What's happening with the stock market?

California

TNTeenager
Joined
Mar 31, 2020
Messages
1,741
Likes
2,436
Location
Northern California
Everything else is too gloomy at the moment. For a change of pace:

With the stock market setting new records every day, this seemed like a good time to request my annual IRA MRD, Minimum Required Distribution. I placed my order over the weekend and it will be executed at today's price.

Looks like I picked the right day. Today the S&P (my savings track this) gained a quarter percent in one day for a new record high.



And I did something I haven't done in 20 years, placed a bet on a wildly speculative stock. In this case, just a single share, this is simply to watch the fun in case the (unlikely) MOASS actually occurs.
The underlying theory here is that hedge funds have massive short positions on Gamestop, far more than the number of actual shares in circulation, so its impossible to cover their short positions as the time periods end. So far, they are rolling over their positions for new positions, to put off the inevitable. The problem is that brokers have lent them shares to short - that don't exist. So the whole thing is a house of cards. Hence the eventual Mother Of All Short Squeezes. If the SEC actually forces an accounting of short interest vs actual shares existing, big hedge funds and brokers might fail when they can't meet their obligations. It's impossible to deliver shares that are imaginary. In theory, this will cause the stock price to rise to infinity as hedge funds compete with each other to obtain real shares to meet their obligations and avoid default. In theory ...

This will be fun to watch. Outright buying one share takes it off the table so the brokerage can't lend it, for a short to gamble with it.
(Fidelity has minimal exposure to risk. It is the more speculative brokerages that are getting rich charging high interest rates to lend shares that may or may not exist).

Fidelity Alert: Order Execution
Account: .....
Your order to BUY: 1.00 shares of GME was FILLED.
Filled:
1.00 shares @ $161.00
Execution Time: 9:30 a.m. ET
 

drssg

Regular
Joined
May 5, 2020
Messages
288
Likes
194
Make sure you factor inflation into how much money you think you are making! (Sorry, I just wanted to add gloom and doom. 😉)

When you take a MRD, do you actually need to cash out the funds, or can you simply move the shares into a non-IRA account? It seems like that would remove any timing concerns for the transaction.
 

California

TNTeenager
Joined
Mar 31, 2020
Messages
1,741
Likes
2,436
Location
Northern California
Make sure you factor inflation into how much money you think you are making! (Sorry, I just wanted to add gloom and doom. 😉)
Too true! Yes. We're comfortable now, inflation won't hurt us. Maybe our kids when they eventually inherit whatever's left. Social Security, pensions, and annual RMD more than cover our moderate living expenses (no debt) then investment returns annually exceed that. We've finally started shoving money to our adult kids as they become parents and buy homes. No point in taking it to the grave. My own father never gave me any cash until his age 85 then he read that for estates over $500k (then) inheritances would be taxed at 50%. That was too late. Sis, I, and IRS each got $125k after sale of his properties and cashing out his investments. We could have used that money years earlier for college etc instead of him leaving it for the IRS.

The rampant inflation of the 70's was a multiplier to the increase in value I created by refurbishing my rentals, flipping as its called today. We paid $45k for a duplex we bought (and lived in, at near zero personal housing expense) then sold 3 years later for $75k. Painting and carpets was about all the refurb we put into that one. Inflation was most of the price increase.

But - scary - we then bought a nice middle class home after years of living cheap - with a 9% variable rate mortgage that inflation soon pushed to 11%. Only the substantial down payment we had made, kept our monthly payments on that note tolerable. We paid a lot over the minimum payments to retire that loan early.

Inflation was good to me, it increased property values easier than increasing rents would have. A big increase in apparent dollar value was cash I could take out when I sold, and banked (invested), even if those dollars invested weren't worth as much as earlier dollars.
When you take a MRD, do you actually need to cash out the funds, or can you simply move the shares into a non-IRA account? It seems like that would remove any timing concerns for the transaction.
it's a taxable event same as a paycheck, in fact it is literally deferred wages. Once you give the order to disburse it you can be mailed a check. I let Fidelity do their default action. Move the proceeds after tax withholding of 20%, into my cash account (where SS etc is deposited monthly, and we write our household checks). It's cash that could be used to buy the equivalent investment immediately. But some of this will go to the kids. If the market drops a lot I'll start buying Fidelity's S&P index fund again.
 

Molalla1

TNTeenager
Joined
Mar 27, 2020
Messages
3,532
Likes
632
Location
Oregon
Make sure you factor inflation into how much money you think you are making! (Sorry, I just wanted to add gloom and doom. 😉)

When you take a MRD, do you actually need to cash out the funds, or can you simply move the shares into a non-IRA account? It seems like that would remove any timing concerns for the transaction.
This is what I have done . . .
 

California

TNTeenager
Joined
Mar 31, 2020
Messages
1,741
Likes
2,436
Location
Northern California
Looks like I nailed a momentary peak. For the mandatory annual MRD I sold S&P index fund yesterday at what happened to be its record high. Then this morning, S&P is down 1.3%. That would equal a year's savings account interest.

"The market will fluctuate" as a famous investor once said. I used to follow events in detail and made some money guessing which way individual stocks would go. I haven't done that for a long time. Day-trading is stressfull, you are betting against the whole world of investment analysts.
 

California

TNTeenager
Joined
Mar 31, 2020
Messages
1,741
Likes
2,436
Location
Northern California
What goes up ....
No kidding. In 2000 and 2008 I stayed mostly invested but it was scary to watch things drop. Turned out it was worthwhile.

One thing I learned reading about investment strategy: (Finance was my grad school major): Overall, long term gains historically have occured on single days of extraordinary price increase. All the other market daily changes are just noise. And overall, long term, it is more profitable to just stay invested forever so you don't miss those extraordinary days. Wimp out, miss out.

That assumes you are a long term investor, for retirement, or multi-generational family wealth , a corporation, or something. Short term the market will chew you up if you try to time ups and down.
 

Diggin_It!

Regular
Joined
Mar 27, 2020
Messages
136
Likes
81
In the mid 90s, I got into a Federal payroll deduction mutual fund sort of thing. I put it something like 5% and they matched it. I didn't stay with them long so it only had 5K or so then. But I left it and let it ride. Watched it for a while and it did OK. Was adding what I could into an IRA for a few years after. Sometime in the late 00s, I was able to roll the IRA into the Federal plan. Balance is fairly decent now. Not spectacular, but reasonable. This year alone, it's gone up more than I initially put in.
 

JerryBob

Peanut Gallery
Joined
Mar 28, 2020
Messages
12,539
Likes
8,169
The key......retire with enough to live the rest of your life without needing to be in the stock market.....just relax....enjoy life and do whatever you want to do! ....Oh yea....be totally debt free!
 

California

TNTeenager
Joined
Mar 31, 2020
Messages
1,741
Likes
2,436
Location
Northern California
The key......retire with enough to live the rest of your life without needing to be in the stock market.....just relax....enjoy life and do whatever you want to do! ....Oh yea....be totally debt free!
BTDT.

But the retirement funds I don't really need for spending short-term are mostly parked in Fidelity's S&P index fund. In my opinion those 500 top businesses are the most stable, durable, profitable places to park money and never think about it. They are so big they can dictate what the economy will be. And the way that list is comprised, losers are removed and replaced by more successful names. Warren Buffet recommended this if you don't want to think about being an active investor. I think he's right. Back testing (historic growth analysis starting from past dates) says this will put you ahead of 85% of all retail investors. Top 15% without thinking about it, sounds good to me.
 

JerryBob

Peanut Gallery
Joined
Mar 28, 2020
Messages
12,539
Likes
8,169
BTDT.

But the retirement funds I don't really need for spending short-term are mostly parked in Fidelity's S&P index fund. In my opinion those 500 top businesses are the most stable, durable, profitable places to park money and never think about it. They are so big they can dictate what the economy will be. And the way that list is comprised, losers are removed and replaced by more successful names. Warren Buffet recommended this if you don't want to think about being an active investor. I think he's right. Back testing (historic growth analysis starting from past dates) says this will put you ahead of 85% of all retail investors. Top 15% without thinking about it, sounds good to me.
Sounds like a good plan for you.....I will stick to what I said.....sit back....enjoy life and not worry.....everybody is different.
 
Top