I seemed to have missed this post, Smash, so I'll answer now, a bit late but perhaps the next time you check in you can respond if necessary ...
We (my wife & I) have what could only be viewed as very conservative investments. Nothing truely high risk, no day trading or anything like that .... most of what we have is in what would normally be looked at as "safe" investments, i.e., blended mutual funds, 401K's, Govt bonds etc. Things with a slower rate of return. We also have heavily invested in ourselves, specifically agressively paying down our mortgage, eliminating ALL debt beyond the minor balance left on the mortgage, maintaining our vehicles in pristine condition to further the life of the vehicle and not have to buy "new", etc. Additionally, we have some real estate holdings that are very long term investments that we aren't currently too worried about (bought them very low and even with this serious market correction we are still very much on the positive side of these properties).
With the realization that any investment is a risk of sorts, we believe that we have limited our exposure to the degree possible that a moderate return on the investments could be realized. As is painfully evident in this economy, even the most conservative of investments has experienced a hit of 30% or more.
Will it come back? Hopefully, but I sure don't know that for a fact. We have to assume that it won't, and we now need to change direction to attempt to recoup the "losses" we have experienced recently. Part of being a conservative investor (IMO) is to not sit back and "hope for the best". Had the economy simply leveled off rather than dropped so precipitously, our gains over the past 15 years could have been re-addressed into even more conservative vehicles. But now, we must look different approaches to solidify our theoretical retirement years.
This is all very responsbile. You're quite correct to focus on paying down debt. Even during bull markets I've always stressed that retirement monies should *NOT* be exposed to the markets. I still emphatically say so, especially for anyone even near retirement.
Instead, people's stock market profits should be set aside to buy hard assets - their home, diversification of currency, perhaps some gold, and funding their retirement. In other words the opposite of what many "experts" advise. And of course most people have only stock market losses over time, which underscores why they shouldn't be adding money to their "investment" accounts much less adding retirement money.
I put it at 50/50 that we'll soon see another severe market drop. Fankly I put it much higher, as the markets have dropped several hundred points while I typed these two replies, but 50/50 odds should be more than enough to make you stop and think very seriously about the risks still present in owning equities. It is not my intent to scare you, but it is my intent to have people realize that all this "stocks are cheap, it's crazy to sell now" crap is as much total BS now as it was 1 or 2 or 12 or 72 months ago. it is always pure BS, as Enron, World Com, Lehman, Bear Stearns, Fannie, Freddie, Ambak, MBI, etc. etc. etc. - or any stock over the past few weeks - so clearly illustrate. Always be hedged. 1987, 9/11, etc. happen with regularity, never mind the natural tendency for markets to revert to the mean.
Is it too stressful and uncertain guessing/betting which way things will go, and if any bounce or slide is temporary or the start of a larger move? Exactly. So don't expose serious/retirement money to it, esecpially if you (I mean people in general not you speciflcally) have debts to pay.
As far as the economy preferably having levelled off, for the future keep in mind Newtonian physics about "equal and opposite reactions". Applied to the markets, any bubble bursting happens faster than its inflation. Or put another way, market corrections are at least as fast and severe as the frauds that the bulls ran on. Consider the current markets in light of the housing/credit boom, or the tech crash in light of the dot-com mania and you'll see it's true. Those were massive frauds - as is the case any time you hear about a "new paradigm" - and in this case the fraud is still ramping up as per recent government actions.
Cash doesn't pay much now, but those who still have cash left when the inflation comes will be enjoying fat interest payments that should cover inflationary increases and monetray collapse, while those who lost all their cash/assets/investment will be enjoying nothing at all. Plan ahead.
We have always tried to be conservative and handle our finances in a manner that limited the risks .... in other words, work a lot harder for what we have but sleep peacefully knowing that we wouldn't lose it all on a gamble. And because neither one of us is well-versed enough to fully manage our own accounts, we engaged professionals that worked for us to manage things in a conservative way. And yet, even with that due caution, we have found ourselves seeing a downturn.
Most "experts" and "professionals", especially those likely to be retained by non-millionaires, are complete hacks, frauds and/or rookies. Unless you're being advised/managed by someone that's beaten the markets consistently over time and is proud to prove it, and ideally has at least once lost everything or close to it, then you're getting bad and even dangerous advice.
A real pro advisor should sound a lot like me, and should have you hedged either way. If not, then compare his record the past few years to the public one I've got here or to those of the resources I've recommended. If his comes even vaguely close please email me the name and number as I'd like to hire them. If not, then why pay for worse than you can get for free?
Even if you find a real pro, consider how utterly collapsed some funds are that are managed by what until recently were investing icons such as Miller, Pzena, Whitman, Kerkorkian, etc. This even includes guys who predicted the collapse and were heavily short stocks like Lehman and MBI.
Please understand that you needn't much time or smarts to take charge of your money and to control it far better than some impersonal wet-behind-the-ears advisor can, or some broker who's main concern is dumping his firm's worthless paper into your account. There are plenty of excellent references in this thread, including many that are free, as well as this thread itself. All of these, if heeded prudently within a hedged portfolio, would have had you safe & sound, if not profiting very well, during the market slide as well as during the bull market which preceded it. Win/win. Compounded.
If nothing else, simply never ever hold or buy anything making 1-year lows and you'll avoid most losses by amateurs and pros alike. This paragraph here is the best investment advice anyone can or will ever give you. It will make/save you the most money of any market/investment strategy you'll ever find. So much more so if you know how to short, and you turn short on those that make fresh lows. Just ask anyone that held Enron or Lehman or Fannie or US Dollars how much better off they'd have been if doing so. Or just ask yourself (I mean anyone reading this) how much better off they'd be today if they'd been following this advice the past year or 10.
Beyond that we need to get into knowing when to take profits or reverse losing positions, but that goes beyond the preceeding paragraph in practice and complexity.
Knowing that we are in much better shape than a fairly high majority of our friends/neighbors/family is of little satisfaction to us. Knowing that many of these people ran the very high risk gauntlet and also knowing that there are plans afoot to provide support to them for their bad behavior leaves a very bitter taste. Perhaps I'm being short-sighted, perhaps I'm misunderstanding the larger picture, but all I know is years of being a responsible, hard working dope has resulted in me having to, in essence, bail out others who chose to be far less responsible ....
Yup, I'm p*ssed off .... and open to suggestions or comments ....
You've every right to be p/o'd, and sadly simply voting ain't gonna fix a damn thing. It's gonna get much worse. I've been dead right every time I have said so over the years this thread has been active and I am equally right in saying it today as we'll all soon find out much sooner than we may care to.
Let me be clear in saying I intend, with all my posts, to empower people not to berate or frighten them. However soft language or pillowing my assertions and experience with caveats won't accomplish that.
People have few choices, no matter where the markets go from here. They learn to hedge properly and generally overstand [sic] how the markets really work, or they join the vast majority of punters and "experts" alike who have lost big and will continue to lose big.
or my beloved Red Sox 
. If you read either of these books, you know that the guy can break down complicated stuff and tell it in a story that is actually entertaining. And if you haven't read either of them and have any interest at all in the subject matter, I highly recommmend them. 
These guys are ruining the economy, and I believe they are doing it on purpose. 
