A question for those of you who know about finance/the current sitaution

[CFH]

I have some money invested in mutual funds which I received from my mom's life insurance. What I'm wondering is, as the crisis shows no signs of abating, should I just cut my loses, take my money out and put it in the bank? Or is this short-sighted thinking? Any advice at all would be great, it's causing me a lot of stress. I've made an appointment to see my investor/advisor dude, but he's just going to tow the company line I would suspect.

[Trainer Monkey]

Honestly,if you dont need the cash,your probably better off riding it out,because if you sell now your going to take an absolute bath

[CGM]

I'm a long term sort of guy. Just a few general principles based on experience and common sense rather intimate knowledge of the financial sector.

It depends whether you think the economy will get better or worse in the next several years. I think things will improve. If your advisor tries to predict what will happen in the short term, or tries to time the ups and downs, odds are he gets it wrong. IMHO

Seeing as how you are into mutual funds, consider index funds. It is a well proven fact that index funds outperform the majority of managed funds over the long term, after taking into account management fees.

Don't forget to consider things like fees and commissions when making your decisions. It very often mean the difference between good profits and mediocre profits, depnding on your holdings.

[CGM]

Honestly,if you dont need the cash,your probably better off riding it out,because if you sell now your going to take an absolute bath

That's true to a point, but IMO not the right question to ask.

A better way of looking at it is to consider the following hypothetical question, all things considered of course:

Suppose you had the cash that selling now would give you. What would be the best thing to do with the money? If the hypothetical answer is put the money into the stock you actually do hold now, then the actual correct decision would be to hold on to what you have. If hypothetically the money is better placed elsewhere, then the actual correct decision is to sell and place the money elsewhere.

Of course that doesn't tell you what the correct decision is, but that in general is the way one should consider it.

[Trainer Monkey]

Honestly,if you dont need the cash,your probably better off riding it out,because if you sell now your going to take an absolute bath

That's true to a point, but IMO not the right question to ask.

A better way of looking at it is to consider the following hypothetical question, all things considered of course:

Suppose you had the cash that selling now would give you. What would be the best thing to do with the money? If the hypothetical answer is put the money into the stock you actually do hold now, then the actual correct decision would be to hold on to what you have. If hypothetically the money is better placed elsewhere, then the actual correct decision is to sell and place the money elsewhere.

Of course that doesn't tell you what the correct decision is, but that in general is the way one should consider it.

If the mutual fund is generally solid,Id just hold my chips. Right now the US market is a train wreck. If you can hold,hold

[CGM]

Honestly,if you dont need the cash,your probably better off riding it out,because if you sell now your going to take an absolute bath

That's true to a point, but IMO not the right question to ask.

A better way of looking at it is to consider the following hypothetical question, all things considered of course:

Suppose you had the cash that selling now would give you. What would be the best thing to do with the money? If the hypothetical answer is put the money into the stock you actually do hold now, then the actual correct decision would be to hold on to what you have. If hypothetically the money is better placed elsewhere, then the actual correct decision is to sell and place the money elsewhere.

Of course that doesn't tell you what the correct decision is, but that in general is the way one should consider it.

If the mutual fund is generally solid,Id just hold my chips. Right now the US market is a train wreck. If you can hold,hold

If it's a solid fund, then sure holding is probably not a bad decision. It might not be the best, but it's probably not bad.

What do you mean by train wreck? Do you mean more or less rock bottom, likely to get worse, better, or completely unpredictable?

[Von Milash]

As someone with an MBA in finance and a licensed financial consultant, the general rule is, if your window is greater than 5 years, hold on to it. There has never been a 10 year period in the history of the financial markets where the markets were lower than when they started. Do a search for the Andex Chart and you'll see.

you can also switch the type of funds you hold though. Of course, there are thousands out there, each of which designed to do different things to accommodate different needs, risk tolerances, time frames, etc. As CGS said, an index fund rides the market, whereas other types try to beat/time it, which is very hard to do.

[CGM]

As someone with an MBA in finance and a licensed financial consultant, the general rule is, if your window is greater than 5 years, hold on to it. There has never been a 10 year period in the history of the financial markets where the markets were lower than when they started. Do a search for the Andex Chart and you'll see.

you can also switch the type of funds you hold though. Of course, there are thousands out there, each of which designed to do different things to accommodate different needs, risk tolerances, time frames, etc. As CGS said, an index fund rides the market, whereas other types try to beat/time it, which is very hard to do.

It's an interesting field of research. Even if many managed funds do outperform the market to a certain degree, relatively few outperform by enough to overcome the management fees. It is correspondingly difficult to figure out which managed funds will do so.

I think historically the percentages are about 70-80% of managed funds are outperformed by index funds.

[killersheep]

As someone with an MBA in finance and a licensed financial consultant, the general rule is, if your window is greater than 5 years, hold on to it. There has never been a 10 year period in the history of the financial markets where the markets were lower than when they started. Do a search for the Andex Chart and you'll see.

you can also switch the type of funds you hold though. Of course, there are thousands out there, each of which designed to do different things to accommodate different needs, risk tolerances, time frames, etc. As CGS said, an index fund rides the market, whereas other types try to beat/time it, which is very hard to do.

It's an interesting field of research. Even if many managed funds do outperform the market to a certain degree, relatively few outperform by enough to overcome the management fees. It is correspondingly difficult to figure out which managed funds will do so.

I think historically the percentages are about 70-80% of managed funds are outperformed by index funds.

I love my broad index ETFs.

[Trainer Monkey]

That's true to a point, but IMO not the right question to ask.

A better way of looking at it is to consider the following hypothetical question, all things considered of course:

Suppose you had the cash that selling now would give you. What would be the best thing to do with the money? If the hypothetical answer is put the money into the stock you actually do hold now, then the actual correct decision would be to hold on to what you have. If hypothetically the money is better placed elsewhere, then the actual correct decision is to sell and place the money elsewhere.

Of course that doesn't tell you what the correct decision is, but that in general is the way one should consider it.

If the mutual fund is generally solid,Id just hold my chips. Right now the US market is a train wreck. If you can hold,hold

If it's a solid fund, then sure holding is probably not a bad decision. It might not be the best, but it's probably not bad.

What do you mean by train wreck? Do you mean more or less rock bottom, likely to get worse, better, or completely unpredictable?

Completely unpredictable,in the house cleaning of the last 8 years,I expect a few people to go down,and when any of them do,the market dips.
Im sure there are quite a few people who are looking in to overseas housing right now,who might be willing to forgo their bonus