View Full Version : Are you hunkering down based on the election?
frugal-one
10-21-12, 7:46pm
Wondering if I should convert some of my stocks and MF into cash. I am not a market timer but am worried. Anyone else?
I don't know what you mean. Are you making a political statement? If so, make it. Your coded message is so ambiguous I can't decipher it.
We're hunkering down regardless of the election. Economics are not really good anywhere in the world.
awakenedsoul
10-21-12, 8:20pm
Wondering if I should convert some of my stocks and MF into cash. I am not a market timer but am worried. Anyone else?
I would do it, if that's what you're feeling. My sense has been to stay cash heavy. (I sold my stocks at the height of the market.) I'm also looking at real estate.
gimmethesimplelife
10-21-12, 8:33pm
Please take this with a HUGE grain of salt. I agree that cash is a good place to be right now with all the uncertainty out there. I like silver too and have been using the money I have made in the past on surveys and focus groups to buy silver coins and stash them away. I also like housing, not so much as an investment but the idea of a paid off place to live. As for stocks, I would personally be picking consumer staples with a decent dividend history right now, but this is me, and I am no great financial success in life. So grains of salt for anyone reading this. One more thing - I personally am in a situation where I will soon be able to get rid of all my credit card debt - if you can too if you have debt, zap it, if only for the freedom of it. Just say no and get rid of it!!!!! Rob
Blackdog Lin
10-21-12, 8:34pm
Yep, I would. (I got out years ago.)
It's looking so close that I'm worried about a repeat of 2000 (supreme court getting involved and all).
And I truly believe in following your gut feelings. Wish I had in 2008 (but noooo, I had to hedge my bets. Should have stuck with my gut.)
I think in most situations, it's best to follow your gut.
sweetana3
10-21-12, 9:27pm
Not worried, diversified portfolio and no debt. I am more worried about the Chinese demand for resources and the instability of the world (mostly European market) than in any overhyped American election.
ApatheticNoMore
10-21-12, 9:53pm
As regards to my personal take on finances I think it's ok to have some money in stocks but I don't go for the heavy stock investment that I'm "supposed to" at my age either, I think 1/4th-1/3th is a ratio in stocks I'm much more comfortable with, they ocassionally have a potential upside as well I'm told :~).
As regards to politics, yes it's a cryptic statement. Could be any number of things? QE3 is going on, and did go into effect just in time for the election (nope not saying the other guy has any economic answers either just stating a fact). The effect of that is unknown (look I read economists on this, not all of them seem to think it's inflationary or anything so ... unknown) but it is the case that things are being heavily supported by the Fed now, it just is. This is a supported economy. So if your suggesting the economy is weaker than it appears in mirror or something, understood. And that this might surface after the election yea maybe (again definitely not saying Romney has the answer). I am pretty uncomfortable on many levels with an Obama lame duck, that guy can do anything! I'm not scared of Romney economically, his lack of environmental policy OTOH is plenty alarming. If I'm equally cryptic, oh well, the state doesn't swing and I'm not voting for either of em. If the Supreme Court gets involved and it comes down to that, well there's also all kind of voting fakery going on, like really all kinds of chicanry so that will be going on then too.
There's also all that looms regardless of there even being an election, there's Europe yes, there's the whole "fiscal cliff" nonsense as well which could have any number of effects.
iamdavidspersonaleconomy
10-22-12, 10:45am
I moved my investments to money market in the beginning of September to avoid any possible volatility around the fiscal cliff coming in January. I expected more volatility as we approach the election, but I expect much more volatility between November 7 and January 1 due the fiscal cliff. I am sure the congress and president will kick the can down the road before Jan 1, but I expect the usual brinksmanship, and volatile markets. That is my gut feeling.
Also possible Congress agrees and prevents the cliff, and then the market gains and I miss out. But I am following my gut on this.
-David
Volitility is the new normal. A 100 point swing used to be exceptional, now it's a daily event. If you don't have the constitution and/or desire to deal with that you probably shouldn't be in the markets. On the home front we're hunkered down only because all of our clients are sitting on their hands, unsure of what's coming. I don't personally think the Presidential race alone is going to make a huge impact either way, but combined with any Congressional swing might. In the mean time we will remain in the markets, out of debt and are developing a lovely garden space. Stocks could crash, dirt won't. Whatever king decided gold was pretty 5,000 years ago apparently never had to eat it. I'll take seeds. And I'm not quite to the point where I think a large supply of ammo is a good investment. A small supply of ammo and a large supply of good bourbon on the other hand...
Before Obama was elected, I moved enough assets around so that I would not be forced to be immediately impacted by any increase in tax rates during his first term. I have just done the same again, so that if on Day One of his new term he raises capital gains rates to 100%, I won't pay any more taxes for another 5-6 years.
I also before his last election invested in several companies I thought would do well while he was in office. My investment in Ruger has been a 10-bagger so far, for example.
awakenedsoul
10-22-12, 1:26pm
When I was in Carmel, the real estate agent told me that a lot of the wealthy investors are selling their stocks and investing in prime real estate now.
The top one percent will have to give half of their estate (when they die) to the government if Obabama is reelected. So, many of them are transferring property to avoid the estate tax.
Yeah, the world's gonna come to an end....just like it was supposed to end 4 years ago when he was first elected!:~)
He was gonna take away your guns, ban Jesus, raise taxes to 90%, invite terrorist to live in the White House, take over every business in the country, and salute Stalin with every sunrise.
I guess he was waiting for his SECOND term....clever fellow. Clever, evil fellow!
Well, one prediction from 4 years ago came true. That certain voters would fall for this stuff in another 4 years! And in 2016....and in 2020...and....:laff:
Yeah, the world's gonna come to an end....just like it was supposed to end 4 years ago when he was first elected!:~)
Now peggy, you gotta admit that last time we weren't staring down the barrel of 12/21/12 AND the election. Times change!
SteveinMN
10-22-12, 3:22pm
When I was in Carmel, the real estate agent told me that a lot of the wealthy investors are selling their stocks and investing in prime real estate now. The top one percent will have to give half of their estate (when they die) to the government if Obabama is reelected. So, many of them are transferring property to avoid the estate tax.
I must be missing something here. Why would a "wealthy investor" sell stocks (income from which is taxed at the capital-gains rate of 15%) to buy real estate which would be taxed at 50% (if, in fact, that's even true)? Or is it that they're selling property to buy stocks?
As for hunkering down (at our 99% level). we're not doing anything different. I don't even pretend to think I'm smart enough to time the market successfully, and, frankly, I don't think there's any good way to predict what the market will do. There's really no reason why the Dow should be over 13,000 now -- and, yet, here we are. We go with our guts and we've become used to a bumpy ride. We have a diversified equity portfolio, the success of which is not predicated on any one thing happening or not happening, and hold a chunk of cash (beyond an EF) because it's just plain financially prudent to do so. "Steady as she goes."
And i don't think much is going to happen at the federal level anyway. First, true fiscal conservatives know the Republicans are no more serious about being fiscally conservative than the Democrats, so I don't expect anything big happening there. Republican candidates (unless they're just delusional like R&R and Bachmann) know they're flavor-of-the-month with voters if they can't get something done in the next four years. Voters are tired of watching a beat-up can get kicked down the road, and if the Republicans don't use their bloc for anything but voting 'no', they'll be voted out in 2-4 years in favor of trying it the other way. This is particularly true if R&R make it into office.
ApatheticNoMore
10-22-12, 3:39pm
I must be missing something here. Why would a "wealthy investor" sell stocks (income from which is taxed at the capital-gains rate of 15%) to buy real estate which would be taxed at 50% (if, in fact, that's even true)? Or is it that they're selling property to buy stocks?
If a house is a primary residence I think the capital gains is at zero if you live in it a few years. I don't think you can beat that deal. Of course that's primary residence, now maybe you can buy a giagantic mansion primary residence but it still does have to be that. Investment property is different. However we do have a whole landed gentry scheme going on in CA with property taxes and Prop 13, basically your property taxes are not only held to very limited increases every year, but you can set it up so your children inherit the whole low tax scheme and this applies to commercial property as well. So that might be what it is all about. I still can't fathom what it should mean to me. So the 1% are buying up property in Carmel, it doesn't mean I can afford property in Carmel. And it doesn't necessarily follow that property in Stockton CA is also a great deal for instance. Maybe the 1% are all getting in this hedge fund where 10 million dollars is the minimum investment as well. Well shrug, not much I can do about that.
If you want to go "conservative" on your investments, ie limit the percentage of portfolio in stock, it seems better to just do so over the long term to me than pulling in and out of the market (market timing). Also seems less an emotional roller coaster, that's just peace of mind though, can't put a ROI on it.
awakenedsoul
10-22-12, 5:11pm
What Apathetic said. Also, Carmel real estate is prime real estate. It wouldn't be taxed if it were transferred to their heirs before they died. In California, property taxes are based on the purchase price of the home and can increase 2% per year.
I live in a working class neighborhood, and have noticed that investors are buying the homes here, fixing them up, and immediately renting them out. They can make money now, unlike at the height of the market. Rents are still high. So, they get a low purchase price, (most of them pay cash,) low property taxes, and consistent cash flow.
I'm not trying to start an argument, this is just my take on it, as an observer.
miradoblackwarrior
10-22-12, 6:06pm
I'm not wealthy enough to have a lot of investments. I am afriad the taxes will go up, regardless of who wins the election. It's Congress that is paralyzed. Taxes are due to go up January 1st with the end of the Bush tax cuts. I can't afford a couple more thousand dollars for Uncle Sam!
Susan
Birchwood
10-22-12, 6:06pm
Volatility also means opportunity and it all depends on your horizon. I think you should concentrate more on asset allocation and let the whole thing ride. As David said, the "Fiscal cliff" can cause a recession, but if you are young enough and can tolerate it, you'll be fine.
If you can't sleep well at night, then you should be in cash.
I figure I'll do fine no matter who gets elected. I'll just adjust. Its the grandkids who will have the problems.
Before Obama was elected, I moved enough assets around so that I would not be forced to be immediately impacted by any increase in tax rates during his first term. I have just done the same again, so that if on Day One of his new term he raises capital gains rates to 100%, I won't pay any more taxes for another 5-6 years.
I also before his last election invested in several companies I thought would do well while he was in office. My investment in Ruger has been a 10-bagger so far, for example.
Guns and ammo sales are the one part of the economy that has done well the last four years.
I have also set things up so I don't have to show much income for several years if need be. I may even get some of my health care paid for, but other cost may go more. We will just have to see how things go.
Yeah, the world's gonna come to an end....just like it was supposed to end 4 years ago when he was first elected!:~)
He was gonna take away your guns, ban Jesus, raise taxes to 90%, invite terrorist to live in the White House, take over every business in the country, and salute Stalin with every sunrise.
I guess he was waiting for his SECOND term....clever fellow. Clever, evil fellow!
Well, one prediction from 4 years ago came true. That certain voters would fall for this stuff in another 4 years! And in 2016....and in 2020...and....:laff:
There are quite a few things he hasn't done. And I don't expect him to do any better if he has four more years.
Now peggy, you gotta admit that last time we weren't staring down the barrel of 12/21/12 AND the election. Times change!
Oh, I forgot! Isn't that when the world is supposed to end? I guess I'd better order my cake!;)
Thanks for the heads up Gregg!
I'm still prepping for Y2038, when time_t overflows. It's gonna be bad.
I'm still prepping for Y2038, when time_t overflows. It's gonna be bad.Well, 32 bit is so 20th Century anyway.
I'm not especially concerned about who wins the election. I'm not thrilled with either candidate, to say the least, but I don't particularly fear for the economy, or tax rates, or anything else based on which one of these clowns win. However, as someone else mentioned, I AM concerned about the economy generally. The banks are still being massively propped up by the federal reserve, debt both the government's and elsewhere, needs to be deleveraged, and the Euro hasn't finished imploding. With that in mind my investments are focused in areas that I think are good opportunities based on that reality.
jennipurrr
10-22-12, 9:22pm
I don't see the election changing my long term plans no matter who wins. Slow, steady, diversify is basically what I am doing.
A few years ago I bought a couple of gold coins because there was a 20% off coupon to exploit on ebay. I held it for a few months and sold out at a happy profit. I am not a good speculator.
frugal-one
10-25-12, 8:41pm
Well, as an update... I rebalanced my portfolio and then had a financial advisor that I respect look it over. I still have a lot of cash and will keep some of that in "safe" places. After the election I may moved more into short term securities. Recently the market dropped over 200 points and my portfolio did not take too big of a "hit". I feel that I am now a bit more diversified and can weather the distance.
iamdavidspersonaleconomy
10-25-12, 9:15pm
I had moved my employee sponsored retirement accounts to Money Market Funds in September to avoid any drop as we approach the "fiscal cliff" I had regretted that as market timing is a REALLY bad idea. I talk with high level investment managers in my work life and they NEVER take huge bets like moving all their money in and out of investments or segments.
This week when the Dow Jones dropped 200 points I jumoed back in and am staying in at my long term allocation, with the investments auto rebalancing each quarter.
No more active betting in the stock market for me, just a solid steady non-sexy long term investing. That also means no hunkering down because of one election.
The way I see it, if Romney gets elected people will think this going to improve the economy and if Obama is elected people will stop worrying about a wild card economic plan. Either way the election will help the market. Beyond market psychology, I suspect the economy will continue to plod along.
The biggest item on my investment concerns is Europe, which seems to teeter on the edge. And the greedy banking system which seems too complicated for any politician to understand well enough to regulate or de-regulate.
My strategy is to invest conservatively and stay the course. Anything out of the equity realm is barely keeping up with inflation or is loosing ground against inflation. I'm willing to take some smaller risks in the stock market to hope for a little better.
SteveinMN
10-26-12, 8:46am
And the greedy banking system which seems too complicated for any politician to understand well enough to regulate or de-regulate.
"It is difficult to get a man to understand something, when his salary depends upon his not understanding it." -- Upton Sinclair
If we were closer to making the decision to quit our jobs, I would probably be more conservative with our investments. As it is, I have been tracking our net worth daily since September 2008 and seeing the ebbs and flows, as well as the overall steady growth to a quite dramatic level, has really helped me feel less nervous about having a significant portion of our assets in the market. This year we have had several weeks where net worth has gone up or down 10-20k. But the overall trend is up. And that has been the case ever since March 2009, when we hit our most recent bottom.
If things tank again after the election and/or the fiscal cliff, we'll just look at it as a great buying opportunity for the long term. We have enough cash in hand to cover 2-3 years of current living expenses (3-5 years of a more stripped down, frugal budget), and would have many, many more years of cushion if we sold our apartment, so we can afford to keep dollar cost averaging into our retirement and college funds while stashing more cash on the side.
lhamo
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