Hey you financial gurus........

[Gatorbait]

I don't play the market but do have a 401 and watching it take a serious beatin'. I am not ignorant on the subject but not a pro by any means. What the hell am I supposed to gather from this chit......

"At the moment, we are about as close to being in a recession without exactly being in one as we can be"

 

[ormond80]

KEEP SAVING AND ADDING TO YOUR 401K. AFTER ALL THAT IS A LONG TERM SAVINGS PLAN, I ASSUME YOUR UNDER 50. THIS BOTTOM OF THE MARKET IS NEAR. WHEN INVESTING PICK STOCKS WITH SMALL PE RATIOS AND YOU CAN EVEN BE SAFE WITH SMALL CAP MUTUAL FUNDS. THINK LONG TERM YET FOR SHORT TERM THE MONEY MARKET IS A SAFE HABOR UNTIL YOU DESIDE WHAT TO DO.

IAM NO GURU, JUST TRYING TO HELP.

 

[DANW]

GATORBAIT ,your 401k should let you move money between different funds within your 401k plan.Right now is a real tough call in this market and we still can see some more downside before we go back up.I dont know how conservative you are ,but i would suggest that you spread it out a little bit.FOR EXAMPLE...20%GROWTH..20%SMALL CAP ETC..So when the market does come back, and it will you will have a nice base.If your time frame is longer than 10 years you will be just fine.I know it dont look like it now ,but over the long term being in the market through plans such as 401k's and mutual funds is the only way to go.I am a floor trader in NEW YORK and i feel your pain,but like i said you will be fine in the long run.Just a little side note..NEVER buy a stock on MARGIN,as that is 1 of the reasons this market got hit like it did,people having to sell their stocks to pay their margins..I am sorry for rambling on and i hope i said something that might help you as you have always helped me with your picks.TAKE CARE AND GOOD LUCK!

 

[Neemer]

Depends upon your age and how long you plan on leaving the money in there. If your investment horizon is longer than 10 years, I would continue to contribute to the plan on a weekly, monthly, or quarterly basis. You'll get the benefit of dollar cost averaging. This aspect is extremely important in maintaining a good return on your investment. I tend not to shuffle my portfolio around since I will not need the money for 30+ years.

I will tell ya, we probably will not see market gains like we did in the last half of the '90s in our lifetime. People are gonna have to become satisfied with 10-15% yearly gains in their portfolios. I doubt we ever see the 50%-100% gains in our lives.

 

[Bonovox]

Nor should we have ever seen gains like that in the first place. The market was so overinflated because of margin trading, as was posted above, that it had nowhere to go but bust.

While I would never call myself a financial guru, I am an investment banker on Wall St and I'll give my 2 cents.

Whatever your timeline, keep putting money in your 401k. What is your other choice? Cash? Your contributions to your 401k aren't taxed until distribution, a huge advantage. If you decide to forgo your 401k, you will in essence be double taxed. Taxed on your distribution up front and taxed on all gains in the back end. With the 401k you're taxed only at the back end -- and you make your true money by using the leverage.

The market is bad right now, obviously. Is there room to drop? Absolutely. Let's take Ariba, just as an example, not picking on anyone. Ariba was trading at 150 and more, and is now under 5. But at 5, it is still trading at almost 4 TIMES REVENUE!!! That is insane!! We're not talking 4 times earnings, 4 times revenue!

There are so many companies that are still overpriced. The tech craze is the reason for it. I knew things were going to hit the fan when I was renting a movie at Blockbuster and heard the clerks discussing whether or not Cisco could go up from 60. People were playing the market without having a SINGLE clue what they were doing. Daytraders, housewives, everyone had an Etrade account. Inktomi was at 188 and is now at 2. There are a billion examples. And you know what? 2 is still too high for Inktomi.

So what should you do with your money? Well, I would highly suggest you don't invest it yourself. There are great bargains out there, but this is truly a stock pickers market. 99.999999% of the world does not have the time, talent nor intelligence to figure out what to buy. Stick your money in a mutual fund, preferably a mid-cap fund and a defensive fund. Oil, gas, tobacco -- though none of them are sexy, are completely effective.

The problem is, after last year, everyone wants to buy at 3 and watch it go to 50. IT'S NOT GOING TO HAPPEN. Buy at 18 and be THRILLED when it hits 22! That's true growth.

The market is reaching for a bottom. Is it there? No, but you'll never find the bottom. Buy near the bottom and you'll never lose money. Right now there is about 5% downside and 50% upside. The thing to watch is book-to-bill and inventory amounts for these corporations. Earnings are still going to be shitty because they are trailing, the are just telling of the past.

To make a very long message simple:

1) NEVER spend on margin
2) NEVER buy a penny stock
3) don't expect 50% growth
4) don't check the ticker everyday to see where you are, you'll go nuts.
5) trust your money to a professional and don't worry about it. Everyone here should be in it for the long-run. Take a macro view of your investment and study the baseball lines instead.

 

[Bonovox]

One last thing:

I would truly suggest some of your 401k right now in a mid cap growth fund. We are probably two quarters from a turnaround, and they will take off the most. You can hedge it with a defensive fund at the same time. There are tremendous values out there with mid-size companies and a mid-cap growth fund will definitely take advantage of it. Be patient, but it's a tremendous opportunity for the mid-caps.

Also, an index fund right now wouldn't be a bad idea. The Cubes (QQQ) are trading in amazing volumes. 10% wouldn't be too much.

 

[djv]

Gatorbait you keep tucking that money in that 401. here is why.
Someone keep track cause Im not going to.
Dow by early 2003 over 12900.
Nas by mid 2003 over 3100.
I know that is not as high as we saw once.
If you keep cost averaging in to your funds you will do fine. Of course I expect you to know your funds well and understand what they can do for you. You deside whats right for you. Growth 50% Balance 30% Index 20%.
Dow by 2005 over 14800.
Nas by 2005 over 4500.
Now if Bush is a complete flop. You may have to lower those last two by about 1000.

[This message has been edited by djv (edited 04-04-2001).]

 

[Cash & Carry]

Been playing the market hard for the last 15 years. It has had it's up's & downs too.Sept.87 & gulf war was a good burp, just like what we have today.I agree that this last correction might take a while to recover,but I'm looking forward for some good "buy" signs. Yahoo,dot.com's & anybody that was going "public" to cash out is one reason why the market is correcting now. I try to buy stock with good value that KNOWS how to make money.. might be slow for a while, but I believe we will recover . Good luck to all

 

[Gatorbait]

thanks fellas. I'm in for the long haul. Not looking for that $$$ for at least 30 years. Anyways, I wanted feed back in the quote I posted.......


"At the moment, we are about as close to being in a recession without exactly being in one as we can be"

 

[Bonovox]

By definition we don't know if we're in a recession because a recession is defined by two consecutive quarters with contraction (negative growth). We haven't had one yet, growth has only slowed.

If it's anything right now, it's the beginning stagflation.

 

[selkirk]

a good discussion, you made some great points Bonovox, I hope you are wrong on Stagflation. I believe the US will not hit Recession but it will be close and hard to predict, however when growth goes from 5% to 1% it is still painfull.

just thought I would discuss some of your points:

1) NEVER spend on margin
I would agree with Spend, most people are up to their eyeballs in debt. However I have invested on Margin and it does work, however I will say one must be carefull. There is nothing like a Margin call to ruin your week, month. Also most people do not invest or consider carefully the strategy, I know many people in late 1999, early 2000 that would put another $100,000-$150,000 second mortgage on their home. They did not even look into the rate being charged or into the past performance of the funds they were investing in.

2) NEVER buy a penny stock
I buy penny stocks, as defined by $5 dollars or less. In the 90s in Canada it was mining stocks and currently it is small junior oils/natural gas plays. many are trading below 4X cashflow, many are trading below 3X cashflow. Recently I have done well on 3 trades, all junior oils, only a small percentage of a portfolio should be put in specs. And when I buy this type of stock I know I can lose 50% in a week. also if the stock begins to drop or people get tired of the story..sell. Also if I have a good gain and the run is slowing I also sell. Still their can be good profits to be made. much higher risk.

3) don't expect 50% growth
true, their will be another mania and people will repeat this all over again. I shoot for 20% which is probably to high, mostly owning stocks and writing covered calls and puts. and shorting the odd stock (however stopped shorting about 3 months ago,to bad)


4) don't check the ticker everyday to see where you are, you'll go nuts.
true, however I check quotes on about 30 stocks daily (the closing price), if one of my stocks I own or tracking breaks down I would like to know.

5) trust your money to a professional and don't worry about it. Everyone here should be in it for the long-run. Take a macro view of your investment and study the baseball lines instead.

if you can find a good broker it helps a lot, provide research and ideas. However I believe no one will take better care of my money, than myself. If I lose the only person to blame is myself. I make mistakes every year sometimes the same ones, I try to learn from these mistakes.

thanks
selkirk

 

[djv]

I would say a lot of good info for many in this thread. In fact there are many, many that wish they had read some thing like this. But as a few have said here. Not sure if it would matter. Those who take high risk that can't. Will take it again. Nice info from everyone here. These are the kind of threads that can realy help those who want to listen and learn. That include myself. I got a couple good ideas I might give a try.
And Gator 30 years! Wish I had 30 years before I had to dig in. You youngster.

[This message has been edited by djv (edited 04-05-2001).]

 

[Kevin]

Anybody pouring money into the market buy UAL...good ol' united airlines. Very cheap right now.

 

[Neemer]

Price of fuel needs to come down some before I jump in on that one. Just look at the Dow 30 and look how much they've been beaten down. These are companies with REAL revenues, sales, & income. Flight to quality as some might say...

 

[pepin46]

the hot-shot financial gurus are lining up to sell their million dollar ny properties.

your money, if it was mainly in the bs internet stocks and the likes, just became very suspect.

most people don't understand the behavior of the market in the last few years: money managers set goals so they rack up their millions in fees, ceo's set up their goals so they can cash in on their stock options and put another 10 or 20 million in their pockets every year. eventually, this legal pyramid crumbles.

the two main reasons for the unrealistic rise in the markets were:

1. greed, both at the managerial and the investor level.

2. an awful lot of money chasing a limited number of stocks(witness the apparent limitless issues of crap internet stocks to accomodate that demand.

read about the whole issue on lucent so you get an idea of what is going on in the real world.


pep

 

[djv]

Pep, A reason that just maybe all those who want you to put part of your S S in there little game. Maybe it's wrong idea. Of course they will say it's backed by the US treasury. Last time I looked we were still in a big hole. So those words mean nothing.
All I can say to any investor. Do your home work. Hot tips can be a way to part with your cash.

 

[marine]

one way of looking at it is this..and this is an analogy both myself and my broker came up with.

The market has been on a slow steady rise since its inception. a few dips and rises here and there and a few more dips along the way... but put it on a graph forthe last upteen years and you will see a rise.

Now, knowing this... you buy stock now and it is going to rise. I am not talking about speculation stock, but the staple stocks like utilities and oils and the sort.

If you were going to buy a corvette, would you buy it at its peak price? or would you buy it when it was on sale?
exactly what the market is right now.
on sale.
dollar cost averaging is going to net the serious investor some serious money in the next twenty years here folks. That is what I am banking on anyway.

and for everyone who doesnt have the stomach to watch the market tumble around...

Bonds are a very good opportunity at the present moment. and so are money-market accounts.
a slow growth, but a guaranteed growth. Depending on the cost of inflation it may negate your earnings over the course of time however.

also... start pumping that money into the Roth IRAs! yea yea yea! I have half a notion to bang out a kid so i can open up another Roth and get somemore money in while the prices are so low.

 

[DOGS THAT BARK]

For you beer drinkers you may take note Anheuser Busch(BUD) has paid a dividend for 50 straight years and increased it last five.
I might add I have followed Selkirks stock write ups for 3 years + and have found few to be as knowledgable and accountable.

 

[marine]

case in point as to the benefits of owning a non tech stock:

7 years ago I bought a large chunk of some shares in Harley Davidson. thats right, the motorcycle company.

I sold it all last october.

It split four times and the sell price was nearly three times the price I bought it at.

But ya know what? They paid a dividend of a measely 4 cents.
Don't go chasing a lot of these huge dividend/high risk/short term to own type stocks. You will probably spend all your profits buying the antacid needed to handle watching it bounce up and down all day long.

slow and steady is the key here for the moderate to serious investor in this market slump we are in.

 

[djv]

Steady is correct Marine. I like those that show earnings growth. Here is one I have had for some time. Medtronic, Medical Equipment and Other. Going on 64 quarters of consecutive earning growth. MDT on the NYSE. In fact Worth just had a artical in its May issue for it.