Dow -119 and plummeting

[geek tragedy]

There will be a default, and now the panic begins
http://quotes.wsj.com/index/DJI

[geek tragedy]

1. -126 nt

[geek tragedy]

2. -132 nt

[geek tragedy]

16. -137 nt

[Robbins]

3. I agree

The tea party In House today have assured it.And now negorations have broken down In Senate.

[ChangeUp106]

4. .

[lostincalifornia]

5. No panic yet. It needs to drop much more on larger volume

[geek tragedy]

8. Tomorrow morning there will be panic. Just wait until Thursday morning

when the president announces that no Social Security checks will be going out.

[lostincalifornia]

19. I am not saying it won't be, it just isn't there yet. In fact even if something does get passed, I

It is too late.to make it by the 17th

[onenote]

65. I missed that announcement.

In fact, I missed pretty much everything predicted by the OP.

I should add him to my list of financial advisors: if the OP suggests the market is going to crash, its the perfect time to buy.

[geek tragedy]

67. Heh. I have nothing but cash and home equity.

Don 't play with stuff I don't understand.

[LondonReign2]

68. Then refraining from claiming imminent collapse

on a market down < 1%, which you don't understand, might be the wise move.

[geek tragedy]

69. If lack of knowledge regarding subject matter were a bar to posting, this would

be a mighty quiet place.

Moreover, the point was to track market reaction to Republican antics. There was a minor spasm of panic yesterday afternoon when the Senate announced they were suspending negotiations.

[MoonRiver]

6. I'm very worried about my retirement accounts, but,

if this means the end of Republicans having any power in Congress, I'll willingly take the hit. Once Dems are firmly in control we'll all make up the losses these bastards have inflicted on us.

[R. Daneel Olivaw]

51. I'm more worried about those most vulnerable that take a hit and lose everything.

[Robbins]

56. I am one of them

I am disabled living In kansas City,Missouri who lives on SSI,Food stamps,and Medicaid plus engery assistance.

Government default means no social secuurity or SSI go out november 1.Come november 6 people on Food stamps barring anymore
techinal glitches won't get them.

Right now a part of me would like to riot against every single republican In the country.The non-tea party republicans are enabling the tea
party.

[R. Daneel Olivaw]

58. I share your sentiment, and I hope this mess is averted.

My mother is on SSI, and my father resides in the VA. My family will be feeling the pain, and will want to share it with the GOPigs that caused it.

[MoonRiver]

63. I agree of course.

The most needy are the ones we must focus on.

[kentuck]

7. The word is getting around.

They are ready to default. Is there still time to clean out the 401K's, and pay the penalty?

[A HERETIC I AM]

18. Why would you do that?

If you are worried about the investments inside your 401(k), then move everything to cash or a money market fund, but selling everything and taking a distribution because of this is quite frankly, foolish.

[jeff47]

20. Not all funds have cash or money market options

And money markets aren't exactly going to have a good time in the wake of a shutdown.

[A HERETIC I AM]

22. The overwhelming majority of 401(k) Plans (not "funds") have a cash or similar option.

It makes a shitload more sense to take a few percentage point hit on yield or price than it does to take an up to 40% hit by removing funds from a tax deferred account.

The 401(k) plan that does NOT have a cash or similar low interest or safe fund he could move to is a rare bird indeed.

A 401(k) is an ACCOUNT, not a "fund".

[jeff47]

27. OMG!!! A TYPO!!! GET THE PITCHFORKS!!!!!

I deeply apologize for re-writing the subject of my response, and missing that I still had "Fund" where it should have had "plan".

as for this:

The overwhelming majority of 401(k) Plans (not "funds&quot have a cash or similar option.

I've had exactly 1 401k over the last 20 years with a cash option that you could actually invest in. The "cash option" in all but one of the plans was the technical mechanism by which funds entered the 401k or were moved around inside the 401k. (Wanna sell the "rapists and pillagers" fund? Proceeds go to cash, and then get split up and re-invested in the newly selected funds).

It makes a shitload more sense to take a few percentage point hit on yield or price than it does to take an up to 40% hit by removing funds from a tax deferred account.

Depends. If a cash option isn't available, and you expect the entire financial system to implode, a 40% loss isn't your bad option.

OTOH, cash it out and roll it over into an IRA, and you don't have the penalty (I forget if that requires something like a 'qualifying event', and really don't care enough to look it up). Then you can pick "cash" or whatever else you'd like to put the money.

[Lurker Deluxe]

34. I have had several

And I have never had one that did not have at least one fixed interest account. Pretty much all of them have their investment options listed online, I am sure you know the ones that don't and can let us all know which ones they are.

Cause I am calling BS that any modern 401(k) does not have a guaranteed income fund or low risk bond fund.

And if you think the entire financial system is going to implode where exactly are you going to put that money that you remove from your investment account? In your bunker behind your house where your 250 guns and several years worth of food is stored?

FFS!! The world is not about to end over some political asshatery!

[jeff47]

39. So you're now claiming a bond fund is a cash fund?

Cause I am calling BS that any modern 401(k) does not have a guaranteed income fund or low risk bond fund.

Yeah...let's think about this for a minute.

What's that low-risk bond fund going to be heavily invested in? Treasuries.

Golly, I wonder if that fund might be affected by a default.

And I have never had one that did not have at least one fixed interest account. Pretty much all of them have their investment options listed online, I am sure you know the ones that don't and can let us all know which ones they are.

Because 401k plans and the funds therein aren't decided on a per-company. Why, they just go to the federal 401k exchange and pick a plan.

Oh wait, that's utterly and completely wrong.

And if you think the entire financial system is going to implode where exactly are you going to put that money that you remove from your investment account?

People predicting such a catastrophe generally aren't thinking logically. Such as believing currency will still have value if their scenario comes to pass.

[Lurker Deluxe]

45. The US government has never defaulted on a bond.

And they will not default on them over this, and their value will not change one penny. It's still the safest place your money can be in the entire world.

Everything is a 401 is called a "fund". As in, "guaranteed income fund", which in my 401 is paying 1.04%, but that money is completely safe from any market fluctuation. The next safest one is "American century government bond fund", then there are 3 more fixed income funds which have minor market fluctuations but are so diverse that they pretty much remain within a couple of points and depend on dividends to move their value, equity investment.

You can change the goal post all you like. Tell me which of the 401(k)s you had that had no guaranteed income fund, or stable value fund ....

Still waiting on that.

[A HERETIC I AM]

38. It does require a qualifying event.

Like leaving the current job.

You can not just roll the balance of a 401(k) into an IRA whenever you feel like it.

No pitchforks needed. I'm sorry if I sounded harsh, but there are so many DU'ers who mangle terms or misstate things on this subject that it is impossible to know if they really know what they are talking about or not. I don't mean to impugn your knowledge, but I see it time and time again on this board.

People tend to freak out when bad financial news comes around and when they freak out, they tend to do the WRONG thing. If you had a well diversified 401(k) portfolio in September of 2007 and did NOTHING while the market collapsed to 6600 and then climbed all the way back to where it is now, you would be doing just fine.

I have had 401(k)'s since the late 80's and every single one that I can recall had a safe investment option. It might be called a "Steady Value Fund" or a Money Market or cash or whatever, but, as I said, the kind that does NOT have such an option would be so rare as to be remarkable.

[jeff47]

42. They have "safe options", but usually that's a bond fund.

And if there's a default, bond funds may have problems.

[Lurker Deluxe]

46. If the US defaults on their bonds

Paper money is useless and inflation will drive the price of a carrot to thousands of dollars.

The will be no bond default over this. The US takes in enough in revenue to pay the debt and service 85% of expenditures ...

[jeff47]

48. Except not paying that 15% is still a default.

Not to mention the economic devastation caused by an immediate 15% spending cut, which will reduce revenue, which will require additional cuts that then reduce revenue and so on and so forth.

In 1979 we defaulted on about 0.0001% of our debt. Software glitches coupled with a delay by Congress meant about $100M worth of bonds were not paid on time to small investors. Large buyers got paid on time.

Cost of that default? About $12 billion in higher interest.

Defaulting on "only 15%" is not going to be a small thing.

[A HERETIC I AM]

47. Typically, yes. (Edited to add a link)

And if there is a default, it will be on short term paper only, or at least that is what we can only hope for.

There was the story the other day about Fidelity selling off it's short term securities from their money market funds.

I'm willing to bet they aren't the only ones who did. One way to find out if YOUR 401(k) provider did is to look at their website, find the name of the fund or funds that fall under that category, find out the 5 letter ticker (easily done on Google) and look it up on www.morningstar.com.

Find the tab for "Holdings" under the "Portfolio" section and look it over. It may or may not have information up to date as of today, but you could find that out by calling the provider directly.


Edit;

Out of curiosity, I looked up what the largest retail Money market fund was. Wikipedia says it is the "Vanguard Prime Money Market" fund (Ticker VMMXX)

So I looked that up on Morningstar. Here's the Portfolio page;

http://portfolios.morningstar.com/fund/summary?t=VMMXX®ion=USA&culture=en-US

Currently 94.39% in cash. That is a Money Market fund valued at over $132 billion.

[Lurker Deluxe]

23. or

If you have your monies distributed properly and the market does tank for over 30% or so you can move money from the money market/cash/fixed income values and place them in the funds that that the hit and catch the bounce and make 25% or so.

Careful though, it's tough to catch a falling knife without getting cut.

[A HERETIC I AM]

32. "Time IN the market is always better than...

timING the market".

At least for the average investor, like the owner of a 401(k) or an IRA or someone holding primarily Mutual Funds.

[Lurker Deluxe]

40. You are absolutely correct

However, being a little more involved in my 401 and it's movements, I actually track the funds performance (including dividends and fees) on my own spreadsheet weekly, I am comfortable making those kinds of risks with the 35% that is in fixed/low risk funds.

That is the reason I set them up the way I do and I am aware that this is not something everyone should do. Overall in the long run the simpler strategy is when the market is down invest more, not less, in risky funds. The mistake most make is when the market falls they remove money from the fund that lost 30% and place it in the fund that lost little to nothing and then cry that the 401 fucked them out of their money. Either let it ride, or double down, don't fold.

[A HERETIC I AM]

44. Then you are doing it right...

by paying attention and have obviously taken the time to learn about your plan and the funds available to you.

Most people unfortunately, do neither.

[Lurker Deluxe]

21. ?!?!?

That's how people end up losing money in such a financial instrument.

Pay attention here, this is fairly simple.

1: Don't take a penalty on your retirement funds for a temporary stock market dip.

2: See #1.

[kentuck]

33. Thanks Lurker.

[Cali_Democrat]

9. Not even down 1%

Still not a panic....yet.

[geek tragedy]

10. Just wait until CNBC announces that the debt talks have broken down

and that the House is planning on leaving town.

[Supersedeas]

61. the sky will be there tomorrow

[aikoaiko]

11. Are we really doing "the sky is falling" over a <1% decline

Granted it could be the precursor to something bigger, but still...

[geek tragedy]

12. Republicans have chosen to default in House, no talks in the Senate.

Default's all but guaranteed at this point.

The real question isn't why are some people panicking, it's why isn't everyone.

[CreekDog]

15. No, we're doing a "sky is falling" over a likely default

and that is close to the sky falling.

[Rex]

13. The 1% must be loving this.

Soon they are going to be able to buy massive amounts of stock at pennies on the dollar!

[geek tragedy]

14. Depends if they're cash 1%ers or 1%ers whose wealth is in financial instruments.

Cash and land are looking like the only safe things right now.

[Rex]

17. They can shift assists right now to land and cash

and then switch back after the stock market falls off a cliff. Probably have most of their money hidden away in a foreign tax shelter just waiting for the day they can buy the NY Stock Exchange.

[geek tragedy]

24. Offshoring wealth is no protection. In terms of financial contagion, this is the bubonic plague. nt

[Rex]

26. So you are saying the default will cause a global meltdown?

nt.

[geek tragedy]

29. Yes, the US dollar is the world reserve currency, and US treasury bonds are considered the

"risk-free" standard underlying directly or indirectly every financial instrument on the planet.

[Rex]

30. Well we always knew the GOP would lead to worldwide destruction some day.

GREAT, just what we needed ANOTHER global meltdown...we barely survived the last one.

[geek tragedy]

31. Think Lehman Bros implosion X100 nt

[tillikum]

57. cash on hand.....take a look

http://www.federalreserve.gov/releases/z1/current/accessible/b102.htm

[ReverendDeuce]

25. It's happening!

[kentuck]

35. OMG! That is scary!

Shiver me timbers!

[d_b]

43. it never gets old

[joeglow3]

28. Not going to happen

Short term at least. If it drops 10%, I will be buying the shit out of stocks because it WILL get resolved and any detrimental impact will be short term (basically non-existent on the financials).

[NoOneMan]

36. "There will be a default, and now the panic begins"

I don't think so. The panic begins, which means more and more of the soft, fluffly center will be able to accept a last minute fuck over

[seabeyond]

37. fuck....

[seabeyond]

41. i just looked at mine. mine went up. yea.... nt

[flamingdem]

49. rut roh nt

[R. Daneel Olivaw]

50. -116

[ChangeUp106]

52. -127 and falling.

Almost closing time...

[JoePhilly]

53. First, you have to get below 15,000 ... then 14,750. ;-)

[Benton D Struckcheon]

54. The market is and isn't worried, kinda sorta.

VIX futures are an interesting place to look for how people are thinking.

October expiring futures, they expire tomorrow morning: 18.13
November futures: 17.53

Which, when you think about it, means they're not quite as worried as you'd think. VIX itself is at 18.51. Both of these are at a discount, but the November one, which will be the one still around on Thursday, is at a really large discount.
Don't know if they're right or wrong. Just an interesting thing to watch.

[SheilaT]

55. Well, it closed down all of 120 points,

about eight tenths of one percent. The market moves that much all the time. This is not a panic sell off, and those who are screaming, SELL! SELL NOW! are being irresponsible.

While what the Republicans are doing is extremely irresponsible, the fundamental basics of our economy, while not as good as they should be, still aren't terrible. Companies are not going to shutter their doors tomorrow. Banks aren't going to fail. Yes, there will be some real hardship if social security checks don't arrive, and if our government actually misses some bond payments (interest payments, redemptions, all those things) it will mean that in the future interest rates will rise because no one will be quite as eager to purchase U.S. bonds/treasury certificates if there's a chance of a missed payment.

Rachel Maddow did a very interesting segment last night about the last time this happened which was in 1979. Here's a link:

http://www.nbcnews.com/id/26315908/#53281430

[R. Daneel Olivaw]

59. -133.25

[SheilaT]

60. Thank you for the correction.

I obviously looked at a slightly too early posting.

[R. Daneel Olivaw]

62. No prob. I'm really not interested in tomorrows numbers if there is no deal.

[NCTraveler]

64. +1

[LondonReign2]

66. LOL. +2