401k November 2007 Market Crashes

If you are going to invest in the stock market, you must invest for more than five years. Anyone whose invested for more than five years, (decades for many of the people in this group) will have seen several of these up and down cycles. In the long run the market follows the long term economy which has has been up for the past 70 years.

When Macy's has a sale, everyone rushes to buy. When Wall Street has a sale, everyone rushes to sell. The guys at Macy's are right.

There is no way of knowing whether or not the market is going to keep going down or not. If the pundits knew anything, they wouldn't be earning their money punditing. They'd be busy trading stocks.

Keep your eye on the long term and think about how your new 401k investments are buying bargains.

-- Doug

Don't watch.

How many years before you retire? If you are close to retirement maybe you should starting moving more into fixed income type investment. But if you can't stand the times when the stock market goes down, maybe you shouldn't be investing in the stock market at all.

BTW if I could predict the future I'd be sipping a tall drink on a tropical island myself, instead of wasting my time here.

Plenty of other pundits are pointing out that now is a right time to buy, not sell.

You must not judge your stock/mutual fund performance using only a short term. Hindsight is of course 20/20 when examining such short term stock results.

Stocks are for the long run. Wait at least ten years before judging how well you did.

For a historical perspective on how investing for the long run "pays," some day soon experiment with the little interactive calculator at

You might also consider what "owning stock" means, too. Here is an essay on the financial integrity of owning a diversified collection of stocks /for the long run/:

All that pundit talk is just meaningless noise, they do not know what will happen. They are just promoting themselves. It is best to ignore it.

It is also wise to not take on too much risk, so if you are not comfortable with holding so much stocks, you can sell some and get into some lesser risk investments. Just make sure to ignore the pundits.

You're absolutely correct, however I think kastnna's point was to put the recent *very* short term loss in context for the market over the last year. I went through a similar thought process in August when I was watching all my positions tank. I was thinking that I was getting killed until I looked at my year-to-date returns. Then I thought, "Well, that's not so bad." Maybe the OP should do the same before panicking.

Of course, if the market was down over the last year, I still wouldn't want the OP to panic, but maybe you think that kastnna's argument could lead to that kind of thinking?

-Will

Example from recent history on the handling of a bank which goes under: NetBank.com.

The bank closed on Friday, Sept 28 at 3p. Customers continued to have access to their deposits via debit cards, checks and ATMS continuously. On Sun, Sept 30, the website was active again. FDIC coverage kicked in and 100% of things covered by FDIC plus 50% of anything above that was moved - including account history and records - over to ING Direct. Folks continued to earn interest at locked-in CD rates for CDs and other deposits started earning ING's deposit rates immediately.

I don't know about your credit union, but at this point, I expect ETrade's bank, at least, would be handled just as smoothly if it came to that.

As far as I know, most of the problems which happen with moving assets due to situations like this are problems which arise when records are lost or screwed up. We have, at this point, no reason to think that ETrade has screwed up or lost records. They have other problems - but those other problems shouldn't have any impact on the FDIC and SIPC insured assets being moved quickly and easily to another bank and brokerage if it comes to that. Again, as far as we can tell at the moment.

If ETrade was your *only* bank and brokerage account and all your assets were there, I'd say get yourself a backup bank and brokerage account established and move some funds. If it's not, I'd worry a lot more about my safety crossing the street to get a cup of coffee than I would about accessing my assets there.

There was an item on NPR this morning that the GE money market fund was heavily into sub prime paper and is underwater. They are NOT making up the losses and offering shareholders 96 cents on the dollar.

-- Doug

"Douglas Johnson" wrote

You sure that's a money market fund? This article calls this troubled GE fund an "enhanced" cash fund:

Nor do I. Either NPR got it wrong (not often) or I did.

-- Doug