Hoarding is exactly what the government is doing right now by filling the SPR, and frankly it's the best thing that could happen. It drives prices up. High prices encourage demand destruction. They also finance new well development. The hoarded oil gives us a buffer to fall back on once shortages become more prevalent. High prices are what we need in order to adapt to what's coming, and the sooner they happen, the better.
Posted: Fri Apr 11, 2008 10:35 am Post subject: Re: So how does your 401k statement look?
"Personal Rate of Return from 01/01/2008 to 04/10/2008 is -8.0%"
Depending on what you believe the long term outlook as to what you should do.
If you think PO is a "bump in the road" type of situation, such that life will continue on mostly as it has, then this should be considered a great time to buy and hold for the long term.
If you think PO represents the end of civilization as we currently know it today, then I'd cash out while you have cash.
I'm of the former opinion, so frankly my current rate of return doesnt bother me as I consider this a great time to buy buy buy!
That said, I do have some plans in place should my bet be wrong and the second horse wins the race...... _________________ "Battle not with monsters, lest ye become a monster, and if you gaze into the
Abyss, the Abyss gazes also into you."
Ammo at a gunfight is like bubblegum in grade school: If you havent brought enough for everyone, you're in trouble
Joined: Sep 19, 2007 Posts: 919 Location: Land of the Tongva tribe
Posted: Fri Apr 11, 2008 10:59 am Post subject: Re: So how does your 401k statement look?
Tyler_JC wrote:
I'm young and I can afford to look at the long term.
I am 25....so I second that. Social Security will probably be obsolete when I qualify so I am putting the maximum amount into my 401k and the maximum amount into my Roth IRA.
The great thing about the Roth IRA is I can pull out the principle penalty free if I need to in the future and then any interest stays until I qualify to take it out.
I think it is STUPID to pull money out of retirement accounts before you qualify and pay the huge taxes just because the current markets scare you.
joeltrout _________________ ENERGY is the basis of our industrial civilization and sustains our standard of living. It is the foundation stone of our national wealth. A nation starved of energy.....will be a nation of starving people.
Joined: Aug 03, 2006 Posts: 3896 Location: Graceland
Posted: Fri Apr 11, 2008 11:50 am Post subject: Re: So how does your 401k statement look?
1/1/2008 - 4/10/2008 is -5.3%
That doesn't bother me too much.
Many 401(k) plans have energy funds in them, and those are great.
I have a 401(k) balance at a previous employer and I have half in an energy fund and half in a fixed income fund and the return there is great. _________________ Our window of opportunity is slowly closing...at the same time, it probably requires a spiral of adversity. In other words, things have to get worse before they can get better.
-M. King Hubbert, 1983
Posted: Fri Apr 11, 2008 11:54 am Post subject: Re: So how does your 401k statement look?
Mine is down quite a bit since the beginning of the year, but it's coming up a bit now. I don't want to cash out yet. I want it to grow some. I have very little faith in paper assets. It will probably come around, or it won't... _________________ Deep in the mud and slime of things, even there, something sings.
Joined: Aug 03, 2006 Posts: 3896 Location: Graceland
Posted: Fri Apr 11, 2008 12:01 pm Post subject: Re: So how does your 401k statement look?
For anyone interested in doing a conversion of a traditional IRA to a Roth IRA, the VERY best time to do it is when your account is down in value--fewer dollars to pay tax on.
One of the opportunities created by a crappy market. _________________ Our window of opportunity is slowly closing...at the same time, it probably requires a spiral of adversity. In other words, things have to get worse before they can get better.
-M. King Hubbert, 1983
Joined: Sep 19, 2007 Posts: 919 Location: Land of the Tongva tribe
Posted: Fri Apr 11, 2008 12:12 pm Post subject: Re: So how does your 401k statement look?
BigTex wrote:
For anyone interested in doing a conversion of a traditional IRA to a Roth IRA, the VERY best time to do it is when your account is down in value--fewer dollars to pay tax on.
One of the opportunities created by a crappy market.
I have a traditional IRA that I bought Bank of America stock a couple years ago when it was around $55 per share. Now it is $37 per share. Now might not be a bad time to convert it to my Roth IRA.
Thanks BigTex.
joeltrout _________________ ENERGY is the basis of our industrial civilization and sustains our standard of living. It is the foundation stone of our national wealth. A nation starved of energy.....will be a nation of starving people.
Posted: Fri Apr 11, 2008 1:06 pm Post subject: Re: So how does your 401k statement look?
YOY I am up just under 2% which kind of shows you how 'good' my trading has been this past year. (it has certainly been unlike the home run years I had when the markets were doing well) Bought some stuff I shouldn't have, held some when i shouldn't have, and sold early on the good stuff.
Joined: May 18, 2006 Posts: 3478 Location: Minneapolis, MN
Posted: Fri Apr 11, 2008 1:41 pm Post subject: Re: So how does your 401k statement look?
joeltrout wrote:
Tyler_JC wrote:
I'm young and I can afford to look at the long term.
I am 25....so I second that. Social Security will probably be obsolete when I qualify so I am putting the maximum amount into my 401k and the maximum amount into my Roth IRA.
The great thing about the Roth IRA is I can pull out the principle penalty free if I need to in the future and then any interest stays until I qualify to take it out.
I think it is STUPID to pull money out of retirement accounts before you qualify and pay the huge taxes just because the current markets scare you.
Joined: Sep 25, 2004 Posts: 4239 Location: Boston, MA
Posted: Fri Apr 11, 2008 2:33 pm Post subject: Re: So how does your 401k statement look?
Vision-master, what are you saying with your post?
That the people cashing our their retirement plans are making the smart decision?
I'd say they are making a stupid decision. If you don't believe that Social Security is going to be able to continue making full payments from now until forever, I'd say that you have a personal responsibility to provide for as much of your own retirement funding as possible.
That is, unless you want to work until you die which is what will happen if you don't save a dime...which is what happens when you sit around waiting for the world to collapse. _________________ "www.peakoil.com is the Myspace of the Apocalypse."
Joined: Aug 03, 2006 Posts: 3896 Location: Graceland
Posted: Fri Apr 11, 2008 2:57 pm Post subject: Re: So how does your 401k statement look?
Tyler_JC wrote:
Vision-master, what are you saying with your post?
That the people cashing our their retirement plans are making the smart decision?
I'd say they are making a stupid decision. If you don't believe that Social Security is going to be able to continue making full payments from now until forever, I'd say that you have a personal responsibility to provide for as much of your own retirement funding as possible.
That is, unless you want to work until you die which is what will happen if you don't save a dime...which is what happens when you sit around waiting for the world to collapse.
Look, I am an expert when it comes to retirement plans, that's how I make my nickel, and I can tell anyone who wants to listen that 401(k) plans are going to be a complete disaster when the Boomers start to retire.
The two largest problems are these:
1. amateur investors chase returns, ensuring sub-par returns at a given level of risk almost all of the time.
2. people don't view their 401(k) plans as "retirement" plans, they view them as "savings" plans, as in "I have the money there if I need it." Something ALWAYS seems to come up before retirement for which people NEED the money.
The tragedy of the slow extinction of the traditional defined benefit pension plan won't be fully felt until they are all gone.
Other 401(k) problems, in no particular order:
1. When the market tanks, 401(k) balances drop, but it is during these periods that people most need their money because what is hurting the overall market may also be hurting them individually (unemployment, etc.). By overloading on stocks, you are creating a situation that guarantees that if you ever REALLY need the money, you are likely to be locking in losses when you take a distribution, not to mention the penalties and taxes you may trigger with an early distribution.
2. 401(k) plan fund offerings are usually poor. Often no energy, precious metals, targeted foreign funds, long term bond funds (typically just intermediate term) or foreign currency funds (how great would it be to have, rather than a U.S. dollar money market, a currency basket money market type fund?).
3. If you read the history of 401(k) plan designs, it's clear it was never even intended to provide for a full retirement payment, it was just intended to supplement a traditional pension plan.
4. Lump sums are simply not safe in many peoples' hands. By making distributions in the form of a lump sum, you are placing a person in a position of greater risk than the benefits frequently justify. It would be better to pay all 401(k) accounts out at retirement over some period of time, not necessarily life, but no shorter than, say, five years.
5. 401(k) loans are convenient but stupid if that is your "retirement" money. Companies with pensions don't let you borrow from the present value of your pension benefit, why should it be different with a 401(k) plan? One more hole in the bottom of the bucket.
6. The biggest problem of all is the decision to provide 401(k) plans rather than traditional pension plans represents an enormous shifting of risk from the employer to the employee. Thus, I have to "worry" about my 401(k) investments, while under a pension plan, it is the employer who "worries" over whether the pension plan trust has an acceptable investment return, but your benefit is defined without regard to anything that happens in the market.
A lot of these issues are not on anyone's radar, but they will be as the flaws in the 401(k) plan design become clearer and clearer as wave after wave of Boomers find that they don't have enough money to retire. _________________ Our window of opportunity is slowly closing...at the same time, it probably requires a spiral of adversity. In other words, things have to get worse before they can get better.
-M. King Hubbert, 1983
Joined: Sep 25, 2004 Posts: 4239 Location: Boston, MA
Posted: Fri Apr 11, 2008 3:12 pm Post subject: Re: So how does your 401k statement look?
I agree wholeheartedly, BigTex.
That's why I think it's insane to empty out your 401K every time you switch jobs. It means that you'll never have a real retirement savings plan.
Lots of people make a lot of very dumb financial decisions and it is costing them dearly.
The best way to invest is to buy when everyone else is selling and sell when everyone else is giving you investment advice.
Of course, it's never that simple in the real world but I think we are approaching the point where the markets will be undervalued.
Peak Oil or not, does anyone expect GE to stop making a boatload of money selling energy efficient appliances, wind turbines, and power plant generators?
Yet the stock fell nearly 14% today because its financial services division is feeling the pinch from the credit crunch. GE will survive and its stock will go back up. Now might be one of those golden opportunities to buy at a discount. _________________ "www.peakoil.com is the Myspace of the Apocalypse."
Joined: Sep 19, 2007 Posts: 919 Location: Land of the Tongva tribe
Posted: Fri Apr 11, 2008 3:15 pm Post subject: Re: So how does your 401k statement look?
BigTex you know more about this than I ever will but I want to explain my understanding. Please correct if wrong.
I think 401k plans are going to hurt more people than help. In the past it seems most companies provided pension plans which are run by professional fund managers and employees are automatically enrolled.
Now it seems fewer and fewer companies offer pension plans and the only way to save for retirement using a company plan is either with a 401k or Roth 401k. But most employees have to make the decision to enroll into the 401k and how much they want to contribute, and where to put the money. It gives the employees all the responsibility. And I do not have faith in majority of people handling their finanical future.
However, my company offers a pension plan and I am contributing the maximum to my 401k. I view my 401k as a supplement to my pension and if I leave the company I can roll it over into an IRA.
Contributing $15,500.00 a year until I am 65 yrs old will add up quite a bit since that is literally 40 years away. I don't see how this could be bad unless the markets literally got wiped out.
joeltrout _________________ ENERGY is the basis of our industrial civilization and sustains our standard of living. It is the foundation stone of our national wealth. A nation starved of energy.....will be a nation of starving people.
Joined: Aug 03, 2006 Posts: 3896 Location: Graceland
Posted: Fri Apr 11, 2008 3:41 pm Post subject: Re: So how does your 401k statement look?
joeltrout wrote:
BigTex you know more about this than I ever will but I want to explain my understanding. Please correct if wrong.
I think 401k plans are going to hurt more people than help. In the past it seems most companies provided pension plans which are run by professional fund managers and employees are automatically enrolled.
Now it seems fewer and fewer companies offer pension plans and the only way to save for retirement using a company plan is either with a 401k or Roth 401k. But most employees have to make the decision to enroll into the 401k and how much they want to contribute, and where to put the money. It gives the employees all the responsibility. And I do not have faith in majority of people handling their finanical future.
However, my company offers a pension plan and I am contributing the maximum to my 401k. I view my 401k as a supplement to my pension and if I leave the company I can roll it over into an IRA.
Contributing $15,500.00 a year until I am 65 yrs old will add up quite a bit since that is literally 40 years away. I don't see how this could be bad unless the markets literally got wiped out.
joeltrout
A recent trend is to provide automatic enrollment in the 401(k) plan and the default investment election is some kind of balanced fund. This is better than nothing, but is really just lipstick on a pig.
For the highly paid sophisticated employee, the 401(k) plan is a great tool with which to create wealth. For the average employee just trying to make ends meet it is not a good tool at all.
A good retirement program should provide the same retirement benefits to similarly situated employees as part of a total compensation package. What we have today is a process where only the lucky or very skilled investor/employees will have a good retirement income, and the rest will be in a bad spot. There isn't much fairness in that, as I see it. Your retirement income ought to be a function of your years of service and your compensation, NOT whether you happen to be a sophisticated investor.
We will come around to that, but we're a ways off right now.
What I think we will see on a large scale in the future will be a cash balance plan type program where the employer contributes a certain amount to an account on your behalf and that amount earns interest at a pre-determined rate (e.g., 7.5%), which creates a bookkeeping account balance. To the extent that the actual performance of the funds (which the employer directs) is more or less than the assumed level of return, the employer may have to put in more or less in future years.
At retirement time, you can elect an annuity or a lump sum based upon the value of the bookkeeping account balance.
It's predictable, it's insulated from market fluctuations, it doesn't require individual employees to be sophisticated investors, it is transparent, it allows an employee to project what his benefit will be with great certainty, and it is more or less fully funded at all times. That's a good program there. _________________ Our window of opportunity is slowly closing...at the same time, it probably requires a spiral of adversity. In other words, things have to get worse before they can get better.
-M. King Hubbert, 1983
Joined: Sep 19, 2007 Posts: 919 Location: Land of the Tongva tribe
Posted: Fri Apr 11, 2008 3:51 pm Post subject: Re: So how does your 401k statement look?
I believe most people spend more time planning their summer vacation then they do planning their retirement. Its all about priorities. Many say retirement is so far away why plan now? I will worry about it later. Then they hit 50+ and reality hits them in the face.
If people would just read a general investing book of some type once a year then they would have far greater understanding of finances. I buy Money magazine for some of my friends. It is a great overview of basic financial responsibility for people whether they are 65 years old or 23 year olds.
All it takes is discipline and a little knowledge. But most have neither and don't care.
joeltrout _________________ ENERGY is the basis of our industrial civilization and sustains our standard of living. It is the foundation stone of our national wealth. A nation starved of energy.....will be a nation of starving people.
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