Monday Morning Roundup - Are The Markets Starting To Recover?
Well the DOW futures this morning said that the DOW would jump by 380 points or so. When the markets opened, the DOW shot up over 400 points right out of the gate. Right now the markets are up about 450 points. Nice to see some positive action in the markets.
In other news over the weekend, investors seem to be cautiously optimistic on news of pledged government aid:
Wall Street is snapping back from last week’s devastating losses on growing hopes the stock market will finally find some footing. Investors are cautiously optimistic after the Bush administration and European governments pledged coordinated actions to help the crippled financial system. The Treasury has said it plans to buy U.S. bank stocks.
Here’s to hoping for a big rebound in the market.
I also noticed this morning that Biblemoneymatters.com just passed 150,000 page views on the site since our launch. Thanks to everyone for visiting the site, and making it more successful than I could have ever imagined!
Here’s a bit of good reading as you get ready for the day!
- Investing in a bear market @ getrichslowly.org
- John Bogle on the current financial crisis @ ptmoney.com
- Falling off the credit grid may be a bad idea @ harvestingdollars.com
- Dream more, work less @ myinvestingblog.com
- Markets tumble @ milkyourmoney.com
- How often do you grocery shop @ remodelingthislife.com
- The national debt has too many digits @ sensetosave.com
- What’s the best financial advice you’ve ever received @ freefrombroke.com
- Our first look at new construction homes @ nodebtplan.net
- Understanding the financial crisis: The basics @ My 401k has lost a lot of money. How about yours? @ christianpf.com
- Repeat after me. Do not panic! @ borrowfromnone.com
Question: What’s The Best Financial Advice You’ve Received?
Tagged!
Over at freefrombroke.com I was tagged yesterday to answer the following question:
What’s the best financial advice you ever received?
That’s a tough question, and I’m not sure how to answer it. I guess I really can’t remember ever receiving any amazing financial advice from my parents, or those around me. But if I really think about it, I WAS able to observe advice in action from my parents. They lived their advice.
Advice in action
When I was growing up my parents lived out the best possible financial advice that I’ve ever received. Their lifestyle showed me how important it is be frugal, to save up for things you want, not use credit and to make do with what you have.
At my parents house we never had a lot of the extras. We didn’t have a cable TV, no video game systems (until I got a job and bought my own), no expensive haircuts (mom cut our hair), and until I was a bit older we didn’t even have a microwave!
Granted, a lot of our making do was out of necessity as my dad was working in ministry for many years, and didn’t bring home a lot of extra income. At the same time, we never really missed the things we didn’t have. Instead of watching a lot of TV we played board games as a family. Instead of going out to eat a lot we ate dinners as a family every night. Instead of buying new clothes my brothers got my hand-me-downs (I usually got the new stuff being the oldest son).
My parents example not only showed to me the value of living a frugal lifestyle, but also told me about the importance of being content, and having other more important things take precedence in your life - like faith and family.
So the advice I got from my parents by observing them growing up:
- Be content in life by focusing on important things like faith and family.
- Live frugally, spend less than you earn and pay cash.
What’s the best financial advice you’ve received?
So now I’ve shared the best financial advice I’ve ever received. I’d be interested to hear your input on the topic.
What is the best financial advice that you’ve ever received?
Is Your 401k Losing Money? DON’T PANIC!!!
Scary financial times
With the economy in the middle of a giant plunge, it is getting harder and harder not to feel a little panicked when you watch your 401k balance drop by $10-20,000 or more. In the last 6 months my wife and I have watched our 401k do just that. A poll on CNN Money says that 60% of Americans feel that a depression is somewhat or very likely to happen.
So what should we do when we’re facing an uncertain economy, and uncertain markets? Do you try to time the markets, and get out before you lose it all? Do you buy more stocks in the hopes that the markets won’t go down much more? What is the correct course of action in a market like this? With that in mind I decided to take a look around the blogosphere to find out what other personal finance bloggers and regular folks are saying right now.
Advice from around the web
One of the first places I looked for input today was on Twitter. I asked my 740+ followers what they thought of the current market, and if they thought people should get out of the market, keep their regular investments or if they should buy now while the market is down. Some of the responses:
- Keep plugging, unless you think this is the end for the US and we won’t ever recover.
- Buy at a bargain!
- I am staying put. I haven’t bought anything new, but definitely not selling now. No selling unless you need funds in the immediate future
- Stay! Buy low, sell high, not the opposite! Unless you need the money right now for an emergency, leave it be.
- Buy more, assuming you’ve got time on your side.
- Run, my vote is to get out now.
- Buy now! If my grandparents had been able to buy right after the 1929 crash, they’d have been rich.
For the most part the responses all seemed to be along the lines of saying that they don’t plan on getting out of the market, they’ll just keep plugging along with their normal 401k contributions, especially if they have time on their side. Many of them also said they’re considering contributing even more to their retirement plans right now in the hopes that they’re getting some rock bottom bargains on stocks right now. One or two people said that they were getting out of the market completely, and converting stocks to low risk fixed value investments.
Blogger commentary and advice
In browsing the blogs in my reader, I am seeing a lot of opinions on the topic of what to do right now. Jeremy over at genxfinance.com, who is a financial advisor, talks about how with the market plunging, people are viewing the situation differently depending upon their personal situation:
Depending on who you are and how close you are to retirement, you might view this situation as a great opportunity, or a complete disaster that’s going to force you to delay retirement. I’ve had some people in my office this week recognize the long-term opportunity and increase their contributions to their retirement plan significantly. I’ve also had people in my office that completely break down and start crying because of the impact this is having on their lives.
If you are investing for the long term and aren’t planning on delaying your contributions, you still may want to take this time to re-examine your investing strategy. Depending upon how much risk you’re willing to take, when you plan to retire and other factors -you may need to make some changes.
This might mean readjusting your portfolio, putting more money into bonds, or even increasing how much you’re investing. If you’re doing all the right things, taking on the appropriate level of risk, and understand the role each investment plays in your financial plan, then staying the course isn’t such a bad thing after all. But if you’re doing the wrong things and are taking more risk than you’re willing to stomach, it might be time for a change.
Jim over at bargaineering.com gives the advice that if you have lots of time before retirement, you shouldn’t get too worried about the current situation. If you’re closer to retirement, you may want to be more conservative.
If you’re like me, about forty years away from retirement, the answer is that you should do nothing differently. Make your regular contributions, check your asset allocations, and do something else with your time. A lot can happen in forty years so you shouldn’t do anything rash like liquidate all of your assets. We had a recession in the 80’s, a mere twenty years ago, and since then we’ve seen the longest bull market period in a very long time. Trying to time the market is a fool’s errand and, honestly, your time is better spent enjoying life rather than fretting about your balance sheet.
If you’re slightly closer to retirement, say ten years away, now’s a good time to adjust where your new contributions are going and go towards a more conservative allocation.
Over at gatherlittlebylittle.com the advice is simple. Stay the course.
I wrote a few months back about what to do if you started seeing your 401k losing money. My advice then was to hang in there and keep investing. The market at the time was beginning a downward trend, but only gradually. Since then the overall decline has become far more significant. Now what do we do?
I’m sure I’ll get a great deal of replies from people that disagree, but I’ll stick with my initial advice: Stay the course.
He goes on to explain that because of dollar cost averaging we’re getting a pretty good deal on stocks right now:
Right now, you’re buying more shares for the same money..lots more. When the market does turn (and contrary to all of the stock market chicken little’s running around screaming the sky is falling, it will return) all of that stock purchased at a low cost will yield high returns.
Miranda in her article “Stop Panicking. Seriously. Stop.” over at yieldingwealth.com tells us to calm down:
Try to avoid looking at your retirement account statement, and remind yourself that over the long haul, the stock market gains. Consider unloading only the especially vulnerable investments. If something still has solid fundamentals, stick with it.
Over at mytwodollars.com David offers up some CNN advice for a few safe places to put your money right now, especially if you’re not sure you want to stay in the market. Among the are money market accounts, CDs, Bonds and money market funds. Click here for more details.
Flexo over at consumerismcommentary.com tells us that while it can be tough emotionally to ride out a down market like we have, in many cases that is the best decision.
While some pundits are calling for a Dow as low as 8,000 before we hit bottom, it doesn’t make sense to make reactionary decisions, particularly when the money is invested for the long-term. It does help to review your risk tolerance to determine if you can face downturns and to find a way to strive to separate your emotions from financial decisions. Emotions are there to guide us, to let us know what may be right for us, but when emotions form the basis of financial decisions, investments suffer.
My conclusion?
In reading all of the advice out there it seems like most of them have come to the same conclusion (as long as you have plenty of time before you retire - 10+ years)
- Don’t panic.
- Evaluate your investments and rebalance your portfolio based on your willingness to take on risk.
- Stay the course.
Staying the course may be easier said than done, but in the long run you’ll most likely come out ahead.
More opinions
For some more reading about the current crisis, and how it should affect your saving for retirement, check out the links below.
- “Stay the Course” is Becoming a Hard Pill to Swallow in This Market
- My 401(k) Is Losing Money, What To Do?
- 401k is losing money - crash and burn
- Stock Market Crash 2008: Stop Panicking. Seriously. Stop.
- We Got a Bailout So Why is the Market Down?
- Safe Places To Put Your Cash In This Economy.
- Changing Your 401(k) in a Treacherous Market
- Not Caring About The Wild Stock Market Swings
House Passes $700 Billion Bailout Bill
After going down to defeat earlier in the week in the House, the second version of the bailout bill was passed today without a problem:
The House of Representatives passed a sweeping, $700 billion economic rescue package after reconsidering the measure it failed to green-light earlier this week. The vote was 263 to 171, well above the 218 votes needed to pass the bill.
On the floor of the House prior to the vote, House Speaker Nancy Pelosi warned, “Our message to Wall Street is the party is over.”
An emotional House Minority Leader John Boehner called the vote one of the “most serious” lawmakers will cast and said, “While we have an imperfect product, we have a responsibility to act.”
An imperfect product is putting it lightly. I’m afraid that this bailout bill is just a band-aid on a gaping head wound, and we’re going to be back in this situation again in the near future. The message to Wall Street? Don’t worry about responsibility and risky investments. The government will bail you out if you get in over your head!
There was still some opposition to the bill:
But opposition to the controversial $700 billion package was still strong.
Rep. Devin Nunes, R-Calif., countered calls of support, saying, “If the secretary [of the Treasury] wants to run a hedge fund, he should go back to Wall Street. This Congress should not hand over such an enormous amount of money. It’s wrong. It’s simply irresponsible.”
So what were some of the things added to the bill in the end?
Some of the goodies intended to attract the votes of individual members of Congress include $192 million for the rum producers of Puerto Rico and Virgin Islands, $128 million for car racing tracks, $33 million for corporations operating in American Samoa, and $10 million for small film and television productions.
Wow. Really? 192 million for the rum producers of Puerto Rico and Virgin Islands? Car racing tracks? I don’t know what to say.
We’ll see what effect the bailout bill actually has. I really do hope that they were right and this ends up turning the markets around, that Wall Street has more accountability and that people will now be more responsible about what loans are given - and taken. Only time will tell.
What are your thoughts on the bailout bill? Was it a good idea? Will it make a difference? Will we find ourselves in a similar situation down the road?
Our Cruise Was the Trip of a Lifetime! (Photos Included!) Part 3
Santorini, Greece
After we sailed from the port at Naples, Italy, we headed on a course towards Santorini, Greece. Santorini, in case you have never heard of it is a beautiful little volcanic island that is known for its beautiful white buildings, and amazing ocean sunsets. The main island that we visited is shaped like a crescent, with a smaller islands in the bay that make up the caldera also being inhabited. Our ship (in the picture below) pulled into the bay, and we took tender boats up to the docks.
We took a bus excursion around the island visiting scenic little villages (like Pyrgos), going to the highest point of the island, and then finishing off with a nice lunch and all you can drink wine at a local restaurant. As you can see from most pictures of Santorini, the houses are mostly painted white (or other light colors) because of the intense heat - it helps to keep the interiors of the houses cooler.
Athens, Greece
We left Santorini and headed to the mainland of Greece, and the capital at Athens. Athens was another beautiful city, although it shows its age in many respects. The day we were there was extremely hot, with blue skies all around. We visited the Parthenon (where the picture of another temple below was taken), the site of the original modern olympics, as well as the changing of the guard at the presidential palace.
Dubrovnik Croatia
We left Athens and headed directly to Dubrovnik, Croatia. We weren’t sure what to think of Dubrovnik, and what we might find there. To be honest it was one of the “throw away stops” on our trip because we didn’t have high hopes. Boy were we wrong.
Dubrovnik, and it’s old walled city ended up being one of the most beautiful stops on our cruise. The old city is so well preserved (and rebuilt after wars in the 1990’s) that it really is a true gem. If you ever have a chance to visit, do it!
Venice Italy
After leaving Dubrovnik we sailed towards our final destination on the cruise, the beautiful city of Venice, Italy. We pulled into the cruise ship port and headed out on our tour of the city. We took a water taxi from the ship to the Piazza San Marco (St. Mark’s Square - below) where we started our tour at the Doge’s Palace. The palace had all manner of beautiful old paintings by renaissance artists, as well as what was once the largest unsupported ceiling in the world (a suspended ceiling). We also got to see the old Venetian prison, and walk across the Bridge of Sighs. Very fun.
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