Do you have money in a 401(k) or IRA? Read this.

So in threads like this one we have all nature of fresh doom predicted for this month:

Everyone seems up in arms about September, from the 500 days left 'till climate chaos, to the God is returning.

I realize this was done in jest and i love a good laugh as much as the next guy. I have not paid much attention to the frequency shift, the alien disclosure, climate melt-down, or the rapture which all seem to be due this month, but I have been watching the stock markets very closely and I believe now is the time to act if you have money on the line you would like to preserve. Nothing was fixed in 2008, the can was merely kicked down the road for seven years. Is it the Schemita? I don't know. But i am convinced that these markets are not safe. We have:

• The DOW opening down 1000 points a week ago.
  
• Student load debt that is completely unservicable.
  
• China, who's state controlled markets have been touted as the answer to our problems, beginning to falter.
  
• Middle class wages having been stagnant since 2008.
  
• A deflationary spiral despite trillions of dollars injected by central banks around the world.
  

There are plenty of threads here to inform yourself of the causes, but i am here to propose solutions.

In 2008 i sat and watched my savings get decimated in a market crash that i saw coming. From the very beginning i told all my friends how bad it would get and yet i did nothing. Without the proper education (and with not all that much money in the game) i sat on the sidelines and watched it happen without taking action to protect my wealth. This year i will not make the same mistake. We have several options available to us as regular investors that can not only preserve our savings, but indeed we can profit from it.

There are two options available to most of us that i would highly recommend people research and consider:

1. Move your savings into a cash or "stable value fund".

All 401(k) and IRA plans have a (low return) stable value fund of some sort. Some may even allow you to hold cash in a money market account. The objective here is not to profit from the fall, but rather to profit after it. If the market crashes you buy back in at the bottom in the classic buy low, sell high trade. We are still at the high, it is not too late, but it will be soon. Had i done this in 2008 i would be sitting on almost twice what i am now.

The risks here? Missing out on a month or two of returns, and possibly some small commissions for the trade.

2. Short the market (with leverage).

****These moves are not for the faint of heart - educate yourself before listening to some fool on your favorite conspiracy site!!****

Short-selling is the process of selling a borrowed stock with the promise of paying back later a (hopefully) loser price:

Short selling is the selling of a stock that the seller doesn't own. More specifically, a short sale is the sale of a security that isn't owned by the seller, but that is promised to be delivered...

...your broker will lend it to you. The stock will come from the brokerage's own inventory, from another one of the firm's customers, or from another brokerage firm. The shares are sold and the proceeds are credited to your account. Sooner or later, you must "close" the short by buying back the same number of shares (called covering) and returning them to your broker. If the price drops, you can buy back the stock at the lower price and make a profit on the difference. If the price of the stock rises, you have to buy it back at the higher price, and you lose money.

www.investopedia.com...

For obvious reasons, short-selling is not permitted within a 401(k) or IRA account but the markets have found a way as they always do: the inverse ETF, or exchange traded fund. If you have singed up for a "self-directed brokerage account" as many employers offer you can make money the whole way down.

An ETF, or exchange traded fund, is a marketable security that tracks an index, a commodity, bonds, or a basket of assets like an index fund. Unlike mutual funds, an ETF trades like a common stock on a stock exchange. ETFs experience price changes throughout the day as they are bought and sold.

www.investopedia.com...

An inverse ETF is designed to return results of the inverse of an index like the DOW, S&P, or NASDAQ. Leveraged inverse ETF's will provide either two or three times the inverse of the index being tracked. The idea being that if the DOW 30 loses 2.5% this morning SDOW goes up 7.5%. It goes without saying that there is a lot of downside risk here. EDUCATE yourself before considering this option. Here is a list of inverse ETF's i found when i started this process:

www.tradermike.net...

This is getting long-winded, and i must be getting some sleep before work, if anyone has any questions please feel free to ask here or message me and i will try to help in any way i can.

Disclosure (not alien): i am heavily invested in SDOW and SQQQ at the moment but these funds are not affected by supply and demand like a normal stock is; if all of you sink your life savings into SDOW this morning my shares will not go up. This is not a "pump and dump"; i wouldn't do that to my friends =)

Cheers and happy investing!!

DOW futures down $245.00 as i type. I believe this thing is going to be moving quickly for the next few weeks.

edit: Here is a great article i found that outlines some possible causes.

I will bite...

Your 401k is better off not in cash holdings.

The 2008 crash was started with $5 dollar gas terrorizing peoples budgets, followed by real estate robo signers causing banks and investment firms to faulter.

The trillions infused by the central banks were just printed monies.

I will suggest that hiding defensively from a down market is how you lose.

Will it drop further? Of course it will.

Will you protect your savings by moving it. Of course it will not.

2008 was the worst it could get since the great depression.

My 401k was up 50% by the end of that same year.

And that wasnt because I followed the mantra of buy high, sell low.

The markets are in a cycle. China magnified it. But it still isnt like 2008, and certainly not like 1929.

And to add, 401ks are not monies you should put in high risk. Aim for a simple 8 to 10 percent a year, anything above that is icing that will compound nicely.

And for crying out loud, if you can get it out of 3% load funds, by all means do so. I pump Vanguard, only because I like paying fractional loads on my money. It is an easy way to experience 2 to 2.75% savings per year, whether you win or lose.

a reply to: smirkley

While some may not be as risk tolerant as I am with the inverse ETF's I think it is foolish to lose possibly 20 - 30% chasing the 1/2% that your 8% annual return would have gotten you over the next month... If the market wasn't crashing.

edit: a 1000 point swing is not a healthy market.

originally posted by: soulshn

In 2008 i sat and watched my savings get decimated in a market crash that i saw coming.

I'm confused with this statement. Did your savings account funds get taken in '08?

originally posted by: soulshn
a reply to: smirkley

While some may not be as risk tolerant as I am with the inverse ETF's I think it is foolish to lose possibly 20 - 30% chasing the 1/2% that your 8% annual return would have gotten you over the next month... If the market wasn't crashing.

edit: a 1000 point swing is not a healthy market.

I always dollar cost average my 401k, and as such I am buying more shares as the price drops with the same money, and when it returns, as it will, my more shares increase in value.

I dont chase anything. I think you may have misread my post. The 8 percent figure is an annual average over a lifetime.

Yes my 401k value dropped about 30 percent or something in 2008, and when the market returned in 2008, plus my added DCA shares, my net year end was an overall gain of 50 percent.

Many if not most employer sponsored 401ks have a load of around 3 percent. That comes off the top of your assets, not your gains. I prefer to average .25 percent load, and let the difference compound over years.

Dont confuse or misstate numbers in short term, that should better be considered in long term numbers for a retirement account.

401ks are not profitable to those that think they are timing the market. Day trading should be left to play money you dont need.

a reply to: soulshn

And yes, I disagree. A thousand point drop is in fact heathy to a market that has built up some steam. It relieves the unrealistic pressures that will allow a healthy market to expand.

I'm putting it in the stable value/guaranteed income fund, and waiting until all of the long term indicators I have access to say buy instead of strong sell as they all currently do, for everything in the 401K I manage. But I will try to at least gain a little out of the rebound once it's clear a bottom has definitively been reached.

That's all I know to do as that's as far as my understanding of the market goes.

Peace.

I came here w/nothing. I'll leave here w/nothing. Being is born of non-being.


+

"They" are trying to make "Haves" out of "Have-Nots" and are using our $$ to pay for it, not "theirs".. What HAS gone up for a FACT? Their bonuses and salaries. Because the NFL™ is starting up, who owns the teams? Who pays for their Billion $ stadiums? Who keeps the $$ when all is said and done? The low income folks that get up-rooted from apartments near these stadiums would cry if they ever saw what happened to their old haunts, good thing they can't afford a ticket to the game to see their old place is now a Starbucks™

Perhaps the $$$ derived from opium "heroin" for the inner cities and opiates for BigPHarma™ hasn't kicked in yet? Or the $$ that is now available only affords "Them" a 9% rai$e from last year..

namaste

a reply to: AceWombat04

Good move. I just wanted to help people that were in the boat I was back in '08. No reason to watch your money disappear when there are simple steps like the ones you are taking that can save you years worth of labor.

Just wanted mark this thread.

I know absolutely nothing about the stock market but it seems like some good advice flowing in here.

for any real risk takers out there..... the ROTH I have cannot be self-directed--- unless I create a LLC devoted just to a ROTH management purpose---- 99% of 401k's are not able to be self directed... where you can buy short futures contract as one poster proposed, the rules for IRA's/401k's are a little tighter than operating a Scott-trade or TD Trade account with heavily taxed monies in the long run


the risk I am speaking of is transferring, say, 50% of an existing account, with the required/certified custodian of that account moving 1/2 of your holdings in whatever you are invested in... and transferring that sum into China stocks if that fund has such a specialized investment item... look into the various options your mutual fund offers...

I sure would not opt for the false security of a Treasury bond fund--that's in a super bubble
a China Fund seems it will POP in year 3 timeframe, after the central planners purge the evil/capitalist/thieves from those CEO+ executive positions and allows some variation of free-market capitalism in their stock market

I have expectations the China Funds of every mutual fund will produce returns like gold did in 2006 & 2007 also in 2010 & 2011 (where Isome people in PM accounts gained 30, 40% returns in each of those 4 individual years)





word of extreme caution...

if the equity markets ,As the DOW Stocks keep getting hammered, and the futures they hold AND as their margins keep going up on their Gold or PM shorts then expect those banks/investment houses to start seizing IRAs and savings/checking accounts to recapture their losses including the various 'derivatives' they will be losing money on...

be prepared to redeem your IRA or 401k quickly... and that ability needs to be prepared today, you will not be able to call up the Manager and request immediate liquidation today.... there will be a 60 or so DAY process to go through
~so get a clearance to redeem a goodly portion of your accumulated N.A.V. of your holdings by the Forms they require you to have ~