Recession

[Harpy Eagle]

Well good luck. I am somewhat closer than you probably with less margin for error as I didnt acquire a 401 until late in the game. It has done very well. If I buy anything it would be more company stock, its easier to read than mutual funds.

Good luck to you as well.

 

[Flopper]

I'm not interested in convincing anyone of anything. I'm beyond that. The democrats are going to do what the democrats do and the same goes with the republicans. One thing I am sure of is there are going to be some changes in about 45 days.

It is very unlikely that there will be any real change even if republicans capture both houses. Biden will veto most all republican sponsored bills. Republicans will continue to block democrat sponsored bills as they have for the last two years. The DOJ will continue to investigate Trump involvement in the Jan 6th insurrection and his mishandling of classified documents. Nothing will change in regard immigration or abortion.

However, the possibility exist that Democrats might pickup a Senate seat and hold on to the House, then we really would see some changes, possibly a comprehensive immigrate bill and bill that would protect abortion rights.

 

[Concerned American]

the possibility exist that Democrats might pickup a Senate seat

Only in the darkest recesses of your mind.

 

[Flopper]

Well good luck. I am somewhat closer than you probably with less margin for error as I didnt acquire a 401 until late in the game. It has done very well. If I buy anything it would be more company stock, its easier to read than mutual funds.

I've been drawing money from my tax shelter retirement plans for about 30 years. What you should be worried about is not having cash in your first year of retire but your last year. So I would consider carefully any move to cash early in retirement. If you have any idea of taking cash out now and reinvesting when market bottoms out, forget it. The chances that will happening is very remote.

 

[Manonthestreet]

I've been drawing money from my tax shelter retirement plans for about 30 years. What you should be worried about is not having cash in your first year of retire but your last year. So I would consider carefully any move to cash early in retirement. If you have any idea of taking cash out now and reinvesting when market bottoms out, forget it. The chances that will happening is very remote.

Not taking out ...simply not buying anything right now as that would simply be pissing money away

 

[Flopper]

Only in the darkest recesses of your mind.

There are people out there that understand that the inflation we are going through and the likely recession is not Biden's fault. Presidents, democrats or republicans get too much credit when the economy does well and too much blame when it slumps. The boom-and-bust cycles that are inherent in capitalist economies depend on forces that are independent of any president’s actions. It’s mostly luck that determines how the economy is doing when it’s time to elect a president.

 

[Flopper]

Not taking out ...simply not buying anything right now as that would simply be pissing money away

Since I began investing in the stock market in 1963, there have been so many times that the market fell 10% or 15% and I stopped investing. I congratulated myself when it fell another 5% or so. Then it shot up 10% or more and I thought oh, shit I should not have stop investing or sold stock. I'll wait and when it goes down, I'll invest but it keeps going up even though economic news is bad. Around `1970, I shifted to dollar cost averaging and it has work very well for me over the last 50 years.

There's a book I read many years ago and consider a must read for stock market investors. A Random Walk Down Wall Street has sold over a million copies and been updated many times. It shows why stock prices move randomly and why you can not predict the market any better than you can pick winning lottery numbers.

 

[Harpy Eagle]

Only in the darkest recesses of your mind.

They will pick up 2 actually.

 

[Blaster]

Not taking out ...simply not buying anything right now as that would simply be pissing money away

Do you have many investments outside of the stock market?

 

[Toddsterpatriot]

No, The two quarters of declining GDP definition is a rule of thumb that does not officially define a recession. The National Bureau of Economic Research (NBER) Business-Cycle Dating Committee, which certifies and dates U.S. business cycles, defines a recession as “a significant decline in economic activity that is spread across the economy and that lasts more than a few months.”

Usually, this rule of thumb holds, but not always. Today, jobs are still plentily with an unemployment rate of 3.7%, strong retail sales, industrial production is rising, as is consumer spending etc. The worst is yet to come.

Continued GDP declines with much higher interest rates....jobs can't fight the Fed.

 

[Flopper]

Do you have many investments outside of the stock market?

If I had no investments in the stock market and had $100,000 to invest, I would dollar cost average, putting in $10,000 a month for next 10 months and then I would make fixed monthly investments. It is easy to say, I will invest when the outlook is better but when that happens the market would have recovered most of it's losses. At the really sweet spot where the market has fallen to impossible low prices, the supposed market gurus will be saying the market wont recover for decades, world wide depression is starting, TV news will be filled with people who lost their life savings and their jobs. And all of sudden the market rises 2,000 points in one day and 1,000 the next, down 500 the next and 700 the following. And when the first glimmer of really good news comes the market has recovered most of it's losses.

 

[Toddsterpatriot]

A 401k buys shares in funds, when the market is down you get more shares for the same amount of money. So, unless you think the market will never come back, you are just shooting yourself in the foot.

Take BCSIX for example. It averages above a $100 a share consistently even going as high as $130. Right now I am getting 13 shares for what I used to get 7 or 8. When the market goes back up, I now have more equity than I would have if the market had not gone down.

You on the other hand just have cash that has just lost value due to inflation.

Take BCSIX for example.

Down 36% YTD.....Ouch!

 

[Harpy Eagle]

Take BCSIX for example.

Down 36% YTD.....Ouch!

Yep, it is great. I am now getting shares of it for 36% less than I was. So my money is buying more of them that it would have been if not for the market drop. Since I am at least 10 year from needing the money, this is a good thing for me.

 

[Flopper]

Continued GDP declines with much higher interest rates....jobs can't fight the Fed.

That's one scenario but it is quite possible that the Fed will carry through on it's promise to raise the interest two more times this year. So by Jan 1, the Fed rate is up to 5.75% and 30 year fixeds are up to 9%, Dow is down to 26,000, and consumer spending, industrial production, and employment are all down. We could then see the fed backing off on interest increases and calls for fiscal stimulus, goverment spending. That would certainly send the market up this Spring. Of course, it could take till next summer for the Fed to send the economy and interest rates down.

 

[Flopper]

Take BCSIX for example.

Down 36% YTD.....Ouch!

What a coincidence. Last week I was rebalancing my portfolio by moving 5% from large caps to small caps. While small caps go down with all growth stocks during a recession, they recover much faster than large caps.

 

[Toddsterpatriot]

That's one scenario but it is quite possible that the Fed will carry through on it's promise to raise the interest two more times this year. So by Jan 1, the Fed rate is up to 5.75% and 30 year fixeds are up to 9%, Dow is down to 26,000, and consumer spending, industrial production, and employment are all down We could see the fed backing off on interest increases and calls for fiscal stimulus, goverment spending. That would certainly send the market up this Spring. Of course, it could take till next summer for the Fed to send the economy and interest rates down.

So by Jan 1, the Fed rate is up to 5.75% and 30 year fixeds are up to 9%

I think it'll take more than 2 hikes to get the 30 year up to 9%.

 

[Flopper]

So by Jan 1, the Fed rate is up to 5.75% and 30 year fixeds are up to 9%

I think it'll take more than 2 hikes to get the 30 year up t

30 year fixed are 7.4 now so a 1.25 increase in fed rates should push it to about 9%

 

[Toddsterpatriot]

30 year fixed are 7.4 now so a 1.25 increase in fed rates should push it to about 9%

 

[Flopper]

View attachment 701559

I think it depends on your location. This is what it is my area.
Average rates
Sep 23, 2022
Loan amount$300K
Down payment20%
State
Washington
Credit score700 - 719
30-yr fixed
7.458%
15-yr fixed
6.437%
10 / 6 ARM
6.968%

 

[Lisa558]

The probability of recession is very high. The Fed is planning on a 1.25% increase in interest rates by the end of the Year and Powell said the Fed is is prepared to continue raising rates in 2023 until inflation is under control. So what do I do about investments in the equity market? Here is my opinion:

• If you are planning on retirement within the next 2 or 3 years, you should keep working and wait for a recover to retire.
• If you trade stocks and you have been beating the indexes, continue doing what you are doing. If you haven't switch your holding into solid growth stocks and stick with them till the market recovers.
• If you have a retirement plan and you are putting a fixed amount monthly, continue to do so. You will be glad you did when the market recovers

Every investor is different so you should discuss your goals and and your holdings with your financial advisor but keep in mind the market is going to recover but no one knows when.

What would you suggest to current retirees who had the recommended mix of asset types, but still has seen a frightening decline in their IRAs (which would be the bulk of the middle class)?

Sell at this point to protect against further declines, or ride it out and live off the cash one has put aside for another year or so hoping the market will be higher in 12 months? Or, to protect cash and not be forced to sell stocks that have been decimated, take a reverse mortgage for those of us who have little to no mortgage?

Also, do you think the market will crash even more if the Dems retain both chambers after the election, since there will be no way to stop Biden’s free spending, or has the damage been done and we are set for hard times even if the Republicans win?