There might be a risk of recession coming. Of course, nobody knows if there will be a recession but there is a good chance.
I know mutual funds investment is long term. Is it a good idea to sell it now, pocket the gain, put the money in money market and buy it cheap if recession does happen?
2007-09-19 10:51:26 · 9 answers · asked by Ray Y 1 in Business & Finance ➔ Investing
I don't think there's a recession coming. If you really believe that a recession is coming, then you should sell your funds. But right now, stock prices are rising. If a recession is coming, there will be plenty of warnings, but there are none now, just some risk factors and general nervousness.
2007-09-19 13:35:21 · answer #1 · answered by Yardbird 5 · 0⤊ 0⤋
The market as defined by the S&P 500 Index is not particularly under priced or over priced. I only start to worry when prices are excessive. No one knows whether there will be a recession or not. In fact, the Federal Reserve takes action to protect against a potential recession. The market is a leading indicator and with a 9% gain this year for the S&P 500, it is saying that a recession is not lkely at this point.
Michael Weiss
The Editor
The Mutual Fund Investor
http://www.mutualfundinvestor.net
2007-09-19 13:52:20 · answer #2 · answered by Anonymous · 0⤊ 0⤋
If you are getting antsy about a possible downturn in the markets, talk with your financial advisor. Have him to explain what types of MF's you have in your portfolio. Remember...I just said, "your portfolio". Learn what is in it, and what are the most likely consequences of economic downturn or even growth.
From the way you have worded your question, it sounds as if you shouldn't be in terribly risky investments, but there are unscrupulous advisors out there. If the funds are part of a company-qualified plan, in which you can make changes, usually once or twice a year, without incurring additional sales charges, look at value funds, which do not usually appreciate as quickly as growth funds in a bull market, but they hold value better in a bear market. Additionally, look at the fund manager's alpha rating compared to the beta. If you have a financial advisor, ask them about the significance of these calculations in choosing your portfolio, as well as the funds' standard deviations. These terms may sound hairy, but they are not. If your advisor is worth his/her salt, they can put these in laymans terms and make you understand them and comfortable with them in less than an hour to where you can explain them better than many advisors.
When you understand them, you will, as they apply to your own portfolio, not fear a bear market anymore than a runaway bull market, and be able to make informed decisions on which funds you are comfortable with. That is better than just taking someone else's suggestion.
Whatever you do, do NOT sell out of fear if the values drop. The market always goes up and down. Only thing that matters is when you decide to sell.
If you have no advisor or they will not take the small amount of time to help you, IM me and I will be glad to.
2007-09-19 12:18:01 · answer #3 · answered by joeiselvis 3 · 0⤊ 0⤋
Ben Bernanke effectively began the process of preventing a recession, so put more money into your mutual funds they have no where to go but up. Bernanke will do 1-2 more rate cuts this year which will rocket stocks higher.
2007-09-19 11:57:22 · answer #4 · answered by Anonymous · 1⤊ 0⤋
I have reported Mr. thompson above for spamming the message board.
The time to have sold your mutual funds was a couple of months ago. Right now they shoud be appreciating, and should do so until past the New Year.
Helicopter Ben has pretty much told us that he's willing to print as much money as necessary to prevent a recession. As long as he's protecting his banking buddies, you can rest assured that we won't recess.
2007-09-19 11:52:44 · answer #5 · answered by Anonymous · 2⤊ 0⤋
Market timing is dangerous. One of the more important rules of investing (long term investing, anyway) is to stay invested. The economy slowing down doesn't necessarily mean the stock market is going to tank.
2007-09-19 10:57:16 · answer #6 · answered by matthew h 2 · 1⤊ 0⤋
Great idea. Ask strangers whose qualifications and motives can never be known.... how to invest your money.
Good luck with that.
When you first got your Mutual Fund(s) you understood the risk. You understood the term "risk tolerance".
Don't forget what you already know. People that jump in and out of funds hurt their investment growth.
Don't kill your future.
2007-09-19 11:58:50 · answer #7 · answered by Common Sense 7 · 0⤊ 1⤋
Keep your MF's. They are long term investments. Also, you should have a qualified and experienced financial planner guiding you.
2007-09-19 11:08:00 · answer #8 · answered by Anonymous · 0⤊ 0⤋
And if it doesn't come, you lose about 12% of gains.
2007-09-19 18:24:29 · answer #9 · answered by Steve R 6 · 0⤊ 0⤋