Posted on 11/27/2008 3:50:02 AM PST by TigerLikesRooster
Mutual-fund firms rocked by asset decline
Stock and bond funds take major hit; record outflows in October
By Sam Mamudi, MarketWatch
Last update: 2:28 p.m. EST Nov. 25, 2008NEW YORK
(MarketWatch) -- After seeming to weather the worst of the credit storm, the mutual-fund industry has been getting walloped, losing more than 20% of assets under management in just five months.
Data from research firm Lipper show that as of Oct. 31, mutual funds of all types -- stock funds, bond funds and money market funds -- had $9.5 trillion in assets.
That's a 20.8% drop from where the industry stood on May 31 when it sported a record $12 trillion under management.
Mutual funds have lost 19.3% of their assets in the first 10 months of the year after closing 2007 with $11.7 trillion under wraps. This puts the industry on pace for one of the worst years in its history.
According to Lipper, since 1959 -- the first year for which it has data -- the largest year-on-year asset declines came in 1973, when assets dropped 20.4% to $3.4 billion, and 1974, when assets fell by 21.4% to $2.7 billion.
Mutual funds' total assets were last below $10 trillion in December 2006.
More to come
The pain may not be over for the industry. The Dow Jones Industrial Average is down more than 10% in November, and there's no reason to believe that investors are returning to the market.
(Excerpt) Read more at marketwatch.com ...
Ping!
I know that come Jan 1 I’m slashing my personal 401K contribution to just enough to get the company match.
For now, putting money in there is pissing into the wind.
It all depends on your time frame. I’m planning to ride it out.
this is what I’m doing. I currently contribute the max and will continue to do so. I’m buying whilst it’s cheap
Agree with lowering to the match, disagree with the wind, in a dollar cost average scenario as a 401k, the down market lowers the dollar cost average, as long as Democrats don’t end the market and your fund/stock choices diversified
Depemds upon your timeline. If you are retiring next year, perhaps it’s one strategy. But even then you can still put it in a tax deferred money market.
If your time line is longer this is just the time to be taking advantage of prices that you will not see in a generation or more. I’m doubling up.
Nah, I just think the market has another 20% down leg.
Maybe I’ll kick the contribution back up in the latter half of next year.
herein lies the potential problem-
“...s long as Democrats don’t end the market..”
It certainly appears that O wants to KILL our economy and start over from scratch.
Who among us would have EVER contributed to a 401K if we thought there was a snowball’s chance in hell it would later be confiscated by Dems to “spread around?”
I’m just not sure what to do anymore.
I wonder if they will come after Roth IRA’s as well.
Wonder if I should buy gold and silver.
Best time to buy is during recessions. Everything has been thrown out with the baby and the bathwater. Plenty of companies around trading way below cash in the bank, valuing the underlying business as worthless. Max out your 401k’s and IRA’s now.
It’s a market of stocks, not the other way around.
Buy high, Sell low.
Citibank doubled last weekend. Not too often we see that.
This is the real source of the market's weakness. And the confusion is justified. Obama has sent out so many conflicting and menacing signals that one can reasonably believe any scenario is possible.
My personal opinion is that putting more money in tax-deferred accounts at this time is not a good idea. For one thing there is no reason to doubt the Obamoids will try to force conversion of them to this bogus Social Security Plus idea of theirs-- including Roth IRAs the only real reform in the last fifty years.
Second, the whole point of deferring taxes is to take advantage of lower tax rates in the future, when earned income presumably drops in retirement. The probability is, tax rates will be much higher in the future than they are now, even for low income retirees. Why defer a (say) 25% tax for a 35% tax in the future?
Third, there is no guarantee that the bull market will return any time soon. There may be a 50% rally, like there was after the crash of 1929, but it led only to the lower market bottom of 1933. It took decades, including the hyperstimulus of World War II, to recover. And we haven't seen the bottom of this perfect storm as yet.
Fourth, we are currently in the midst of a campaign to destroy the currency. The value of the dollar is doomed, as we manufacture multi-trillions of dollars that don't exist for the sake of "bailouts" that won't work. The looters have seized the Capitol and opened the floodgates.
I can't tell you what to do, but my intention is to conserve cash, with an interest-earning money market fund I can make withdrawals from and write checks out of, and use my money now, while it it still worth something: reduce debt, trade the market volatility right now, and buy real assets. Plus I have a small stash of gold and silver for the day when hyperinflation hits. JMO.
Happy Thanksgiving.
By Ambrose Evans-Pritchard
Last Updated: 7:29AM GMT 27 Nov 2008
The bank said the damage caused by the financial excesses of the last quarter century was forcing the world's authorities to take steps that had never been tried before.
This gamble was likely to end in one of two extreme ways: with either a resurgence of inflation; or a downward spiral into depression, civil disorder, and possibly wars. Both outcomes will cause a rush for gold.
"They are throwing the kitchen sink at this," said Tom Fitzpatrick, the bank's chief technical strategist.
[snip]
Why? Compounding, tax deferred. Could be a better bet.
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