow money and invest it.

If you equate stocks with "gambling", then you really should not own stocks. Selling securities when they are at the bottom is idiotic. You're locking in your losses.

[geni]

If you equate stocks with "gambling", then you really should not own stocks. Selling securities when they are at the bottom is idiotic. You're locking in your losses.

Zee trick is knowing when they are at the bottem (there also a number of options with stocks that are effectively gambling).

[drkitten]

You are saying borrow money for my son's current college expenses adding interest expense to the gamble the stocks are going to go up? That is not a good economic plan. If it were then everyone should borrow money and invest it.

Er,....

a) some things can be a good economic plan without necessarily being the sort of thing everyone should do. Borrowing money for investment (as Francesca points out, the usual term for that is "leverage") is one of them. If you know what you are doing, and are confident that you know what you're doing, then it can be a very good idea.

b) That the stocks (in general) are going to go up is not really a gamble. Any individual stock you picked may go all the way to the bottom, but people five years from now will still need shoes, banks, gasoline, and silly advertisement driven toys for their bratty children. The question is just one of time-frame. Would you rather pay the interest for a while as the stocks recover, or sell now ("locking in your losses," as TCS put it).

c) Talk to a financial planner. NOW, if possible -- yes, they are often open on Saturdays. You've already &^*&^ed up by keeping money you need now in a high-risk investment. Don't &^*&^ up further by taking advice over the internet from Francesca, TCS, or me. We don't know enough about your situation to properly advise you.

[drkitten]

If you equate stocks with "gambling", then you really should not own stocks.

Of course, if you equate stocks with risk-free investments, then you shouldn't own stocks either. Stocks are basically gambling using the house's dice. The odds are in your favor, and if you have the right kind of information, you can shift the odds even further in your favor, but they're still just odds.

I know you worship at the altar of the great Warren Buffett.... but do you remember reading the annual report where he said that none of his investments that year tanked?

Me neither.

[The Central Scrutinizer]

Of course, if you equate stocks with risk-free investments, then you shouldn't own stocks either. Stocks are basically gambling using the house's dice. The odds are in your favor, and if you have the right kind of information, you can shift the odds even further in your favor, but they're still just odds.

I know you worship at the altar of the great Warren Buffett.... but do you remember reading the annual report where he said that none of his investments that year tanked?

Me neither.

Of course not. :)

Yes, of course there is "risk". There is "risk" that when you walk out the front door of your house, a tree branch will fall on your head. And yet, we don't consider walking out the front door to be "risky" behavior. Yes, there is "risk" in buying securities. But we (or at least I) don't consider it to be "risky" behavior. We (or at least I) do consider gambling (as we normally think of it) as "risky" behavior. Ergo, investing <> gambling.

[Travis]

Of course not. :)

Yes, of course there is "risk". There is "risk" that when you walk out the front door of your house, a tree branch will fall on your head. And yet, we don't consider walking out the front door to be "risky" behavior.

I do. I had to always exit my house through windows so I would feel safe. Eventually I had the trees cut down to eliminate the branch decapitation possibility. I also had the gas and electricity disconnected and I sleep in a padded closet with a flashlight, shotgun and a Boy Scout manual.
:D

I should add that I own no stocks........go figure.

[The Central Scrutinizer]

I do. I had to always exit my house through windows so I would feel safe. Eventually I had the trees cut down to eliminate the branch decapitation possibility. I also had the gas and electricity disconnected and I sleep in a padded closet with a flashlight, shotgun and a Boy Scout manual.
:D

You know, the batteries in that flashlight could explode and blind you. You are engaging in very high risk behavior.

[Travis]

You know, the batteries in that flashlight could explode and blind you. You are engaging in very high risk behavior.

You're right! I should replace it with a candle. After all I will need some form of light to see my stockpile of TNT that I also keep in there.

[Skeptic Ginger]

If you equate stocks with "gambling", then you really should not own stocks. Selling securities when they are at the bottom is idiotic. You're locking in your losses.If you paid attention to the context of this discussion maybe you wouldn't make such irrelevant comments. My son is in college now. We are using the money now. With the market fund in question we are in that small group of people who are not going to be able to wait for the market to turn around.

On the other hand, the fund has grown considerably above the original investment. And when it was started, there was not an option for a deferred tax account for education and I've been considering switching the account anyway to one that is tax free. So the best option for us is to cash it out, clear the capital gains at a low tax rate and reinvest when the market turns around. Though I was rather pissed the incompetent self serving members in our government caused even further losses for us today, I can't see waiting any longer for the market to turn around. I assume you've heard the saying, "Don't fall in love with your assets"? The reason the market tanked today is because a lot of experienced traders moved their money to bonds and other types of accounts. Just because I took the money out does not mean I cannot put it back in next year. It does, however mean, we can plan on having enough money to cover my son's college costs. There are a couple of 5% short term cd options out there.

Anyone who thinks they should borrow money needed now rather than cashing out stock funds until the market turns around is not thinking things through. It would be nice not to end up selling low, but it doesn't always work out that way. But borrowing money to invest in a market like this one? That's ludicrous.

[a_unique_person]

If you equate stocks with "gambling", then you really should not own stocks. Selling securities when they are at the bottom is idiotic. You're locking in your losses.

The bottom is also zero. Sometimes you just have to take the losses. Selling because something is down as part of a cycle is pointless, if it's just going to go up again. "Averaging" out your losses by more shares in somthing that stinks because you can than say you didn't lose as much per share as you originally did is one of the most idiotic share buying strategies I have ever heard of. Only are sharebroker could have thought that strategy up.

[Skeptic Ginger]

Er,....

a) some things can be a good economic plan without necessarily being the sort of thing everyone should do. Borrowing money for investment (as Francesca points out, the usual term for that is "leverage") is one of them. If you know what you are doing, and are confident that you know what you're doing, then it can be a very good idea. I earn my money from my expertise in infectious disease and occupational health. I don't earn my money following the stock market. I have no doubt people can be good at buying and selling stocks. I have no interest in pursuing such a career. I seem to recall a lot of bankrupt day traders from not too long ago. For most of us, we just need to manage the risk/gain ratio that suits our circumstances. Adding loan interest to the stock losses right now is not something prudent for the person with an average money market fund.

b) That the stocks (in general) are going to go up is not really a gamble. Any individual stock you picked may go all the way to the bottom, but people five years from now will still need shoes, banks, gasoline, and silly advertisement driven toys for their bratty children. The question is just one of time-frame. Would you rather pay the interest for a while as the stocks recover, or sell now ("locking in your losses," as TCS put it).This is not something I am unaware of. I actually have a minor in business administration to go with my master's in nursing and I've run my own business successfully for the last 18 years. But I beg to differ on that "locking in your losses". Actually that is the mistake people make when they think selling their stocks is somehow the end of the funds. If you make a habit of buying high and selling low, it's a problem. But an awful lot of very experienced traders moved their money today. Contrary to locking in their losses, they are simply protecting those assets for the moment.

c) Talk to a financial planner. NOW, if possible -- yes, they are often open on Saturdays. You've already &^*&^ed up by keeping money you need now in a high-risk investment. Don't &^*&^ up further by taking advice over the internet from Francesca, TCS, or me. We don't know enough about your situation to properly advise you.No worries. Just because I said I was cashing in my son's stock fund does not mean I am a babe in the woods. I've been following the situation closely. I waited as long as I could and it hasn't paid off. Time to change direction.

[Francesca R]

Anyone who thinks they should borrow money needed now rather than cashing out stock funds until the market turns around is not thinking things through. It would be nice not to end up selling low, but it doesn't always work out that way. But borrowing money to invest in a market like this one? That's ludicrous.That blanket statement is not correct, is it?

[The Central Scrutinizer]

If you paid attention to the context of this discussion maybe you wouldn't make such irrelevant comments. My son is in college now. We are using the money now. With the market fund in question we are in that small group of people who are not going to be able to wait for the market to turn around.

Then you shouldn't have stayed in to start with.

Anyone who thinks they should borrow money needed now rather than cashing out stock funds until the market turns around is not thinking things through. It would be nice not to end up selling low, but it doesn't always work out that way. But borrowing money to invest in a market like this one? That's ludicrous.

Are you nuts? If there was ever a time to borrow money to invest (in general not a good idea), it would be now. Exactly the opposite of what you are saying.

[The Central Scrutinizer]

The bottom is also zero. Sometimes you just have to take the losses. Selling because something is down as part of a cycle is pointless, if it's just going to go up again. "Averaging" out your losses by more shares in somthing that stinks because you can than say you didn't lose as much per share as you originally did is one of the most idiotic share buying strategies I have ever heard of. Only are sharebroker could have thought that strategy up.

I agree. But I'm not sure why someone would buy more shares of something that "stinks". I'm not sure why they would have bought them in the first place.

[roger]

All I know is I feel sick to my stomach over this crash.

Sick because I'm so excited at the fire sale. I can't decide what to buy next, and how much money to borrow. Cash rich, no debt, extremely low SG&A companies trading at 1-4x FCF. It's a mad, mad world.

[The Central Scrutinizer]

I earn my money from my expertise in infectious disease and occupational health. I don't earn my money following the stock market.

I earn my money from software. I earn money from investing in stocks. But like you, I earn none of it from following the stock market.

I have no doubt people can be good at buying and selling stocks.

It's mostly buying. There's very little selling involved.

I seem to recall a lot of bankrupt day traders from not too long ago.

I do to. But day trading <> investing.

But an awful lot of very experienced traders moved their money today. Contrary to locking in their losses, they are simply protecting those assets for the moment.

Most of those "very experienced traders" are playing with institutional money. They are buying and selling for very different reasons than individual investors.

[The Central Scrutinizer]

All I know is I feel sick to my stomach over this crash.

Sick because I'm so excited at the fire sale. I can't decide what to buy next, and how much money to borrow. Cash rich, no debt, extremely low SG&A companies trading at 1-4x FCF. It's a mad, mad world.

As Mr. Buffett has always said, "A wise investor buys when everyone else is selling."

[roger]

What I find fascinating about threads like these is people making decisions based on the assumption that they can predict short term swings in the stock market while staring at ample proof that they cannot (else why would they be looking at a paper loss). I imagine a retort that they are merely protecting themselves from further loss, but if that was so, then they should have sold yesterday or the day before, since the argument was the same.

Either you can predict short term market swings or not. No one have ever shown evidence of the former (admittedly, a difficult thing to prove). OTOH, people have shown the ability to understand and run businesses. From that a pretty straightforward investment strategy flows using basic logic. Ben Graham wrote about it nearly a century ago. Anyone wading into the markets without that basic understanding is, IMO, gambling. It's really sad, given how assessable (in all senses of the word - the books are on all library shelves, and they are very easy to understand) the information is. People spend weeks studying what car to buy, but throw money into mutual funds, trying to secure their future, where they don't know what the heck they own or what the price movements mean or don't mean. It just doesn't make sense. :confused:

[Francesca R]

^^You're busy chatting while most stocks are rallying and the bargains are getting away :)

[The Central Scrutinizer]

^^you're busy chatting while most stocks are rallying and the bargains are getting away :)

:dl:

[The Central Scrutinizer]

What I find fascinating about threads like these is people making decisions based on the assumption that they can predict short term swings in the stock market while staring at ample proof that they cannot (else why would they be looking at a paper loss). I imagine a retort that they are merely protecting themselves from further loss, but if that was so, then they should have sold yesterday or the day before, since the argument was the same.

Either you can predict short term market swings or not. No one have ever shown evidence of the former (admittedly, a difficult thing to prove). OTOH, people have shown the ability to understand and run businesses. From that a pretty straightforward investment strategy flows using basic logic. Ben Graham wrote about it nearly a century ago. Anyone wading into the markets without that basic understanding is, IMO, gambling. It's really sad, given how assessable (in all senses of the word - the books are on all library shelves, and they are very easy to understand) the information is. People spend weeks studying what car to buy, but throw money into mutual funds, trying to secure their future, where they don't know what the heck they own or what the price movements mean or don't mean. It just doesn't make sense. :confused:

Well said.

I was talking with some friends over beer last Friday, and one was proudly telling everyone how he had taken all of his money out of the market and would put it back in later when the market recovered. And they were patting him on the back for making a wise decision! I said, "Are you nuts? So now you have to pay capital gains on the money you took out, and you're gonna re-buy it all later when it is more expensive? That's madness!"

Oh well, I guess it's irrational behavior like that which makes it possible for people like Mr Buffett to be so successful.

[Skeptic Ginger]

Then you shouldn't have stayed in to start with. So you are saying that when my son was a young child we should never have started a mutual stock fund to save for his college costs?

Get a life CS. It just turns out that when we have begun to use the money this market crash occurred.




Are you nuts? If there was ever a time to borrow money to invest (in general not a good idea), it would be now. Exactly the opposite of what you are saying.Go for it. :rolleyes:

[UnrepentantSinner]

In case anyone is still interested in the OP, I've been able to use my debit/ATM card at all points during the last two weeks.

So if your bank fails, and there's a buyer, the only change will be the facade on the branches and the routing number on your checks.

[Francesca R]

So you are saying that when my son was a young child we should never have started a mutual stock fund to save for his college costs?Nobody said anything like that and you are probably fully aware that no-one did, aren't you?
It just turns out that when we have begun to use the money this market crash occurred. It didn't "just turn out" that you retained full exposure to risky assets up to the point you would need to use the money though--unless the date of the beneficiary's need for the funds was somehow a surprise. (But averaging out over the last several years might not have made much difference anyway absent some luck; regret about missing the high is probably not something to be entertained much)

[The Central Scrutinizer]

So you are saying that when my son was a young child we should never have started a mutual stock fund to save for his college costs?

I guess reading comprehension isn't your strong suit? I said you shouldn't have stayed in, not that you should have never invested. :rolleyes:

Go for it. :rolleyes:

Maybe I have.

[UnrepentantSinner]

I finally checked my main mutual fund and it's down $10 from the last statement so I think it's the perfect time to send $1000.

[The Central Scrutinizer]

I finally checked my main mutual fund and it's down $10 from the last statement so I think it's the perfect time to send $1000.

Huh?

[Skeptic Ginger]

I guess reading comprehension isn't your strong suit? I said you shouldn't have stayed in, not that you should have never invested. :rolleyes:.....Which is exactly what I said I was going to do, get out, because I am one of the people who is using the funds now and cannot wait for the 5 year turnaround.

It amazes me how poorly people follow a discussion like this. I said I was cashing out the stock fund. You and Francesca insisted one should not withdraw the funds. I said I needed to because I couldn't afford to stay in right now and you made the absurd statement Then you shouldn't have stayed in to start with.

BTW, I saved the last week's equity losses by cashing out the fund. Money's currently earning just under 3% in a 3 month CD.

I got out at a little over 17.5 and today the share value is just over 14. I think this graph (http://finance.yahoo.com/echarts?s=VGSTX#chart1:symbol=vgstx;range=3m;indic ator=volume;charttype=line;crosshair=on;ohlcvalues =0;logscale=on;source=undefined) suggests I made a good decision.

[The Central Scrutinizer]

Which is exactly what I said I was going to do, get out, because I am one of the people who is using the funds now and cannot wait for the 5 year turnaround.

It amazes me how poorly people follow a discussion like this. I said I was cashing out the stock fund. You and Francesca insisted one should not withdraw the funds. I said I needed to because I couldn't afford to stay in right now and you made the absurd statement

Wow. Reading comprehension really, really, really isn't your strong suit, is it?

BTW, I saved the last week's equity losses by cashing out the fund. Money's currently earning just under 3% in a 3 month CD.

I got out at a little over 17.5 and today the share value is just over 14. I think this graph (http://finance.yahoo.com/echarts?s=VGSTX#chart1:symbol=vgstx;range=3m;indic ator=volume;charttype=line;crosshair=on;ohlcvalues =0;logscale=on;source=undefined) suggests I made a good decision.

Let's see how "good" your decision is in 10 years.

[Skeptic Ginger]

Wow. Reading comprehension really, really, really isn't your strong suit, is it?

Let's see how "good" your decision is in 10 years.:id:

Reading comprehension question: What did Skep say she was using the money for?

Hint: Her son is going to a university and is in year 2 of a 4 year program with an option to go on after his initial degree.

[The Central Scrutinizer]

Reading comprehension question: What did Skep say she was using the money for?

Grammar comprehension question: For what did Skep say she was using the money?

Hint: Her son is going to a university and is in year 2 of a 4 year program with an option to go on after his initial degree.

I think what you are trying to do is refute the claim that reading comprehension is not your strong suit. And yet, every statement you make further proves the claim. :id:

[Francesca R]

Francesca insisted one should not withdraw the funds.
No I didn't.
It amazes me how poorly people follow a discussion like this.You're correct there.

[Jaggy Bunnet]

Which is exactly what I said I was going to do, get out, because I am one of the people who is using the funds now and cannot wait for the 5 year turnaround.

TCS said "shouldn't have stayed in" - that is past tense. You are talking about not staying in - present tense.

The point that TCS is making (I'm sure he will correct me if I am wrong) is that, knowing that you need the money now, a sensible strategy would have been reducing the percentage invested in risky assets over the last X years, rather than leaving it all in equities.

Essentially you are in the same position as someone approaching retirement with a pension fund built up over a number of years, in that you need to start using the value in that fund in the near future.

And guess what is common advice in that circumstance?

"The goal of most people approaching retirement is to begin preserving the capital they’ve accumulated so far while continuing to build assets. That’s why you may want to consider adjusting your investment mix to reduce your portfolio’s risk. One way to reduce your risk and look to preserve capital is by moving some money out of stock funds and into bond funds and cash equivalents. That way your portfolio may not experience as many ups and downs."

http://americanfundsretirement.retire.americanfunds.com/planning/needs/approaching-retirement.htm

"Therefore, the portfolio allocation for those nearing retirement will likely gradually move toward a full-scale defensive investment strategy in order to minimize risk. At some point in the working life of an investor, the goal is not to increase gains, but to protect those gains from annual fluctuations that may occur in the stock market."

http://www.wisegeek.com/what-is-a-defensive-investment-strategy.htm

[The Central Scrutinizer]

TCS said "shouldn't have stayed in" - that is past tense. You are talking about not staying in - present tense.

The point that TCS is making (I'm sure he will correct me if I am wrong) is that, knowing that you need the money now, a sensible strategy would have been reducing the percentage invested in risky assets over the last X years, rather than leaving it all in equities.

Essentially you are in the same position as someone approaching retirement with a pension fund built up over a number of years, in that you need to start using the value in that fund in the near future.

And guess what is common advice in that circumstance?

"The goal of most people approaching retirement is to begin preserving the capital they’ve accumulated so far while continuing to build assets. That’s why you may want to consider adjusting your investment mix to reduce your portfolio’s risk. One way to reduce your risk and look to preserve capital is by moving some money out of stock funds and into bond funds and cash equivalents. That way your portfolio may not experience as many ups and downs."

http://americanfundsretirement.retire.americanfunds.com/planning/needs/approaching-retirement.htm

"Therefore, the portfolio allocation for those nearing retirement will likely gradually move toward a full-scale defensive investment strategy in order to minimize risk. At some point in the working life of an investor, the goal is not to increase gains, but to protect those gains from annual fluctuations that may occur in the stock market."

http://www.wisegeek.com/what-is-a-defensive-investment-strategy.htm

Precisely.

Do you teach reading comprehension? Perhaps skeptigirl could sign up.

[Skeptic Ginger]

TCS said "shouldn't have stayed in" - that is past tense. You are talking about not staying in - present tense.

The point that TCS is making (I'm sure he will correct me if I am wrong) is that, knowing that you need the money now, a sensible strategy would have been reducing the percentage invested in risky assets over the last X years, rather than leaving it all in equities....And just what risky assets would that be? We've had a long term college fund in the stock market since my son was very young. The particular fund, Vanguard Star Fund, is extremely well diversified and includes 30% in bonds as well as the rest being divided between multiple mutual funds.

We expected to use the fund for college, it was never intended for anything else. It is just one of those things. Sometimes the market crashes just when you want to cash in. Sometimes the housing market crashes just before you put your house on the market. It's not something I was unprepared to deal with. I dealt with it. I took the money out as soon as it was apparent leaving it in was too risky under our specific circumstances.

I'd like to see the posts from a year ago where the people in this thread who imagine themselves to be such experts in finance made predictions that the market crash we are seeing now was going to occur.

I don't have an issue with people's opinions here about investment strategies. I do have an issue with the condescending BS that their invalid assumptions actually apply to my circumstances. I am not in any kind of financial squeeze. There will be enough money for my son to finish at least 4 years of college without any loans or grants despite the fact we would have have about $10,000 more if I took the money out 3 months ago. It's absurd to assume that the fact I cashed in my son's college fund all at once rather than leaving it in the market implied anything at all other than, that was what the circumstances called for.

My 18 year business has been adequately successful. My very nice house is paid off. I don't carry any credit card debt. I have never bought a car on credit. I'm driving my 4th new car in 10 years. Oh and did I mention I stayed in a nicer cabin than TCS on the Galapagos cruise. ;) Things are going fine here despite the current economic crisis.

[Jaggy Bunnet]

And just what risky assets would that be? We've had a long term college fund in the stock market since my son was very young. The particular fund, Vanguard Star Fund, is extremely well diversified and includes 30% in bonds as well as the rest being divided between multiple mutual funds.

Well you clearly know what would be less risky than equities as you give an example yourself. All assets do not carry the same level of risk.

We expected to use the fund for college, it was never intended for anything else. It is just one of those things. Sometimes the market crashes just when you want to cash in. Sometimes the housing market crashes just before you put your house on the market. It's not something I was unprepared to deal with. I dealt with it. I took the money out as soon as it was apparent leaving it in was too risky under our specific circumstances.

The fact that the market could crash just when you want to cash in is precisely why your investment strategy is to reduce the percentage of risky assets as you approach that time. You reduce your exposure to protect yourself from exactly that circumstance.

I'd like to see the posts from a year ago where the people in this thread who imagine themselves to be such experts in finance made predictions that the market crash we are seeing now was going to occur.

Reducing the risk profile of your investments as you approach the time when you expect to draw on those assets has been standard advice for decades. It is also not a prediction that the market will crash, despite your attempts to paint it as such

I don't have an issue with people's opinions here about investment strategies. I do have an issue with the condescending BS that their invalid assumptions actually apply to my circumstances.

You posted about your circumstances and you got good advice about what a sensible investment strategy for such savings is. If you choose to get defensive and see that as being condescending that is your problem, not the person who gave you the advixe.

[Francesca R]

And just what risky assets would that be?People mean equities by this. The assets you were, um, in.

We've had a long term college fund in the stock market since my son was very young. The particular fund, Vanguard Star Fund, is extremely well diversified and includes 30% in bonds as well as the rest being divided between multiple mutual funds.So it has 70% exposure to equity market? No that is not "diversified". And you miss the point about changing asset allocation over a fund lifecycle.

It is just one of those things. Sometimes the market crashes just when you want to cash in.Fine and dandy if you want to leave these things to chance, it's your money (well, some of it still is). But it isn't "one of those things"--that will be where you're burying your head in the sand.

Sometimes the housing market crashes just before you put your house on the market.Bad analogy: people are usually trading one property for another, not cashing out to do something else.

I dealt with it. I took the money out as soon as it was apparent leaving it in was too risky under our specific circumstances."As soon as it was apparent" . . . Yeah, right. Nick of time.

I'd like to see the posts from a year ago where the people in this thread who imagine themselves to be such experts in finance made predictions that the market crash we are seeing now was going to occur.Nobody sensible "predicts crashes". But since you ask, here's a thread (http://forums.randi.org/showthread.php?t=101204) where I wonder out loud why on earth the market was pushing new highs in December 2007 given everything else that was going bad. Which is, by the way, why I was substantially out of equities then. That could have been wrong, but it wasn't. I am heavily invested now though, even though I have no idea when the market will bounce. (Incidentally that thread has a certain poster making silly zen-like statements that "the market doesn't exist")

It's absurd to assume that the fact I cashed in my son's college fund all at once rather than leaving it in the market implied anything at all other than, that was what the circumstances called for.Some people are pointing out that you have admitted to a classic asset allocation mistake with this action (and some went as far as to indicate a potential remedy), and that irks you greatly. Yes--we get that.

Oh and did I mention I stayed in a nicer cabin than TCS on the Galapagos cruise.
Perhaps you two should have shared a cabin :D

[The Central Scrutinizer]

I'd like to see the posts from a year ago where the people in this thread who imagine themselves to be such experts in finance made predictions that the market crash we are seeing now was going to occur.

I make no predictions on where the market may or may not go. Because I don't care. It's not relevant to successful investing.

As Mr Buffett said this year - "If I knew where the market was going tomorrow, next week, next year or 10 years from now, I would trade in S&P futures. It would be a lot easier than evaluating businesses."

Oh and did I mention I stayed in a nicer cabin than TCS on the Galapagos cruise. ;)

Given that you never saw my cabin, and given that mine was the only one on the ship with a double balcony, and given that it was also the least expensive on on the ship, I would have to question your financial acumen.

[Skeptic Ginger]

Did I mention I cashed out our stock in time to protect my son's educational funds? I believe I did mention that. Did anyone cash out their stock months ago because they saw this crash coming? I don't believe anyone has claimed they did.

Could someone please explain what their criticism is again here in my handling of my finances?

[Jaggy Bunnet]

Did I mention I cashed out our stock in time to protect my son's educational funds? I believe I did mention that. Did anyone cash out their stock months ago because they saw this crash coming? I don't believe anyone has claimed they did.

Could someone please explain what their criticism is again here in my handling of my finances?

Nobody has claimed they saw the crash coming, That is a strawman. The advice you were given has absolutely nothing to do with predicting crashes.

What several people have pointed out to you is that there it is generally accepted investment advice to reduce the proportion of risky assets as you get closer to the time when you will need to convert those assets into cash. You choose to interpret that as criticism of your handling of your finances. Others would see it as friendly advice that you could benefit from in relation to future investment decisions.

[The Central Scrutinizer]

Nobody has claimed they saw the crash coming, That is a strawman. The advice you were given has absolutely nothing to do with predicting crashes.

What several people have pointed out to you is that there it is generally accepted investment advice to reduce the proportion of risky assets as you get closer to the time when you will need to convert those assets into cash. You choose to interpret that as criticism of your handling of your finances. Others would see it as friendly advice that you could benefit from in relation to future investment decisions.

Exactly.

For example, let's say the kid's college is going to cost $20K per year. When he is a high school senior, or maybe even a junior, you look at your savings account. It's all in stocks, and it is worth $90K. You sell $80K worth, and put it in cash (CDs) or gov bonds or something similar. Perhaps 4 CDs at $20K each - one with a maturity of 1 year, one with 2 years, 1 with 3 years, the last with a 4 year maturity.

But some people wait until the exact minute they need the money, and then whine that the market crashed a week earlier, but pat themselves on the back for pulling their money out now.

[Skeptic Ginger]

Nobody has claimed they saw the crash coming, That is a strawman. The advice you were given has absolutely nothing to do with predicting crashes.

What several people have pointed out to you is that there it is generally accepted investment advice to reduce the proportion of risky assets as you get closer to the time when you will need to convert those assets into cash. You choose to interpret that as criticism of your handling of your finances. Others would see it as friendly advice that you could benefit from in relation to future investment decisions.Of course the fact I am financially secure is irrelevant. Surely I need advice. :rolleyes:

The point you are missing is that I had no reason to take the assets out of the stock market until I took them out. It was not my only source of funds.



So, leaving that condescending foolishness out of the picture, let's look at the other principles involved. The idea that one should hang on to a losing investment because in the usual market one does better to sell high and buy low doesn't allow for the flexibility in decision making one needs when unusual events occur. Surely you've heard the idiom, "don't fall in love with your assets"? If the stock market is crashing, as opposed to simply moving up and down in a typical cycle, do you maintain your love of your assets or do you change course?

Nothing stops me from buying back in or buying more specific investments later when things stabilize. The idea you fix your losses by selling implies you don't have the assets in hand once you cash in. I have the money in the bank. It isn't gone.

[The Central Scrutinizer]

If the stock market is crashing, as opposed to simply moving up and down in a typical cycle, do you maintain your love of your assets or do you change course?

You buy more of your assets.

Nothing stops me from buying back in or buying more specific investments later when things stabilize. The idea you fix your losses by selling implies you don't have the assets in hand once you cash in. I have the money in the bank. It isn't gone.

So let me get this straight - you sell assets when the market crashes, thus locking in your losses, (potentially) pay capital gains taxes and brokerage fees, then buy the assets back later at a more expensive price? Note to self: Don't take investment advice from skeptigirl.

[Francesca R]

Of course the fact I am financially secure is irrelevant. Surely I need advice.
I'm glad you're financially secure, but you're making a dog's breakfast out of this thread. Give it up :)

[Jaggy Bunnet]

Of course the fact I am financially secure is irrelevant. Surely I need advice. :rolleyes:

The point you are missing is that I had no reason to take the assets out of the stock market until I took them out. It was not my only source of funds.

So when you posted that your son was in college now and that you were using the money now (bolding yours) as your justification for selling now that was completely irrelevant information because you had other money that you could have used anyway? Then why bother posting it?

And if you cannot see that your investment strategy was inappropriate then, yes, you do need advice.

So, leaving that condescending foolishness out of the picture, let's look at the other principles involved. The idea that one should hang on to a losing investment because in the usual market one does better to sell high and buy low doesn't allow for the flexibility in decision making one needs when unusual events occur. Surely you've heard the idiom, "don't fall in love with your assets"? If the stock market is crashing, as opposed to simply moving up and down in a typical cycle, do you maintain your love of your assets or do you change course?

Nothing stops me from buying back in or buying more specific investments later when things stabilize. The idea you fix your losses by selling implies you don't have the assets in hand once you cash in. I have the money in the bank. It isn't gone.

All of which is totally irrelevant to the advice about asset allocation that you appear unable to understand. Maybe TCS is right and you do have a reading comprehension problem.

[69dodge]

For example, let's say the kid's college is going to cost $20K per year. When he is a high school senior, or maybe even a junior, you look at your savings account. It's all in stocks, and it is worth $90K. You sell $80K worth,

Presumably, if the market had just gone down a lot then, you wait a while before selling, in the hope that it will go up before you need the money? Otherwise, what's the difference between doing it early or at the last minute?

[Giggywig]

Presumably, if the market had just gone down a lot then, you wait a while before selling, in the hope that it will go up before you need the money? Otherwise, what's the difference between doing it early or at the last minute?

Once you have what you're going to need, as in TCS' example, you do it so that you keep what you're going to need in case things go south in the meantime.

[drkitten]

Presumably, if the market had just gone down a lot then, you wait a while before selling, in the hope that it will go up before you need the money?

Well, if the market had just gone down then, then you might have already screwed up.

The usual number I see is a five year investment horizon. I.e. don't put any money into equities that you expect to need in the next five years. Even if you expect that the market will do well over the next five years, you put the money into a safer investment in case the market tanks unexpectedly.

Even if the market has just gone down a lot, nothing keeps it from going down further. If I had $150,000 in the account, it's gone down to $90,000 and I need $80,000, I'm still probably better off pulling out $80,000 now while I had then in risking having the entire portfolio go down to $50,000 and leaving me with a $30,000 shortfall.


Otherwise, what's the difference between doing it early or at the last minute?

The difference is that you're pulling money to pay for your child's senior year of college while she's still a junior in high school, precisely because you know that you'll need the money within 5 years and you have that money now. (And you probably should have pulled the money if you could for the child's freshman year when she was still in middle school.)

[69dodge]

Well, if the market had just gone down then, then you might have already screwed up.

What do you mean? It can go down at any time. What should I have done differently beforehand?

The difference is that you're pulling money [...] precisely because you know that you'll need the money within 5 years and you have that money now.

Why assume that I have enough money now? Maybe I don't, due to the market's recent drop. If I were somehow able to ensure that my stocks would be worth enough five years before I need the money, I would likewise be able to ensure that they would be worth enough exactly when I need it. In that case, why bother with the whole business of moving money to safer investments five years before I need it?

[Skeptic Ginger]

So the premise of some here seems to be if the market is in a crash that goes beyond the usual intermittent decline, anyone who gets out before total collapse is a fool. I think not.

I made a decision to get out of a mutual fund during an extremely unstable and unpredictable market. Sticking to a set formula despite changing conditions seems to be the foolish position here. If anything, someone with a mutual fund should consider moving into individually chosen stocks.

I remain quite satisfied with the decision I made to take my son's college fund out of a volatile situation. And as for not having taken it out a year ago, the idea people should take any money out of a stock market fund a year or more in advance of using it, for either a child's college tuition or retirement, because they should have anticipated it was at a peak then is a fantasy. This conversation is getting ludicrous.

[69dodge]

And as for not having taken it out a year ago, the idea people should take any money out of a stock market fund a year or more in advance of using it, for either a child's college tuition or retirement, because they should have anticipated it was at a peak then is a fantasy.

I don't think the idea is that someone should know that it's at a peak. I think the idea is that if it's worth at least what they need, but not much more, they should get out while they can, because it might go down below what they need and, in the short time remaining, not go up again, and then they'd be in big trouble.

It sounds like you aren't especially in trouble, so I'm not sure why people are bugging you.

[Skeptic Ginger]

....

It sounds like you aren't especially in trouble, so I'm not sure why people are bugging you.Well this will sound trite, but they are bugging me because they personally don't like me. I should add, however, the feeling is reciprocal.

[Francesca R]

So the premise of some here seems to be if the market is in a crash that goes beyond the usual intermittent decline, anyone who gets out before total collapse is a fool. I think not.No it isn't.

the idea people should take any money out of a stock market fund a year or more in advance of using it, for either a child's college tuition or retirement, because they should have anticipated it was at a peak then is a fantasy.No the idea that one should reduce one's risk as the known date of redemption approaches is accepted investment wisdom. If you don't understand why that is so, you're beyond attempts to reach you, since it's been spelled out enough by now.

Well this will sound trite, but they are bugging me because they personally don't like me. I should add, however, the feeling is reciprocal.That's a very poor attempt at a get-out, given that people have been challenging your arguments not you.

[Jaggy Bunnet]

Well this will sound trite, but they are bugging me because they personally don't like me. I should add, however, the feeling is reciprocal.

Does that include the professional investment firms whose sites I linked to that give exactly the same advice as others on this thread have given you?

Do they dislike you as well?

Or maybe you are just paranoid?

[Jaggy Bunnet]

So the premise of some here seems to be if the market is in a crash that goes beyond the usual intermittent decline, anyone who gets out before total collapse is a fool. I think not.

If you think that is the premise then either:

you have totally misunderstood pretty much every post in this thread; OR

you are deliberately misrepresenting others arguments because you are unable to come up with any genuine response to them.

So which is it?

the idea people should take any money out of a stock market fund a year or more in advance of using it, for either a child's college tuition or retirement, because they should have anticipated it was at a peak then is a fantasy. This conversation is getting ludicrous.

If it is getting ludicrous, it is only because you keep posting strawmen. Nobody has said that you should anticipate the peak of the market and remove your money then.

Here is a tip: when you need to lie about the arguments of others in order to draft a reply, that might be a good time to consider whether you might in fact be wrong.

[The Central Scrutinizer]

so the premise of some here seems to be if the market is in a crash that goes beyond the usual intermittent decline, anyone who gets out before total collapse is a fool. I think not.

I made a decision to get out of a mutual fund during an extremely unstable and unpredictable market. Sticking to a set formula despite changing conditions seems to be the foolish position here. If anything, someone with a mutual fund should consider moving into individually chosen stocks.

I remain quite satisfied with the decision i made to take my son's college fund out of a volatile situation. And as for not having taken it out a year ago, the idea people should take any money out of a stock market fund a year or more in advance of using it, for either a child's college tuition or retirement, because they should have anticipated it was at a peak then is a fantasy. This conversation is getting ludicrous.

Whatever you say, Claus.

:hb:

[The Central Scrutinizer]

Well this will sound trite, but they are bugging me because they personally don't like me.

FYI, it's more than just the people in this thread.

[roger]

I remain quite satisfied with the decision I made to take my son's college fund out of a volatile situation. And as for not having taken it out a year ago, the idea people should take any money out of a stock market fund a year or more in advance of using it, for either a child's college tuition or retirement, because they should have anticipated it was at a peak then is a fantasy. This conversation is getting ludicrous.it is not a fantasy, it is bog standard advice. People aren't making up the 5 year number. Any financial advisor will advise the same. Because these crashes happen, and they are not predictable. That's what's so funny about your protests - you want people to have predicted this crash. That's the whole point; we can't predict it, so you insulate yourself. Those of us who could afford to ride out the market left our money in; those who need the assets need to take it out, or risk a significant loss. Such as yours.

Furthermore, there are quite acceptable ways to maintain exposure to the market while you have you money in T-bills or whatever. Such as purchasing options. You would have taken much of the ride up if there was a ride up in that time frame, while limiting your losses. And there are other strategies.

This is all very, very standard advise. You took an unnecessary risk, and it cost you permanent loss of capital. And we are the fantasizers?

[Giggywig]

And as for not having taken it out a year ago, the idea people should take any money out of a stock market fund a year or more in advance of using it, for either a child's college tuition or retirement, because they should have anticipated it was at a peak then is a fantasy. This conversation is getting ludicrous.
The bolded part is a strawman. Nobody expects you, or anybody else, to anticipate peaks and valleys in the market. The advise you were given was to set a time horizon for when you will need the money (the number drkitten recommended was 5 years), and once that horizon is reached you take the money out of riskier investments designed to continue building capital, and put it into safer venues designed to preserve capital.

[Francesca R]

I think that skeptigirl started this little display after I said in post 9 that, if she thought it was a crazy level to sell equities (25 Sept)--not that crazy compared to today--she was unlikely to have no other course of action open to her. From there on her responses got defensive and drew increasingly on strawmen and displayed resolute unwillingness to acknowledge the point everyone else has repeated many many times.

In any case this is hardly about WaMu any more. Bye thread.

[Skeptic Ginger]

Does that include the professional investment firms whose sites I linked to that give exactly the same advice as others on this thread have given you?

Do they dislike you as well?

Or maybe you are just paranoid?No, Jaggy. I have said very clearly that my personal decision to take my son's educational funds out of the stock market was the correct decision for me at this time. It was also correct to invest in that fund when he was young. And it is pretty hard to make the case we should have taken the money out sooner given the fact predicting a year ago what would be the case today is a stretch.

Yet you, Francesca and TCS have manufactured some fantasy about my financial circumstances then projected some bizarre implications about a simple post regarding taking the money out considering my personal situation. You've projected a fantasy I am some babe in the woods and you all are so knowledgeable and wise. You can't seem to discuss the thread topic without this condescending projection.

If you can't recognize your personal baggage is affecting this discussion, I doubt my pointing it out yet again will matter. But let me try. Just what is it you think I am saying that contradicts your imagined wisdom?

[The Central Scrutinizer]

No, Jaggy. I have said very clearly that my personal decision to take my son's educational funds out of the stock market was the correct decision for me at this time. It was also correct to invest in that fund when he was young. And it is pretty hard to make the case we should have taken the money out sooner given the fact predicting a year ago what would be the case today is a stretch.

No one ever said anything about predicting anything Claus. But you already knew that.

Yet you, Francesca and TCS have manufactured some fantasy about my financial circumstances then projected some bizarre implications about a simple post regarding taking the money out considering my personal situation. You've projected a fantasy I am some babe in the woods and you all are so knowledgeable and wise. You can't seem to discuss the thread topic without this condescending projection.

Remember, just because you're paranoid doesn't mean everyone is not out to get you.


If you can't recognize your personal baggage is affecting this discussion, I doubt my pointing it out yet again will matter. But let me try. Just what is it you think I am saying that contradicts your imagined wisdom?

Very funny Daniel-son. Look eye. Always look eye.

[Skeptic Ginger]

it is not a fantasy, it is bog standard advice. People aren't making up the 5 year number. Any financial advisor will advise the same. Because these crashes happen, and they are not predictable. That's what's so funny about your protests - you want people to have predicted this crash. That's the whole point; we can't predict it, so you insulate yourself. Those of us who could afford to ride out the market left our money in; those who need the assets need to take it out, or risk a significant loss. Such as yours.

Furthermore, there are quite acceptable ways to maintain exposure to the market while you have you money in T-bills or whatever. Such as purchasing options. You would have taken much of the ride up if there was a ride up in that time frame, while limiting your losses. And there are other strategies.

This is all very, very standard advise. You took an unnecessary risk, and it cost you permanent loss of capital. And we are the fantasizers?So where have I posted anything to the contrary to the 5 year stock market recovery average?

[Skeptic Ginger]

The bolded part is a strawman. Nobody expects you, or anybody else, to anticipate peaks and valleys in the market. The advise you were given was to set a time horizon for when you will need the money (the number drkitten recommended was 5 years), and once that horizon is reached you take the money out of riskier investments designed to continue building capital, and put it into safer venues designed to preserve capital.I repeat, where have I posted anything indicating the 5 year recovery average is news to me?

In 5 years my son will be in grad school or out of college. Is anyone here seriously suggesting I should have left his college fund in the market because, heaven forbid, the time I withdrew it was not perfect timing?

The only strawman here is in the bizarre imagination people have about what I've posted.

[Jaggy Bunnet]

And it is pretty hard to make the case we should have taken the money out sooner given the fact predicting a year ago what would be the case today is a stretch.

It is standard investment advice to make the case that you should have switched to less risky assets as you approached the time when you intended to use the money. As everyone in the thread, except you, is aware this has nothing whatsoever to do with predicting market movements.

If you can't recognize your personal baggage is affecting this discussion, I doubt my pointing it out yet again will matter. But let me try. Just what is it you think I am saying that contradicts your imagined wisdom?

Someone appears to have personal baggage (who was it who made the "I'm considerably richer than you" post?) - projecting your feelings to others does not change reality.

Many people on this thread have told you what the disagreement is so I have no doubt that you are well aware of it. The fact that you continually misrepresent investment advice to reduce risk in your portfolio as you approach maturity as "sell when the stock market is highest" appears to be down to a stubborn refusal to admit that anyone but you could ever have anything useful to say. I see you are now changing your misrepresentation of the advice to "leave your money in for five years while the stock market recovers" - can you not even keep your lies consistent?

[Francesca R]

(error)

[Giggywig]

I repeat, where have I posted anything indicating the 5 year recovery average is news to me?

In 5 years my son will be in grad school or out of college. Is anyone here seriously suggesting I should have left his college fund in the market because, heaven forbid, the time I withdrew it was not perfect timing?

The only strawman here is in the bizarre imagination people have about what I've posted.
What 5 year recovery average? The 5 years I was talking about was how long BEFORE you need the money should you take it out of riskier securities and put it into safer things, like a CD. If your son will be in grad school in 5 years that means you ALREADY MISSED the 5 year time horizon.

Again, nobody is asking you to hav e perfect timing about when you withdraw. What is being said here is that you should reduce the risk well before you need the money. The only one with the bizarre imagination about what people are posting here is you.

Listen, I don't think I've ever interacted with you before. I don't have an opinion on you, so please don't assume motives on my part. What is being posted here by several people that you seem to be failing to understand is this:

By the time you took the money out a few weeks ago, it was already years too late had you been following traditional financial advice. Nobody asked you to guess the right time to take the money out was the peak of Oct '07 because you should have taken your money out several years before that. If you need the money NOW, it should have been safe 5 years ago.

[Francesca R]

What 5 year recovery average? The 5 years I was talking about was how long BEFORE you need the money should you take it out of riskier securities and put it into safer things, like a CD. If your son will be in grad school in 5 years that means you ALREADY MISSED the 5 year time horizon.Notwithstanding the sillyness of skeptigirl's responses, taking the whole lot out of equities (proxied by the S&P 500 ex dividends) five years ago (pink arrow) would not have been much different, and would have looked a bit "regrettable" for quite a while. Moving--say--one fifth of the money out each year from 30/9/04 onwards (green arrows and final blue arrow) until 30/9/08 would have resulted in a higher value than taking it all out on the blue arrow. This is the recommendation I am familiar with. In the case of pension accounts, the gradual reduction in risk is normally recommended to start earlier than that, because it's often your life savings.

(I assumed in the chart that she actually exited on 29/9/08 as per her posts, when the level of the index was 1120)

Exiting at end September rather than now saved 20%.

You can "win or lose" with a gradual exit strategy versus a high risk one, but that's the nature of cutting risk.

http://h1.ripway.com/FrancescaR/GSPC.jpg

[Giggywig]

Notwithstanding the sillyness of skeptigirl's responses, taking the whole lot out of equities (proxied by the S&P 500 ex dividends) five years ago (pink arrow) would not have been much different, and would have looked a bit "regrettable" for quite a while. Moving--say--one fifth of the money out each year from 30/9/04 onwards (green arrows and final blue arrow) until 30/9/08 would have resulted in a higher value than taking it all out on the blue arrow. This is the recommendation I am familiar with. In the case of pension accounts, the gradual reduction in risk is normally recommended to start earlier than that, because it's often your life savings.

(I assumed in the chart that she actually exited on 29/9/08 as per her posts, when the level of the index was 1120)

Exiting at end September rather than now saved 20%.

You can "win or lose" with a gradual exit strategy versus a high risk one, but that's the nature of cutting risk.


I agree that gradually taking your money out is probably the right thing to do. I should have made it clear, but I was getting a bit short and just wanted to get the point across, if not with all the detail. So she should have taken out a % for the freshman year 5 years out, another % the next year, and so on.

[BenBurch]

I don't think the crash is done. I could be wrong, but I suspect the bottom will not be found until around 6000. And from there the recovery will be slow.

[Francesca R]

A 3992-year bear-market? That's grim.

[BenBurch]

3992? Who said that?

But I think it will be as long to climb out of this as the 1929 crash was.

[roger]

I don't think the crash is done. I could be wrong, but I suspect the bottom will not be found until around 6000. And from there the recovery will be slow.
I hope you're right.

She was joking - 6000AD vs 6000 DOW.

[The Central Scrutinizer]

I agree that gradually taking your money out is probably the right thing to do. I should have made it clear, but I was getting a bit short and just wanted to get the point across, if not with all the detail. So she should have taken out a % for the freshman year 5 years out, another % the next year, and so on.

There are a dozen different ways of doing this -the 5 year lead time is a bit long for my taste, but the point is, when you start getting close (the definition of close varies by person), you start preserving assets, in order that you will actually have the money when you need it. What you don't do, is keep all the money in securities until the exact hour you need it, then sell when the market crashes and pat yourself on the back for not losing as much of it as you could have had you sold a week later.

And what you also don't do is, when it is obvious you are wrong, do a Clausian goal post move and pretend that is what you were talking about the whole time.

[Giggywig]

And what you also don't do is, when it is obvious you are wrong, do a Clausian goal post move and pretend that is what you were talking about the whole time.
But if you keep at this long enough, your opponents eventually get bored or tired and you win! Or something.

[Skeptic Ginger]

What 5 year recovery average? The 5 years I was talking about was how long BEFORE you need the money should you take it out of riskier securities and put it into safer things, like a CD. If your son will be in grad school in 5 years that means you ALREADY MISSED the 5 year time horizon.

Again, nobody is asking you to hav e perfect timing about when you withdraw. What is being said here is that you should reduce the risk well before you need the money. The only one with the bizarre imagination about what people are posting here is you.

Listen, I don't think I've ever interacted with you before. I don't have an opinion on you, so please don't assume motives on my part. What is being posted here by several people that you seem to be failing to understand is this:

By the time you took the money out a few weeks ago, it was already years too late had you been following traditional financial advice. Nobody asked you to guess the right time to take the money out was the peak of Oct '07 because you should have taken your money out several years before that. If you need the money NOW, it should have been safe 5 years ago.This is getting really old.

The fund was for my son's college. I have plenty of money and net worth.

End of imaginary condescending assumptions.

[Jaggy Bunnet]

This is getting really old.

The fund was for my son's college. I have plenty of money and net worth.

End of imaginary condescending assumptions.

The fact it was for a specific purpose is precisely WHY you should have taken it out of equities some time before it was required for that purpose.

No assumptions are required, everything is based on what you have STATED in this thread.

The person guilty of condescending assumptions is you. You assume that the only reason anyone could possibly disagree with you is because they have personal issues with you and don't like you. This is despite the fact that they can back up their position on investment advice with links to independent sites and that the ONLY person in this thread who disagrees with that advice is you. Have you ever considered for even a second the possibility that everybody else could be correct and YOU could be wrong?

[Giggywig]

This is getting really old.

The fund was for my son's college. I have plenty of money and net worth.

End of imaginary condescending assumptions.
The only thing getting really old is that you are unwilling or unable to understand what people write. And I give up.

[roger]

Apparently a less net worth than you used to have. Which is a strawman on your part anyway. Warren Buffett could make a bad investment, lose 5 billion dollars, and still be the richest man on the earth. It would still be a bad investment, despite being the richest man on the earth. Your net worth is not evidence that you invested wisely.

And that is not condenscension, it's hoping that you won't put yourself in that position again. Don't put money in the market that you need in the short term. It should be clear why.

[Skeptic Ginger]

The only thing getting really old is that you are unwilling or unable to understand what people write. And I give up.Because the discussion doesn't apply to my personal circumstances you falsely assume I don't know what people are talking about. More condescending crap.

It is an absurd premise. How many people in real life as opposed to the imaginary 20:20 hindsight version being repeated ad nauseum here take their kid's college money out of their mutual fund before they need it?

False premise: I could not have paid my for son's college education without the stock fund.
False premise: It is always better to leave shares in the stock market when the market nose dives because it will eventually recover.

[Jaggy Bunnet]

False premise: I could not have paid my for son's college education without the stock fund.
False premise: It is always better to leave shares in the stock market when the market nose dives because it will eventually recover.

False premise: that anybody (other than you when creating strawmen) in this thread has made either of those statements.

[egslim]

How many people in real life as opposed to the imaginary 20:20 hindsight version being repeated ad nauseum here take their kid's college money out of their mutual fund before they need it?
Those either with above-average personal knowlegde of the financial markets, or with access to good financial advice.

It's like Cinderella at the ball: Everyone wants to leave at 23:59, but nobody has a watch. So the sensible thing to do is leave earlier, but that takes a lot of discipline. Few people manage to do it, but they are generally better off because of it.

[The Central Scrutinizer]

False premise: that anybody (other than you when creating strawmen) in this thread has made either of those statements.

People are learning a lot about skeptigirl in this thread. Things which I already knew.