General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsCan anyone recommend a primer on the stock market?
My pitifully measly retirement mutual fund balance is now 91.6% of what it was last Wednesday. And I have no idea how any of it works. Specifically, just now, how the virus affects the stock market. But, in general, I just don't get it, I hate to admit...
Wounded Bear
(58,653 posts)Personal Finance and Investing (Group)
https://www.democraticunderground.com/?com=forum&id=1121
Dark n Stormy Knight
(9,760 posts)If the latter, I'm not sure where to start.
If the former, I don't think I will. I'm suddenly sorry I asked, as I realize now, I will never understand it all!
progree
(10,907 posts)I read every post in it. Here is a thread that has a lot more of my writings on the subject, and opposing points of view too.
https://www.democraticunderground.com/11211434
Dark n Stormy Knight
(9,760 posts)it's over my head. Believe it or not, I have a MENSA IQ, but my brain just doesn't grasp economics. (Really, there are loads of things I just don't get, especially now that Trump has been elected and continues to enjoy support and could very well be reelected, I'm pretty sure I don't understand anything. So much for IQ being worth a hill of beans...)
I've bookmarked the thread and A HERETIC I AM's tutorial, and will try go back to it over time, but I feel like I need to start with something so much more basic. Maybe a middle school level economics book!
msongs
(67,405 posts)Dark n Stormy Knight
(9,760 posts)That much even I already know.
Amishman
(5,557 posts)Usually biased towards short term.
The outbreak is a threat to earnings in many ways; illness disrupting workers, quarantines disrupting supply chains, and general fear keeping people at home and not buying things. Probably a little concern about an actual severe pandemic, but the former considerations are probably most of it.
Dark n Stormy Knight
(9,760 posts)That at least makes some sense to me.
NRaleighLiberal
(60,014 posts)go to Yahoo Finance page, click the link for the Dow, view the max time line. Over time, it goes up.
But it is not immune to wild oscillations, esp when a world event is occurring.
Dark n Stormy Knight
(9,760 posts)I see the spikes and the general upward trend. Which, I kind of knew, but I like visuals.
NRaleighLiberal
(60,014 posts)Frasier Balzov
(2,647 posts)It still is.
The virus is just a convenient excuse for a sell-off.
Your education should start with learning all about what you presently own.
Mutual funds, ok. But what do they hold in their portfolios?
Dark n Stormy Knight
(9,760 posts)My fund is
76.36% SPINNAKER FID VIP GROWTH and
23.64% SPINNAKER PIO FUND CLS I
Whatever that means.
I guess this page https://fundresearch.fidelity.com/annuities/summary/FBDEC is supposed to mean something to me, but I don't know what.
I guess it's hopeless for me to expect to get this after a lifetime of not getting it. My brain freezes.
But thanks anyway.
Frasier Balzov
(2,647 posts)However, they may not be age-appropriate at this stage of your life.
FBDEC is technology heavy.
You might want to consider transitioning to a government bond fund which pays out monthly dividends.
progree
(10,907 posts)are big money-makers to those who sell them and to the insurance company. Looks like Fidelity does well on it too.
I've never read anything positive about variable annuities. Never.
I'm certainly out of my tree on this one, but when I looked at the link and saw 0.63% expense ratio and 1.00% annual annuity charge, I saw 1.63%/year going out the door, year after year. That murders performance.
If you are going to get started in equity investing, do what Warren Buffett, the world's greatest investor recommends for those who want to be in the market but don't want to learn or do research or stock pick -- get an S&P 500 index fund. I think he recommended Vanguard's, but that was more than 10 years ago; now Schwab or Fidelity are now also very competitive in index funds -- they all have very low expense ratios. Vanguard's VFIAX has a $3,000 minimum and a 0.04% expense ratio.
Expense ratio -- that's the percent of the fund's assets that Fidelity and the fund's advisors take out each year to service the fund and pick the stocks.
So with a 0.04% expense ratio, a $10,000 account will have $4 taken out. Each year per $10,000.
At a 0.63% expense ratio + 1.00% annuity charge, $163 is being taken out. Each year per $10,000.
If you feel you must have an annuity, then get a simple fixed annuity.
I don't know anything about Spinnaker, but I'm guessing they make plenty of money on you too giving you advice that's in their interest, not yours.
Dark n Stormy Knight
(9,760 posts)The only reason I have money in this account is that my previous employer pushed it and matched contributions. However, I wasn't able to contribute much. Granted, a lower expense ratio would be preferable, but as my balance is insubstantial, sub 1% fees really don't amount to much. It was the recent huge drop that got my attention.
As for changing to some other investments, I don't think I can withdraw funds or sell them off or whatever else one might do for a number of years yet without penalty.
Basically, we will probably end up on the street one of thee days, as we just don't have savings or investments that amount to much at all. So, we hate to see the tiny cushion we have get even thinner.
Thanks again, though, for taking the time to give me this input.
progree
(10,907 posts)My recommendation for a book is a "Investing at Level 3" by James Cloonan, the founder of AAII (American Association of Individual Investors). published in 2017. Level3Investing.com
I'm a buy-and-hold type of person, which beats most who try to time the market. There are plenty of stuides, e.g. Dalbar, that show that most equity mutual funds do better than the people who invest in them, because the investors tend to buy equities when the market is doing good and sell when the market is doing poorly (i.e. buy high and sell low).
Dark n Stormy Knight
(9,760 posts)I just realized that the figures I was using are identical to yesterday's, so apparently not yet updated for today.
progree
(10,907 posts)the last 2 crashes (the S&P 500 fell 49% or so from peak to trough in the dot-com bust and 57% during the housing bubble bust) and both times they recovered and went on to set a string of new all-time highs. And a much better return than any bond funds or CD's during the same time period (2000 to present). The long-term record of stocks is vastly superior to bonds or Treasury bills.
http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html
Bear in mind that the stock market periodically sets new all time highs. It has never, ever, set an all-time low.
Response to progree (Reply #21)
Midnight Writer This message was self-deleted by its author.
Dark n Stormy Knight
(9,760 posts)had the same experience with those last two crashes, so I should know to look at it that way. Thanks for the reminder.
Hoyt
(54,770 posts)Conventional wisdom is that is probably good at a younger age, but possibly need to get a bit more conservative at an older age. But there are a lot of factors.
At least historically, when the markets drop big, they come back. But you never know when that might change. Maybe this is the big one, maybe not. We could end up like Japan and languish for decades.
Good luck.
Dark n Stormy Knight
(9,760 posts)Thanks.
progree
(10,907 posts)and other fixed income interest rates are so low. Who wants to settle for 2 or 3%?. One can find a lot of high quality stocks with better yields than that. So when you look at something like Shiller's CAPE ratio, keep in mind that it isn't adjusted for the yields of competing fixed income investments.
Dark n Stormy Knight
(9,760 posts)"it's Greek to me"? Well, that was. And, unfortunately, I only speak English.
But thanks anyway.
safeinOhio
(32,675 posts)of good returns. Best advice ever.
Yavin4
(35,438 posts)A lot of goods come out of China. For example, a lot of pharmaceuticals are made in China. If China is quarantined from the rest of the world or the virus becomes a pandemic, then it will cripple the world's economy.
Dark n Stormy Knight
(9,760 posts)economics in general. I've tried to educate myself on it, but my brain seems incompatible with the concept.
But, thanks for the specific detail regarding China. That makes sense.
Hotler
(11,421 posts)Dark n Stormy Knight
(9,760 posts)It's so hard though for someone like me to digest the info though. Something about economics just scrambles my brain.
Still, thanks for the reply and reminding me about Motley Fool.
Hotler
(11,421 posts)it mostly is. Another source is free adult classes at the local community colleges about Wall St. and investing.
have a look around here. There might be a course for you.
http://www.openculture.com/
Dark n Stormy Knight
(9,760 posts)I hadn't seen that site before. Will check it out.
cbdo2007
(9,213 posts)That's the #1 rule of the stock market.
AGeddy
(509 posts)In China and Japan, companies and schools are closing for an extended period of time.
- A large chunk of our economy depends on the supply chains that go through those countries. When you buy something on Amazon, it likely has parts that came from China. When those business shut down production for an extended period of time, people buy less stuff. Economic activity slows.
- Any business that depends on tourism dollars, and Spring Break is around the corner, takes a major hit when everybody decides to stay home.
- Movie theaters, restaurants, sporting events, broadway shows... anything that involves going out where masses of people are... gets damaged by this.
The virus changes human activity in ways that negatively affects commerce... which in turn negatively impacts markets.
It is as simple as that.
Dark n Stormy Knight
(9,760 posts)Good synopsis.
dawg
(10,624 posts)Money you won't touch for at least the next five years goes in a broadly diversified investment vehicle such as an S&P500 index etf.
Money you *might* need to use within the next five years, however unlikely, belongs in cash or CD's.
Follow those three rules, and you'll outperform the majority of MBA-educated Wall Street "geniuses".