Here are just a few questions you won’t see asked or answered on the so-called money shows on television:

1.  What if this is a depression? What if it’s not a short term bear market?  What happens to my retirement money? Where should I put my money in a depression?  Do you have any idea?  (Remember – It took them a year to call a recession – only 12 months late… but we knew it, common sense told us.)

2.  If 12-15% of Americans are out of a job (both those on unemploymnet and those who have run out of unemployment benefits and have just stopped looking), an unspecified percentage have part-time work that need full time work, and those of us with a job have no idea whether we might lose or keep the one we have, and none of us want to spend our money and we can’t get any credit, and even if we did, we probably won’t get our hand caught in that tiger trap again, tell me where will the profits come from so that big companies will make money, and start a new “bull” market?  Or even an “up” market?

3.  If you can move your money right now into an investment vehicle that will at least earn 2%, 3% or 4%, why shouldn’t I do that while I wait for the market to get better?  (Don’t just tell me not to do it, tell me WHY.  And then tell me why it’s OK to lose another 20% while I wait for the market to turn.  And if you tell me again about what the market has earned “historically”, I will kick your ass.  I am not stupid, I have a calculator…)

4.  If you lose 20% YTD in your investment account, your new lower balance wil have to return 25% to get back to square 1.  (For example:  a loss of 20% off of $5,000 leaves yo with $4,000.   But to make back $1000 on $4,000 is a jump of 25%.)  So when they tell you to wait for the market to “come back” – how far will it have to increase to just get back to where you started?

5.  What if the markets stay depressed for another ten years?  And there is no climb like we’ve seen the past 30 years?  We have already lost enough in the market to erase teh last 12 years of gains.  So, should you believe them when they tell you to take a 20 year time horizon?

6.  If you take your money out of the market, put your money in CDs or inflation adjusted bonds, or government bonds, or other more reliable vehicles, the huge Wall Street behemoth – financial advisors, mutual fund companies, television talk show hosts – they don’t make any money.  Need I say more.

Image by scottwills via Flickr

I wanted to go back on something I posted a few posts ago.  You probably SHOULD keep investing in a 401(K) or other retirement plan, at least up to the company match, if you are lucky enough to get one.  The danger is in continuing to put your hard earned dollars into this market through some kind of standard index mutual fund.

My co-worker argues with me: Oh, it’s dollar cost averaging!  We’re buying on sale! It’s OK to lose, because I have a 20 year time horizon!!  What a bunch of Bull!   Why should you lose two years or more worth of increases of any kind, and actually take a loss?Then, take the next two years after that, or longer God forbid, to get back to where your balances equal just your inital investment?

Dollar cost averaging is for dupes! It’s to make you believe it’s EASY to manage your own retirement, so that your employer doesn’t have to feel guilty about not offering any kind of fixed retirement plan any more.  Meanwhile, you will LOSE 4 years of any return at all, plus principal, if you are just following the “conventional wisdom”.

Investments experts are not “dollar cost averaging”.  They are sitting on the sidelines with their cash. The are investing in short ETFs, currencies, and corporate bonds, all of which you likely have NO access to in your 401K.  Only the dupes keep “buying” stocks at these crappy levels, because they haven’t taken the time to learn something and stop their contribution from going into the same old index fund.  OF COURSE Wall Street is telling you to keep contributing, so they have someone to SELL TO.

So, put your $$ into your retirement fund, up to the company match, to keep saving, but keep it in the government bond fund or the savings account fund. What the heck, why not EARN 3% instead of LOSING 20%.  Then in 2 years when the market slowly creeps back, THEN switch your allocations.  For everything you want to save beyond your company match, set up a self-directed ROTH.  Put as much as you can in there.  And LEARN how to invest, find other vehicles that are actually making money (they are out there).  Otherwise, you’re just throwing it away.