Our financial system is crumbling this week.

[Radbird]

The timing of this really sucks for me. I just spent time reviewing my mom's finances with her during our recent visit home. My sister is trying to convince her to take her money out of her investment accounts and put it all in bank CDs. I argued against that, citing the market recovery and extremely low CD rates. I expect to be getting an "I told you so" call from her anytime now.

[TimeForGuinness]

The timing of this really sucks for me. I just spent time reviewing my mom's finances with her during our recent visit home. My sister is trying to convince her to take her money out of her investment accounts and put it all in bank CDs. I argued against that, citing the market recovery and extremely low CD rates. I expect to be getting an "I told you so" call from her anytime now.

CDs are worthless right now (most are < 1%)...just find a safe fund with a 3% return rate.

[TimeForGuinness]

I agree in part -that attempts at market timing on a regular basis is foolhardy. But it does help to pay attention - have a macro view looking for sea changes. The co-worker said he sensed the market was growing beyond reasonableness and felt it was due to correct. If you can avoid the hit, why not?

Personally, I just take a peak at the world and economy and make an adjustment to the retirement funds a couple times per year. A lot of people in my age range set their retirement funds back 5 years because they relied too much on growth fund dogma.

As long as you're moving from an equity position to a cash position to miss the slide, and then get back in - I see your point. But the 'average' American (i.e. pullin something like $44k with 2.5 kids) was panicking when we were on our way to 6500. While their cash and holdings make up a relatively small percentage, them selling off in a rush and pulling money out of their banks is part of what lead to the credit crunch and IMO part of what keeps the economy from recovering faster.

I can see where he thought we were do for a correction, but the market moving 1400 points in 12 minutes seemed like a combo of error, fear and Greece. Today would probably be a good day to get back in, it'll start climbing again before long. I read on a blog called iwillteachyoutoberich (it's ok), if you missed the 10 biggest one day gains over the last 20 years your return went from like 10% to around 6%. So moving in and out to time the market can cost you a lot of money, too.

For the record, I'm young and dumb and have little money in the market. My neighbor is a broker and helps me out. I just like to learn, and I like numbers.

I'm a little older (32), but still dumb. I ask a lot of questions (especially to my broker and other business people), and have been investing since I was 14. Trading short term, IMHO, is something I cannot grasp...I'm a long, and tend to invest rather than trade.

Like you, I really enjoy numbers...but I also like to see the impact of mob mentality on the markets. It can be very interesting to follow.

[vinsanity]

For the record, I'm young and dumb and have little money in the market. My neighbor is a broker and helps me out. I just like to learn, and I like numbers.

I'm a little older (32), but still dumb. I ask a lot of questions (especially to my broker and other business people), and have been investing since I was 14. Trading short term, IMHO, is something I cannot grasp...I'm a long, and tend to invest rather than trade.

Like you, I really enjoy numbers...but I also like to see the impact of mob mentality on the markets. It can be very interesting to follow.

Trading short term is something I want to get in to, and have even considered a career change at some point to something financial. My neighbor gives me a little 'homework' assignments when we go out and drink and will help me learn about options, leveraging etc etc.

Straight up buying and selling stocks is something I think you just got to have time and desire to read and understand the companies. It's like Buffet says, buy what you know. I work in computers/tech, while it's a hot industry I worked for a client who's stock plummeted while I was there. I could bought a buncha shares of it (if I had cash), thinking it was a pretty quality product and the stock was under-priced. The week after I left, they received buyout offers for a few dollars over market value. I'da made a pretty penny.

[vinsanity]

Market's Back!

[heyzeus]

The market will go up. It's either going up or our whole economy is gonna go in the crapper. It's either goin up or all the way down. If it goes all the way down, do you really think your cash is going to be worth anything?

That's why I've converted all of my stocks, mutual funds, and cash into ammo, spam, and toilet paper. When the Revolucalypse comes, I will be the King of the United State of Heyzeus, and you will barter with me for yams on my terms.

I want your yams now and I'm willing to pay a premium.

I will trade yams for arrowheads and canned vienna sausages.

[redbirdjazzz]

The market will go up. It's either going up or our whole economy is gonna go in the crapper. It's either goin up or all the way down. If it goes all the way down, do you really think your cash is going to be worth anything?

That's why I've converted all of my stocks, mutual funds, and cash into ammo, spam, and toilet paper. When the Revolucalypse comes, I will be the King of the United State of Heyzeus, and you will barter with me for yams on my terms.

I want your yams now and I'm willing to pay a premium.

I will trade yams for arrowheads and canned vienna sausages.

Kinky.

[sighyoung]

The market will go up. It's either going up or our whole economy is gonna go in the crapper. It's either goin up or all the way down. If it goes all the way down, do you really think your cash is going to be worth anything?

That's why I've converted all of my stocks, mutual funds, and cash into ammo, spam, and toilet paper. When the Revolucalypse comes, I will be the King of the United State of Heyzeus, and you will barter with me for yams on my terms.

I want your yams now and I'm willing to pay a premium.

I will trade yams for arrowheads and canned vienna sausages.

lukethedrifter-in-a-can?

[Hungary Jack]

Here is a grrrreat article in the NY Times examining some of the parallels between Greece and the US. The author notes the similar levels of public debt / GDP ratios between Greece today and where the US projects in 10-20 years. It's scary, but hopefully not a surprise to anyone here.

A few tidbits:

The United States will probably not face the same kind of crisis as Greece, for all sorts of reasons. But the basic problem is the same. Both countries have a bigger government than they’re paying for. And politicians, spendthrift as some may be, are not the main source of the problem.

I disagree on the last point, but whatever.

The message seems clear: woe unto the politician — in Washington, Athens or London — who tries to go beyond platitudes and show some actual fiscal restraint...“Most of the public thinks, ‘If only the darn politicians could get their act together to cut waste, fraud and abuse, and to make tax avoidance go away and so on,’ ” Mr. Greenstein, head of the Center on Budget and Policy Priorities, says. “But the bottom line is, there really is no avoiding the hard choices.”

But the main issue isn’t the near-term deficit — the one created by the recession, the wars in Iraq and Afghanistan, the Bush tax cuts and the Obama stimulus. The main issue is the long-term deficit...As a rough estimate, the government will need to find spending cuts and tax increases equal to 7 to 10 percent of G.D.P. [bout $1 trillion today]. In concrete terms, Medicare’s entire budget is about $450 billion. The combined budgets of the Education, Energy, Homeland Security, Justice, Labor, State, Transportation and Veterans Affairs Departments are less than $600 billion.

This is why fixing the budget through spending cuts alone, as Congressional Republicans say they favor, would be so hard. Representative Paul Ryan of Wisconsin has a plan for doing so, and it includes big cuts to Social Security and the end of Medicare for anyone now under 55 years old. Other Republicans have generally refused to endorse the Ryan plan. Until that changes or until the party becomes open to new taxes, its deficit strategy will remain unclear. Democrats have more of a strategy — raising taxes on the rich and using health reform to reduce the growth of Medicare spending — but it is not nearly sufficient.

What would be? A plan that included a little bit of everything, and then some: say, raising the retirement age; reducing the huge deductions for mortgage interest and health insurance; closing corporate tax loopholes; cutting pensions of some public workers, as Republican governors favor; scrapping wasteful military and space projects; doing more to hold down Medicare spending growth.

[vinsanity]

The United States will probably not face the same kind of crisis as Greece, for all sorts of reasons. But the basic problem is the same. Both countries have a bigger government than they’re paying for. And politicians, spendthrift as some may be, are not the main source of the problem.

I disagree on the last point, but whatever.

I see why, but look at California. I believe the state can not raise taxes without a vote. So California voters refuse tax increases, but always vote to pass legislation that increase government programs. Raising taxes is almost always political suicide. Obama could balance the budget, but if there were tax increases across the board he and the dems would be slaughtered in the next two elections. So it's their fault for not being willing to take the bullet, but I blame the voters for wanting lower taxes in the wake of record deficits.