OT - Dow plunges 1,175 - worst point decline in history

[C40_guy]

Originally Posted by kppolich

As I approach the income land of no longer qualifying for ROTH IRA contributions. I may move to the ROTH 401(k) to get that tax taken care of now instead of later and continue to build a tax free post contribution investment via that vehicle while my ROTH IRA sits idle. Then, roll the ROTH 401(k) into my ROTH IRA after i leave the job or retire. I still need to talk with an advisor about this and play out some scenarios.

Good move.

There was (still is?) the technique of recharacterizing an IRA contribution to Roth IRA, even if you're over the limit for contributing to a Roth IRA. I've done it for a while and haven't seem to have gotten it right the past couple of years. TurboTax complains and I have to reverse things... So I just gave up on that tweak...

[akelman]

Originally Posted by steveandbarb1

just a bling - cards will be tumbling down once some new Covid data comes in as well as earnings reports

Could be. Or it could be, as many observers have noted, that there's no safe harbor for people's money at the moment, and so the market is where it's at. Regardless, it's definitely the case—and again, this isn't some great insight—that the market isn't the economy, and the market may not care if infection rates spike, so long as people are still working and spending money.

[Latestart]

The 'market' is saying things look as good now as they did in January 2020. I'm not smart enough to understand how rents, earnings, consumer consumption and other fundamentals are equally good now as then. I see headwinds for all non-digital retail, airlines, hotels, car rentals, retail dining, housing in dense urban areas that rely on public transit, office rents, movie theaters, entertainment parks, oil and gas, and so on. We haven't started to incorporate government borrowing and the trade war with China.

We will be lucky to have a vaccine in 18 months and we have to give it to 200M+ people in the US. In the meantime, we are changing everyone's consumption habits.

Depending on your age, you should have a 'risk aware' asset allocation - this could be a bumpy ride...

[kppolich]

Originally Posted by C40_guy

Good move.

There was (still is?) the technique of recharacterizing an IRA contribution to Roth IRA, even if you're over the limit for contributing to a Roth IRA. I've done it for a while and haven't seem to have gotten it right the past couple of years. TurboTax complains and I have to reverse things... So I just gave up on that tweak...

Interesting, I will look into that. For the moment I am only making a few contributions.

Monthly 401(k) and HSA Contributions
Yearly ROTH IRA Contribution
My IRA is currently just a holding place for old 401(k)'s to roll into. Not ready to make extra IRA contributions just yet.

[C40_guy]

Originally Posted by kppolich

Interesting, I will look into that. For the moment I am only making a few contributions.

Monthly 401(k) and HSA Contributions
Yearly ROTH IRA Contribution
My IRA is currently just a holding place for old 401(k)'s to roll into. Not ready to make extra IRA contributions just yet.

Here's some info on the conversion.

[echappist]

Originally Posted by C40_guy

Good move.

There was (still is?) the technique of recharacterizing an IRA contribution to Roth IRA, even if you're over the limit for contributing to a Roth IRA. I've done it for a while and haven't seem to have gotten it right the past couple of years. TurboTax complains and I have to reverse things... So I just gave up on that tweak...

I'd think that so few people have the wherewithal to do backdoor Roth contribution that TurboTax perhaps just doesn't implement it (or implement it correctly). Certainly worth heading over to bogleheads to inquire if there is software that may do it better.

Originally Posted by Ozz

Curious to hear what "kppolich" says, but I had an option for a roth 401(k) at previous employer, however the contributions counted against my annual 401(k) limit....I was more interested keeping pretax contributions as high as possible (reducing taxable income) so didn't keep it in place for long.....

a lot of this depends on your personal circumstances. Factors to consider include state of residence (and how it characterizes your "pre-tax" retirement contributions) and whether one expect to receive any pension in retirement.

For instance, certain states either do not exempt treat pre-tax contributions for anyone (e.g. Pennsylvania) or does not exempt those contributions for some (e.g. NJ, which taxes contributions to 403b, 457, and TSP accounts). That may tip things one way or the other. Ditto for whether states have an income tax.

Personally, I really should be arsed to switch from traditional to Roth TSP (federal gov't equivalent of the employer sponsored Roth 401(k)), but haven't gotten around to it. My current effective tax rate is the lowest it will ever be, as my wife is attending professional school. Probably will do so some time in the next year or so.

I will also draw a pension from the federal government. Based on current rules, RMD will surely become an issue and bump up my effective tax rate.

So it all depends.

[yngpunk]

Originally Posted by echappist

I'd think that so few people have the wherewithal to do backdoor Roth contribution that TurboTax perhaps just doesn't implement it (or implement it correctly). Certainly worth heading over to bogleheads to inquire if there is software that may do it better.

I think this used to be the case, in that you had to manually "override"' TurboTax to get it to accept the backdoor Roth, but TurboTax usually had the methodology shown on their online forum...just had to google for it. However, I think the last few tax years they've fixed the issue and the step-by-step process specifically asks if you re-characterized your IRA via an conversion.

[likebikes]

djia ATH by independence day, you heard it here first.

[verticaldoug]

Well the FED does plan to continue to buy both Treasury and Corporate Bonds until some date far in the future. The ECB announced today they plan to buy until June 2021. There is nothing left to buy but stocks.

I have central bank fatigue now. If it is not clear, this is just a huge wealth transfer from average tax payers and future tax payers to a capital class.

If communism had to ultimately fail because it was command control, this is a form of monetary communism. It ends badly someday. That day is not today, so I guess I should get back out in the field and make some hay while the sun shines

[bigbill]

One of my mutual funds final went positive yesterday. I had put 25K in it back in March, now it is $25,098. Living large. I rolled my old 401 and military thrift savings into an IRA managed by Schwab. It's still down from the old high, but still okay. I have a work 401 but the company has suspended their 4% matching for now. Fortunately or unfortunately, however you look at it, I can't deduct traditional IRA contributions or contribute to a Roth.

[Burnette]

The recovery graph isn't exactly V shaped, but it's close. Market rally numbers:

The S&P 500 has returned 37.7% over the last 50 trading
days, making it the benchmark index's largest 50-day rally
in history, according to LPL Financial.

. If history is any indication, there could be more gains
ahead.

. Looking at the other largest 50-day rallies, the firm found
that stocks were higher 100% of the time six and 12
months later. The average 6-month return was l0.2%,
while the average l-year return was 17.3%.

The S&P 500 has steadily climbed higher after
dropping to an intraday low of 2,191. 86 on
March 23 putting to an end the ]ongest bull
market in history as Covid-19 battered global
markets. The benchmark index is now 41.7 %
above that low, and less than 9% from its
February all-time high level.

https://www.google.com/amp/s/www.cnb...he-sp-500.html

[Ken Robb]

I just had a big CD mature and so far the best rate I have found for the cash is .35%---YESSSS! 1/3 of 1%. I'm expecting a call from my broker and a fixed income specialist from Chas. Schwab to see what ideas they may have. I'm retired so I'm not interested in any crazy-wild equity plays. I still hold dividend-paying stocks. I don't expect any reasonable rates on CDs until late November at the earliest.

[tmessenger]

Look on investopedia.com they list the highest yield savings account or MM banks in the US, right now they are around the 1.5 ~ 1.4% range.

Tim

Originally Posted by Ken Robb

I just had a big CD mature and so far the best rate I have found for the cash is .35%---YESSSS! 1/3 of 1%. I'm expecting a call from my broker and a fixed income specialist from Chas. Schwab to see what ideas they may have. I'm retired so I'm not interested in any crazy-wild equity plays. I still hold dividend-paying stocks. I don't expect any reasonable rates on CDs until late November at the earliest.

[Burnette]

Another article explaining the disconnect from the street to the Street and what is driving this rally:

At a time of roiling civil unrest and an unprecedented economic crisis, stock prices are chugging along quite nicely. In fact, they have rebounded sharply since the dark days of March.

The Dow Jones Industrial Average, which lost 37% of its value between Feb. 12 and March 23, has now regained more than two-thirds of the ground it lost. Same with the broader S&P 500 index.

Some of the rebound has been driven by a few big tech companies such as Apple and Microsoft, which have returned to their pre-pandemic levels.

"These companies ... have developed just an unbelievable sort of character that just does not exist among the broader stock market," says Jim Paulsen, chief investment strategist at the Leuthold Group.

"They've been able to grow even when the economy doesn't grow. And when the economy does grow, they grow faster. That is an incredible attribute," he says.

Because tech giants make up a large part of major stock indexes like the S&P 500, their movements tend to have an outsize effect on the broader market.

https://www.npr.org/2020/06/04/86511...e-stock-market

[verticaldoug]

Originally Posted by Burnette

Another article explaining the disconnect from the street to the Street and what is driving this rally:

At a time of roiling civil unrest and an unprecedented economic crisis, stock prices are chugging along quite nicely. In fact, they have rebounded sharply since the dark days of March.

The Dow Jones Industrial Average, which lost 37% of its value between Feb. 12 and March 23, has now regained more than two-thirds of the ground it lost. Same with the broader S&P 500 index.

Some of the rebound has been driven by a few big tech companies such as Apple and Microsoft, which have returned to their pre-pandemic levels.

"These companies ... have developed just an unbelievable sort of character that just does not exist among the broader stock market," says Jim Paulsen, chief investment strategist at the Leuthold Group.

"They've been able to grow even when the economy doesn't grow. And when the economy does grow, they grow faster. That is an incredible attribute," he says.

Because tech giants make up a large part of major stock indexes like the S&P 500, their movements tend to have an outsize effect on the broader market.

https://www.npr.org/2020/06/04/86511...e-stock-market

It's simple. In the last 13 weeks, the FED has expanded its balance sheet the same amount it did in 6 years after the 2008 recession (9/2008-9/2014)= +3 trillion dollars

That's 3 trillion focused on financial assets (not the broad economy) so is it surprising the markets are up?

And for good measure, you force small businesses to close, basically handing a monopoly to online and big box stores.