Does the Fed want a market crash.

There's been a move toward privatization of public companies. A crash would make it that much cheaper for the rich to get those companies. When these bastards are done there won't be a middle class and the rich will own everything.

because they have enough reserves to gobble everything up when it does.

I doubt we're in for a crash, although we're in for a major correction.

Consider that the US stock market is the only one WORLDWIDE still in positive numbers. Most regional exchanges are down by double digits, some as much as 50%.

So hold onto your hats. We're in for a disaster for most small investors.\

However, it should drive a stake into the withered heart of social security privatization forever. Or until the next bull market.

to put your investment money in cash and wait for a market correction. if you think you see it coming. i read Martin Zweig's book a while back and from his method, along with some other, more esoteric methods, i figured i'd wait until this fall to buy the stock i want. in the meantime i bought a bear fund and a short term cd.

i wonder how much online trading has changed the 'rules'?

Buying cheap assets after a crash was one way the rich got richer. Right up through the Great Depression, fiscal and monetary policy was actually designed to worsen conditions. A lot of it may have been due to economic ignorance, but a populist in charge of the economy would have handled things a lot differently.

Today, Fed Chairmen like Bernanke, Greenspan, and Volcker are modern economists, not robber barons. Their whole professional reputations are bound up with improving economic conditions. Since 1981, Fed policy has been pretty accommodating, resulting in the long boom with very few interruptions. In any case, most businesses make more money off cash flow in a steady economy than by buying up cheap assets during a bust. There may be an exceptions for asset-based industries like real estate,
but assets are generally not the chief concern of industry.

Because of oil prices, the Fed is concerned about inflation now more than growth. Bernanke is trying to balance the two. I don't know if he'll raise or lower rates, but it will be because of his reading of the inflation tea leaves.

and he's hired the stooges to do it.

...the market usually gets it right in the long term, but in the short term it can be unpredictable and emotional.

People are freaking out because the Fed hasn't made clear whether they'll stop hiking rates or not. Markets hate uncertainty, and this is one of those uncertainties they hate the most.

Seems like some of you have some savvy about the market so I would like to ask a few questions.

I remember after 9/11 we lost nearly $145,000.00 before I was aware of exactly what was happening. I handle all the finances for us and admit this was new to me.

My husband had just taken an early retirement and we put our 401K money with them on advice from a friend who said they had handled their money very well. Since he was under the age of 59.5 we never withdrew any money until about 3 years ago. I was a NOVICE at the time, still am to some extent, but we have NEVER recovered the amount we lost. While we have taken some money out to live on over the years, it still never added up to that amount.

Any suggestions here to STOP the leaking that is going on with our account?? Should we request that they dump our stocks and go Mutual Funds or Bonds?? I'm not even sure I'm asking the right questions today and had always thought my broker would advise us regarding our portfolio.

Since this was tax deferred money, each time we withdraw money we have to pay taxes and that was okay when we were saving. We've had some financial hits lately and will probably have to withdraw more money. Our broker keeps telling us to re-finance our home, but we only have 8.5 years to pay on it and I don't think that's very smart. I check my balance every day, but I'm getting worried again.

Does anybody think we are headed for another crash? It will cost money to withdraw our money and switch to CD's. We have 5 acres of land up for sale right now, but NOTHING is happening there either. We need a high end buyer but don't want to sell now if the housing market is popping too.

Any suggestions??

..I am not a financial advisor.

Now that my CYA statement is over....

From the sounds of it, you need a serious sitdown with a financial advisor. Not someone who's going to sell you things, but I real-deal CFA. A broker sells you things...they are not the people you want advising you on what's appropriate.

Regardless of who the custodian of your IRA is, the most important thing is that you invest in things appropriate for your needs at the time. If you're in retirement now, you should be mostly concenred with preservation of prinicipal, which means you should've been mostly out of stocks a while ago. Maybe not completely out (again, it all depends on your situation and how comfortable you are with risk), but mostly out and in things like money markets, bonds, and things like that. You talk about dumping stocks and going into mutual funds...but mutual funds are just a vehicle for holding things like stocks. They might hold bonds, they might hold realestate, they might hold all of the above. You might already be in mutual funds. You need to get a better idea of where you're invested and where you're not.

than stocks. The portfolio seems to be set up with a little over a quarter in stocks and that may be because we did take some risk initially.

But when I see losing $1,000.00 a day it's a little upsetting. Perhaps we should just tell him to sit tight with mutuals but I just don't know. But we are kind of stuck because switching from Morgan Stanley will cost us.

Now on the other hand, IF I were to sell my property I will take your advice and see a financial advisor. I was just getting more and more concerned about the market. I WAS told that CD's would be a way to go for right now, but it's not an option presently.

Having lost so much before, I just get the heepie-jeebies about this stuff.

Thanks for your input, it was helpful and I appreciate it.

Stock mutual funds? Bond mutual funds?

When you invest in a mutual fund, you are essentially investing in whatever that mutual fund holds. For example, my IRA is made up of 8 mutual funds. Of those 8, 6 of them invest exclusively in some category of stock (small companies, large companies, foreign companies). SO the fortunes of those funds are pretty well correlated with current health of the stock market. You can probably guess how I'm doing right now :D

Mutual funds are a generally less risky and more affordable way of investing in stocks...you buy a whole basket of stocks rather than just one or two at a time, but because they invest in stocks their value is tied to what happens to the value of those stocks.

Not being a financial advisor, but being somewhat of a personal finance geek, here's what I'd do in your case:

Do some research on asset allocation. Googling "asset allocation models" will return you enough options to keep you busy for a while. Use the information you find to decide what is appropriate for your situation. To me, you sound like you might want a moderate to conservative investment style. Again, I don't know...but that would be my guess. 25% or so in stocks total would be somewhat conservative but I have a hunch, based on what you've told me, that you might heavier in stocks than you think.

Once you get that figured out, get your IRA statements (or quarterly reports or something that shows a relatively current breakdown of the account as a whole) together and figure out what your current style actually is. Look at everything you're invested in. Get to know your mutual funds inside and out: what kind of things they invest, what the goal of the fund is (capital appreciation? preservation of principal?)..it should be relatively easy to figure out whether it's a "Large Cap Growth" or "Small Cap Value" or "Emerging Markets" or something like that. If they are Morgan Stanley funds, you should be able to find the prospecti pretty easily, and those will tell you everything. A lot of times the name of the fund will tell you right off the bat what kind of fund it is.

Moving on: Compare your findings to the asset allocation model you've chosen. Where do you need to make adjustments? Are you in the right kind of investments for your situation? If not, adjust accordingly. This can be as simple as moving some of the money from your "Large Cap Growth" to a Money Market fund. Morgan Stanley, as far as I know, has a multitude of funds so you should be able to find the appropriate ones without having to switch out to another brokerage house. That you're with Morgan Stanley as opposed to some other brokerage house probably doesn't make much of a difference..it's more likely the investments you've chosen.

If you're losing $1K a day, you've either got a heck of a lot of $$$ socked away (which is awesome), or you're much heavier in stocks (or stock mutual funds) than you realize. Maybe it's both.

I can't say I have lots and lots of money, had more at one time. Was planning for the future and was extremely "thrifty" in my buying habits. When we bought the 5 acres we were warned NOT to buy in that area. I'm so glad I didn't listen. We bought it for $28,500.00, and have it for sale at $340,000.00. That was the going price last January, but market has fallen, but we'll just let it ride. Keep the For Sale By Owner sign up and wait.

My husband worked for GTE and I always worked, but I don't own a DVD, I use a cell phone which I JUST got and buy minutes for it because I stay home most of the time. Taking care of my mother-in-law with Alzheimer's for 7 years keeps you pretty tied down. I don't even wear a wedding ring, can't stand jewelry on me. We live pretty modestly and I cook almost every night. We rarely eat out because of his mother. We're just not high end buyers. I'm not a scrooge, I believe in wearing GOOD shoes, but I hit Goodwill and garage sales for lots of things. I do have one problem, I don't mind paying for certain perfumes if I like them. Not the most expensive, but nothing "Charlie!" Just thought I would throw that in.

My husband is a Jack of all trades, he re-roofed our house, built himself another huge work place. He works on vehicles... I grow all kinds of plants and have plant sales... and garage sales.

We are "worker bees" but wanted to have some money put away so we could travel after he retired. But right now, with his mother here and her advanced stage of Alzheimer's we are still waiting. She'll be 94 soon and is taking NO medications. But I'm not 60 yet, so I guess I have some active years left.

I'll print out your information and do some research. Thanks again.

..hoped some of it helped. Again, I'm not a pro and speaking in very general terms.

At the very least, getting allocated properly will help protect you against big losses in short periods of time.

Good luck!

what % (not dollars) are you losing and how does that compare to the market as a whole?

do I play one on TV. Here's a nickels worth that I'll pass on...

What will hold it's value if the whole economy "corrects"? That's what I'd buy.

If you believe that the stock market and the dollar will continue to go down like they have you need to get your money out of dollars and paper. Sure you're going to pay the tax on what you withdraw, but you also have to consider what it is costing you in diminished value to leave it in. From what you said in your post and working with a starting figure of $350,000 (just my guess from you losing $150K post 9/11), leaves you about $200,000 2001 dollars. If, since 2001, your investments have performed well you have probably recovered about $120,000, is this close? Here's the kicker, since 2001 the dollar has lost over 35% of its value. So if the numbers are right, your $320,000 is now worth $208,000.

Big money is buying up tangible assets and converting to other currencies, mostly Euros. Maybe they know something?

I don't know HOW you did it, I'm not that financially savvy... but you really crunched some numbers here!

Kudos, I'm amazed! I sort of, kind of made a decision! Not staying where I'm at even though I lose up front... regardless I gotta get out.

The really really sad thing about all of this is that I scrimped my way into having "something" and blew it by thinking that putting what I felt was a substantial amount of money with what I felt was a reputable company, was going to keep me SAFE!

Lessons learned, but NOT forgotten! Kinda makes you wonder why people question those who put THEIR money under a mattress! No, I'm NOT that cynical... but I came from "poor" 6 kids in my family before I married and wanted have some security and happiness when I retired. My parents and my husband's parents didn't have money either. I do think with some correction I will reach some of my dreams, but I have seen a darker side of what many call "making it!"

I really should have taken some financial courses... it IS my fault to some extent!

I missed your reply, as you are likely to miss this one because more than 2 days have passed.

I do work in the periphery of the financial/investment industry, and enjoy trying to help the (assumed to be) sane folks here @ DU (99% of my clients are bat-shit crazy fascists).

Please let me know what direction(s) you are considering as I may be able to point out some of the often over-looked caveats in a particular investment. This is a good time to make a move as they are propping up the dollar right now to make * look less disastrous, in combination with the usual summer doldrums, so many areas are good bargains right now.

but for those without investments or money, I advise investing in gardening equipment and a place to grow your own food. Oh, and for those so inclined, lead.
:evilgrin:

(no longer a member of the "investor" class)

And now back to the regularly scheduled rational discussion...

Check out this link for comments by Morgan Stanley Chief Economist Stephen Roach

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B6E4908D4-A298-4190-A2F0-A3686FB999FC%7D&siteid=mktw&dist=

StreetTracks Gold Trust (GLD : GLD62.28, -0.27, -0.4% ) , an exchange-traded fund that invests in gold bullion, is up 32% year to date, and has gained more than 62% over the trailing 12 months.

Natural-resources mutual funds have returned a handsome 48% over the past year, according to investment research company Morningstar Inc.

In his note, Roach expressed concern that unlike previous bull markets for commodities, the current boom is taking place in a low-inflation environment.

"Perspective is key: In the midst of a slightly subpar upturn in global growth, a low-inflation world is experiencing the sharpest run-up in commodity prices in modern history," he said. "If that's not a bubble, I don't know what is."

Yet some commodity bulls maintain that globalization and the rise of emerging economies, particularly China, will fuel demand for oil and energy. Roach thinks this argument is overblown though as China improves its commodity efficiency and reduces consumption.

"Great at copying and now pressured to do so by higher input prices, China's appetite for industrial materials is likely to diminish in the years ahead," he said.

So the company that is stealing $1000 a day from you will charge you a penalty if you pull out.

This same company is telling the world to avoid the very investments that would have doubled your money last year. Roach burped out more distortions and outright lies in the above article than I care to count. Who's side are they on?

His comments on China indicate that he is either stupid or a liar. He's obviously not stupid so he must be lying. China is not going to fall victim to commodity price inflation anytime soon. They are acquiring hard commodities by buying producers and avoiding premium prices by buying from the exchanges. For example China's long term target price for copper is 30% less than the spot. This means they have done an end run around commodity price inflation as buyers and they are making a killing as sellers. Roach is 180 degrees wrong on the China economy

Be that as it may, the real question is can you afford to continue to do business with Morgan Stanley because at the rate of $1000 a day you will be broke by next year. Follow some of the excellent conservative advice by other posters.

1) Hire a PFA.

2) If you can liquidate your land package do it but if you lose more than 20% on your $340,000.00 asking price hold on to it. Real estate traditionally only falls back by 20% off speculative highs. You were wise to buy land. Land is much more liquid and holds its value better when Real Estate prices go south. Plus the cost of holding it are much lower.

3) If you wish to stay in a fund try to transfer 25% of your portfolio into a resource based mutual. Before doing that follow Kitco, 321 Gold and Stockwatch in order to identify solid asset based companies with good long term charts, then find out which funds are buying them.

4) If you find you like resource opportunities look at Energy Trusts and resource groups like
Hunter Dickenson. They have earned their investors billions in the last ten years by taking early positions in asset rich junior resource companies.

5) By all means get out of Morgan Stanley even if you take a hit but make sure you find and alternative that shows reliable asset appreciation first.



Roach's boss remember is now the US Treasury Secretary. He's there to make sure the Fed prints enough money to save Morgan Stanley's hide in the event of a recession. If a recession does occur it will be driven by higher interest rates designed to protect dollar based paper assets by the likes of Morgan Stanley and Co.

And thanks to all the others who commented. I see that I need to make some changes. I have at least a good weeks worth of research to do.

And about Morgan Stanley, I regretted THAT decision some time back. My broker actually got a bit "miffed" with me right after the election because he knows my politics. I KNOW where he sits.

However, I did let him know that IF and WHEN we sell our land... he AIN'T gettin it! And I do realize the value of land, especially where I live... one of the reasons we bought in the first place despite negative reports. It's one GOOD investment we made and something we can fall back on. I can sit on it for now, especially since the land market seems to have slowed quite a bit. Maybe this time next year it won't be so bad.... but who knows. I'm just feeling "hinky" about my money right now because I don't think the economy is doing that well! I do think I'll have to make some changes after I do my homework. Geeeezzzz, it shouldn't be so difficult for us "novices!"

I'm not selling unless I'm forced to.

They have a fiduciary obligation to represent
YOUR INTERESTS you can sue them if they give
advice that cannot be backed up by public documents.

They work for you not the brokerage.

Remind them of that.

Also remind them that the Internet has changed
the world. By this I mean.......

If a broker got 'miffed' at me for whatever reason
I would lean over his desk, hold his business
card in his face and tell him to adjust his attitude.

If I didn't get an immediate apology I would go to
his manager and complain. If his manager copped attitude
I would say,

"Thanks for taking the time to listen to me. Would you
please make arrangements to close my account? If you'll
excuse me I have to get home now. I have a few hundred
emails to send."

I guarantee said manager will throw himself at the door
and pop fresh grapes in your mouth.

These guys know how to do the math. They know how fast
bad press moves on the Internet.

For every customer offended 100 are lost. On the internet
that increases by a factor of 10 depending on the traffic
figures on chat boards.

out and will be taking earlier advice and look for a GOOD financial analyst. From what I have been able to garner from my broker, we are tied to S&P a lot. But when I talked to him today he told me that he had switched some of our money to more aggressive stocks. Seems my husband, and I'm not putting him down... in an effort to regain money told him that this would be OKAY! We had withdrawn around $15,000.00 in January and I didn't listen in on the phone.

I do think this has had an impact on the recent leakage. Having said that though, I have increasingly been unsatisfied with this guy. He's been in the business for a long time, but I've had my suspicions about him for quite some time. If you are dealing with less than 1/2 million he doesn't seem to stay connected in any way. And we have less than that 1/2 million. I live in a very affluent city and this also ties to the situation. Add to the whole ball of wax, he doesn't LIKE me very much... he does like my husband because he's just so personable.

Personable gets you NO WHERE when it comes to money. And when the call to withdraw comes, he's going to know WHO was behind it. One thing I can't forget right after the election was a comment he made when I was inquiring about our portfolio. I told him I try to watch a lot of the financial programs and was worried about some negative information I was getting... he said to me "Well, do you think it would have been better if Kerry had won?" This caught me off guard because I wasn't EVEN TALKING about the election, but I did answer... "Only time will tell!"

I think way back in the recesses of my mind, I'm still very pissed off that he let our account lose that initial $145,000.00! At the time I'm sure everyone was doing the basic CYA, but I was completely SHOCKED at the loss. THIS was our first "bad" experience!

But now, I don't give a fig... I doubt he'll lose much sleep over anything less than 1/2 million but I don't care. I'm looking into CD's until I figure out EXACTLY what needs to be done. And yes, we'll take a hit, but he can take the taxes out right now but I don't think he can charge if we leave "some" money in the account. But maybe there's a clause that states we have to leave at least $50,000.00 to $100,000.00 without incurring yet ANOTHER fee! I'll find out soon enough.

Oh well, at least I did make ONE good decision about the property! In time it may be what secured our future!

in the beginning! Not any more!

You know these guys, they're like LOBBYISTS, IMO!

i would be in either cash or short term cd's at least for the next 6 months. i think you should wait and see how the housing market decline effects the rest of the economy

While I was swimming today, back and forth, back and forth I made THAT decision! I just went to my husband and said... "we're pulling the money" and there will be NO argument about it!

No matter what the broker says, we're pulling the money! I'm not sure if I'm making the right move, but I know I'm not very happy right now... so I'm going with my women's intuition!

Putting the money in short term CD's through our Credit Union.

You people have been GREAT... helped me a lot! I doubt the property is going to sell right now even though it's in one of the fastest growing cities in Florida. I think now that it's "hurricane" season people are waiting. The property on is on the west coast of Florida, very close to where Charley hit 2 years ago. But the property had no damage at all, nor did we for that matter. But people are a bit spooked right now.

Where I live right now was supposed to take the hit but didn't! I would say more, but don't want to jinx myself!

my mom had a Vanguard Wellington account which has been around since before the great depression. return since inception is around 10%. I think it's a good fund. i followed suit, until my conscience forced me to find an SRI fund (pax world fund which is fairly comparable). Although right now most of my investments are in cds ans a bear fund.

Lately, I've heard some negative stuff myself. It's bye-bye for now. I wish I could divest it all without a fee, but from what I've read... they charge me for closing the account completely.

matter" still have significant positions that must be moved before the crash can take place.