Lots of 401k/IRA->PM threads, how about the opposite?

DrBuster

So for a few reasons over the years I haven't played the stocks since the 90s. Watch the markets every day, as I have for proabably the last 25 years+, have my picks and plays, watches, etc., so it's not a blind arena for me at all.

Been debating doing the opposite of what a lot of folks ask about here. Instead of withdrawing retirement acct funds to purchase PMs I am thinking about converting some of my stack into a trading account. Nothing huge, sub 5 figures to get rolling (play/pocket money for you monsters), but enough to dent my small stack (say 1/3 to keep it round). Reason being I think we're in for a bit of a market adjustment and I don't want to miss the run from the bottom on the next go-round.

I have the amount in cash that I'd want to do, but that would dip into the rainy day savings and I'm hesitant to touch that right now (end of year contract time). As it stands I do not have a current 401k/IRA/pension and this would get that started back up again.

So...would you do it? No? Reasons either way.

derryb

IF metal bull continues, lot of money can be made with paper. Paper offers quicker ins and outs, low fees, no delivery delays, no required storage, etc. Risk of paper is reduced by monitoring what you are invested in and who holds your account. First sign of trouble get out.

I prefer self managed on-line accounts - I use Scottrade. Can be done with a regular brokerage account, a regular IRA account (contributions limited), or a Roth IRA account (contributions unlimited unless converted from a regular IRA - penalty free but taxes due, and withdrawal restrictions on the first five years from the date the account was opened).

Person trading metals in a brokerage account should consider metal ETFs - lots of choices including leveraged (X2 and X3), inverse leveraged, and miners of both flavors. I personally prefer the ETFs. Go to etfdb.com for a lot of ETF information and research.

But, don't forget to keep stacking for the long term.

OperationButter

I agree that market should be in for a correction, a rather large one at that. However, its very hard to not notice the trend of POMO days (esp larger days). As much as I would like to, I have learned the lesson to not go against the FED.

I do have a tiny bit of money that I trade options with, but I havent liquidated any of my stack to do so.

guitarwes

Converting physical into electronic paper? Isn't that blasphemy?

jmski52

With all of the shenanigans and dirty dealing in the stock market, my reasons for staying out are simply philosophical - starve the beast.

Yeah, there are real companies out there, represented by real stock but the system is horribly corrupted. I'm out, and unless I go into GDXJ, I can't see any reason to trade real assets for a paper position.

If I feel like gambling, I'll gamble. But I'll do it on my own terms. To heck with them. They can take their HFT and shove it.

The bigger issue is still sovereign debt and relative value. If your particular stock goes up 25% and the dollar drops 15% in the process, you've just lost value after taxes.

tneig

Higher than 'average risk' manuver, if one can get through all the steps, absorb loss, and assuming a market to roll back up with (housing market, facebook).

IRA/Roth balance.

How will you know the bottom or the top? What would be good pics at the bottom? When/how/price would you sell the PMs?

What to do with the money inbetween steps?

Nice reverse thread!

pursuitofliberty

I don't think it's crazy at all. I like to stay balanced, and I think the market valuations for more than a few issues are compelling. In fact, I put some reasonable money in the market recently (a few stocks and two mutuals funds) and feel good about my positions, even with the last two weeks events.

I'll leave it at that because I think you know what you're looking at ... but certainly, based on what you are saying, I would consider it.

fishcooker

If tax rates are going to rise, I don't think I'd do a 401k.

DrBuster

This would be a basic Scottrade account, not a 401k or anything in particular, just something to play around with.

derryb

<< <i>This would be a basic Scottrade account, not a 401k or anything in particular, just something to play around with. >>


The disadvantage of trading with an IRA account is waiting for the funds to settle (3-4 days). To keep IRA accounts from being used for "day trading" there is an IRS restriction that basically says you can't sell something on which the funds used to buy it have not settled. In order to avoid being stuck in a position awaiting settlement, the IRA trader, to be safe, must wait for funds from the last sell to settle before purchasing the next position. Otherwise you could end up having to hold a postion while you watch it decline. This puts the trader in a cash position for a couple of days.

You don't have this restriction with a regular brokerage account, but different brokers may put a limit on how many times you can buy and sell the same postion in a given period of time. I know Scottrade does this, while not very restrictive, to "discourage" using their accounts for day trading.

An on-line, self managed regular brokerage account is a great way to play the markets, especially the paper metal markets. Easy, quick ins and outs of a position with minimal fees. Be sure to check out all the available ETFs at etfdb.co. ETS are like mutual funds but can be bought and sold any time the market is open. For all practical purposes they trade just like stocks.

Gains/losses with a regular account are treated as investment income for tax purposes. Go for it - just be sure to also manage the fear and the greed, otherwise you will trade irrationally.

DrBuster

I imagine the most action this would see would be 1/week on the high end for an order.

derryb

<< <i>I imagine the most action this would see would be 1/week on the high end for an order. >>


but knowing you can turn right around and dump it is important.

JCMhouston

<< <i> I don't want to miss the run from the bottom on the next go-round. >>



That boat has sailed, the time to be buying was late 2008 and early 2009. But having said that I don't think people should put all, or even most, of their investment dollars in PM's. We've had a pretty good run in PM's over the last few years and I was glad I still had some $8 silver and $300 gold to sell into the market. And I still have maybe 5% of my investments in physical PM's and play with paper PM's when it seems reasonable. I'm about 70% stocks right now, down from 100% in sping 2009, and about 25% cash waiting for some additional drops in the market.

All markets go up and down, regardless of what the doomsayers may tell you. Balance your investments and you'll be prepared for most eventualities.

DrBuster

sigh, forum burp.

DrBuster

sigh, forum burp.

DrBuster

sigh, forum burp.

DrBuster

Hindsight is a beech. Should have done this for the trading account, ha!

BAJJERFAN

<< <i>

<< <i>This would be a basic Scottrade account, not a 401k or anything in particular, just something to play around with. >>


The disadvantage of trading with an IRA account is waiting for the funds to settle (3-4 days). To keep IRA accounts from being used for "day trading" there is an IRS restriction that basically says you can't sell something on which the funds used to buy it have not settled. In order to avoid being stuck in a position awaiting settlement, the IRA trader, to be safe, must wait for funds from the last sell to settle before purchasing the next position. Otherwise you could end up having to hold a postion while you watch it decline. This puts the trader in a cash position for a couple of days.

You don't have this restriction with a regular brokerage account, but different brokers may put a limit on how many times you can buy and sell the same postion in a given period of time. I know Scottrade does this, while not very restrictive, to "discourage" using their accounts for day trading.

An on-line, self managed regular brokerage account is a great way to play the markets, especially the paper metal markets. Easy, quick ins and outs of a position with minimal fees. Be sure to check out all the available ETFs at etfdb.co. ETS are like mutual funds but can be bought and sold any time the market is open. For all practical purposes they trade just like stocks.

Gains/losses with a regular account are treated as investment income for tax purposes. Go for it - just be sure to also manage the fear and the greed, otherwise you will trade irrationally. >>



With an IRA through a brokerage, if you sell a position you can't use the funds to buy a new position until the funds settle, usually the old T + 3 days. If you buy a position, you can sell it at any time after that whether those funds have settled or not. At least that is the drift I get from my custodian.

cohodk

With an IRA through a brokerage, if you sell a position you can't use the funds to buy a new position until the funds settle, usually the old T + 3 days

That is not true. If you sell XYZ today, you can also buy ABC today. Both trades would settle on the same day (T + 3).

derryb

<< <i>With an IRA through a brokerage, if you sell a position you can't use the funds to buy a new position until the funds settle, usually the old T + 3 days

That is not true. If you sell XYZ today, you can also buy ABC today. Both trades would settle on the same day (T + 3). >>


With an IRA you can use the unsettled funds to buy a new position immediately. Problem is Federal Reserve Regulation T prevents an IRA account from selling a position that was bought with unsettled funds until the funds have settled (3-4 days after the sale that provided the funds to purchase the new position). In other words, unsettled funds may not be used to purchase securities unless you hold the new purchase until the previous sale has cleared. You can actually make the trade that violates Reg T, but doing so places a 90-day restriction on your account. If a trading restriction is placed on your account, you will only be able to place buy transactions using settled funds. To avoid this scenario I normally do not purchase a new position in my IRAs until funds have settled. This prevents me from having to holding a bad position and allows me to quickly dump a bad purchase.

Also, note that the sale proceeds of bonds, unit investment trusts (UITs), mutual funds and CDs cannot be used to make purchases until the sells are settled. Additionally, unsettled funds from the sale of stock cannot be used to purchase options, fixed income products or mutual funds. Unsettled option proceeds can only be used to buy new options.

BAJJERFAN

<< <i>

<< <i>With an IRA through a brokerage, if you sell a position you can't use the funds to buy a new position until the funds settle, usually the old T + 3 days

That is not true. If you sell XYZ today, you can also buy ABC today. Both trades would settle on the same day (T + 3). >>


With an IRA you can use the unsettled funds to buy a new position immediately. Problem is Federal Reserve Regulation T prevents an IRA account from selling a position that was bought with unsettled funds until the funds have settled (3-4 days after the sale that provided the funds to purchase the new position). In other words, unsettled funds may not be used to purchase securities unless you hold the new purchase until the previous sale has cleared. You can actually make the trade that violates Reg T, but doing so places a 90-day restriction on your account. If a trading restriction is placed on your account, you will only be able to place buy transactions using settled funds. To avoid this scenario I normally do not purchase a new position in my IRAs until funds have settled. This prevents me from having to holding a bad position and allows me to quickly dump a bad purchase.

Also, note that the sale proceeds of bonds, unit investment trusts (UITs), mutual funds and CDs cannot be used to make purchases until the sells are settled. Additionally, unsettled funds from the sale of stock cannot be used to purchase options, fixed income products or mutual funds. Unsettled option proceeds can only be used to buy new options. >>



I don't think I saved my communications with my custodian, but IIRC the above was what I was told; otherwise I stand corrected. I'll have to go back and do a little digging. Not an issue for me as I always have some amount of settled funds.

jmski52

Zero Interest Rate Policy is intended to push money towards the stock market and away from low-yielding bonds. Gov.com needs low interest rate financing so that ongoing operations & entitlement spending can be expanded without incurring a large financing charge. Politicians love this aspect.

As long as gov.com bonds are seen as risk-free, the advantage belongs to gov.com. Until the perception of "risk-free" changes. When gov.com bonds are no longer seen as safe, the advantage goes into reverse and low-yielding bonds will lose a significant percentage of their principal quickly instead of slowly.

If, and when this happens the loss of capital will present a serious problem to the stock market. It's not a big deal when viewed from day to day. "It's getting warm in this pot", said the frog.

BAJJERFAN

<< <i>

<< <i>With an IRA through a brokerage, if you sell a position you can't use the funds to buy a new position until the funds settle, usually the old T + 3 days

That is not true. If you sell XYZ today, you can also buy ABC today. Both trades would settle on the same day (T + 3). >>


With an IRA you can use the unsettled funds to buy a new position immediately. Problem is Federal Reserve Regulation T prevents an IRA account from selling a position that was bought with unsettled funds until the funds have settled (3-4 days after the sale that provided the funds to purchase the new position). In other words, unsettled funds may not be used to purchase securities unless you hold the new purchase until the previous sale has cleared. You can actually make the trade that violates Reg T, but doing so places a 90-day restriction on your account. If a trading restriction is placed on your account, you will only be able to place buy transactions using settled funds. To avoid this scenario I normally do not purchase a new position in my IRAs until funds have settled. This prevents me from having to holding a bad position and allows me to quickly dump a bad purchase.

Also, note that the sale proceeds of bonds, unit investment trusts (UITs), mutual funds and CDs cannot be used to make purchases until the sells are settled. Additionally, unsettled funds from the sale of stock cannot be used to purchase options, fixed income products or mutual funds. Unsettled option proceeds can only be used to buy new options. >>



I swear I posted a reply but it's not showing up. Either my custodian misinformed me or I misunderstood what they sent. Alas it is no longer available. I distinctly remember being told what I posted earlier, but I'll stand corrected. Not a big issue for me as I'll always have settled funds available. Looky there, it posted more than 3 hours late.

chumley

I have a TDAMERITRADE account and bought just one stock,Verizon...has about an 8 per cent return and gives me something to play with when I am not fondling silver

TwoSides2aCoin

I'm lost
in the market condition