OT/ Question for those with investments

[maldorf]

I am named as a beneficiary of a small trust fund. Back in July it had a portfolio value of $200k. My most recent statement just arrived and its now woth just $140k. Those of you that have investments, are your values dropping like this or is my portfolio manager just an idiot? 75% is in equities and the other 25% is in fixed income. Just wondering if we could help ourselves by getting someone else to manage this thing. At this rate it isnt going to be worth jack by the end of 09.

[swole79]

Thats pretty much the norm right now. Many have been hit worse than that.

[maldorf]

Originally Posted by swole79

Thats pretty much the norm right now. Many have been hit worse than that.

I feared as much. Hard to swallow. Guess Im lucky in that we dont need to draw on any of those funds and we can just wait for years until this is all just a memory.
I was just unsure how bad it was, and losing 30% of its value in less than 6 months seemed just insane.
ANyone here investing in the market now? Wondering what kind of strategy others are imploying.

[thebrick]

http://www.latimes.com/business/la-f...,3622716.story

[OuchThatHurts]

I would not want anyone managing my assets right now other than myself. Looks like you took a 30% hit. All things considered, that's not too bad but at least get out of equities for the time being.

[ssdark1]

thats a substantial amount of $ bro...should be way more than enough to motivate you to learn as much as you can about the financial world. i would make it a goal to read at least ten books on the subject and take matters into your own hands. dont trust money managers, its in their best interests to have your $ in the market, they have people they are far more concerned about pleasing than you. like oth said, out of equities...

[The Myth]

Originally Posted by maldorf

I am named as a beneficiary of a small trust fund. Back in July it had a portfolio value of $200k. My most recent statement just arrived and its now woth just $140k. Those of you that have investments, are your values dropping like this or is my portfolio manager just an idiot? 75% is in equities and the other 25% is in fixed income. Just wondering if we could help ourselves by getting someone else to manage this thing. At this rate it isnt going to be worth jack by the end of 09.

If the portfolio was worth 200k before you got it, I am wondering how well has it done over the years and exactly what stocks are included. This will be the determining factor if you should just leave it alone or try to do something else with the value of it right now. If there are Tech and Oil companies involved, leave it the hell alone..... You will thank me for it in another year...

[ssdark1]

thanking you in one year, cursing you in five...

[DatBtrue]

Why is your portfolio even invested in stocks?

That is a very risky asset class.

You may want to think about simply preserving what you STILL have by safeguarding the principle and earning some interest.

When times become more certain you can reinvest in equities. But at the moment it seems many publicly traded companies will fail this year. Too much uncertainty... these times call for captial presevation which means precious metals and fixed income instruments.

[OuchThatHurts]

Originally Posted by DatBtrue

Why is your portfolio even invested in stocks?

That is a very risky asset class.

You may want to think about simply preserving what you STILL have by safeguarding the principle and earning some interest.

When times become more certain you can reinvest in equities. But at the moment it seems many publicly traded companies will fail this year. Too much uncertainty... these times call for captial presevation which means precious metals and fixed income instruments.

Absolutely. Good post. As your name says "DatBtrue"

[thebrick]

Sorry guys, I have to respectfully disagree when you say bail out of equities at this point... especially after the big hit last year.

1) First, evaluate WHEN you will need this money. If its sooner than later, no you shouldn't be heavily invested in stocks to begin with. If we are looking at at least 10 years out before you need it, stocks have historically out-performed other investments long-term, period.

2) If you do cash out now, you have insured that your losses on paper have now become permanent realized losses.

3) Don't try to time the market. When the day comes markets recover (and it will) history shows us that some of the best market gains comes literally in the first days of the recovery. Trying to time this is virtually impossible and in doing so, you have already missed some of the biggest returns.

Bottom line is, you have to find a place where you are comfortable with your money. You want to be able to sleep at night. Would I put NEW money in the market right now? That's up to the individual and their tolerance for risk.

[OuchThatHurts]

Originally Posted by thebrick

Sorry guys, I have to respectfully disagree when you say bail out of equities at this point... especially after the big hit last year.

1) First, evaluate WHEN you will need this money. If its sooner than later, no you shouldn't be heavily invested in stocks to begin with. If we are looking at at least 10 years out before you need it, stocks have historically out-performed other investments long-term, period.

2) If you do cash out now, you have insured that your losses on paper have now become permanent realized losses.

3) Don't try to time the market. When the day comes markets recover (and it will) history shows us that some of the best market gains comes literally in the first days of the recovery. Trying to time this is virtually impossible and in doing so, you have already missed some of the biggest returns.

Bottom line is, you have to find a place where you are comfortable with your money. You want to be able to sleep at night. Would I put NEW money in the market right now? That's up to the individual and their tolerance for risk.

Yes. And this is the other way of looking at it. Basically two camps going on here. And here is the problem I have with this philosophy. Normally, on a stock market dip or mild recession, you can be assured that those stocks come back because the business models are intact. Unfortunately, this is a totally different situation. We are in a place we have never been before, historically speaking. Some of these stocks simply aren't coming back. These companies are going down for good. They represent poor business models that relied too heavily on credit and rampant consumerism and the bad apples are just raining off the trees.

Take this guy in this thread. He's down 30% and yeah, the trust isn't a ton of money but he still owns a substantial portion of it. Better for him to cut his losses than wait for this hopeful "big up". Trading volume has gone way down. I'm not exactly suggesting that he try to catch a falling knife. I don't try to catch falling knives. But until jobless rates begin to fall and home values start to level off or rise, the trends will remain downward and the inevitable deflation will increase the value of his remaining money. I don't foresee the "big up" that everyone is waiting for. Too many people have already tried to catch that only to get burned once again and lose even more money. The credit industry will never be the same.

Under normal circumstances, I'd be agreeing with you 100% but nobody in finance seems to want to acknowledge that this isn't just the decade's typical run-of-the-mill recession. These are historically bad numbers with a historically bad forecast and every day the headlines read, "Dow up as investors shrug off dismal 4Q estimates". Everyone just keeps "shrugging it off". And that's exactly the way it will stay - either trade sideways or down until all the bad apples are shaken out of the tree.

At the very least, go with bonds or precious metals. I keep hearing them saying "undervalued, sale price, etc." but what value is a stock that's undervalued now but will be worthless in two years? The treasury can't play the role of a kickstand for the economy forever and 1 or even 5 trillion dollars is just not going to fix it.

I hope I am wrong, in which case I will have made no money from now until it's over but if I'm right (and the leading indicators are right) than I'll save a fortune. So I ask you. Would you rather wait this out making no money and get back in when true signs of improvement are seen or do you just hold on for dear life and pray that the markets don't continue their years long trend?

IMHO, if your downside potential is huge than it's wise to play it safe. But if downside potential is only a few hundred thousand than maybe it might be better to wait because with just a few hundred thousand what you are looking for there is appreciation obviously. But if your downside risk is much higher you need to consider asset preservation.

[jawbreakerkid]

Abandoning equities could be an enormous mistake, however, I would cut back my equity exposure. There are ways to have equity exposure without incuring all the risk, in the form of structured investments, or some of the ETF products available today.

If you are invested in equities in the form of mutual funds, SELL. Mutual funds are expensive when taking into account the manager fees, your advisor fees, and the trading fees the manager incurs in the management of the fund. You can lose up to 2% of your gains, or add that 2% to the losses you experience. ETFs are much more efficient, where you incur a .2% cost for the passively managed fund as opposed to the actively managed mutual funds. Beautiful thing about mutual funds in this bear market, when some funds are losing as much as 63% of their value, redemptions are causing the managers to sell out of profitable positions, causing the remaining investors to pay capital gains when they have lost a considerable amount of principal! If you can't tell, I hate mutual funds.

If you are smart about it, the government is telling you where to invest, follow the government. You can get equity type returns in investments that are essentially government guaranteed. There is tremendous opportunity, outside of trying to pick up beaten down stocks. I don't want to make it too easy for you, but a good advisor worth half a $#@* should be able to steer you in the right direction.

This market is not going to rally anytime soon, we have a multitude of problems that we need to work through. If there has ever been a market to take a tactical approach as opposed to a strategic approach, this is it.

[altamoreaf]

If I read your post correctly, you have no choice as to where the money is invested. A beneficiary of a trust has a right to receive the benefits of the trust, but only the trustee can make investment decisions. My advise to you is to talk to a qualified legal representative concerning the loss. The trustee is regarded as having a fiduciary relationship with the beneficiary, and any loss as a result of bad investments by the trustee could be actionable by the beneficiary.

[OuchThatHurts]

Originally Posted by jawbreakerkid

Abandoning equities could be an enormous mistake, however, I would cut back my equity exposure. There are ways to have equity exposure without incuring all the risk, in the form of structured investments, or some of the ETF products available today.

If you are smart about it, the government is telling you where to invest, follow the government. You can get equity type returns in investments that are essentially government guaranteed. There is tremendous opportunity, outside of trying to pick up beaten down stocks. I don't want to make it too easy for you, but a good advisor worth half a $#@* should be able to steer you in the right direction.

This market is not going to rally anytime soon, we have a multitude of problems that we need to work through. If there has ever been a market to take a tactical approach as opposed to a strategic approach, this is it.

How can it be a mistake? All you stand to lose is some measly appreciation yet at the same time risking your childrens' future. I have an online brokerage where I play with some fun money but in my opinion, and it's just my opinion, you should have in equities that which you can afford to lose. Because one thing I can promise you is more losses if you stay in stocks and mutual funds. I have more short positions now than long.

Originally Posted by altamoreaf

If I read your post correctly, you have no choice as to where the money is invested. A beneficiary of a trust has a right to receive the benefits of the trust, but only the trustee can make investment decisions. My advise to you is to talk to a qualified legal representative concerning the loss. The trustee is regarded as having a fiduciary relationship with the beneficiary, and any loss as a result of bad investments by the trustee could be actionable by the beneficiary.

Before sending the guy on a legal crusade, it might be wise to first ask him who the trustee(s) is! It could be Dad, Aunt Marie, or Rick down the street. He did not say whether or not he has any control over the allocation of the trust assets. It might just be a matter of a phone call.

[OuchThatHurts]

Originally Posted by jawbreakerkid

If you are smart about it, the government is telling you where to invest, follow the government. You can get equity type returns in investments that are essentially government guaranteed.

What did you mean by this? Are you talking about TARP-backed cos like Citi?

I'd really like you to share that with me if you don't mind. PM if you want.

Thanks,

OTH

[altamoreaf]

Before sending the guy on a legal crusade, it might be wise to first ask him who the trustee(s) is! It could be Dad, Aunt Marie, or Rick down the street. He did not say whether or not he has any control over the allocation of the trust assets. It might just be a matter of a phone call.[/QUOTE]

You are correct, but trustees are typically professionals who work for trust departments at local banks. Even if this is not the case and the trustee is Dad, Aunt Marie or his buddy Rick, at least he will know where he stands.

[OuchThatHurts]

Originally Posted by altamoreaf

You are correct, but trustees are typically professionals who work for trust departments at local banks. Even if this is not the case and the trustee is Dad, Aunt Marie or his buddy Rick, at least he will know where he stands.

Often yes. But usually only if a trustee or group of trustees was not specified when the trust was created. For example, I would never allow my own son's trust to fall into the hands of a non-relative. But you are right, many people are not forward-thinking and it does happen.

[rotty]

Originally Posted by OuchThatHurts

What did you mean by this? Are you talking about TARP-backed cos like Citi?

I'd really like you to share that with me if you don't mind. PM if you want.

Thanks,

OTH

I woulkd assume he was talking about all the companies that are getting the bailout from the government. I'm not sure if Wells Fargo took money or not, but if I had money to invest I would be putting it in Wells Fargo and Golman Sachs and if I owned any big 3 auto stocks I would use it as TP.

I think if you have money that you can afford to take a loss on in the short term there are a lot of really good buys out there. The market will come back and come back strong, it just might take a while. When it does come back, it will be like a last man standing fight anf those companies should be good to go from here on out

[rotty]

What I wouldn't do is invest in sailing an iceberg from the North Pole to countries to deliver fresh water like Monty Brewster did in the movie Brewster's Millions