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Old 09-16-08, 03:13 PM   #1
linux_author
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Diversification work for you?

i feel a bit more comfortable posting here... but i wanted to get a feel for how folks have weathered the year-long market corrections... just went through the figures, and it looks like diversification works! have only taken a 2 percent hit in my diversified holdings/accounts vs the wife unit's stock-based accounts (which suffered a 10 percent decline)...

my retirement horizon is still out nearly 20 years, but the mix we have for our age is (50/30/10/10: stocks/bonds, real estate, insurance, cash); within that mix my holdings were 9/35/56 short-term, bonds, stocks, while the wife unit's were 84/16 stocks, short-term...

in fact, with the last two months i've made a determined effort to increase savings (cash, indexed funds in tax-free account, i.e. ROTH IRA)... my personal feeling is that this correction offers an opportunity for some folks to make up a tad for the past 10 years... (market was at a 5,000 Dow when i first got started - really, really, really wished i had started earlier)...

hope everyone else is doing OK - i guess my advice would be: "Don't panic."

:-)
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Old 09-16-08, 03:32 PM   #2
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While waiting for my late mother's will to wend it's way through the Florida courts and for the estate to end up in Canada, the portfolio has lost a bit over 15%.
Don't get me started on your deregulated economy and banking system.

But, you are right. The key is: don't panic.
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Old 09-16-08, 03:52 PM   #3
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Diversified myself out of the stock market 14 months ago..... But then, I'm 62 and can't wait around and wait for my money to come back. At this point, I'd consider burried coffee cans a safe investment.

I'm more worried about the status of my first pension if the issuing insurance company goes bankrupt. I still have more bikes to build.
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Old 09-16-08, 03:56 PM   #4
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Well, since I've barely gotten out from under a massive amount of credit-card debt, and for the past third of a year getting paid at all has been touch and go, and now I'm unemployed with my former employer owing me over $9,000. Whether to diversify my investments or not hasn't really gotten high on my radar. I'm just glad that I took the advice of having 3-6 months income saved up for a rainy day. And I now have a little more time to go on bike rides.
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Old 09-16-08, 04:10 PM   #5
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Does this mean I should own several different brands of bikes?
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Old 09-16-08, 04:15 PM   #6
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I took the advice of having 3-6 months income saved up for a rainy day. And I now have a little more time to go on bike rides.
+1

sage advice... six months' minimum IMHO... hope things get better...

and diversifying brands is always good... i'm spread between Specialized and Pedal Force (a good group buy here on BF for a studly CF frameset - it's now my favorite ride)...

my thoughts are with all those 50+rs struggling right now...
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Old 09-16-08, 04:16 PM   #7
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Down 2% in what timeline?

I'm extremely diversified, but I was part of a building sale last summer and against my better judgement put in a bunch of money when the market was at an all time high. I knew better, but doubted myself. I've lost about 10% since the beginning of last summer. Much less than the market in general, so I'd say it worked.

Now, my 401k, in which I let myself trade and test myself, I was about 40% above the market in the past 3 years. And I never had more than 5 stocks going. I was thinking myself very clever, because against the S&P it usually gained more or lost less each day. But then the last 2 weeks happened, and now my gain is substantially diminished. I'd say I'm only 10% over the S&P now.

I'm involved in another building sale in February, and I'm going to keep that money away from the market. Maybe start dribbling it in 1.5 years from now. We haven't seen the massive layoffs yet, and that needs to happen before I trust the market again. Although, I don't see any reason why it should rebound. America doesn't have a lot to offer right now, besides food.

I'm terrified this will screw up my retirement.
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Old 09-16-08, 04:30 PM   #8
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Down 2% in what timeline?

[snip]

I'm terrified this will screw up my retirement.
- last 12 months...

- i wouldn't worry about retirement unless you're due in the next year or so...

- i grew up in an orphanage, so my lifestyle expectations can adjust somewhat...

:-)

(whenever my wife complains about having to max her 401(k) i tell her it's the difference between a view of the ocean or a view of an alley in retirement)...
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Old 09-16-08, 04:47 PM   #9
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I'm fairly diversified. I'm figuring either Tom Bombadil, Louis, or Digital Gee will look after me in my old age.
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Old 09-16-08, 05:05 PM   #10
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I'm practicing for my retirement job

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Old 09-16-08, 05:46 PM   #11
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Never look at your pension plan details in a down-turn.
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Old 09-16-08, 05:58 PM   #12
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Though I am certain these are difficult times for any one with investments (including myself), it's much more so if one lives it every day as I do. My job involves navigating a specialized part of these troubled markets, , a situation that's been going on for over a year. Thankfully my cycling gives me the stress relief I need, or you might be reading / hearing about me on the news...
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Old 09-16-08, 07:23 PM   #13
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The key is to own investment-grade securities and not to panic. In fact, a serious market correction is a great opportunity to accumulate a favorite stock, assuming that you have several months of liquid capital, so that you do not have to sell anything in a down market.

I am currently working on a career transition from industry into academia, hoping for greater stability and a bit less stress, and willing and able to take a significant pay cut.
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Old 09-16-08, 07:40 PM   #14
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I'm fairly diversified. I'm figuring either Tom Bombadil, Louis, or Digital Gee will look after me in my old age.
Just let me know where you'll be living and I'll come and visit every 6 months.
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Old 09-16-08, 07:58 PM   #15
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Just let me know where you'll be living and I'll come and visit every 6 months.
You won't have far to go. I'll be living at your house.
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Old 09-17-08, 08:43 AM   #16
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See, I know diversification gives you lower risk/lower return. But there's a case for individual stocks, too. Right now, the S&P is down 2.34%, but my 401k is only down .34%.
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Old 09-17-08, 08:58 AM   #17
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I'm definitely in favor of diversification. Road bikes, mountain bikes with full suspension, mountain bikes with no suspension, all around doodling bikes, fixed gear bikes...

Having a diverse portfolio of bikes greatly increases the fun return on your bike stable investment.
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Old 09-17-08, 04:53 PM   #18
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Diversified? That means spreading it around between multiple crooks, right?
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Old 09-17-08, 06:00 PM   #19
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I have a pretty good bit of money (to me anyway) invested in Florida real estate. We had to lower the rent on one house by 20% to get someone back in it after our renters moved back up north. There are a lot of empty houses where people got greedy and bought like crazy thinking they could always resell for a profit. I think with patience it will get back to normal and a lot of the rookie real estate investors will learn a very expensive lesson. I feel badly for the people in the building industry who are out of work now. As for my retirement investments, I am not even going to look at them for awhile.
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