Are you making any changes to your 401K, 403B, or IRA accounts as a result of the market turmoil? How are you planning to ride this economic crisis out and come out as unscathed as possible?

By not having such accounts to begin with!

www.emigrantdirect.com

Even with the market turmoil, Emigrant's savings rate is going up again. Used to be 5.15% back when I started this account, then it dropped to 2.5% and now it's back up to 3.00%.

That's about the best I've got.

I'm converting my 403B and IRA to money market funds, which are essentially cash. The interest rate is only 1% or so, but it's the safest place my money can be at the moment. My dad the day trader, Tom Friedman of the NY Times, and the CNBC commentator he quotes all say the safest position right now is "cash and fetal." I'm heeding that advice. I don't think we've seen the bottom of this yet.

So what's the difference between a savings account and a Money Market?

If you sell at the bottom of the market and then want to buy in later, you have to wait for your cash to earn a return at a very slow rate. If you leave it in place, it will rise with the market at the same rate the market does. The annual rate of return on the market averages 8-9% historically, and that includes the Great Depression crash. No money market fund offers that kind of return. With your time horizon, Dora, you have many years for the market to rebound. If you bail now, you're selling low and buying high. Just the opposite of what an investor wants to do. Traders go to cash for short periods, and buy in short bursts for a quick turnaround. That's a quick profit, not a long term investment strategy.

Just IMHO. I'm continuing my normal contributions, buying in cheap. My time horizon is a lot shorter than yours is, but a couple of years can make a huge difference in the market. If I bail now, all I do is lock in a loss.

Dollar cost averaging is childishly simple, but the most proven investment strategy over time.

thrice wrote:

If you sell at the bottom of the market and then want to buy in later, you have to wait for your cash to earn a return at a very slow rate. If you leave it in place, it will rise with the market at the same rate the market does. The annual rate of return on the market averages 8-9% historically, and that includes the Great Depression crash. No money market fund offers that kind of return. With your time horizon, Dora, you have many years for the market to rebound. If you bail now, you're selling low and buying high. Just the opposite of what an investor wants to do. Traders go to cash for short periods, and buy in short bursts for a quick turnaround. That's a quick profit, not a long term investment strategy.

Just IMHO. I'm continuing my normal contributions, buying in cheap. My time horizon is a lot shorter than yours is, but a couple of years can make a huge difference in the market. If I bail now, all I do is lock in a loss.

Dollar cost averaging is childishly simple, but the most proven investment strategy over time.

But all this is assuming we're at the bottom now, and I don't believe we are. I don't think we'll be seeing any gains over the next 9 months or so regardless of the bail out passing or not, and we MAY still see significant losses. I'm not going to stay out of the market for the rest of my 30-whatever years before retirement, just until I'm confident we've hit the bottom and are on the way back up. My paltry $2K will buy a whole lot more stock when we really are low as we're gonna go than the $500 I might end up with if I let it ride.

I agree with dora. Most financial people believe the bail out will NOT solve the credit crises. It's like bailing water out of a boat with a hole in it. This will help bail, but will not fix the hole.

Thrice, you seem to think this is a NORMAL downturn. Wrong. This one could be Worse than the '29 crash. Look around my friend, these are the good times. Now strap on your seat belt because you ain't seen nothing yet.

If you will notice, the VIX (the measure of fear of investors) is up to 45 yesterday. It hasn't been that high since '98.

One should be looking to "keep what you've got", rather than trying to beat the market.
BTW, the largest GM dealer in Florida just filed for bankruptcy recently.
Also, BTW, the stock market has just now reached the 1998 level. Ten years of gains, down the tubes. So much for long term investing.

While I am not a financial advisor, I am a professional in the retirement plan industry, and I consider this sort of panic about the economy's impact on one's retirement plan to be unwise. If you have a 401(k), 403(b), or IRA, you bear the responsibility for allocating your contributions into beneficial investments. Traditional thinking is that when you start saving for retirement, your portfolio should favor stock funds that may have short-term volitility, but greater long-term benefit. As you near retirement, your allocation should gradiate out of stock funds and into stable funds so that your potential short-term risk is smaller than when you were younger.

I don't see how it matters whether the market dips any further if we can assume it will come back up in the long term. If you sell your shares now after you've already taken a loss, you may have to pay more for the same shares later if you don't catch the market again at the right time. Not to mention any associated fees that many asset managers charge to reallocate funds.

Furthermore, in an economy where a stable, non-corrupt corporation can offer to purchase a similarly-sized corporation without assistance from the FDIC or any other government agency, perhaps we should begin to examine whether the Government's "bail-out" is really as necessary as many would like you to believe.

Do. Your. Research.

COWman wrote:

BTW, the largest GM dealer in Florida just filed for bankruptcy recently.

Are you associating this bankruptcy with the current economic situation? Or would it be possible to attribute the bankruptcy to a more likely reason, namely GM's continuing sales decline that we've been hearing about in the news for several years?

PANIC! PANIC! PANIC! ACT NOW! THINK LATER!

It is such a shame our society is ruled by fear. I'm not going to pretend the economy is in a great place at the moment, but to assign panic to the situation at apocalyptic levels is ridiculous.

Well said all around, NoMN.

thrice wrote:

Well said all around, NoMN.

Thank you, sir!

No one is saying it's the apocalypse.

And there were no fees to transfer my money within the fund options offered by Fidelity (my 403B) and Calvert (my IRA). None. It cost me nothing to move from a potentially (probably) volatile area to a safe one.

And we'll have to agree to disagree on whether this is panic or prudence. Time will tell. All your advice and observations apply to normal, healthy functions and fluctuations of the market. I personally don't think what we're seeing are normal and healthy fluctuations. And with all due respect, I value the opinions of those who advised me to take this course of action and make their daily livelihood from observing and playing the market quite a bit.

This is from Tom Friedman's column in the NY Times a couple days ago:

Quote:

I was channel surfing on Monday, following the stock market’s nearly 800-point collapse, when a commentator on CNBC caught my attention. He was being asked to give advice to viewers as to what were the best positions to be in to ride out the market storm. Without missing a beat, he answered: “Cash and fetal.”

I’m in both — because I know an unprecedented moment when I see one. I’ve been frightened for my country only a few times in my life: In 1962, when, even as a boy of 9, I followed the tension of the Cuban missile crisis; in 1963, with the assassination of J.F.K.; on Sept. 11, 2001; and on Monday, when the House Republicans brought down the bipartisan rescue package.

I've done quite a bit of research on this, talked to quite a few people with differing opinions, read a lot of analysis, and have a good basic understanding of investing principles. We may have different opinions on the appropriate course of action here, but please don't assume that I'm acting solely out of ignorant panic. It's not the case.

Also, frankly, even if I do miss out on some big unforeseen upswing in the next few months (which, again, is unlikely), I'd much rather look at this as a learning experience in managing my own money than be one of those people who shoves their 401K statements into a drawer unopened because they're too paralyzed by their own ignorance to do anything about what they see there. I'm not going to blindly trust other people, corporations, fund managers, or Wall Street to know what's best for me. They do not have my best interest at heart. So I need to learn how to make my own choices--intelligent and informed choices--by trial and error if necessary. I think that's much more responsible than the folks who are watching their retirement savings literally disappear because they trusted people who told them "not to panic" and "these are the unerring principles that you should follow regardless of the actual reality of the current circumstances." I don't ever want to be in that position. So I might as well start getting my hands dirty now and learning the ins and outs.

I didn't mean to put you on the defense, dorajar, and while my style of writing does take snippets that have been posted by you and others, I am not directing my comments at any one person, and certainly am not trying to imply that you, dorajar, are either ignorant or haven't sought advice from the proper sources. My "Do. Your. Research." statement is just that - a reminder that everyone should do their research. If you have, good. If you haven't, do it. Pretty simple.

As to "no one is saying it's the apocalypse," that may be true in this thread, but it is certainly not true on a broader scope. Many people just don't understand what is going on in the economy (and, again, "many people" does not necessarily include you, dorajar, or, for that matter, any specific person in this forum) and have been convinced by the media or by word of mouth that this is and will continue to be worse than the Great Depression and everyone is simply, for lack of a better term, royally f****d. Now, again, I offer that such a scenario may indeed be the case - I think that remains to be seen. But, I don't think it's a definite outcome, either, and I have yet to find a satisfactory explanation for how the bailout will improve the economic situation and why it is so immediate and necessary.

In general, I feel that people too often jump to conclusions and act upon impulse. Sometimes, they get lucky and that impulse turns out to have been the right move. Other times, not so much. I'm not saying I have all the answers or that any of my answers are correct or that I have answers at all. I was merely stating what my opinion is based on my experience in a sector of the financial industry. Which is, sorry to disappoint, completely legitimate. I may not have the certifications of those you have had the fortune to speak to about this situation, but I do have valid experience that applies to general situations. You have a specific situation, and you have the opportunity to utilize knowledgeable resources and appear to be well-versed on nearly every topic on the planet.

Most people are not you.

And my comments are not inaccurate, disrespectful or condescending just because they may not apply to your personal situation.

Now, COWman has not responded as to what his implications were with his comments about a GM dealership in Florida. But, if his intention was to imply that the dealership was closing because of the current economic situation, bypassing the statistical fact that the dealership's product has become less desirable to the American consumer, such is the kind of dangerous assumption to which my earlier comments apply.

nomnnice wrote:

this is and will continue to be worse than the Great Depression and everyone is simply, for lack of a better term, royally f****d. Now, again, I offer that such a scenario may indeed be the case - I think that remains to be seen. But, I don't think it's a definite outcome, either, and I have yet to find a satisfactory explanation for how the bailout will improve the economic situation and why it is so immediate and necessary.

I agree with this. In the sense that it MAY get that bad, and it may not, and it's not clear how the bail out is specifically going to help avoid that.

We'll see, I guess. And really, my decision has a lot more to do with what I said in my last post (wanting to learn and get hands-on experience in managing my own money) than it does with any real fear or dire need for protection. Let's face it. I have less than $5K in my two retirement accounts combined, and over 30 years of contributions left to make before I retire. Nothing that happens this year is going to make or break me. Which actually makes it a perfect time for me to jump in and educate myself.

dorajar wrote:

Also, frankly, even if I do miss out on some big unforeseen upswing in the next few months (which, again, is unlikely), I'd much rather look at this as a learning experience in managing my own money than be one of those people who shoves their 401K statements into a drawer unopened because they're too paralyzed by their own ignorance to do anything about what they see there. I'm not going to blindly trust other people, corporations, fund managers, or Wall Street to know what's best for me. They do not have my best interest at heart. So I need to learn how to make my own choices--intelligent and informed choices--by trial and error if necessary. I think that's much more responsible than the folks who are watching their retirement savings literally disappear because they trusted people who told them "not to panic" and "these are the unerring principles that you should follow regardless of the actual reality of the current circumstances." I don't ever want to be in that position. So I might as well start getting my hands dirty now and learning the ins and outs.

I'm completely confused, dorajar, as to why you are seemingly so upset about my comments when, from what I can see, we appear to fundamentally agree.

We both are stating that people need to understand their own economic situation and make informed choices rather than just listen to what is coming at them from media or advisors. Unfortunately, I don't think anyone knows what the most successful choice will be in this situation and there are certain risks associated with all of them. It will be an educated guess, at best.

So, again, I'm lost. I don't know why you're pissed at me, and I certainly don't understand why you're implying that because I hold a certain opinion on this topic that I should not be trusted.

I am not your enemy, dorajar. I wish you could see that.

Oh I'm not pissed at you at all! I was defensive in my first post because I thought you were saying I hadn't done my research, but now I'm just explaining myself and trying to articulate (for my sake as well) why I'm making the choice I'm making.

No worries at all, nomnnice. As far as I'm concerned this is just a spirited discussion. Sorry if it came across differently!

A good learning experience is a good thing, Dora.

I've already been on the roller coaster a few times. My retirement savings were riding quite high in the 1990's, when the Dot.com bubble made the stock market go crazy buying companies that had nothing behind them but a good idea. At some point, someone called their bluff and asked to see some profits. Many of them tanked. Since then my value has been cut in half, well before the first inauguration of GW, by the way.

The reason I always hammer people to stay in the market is that the economy is diverse. People will still buy jeans. They will still buy Coke. They still eat. Etc. Etc. While some liquidity is necessary to keep all businesses running, basic necessary industries will still continue to function. Frankly the entire premise of the markets and economy is that it will eventually recover from whatever is thrown at it. If one does not believe that, and accepts that we will somehow become an economic basket case permanently, then there's not much point to investing or saving for retirement. If I seriously believed that, I would buy a shack in the woods and 40 acres.

Money managers do not operate the same as you and I do. "Cash and fetal" is an appropriate approach for someone who gets professionally graded every year on the return they get for their clients. Have a really bad year or two? You get fired. They don't have the luxury of 30 year horizons to recover in. If they did, they'd generally follow a buy and hold strategy, as has served Warren Buffet and numerous other investment legends well.

thrice wrote:

. If one does not believe that, and accepts that we will somehow become an economic basket case permanently, then there's not much point to investing or saving for retirement. If I seriously believed that, I would buy a shack in the woods and 40 acres.

But I don't plan to stay out of the market permanently. I plan to get back in when I'm confident we've left the possibly devastating bottom behind us and are on the way back up. Think of it this way. If you had managed to get out when the dot.com crash was half way down, then bought again when the market had hit its low and was bouncing back, you'd have lost less. Obviously predicting where those lows are going to occur is as imperfect as gambling, but that's the idea. Buy and hold is a reasonable strategy for many, in normal circumstances, but you can't tell me it's the only strategy. Day traders do pretty well for themselves too (some of them), jumping in and out and all around on a daily basis. I don't intend to go that far, but I'd like to be flexible and knowledgeable enough to operate on multiple places along that spectrum--from buy and hold, to day trading. Lots of people are seeing huge losses right now. Luckily my mom got the advice from someone who saw this coming to transfer to cash (money market) a year ago, so she's largely been spared. I'm immensely grateful for that. If she had stayed in the market she'd have seen tremendous losses, and she's only a few years from retirement now.

"If you had managed to get out when the dot.com crash was half way down, then bought again when the market had hit its low and was bouncing back, you'd have lost less."

Aha! And there's the key, Dora. I didn't sell anything, so I didn't lose anything. I still have the same number of shares, albiet less valuable ones. You don't actually suffer a loss on shares until you sell them for cash.

I won't try a lengthy example, and God knows I'm no stock expert. But let's say I have 100 shares at $50 each, for $5000. The market drops in 6 months, and they're only worth $25 each, for $2500. I lost $2500- on paper. But if I hold, I still have 100 shares.

But I didn't. I sold at $25, and got $2500 cash. How long will I need to stay in cash at a generous 3% interest just to get back to where I was 6 months ago? Short answer is many years. Whereas if I had just left them in a fundamentally sound investment, the odds aren't bad that they would recover on their own in a much shorter time.



"Buy and hold is a reasonable strategy for many, in normal circumstances, but you can't tell me it's the only strategy. Day traders do pretty well for themselves too (some of them), jumping in and out and all around on a daily basis."

No, buy and hold isn't the only way. I think of my money in two parts- bedrock investments that I rely on, in mainstream, necessary industries with staying power. And gambling money. The latter is money I jump in and out with, big risk with big potential gain. It has given me both, depending on the issue. But I don't put the house payment in there.

And as your day trading friends will tell you- some do very well. Most go broke.

" Luckily my mom got the advice from someone who saw this coming to transfer to cash (money market) a year ago, so she's largely been spared. I'm immensely grateful for that. If she had stayed in the market she'd have seen tremendous losses, and she's only a few years from retirement now."

Another key point. Your mom is near retirement. It's entirely appropriate at that time to invest conservatively, because you have little time to recover from mistakes and fluctuations. Most people shift their assets to minimize risk as they approach retirement, no matter what the market is doing.

Go with what you're comfortable with, D. I've listened to enough "investment gurus" to figure out that they like to make dramatic statements to draw attention to themselves and declare you a fool if you don't act on their advice right now.

The big question is- if they are so prescient, then why weren't they telling everyone that this crisis was imminent? I'm starting to think that their advice often tends to be as generic as horoscopes. Mouth some basic platitudes and mysterious generalities, and point to whatever occurs as evidence of your soothsaying abilities.

Hogwash. Someone giving good investment advice will not only tell you what to invest in and divest from. They will also tell you why, in language that makes sense to you. A rare commodity, that kind of useful advice without the laser lights and dry ice fog effects.

Ladies and Gentlemen,
It appears that this is a lively discussion. I love the fact that dora is getting a financial education for free (almost). Most people rely on a "professional" financial planner from Ameriprise, Fidelity, Charles Schwab, etc. to make or help them make financial decisions. Dora is taking the bull by the horns and "getting her hands dirty". Most, if not all, financial advisors are more concerned about THEIR financial situation more than the clients. In my 35 (or more) years of dealing with many, I have found that to be the case. "Buy and Hold", "dollar cost averaging", "diversify", "the market will be back", yada, yada. They are happy to sell you stuff, and move it around, but NONE of them call when the economy is going south, saying "it's time to get on the side lines".
Thrice, look at the dow in Jan 2000, it was 11,200. It took over 2 years, to Oct 2002 to reach 7700. How many professional advisors called their clients and said "it's time to get on the side lines"? Maybe with some of their bigger clients, but certainly not most. So, if someone even after a YEAR got on the sidelines they would have saved a lot of heart ache and wealth.

This market has gone from 14000 last year at this time, down to 10325 today. That's a 30% decline in one year. AND 6.2% unemployment, losing 160,000 (ok 159,000) jobs last month.... the 9th month in a row, etc. etc. And we are adding $700 Billion to the national debt TODAY.

Bottom line, I recommend that more people "get their hands dirty" and make some financial decisions. These are no ordinary times. Dora, you go girl!

I don't disagree with your low general opinion of financial advisors, Cowman.

But let's look at the whole picture and reasonable expectations, ok?

"Thrice, look at the dow in Jan 2000, it was 11,200. It took over 2 years, to Oct 2002 to reach 7700. How many professional advisors called their clients and said "it's time to get on the side lines"?

You're right. My broker never bothered to call me on September 10, 2001 and tell me "Thrice! Get your *ss out of the market! A whole slew of loonies are going to highjack jets tomorrow and fly them into the Pentagon and the World Trade Center, and a whole bunch of people are gonna die! The impact on the economy will be horrendous and longlasting!".

Long story short is that I think Peter Lynch represents all that is good and positive about investment. He followed consumer trends and picked winners based on what people liked and needed, and put his money there. He focused on companies that had identified desireable products and services and emphasized quality delivery of them. Didn't care a whit about the overall economy or market trends. He used good common sense.

People can moan and wail about the coming collapse, but you can still bet your patuitee that they'll still be lined up around the block for the next Iphone when it comes out.

Hard to tell where the hype starts and stops. Credit crunch? Blood running in the streets? Well, I just walked into a credit union (with an unremarkable income and credit rating) and took out two big ticket consumer loans at 5.99%. Apparently they had not heard about the crisis yet.

http://www.icmarc.org/xp/rc/planning/newsletter/2008/summer/save/MarketViewCostofMissingtheMarkets.html

dorajar wrote:

Are you making any changes to your 401K, 403B, or IRA accounts as a result of the market turmoil? How are you planning to ride this economic crisis out and come out as unscathed as possible?

No - if you are close to retirement, you should have prepared yourself for something like this. If you are young and have more than 10 years before you retire, you can ride it out. The market goes up and down all the time. This is normal - we just haven't seen something like this in recent memories.

Quote:

Breaking News 9:35 AM ET:
Stocks Open Sharply Lower on Spreading Credit Worries; Dow Falls More Than 200 Points in First Minutes

We shall see...

thrice wrote:

http://www.icmarc.org/xp/rc/planning/newsletter/2008/summer/save/MarketViewCostofMissingtheMarkets.html

It would be interesting to see a chart that reflected what would happen if that $10K missed the ten WORST days.

Talk about Blood in the Streets ......

Dorajar, it looks like you are starting to think like an investor. Congrats.

dorajar wrote:

thrice wrote:

http://www.icmarc.org/xp/rc/planning/newsletter/2008/summer/save/MarketViewCostofMissingtheMarkets.html

It would be interesting to see a chart that reflected what would happen if that $10K missed the ten WORST days.

But, Dora, both scenarios are hypotheticals that couldn't possibly be created in reality.

I respect your personal decision to convert to cash because I am confident in your ability to fully research your choices.

However, thrice is not incorrect in saying that the point at which you take an actual loss is when you sell. It's about the number of shares held.

nomnnice wrote:

dorajar wrote:

thrice wrote:

http://www.icmarc.org/xp/rc/planning/newsletter/2008/summer/save/MarketViewCostofMissingtheMarkets.html

It would be interesting to see a chart that reflected what would happen if that $10K missed the ten WORST days.

But, Dora, both scenarios are hypotheticals that couldn't possibly be created in reality.

I respect your personal decision to convert to cash because I am confident in your ability to fully research your choices.

However, thrice is not incorrect in saying that the point at which you take an actual loss is when you sell. It's about the number of shares held.

Right. Both are hypotheticals. You could use one hypothetical to support your position, and I could use another to support mine. So neither is probably very useful.

And I'm with ya on the number of shares held. I've been meaning to go back to thrice's example of the hypothetical 100 shares. Here it is:

Quote:

I won't try a lengthy example, and God knows I'm no stock expert. But let's say I have 100 shares at $50 each, for $5000. The market drops in 6 months, and they're only worth $25 each, for $2500. I lost $2500- on paper. But if I hold, I still have 100 shares.

If he sold when they dropped to, let's say, $35 a share and sat on the sidelines while they dropped further to $25 per share, and jumped back in when they started coming back up at say $30 per share, his $3500 would buy 116 shares. If it's all about the number of shares held, that would have been a winning strategy.

Yes, but that would depend on an assumption that the market will continue to go down, which, while possibly true, is a pretty cynical viewpoint and kind of out of character for you, dora.

nomnnice wrote:

Yes, but that would depend on an assumption that the market will continue to go down, which, while possibly true, is a pretty cynical viewpoint and kind of out of character for you, dora.

I don't think it's cynical. I think it's realistic.

I can't find any serious analysts who expect the market to make any significant gains in the next few months. Just today the Dow dropped below 10,000 points for the first time since 2004.

http://www.nytimes.com/2008/10/07/business/07markets.html?hp

It's right there in the headlines. I've already saved myself a bundle (on paper) by going to cash when I did.

("cash" by the way is another way of saying a money market account--still tax-deferred and reserved for retirement, just not in stocks. Just to clarify. "On the sidelines," in other words.)

I also wanted to talk more about thrice's point that Warren Buffett has made millions from his philosophy of "buy and hold." That's true, but Buffett also hand picks the companies he wants to invest in:

Quote:

In a nutshell, Buffett strives to identify highly profitable companies capable of generating strong future earnings growth. To that end, he looks for companies with a sustainable competitive advantage, which, for him, usually translates to a strong brand name. Stocks such as McDonalds, Gillette (G, news, msgs) and H&R Block (HRB, news, msgs), all major Berkshire holdings, are examples.

Buffett doesnt look at analysts forecasts to predict future growth. Instead, he relies on the companys historical results. This requires an in-depth understanding of its business plan. He seeks out companies with strong management and demonstrated expertise in their industry. Conversely, he avoids companies that expand outside their area of expertise.

http://moneycentral.msn.com/content/Investing/Findhotstocks/P90537.asp

Most 401K options are mutual funds with a predetermined set of shares in a predetermined list of companies, picked by some fund manager somewhere based on who knows what rationale. If you want to use Warren Buffett as an investing model, more power to you, but it does still mean being a lot more hands on in your investment choices, as opposed to simply picking the so-and-so mid cap fund from Fidelity and buying and holding come hell or high water.

dorajar wrote:

I don't think it's cynical. I think it's realistic.

I'm thrilled I have you on the record as saying this and, rest assured, I will be using this against you the next time you accuse me of cynicism or negativity of my own.

Again, not arguing with the truth of the matter, but I'm just surprised to hear that from you.



Last edited by nomnnice on Mon Oct 06, 2008 12:27 pm; edited 1 time in total

Fair enough!

Now Dora, you need to know about going "short". Basically, it a strategy of making money when your stock (market index, ETF, etc.) goes down.

Today I was short and had my best day in four YEARS.

cheers!

http://www.startribune.com/business/30547309.html?elr=KArksLckD8EQDUoaEyqyP4O:DW3ckUiD3aPc:_Yyc:aUUss

Star Tribune business columnist Neil St Anthony, who tends to give sober and moderate advice, urges investors not to bail and to continue steady accumulation of good stock shares.

Note his focus on individual companies. Maybe that's what you're looking for, Dora. I can't recall the particulars, but maybe you should explore a self directed IRA. As I recall, it's a basket of individually picked stocks that you choose that are all held in an IRA designated account.

http://en.wikipedia.org/wiki/Self_directed_ira

That's definitely closer to something I'd be comfortable with. At the same time, I'm no Warren Buffett, so I'd need to do a ton more research before jumping in to that.

The Stock Market ... my favorite subject. If individual stocks is your game, which I swore off of three years ago, (Which might be right for you) then I would suggest you start subscribing to Investors Business Daily and follow their rules RELIGIOUSLY. There are about 20 rules. Start to memorize them first, the write them on the inside of your forehead and never deviate.
Rule number one: Never take more than an 8% loss. Don't "wait for it to come back", don't ask your Uncle, don't ask your clergyman, GET OUT.