I have a question about stocks, assets, etc

[FirstLight]

So, not like this really has any afect on ME - except for the fact that my Dad has everything tied into a family trust. Right now, he is the decision maker - and we won't have consensus vote between my mom, sister and me until AFTER he passes. (He is really into FOX and I have sen him get more and more bitter and distrustful in a short time...but I digress...)

IF you have a considerable amount of stock in one place, and probably some bonds too...wouldn't it be prudent to get the hell out now before nothing is worth nothing? I can't help thinking that we are going to be royaly screwed down the line because my Dad thinks the economy failing is just a bunch of hooey. AND get this, most of his stock is in Lucent/AT&T...which actualy may be one that will do well, considering the FISA debaucle...

just speculating, since the rest of the banks are going belly up - I figure now may be good time to switch our currency to wampum.

[aspergris]

1. no, no , no, no

First of all, I am speaking about investing here (not trading - which is something I do but is a different paradigm than trading)...

First of all, what's your timeframe. If you are 60, and you have 80% of assets in stocks, then you are probably an idiot :)

Second, retail investors have a GREAT tendency to sell near bottoms and buy tops. Never fails

This "nothing is worth nothing" stuff is ridiculous

Apple stock is about 170.

I bought it at 25.

Is it worth nothing?

For pete's sake, the banks are sucking #$(#(. Well, duh.

But you shouldn't have more than 5-10% OF your stock portfolio IN banks anyways.

So, it shouldn't be a big deal to any individual investor - the banks.

FOr the average investor - you should have a diversified portfolio, and your mix of bonds, commodities, stocks, etc. should be tailored to your time horizon.

Panicking AFTER the market has dropped 25% is a ridiculous way to act.

Dollar cost average and understand the market goes up and it goes down.

[FirstLight]

4. See, I know nothing about this economic stuff at all, obvoiusly

I can't even balance a checkbook! lol

But I know my Dad isn't diversified in the slightest. He hid thousands from my mom over the years and never even put the house in her name until we were grown, so he's a little stupid in that sense. He used to be a bit more on the ball, but at 75, I doubt if he even knows where half his money is.
And yes, I guess I am responding to the bailouts and thinking we (the US economy) are going to be belly up soon, so I was thinking it would be cool if we could persuade my dad to liquefy and just buy some land ...or something.

[Tangerine LaBamba]

7. Let me get this right:

You "can't even balance a checkbook," but you're questioning your father's investment strategy?

Do you think the fact of your stated incompetence might be a factor in his closely holding his assets?

[FirstLight]

13. sorry, that wasn't the question...

and he has ALWAYS pinched pennies till they scream.... depression mentality.

my financial imcompetence is neither here nor there when it comes to his investments, it is my mom I'm worried about. My dad is also sliding into dementia, and I just want to have an idea of what I am talking about when we sit down as a family to discuss this.

thanks for being snarky

[Tangerine LaBamba]

15. So you ask on a message board?

Yeah, your good sense is showing.

[FirstLight]

16. because you are so nice

thanks for the advice


:rolleyes:

maybe I ask here because I don't have an accountant, maybe because people here on DU are "usually" helpful and kind

so fuck you very much

[Tangerine LaBamba]

18. Charming

It takes a real leap of faith to go to a message board to get financial advice about finances that aren't even yours. There's nothing like advice from perfect strangers. That shows serious intellect.

You know, when you ask on a message board, you get all sorts of responses, including some you don't like. So that triggers vulgarity from you.

Charming.

[high density]

29. If your dad's plan is to pass the money on to you and your sister

Then it is a good idea to have it in the stock market. On the other hand, owning individual stocks is not a good thing in my opinion. Buying low cost, index mutual funds (such as an S&P 500 index or total stock market index) lets you buy hundreds or maybe thousands of companies in a single ticker symbol. It means no more than 2-3% of your money is tied up in any one company, and if a couple of them fail then you aren't stung so hard. The returns float up and down with the index instead of a single company.

If he has owned a lot of AT&T for a long time, the Lucent stock was likely from the AT&T spinoff in the 1990s, so the dive of that stock/company might not be as financially painful as originally thought. Yeah it would be nice to go back and sell LU at $60/sh (I had some given to me and wish I could do the same) but we can't and that's how it is. The tale of Lucent being run into the ground is one of the reasons why I like index funds so much to avoid similar stinkers.

The bottom line is, if your dad is set on owning stocks directly then you're very unlikely to change is position now. My grandfather is the same way, but he's way over exposed in energy. The market has been great to him, but all it would take is another environmental disaster from ExxonMobil to tank their stock and there goes a huge chunk of his wealth. If my grandfather dies before my grandmother, it is going to be a part time job for somebody to manage her finances. She would give all of her money away to anybody that simply asked for it.

[pitohui]

21. can't balance a checkbook but want to spend your dad's money?

'kay, i've heard enough

it's always easy to spend someone else's money, isn't it? and it's always annoying when that someone else stops you from spending their money


in general when someone asks me how to grab their parent's money, i assume the worst and i'm rarely proved wrong, it's the work of a sociopath to try to get dad's money away from him when he isn't even cold in the ground yet!

[MercutioATC]

6. Alternately, one can not diversify but remain conservative.

It does take some effort, though.

Diversification never made sense to me (for me) because I watch the markets kind of as a hobby anyway. Why would I want X% of my assets in stocks in a bear market? Better to hold them in cash or bonds for now (I'm in government securities). When the market starts to turn around, I'll look at sending some money back to the market.

[aspergris]

11. I was referring to an investment paradigm

NOT a trading paradigm.

You are referencing more a traders paradigm

I use trading to make income.

I use INVESTING to make wealth

But put briefly, most retail investors should NOT try to time the market

furthermore, a bear market is when you can pick up VALUE (iow stocks at a discount)

a retail investor who dollar cost averages does this by formula. And does far better than he would if he TRIED to time the markets.

Like I said, I *do*, in my trading accounts, but for the layperson it is almost always less effective than dollar cost averagign which naturally uses the dips to get decent prices longterm

[MercutioATC]

12. Oh, I agree in most cases.

Most people don't want to invest the time. For them, these investing strategies are fine.

I simply wanted to offer an alternative.

[dantyrant]

17. Well...

Good advice for some sectors, bad advice for others. I wouldn't hold Citi now. I don't care how low it goes -- there's no value there.

The notion that you only take a loss when you sell is, in my advice, nonsense. When I log into my brokerage account, my holdings are shown priced at previous market close. Sometimes it's prudent to sell after a 25% drop -- I have no doubt many dot.com 'investors' or people who bought the Nikkei at 40,000 would agree with the hold-and-wait strategy.

I believe we're still in the early innings of this Thing. Inflation is running wild, whatever the CPI may say, and stock PE's will have to come down once inflation as accepted by the market as more than an intermittent phenomenon. Certain sectors will continue to do well though, in all likelihood: energy, food, gold/silver.

I'd advise anyone with stocks as long-term investments to be sure that they're invested in the right things. Are they things people need, or are they dependent on conspicuous consumption? Do they make things of value, or do they just shuffle around paper?

[MercutioATC]

2. Well, here are the charts for AT&T and Lucent:

AT&T (T)

http://chart.finance.yahoo.com/c/6m/t/t


...and Lucent (ATT.L)

http://chart.finance.yahoo.com/c/1y/a/att.l


...not looking so good...

[dysfunctional press]

19. looking at a 5 year chart for lucent is more fun...

unless you have money invested in it.

http://finance.yahoo.com/echarts?s=ALU#chart1:symbol=alu;range=5y;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

[A HERETIC I AM]

3. Concentrated stock positions with older investors is not at all uncommon

and if your father has had his AT&T stock for a long period, his "Cost Basis" (The split-adjusted price or what the IRS recognizes as what he paid for it) could be as low as $2.00/share or even lower. AT&T closed today at $24.86. If he were to sell, the difference between his cost basis and the current price is considered Capital Gains that are taxable.

What would be prudent is for him to have his portfolio properly diversified and allocated. That way, if one of his large positions does go south, it doesn't take the entire trust account with it.

since the rest of the banks are going belly up

Easy, there. one or two or even twenty banks in trouble is NOT the same as "the rest of the banks".

Recessions and market corrections are a normal and healthy part of the economic cycle. Despite the predictions of many on DU, the economic system is not going to collapse. And if i turn out to be wrong...well...I won't be posting online in order to eat crow.

[FirstLight]

5. Sorry...economics, accounting, etc are not my strong subjects...

So I have a tendency to see the bailouts and other such activities as an VERY bad sign...

I wish my Dad could think more creatively and make the investment a litle more "safe" ...it is like playing roulette with all your chips on one number, not spreading them out to improve your chances.

But he is so afraid someone is going to "take his money," he'd rather hoard it in one place.

[Konza]

8. I agree with the timeframe argument from prev. post

My opinion FWIW is that stocks, mutual funds, other securities are long term investments. These are not things to freak out about at the first sign of trouble. Panic pulling out of the market really doesn't do any good. But it all depends on the age of the investor and their attitude towards risk.

On one note I would be leery of putting all of my eggs into one basket. If most of your investments are in one stock, you need some diversity. I'm certainly no hardcore investor guru, I just use mutual funds that suit my needs, check them every couple months, and pretty much let them do their thing. In the past I have pulled out of investments, but I ended up kicking myself most of the time.

Not knowing the details of the situation I would just urge you to use caution. Downturns come and go, and if you can stick it through for the long haul you'll do wonders. Remember, these are designed for the long term, so treat them that way. If you will need the money in a year or two it shouldn't be in mutual funds or stocks. If you can live without the money now then sock that cash away and it'll be your best friend in a decade. Panic selling is rarely the answer. By the time you freak out the downturn has already occurred. Nothing is more irritating is checking a stock or fund that you pulled out of three years ago and then contemplating the money you lost due to your fear.

Finally, ignore everything you read on boards about stocks ;)
You know what is best for your situation, just take your time, think it through, think long term and you will be fine.

[latebloomer]

9. I can relate!

My 82-year-old mother has a lot of her money tied up in aggressive stocks, and has seen a lot of losses over the past year. When asked about it, she blithely states that the market will go up again. Oh really? And what kind of a time frame do you have at your age?

She has a financial advisor who kisses her patootie and she thinks he walks on water. My brother did all this research to help her out with this, and to show her the advisor wasn't doing right by her, but she basically told bro to piss off.

She's very stubborn and I have to just let her do what she wants. But it's such a waste of money that her grandkids could eventually use.

We're gonna try to get her to an elder law attorney to protect her assets in case she needs a nursing home. That will suck up every penny you have!

[FirstLight]

14. YA... that's why he is so fearful to touch his money

...he is terrified that he will end up alone in a nursing home and uable to pay for it. Been afraid of death and illness as long as I can remember...

[latebloomer]

23. My mom's attitude is that she will NEVER go into a nursing home

She expects me to take care of her, I guess with assistants. What if I can't? My house sure isn't set up for it, so she better hold on to some money so we can buy a bigger one.

Plus my MIL is already living with us- another heinous situation. :eyes:

[high density]

30. If your mother plans to pass on that money...

then having it in the stock market is the place for it to be. She is a smart woman to set a course and then stick with it even when the market loses value. If you don't have that sort of staying power then you are always trying to time the market. Most people who time the market end up buying high and selling low. They do this again and again, and end up with significantly worse returns than if they had just let it ride to begin with. It's not a waste of money by any means, unless you are extremely pessimistic and feel our markets will still be depressed a few decades from now.

[Uben]

10. I lost half my savings in a divorce!

Sure hated to break that twenty dollar bill!

[pitohui]

20. since your dad is the decision maker, there is nothing you can do and no use fretting

if worse comes to worse, you will be just like the overwhelming majority of us -- you will have to work for what you have

you cannot tell your dad what to do, he was picked as decision maker in the will or trust for a reason and even if it's a bad reason (prejudice, the belief that only a "man" could make financial decisions) there is nothing legally that you can do so raising the issue serves no purpose except to start fights

my mom has inherited money, do i think she always spends it wisely, no, but it's HER money, she is the decision maker now, so i let her make the decisions

assume you will have to work for what you have like everybody else and if you do end up with some extra money from dad then it will be a pleasant surprise

[A HERETIC I AM]

26. That is not entirely true.

Putting aside the assumption being made by you and others on this thread that the OP is merely trying to get her hands on dads money, saying "there is nothing you can do" with regard to the assets held in a trust is not accurate.

It depends on the trust and how it is set up.

Is it a revocable trust or non-revocable?

If dad is the trustee of his own trust, who is the successor trustee?

Is the trust in his name or is it "The Smith Family Trust, John Smith, Trustee"?

Are there provisions in the trust for change of trustee in the case of mental incapacity?

Etc. Trusts can be amended. The OP and her mom need to consult an attorney.

If the OP's father has beginning stages of mental incapacity, a trusted friend or attorney could be brought in to discuss with him the consequences of him losing his mental faculties and not having made provisions beforehand.

No judge in the country would fault a family member who suggested altering the control of a trust if the trustee shows verifiable signs of diminished mental capacity.

If there is a valid concern that some family members are trying to take control of monetary assets for their own profit, a Corporate Trustee can be engaged that will act as a disinterested third party and carry out the provisions of the trust to the letter.

[Tierra_y_Libertad]

22. As a 64 YO retiree, I just pulled out and put ours in money markets.

We had our (rather modest) IRAs in a relatively conservative balanced fund which has done well - about 9% per annum - since we retired.

But, the with the economy going south, I thought it prudent to switch until things sorted out after the election.

Having said that, being 64, and retired, and our IRA's being the source of only about 10% of our income (the rest being federal & state pensions), I see no reason to take any risk.

If I were younger, still working, and had time on my side, and still in need to insure enough for retirement, I would be willing to take more risk.



:shrug:

[FirstLight]

24. So...to clarify...I am not "after" my dad's money

But I am concerned that he has a tunnel vision when it comes to the legacy he has worked his entire life to build. I am afraid he and my mother will be in bad shape over the next couple years, especially the way things are going in the economy. And yes, I DO believe that things are headed into a REAL nasty downturn, not just a blip.

My question was about diversifying and what that means, some of you answered the question by pointing out the difference between long term vs short term investments, etc...and I thank you.

Mom is going to have to make some decisions soon about his ability to handle their finances, he has made some major mistakes in the past six months that could have really jeopardized their well being, luckily, the bank called to double check before making the transaction. So, again, it isn't about anyone trying to get anything...I just
want to know some info so I can do some more research. I asked here because DU has been a real wealth of info on lots of subjects and I think there are some real "economy-heads" here...and the thought was in my mind after reading through the daily stories about fannie mae etc.. so I asked.
thanks for those who chose to give info instead of snark

[ZenKitty]

25. The only adivce I would give you is....

DON'T seek financial advice from random folks on the internet.

Questions that come to mind...

Why are you worried about what your father is doing with HIS money?

Are you laying in wait for your dad to kick off so that you can capitalize on the fruits of his labor?

Why aren't you busy enough, creating your own money...so busy that you wouldn't even spend a nanosecond of thought about your father's wealth.

On what basis of knowledge do you state "the rest of the banks going belly up"

"we are going to be royaly screwed down the line" pretty much says it all.

Get a job and make your own fricking money.

This just makes me sick!! Why do you care what your father does with HIS money other than to leech of the fruits of his labor.

[DailyGrind51]

27. aspergris is correct, diversification in investments is the key to sleeping nights

in an economic downturn, panic selling is not.

[DFW]

28. When Bush was "selected" on December 12, 2000, I took precautions

I changed a fair amount into Deutsche Mark (since converted into euros), and bought
a bunch of gold, which I normally shun as an archaic investment.

My investment "adviser" told me I was nuts, and that Bush would be good for stocks
and business. I reminded her of her great recommendations (she is a Republican), and
her response was, "well, who knew?" I reminded her that I did. She admitted, at least,
that my instincts were better than all of their highly-paid consultants.

How'd I do? Well, the dollars doubled, and the gold tripled. i.e. so-so. If I had
bought oil futures, I'd have been worth ten times what I am now.

[Midlodemocrat]

31. Your last sentence betrays you.

'our currency'. It's not your money.