| Page 2 of 2 < |
Holding Out Hope for the Long Term
|
TOOLBOX
   Resize
COMMENT
 Discussion Policy
 CLOSE
Comments that include profanity or personal attacks or other inappropriate comments or material will be removed from the site. Additionally, entries that are unsigned or contain "signatures" by someone other than the actual author will be removed. Finally, we will take steps to block users who violate any of our posting standards, terms of use or privacy policies or any other policies governing this site. Please review the full rules governing commentaries and discussions. You are fully responsible for the content that you post.
Who's Blogging  |
The Leesburg satellite industry consultant moved all $120,000 of his 401(k) retirement account out of an S&P 500 index fund, a foreign stock fund and a bond fund. He put two-thirds into a money-market account and the rest into gold and a foreign currency fund. "I feel good about it because I think the stock market is going to be a lot lower six months to a year from now," he said.
Many investment strategists, however, caution against taking either extreme approach. Instead, they advise holding tight or rebalancing your portfolio if you think you're overly invested in any particular area. "That's a superior approach than always trying to look around to time the market or panic," Hammond said.
Even those investors who parked their money in mutual funds to avoid the hassle of picking specific stocks are feeling the pain. Many mutual funds, mainly financial sector and value funds, had shares of Fannie Mae and Freddie Mac among their portfolios.
The top 10 mutual funds with the biggest combined percentage of their portfolios in Fannie Mae and Freddie Mac are down double-digit percentages year to date, according to a Morningstar analysis. The Fidelity Select Home Finance Fund, for instance, had 17.01 percent of its portfolio in Fannie Mae and Freddie Mac and is down 42.84 percent. With 11.79 percent in the two mortgage companies, the Touchstone Large Cap Value Fund is down 37.02 percent.
"I've been in the business for 20 years," said Ronald J. Rough, director of portfolio management for Financial Services Advisory in Rockville. "I would say it's probably the most challenging environment I've been through . . . There's nothing that looks attractive right now."
Analysts and economists said the stock market would not calm down until home values began rising and unemployment dropped. What's more, the extent of mortgage losses at many of the nation's banks is still unknown.
"The game is more complicated than hide-and-seek. You're dealing with a situation where many of these losses are still unknown," said Christopher Thornberg, a principal at Beacon Economics, which does regional economic forecasting. "It could take a year, 12 months, 15 months to figure out."
