# Investment in free-fall



## debodun (Nov 21, 2016)

I've lost ±$4000 this month on my tax free investments! Anyone know why the value is plunging?


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## Don M. (Nov 21, 2016)

The markets have been on a roller coaster for the past couple of months....as Wall Street has been trying to figure out the ramifications of this Presidential election.  The Bond Markets, especially, have been taking an extended downward slide.  Many States, such as California, and Illinois have overextended themselves to the point where their burden of debt is almost reaching a breaking point.  Even US treasuries have been going downhill as the reality of this huge national debt is beginning to hit home.  The problem is being made worse by Foreign bonds in nations that are moving towards a Negative return.  

If you follow the "experts" the reasons for this market performance all over the place...no one really knows what is going on, or where the markets are heading.  Probably the best advice in such an environment is to be diversified, and conservative.  There are an increasing number of analysts who are predicting a repeat of 2007 sometime early next year.


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## mathjak107 (Nov 22, 2016)

interest rates on bonds have soared  the last 90 days . inflation fears over trump spending has made bond investors demand more interest . the long treasury bond fund TLT  is down about 13% the last 90 days .

bonds are not the safe investment folks were led to believe . we had a 35 year bull market in bonds and except for a few bumps in the road rates on bonds just got lower and lower - until 3 months ago when they flipped .

most of us have never seen a bond bear market in our lifetime as investors


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## nvtribefan (Nov 22, 2016)

debodun said:


> I've lost ±$4000 this month on my tax free investments! Anyone know why the value is plunging?



Whether or not a 4k loss means "the value is plunging" depends on your balance at the beginning of the month.  The percentage of the loss is much more telling than the dollar amount.


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## mathjak107 (Nov 24, 2016)

actually as we fill our gas tanks over the years and have more and more invested it really is not a percentage thing mentally as much as a dollar thing .

today a mere 7% drop represents 9 years of contributions maxing out my 401k at catch up . that is an insane amount of money  in the scheme of things .

when you are young and starting out that 7% drop may be a few months of contributions .

everything is relative .

the problem is humans are prewired . we hate losing money more than making money  . we do not even use the same parts of the brain  to rationalize with when we trade hypothetically vs having actual money at risk .

so a loss is a loss to our feeble brains . morningstar investor returns show that  as a group investor behavior sucks regardless if the fund is an aggressive growth fund or a conservative balanced fund . investors seem no more inclined to stay the course when things get tough .


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## debodun (Dec 3, 2016)

I made  a graph of that particular investment over the past year. It hit a high in August, then slipped a hair in September and again in October, a little more in November, then plunged. I'm almost back to the value it was at the beginning of the year.


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## mathjak107 (Dec 3, 2016)

it is a muni bond and bonds got crushed . the 30 year bond is off about 17% .  any time you buy one asset class and bet the ranch on it look out . that is speculating not investing .


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