So much for saving... VFINX in the dumps

A dollar saved is a dollar earned?  Not so much.  So I've been investing in Vanguard's 500 Index (VFINX) for quite some time now.  The graphic above shows the 10 year performance of the fund.  The end of 2007 to now has hit the fund hard erasing gains and causing negative performance.  Bah.  So... what's an investor to do?  Is it a fire sale? Time to buy some new shares? Dollar Cost Average?  Mmm with "experts" prediciting further struggles and the abysmal performance in January causing the year outlook to be just as bad (As January goes, so goes the year...)  its a hard call.  Wait and you could miss those huge upside days.  Invest now and you could see further losses.

They say this recession is worse and more far reaching than any before and that the boost in the stock market post-recession can be a long time away and isn't guaranteed.  Is it the end of an era?  I'm in it for the long haul so I'll stay put for now.  Invest in some more shares slowly and hope things start to turn around.  Hope Warren is right... be fearful when others are greedy, be greedy when others are fearful.  

Steelers just won the Super Bowl. Super.

One Love, 

Look

Interest Rate Freefall

Long story short. Fed cuts overnight interest rates from 5.25% to 4.75%. Result: Interest rates fall off a cliff.

Glad I locked in a 5.36% 12 month CD at E-loan before the carnage, but kicking myself for not locking in for 18 months. Unfortunately 2 CDs expired after the freefall and blah. My Wamu CD i rolled into a 4month CD @ 4.65% APY (They were offering ~2.7% for all other maturities!). My Emigrant Direct CD I transferred into my savings account earning 4.75%.

So there's little options out there as all banks seemed to have followed suit. There are higher rates at Countrywide and IndyMac, but their exposure to subprime worries me. Although they are FDIC insured, I don't feel like the small bump in rate would be worth the headache should they fail. So for now I'm going to sit tight and see how the rates play out in the coming weeks.

In other portfolio news, I'm roughly 50% cash which is way to conservative for my age bracket. Sadly, this is probably the lowest cash ratio I think I've ever had for my porfolio showing my uber conservativeness. I've been ramping down this cash number, however. I set up an auto-investment with Vanguard into my VTRIX mutual fund. I'd invest more, but with the market so hot right now and everything trading at all time highs, I'm hesitant to do more.

Well I guess we'll see what happens in the coming weeks.

One Love,
Look