Time to top-up the IRA?

I remember 10 years ago reading about how the ideal person to take advice from was someone who was giving it away for free because he’d already made his fortune and didn’t need to take a percentage of yours. Well, through my mom, I know one of these types – a retired trader who loved his job so much, that he still spends his days researching stocks and advising friends.  He and I have something in common: we are both contrarians delighted with the phenomenal discounts currently available. Apparently, he’s snapping up GM for the long-haul, so I’m trying to find out if he would recommend it for my IRA. Its share price has dropped by 35% this week alone, hitting levels not seen in over 50 years. 

Anyway, I won’t get into this too much because I don’t want to be accused of … damn, I forget the term for talking up a stock to get people to buy it and manipulate the price (ramping?), but since my blog is only 2 weeks old and I doubt that anyone with the kind of dough to affect the stock price is reading it (and if they are, I’m sure they didn’t get that rich by taking advice from anonymous strangers off the blogosphere).

I do have two sources of reluctance –

  1. I am not looking forward to logging into my TDAmeritrade accounts and putting a hard number to my losses. The mutual funds I’m in are all down 35-55% since I bought them earlier this year when the Dow was around 11,300.
  2. Although the economy has been tanking for a month now, this is the first week I’ve had a slowdown in my business, and it’s been big. Given my recent trends, I’m looking at a 40% reduction on my bottom line. However, these things happen no matter what the market is doing, so it’s hard to tell at this point if this is a bad new trend or if it’s just a normal glitch. But the money I’m pumping into the IRA is equal to a month’s rent…

Note @ 3:30pm:  I wrote all this 4 hours before CNBC started giving GM a lot of attention. And my retired guru passed on this advice 3 days ago…I hope he was either waiting to buy or shorting at the time!

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2 Responses

  1. Thanks for visiting my blog MMK. 😀
    Re: investing in GM, do you feel you have an adequate EF? If not, I think your money is better in a savings account. If you do have a sufficient EF, I think an investment portfolio can include some (5-10%) speculative investments. Last time I checked GM was below $5/share, suffering lack of liquidity. I would only invest an amount you are comfortable losing.

  2. I have 3-4 months in EF (thanks to ridiculous rent, it’s actually quite a nice chunk of change). I’m never comfortable losing money, but unfortunately I’ve gotten quite used to it over the past month. Grrr.

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