Tuesday, October 14, 2008

I'm Mad About Yesterday's Market Gains!!

The record-breaking gains in the market yesterday really pissed me off! And if the European markets are any indication, today could be another day when the Dow and S&P are heading upwards again! This sucks!

Why am I bemoaning stock market gains when just days ago I was feeling almost nauseous about all my losses? Because the peaks and valleys of the market don't seem very well timed in relation to my 401k! If I am making contributions on the 15th and 30th of every month, I'd like those days to be when the lows are, so I can get more shares for my money. The recent lows have fallen in between those times, and it looks like the market could be back up on a bit of a peak on the 15th when I'm automatically buying! So much for getting any bargains.

I guess one small consolation is that it's almost a moot point now. I think I may be making my last 401k contribution with my next paycheck, as that will bring me to the $15,500 maximum. I do have cash in savings accounts that I could use to buy more mutual funds via my E*Trade investment account, but given the volatility of the market lately, I don't really want to increase my exposure right now, and prefer to leave that money in cash and CDs just to balance things out. And when it comes down to it, I am not someone who really wants to try to time the market. I would never try to jump in and out of the market, trying to buy and sell along the ups and downs. But I do believe in putting money in the stock market for the long term, and if I am going to be investing money anyway, I'd like to take advantages of low points. And the good/bad news is that I'm sure there will be many more of them in the months and years to come!

12 comments:

savvy said...

If your company provides a 401k match, depending on how they do it, you may be leaving money on the table by maxing out before the end of the year.

Middle Class Hick said...

You could be in my boat. My company has never been able to deposit the 401k properly along with our company match. They always deposit it 3 or so days late. Why does this matter? Well think of it, after all these companies buy on the 15th and 30th, the market is up, then my company comes in 2 days late, and while the market is higher, they buy. Less shares.

I figured it out when I went to HR, and asked them about it, I was short about $10k dollars with on $50k in the account. So by the company not putting in the money on the day I get paid - I am off 20%? Yup. So I have lost 20% of value by the company timing it wrong.

When I brought this up to HR, they said (and it is true) technically they have 15 days to deposit the money AFTER the day you are supposed to get paid. So they are well within their right and guidelines. It just sucks that they cannot do it right and are screwing people out of money.

finance girl said...

wha...? Even if the market had strong days today and tomorrow, doesn't make up for the losses in the last year....?

You're still buying low, you need to put it in larger context than just the last couple of weeks.

Optioned Unarmed said...

If you REALLY want to have some control over what days your 401(k) plan buys stock shares, you could probably arrange to have all your new 401(k) deferrals and matches go into a money market or stable value (cash) fund, and then make your stock purchases from that whenever you perceive an opportunity to purchase at low prices.

I doubt you'd be any better off this way in the long term, but it is an option...

Susy said...

I know I just opened a new IRA hoping that the deposit would go through while it was at it's lowest, no such luck.

Chad @ Sentient Money said...

I do what Optioned Unarmed does. It works better. Just mindlessly putting money is not a great plan.

But, don't worry, the market will be coming back down shortly. The problem is slowly moving from one of tight credit to one of an economy in a recession. Bankruptcies in retail companies are just around the corner.

Anonymous said...

My contributions go in the same days as well and so do million of other people's... the implications being...?

Anonymous said...

That's funny, because I felt the exact same way.

Anonymous said...

You can only take advantage by putting extra into the market. You were supposed to be fearful when the market was red hot, not right now!

stephanie said...

I understand completely! I also get paid on the 15th and the last working day of the month!

Kady said...

Well, it's the 15th, and the market tanked today, so you're in luck!

(look at me, finding the upside)

Tim said...

we do tend to focus on times when we bought something at the peak and compare it to a valley. take a look at all past contribution days and see what happened, and then make a judgement.

i also agree with the point about there seems to always be a spike when 401k's get invested, and that is probably because lots of people are getting paid at the same time and lots of money is going into the market at the same time...buying not selling. i also don't like the fact that mutual funds don't offer you a limit price, but the end of the day market price. oh well.

as Kady mentioned, yesterday was a huge tank. i'm glad because i have automatic investments going in yesterday, the 15th.