Will there be a stock market correction?

investing noob wrote:

I started a new job and started to roll over my old 401k into the new one. The funds were liquidated a couple weeks ago and I received the check in the mail. It's good for 180 days.

Should I forward the check to my new 401k right away, or try to time a correction in Sept/Oct? I've already missed out on some gains.

For the love god, put the damn money in the 401K. What you are saying is the tax planning version of someone thinking about having lunch on the train tracks because they don't think a train is coming anytime soon. If you don't get the money back in the 401lk all of it becomes taxable (unless some of it is designated as a Roth) and likely penalties on top of it. The IRS has no sympathy if there is some internet outage that doesn't let you get the money back into the 401K at the last moment. Nor does the IRS care if you are suddenly taken to the hospital for some kind of emergency and you don't get around to meeting the deadline.

Yes, SPX is reaching a critical level (4560-4600). This trend-line hasn’t been tested since right before the COVID crash and we know how that ended. Right before Labor Day weekend last year we had a correction as well. Dangerous time zone for seasonality in September. https://twitter.com/bcalusinski/status/1432068518577524737?s=21

Okay, here's the skinny.

Prevailing sentiment on issues like this is that you can risk it by timing it, but you stand about as good a chance of losing some potential gains as grasping a few percent advantage. With that in mind, most advisers say don't fret over it, just roll it over, and even if it dips a bit in the subsequent weeks/months, the amount you would have made had you timed it somehow perfectly will be relatively insignificant by the time you take it out years from now.

All of which is just another way of saying that it doesn't really matter in the big picture, and presumably you are in this for the long haul.

So that's conventional wisdom. Fussy people like myself find a way to needlessly complicate things, so when I am in one of those moods, what I would do is a simplified version of dollar cost averaging (DCA), in which you would take a third of the money and roll it over now, roll over about a third of the money in say a month or two, and then roll-over the remainder a few weeks before the deadline.

If it's a small enough amount of money to not actually make and appreciable savings, however, just do it all at once.

As for the markets, it seems we have been in a very nervous time these last few months. There seems to be a lot of trepidation. Which could easily result in a lot of cash on the sidelines that suddenly feels it necessary to get back in. So a melt-up is not out of the question either...

Here's the skinny. If you got the money from a 401k and you're not old enough to take a retirement distribution, you have to put that money back into a retirement plan or pay the taxes plus a penalty. If you are old enough, you just pay the taxes.

You can roll it over into a brokerage account IRA and trade stocks, ETF's and mutual funds within the IRA, just cannot go short.

If you try timing the market and you lose, you have to come up with the money to roll over the amount of the distribution, or pay tax on the difference. You will get to reclaim the tax on the loss by writing off the loss eventually.

If you try timing the market and you win, you will have to pay tax (at the regular rate, not the long term cap gains rate) on (almost) all of the gain. And you have to get out of the market to complete your rollover.

If you roll it over into an IRA, you can do market timing within the IRA, or any other investment strategy you like (cough, buy and hold, cough). There's no tax to deal with until you take distributions.

If you convert to a Roth IRA, there is tax to pay now, but no tax on the distributions.

If you are significantly below retirement age, the correct answer is almost certainly roll it over immediately to an IRA, and most likely convert to a Roth IRA. I am surprised you got a check in hand. The more typical thing would be a direct transfer from one institution to another.

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That's the skinny, the real one.

I esp. appreciate his point about just rolling it over now, and you can time your purchases within that roll-over IRA brokerage account by when you choose to trade your investments of choice.

Sound advice, imo.

And I have had a few instances of distributions for various reasons, sometime because of overcontributing and once due to my plan administrator at work making a mistake, even. They are a pain to do the IRS paperwork and adjustments on your taxes, made even worse because by the time you come to do them, the details have become a little fuzzy. Avoid this if you can.

Not sure if someone has mentioned this yet, but I wanted to respond as quick as I could...You can’t rollover your former 401k into your current 401k. You’ll need to roll it over into a ROLLOVER IRA. That is going to be a self-directed account.

investing noob wrote:

I started a new job and started to roll over my old 401k into the new one. The funds were liquidated a couple weeks ago and I received the check in the mail. It's good for 180 days.

Should I forward the check to my new 401k right away, or try to time a correction in Sept/Oct? I've already missed out on some gains.

The stock market has never been more overvalued. That said the FED is absolutely committed to backstopping the market so at any sign of trouble between the FED and the federal government they will unload massive amounts of cheap money to prop things back up. Honestly who knows what the hell will happen in the next year with this mess of a financial system. Only thing to say for certain is in an inflationary period, which is far worse than the rigged CPI metric indicates, do not hold Bonds.

You have 60 days to roll into and IRA or you will owe taxes. So first roll the full amount into an IRA to avoid taxes. Then you can invest totally on day one or over time. If afraid of buying at top, invest into funds or stocks over a set time frame. Like 1/3 now, next 1/3 at 2 months and finally 1/3 at end of December. In the long run it won’t really matter, just what feels best to you.

Unless you’re close to retirement age, just put the money right into the market and forget about it for another 30 years.

https://twitter.com/adamsinger/status/1432111203476705287?s=21

ForFusion wrote:

Not sure if someone has mentioned this yet, but I wanted to respond as quick as I could...You can’t rollover your former 401k into your current 401k. You’ll need to roll it over into a ROLLOVER IRA. That is going to be a self-directed account.

What? I've already rolled over a 401k before. The distribution option I chose for my old 401k literally said to roll over into another employer sponsored plan.

investing noob wrote:

ForFusion wrote:

Not sure if someone has mentioned this yet, but I wanted to respond as quick as I could...You can’t rollover your former 401k into your current 401k. You’ll need to roll it over into a ROLLOVER IRA. That is going to be a self-directed account.

What? I've already rolled over a 401k before. The distribution option I chose for my old 401k literally said to roll over into another employer sponsored plan.

Depends on the terms of the new employer's plan - some do, many do not.

I had one to do a few years ago and my current employer would not accept roll-overs, so check with your plan administrator.

Make sure to roll it into another 401K SOON or it'll be a significant tax penalty!!

seattle prattle wrote:

investing noob wrote:

What? I've already rolled over a 401k before. The distribution option I chose for my old 401k literally said to roll over into another employer sponsored plan.

Depends on the terms of the new employer's plan - some do, many do not.

I had one to do a few years ago and my current employer would not accept roll-overs, so check with your plan administrator.

I already started the rollover process with my new 401k. They keep calling me to ask when I will deposit the check.

Thanks everyone, I just found out my new 401k has an app. I uploaded the check through the app so hopefully it gets deposited soon. The app has a rollover section so this 401k is rollover friendly.

I like this new 401k and app. I might rollover another 401k from Vanguard too, since I have access to Vanguard funds in this new 401k too. Not a fan of Vanguards app or website.

Investing is about time in the market, not timing the market. Sitting in cash just because the S&P 500 is setting new highs is a mistake on several levels. First, to be successful, especially in long term investing, it’s vital to make decisions based on long-term expectations, not short-term market moves. Second, and probably ly most importantly, past performance is not indicative of future results. Setting new highs doesn’t necessarily mean the market has peaked and a correction is imminent, just as a pause during a sharp sell off doesn’t mean there’s not still further to fall. The right time to invest is always now. If your money is sitting in the bank it's losing value, especially when today's extremely low interest rates aren't even keep up with inflation. Forward that check! :-)

investing noob wrote:

Thanks everyone, I just found out my new 401k has an app. I uploaded the check through the app so hopefully it gets deposited soon. The app has a rollover section so this 401k is rollover friendly.

I like this new 401k and app. I might rollover another 401k from Vanguard too, since I have access to Vanguard funds in this new 401k too. Not a fan of Vanguards app or website.

Vanguard's website is clunky but it's arguably your best place to roll your 401k into (i.e. open a Vanguard IRA). Vanguard offers a wide selection of index ETFs and funds with the lowest fees in the industry. Most competing funds are very similar to each other so the only difference is in the fees as these directly eat away at your gains year after year (compounding negative interest).

You also want to use a self-directed IRA instead of a company 401k as you will get MUCH more selection in your investment options. Don't try to time the market; that's a coin flip as the current price represents the mid-point between the bulls and bears, so unless you know more than all of Wall Street, you're wasting your (compounding) time.

And stick with boring index funds. Source: I have 2 decades+ experience in trading and the financial industry and have been a self-directed investor (not trader) that whole time.

investing noob wrote:

I started a new job and started to roll over my old 401k into the new one. The funds were liquidated a couple weeks ago and I received the check in the mail. It's good for 180 days.

Should I forward the check to my new 401k right away, or try to time a correction in Sept/Oct? I've already missed out on some gains.

Depends on your age. If you're young just re-invest and not worry about it. When you're young just focus on the long term and not worry about short term market fluctuations.

If you're old and near retirement age, you could wait a few months to see if there's a correction, but if there's not then hurry up and invest it.

WinnytheBish wrote:

Steve The Addict^^^^^^^------- wrote:

Look for the market to plummet and inflation to really take hold when the free handouts and lockdowns are over for good. When landlords evict tenants, when businesses close and go bankrupt, when people start losing the employment insurance money for sitting at home doing nothing. It could still be a half dozen more months or more depending on how things progress or regress regarding the covid, lab created weapon, agenda based pandemic.

Found the guy who doesn't understand how the market works

Steve The Addict must be one of the liberal drug addicts in Portland.

When the handouts stop people will have to actually start working again, which will help the economy. Stuff will actually start getting done, and inflation will get back under control since there will be fewer shortages of things since more is getting produced again. If fewer people are working less gets done and there's less goods/services to go around. That should be obvious to anyone. Handouts make people comfortable and not want to work as much. Then the prices go up because nothing is getting done and those handouts are worth less than they used to be.