Stock Market Crash

[SARGE]

Even though I became the brunt of jokes from family and co-workers, over a year ago I pulled my 401k out of the stock market and stuck it in bonds, sensing the current state of affairs. I had a return of 12% while everyone else lost their arses. I just won't gamble anymore with my future retirement; 5-12 % is better than a minus 40%. Yahoo goes from a value of 150 billion to what I hear is 7 billion. Bad times a brewing. My company gives me stock options on 150 shares. I don't want 'em.

[Kubie]

My 401k took a hit today. Gonna ride it out. I see things getting better in the not too distant future.
Carl

[Byte 2.0]

The Stock Markets are in Sad shape. Wish I wasn't in them at all now. I guess my money is tried up for the next 20 years.

I know one guy that brought into one stock, now it would cost him more to sell it, then it is worth.

[bob]

/-Quote-////I had a return of 12% ////

12% on bonds?

Not bad. Milkin would be proud.

[SARGE]

Bob, that was the report my company sent me. I admit I did a double-take myself. Company has 6 directions to invest your contributions and offers a 1, 5, and 10 year history of how each perform. Naturally bonds run low, barely keeping up with inflation. 12% is what they reported for 2000, so THEY can answer for it. My own $ seem to be accurate as theirs.

There are bonds, then there are BONDS. Milken got caught

[LawyerRon]

Hey Sarge,
Don't rub it in.

[bob]

Yes. The scam is that you must invest in risk. My 401 offers bonds and the money invested over 10 years beat all but the income fund.

Follow the money. Who won. It was not the day traders.
Not the 401K people. The funds were raped.
Hot topic...Best at forumclick - missed you SARGE

[mairving]

I look at all this and wonder about the effect of gas/energy prices on our economy. When gas is cheap, we are rolling. When it is expensive, things slow down. They are already talking about the change in disposable income for people on the west coast because of energy prices. Mine was about $150 less last month because of my futility bill.

It is now a good time to buy stock though. Bargains galore await.

[SARGE]

There is some comfort in buying while low if company has a history of good $. Lucent, on the surface, should be a steal right now, but... Too many newbies throwing money in market and getting the jitters, making it rough for us all.

[Xayd]

Agreed Sarge, there are companies in this mess that should be around forever, like Sun, Lucent, Cisco, etc. I'd consider these a steal myself, and seeing as everything's on a downward turn, it'd be a great time to buy in.

But on the crashes, it was bound to happen. Most of these dot coms had no chance of ever turning a profit. Hell, I work for one that has been surviving on loans and stock sales for 10 years. Did they think they could borrow their way into prosperity?

The thing that got me was NetZero sponsoring the NBA playoffs last year. You don't become a major sponsor of the championship of the second biggest sporting event in the world by giving stuff away for free. It's up there with a local YMCA sponsoring the Super Bowl instead of a little league team. That and Napster's website listing job openings that sport six and seven figure salaries for vice presidents of business development and vice presidents of operations. Hell, that's like a Warez site hiring executives, where's the beef?

Xayd

[Statica]

One man's crash is another's boom!

My trading account has seen a flurry of activity over the past week or so. Its basically going to be a "V" or a "W" economic trend, and I know a lot of ppl have lost a lot of dough but I find it a very good sign. Overinflated and unrealistic prices of a lot of firms will finally get grounded in reality. Again investor confidence doesnt seem to have been shattered, there is just a lot of caution, which is always a good sign!

[troysvihl]

good job sarge. smart move. i did the pretty much the same thing.

frankly, i'm happy to see some rationality come back to the market to end all this talk of a "new economy." economic rules don't change. (plus it's fun to see day traders finally realize that what they have been doing is just blindly getting lucky.) Many people have forgotten the rule that if something is easy to do, you probably can't make much money from it.

there is acctually a whole school of investment theory on doing the opposite of what everyone else is doing. when you start to hear people saying how great things are, and this is the "new economy" and this is how things are going to be from now one, that's the time to dump the stocks. Duriong a downturn, when you hear people saying that we should just get used to this slower growth, b/c that's how things are going to be from now on, then that's the time to buy.

anyway, that's pretty much the jist of it, and some people swear by it. however, YMMV.



It reminds me of a story (probably an urban myth) about a wife of a stock broker that heard about the crash of 1929, and she figured they were now poor. She dissmissed all the servants that day, and started getting ready to move out of their highly leveraged house. Well, when the husband got home that night he asked her what she was doing, and she told him she was preparing for the worst. She asked, "when do we have to move out?" He replied, "Never. I made more money today than the rest of my life combined." It seemed that during the previous week, he felt that people were to optomistic. Not only had he liquidated his holdings, but he acctually sold tons of stock short.

[SARGE]

Heard some stats tonight. In 1973 10 percent of Americans were in the market; today it's 50 percent, due I'm sure to the 401k's. Also, I figure since the market became so accessible and popular, more folks wanted in on the action, not expecting the current conditions. Heck, you can invest online now, the instant gratification thingy. Now the downturn has brought disappointment and some panic among the newbies. Outside the 401k, I'd take $5000 and invest in 3 biggies who will be around when the dust settles. I need to check the figures, but I believe Lucent was at $70 and now $17. They aren't headed for extinction so a big chunk would go there. The other 2 I'm thinking about...

[kraken]

Sarge

Your comment on Lucent hit the mark, it would be worth gambling a little on them as they have the best internal 56K modem chipset on the market (6% CPU overhead on a pentium 225 MMX (overclocked)). While the world is going ADSL there is a lot of room in the 56K market. PCs for Kids uses the netcomm (lucent chipset) modem exclusively for its systems (pentium 90 16MB RAM). I have connected tonight at 52000 Kbps and last night it was 53333Kbps using a lucent chipset internal moden (netcomm). The installation is a breeze and of the 401K it would be worth investing 30K in lucent (my opinion). Lucent has a solid product IMHO.

I have no idea what the 401K's are but I take it to be thousands(people with).

Seen the Aussie dollar lately (groan) bloody Howard.


[Edited by kraken on 03-15-2001 at 09:21 AM]

[SARGE]

401k is a tax deferred retirement plan offered by employers. Say you save $200 a month, deducted from paycheck. This is deducted from earnings before income tax on that paycheck. In my case, the employer also contributes 80% of whatever I put in. I can designate my portion to go into several types of investments, from bonds, guaranteed interest, global equities, diversified portfolios, company stock, or divide it up into all. The company's contribution goes strictly into their stock.

On Lucent:

http://biz.yahoo.com/bw/010314/2542.html

[Kubie]

Kraken, to follow up on Sarge's post, you can't touch the money until you are 59 1/2 or you pay steep penalties. The idea is to help you build a retirement fund. When you do withdraw the money, taxes are charged at your income level at retirement. So you should pay less taxes because retirement income is normally less then your working years. It really is a very good way to stack up money for the later years. The 401k I have now from a former employer matched my contribution dollar for dollar and was fully vested every 30 days. Needless to say, I put every dollar allowed into the fund. It sure is gonna pay off in 29 more months.
Carl

[kraken]

Sarge

Same crap as our superannuation.

It seemed reasonable that 401K meant 400,000+ deniros.
Pension plans are ruled by those who earn big fees. It also saves the gov't billions. I hope your decendants have it as well??

[troysvihl]

sarge, next time you liquidate your investments, make a quick trip to the carribean and put your money in a bank down there. then purchase your next round of investments through that account. you'll be able to avoid any short or long term capital gains tax. and that will bumb up your real investment earnings to levels you didn't think possible.

[SARGE]

gracias

[bob]

Don't expect Bush to pardon you if you get caught.

[troysvihl]

the odds of getting caught cheating on taxes are pretty small nowdays. I read the stats a few weaks ago, and audits are down something like 95% and seizers are down over 99.9%, etc.

Although I will qualify that suggestion: Make sure you choose a bank that has been around a long time. (at least 50 years in the Carribean or at least 80 years in Switzerland) If you try to look up banks on the net, they will almost always claim to not offer their services to Americans. It's a different story when you are at their branch in their respective countries. They have to print that in order to comply with US banking laws, which dissalow advertising by any banks that are not part of the FDIC program. (Don't use any bank that doesn't make this claim, b/c they probably aren't legit. Also, don't deposit with any banks that don't want to deal with you face-to-face. Just look for all the common sense stuff that should makes you warry.)

There are several Carribean nations that will grant you citizenship in their country if you deposit a certain amount. (I've heard Belize will do it if you deposit 50k) They will allow you to choose a new name. That way any records mailed to you will not be a traceable.

It's amazing how fast your money will grow when you don't have to pay the 28% long term capital gains tax. (not to mention state income taxes) Not paying 28% is the equivalent of an extra 28% return on investment.

[Edited by troysvihl on 03-22-2001 at 02:59 AM]

[SARGE]

Think of how much one could stash away for the coming revolution.

[troysvihl]

viva la revolution!!!!!!!!!!!!!

[troysvihl]

hey sarge (and anyone else that may be interested), I'm heading to the Bahamas in a couple of weeks. I intend to scope out some banks to determine what kind of money stashing opertunities are available down there. If you're interested, I could post my findings for you when I get back. Just let me know if you (or anyone else) are interested.

[bob]

I am very interested. After the fees you will find a that you must make between 6 and 7 figures per year to get an advantage.

[troysvihl]

do you know that for sure bob or are you just guessing? eitehr way, i'll find out what I can and tell you about it.

[bob]

I know nothing for sure. Most of us that make money do not pay capital gains. We just add it to our total income. I am willing to learn how to keep my money. Hope you can find a way to succeed.

[troysvihl]

>>Most of us that make money do not pay capital gains<<

If you own stocks for longer than a year, you'll pay capital gains. If you own them for less than a year, the gain is ordinary income and is taxed at your normal rate. (which is usually much higher than capital gains.

[bob]

I entered a stock profit in Turbo Tax for 100,000 and 1,000 for owning it less than 1 year and longer. The taxes were higher if I owned it less than 1 year. Could it be that the capital gains are due if owned less than 1 year?

[troysvihl]

No they shouldn't be due for a holding less than a year. Capital gains are applied on two differnt levels, long-term and short-term. If you hold a capital asset longer than one year, any gain will be taxed at the long-term capital tax rate, which I believe is currently 28%. If held less than a year, gain is taxed as short-term gain which winds up being taxed as ordinary income. So if you happen to fall into a tax bracket lower than 28%, you will pay less tax on the gain from the sale of that asset.

(Well whadyaknow, those tax law classes acctually are useful for something besides saving me from spending $40 on H&R Block)