Posted on 01/24/2022 10:33:02 AM PST by Browns Ultra Fan
The stock market has never started a year falling as quickly as it is now.
The S&P 500 has dropped 11% — heading into correction territory — in the first 16 trading days of 2022 in its worst-ever start to a year, according to Bloomberg data that goes back over nine decades.
The downturn comes as traders brace for the Federal Reserve to tighten monetary policy and a surge in U.S. Treasury yields weighs on the outlook for stocks. A host of technical signals also suggest that more volatility may be coming up ahead.
S&P 500's 11% drop in first 16 days is worst of all years
“The Fed pulled the punchbowl, liquidity has evaporated, and the S&P and NDX broke below their 200dma for the first time since the Covid outbreak,” said Rich Ross, technical strategist at Evercore ISI.
A bear market down to the 3,800 level is likely for the S&P 500, Ross said, given “the dramatic erosion of the technical backdrop, in conjunction with the highest inflation, tightest policy, and most uncertain political and geopolitical condition in years” — not to mention its historic rally since 2020.
But look at Europe too!
(Excerpt) Read more at confoundedinterest.net ...
I called today...opportunity.
I trade everyday..for myself.
When I got started...I made every mistake.
Learned the hard way....
That was around 1997 or so....
I could tell you stories...........
Why don’t you take charge of your account?
Another thing is if you're within the income limits to start a Roth IRA (if you haven't already done so). Basically, you can put money into your Roth 401K at work, then when you leave work transfer your Roth 401K money to your Roth IRA and have no tax hit for the transfer (unlike a conversion from traditional/tax deferred retirement money to Roth post-tax money). That money can be withdrawn penalty free only if your Roth IRA is at least 5 years old (really 5 January 1st's years old since the 5th year is satisfied on January 1st of that year).
Keep in mind that each conversion has its own 5 year rule. For example, when my wife retired a couple of years ago and I converted part of her 401K into her Roth IRA, that amount of money is counted as conversions in year 2020, thus can't be withdrawn penalty free until year 2025. Between now and then we can withdraw the contributions portion of her Roth IRA because her Roth IRA is over 5 years old. But we can't withdraw the conversion portion until year 2025. If we do another conversion between now and then we can't withdraw that amount until 5 years after whenever we did that conversion. Only after all of the conversion money is done doesn't it count as withdrawing earnings, which has the 59.5 years old rule (which you already satisfy).
I'm basically spelling out what in IRS jargon is referred to as the Order of Distibution Rules for Roth IRA's.
The last time I was near Tampa I visited the vacation homes of Henry Ford and Thomas Edison, including the lab Edison discovered that rubber can be extracted from goldenrod plants (so we wouldn't have to import as much rubber from Cuba in case we wound up in another world war, which we did).
The powers that be couldn’t let it close down today (not at the numbers it was at mid-day for sure), so they did what was necessary to have it close up so the headlines would not reflect reality.
I’m 40% equities, 40% rentals and 20% other stuff, largely bonds, but some gold/silver/digital currencies. Planning on retiring in 2-3 years when I’ll be 42-43. Since I’m still a long ways from SS/medicare, planning on a 2.5-3% withdraw rate or perhaps 2% and consult part time after a year or two break of not working in corp America. I don’t see me changing my asset allocation too much for a while. If US Treasuries ever go above 5% again, i’ll shift more to bonds. I have done $40k in 7.12% I-Bonds the last couple months for the wifey and myself combined but that’s just a fraction of our net worth.
What are “LW discussion boards” and who are the lunatics that populate them?
Some mortgage REITs may be vulnerable to rising interest rates and cut their dividends.
Yep. Hit the Fibonacci number on the head. May be worthwhile to consider before this sell off runs it’s course.
Maybe it's just me, but I'm uncomfortable with being too overweight long term in one asset class. One reason I'm comfortable with being 75% in equities (later when I jump back into them) is because they're spread out in 35 or 36 asset classes. The other reason is that they'll be in mutual funds (each fund giving me a little diversification across many companies even if they're in one asset class). The idea being that if we have a big downturn that lasts 5 years I can still withdraw 4% annually and have 6 years worth in the 25% of the portfolio in "safe" funds. And if I'm wrong in either the downturn lasts longer or that some of my "safe" funds went down with stocks, that's okay because my equities are so diversified that some of them will be high anyway even if most of them are down. (i.e. my tech funds and health science funds were high even in March 2020, the few funds I which I'd stayed in when I had gotten out of all equity funds in late 2019).
During the growth era (while I'm working) my strategy was always to put my monthly investment into whatever mutual fund had the lowest balance at the time (buying low). The opposite when I retire (selling high by withdrawing from whatever fund is highest).
Of course, that's not counting the phases like I'm in now where I'm doing a little active investing by having moved money out of all of my equity funds recently (while they were all high) and waiting on a bigly correction (while still working and not withdrawing from my portfolio).
But if I had 40% or more in one equity asset class then I might need more than 25% in the "safe" bonds and money market funds.
Daily Kos, Craigslist and a few others. It’s pure entertainment. They are beside themselves with hate and anger.
The best way to combat wealth inequality in the US is to allow citizens to copy Nancy Pelosi’s trades in real-time— Dr. Parik Patel, BA, CFA, ACCA Esq. 💸 (@ParikPatelCFA) December 30, 2021
Looks like the Plunge Protection Team came through today.
The PPT* is at work
*Plunge Protection Team
My stocks are very diversified and my rentals generate about 9% cash returns so don’t even really care what the value of them is at any time. I plan on keeping 2 years of cash expenses on hand when I retire as well
My stocks are very diversified and my rentals generate about 9% cash returns so don’t even really care what the value of them is at any time. I plan on keeping 2 years of cash expenses on hand when I retire as well
Sounds like a well thought out plan. Thanks for swapping ideas with me.
That is part of my advice to my 25 year old son, regarding Roth IRAs. I wish I had put more into them.
I gave him the spark by giving him $500 to research and pick how own stocks, when he was 17. He now owns a portfolio of 23 stocks and 3 mutual funds.
I missed out on Roth’s because our 401K didn’t have that option for many years. We were both getting matched up to 5%, so no resources to go that route. I need to come up with a plan for Roth Conversions, that doesn’t drive me into an upper tax bracket.
1. It's a slight cost to go up into the next tax bracket if it's just a slight increase in the rate. For us, we were in the 22% tax bracket. I could have converted just enough of her 401K in the first year to keep us barely in the income range of the 22% tax bracket, then repeat again the next year, then the next, etc. (You don't have to do it all in one year.) But because the next tax bracket above us is 24%, I realized for a cost of just 2 more percent I could convert all of her 401K in the first year and treat the extra 2% cost of converting as a kind of insurance premium against future rising tax rates. But that works only if the next tax bracket above yours is a slightly higher rate (i.e. going from 12% to 22% is very costly, same for going from 24% to 32%, but not for going from 22% to 24% or maybe 35% to 37%).
2. The other thing I realized is that if you do convert in chunks (say $50K this year and $50K the next year, etc.) then migrate whatever mutual funds you have that are lowest at that time. Let's say you have a lot of money in a traditional IRA spread out across many mutual funds in different asset classes. Chances are some of your equity funds are doing poorly even if many of them are doing well. For example, some equity funds that are so low that I'm thinking about jumping back into soon are PRGTX (down 45.7% from its max), PRSCX (36.6%), PRLAX (36.1%), and PRNHX (28.3%). If I wasn't using an active investor strategy (I'm out of equities until they drop further) but instead using a pure buy and hold strategy and was invested in all the funds I like, those would be the funds I'd convert from traditional IRA to a Roth IRA right now. Why? Because if the conversion is done while they're low that means less dollars in the conversion to pay the tax on. Maybe next year the other equity funds will be low and I'll convert them.
Basically, converting shares that are low allows you to convert a larger portion of your portfolio from a share count perspective, while having a lower tax hit (because it's low from a dollar perspective). If the funds rise back up to their all time highs let it be done in the Roth account. If you have a million dollars you're converting and you're, therefore, converting in chunks instead of one large swoop, converting the chunks that are low each year might result in the dollar conversion calculation be something like $600K or so (after the overall process is done in many years) instead of $1 million.
Makes sense. I reflexively despise paying those big tax bills.
Are you a RIA ? You seem to be very knowledgeable.
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