Are you still in the stock market? I sold on Monday.

[Wcross]

The mortgage mess has me worried enough to get out. My feeling is that people will stop consuming due to the inability to raid their "home equity". Many people ran up credit cards and then "paid them off" using home equity. Many people bought new cars using their home equity.
People who bought using sub-prime mortgages are just now starting to find out the real cost of their agreements. They are not going to have any disposable cash for anything else.
Credit card companies are tightening their standards and raising rates for even people with good credit histories. The high price of fuel is going to further pinch peoples income. Increased costs for transportation of products will be passed on to the consumer.

To get further doom & gloom information on the mortgage mess visit this site;
http://ml-implode.com/

The thing that made me get out this Monday was this particular article;
http://www.financialnews-us.com/?page=ushome&contentid=2448565379

Mystery trader bets market will crash by a third Renée Schultes
16 Aug 2007
Carry trade unwinds as yen hits one-year high
An anonymous investor has placed a bet on an index of Europe's top 50 stocks falling by a third by the end of September, as world equity markets plunged for a third day and volatility hit a three-year high.

The mystery investor has bought put option contracts on the DJ Eurostoxx 50 index that will result in a profit if it plunges to 2,800 or below by the end of September. Based on the 2,800 strike price, the position covers a notional €6.9bn, and potentially even more using a market price of about 4,100 when the trades were done on Tuesday and Wednesday.
The identity of the investor is unknown but market sources speculated it was either a large hedge fund hedging itself against deepening losses, or a long-only fund manager pressing the panic button to protect its gains.
The investor has bought a total of 245,000 put options on the index. The September put option with a 2,800 strike was the most popular DJ Eurostoxx 50 contract yesterday, according to data from Bloomberg.

[LeftCoast]

1. You really need to get a financial advisor

It's worth the money to pay someone who does this for a living.

[indepat]

5. You're o.k. with a financial adviser who has not been blinded by the right:

problem is wall street is teeming with a glut of those who see glorious magnificence in every disastrous 'puke pre-emptive war and insane, no idiotic, foreign, domestic, fiscal and tax policy.

[LeftCoast]

8. It's like finding a good auto mechanic.

It's absolutely critical to do some research on them. How's their track record? How many recessions have they weathered, etc?

[BadgerLaw2010]

15. Yeah, you usually want to see some grey hair.

Whiz kid prodegies exist, but that's unusual by definition. You absolutely have to check around and make sure that what the guy in question usually recommends works for you instead of just the references.

Some people want mad growth and will accept mad risk. Others just want their money to be there.

[Yupster]

22. You sure want someone who's been through

2002 anyway. That was one rough year. Be nice if he/she went through the tech boom - bust of the late 90's too. Lots of lessons to be learned there too.

[Wcross]

7. Perhaps I do.

Are you saying everything is "hunky-dory" and the market will continue to remain positive?
I disagree but there is no way to determine who is right other than to wait and see. I may be wrong. I may be right. Time will tell.

BTW- Weren't all those people that were steered into funky mortgages helped to do so by a "mortgage advisor" who did it for a living?

[LeftCoast]

9. No. Everything's not hunky dory

Neither is it the end of the world.

I don't know what stocks you held. Selling them might or might not have been a good idea. However, I have seen lots of people lose large sums of money doing what you describe.

See my above post about how important it is to do your homework before picking a financial advisor.

[BadgerLaw2010]

13. Agree. Liquidation can be very problematic.

Selling stocks at a 10% decline bottom only makes sense if you believe that there's substantial risk of a sustained further downturn that won't correct for some time. Assuming that the investor in question actually has a reasonable time horizon, not the next few months or weeks or lunch time.

If it was possible to call market positions accurately like that, there would be a lot more billionaires than there are. Instead, most do-it-yourself active traders go broke within three years. The ruin rate for that is like 95%. Market timing is dangerous in the extreme, especially in news-driven environments that don't follow traditional technical behavior.

No one knows how to do this. Hell, the quant funds don't know how to adapt to real news events. Even the most high-profile, successful hedge fund managers like Cramer don't return a 10th of what they would if they were always right, and they can be incinerated in this sort of environment as well.

When actually *investing* for reasonable time horizions, the big issue is if you can wait it out, and how much do you lose by selling or in forgone return. Avoiding a 20% decline while earning 5% on your new cash position and then getting back into the market at a bottom is great. But if the market goes up 10%, you got hosed.

This is doubly true if you're selling financial stocks at this point. Most are priced at bankruptcy risk, which is just stupid in most cases. Example: E*TRADE is priced as if its going out of business, that's the only reason a stock with their earnings growth should be this cheap. They don't have nearly enough even potentially bad debt to force them to file and they don't even *have* sub-prime mortgage debt on their books. This pricing is idiot, and selling here is selling at a bottom.

Same's true for just about every beaten-to-a-pulp financial, from the Wall Street banks to regional banks. These have already declined more than a general market crash would be. They won't fall further unless they actually go out of business.

Selling is fine, but you absolutely have to know what you're selling and why you're selling it, and what the risks and gains of doing so are. If you can't do that yourself, get help to do it.

[Yupster]

24. Everything's never hunky-dory

There's always a war on or a housing crunch or inflation fears or a wildly inflated market or recession, or political fears or Pearl Harbor or the Kennedy Assasination or stagflation or the Cold War, or something else, and yet the market has jogged along.

[Dorian Gray]

27. Yes...

and they don't all cost a fortune.

I'm keeping my mutual funds in my 403(b), my IRA, and my general account well diversified. If I take a hit, I take a hit. But, I'm not going to panic and run for the hills. There are tax consequences to selling much of your stuff, so if you weight that against a temporary loss, holding isn't a bad idea.

[indepat]

2. A 33% drop is not out of the question: I've been threatening to get out of the market for weeks

but have just kept putting it off.

[truebrit71]

3. I bought puts on the indexes yesterday...

...first time I've ever been short the market...

[BOSSHOG]

4. I will stay for a few more years

Mutual Funds have treated us well the past 20 years. I'm now 53 and will begin reducing my risk in another couple of years. I would never, ever get a home equity loan or a reserve mortgage. I recall a few years back the enormous homes nearby that young buyers were moving into with the corresponding mortgage load. A wise old sage said he was observing the neighborhood and all the residents ate at home because they could not afford to eat out. Money management isn't that difficult but it does compete with greed.

[sinkingfeeling]

6. I sold last month just before the 'record high'. The broker called then, kind of rubbing it in that

I should have stayed a while longer. I told him that I expected the market to take a nasty fall.The next week, the market went into free fall and had to be propped up with the $billions. I've resisted the urge to call him back and say, "I told you so".

[dmallind]

30. Strange - this "freefall" was a record high just a few months ago.

Anyone who is talking about normally well diversified equities funds "losing" must have put all their investment into these funds in the last year. Personally like the vast majority of investors my purchases have been at a variety of levels the vast - and I mean vast - majority of which were well below their current value.

You are only losing in say a DJIA index fund with the index at 13300 if you were stupid enough to buy it all at above that. If you built it over the last decade or so mostly at 7000-11000 you are doing just peachy - just not QUITE as peachy as you were at 14000 is all.

[soothsayer]

10. well, not everything is going to tank (but gawdnose wha't's safe!)

[edhopper]

11. A good adviser

would have you diversified. It's about risk, not reward.
I am still in stocks, mostly in Mutual Funds. But with more international exposure. I also have fixed income, commodities like Gold and some good old cash.
You need an adviser whose investment philosophy matches yours. If the market tanks, I will take a hit, but hopefully not a big one. On the other hand, timing the market is a fool's game.

[Wcross]

12. I went into cash.

I can afford to sit out for a year or two if need be.

[REP]

14. Hell Yes I'm In - Up 105% Even With The Decline

Sell now? HELL NO!! But that's my portfolio; your mileage may vary.

[DinahMoeHum]

16. I'm staying in the market, but I'm diversified. . .so, not too worried.

Stocks, mutual funds, ETFs, including a gold-silver mining stock.
Also have gold and silver coins, not a lot, purely for survival, not for speculation. Bought those over 10-15 years ago, when the prices were much lower.
And my portfolios also have CASH - so I can make like a vulture if the shit really hits the fan.

Also, I have no debt - not from credit cards or mortgage or anything. I use only 1 credit card and the bill is paid in full every month.

Basic rule: if you're in (the market), you'll win - if you get out, you lose.

:shrug:

[rucky]

17. If you liquidate and the dollar plunges...

you still lose.

[Wcross]

19. While it is possible the dollar will "plunge"....

Seems to me it is near bottom now. Also, if the dollar does plunge, stocks will follow.

[Cruzan]

18. I day trade so I'm always out when the market closes

But as a trend follower, this has not been a good market for me these last few weeks and I'm often on the sidelines just waiting for a direction to be chosen. I can handle a bull market or a bear market, it's the markets in between that are a pain. Also, with this being the week preceding Labor Day, volume has been quite light which sometimes makes the market even more volatile.

[NeedleCast]

20. Yup, I'm still in

But most of my investments are in mutuals or long term DRIP accounts. Even with a volitle market I'm not all that worried. Unlike some, I don't think the sky is falling quite yet.

[libnnc]

21. I'm still in but I've moved most of my stuff into bonds

[LondonReign2]

23. Staying in

I have no special insight into the market, but with waning consumer confidence it could get bumpy. Nonetheless, I am staying invested -- don't want to trigger any unncessary cap gains, don't want to miss moves up. I'm 60% in individual stocks, 32% in mutual funds, 8% in cash, 0% in bonds (except small exposures through balanced funds).

[mudesi]

25. I wouldn't get out when everybody is selling...

Sell when everybody is buying, buy when everybody is selling.

[Swede]

26. Google insiders buying stock.

The people on the inside are buying up stocks at bargain prices,hang in for the long haul and make real money.

http://news.google.ca/news?hl=en&q=insiders%20buying%20stocks&ie=UTF-8&oe=UTF-8&um=1&sa=N&tab=wn

[MilesColtrane]

28. Getting out of stocks now...only makes sense if you are retiring today.

Almost everybody loses money they could have made when they try to time the market.

Diversify, dollar cost average, and quit watching the ticker.

[taught_me_patience]

29. I reallocated my 401k to 50% bonds 3 months ago

pretty conservative for a 29 year old. My individual stock portfolio is mostly long big oil with small shorts in hombuilders.