what to invest during government default?

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what to invest during government default?

Postby gallo146 » Wed Oct 09, 2013 8:34 pm

we are very concerned about the goverment defaulting next week. are you all prepared? do you recommend moving assets into moneymarket funds? or Total Bond fund or GNMA? away from stocks? please answer before next THURSDAY (default day)
thank you
el Gallo
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Re: what to invest during government default?

Postby livesoft » Wed Oct 09, 2013 8:36 pm

Please invest in reading this other thread on the subject: viewtopic.php?f=10&t=124151

Synopsis of that thread: Don't change a thing.
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Re: what to invest during government default?

Postby InvestorNewb » Wed Oct 09, 2013 8:38 pm

Put it all under your mattress.
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Re: what to invest during government default?

Postby mhc » Wed Oct 09, 2013 8:46 pm

What is this government default you are referring to? Is something happening? I have been playing with my kids in the park.

Regardless, I am not going to change my investments. I just got an extra $5k that I will probably invest in TSM.
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Re: what to invest during government default?

Postby livesoft » Wed Oct 09, 2013 8:50 pm

Here is a legitimate hot tip: Put everything in TIAA Real Estate Account. Even if everything else drops, the TREA is guaranteed to go up for another 6 to 9 months before it matches any drop that other things might experience. It is practically like investing in a time machine.
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Re: what to invest during government default?

Postby john94549 » Wed Oct 09, 2013 9:49 pm

Joking aside, all who have invested in manufactured dips have apparently done well. Example: Should one invest in a given equity at $95/share and it goes to $100/share, that is better than a CD.

That said, should shares plummet, and stay in the toilet, we will all be happy with our CDs.
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Re: what to invest during government default?

Postby The Wizard » Wed Oct 09, 2013 10:18 pm

Not a good idea to start another thread on the default given the forum advisory...
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Re: what to invest during government default?

Postby Jim180 » Wed Oct 09, 2013 11:02 pm

I suppose if anyone believes next week will be armageddon for the U.S. they would invest in gold. I don't believe it is, so I'm using this weakness to add to the stock market. I need more stocks in my AA. If you were happy with your AA before the shutdown then I would make no changes.
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Re: what to invest during government default?

Postby Valuethinker » Thu Oct 10, 2013 5:33 am

gallo146 wrote:we are very concerned about the goverment defaulting next week. are you all prepared? do you recommend moving assets into moneymarket funds? or Total Bond fund or GNMA? away from stocks? please answer before next THURSDAY (default day)
thank you
el Gallo


Gallo

No one knows. But as far as can be determined, markets are more worried about ST money market instruments than anything else.

So I'd rather be in Total Bond Fund. Or intermediate term Treasury Fund. On the general principle that the default, being of political rather than economic origins, will not last forever.
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Re: what to invest during government default?

Postby BBL » Thu Oct 10, 2013 6:12 am

I'm looking for any chance to book some losses via TLH. Not so easy to come by lately. Good problem to have.
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Re: what to invest during government default?

Postby nisiprius » Thu Oct 10, 2013 6:32 am

gallo146 wrote:we are very concerned about the goverment defaulting next week. are you all prepared? do you recommend moving assets into moneymarket funds? or Total Bond fund or GNMA? away from stocks? please answer before next THURSDAY (default day)
thank you
el Gallo
Goodness. Well, to begin with, I'm a fatalist about such things. I don't know what will happen but I'm doing nothing. I'm just as likely to dodge INTO a bullet as to DODGE a bullet. In general, I think it's a mistake to make investment changes based on news headlines. And in general I think it's a mistake to guess how an unfolding story will unfold.

Let me show you what I mean about "unfolding." A group of friends of mine was having a bull session via email just the other week, and one of us, who happens to be a civilian employee of the Department of Defense, had been furloughed and pressed us all for guesses on how long we thought it would last, because he wanted to think about possible vacation plans, etc. Here's the point. Every single one of the guesses was, simply, a guess on how long the government shutdown would last. NOT ONE OF US even considered the possibility that the furloughs would end WITHOUT the government shutdown ending, or how that would happen.

You just don't know what's going to happen, and even so you don't know how anything will affect the market. Remember when S&P downgraded the rating of Treasury bonds? How big an effect did you think that would have? I thought it would have a lot more effect than it did. Remember when Bernanke talked vaguely about eventually tapering down bond purchases? I thought that would have a lot LESS effect that it did.

What surprises me, though, is the idea that you would move out of stocks in order to protect against a bond collapse. I think, really, what you are saying is that you fear a general economic collapse of some kind. Well, so do I, but I don't think there is any easy, cheap, surefire protection to be had just by going online and placing a few orders for mutual fund exchanges.

I'm doing nothing whatsoever. Except worrying, of course.
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Re: what to invest during government default?

Postby Grt2bOutdoors » Thu Oct 10, 2013 8:14 am

What does your Investment Policy Statement say? Is your asset allocation invested according to your IPS? If not, then re-balance your assets. Stay the course! Take advantage of childish behaviors - buy low, sell high.
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Re: what to invest during government default?

Postby dickenjb » Thu Oct 10, 2013 9:11 am

Nobody else knows about the impending government default possibility? Or is it priced into the market already? (rhetorical question)
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Re: what to invest during government default?

Postby optimpessim » Thu Oct 10, 2013 9:47 am

We have RMDs that need to be taken by the end of the year. My plan is to wait for a RBD (Really Bad Day) for stocks. That day I will sell fixed income in tax deferred and invest it in stock funds in taxable. Of course I will be counting on my infallible intuition to tell me which is the right day! :? In addition to taking the RMDs we will be rebalancing. The added benefit to the plan is that by harmlessly "market timing" this move, I will be injecting a little bit of excitement into an otherwise boring chore.
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Re: what to invest during government default?

Postby MoonOrb » Thu Oct 10, 2013 10:44 am

How can someone with 163 posts here ask this question?
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Re: what to invest during government default?

Postby robiu977 » Thu Oct 10, 2013 11:10 am

Hopefully you moved all your equities into cash yesterday since today is such an awful day :oops: Best advice ... stay the course and don't look at the stock indices. That is why you come up with an appropriate asset allocation, to withstand the ups and downs on your portfolio. I know nothing earth shattering but I certainly try to remind myself of that everyday. Unfortunately I cannot help but look on CNN Money each day and log onto Vanguard each evening but I am comfortable with where my portfolio is and don't plan to change anything.
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Re: what to invest during government default?

Postby gallo146 » Mon Oct 14, 2013 6:35 pm

thank you kindly for your insights. we pull 10-20%% to Money Market from agressive assets. left rest monies in total bond fund, GNMA and Wellesley Fund, and KO stocks. When you are retired you fear people that drink the kool aid ---ooops--- TEA?
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