Pigeon Drop Posted March 10, 2003 Report Share Posted March 10, 2003 Wow. The natives are indeed restless this weekend. I just finished reading for over an hour to catch up on this thread. People now paying penalties to get their money out of 401ks so they can use it to buy gold coins? Cutting 401k contributions and losing the tax deduction? Look, if you take the tax deduction and just hold the money in the cash option (money market) in your 401k until you lose your job, you will be able to roll it to an IRA and short away, buy bear funds, gold stocks, etc, all under the tax deferred umbrella from then on. And you KNOW you will lose your job, because if the stool prophecies come true, almost everyone will. So it is a certainty, you will have the chance to roll your 401k into an IRA sometime soon. Until then, just keep the money in cash or MMF or GICs in the 401k (whatever they offer, they always have one option for this) if you want no exposure to any of the other choices. Or do you really think it is worth it to pay the 40% tax to have access to the remaining 60% of the money today, so you can place these bets today instead of tomorrow. You will need to make 1/(1-.4)-1=67% return on your bets just to break even after the taxes lost. Or do it this way: put the maximum contribution in the 401k, held in cash. Now borrow an equivalent, after tax, amount from your cheapest source of borrowing and buy your gold coins with it. Yes you will have debt, denominated in the dollars you fear will become worthless. So what? You have the cash in your 401k to balance it, and it is becoming worthless at the same time. So you are effectively both LONG and SHORT the same thing. And you can buy your gold coins with the borrowed money, or bet it on the impendiing collapse of mankind, or do whatever you like. You have no risk because your 401k dollars balance your loan dollars. And you got to save the 40% taxes because you kept your 401k deductible contribution. And if you do the loan for investment purposes, the interest on the loan is deductible as investment interest, no matter where you borrowed it. It is awfully easy to get swept up in a mass hysteria that feeds on itself, and make extreme moves which will be much regretted later. Link to comment Share on other sites More sharing options...
Jorma Posted March 10, 2003 Report Share Posted March 10, 2003 You can't end a 401K unless lose your job without paying all the taxes plus a 10% penalty. I actually considered it for a few moments in late 01. I might have bought gold stocks. I just didnt' trust my trading. I couldn't bear the thought of that penalty. Buying gold stocks I would have been ahead. Later I got laid off permanently, so rolled into an IRA. Later I was rehired. I had the summer off and now I control my money totally. Sweet. Still, while a 30% penalty is terrible; at any time since 3 years ago you had good opprotunity to make it back, and it's yours then. A radical move yes. It should not be ruled out. Nothing should be ruled out. Link to comment Share on other sites More sharing options...
sheet4brain Posted March 10, 2003 Report Share Posted March 10, 2003 Talking good franchises - there is a franchisein Australia that I think offers a near religious experience - boostjuice.com.au I don't know how they do it but it is awesome stuff. I think it would do well in the US - particularly in CA. I have my weekly dose(s) of Boostjuice at the local suburban shopping centre. It's really taking off. They make your order right before your very eyes. Real good stuff!! Link to comment Share on other sites More sharing options...
wndysrf Posted March 10, 2003 Author Report Share Posted March 10, 2003 GE squeezes out a pension shocker. Read about it on Bloomberg. Futures just tanked. Link to comment Share on other sites More sharing options...
GregFokker Posted March 10, 2003 Report Share Posted March 10, 2003 LOL Doc! Beautiful. Link to comment Share on other sites More sharing options...
Oilman Posted March 10, 2003 Report Share Posted March 10, 2003 Pigion Drop, As I agree with you, I like to keep and think about all my options open. My employer does not give me much option in my 401k. 1. fix income 2. US equities, 3. Multibalance. No MMF. At the momeent, I am employeed in the Oil industry and the chance of losing my job is very low. I could just contribute in a regualr IRA instead of the 401K which has the same tax benefit and I get to invest as I like. Oilman Link to comment Share on other sites More sharing options...
Bird D Durr Posted March 10, 2003 Report Share Posted March 10, 2003 How the hell this thing can go up today is beyond me................... Buying more and more silver...................sleeping easier day by day.............. Link to comment Share on other sites More sharing options...
Guest Posted March 10, 2003 Report Share Posted March 10, 2003 Mark, yes, I saw K-Wave's message but I'm still not quite sure what exactly you want me to post. He simply mentions three declines and that they happened "after the market got Dover Sole". It would be nice if I could get specific instructions as to which particular time periods you want the SPX chart to cover and what particular indicators you want to indicate the "Dover Soleness" of the maket. Here is my best shot at illustrating it; if it is not what you want, please specify exactly what you want me to do. 3/8/01 - 3/22/01 - 10 trading days - SPX 180 point drop after hitting "Dover Sole Levels". I am trying to illustrate this by using a chart of the SPX starting from January 2001 and continuing till March 7, 2001. I am using the full stochastic as an overbought/Dover Sole indicator. Note that the market got Dover Sole even before the March 8 date: Now, in order to illustrate what followed, I am using a chart of the same thing and with the same starting period - but ending on March 22, 2001: 8/27/01 - 9/21/01 - 14 trading days - SPX 240 point drop after hitting "Dover Sole Levels". This time I am using a chart starting on July 1, 2001 and ending on the day before the start of the 14 trading days mentioned above - i.e., on August 26, 2001: To illustrate what followed, I am using a chart with the same starting period but ending on September 21, 2001: 7/8/02 - 7/24/02 - 12 trading days - SPX 220 point drop after hitting "Dover Sole Levels". Again, I illustrate it with a chart starting on June 1, 2002 and ending on July 7, 2002: Followed by a chart with the same starting period but ending on July 23, 2002: Is that what you meant? Or something else? Regards, Vesselin Link to comment Share on other sites More sharing options...
Mies van der Rump Posted March 10, 2003 Report Share Posted March 10, 2003 Doc, my parental units tried to convert to KKDism when I was just a tyke. I knew then, without being able to explain it, what the problem was: Frosting to donut ratio WAAAAAAY to high. Can't taste the lard through all that sugar. Carry on you zealots. Link to comment Share on other sites More sharing options...
Pigeon Drop Posted March 10, 2003 Report Share Posted March 10, 2003 The contribution limit for the IRA is much lower than that of the 401k. Also, depending on income, it might not be deductible. If not deductible and you qualify for a Roth that is clearly better for an after tax contribution than a traditional non deductible IRA. I guess if people are willing to sell their house, pay commissions and moving costs, and move into a rental because they are sure that houses will later sell for cents on the dollar, then it isn't much of a stretch to nuke the tax deferred accounts and pay all the penalties and taxes to get access to the funds and put them into gold coins or use them to buy puts. I am in awe of these abilities to know the future so accurately. A good book which most here should read is "Fooled by Randomness: The Hidden Role of Chance in the Markets and in Life" by N Taleb. Link to comment Share on other sites More sharing options...
mjkst27 Posted March 10, 2003 Report Share Posted March 10, 2003 Oh Pigeon Drop oh exalted one! Please tell us what your sanguine vision of the future is. How is it that you feel so comfortable as to condescend to me and all others on this board? Stop telling us that we are unjustifiably bearish, and start telling me why our bearishness is so unjustifiable. Link to comment Share on other sites More sharing options...
Pigeon Drop Posted March 10, 2003 Report Share Posted March 10, 2003 I am bearish too, I think we are likely in a deflationary time which could last years. The difference is, I know I have often been wrong in the past, may be wrong now, and will be wrong again. When someone is so guaranteed sure that their extreme view is right, that they make extreme all or nothing bets on it, that in my opinion is foolish. When you nuke your retirement account and give up 40% of its value in penalties and taxes, that 40% is gone, guaranteed certain, and will never come back. Similarly when you sell your house only for the reason that you want to bet it will decline in value, and you absorb the costs of sale and moving and losing your property tax base, those costs are gone from your capital base guaranteed, and will not come back. So you had damn well better be right, just to break even after costs. There is nothing wrong with having a bearish view. There is a big difference between having a view and having a religious belief that you know the future so certainly that you will take huge risks that you are right. I believe there are some people here that are so certain the market will decline in the next 6 months, say, that they would be willing to risk their lives on it. That is not wisdom, nor trading prowess, that is the mark of someone, in my opinion, GUARANTEED to blow up in the future. Link to comment Share on other sites More sharing options...
Recommended Posts
Archived
This topic is now archived and is closed to further replies.