So .... my broker called today ........

[Stinky The Clown]

.... no, I'm no big time investor. My two partners and I have SEP IRA accounts with the same brokerage house. We just made another (all too modest) contribution and so he called to see what I wanted to do with it.

Here are a few tidbits from our conversation:

The housing market won't fully bottom out till next year (his company sez).

The Asian markets will be tainted because of China and as a result all derivatives of their stock markets (some US mutual funds) will not see the same strong growth.

The European market has bottomed and is making a reasonably strong come back. Eastern Europe, however, remains more an emerging market than a recovering market.

South America and Africa remain emerging markets except for Brazil, which is seen as a commodity market.

The US will not hit full recession, but can be expected to see some scattered declines through late this year. They see the recent stock market dip as a needed correction. They expect a level to slightly up market, segment declines notwithstanding, for the next year or so. The culprit, as they see it, is the mortgage market, which will tighten credit across the board and affect everything to one degree or another.

So ....... I put my new pennies and some cash I was holding on the side into yet another European fund, this time a slightly more risky growth fund. Except for the cash I'm still holding, 100% of my portfolio is in non-US stocks or non-US focused mutual funds. Over the last four years (that's how long we've been with this guy) my total portfolio has grown 23%. I take credit for this since each of our SEP IRAs is mostly self directed. One of my partners had a lot of REITs and other real estate derivatives (not exactly sure what). She's getting slammed ..... but has moved out of that and into international stuff not unlike mine. I'm not sure what my third partner's doing. She's out and I haven't talked to her today.

So far, this account allows me to retire comfortably ... for about a year. :eyes:

[Warpy]

1. I hear you. It's hard to know what to do

but I'm out of anything that has ever been near CDOs. I had an insured Fannie Mae fund and dumped it in favor of Bank of Scotland about 6 months ago.

The problem with this stuff is the sheer magnitude of it. Something like 70% of the loans issued in California over the past 2 years were ARMs. When those puppies reset, all hell will break loose. Banks and brokerages will be slammed. Some mutual funds will be slammed. Nobody will get out unscathed, and the trillions of dollars that go "poof" will affect every bit of the market, top to bottom.

I'm expecting to get hurt in this one. I don't think there is any way around it.

[enid602]

2. in Cheney we trust

Remeber, European and Asian markets tend to rise and fall along with Wall Street. Although international stock mutual funds offer a bit of a hedge against the dollar, they still go up and down with the market. International bond mutual funds are much better. I have half of my funds in them (EuroPacific Fund, American Century International Bond Fund, T Rowe Price Int'l Bond Fund, Mainstay Emerging Mkts Bond Fund, etc). Thanks to FOIA, it's been discovered that old Cheney's in the same bond funds, so I feel more secure. After all, who should know better (how to protect against a weak dollar) than the people whose policies are responsible for the dollar's downfall?

[Raine]

7. Just keep in mind

that Cheney can afford to lose lots of money so he can take more risks. Deadeye Dick won't feel the loss plus his rich friends will bail in out in one way or another.

[enid602]

9. risk

Investment in non-dollar, hard currency- denominated AAA bond mutual funds is about as low a risk as you can take. There is a bit of risk, say should the dollar appreciate significantly vis-a-vis other currencies, but that's not likely to happen given Washington's spending habits and hesitance to tax. A country is just like a family; those which tailor their spending to their income (and save for a rainy day) are likely to fair better than the more financially reckless families. I think the US (quagmired in Iraq, considering its options with re: to Iran) is fairly reckless as far as countries go. I find it Ironic that the author of these reckless policies is among the first to invest (in a big way) in international bond mutual funds.

[Gregorian]

3. I don't have a crystal ball. But I say the housing market will just be starting to fall by next summ

er.

So far, only the most severe houses are in trouble. The higher end stuff is just sitting. No price reductions.

My prediction is we have a long long way to fall. I can easily say that when house prices rose by 20% per year for a decade.

I'm a lot more doom and gloom than most. And to be honest, I hope the shit hits the fan. I'm sick of all of the growth. The bad part of that kind of thinking is that if that happens, it's going to hurt all of the wrong people. So I hope it doesn't happen. Life sucks if you aren't rich. I just hate it.

[Neshanic]

5. Correct. Look at the arm resets. Housing will be 2010 if that.

[A HERETIC I AM]

4. Is that 23% total for 4 years or 23% annual ROR?

Have you talked with him about BRIC funds? They would seem to fit what you describe as your preference for allocation.

Just curious.

[enid602]

6. risk

23% over a 4 year period is very good if you've invested in a diversified, low-risk portfolio. Beware of anything that promises 20-30% per annum. Higher yield expectations = higher risk. If you're in your 50's+, you should be more interested in maintaining your investment. Now is not a good time for risky investments. We don't know what inflation will be down the road (there's a good chance it will be significant), but I'd still go the low risk route. I don't think many of us are going to get rich playing the market; I just hope to have SOMETHING left for retirement.

[A HERETIC I AM]

10. Thats pretty much why i was asking the OP'r.

FWIW, you're right, many of us won't get rich "playing the market".

So don't play the market.

Instead, have a PLAN, stick to it and INVEST for the long term in a well managed, well diversified portfolio. Whether that is high risk or low risk or a shoe box under the bed depends on the individual and his/her risk tolerance and time horizon, not whether this is or isn't "a good time for risky investments".

[Stinky The Clown]

12. No, that's the total that has happened over the four year period.

23% per year sounds Las Vegasesque! :)

[Yavin4]

8. Buy Stocks That Pay Dividends

The U.S. stock market follows U.S. demographics, which means the general investment behavior of the Baby Boomers will tell you what to invest in. In the 80s and 90s, boomers wanted fat growth as they built up their retirement funds, so the tech sector and pharma was the way to go. Now, starting in 2010, boomers will begin the wave of retirements. So, expect them to pull their money out of growth stocks and into dividend paying stocks.

Any stock that carries a nice dividend will become extremely valuable starting in 2010.

[Joe Fields]

11. My broker is E.F. Nuttin'....When he talks, no one listens....