phoggie,when i read about all the "distress" the financial markets are causing, and people taking their $$$ out of the stock market,semi-joking about putting their $$$ under the mattress, it is time to start investing!!!! When sentiment is this bad, a bottom is forming...I grant you at 66, time is not on your side for heady gains,but someone with a 10-15 year horizon should start adding to positions..fwiw, i have been short the market for 6 months or so,so for me to turn quasi-bullish is surprising to me

If you are in reasonably good health, you have a life expectancy of another 20 years. That's a pretty long timeline for investment purposes.

You may need to consider going back to work, perhaps part-time, to get through this rough patch on the economy. It is never a good idea to be retiring on a tight budget. At the very least you should have "wiggle room" in your portfolio to up your distributions by the annual amount of inflation each year.

Console yourself with the fact that the news media lives to sell bad news - so the worse they make it sound, the more attention people pay them. Kinda like the five year old crying "wolf, wolf!" every half hour.

Are we in a bear market? Yes. In a depression? No. Do the markets fluctuate upwards as well as downwards? Yes.

In the last bear market - the dot.com bust, remember that one? - our portfolio was almost completely invested in big cap equities. We lost 26% of the portfolio in two years. I chose not to change anything, because I felt the S&P 500 would lead the recovery, which it did. 18 months after that, we recovered completely to where we had been before the loss started, and the portfolio - which I later diversified to reduce risk - subsequently tripled. So the losses for this year have been painful, but the long-term gains remain pretty good.

And yes, I do expect the market to recover, so I'm not terribly worried. Balance sheets, outside of airlines and a small percentage of banks, remain quite strong. Hysteria in the air (and the airwaves), however, just confirms my belief that most people don't have the stomach for investing properly.

Diversification of your portfolio reduces risk. You may not make the huge gains of being lucky with individual stock holdings, but you can minimize losses in a bear market.

Good luck to you going forward. I hope things turn better for you.

phoggie-"I am a retired 66 year old female and "thought" that I had my finances in order....although I don't have much, I can not afford to lose it!! Everyone says, "It will come back...it always has"...that might be okay for someone younger, but I might not have that much time left to wait. Thanks for letting me vent!! But your thoughts and advice is welcome."

I think the investors who have pulled their money out of IndyMac, Fannie, Freddie, etc share your sentiments. I know I do. Investors (and taxpayers) are tired of being lied to by the so called 'experts' in Washington and on Wall Street who simply can't afford to tell anyone how bad things really are.

Look at the negative publicity Senator Schumer is receiving for saying IndyMac isn't viable? Is is it HIS FAULT that the regulators weren't doing their job? Is it HIS FAULT that IndyMac wants to have its cake and eat it too? Figures that they would rather kill the messenger than TAKE RESPONSIBILITY for THEIR lack of action to properly protect the economy.

Same thing happened before the Depression. History repeats itself. Check out the link in Dave Donhoffs' post "Forget Inflation! Market Fundamentals are Appalling". The quotes that the president and other 'experts' made just before the crash, are eerily similar to what is being said now.

As for what to do now? You may want to read the following links and form your own conclusions as to what actions might be best to take. Based on the info in these links, I am (very) thankful for the changes I made to our portfolio starting back as early as mid 2007'.

Links that might be useful:

Sell, Hedge ... or Be Prepared to Lose!
by Martin D. Weiss, Ph.D. 06-30-08
www.moneyandmarkets.com

Distortions, Deceptions and Outright Lies
by Martin D. Weiss, Ph.D./April 7, 2008
www.moneyandmarkets.com

Ratings Collapse
by Martin D. Weiss Ph.D./12-24-2007
www.moneyandmarkets.com

A book I recommend is 'The Lies About Money' by Ric Edelman

Here is a link that might be useful: Ric Edelman Website

"randy427-A book I recommend is 'The Lies About Money' by Ric Edelman"

I have that book, its good.

Here is another one I like:

Brokerage Fraud-What Wall Street Doesn't Want You to Know
Tracy Pride Stoneman & Douglas Schulz

It's really something isn't it? I'm not retired or planning to be anytime soon but it's all still very disconcerting. I'm also no expert on the economy but I do think this time the situation is a much bigger deal than the last few recessions that were in the big scheme of things "blips" on the radar. Seems like we're in for something bigger and longer - the likes of which we have not seen since the depression. Everyone acts like we're never going to have something like that again - like all the necessary regulatory prevention is in place. Well, the mortgage banking mess certainly doesn't inspire confidence - combined with devaluation of the dollar and skyrocketing oil prices. And we recovered from the depression with the new deal - income tax put in place for the first time. It's also now a very global economy - how much more can we tax ourselves and/or how much more of a deficit can we run at without causing a major collapse of the US economy. Just doesn't seem like the government can bail us out again without major ramifications.

The sickness that it gives me is called the "Double W" ...

... "Wastage of the Wallet".

ole joyful

jkom -- I always read and value your posts, but there's a problem with advising people to go back to work or take part time jobs. Who will hire *older* people? What will they pay them? This has been true for some years -- ever since companies needed to become 'lean and mean', 'do more with less (workers)'. Many places certainly don't want the health liabilities. There's always a fresh crop of graduates to hire at starting salaries. Now unemployment is rising.

It's a possible solution, but I don't see *good* jobs for older people going begging.

chisue, while an elderly,retired person is unlikley to find a "well-paying" job, there are many jobs that pay more then minimum wage that go begging for help..I can vouch for 2 specific areas..1st Northern NJ, my mom is 72, and has 2 jobs, and was offered another recently...pay is 10 bucks per hour..she loves it, keeps her busy and she gets some soical interaction,in addition to a decent wage..
In SE PA, there are many jobs that can't be filled..My oldest child(high school) has 2 jobs,both PT...she isn't even 17!!! A retired person could easliy have taken either job..
Retired people are just looking to supplement(for the most part)their retirement savings/social security..they don't need to make 30k a year

Phoggie - as for selling your house, you might find some peace of mind by accepting that it may be two or more years before the housing market comes back. I had thought I might sell my place next year but now thats out so I'll use my spare time to get everything in tip top shape - no expensive remodeling or upgrades - just cleaning, painting and landscape work.

Some have suggested you might want to go back to work. If so, you might take a look at an article titled "Top 20 Retirement Jobs and Industries" on AARP's website. Lots of info there and you might be surprised at some of the company names who desire the stability of a senior - its not all retail either. And the federal government has a website USAJOBS.Gov - just plug in your zip code and see whats available.

phoggie: "I have money in the money market account that is just "sitting and waiting for a better day", but now the thought of not being insured worries me.

Some in CDs, but wish I had put more in than I have...seems to be the best and most safe place right now."

Phoggie, no one has ever lost money in a money market account. However, if it will make you sleep easier, it is very easy to just purchase more CDs using that money. If you don't need immediate access to the money, and as you say it is just "sitting and waiting for a better day", then there is no downside to making that move, and in fact, you'll most likely get a better return on your money anyway.

phoggie: "I have money in the money market account that is just "sitting and waiting for a better day", but now the thought of not being insured worries me."

Even though the interest rates are abysmal right now, I've put some of my money into treasuries. This is why:

How Safe is My FDIC-Insured Bank Account?
by Dr. Chris Martenson : April 14, 2008

Your bank account may not be as safe as you think (or hope). Taking a deeper look at the legal details and the financial depth of the FDIC reveals several troubling details that call into question how the FDIC would fare during a true banking crisis.

How many bank failures could the FDIC handle at once?
(see chart at link below)
The 1.22% Reserve Ratio means that for every dollar in your bank account, the FDIC has 1.22 cents “in reserve” ready to cover your potential losses. This has proved to be an ample amount during the period of stability we’ve recently had, but it doesn’t seem particularly significant, considering the recent headlines about banking losses (Spring of 2008).

Consider, for a moment, the collapse of Bear Stearns. In order to assume that bank, JP Morgan asked for, and received, a special waiver from the Federal Reserve to keep $400 billion of suspect of Bear Stearn's assets off the books of JPM (page 4 of the linked document). While JPM may have been padding the books a little bit here, due to the uncertainty of how bad the wreckage might turn out to be, $400 billion dwarfs the $52 billion reserves of the FDIC.

If one medium-large bank collapse could wipe out the FDIC by a factor of nearly 8, what do you suppose would happen if there were multiple, simultaneous bank failures? At this point, my guess would be that Congress would be sorely tempted to borrow additional funds to remedy the situation, but I worry that hardship and losses might result while the laws were amended and sufficient funding avenues identified. So how many bank failures could the FDIC endure? The data suggests slightly fewer than one big one.

I thought the FDIC has full faith and credit backing by the US treasury?

Actually, no, it does not. The language in Section 14 of the FDIC Act is clear and unambiguous (emphasis mine):

(a) BORROWING FROM TREASURY.-- The Corporation is authorized to borrow from the Treasury, and the Secretary of the Treasury is authorized and directed to loan to the Corporation on such terms as may be fixed by the Corporation and the Secretary, such funds as in the judgment of the Board of Directors of the Corporation are from time to time required for insurance purposes, not exceeding in the aggregate $30,000,000,000 outstanding at any one time, subject to the approval of the Secretary of the Treasury: Provided, That the rate of interest to be charged in connection with any loan made pursuant to this subsection shall not be less than an amount determined by the Secretary of the Treasury, taking into consideration current market yields on outstanding marketable obligations of the United States of comparable maturities.

Now that’s pretty interesting. First, that any additional money from the federal government is not a guarantee, but rather a loan, which will only be made subject to the approval of the Secretary of the Treasury. Further, that the loan is to be made at “current market yields." What do you suppose would happen to US Treasury yields during a true emergency? I can imagine a few scenarios where they might skyrocket, and this would serve to compound the difficulty of keeping the FDIC fund solvent.

Links that might be useful:

www.financialsense.com/fsu/editorials/martenson/2008/0414.html

www.moneyandmarkets.com

At age 72, and almost 100% retired, I have watched patiently as the bad news has unfolded in recent months. With close to 50% in broadly diversified index mutual funds in the stock market, I rested easy because I know how markets work. They fluctuate, and you have to be there when things bottom out, otherwise you'll miss the next soar in stock prices. That's how I felt until it finally dawned on me that I was assuming that the bubble that burst was due to the usual "irrationale exuberance." But I was wrong. Because regulators have been lax in enforcing the rules and regulations, and because the rules and regulations on the books are too lenient, an enormous amount of fraud has greatly distorted the entire financial system so that the numbers are really a crap shoot.

First they said that the subprime mess was "contained." But it didn't go away. It just got worse. Then we had the BearSterns debacle. And most recently the Europeans urged the Administration and the Fed to do something about Fannie Mae and Freddie Mac RIGHT WAY or the worldwide deck of cards will collapse. Think of it: THE EUROPEANS AND OTHER FOREIGN INVESTORS HAD TO WAKE UP THE BOYS IN WALL STREET AND FORCE THEM TO ACT, AND REAL FAST, OR ELSE.

AND OBSERVERS CLOSE TO THE SITUATION SAY THE WORST IS NOT OVER YET. THERE IS NO LEADERSHIP. NOBODY KNOWS WHAT TO DO, AND SOME HAVE VOICED CONCERN THAT WE ARE HEADED FOR A DEPRESSION WORLDWIDE. THAT'S DEPRESSION, NOT RECESSION.

So, to help me sleep at night, I went through all our mutual funds and reduced our stake in stocks by half what it was previously, and put the proceeds in money market mutual funds. I plan to watch things closely, and I may take more chips off the table. If CD rates go to 10-12%, like they did back in the early 80s, I'll be first in line with a pile of cash.

One final word: WE NEED REGULATION, LOTS OF IT, to reign in the excesses of the financiers.

haus....How long ago did you reduce your mutual funds and stocks? Didn't you take a real beating? I did put my annuity in a "lower risk" account....and keep beating myself for not following MY gut (instead of the planner and DH) and cashed it out (and paid the taxes on it) when it reached 14,000~~~

Here's hoping better days are coming.....and do it quickly!!

dreamgardem, how about you quit spamming the board with the same doom and gloom nonsense over and over?

We get it already. You think (or rather martin weiss thinks) that all government officials are either liars or thieves or both.

Why don't you just go ahead and buy a whole bunch of nonperishable supplies and move to an underground bunker out in the far northwest and wait for the black helicopters to arrive.

That way, the rest of us can calmly discuss the financial markets without you spamming us with more nonsense. If we wanted to read martin weiss's nonsense, we'd have done it already.

Since our overall nestegg is broadly diversified, our hit is less than 5% in the recent downturn. And even our hit in the stock portion of our nestegg is modest, again because it is very broadly diversified in index funds, and also because we have a modest position in a mining stocks mutual fund (a proxy for gold) and an energy stocks mutual fund (a proxy for petrol) and those have gone up a lot in recent years.

As I said in my previous note yesterday, I have stomached previous downturns without a shift in position -- NO MARKET TIMING -- but this time it's different, because too many people have not played by the rules, and now nobody knows what's going on. I think the prudent action to take in this environment is to pare down your stake in equities and wait until the macroeconomics and the banking mess improves. As it said in the morning's newspaper, banks traditionally loaned money for mortgages based on lenders' ability to repay, which means they would check credit ratings, job history, proof of earnings, savings accounts, etc. With the subprime hysteria, they stopped doing that; what they did was lend based on ALLEGED (in other words, LIED ABOUT) job salary, etc. The banks didn't care because they were making big fees for processing these fraudulent loans, and then repackinging them and peddling them to third parties, like Fannie Mae, other banks, etc. That means that investors in Fannie Mae and Freddie Mac, and a lot of other similar companies got stuck with far too many of these bad loans. AND NOBODY KNOWS HOW MANY THERE ARE, OR WHO HAS THEM. OR, IF THEY KNOW, THEY'RE NOT TELLING. WHEN YOU SEE BIG FIRMS FAILING OR BEING RESCUED AT THE LAST MINUTE, AND YOU SEE CEOs GETTING THE AXE, SOMETHING REALLY BAD IS GOING ON. The banks in Japan were hit with a similar problem about 20 years ago, and they're still crawling out of it, and this situation bears some very disturbing similarities to the 1930s.

There's a lot of hand-wringing behind closed doors on account of this, especially because it's an election year, and nobody wants to get stuck with the blame. But there's enough blame to go around.

bemadman-"WE get it already. dreamgardem, how about you quit spamming the board with the same doom and gloom nonsense over and over?"

My, my, please don't get your knickers in a bunch over my posts. Are you employed in the financial industry? If so I could appreciate why my posts might be upsetting. Otherwise, I don't see how it is your business to play forum moderator and lecture me on what is (and isn't) appropriate to post about in this forum.

I've been coming to the GardenWeb forums just a little longer (two years) than you so if you don't care for what I have to say you DO have a choice! Read something else!

Do you claim to know what everyone else who posts here thinks, because I think your liberal use of the word "we" is a bit presumptive. It would be helpful if you allowed others to speak for themselves.

"That way, the rest of us can calmly discuss the financial markets without you spamming us with more nonsense. If we wanted to read martin weiss's nonsense, we'd have done it already. "

Martin Weiss speaks nonsense? LOL. Care to put YOUR financial credentials up against his?

A link that might be useful:

Martin D. Weiss, Ph.D.-BIO
www.moneyandmarkets.com/Experts/MartinDWeissPhD/MartinWeissPage.aspx
Martin D. Weiss, Ph.D. is the nation’s leading advocate for investor safety. As editor of his monthly "Safe Money Report," and the author of Investing Without Fear and The New York Times best-seller, The Ultimate Safe Money Guide, Dr. Weiss has helped hundreds of thousands of investors avoid the losses of a multi-year bear market. In February 2003, Hulbert Financial Digest/CBS MarketWatch, which rates newsletters by performance, awarded top honors to "Safe Money Report." His Weiss Ratings, based largely on the Weiss proprietary computer model, has won acclaim by the U.S. General Accounting Office (GAO) for having beaten the competition by three to one in accuracy.

The situation in Japan's deflationary environment is quite different although it may superficially look the same. But the political and social dynamic is not at all similar to the US.

Yes, some banks will fail. It will not be in anywhere near the numbers that failed during the savings & loan debacle, where the cries for regulation and against those evil, lying, low-life bankers were....hmmm, almost the exact same word-for-word outcries.

The stock market is no different than the RE market. It is worth, on any given day, what somebody thinks it may be worth to someone else.

And like RE, it is an area where longer-term thinking rewards better than short-term thinking. I applaud haus_proud for having a diversified portfolio; it's a sensible and basic financial instruction that all too many people don't pay any attention to (are you listening, those of you who have more than 20% of company stock in your retirement account?).

I only wish we could be in mining or energy funds; but they are too volatile for inclusion in the fund offerings of our company retirement accounts. Nonetheless, we're as diversified as we can be. I recently transferred a good chunk out of the sole international equity fund to go back into US stocks. With the market decline, it's a good time to buying more shares for that dollar-cost averaging. We've gained considerable profits over the last two years from that fund; it was time to re-allocate and position ourselves for the next couple of years.

Since my DH is still working, this means we're still contributing (buying) - mostly stocks, a little bit of bonds, since we're still in our 50's. Not contributing the maximum, but 4x more than we used to, so for us that's a goodly amount, LOL.

dreamgarden: "Do you claim to know what everyone else who posts here thinks, because I think your liberal use of the word "we" is a bit presumptive. It would be helpful if you allowed others to speak for themselves."

Fair enough. Does that mean then if others speak up and ask you to quit papering the board thread by thread with C&Ps from martin weiss's website that you will do so?

bethesdamadman-"Fair enough. Does that mean then if others speak up and ask you to quit papering the board thread by thread with C&Ps from martin weiss's website that you will do so?"

If you want to be "fair", then please refrain from accusing others (who have been here longer than you) of 'spamming the board' or suggesting that they "buy a whole bunch of nonperishable supplies and move to an underground bunker out in the far northwest and wait for the black helicopters to arrive."

I'm still waiting for a response to my other questions:

Are you employed in the financial industry?

Are your financial credentials comparable to Martin Weiss's?

Whoa, I think the conversations are going OT here - let's get back to Phoggie's concerns, which in re-reading I note she mentioned wanting to sell her house, but nothing in town is selling.

It's pretty clear the current environment is to the buyer's advantage, not the sellers. You can certainly sell your house, but you will have to take much less, in some areas up to 25-30% less, than it was worth two years ago. If you can afford to take the hit and absolutely must sell, then find the very best RE agent you can, and make sure you take their advice about how to best market your property.

If you can hold on instead, you will be a much better position in a couple of years. The real fall-out is not banks failing or home prices falling, it's the tightening on mortgage applications. A rather large percentage of folks can no longer qualify, as excerpted below from the WSJournal (a link to the full article is provided as well, but you need to be a subscriber to read it):

"...But even borrowers who think they're well positioned to be approved for a mortgage "can't assume anything," said Guy Cecala, of Inside Mortgage Finance. And they'd better be prepared to shop around to get the best rates

"Cecala estimates that a third of the people who were able to get a loan in 2005 and 2006 no longer qualify for financing today. That takes into account the disappearance of subprime and Alt-A loans as well as the tightened requirements for getting prime mortgages, he said.

"Mortgage credit is as tight as we've seen it in a generation," said Cecala, publisher of the industry newsletter. "When does it get looser? When people feel that the housing market is stabilized, and that's really not going to happen until we start seeing an end to rising defaults and foreclosures, and housing prices have stabilized in markets throughout the country."

"If he had to guess, it'll be another year before getting a mortgage becomes any easier.

"In some cases, lenders are even looking beyond the numbers for proof not only that an applicant has a job with a steady income stream but is also likely to keep that job, said Bob Moulton, president of Americana Mortgage Group on Long Island, N.Y....."

It's a rough time for many. Watch your expenses, take care of your health (maintenance being many times more cheap than procrastination). Talk to your neighbors or friends about ways you can save money together, even in little ways. Look at your town/city with new eyes, there might be free events you passed by before - if you give them a try, it will at least be something different, and you won't be out any big $$. And you might find something new and interesting this way, that you would have missed otherwise.

Get together with a friend, take a walk in good weather and just talk. Come back home for coffee and a home-made coffeecake. Someone posted on the Caregivers forum about a friend whose DH was just given 2 months more to live - it reminds you that truly, the best things in life have little to do with money.

Here is a link that might be useful: WSJournal article (subscribers only)

jkom~~ The last two paragraphs in your post said it all.."it reminds you that truly, the best things in life have little to do with money". Thank God for a wonderful family and true friends....without them and your health, life would not be worth living~~~~
Thanks for reminding me of this while I am going through some really tough personal times...

dreamgarden: "Are your financial credentials comparable to Martin Weiss's?"

Well, let's see. I've never been issued a cease-and-desist order from the SEC for misrepresenting myself as an investment advisor and forced to pay the SEC over two million dollars for violating securities regulations.

So I guess the answer would be no.

I would agree with Hans, your biggest mistake came when you tried to "time the market". If you really knew how to time the market you'd been rich along time ago. You need to diversify and not keep all your eggs in one or two baskets. I think it is easier now than ever before to be diversified, with all the ETFs available.

dreamgarden to bethesdamadman-

"I'm still waiting for a response to my other questions:

Are you employed in the financial industry?

Are your financial credentials comparable to Martin Weiss's?"

bethesdamadman-"Well, let's see. I've never been issued a cease-and-desist order from the SEC for misrepresenting myself as an investment advisor and forced to pay the SEC over two million dollars for violating securities regulations.

So I guess the answer would be no."

So it sounds as if you DO work in the financial services industry....

I wonder why didn't you answer this question the first time I asked?