Investment/Retirement/Cruising Kitty

[Southern Star]

Virtually zero - I too got lucky and sold off my mutual funds to buy GIC's (guaranteed investment certificates) in the summer of 2007. On the other hand, there has been a slight drop in the value of my real property combined with a dramatic drop in the value of the Canadian dollar (which will, at least in the short-term, reduce what I can purchase offshore by about 20 %); the latter is offset partly by the increased value of the US$ in my USD account.

My retirement plans haven't changed (Fall of 2009); having said that, I am delaying the next phase of construction on Margarita until the exchange rates stabilize to some degree (and to see if the downturn in the world economy reduces construction costs).

Brad

[TaoJones]

Originally Posted by kevingy

<snip> When I'm able to cash out (in another 23 years or so), I'm certain that all of this turmoil will be over.

I find it very odd that all of the individual stocks I own, with one exception, are fairing better than the traditionally safer mutual funds.

Well, one certainly hopes that the markets can stabilize in less than 23 years, but merely stabilizing isn't the same as a return to profitability.

For example, after the crash in October '29, the markets stabilized fairly quickly, but the trend was still downward through most of the '30s. If an investor had ridden the market down, then back up, he hadn't actually reached break-even until the mid-'50s.

As to the disparity in the performance of mutual funds and what you've been able to obtain on your own, that isn't really so mysterious. Mutual funds do better than the average investor, as a rule, because they're better at crunching the numbers and choosing companies to invest in.

In a market panic, however, when the preponderance of individual investors are desperately pulling their money out of the market (including investors in mutual funds), the downward bias is compounded. Some, like you, don't panic. Therefore, your losses are unrealized; i.e. "only" on paper.

Mutual fund managers, though, don't have the option of staying invested if the individual investors in their funds are demanding redemption, or a transfer of money invested in equities into the money market, if the demands exceed the liquid capital the fund is holding in reserve. The managers must then liquidate the funds' stock holdings to meet redemptions, or to move investors' capital into the money market, as well as to replenish the depleted capital reserve.

Whatever the reason(s) behind it, forced selling can badly damage the mutual funds' performance numbers. The greater the severity of the crash, and/or the longer the panic lasts, the worse the funds' numbers are going to look.

Similarly, while you can begin buying when you perceive the downdraft to have ended, fund managers may not have the luxury of buying stock at that same point. They will, most likely, have to wait for new investor capital to come into the fund, or for the funds' present investors to transfer money back from the money market into equities.

So it isn't really surprising that your performance has surpassed that of many mutual fund managers, if you're good at selecting stocks to invest in and if you have sufficient liquidity to take advantage of fire-sale prices.

TaoJones

[Solstice]

We've lost a lot, but I refuse to figure out how much. Our investment advisor put a major chunk of our money in a liquid CD a year and a half ago or so. With what remains in that, we can continue cruising frugally for two to three more years. The hope is that the job market will recover enough by then that we can get jobs. That's the change in our plans: from maybe needing to go back to work someday to definitely needing to go back to work. I'm just glad we were already out here when this hit. I might not have had the guts to do it otherwise.

[Cheechako]

If you are out cruising you are more insulated from the effect it seems, sure your kitty is decreasing, but you dont get the news barrage everyday and aren't effected by layoffs etc. It's a good time to be out there, this thing is a lot bigger than any I've experienced. The price of food etc has inflated in a huge manner..... doesnt make much sense really. A large bag of chips is now about $3.99, a large bag of dog food that used to be $17 is now closer to $25......

[Solstice]

True, we haven't yet been affected by the layoffs, but I suspect my brother-in-law will lose his job shortly. There have already been several rounds at his company. And I had no idea how much the cost of food had gone up. However, since we're at the dock for the winter, we do follow the news -- NPR, MSNBC, and the Daily Show and Colbert Report to lighten things up -- faithfully and a bit obsessively. We were quite hard hit in the early 80s when I lived in Oregon. This seems worse than that, though.

[Stillraining]

Originally Posted by Solstice

True, we haven't yet been affected by the layoffs, but I suspect my brother-in-law will lose his job shortly. There have already been several rounds at his company. And I had no idea how much the cost of food had gone up. However, since we're at the dock for the winter, we do follow the news -- NPR, MSNBC, and the Daily Show and Colbert Report to lighten things up -- faithfully and a bit obsessively. We were quite hard hit in the early 80s when I lived in Oregon. This seems worse than that, though.

Yes and no..I was here then too ( Washington is my home state) I had a framing buisness that tanked months before Mt. Saint Helens blew in May of 1980..There was not much work of any kind then..I made a career change to the Oil field within weeks of that eruption..

Yes it was bad here from late 79 through 81 or 82...but it actually lasted untill the mid eighties really and lots of people migrated from here to elsewhere... but this time this is more global and therefor vastly different..and The PNW has actually lagged behind in ill effects..but we definitely have them now...I also experienced the bust of the oil boom in 86 in Alaska loosing most all my investments made during that hay day when I should have been investing back down here where it was still depressed...Yep buy high sell low that's my motto...

If ya want to know what to do to make money just follow me around and do the opposite of what I do.

[Tspringer]

I am up 34% year to date on stock market investments.

But.... the word investments really is not accurate because I do not invest in the stock market, I only trade on a speculative basis. This year, put options on REITs, Builders, high end retail and Financials have been no brainers.

The stock market is WAY too risky and volatile for longer term investing right now. Plenty of people in 1929 and 1930 played the "dollar cost averaging" game..... the market bottomed in 1932 and it did not regain its pre-crash levels until 1952.

Ask yourself this question: Can you afford to wait 20 years for your investment to get back to even?



Terry

[gonesail]

Originally Posted by Cheechako

don't get greedy. ride it up and get out early.

you got that right and that is what I have done. a little money made with CD or fixed interest is better than nothing. my 401K has also made money .. not as much as I would prefer.

[starfish62]

Originally Posted by neelie

Changes?... all sharp implements and Leonard Cohen CDs removed from boat.

I respectfully disagree. Leonard Cohen is critical to survival at the present time.

[anotherT34C]

How much have I lost? No idea, actually. I won't look. That's the advantage of being thirty-something.

I did bump my contribution up to maximum, however. I figure if things eventually return to profitability, it's like buying 20 years ago. If not, well... then the only profitable investments will be in guns, canned food, and desert-wear (Mad Max, here we come).

[nautical62]

I think it's important to remember "loss" is the difference between what you bought something for and what you sold it for, assuming that's a negative number. It's not really fair or correct to look at a high and low values and call that difference a loss.

I purchased only a very small fraction of their highest value and hopefully won't sell any at their current low value.

[Cheechako]

IMHO You're using "Broker Logic". I view "loss" by comparing what the difference between a secure investment and the current snap shot is. So if you invested $1000 2 years ago in the stock market and it is now worth $650, it is worth $1082 if you had bought a CD. Your loss is $432.
"Ask yourself this question: Can you afford to wait 20 years for your investment to get back to even?" Terry
Truer words were never spoken Terry!

[MarkJ]

I'm lucky we havent lost anything.

However the US dollar is way higher so my monthly kitty would be down by about 1/4 if I was cruising in USA or Carib etc. Fortunately I am cruising Australia and Asia for the next year. Yippee! It will have recovered by then


Mark

[David_Old_Jersey]

Originally Posted by nautical62

I think it's important to remember "loss" is the difference between what you bought something for and what you sold it for, assuming that's a negative number. It's not really fair or correct to look at a high and low values and call that difference a loss.

I purchased only a very small fraction of their highest value and hopefully won't sell any at their current low value.

Funnily enough I was having a discussion (argument? ) with a mate over this last Sunday.....his position was like yours.

My argument was that you have already lost, even if you have not actually sold. If your investment is now valued at USD500 (instead of USD1000 you purchased at) then you get to say to yourself "what is the best way of turning USD500 into USD1000?" (note I did not say "back into" - as "The value of your investment can simply go down instead of up" ).....the answer may be that what you have already is the best way. But their are always other options to consider......plenty of other investments have gone down the toilet in recent times, some will resurface better and quicker than others. and some won't resurface at all........

Me? What doesn't go on the refit this Winter I plan to drink

[Charlie]

I took 95% of my money out of the stock market a year ago. The 5% is down 40%. I saw how much money we were paying in interest to the banks on our apartment buildings and took my Mom's trust money and paid off the mortgages on the apartment buildings and now pay that interest to my Mom. She can't get 6% anywhere else that is safe. How does the downturn affect my cruising plans? I had a plan to have my house paid off in the next two years by building a couple of spec houses. Well that plan is put off for who knows how long. The monthly mortgage is comfortable as long as either one of us is working but if I stop it becomes a burden. I'm working on a new plan but don't have it all put together yet. I can't leave for full time cruising for six years (kids out of high school) or so but I'll do as much commuter cruising as I can till then. The house needs to be paid down so that mortgage and taxes are less than $1k / month afterwhich my passive income will keep me going just fine. If I could talk my wife into ging back to work full time we could get the house paid off but I don't think she wants to do that.