Not giving credit where it's due and the sky is falling...

[speltwon]

When the stock market was down bigtime from it's 2008 high, there was a lot of justified gnashing of teeth over destroyed 401k valuations, savings ruined, etc.

Well, guess what? It's had a massive runup since the bottom.

It is up over 50% from the (first?) bear market low. If you're 401k is 90% equities , for example, you have experienced a massive resurgence in wealth. And if you did what you are supposed to do and kept dollar cost averaging in a bear market (iow didn't throw up your hands, but kept investing), you did even better by getting some shares for less when the bear market was in full effect.

I thank Obama and the Democratic congress. I would bet big $$$ that people who were (justifiably) decrying the awful levels of equities not too long ago and how 401k values had eroded are now the ones silent about this amazing run.

I can't recall the last time I read anybody posting anything positive and acknowledging this massive run. I saw tons of posts and even threads on the horribleness of it being down. Where's the love now?

Here... I'll help

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=djia&sid=1643&o_symb=djia&freq=2&time=12&x=52&y=11

THANKS OBAMA. THANKS CONGRESS. THANKS SMALL BUSINESS. THANKS INVESTORS. THANKS BIG BUSINESS. THANKS ECONOMY THANKS AMERICA

And yes, I know unemployment is awful, etc. But there ARE positives out there, and emphasizing only the negative is very skewed imo

[RainDog]

1. you're assuming people have money to invest still

and some do

but a lot don't.

[speltwon]

2. No, I'm not

Even if you had no money to invest, you still have seen a massive surge in the value of your equity holdings (401k etc.). I'm honest enough to admit that I took a hit on a short I made when the dow was 1000 pts lower. I bet against it going higher. I was wrong. Otoh, I have a lot of commodity exposure so...

Either way, assuming a 90% equity holding (which would have REALLY hurt during the downswing), you have experienced a very significant increase in wealth.

You can't have it both ways. If it sucked so much that it was down so much, and it did, then it's a very good thing it's up so much, and it is.

[RainDog]

5. people need jobs that pay living wages

and health care that they can afford.

you are speaking from the position of someone who doesn't get that this is a huge issue for many people in this nation.

[speltwon]

8. No, I am speaking from the position of someone

who can give credit where it's due AS WELL AS DISH OUT THE NEGATIVES when it's bad.

The stock market has done very very very well. Frankly, the "the sky is falling" crescendo was almost a near perfect buy signal for those that trade, in the same respect that the cacophonous euphoria at the high was a decent sell signal. "Buy when there is blood in the streets." etc.

Regardless, you are still proving my point. It is a GOOD thing that market is up. It has significantly increased the wealth of everyday americans who have 401k's and are otherwise invested in the market. If and when the market crashes, we will hear negativity. It's ridiculous that we hear no positivity now.

Living wages and health care are issues. So are equities and the market. I personally have a close relative who lives exclusively off her holdings. Her wealth has increased about 50% because of this run. MANY others are in the same situation. I live off wages, but a significant portion of my wealth (I am solidly union btw and thus get pretty decent wages) is tied up in equities, too

[RainDog]

11. LOL. well, I'm glad I proved your point

because some of us have not seen many good things b/c we've had to remove money in order to live while looking for work so, you know... we just see our retirement money disappearing.

but, yeah, the positive is it's disappearing a little bit more slowly!

now, if only I could afford health care to deal with the crushing depression this (and other circumstances) has caused for me.

but I'm glad to know that those who still feel like they're a part of American life as they knew it before the banana republic are doing better...

[speltwon]

12. I am sorry that you are going through bad times

I am saying that the resurgence in the stock market is a POSITIVE thing. At a minimum, if you had no equities, it wouldn't effect you. The only people it could affect negatively was somebody who was short. It either doesn't affect a person or affects them positively. It's a good thing.

[DURHAM D]

3. Who cares. Where are the jobs? nt

[speltwon]

4. Thank you for demonstrating my point

If nobody should care that it's up (absurd), nobody should have cared it was down (equally absurd).

This is exactly the illogic I am decrying.

[DURHAM D]

6. Let me try again.

It is IRRELEVANT. Where are the JOBS?

[speltwon]

10. No, it's not irrelevant

Do you know anybody who lives off their equity holdings? I do. A close relative does. Her husband worked all his life, and she is an artist (she does get some additional income from her art). He invested in the market, with his modest wages, and she is now living off them, primarily. Her wealth has gone up over 50% since the market low. That's a good thing. My retirement holdings have also had a massive resurgence. If you have a 401k, you likely have seen a similar run. Better if you have some commodity exposure as well

[DURHAM D]

15. I have equity holdings.

Here in my retirement years they provide me a nice income to supplement my SS. As for commodities - I own farm land that produces wheat, milo and hay, not to mention oil and gas.

Still, I would rather that family, friends, and strangers who are unemployed or under-employed had a good job and health care. Guess that is what makes me a democrat. Its not about me.

[plumbob]

7. Still waiting for the return to 14,000 reached in 2007.

And without allowing for inflation, that's a good solid 14% loss to date. Some recovery.

And the NASDAQ is dead to me, Please do not even mention it.

[speltwon]

9. Not at all

If I was, I wouldn't have done a targeted swing short when the dow was 1k lower, as I said. Like I said, that trade sucked. Otoh, my commodities have done well.

I am not saying "all is restored". I am saying if someone had said at the nadir of the bear market (not that long ago if you will recall...)

"Hey, in a couple of years, the dow will be up over 50% from the level they are at now"

You would have scoffed at them. Well guess what? It is .

[JoePhilly]

21. The run up to 14k was a joke, and if you measure your gain and loss

from there ... you probably have no money in a 401k.

If you go back and look at the DOW from 2000-2007. It runs in a range from 10k to about 12k. Then it suddenly jumps to 13k, and then to 14k, where it stays for about 14 minutes.

For any REAL investor who was paying attention, the run up to 13k and then 14k was the time to take some gains and put them in CASH.

The Dow is now at about 12k again. The top of where it was when the Bush collapse took place. If you rode it out, and then INCREASED your investments on the day Obama took office, you made a killing.

As a simple example ... I have a friend who maxed his 401k contributions in the first 4 months of 2009. Which means he was buying, and getting a company match at an average of about 7500k. He's more than doubled that money.

Of course he could have put that money in real estate. Oooops. Or kept it in cash ... no gain there.

Those who could ride the collapse out got to buy plenty at about 7500, and that, added to what had been a FLAT 8 years under Bush, did very well, particularly compared to other investments.

[plumbob]

24. Of course I didn't have, don't have and won't have any money in the

casino called the stock market. At least in Vegas, you get comped drinks, cheap buffet and a nice show.

There certainly were people who bought at 14 with the advice of their financial advisors, yes?

You said it best - it never really increases, just runs in a range.

You might want to check into rental property for a real investment. People need to rent when times are good - can't buy, and when times are bad, losing homes. Tax treatments are fab, too.

Might be too real for ya.

[JoePhilly]

25. 1) I own a rental property ...

right now it basically breaks even, but it, like most real estate investments has lost more equity that I would like (starting in 2007). So, in terms of my investments, its really not the one performing the best over the last 5 or even 10 years. One of the weaknesses in real estate investment is liquidity. I could sell it, but honestly, I wouldn't make much right now. Better to hold it, let renters pay the mortgage, and wait for real estate to improve. Fortunately, I have that option. Of course I also have my own home, which I see, ultimately, as an investment. We bought it well before the bubble, so even now, its a strong investment. I just refinanced the remaining mortgage on it at ~3.85%.

2a) You seem to be confused about what investments are found in a 401k. Sure, most include stocks and mutual funds (the "casino" that you refer to). But they also usually include bonds, treasuries, and even fixed interest funds where the gains are small, but consistent (kind of like a CD where you know exactly what you'll gain up front). And so the issue is not whether to have a 401k, but how to invest it.

2b) Two phrases for you to know ... "Company match" and "Tax deferred". Many companies will "match" your 401k contributions up to some percentage (usually 2%, 4%, 6% or so). And yes, some don't. If yours does, you are a fool not to take that money. Even if you stick it in the most boring investment. But even if your company does not "match" you still get the "tax deferred" benefit. So let's say you make enough to invest 10k in a 401k (the max right now is about 16k). If you invest 10k in a 401k, the taxes on that 10k are deferred, which probably saves you about 2k-3k in taxes now (you will pay taxes later, but only on what you take out when retired, which should be taxed at a lower rate because your overall income will be lower).

3a) Those buying at 14k because of advice from an adviser. Chumps. When the market runs up, you take out gains and put them in more stable investments. You ever hear the phrase "buy low, sell high" .. ?? Personally, I started shifting money to safer investments when the DOW hit 13k back when Bush was President. It was moving up too fast, and for no good reason. Some might argue that I missed some gains between 13k and 14k, I say "so what!!" ... when the DOW dropped, I had fewer aggressive investments.

3b) Dollar Cost averaging. You are correct that any DOW shares that I bought at say 12k years ago, gained no value. But, the shares that I bought at 7500, 6500, 7500, 8500, 9500 as the DOW returned have done VERY WELL. That is the point of dollar cost averaging. And so, if you combine shifting gains when the market runs high, with a dollar cost averaging approach, you can do very well. This past summer, many on DU were declaring the end of the market because it dropped to like 9500. I saw that # as LOW. Now that we hit 12k, I have AGAIN, shifted money to more conservative investments. btw ... I started investing in y 401k around 93 or so when the DOW was at about 4k or so.

4) At no point did I say that the DOW "never really changes, just runs in a range" ... what I explained was that for a SPECIFIC PERIOD, from around 2001 to 2007ish, that is what it was doing. Bush economics at its finest. My point was that if you want to deal with the FUTURE, you better know the PAST. And thanks to GOP economics, we saw a collapse of the DOW, which caused millions to panic, so that some could swoop in and "buy low". But where is the DOW now? Its back at about 12k. Which is probably close to where it should have been. The Bush years are basically a flat line until the end. He came in with a DOW at 10.5k, and left with a DOW of ~7500. The jump to 14k is makes no sense.

Bottom line ... The less money you have to invest, the less you should be investing aggressively. The younger you are, the more aggressive you can be. There is a balance here. If you want to invest aggressively, then yes, you are in Vegas. But one can do quite well investing in very stable areas too. The most important thing is to be paying attention. Most of the advisers are useless. You need to determine your own risk tolerance and go from there. Back in the 80s when I was a teen, I accepted the fact that Social Security would be gone when I hit 65. I'm ~47 now. And I still expect it to be gone. I've been actively managing my 401k (and other investments) for more than 20 years. And right now, my 401k investments are doing very, very well. And as I said,

This "real enough" for you??

[plumbob]

26. Plenty real. Social Security will be here, though.

Here's my favorite property:

10 units, 1 bedroom each, rented for $525/month each, waiting list of 22 people wanting to rent as of today.
Property tax around $5,000 per year.
Paid $50,000. Financed 20 years for $500/month, long paid off.

Long and short: total rents collected 27 years @ average of $50,000 per year > $1.3 million

Total financed cost @ $110,000
Total property taxes < $108,000 total

Annual maintenance and upkeep @ $5,000 = $135,000 total

Net before tax right at $1 million over 27 years.

Now get a few more dozen that do about 75-80% of this over the years, and you'll never want a passive investment again.

Good luck in the future and god bless anyone trying to do better in these lazy times!

[JoePhilly]

27. Sounds like my first appartment in DC!!!

Back in the early 90s, if you add $400 a month.

A missing part of our discussion is how you (or I) like to spend our time. Because if we set money aside, this is really the big question. How does one like to spend their time, and does your investment model support that?

And this differs for everyone.

The headaches that come with a large rental property like the one you describe are very real. Now, some people would have no issue with that, and after enough years you can hire others to deal with the BS. But honestly, that isn't me. I started with nothing. My father was in construction and I learned as a teen how to fix all types of home or apartment issues. I have a friend who loves doing that, I hated it. And so, to get to the point where one owns one or more large properties like you describe, either they built from the ground up (doing work they love, or hate in my case), or they had something big handed down and they "manage it".

In the end, I am a fan of smart diversification. You picked up on "passive" investments. I don't see them, or treat them, as passive. I ACTIVELY manage them.

You said net before tax for that property is at about 1 million ... my investments, starting ~1990 with my first "real job", that I love ... is now also just over 1 million ... and that's about 20 years. But you have to "actively manage".

To be honest, I think that if you own properties like you describe, AND you also invest in a 401k of some kind, you'd be able to get the best of both worlds.

Good luck.

[girl gone mad]

13. Live by the sword, die by the sword.

Equities are due for a massive correction, though I suppose a dollar collapse might keep prices artificially pumped up.

Nobody in their right mind should be cheering what's happened on Wall Street. A cadre of greedy thugs and criminals were propped up on the backs of working people and savers. Thank Bernanke, if you absolutely must thank someone. I'm guessing you'll be singing a different tune by the end of the year. The neoliberals will get what they deserve in due time and the global insurrectionists aren't going to pause to consider how the overthrow might effect your portfolio.

[speltwon]

17. Like I said, I'm not always long biased

I have no problem with shorting, and I've been a commodities bull for a long time, too.

I am just saying there has been a massive resurgence in wealth for those who depend on their 401k's. That's a good thing. Frankly, I do agree there is a LOT of overvaluation out there right now.

[SoCalDem]

19. And I recall reading a while back about how come companies stopped contributing

their share to 401-ks . I wonder how many of them are back "in", and how many are employee-only contributions.. People get a bit skittish when they see their money yanked out from under them. Perhaps the young ones have decade to build it back up, but if you are 45+, you might just be a bit reluctant to play that game again, so close to the end of your career.

People in their 50's & 60's have been through MANY rollercoaster events financially, and this was just the latest. ...and if you couple it with the downsizing, layoffs, "the market" is the least of their worries right about now.

[UrbScotty]

14. "Thanks Congress" - should be "Thanks DEMOCRATS in Congress"

;-)

[speltwon]

16. Good point. I was referring to the Democratic Congress

and of course they WERE the ones in office during the resurgence.

[UrbScotty]

20. Ah. I see. (nt)

[speltwon]

22. Kind of obvious if one looks at the chart

and can remember when we hold our elections...

[Sherman A1]

18. I am a lucky one who has seen the benefit

of the market return, so your point is well made. That said I have seen the other factors of our charming economy as well with stagnate wages and rising prices. We all know of those who have suffered terribly and we know that all is far from good. Nevertheless your point is a valid one, causing me to wonder just why in my case my defined benefit plan pension (which is invested in various areas of the market) just issued a 25% decrease going forward. Seems odd that the market is back yet from 1/1/2011 we will be earning credits that are worth only 75% of those earned up to that point.

[Kurovski]

23. Don't forget to also thank George W Bush...