Posted on 07/25/2008 11:50:34 PM PDT by TigerLikesRooster
Stocks face longer bear market as more tap nest eggs
Thu Jul 24, 2008 7:46pm EDT
By Jennifer Ablan - Analysis
NEW YORK (Reuters) - Major U.S. stock indexes, already trapped in bear territory, face a tougher road to recovery, as more Americans crack into their nest eggs to withdraw cash to cope with rising economic pressures.
The Dow Jones industrial average and the Standard & Poor's 500, which have fallen 20 percent or more from their closing highs of last October, qualifying them as bear markets, have taken big hits from the drastic slowdown in housing and credit as well as record oil prices.
The troubles hanging over the U.S. economy and the stock market are deep enough that a sharp rally this spring and a brief summer rebound have done little to reverse the damage. For the year so far, the Dow is down 14.4 percent, the S&P 500 is off 14.7 percent and the Nasdaq Composite Index is also down 14 percent.
Even worse, stocks that have dropped to where they are seen as compelling buys get battered further by renewed fears over the stability of the banking system.
(Excerpt) Read more at reuters.com ...
Ping!
The ones who took on too much debt have only themselves to blame. Unfortunately, I suspect that those who were prudent with their finances will foot much of the bill for the mess. Even so, I prefer being debt-free and I wouldn't trade places.
Sounds like a buying opportunity.
The problem with buying on the way down is that one doesn’t want to do so TOO soon.
Yep. So glad I saw the writing on the wall, or finally went more conservative, or whatever in 2006 and 2007. I finally realized I am old and unemployed and went from 95% equities to about 75% equities when prices were good. (Still way more daring than the “experts” would suggest for someone my age), but I totally disagree with conventional wisdom of 50-50 stocks and bonds. I own no bonds. Stocks and cash equivalents for me. If 75-25 stocks and cash is not good enough, life is not worth the hassle anyway.
2008 decline is not near as painful as 1987, when I was 100% invested. I have about 7 years spending in cash equivalents, even more if I live long enough to start collecting my socialism security checks this November. If I die too soon, some little red guard enlistee (draftee?) will enjoy the fruits of my 38 years of “contributions” to FDR’s socialist dream.
I have felt way more secure since I paid off my first (and only) house mortgage in 8 or 10 years, 25 or 27 years ago, and got my second son through college five years before I retired in 1998 at age 52. I would not have considered retirement when I still owed on my home or had dependent children.
Thanks for the ping.
true!
Just from my observation, that is the problem people I know made or are making...they are getting older, but aren't moving investments from the volatility of stocks to the relative stability of bonds. I guess it comes from the illusion we all have that we're still "young". :)
Just BULLISH! No indication of recession in the least...
Now a question: I was under the assumption many people are borrowing against their 401k, not just cashing out. The article states people are just taking money out. That means taxes and fees up front with no chance of paying the money back penalty-free. Did you get the sense these “hardship withdrawals” were loans or actual withdrawals?
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