401k in the crisis: Is it too late to sell?

[hakrjak]

Well -- Like a bunch of people, I thought I saw a bottom a week and a half ago or so and dove back into the market guns blazing, pouring 100% of my 401k from moneymarket back into stock ETFs, and company stock. Now it looks like my plan has been F'd since Jump Street...

If you're in this position, is it too late to sell -- or should you just ride it out and keep buying? Up your contributions to the max you can afford to take advantage of the low prices here?

- Hakrjak :coolgleamA:

 

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[kimberland]

I don't think there's a rush to buy now.
Historically, recessions are about 9 months
and the pop up in stock prices doesn't happen until about half way
so that makes the opt time to buy around February.

'Course if this is a deeper recession,
that time frame will be longer.

As for cashing out,
I believe most of the damage has been done
but if you can get a higher (future!!) return elsewhere then...

 

[andviv]

I took a bigger cash position and I'm not jumping back in yet. I'm even think of moving even more to cash.

I will redirect the newer contributions to REITs mostly (RE is what I understand and believe in).

And I keep thinking this is just another account I have for the long term.

 

[^eagle^]

Well -- Like a bunch of people, I thought I saw a bottom a week and a half ago or so and dove back into the market guns blazing, pouring 100% of my 401k from moneymarket back into stock ETFs, and company stock. Now it looks like my plan has been F'd since Jump Street...

If you're in this position, is it too late to sell -- or should you just ride it out and keep buying? Up your contributions to the max you can afford to take advantage of the low prices here?

- Hakrjak :coolgleamA:

Buy low sell high?

You only lose when you sell low.

I didnt take the leap myself but if I had I would just ride it out.

401ks are long term.

 

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[hakrjak]

Yeh, I hear you... I think I'll up my contributions from 6 to 15% of my paycheck and just buy it all the way down to the bottom.

- Hakrjak

 

[kidgas]

I don't know what ETFs you trade, nor what your company stock might be. However, one consideration is to go long your 401(k) and use a taxable account to purchase puts or even short stock. You could do this for a portion of the shares and thus hedge somewhat while the market continues to reach for a bottom. For example, if you are with ORCL and own 1000 shares in your 401(k), you could short half (or 500) shares. If ORCL drops, you end up making some profit short term while dollar cost averaging in more shares each month with the 401(k).

If ORCL begins to rise as if today is somehow the bottom, then you start making profit in your 401(k) only half as much. The loss on the short can be used to offset gains in other areas or earned income. Just my 0.02. It may help you feel less seasick from all the market volatility.

 

[hakrjak]

Thanks! That is a great suggestion for someone sick from all the volatility.

Reminds me of playing craps, when some people will play some of the numbers to come, and other numbers to 'don't come'... they are hedging, but if they play too long -- the house gets it all anyway.

- Hakrjak

 

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[^eagle^]

Yeh, I hear you... I think I'll up my contributions from 6 to 15% of my paycheck and just buy it all the way down to the bottom.

- Hakrjak

I don't know if I would buy more.

I would just hold what i got and wait for it to recover. Future contributions I would put in bonds or stable value while I was waiting. and be ready to strike when the market started bouncing back. Because of slow reaction time of trades with 401k I think it's better to wait until you KnOW that the market is recovering as opposed to speculating.



I never contribute more than my company match. My company matches 50cents on the dollar so I have a ROI of 50% in stable value.

But I don't like the stock market anyway. All it takes is a couple of idiots in a company to screw the company and send the stock plummeting. I understand forex better but my 401k doesn't allow forex or precious metals trading.

When I am in I buy small and mid cap funds. It takes a lot more idiots to shake up a fund that it does an individual stock.

 

[NoMoneyDown]

One of the things Kiyosaki notes when it comes to 401k's and mutual funds is since they are aligned with the stock market (for the most part), you can only make money when they underlying asset goes up (IOW, not when it goes down). This is just another "con" with these types of investments.

Also, and I don't want to politicize this for obvious reasons, but some people suggest that 401k's are nothing more than a scam. For example, here is one person's take on 401k's.

My company contributes 2% automatically and dollar-for-dollar matching for the first 6% an employee contributes. Ironically, under their old plan, they had an automatic pension account, but that was thrown out several years ago. I still make interest on the pension account, but the company no longer makes contributions to it.

 

[hakrjak]

And here comes more pain this morning.... The Dow is currently down 450... I can't believe this can happen so many days in a row with such good bargains out there! This market is so damn oversold right now...

- Hakrjak

 

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[RaceDriver]

For myself, I'm holding what I have (already took the loss, so why lock it in and miss the recovery), and sitting on cash until I see the signs of a sustainable rally (three days up on solid volume).