I’ve never understood how the DJIA has survived as the prime indicator in modern times, it represents only 30 stocks in a universe of thousands, plus it has a wacky weighting formula from adjustments over the years. (Not to mention that the stocks in it change when one falls out of favor.) When it was devised it was a shortcut in the day of manual calculation, but now we can instantly compute statistics of all variety for the stock markets as a whole.

Back on topic, Kevin asked if we are making any investment changes based on the changes in market value. I opened my first Roth IRA last week. Yesterday I opened my second. The online calculators say this was a good idea, and in my mind it seems like it too. Has anybody else given thought to making a Roth IRA Conversion now?

I took some of my Rollover IRA and converted it to a Roth IRA. It occurred to me that the IRA is currently worth a lot less than I expect it will be in the future. For that matter it might even be worth less than it was when I made the contributions. So of the choices of when to pay income tax — when I earned the money years ago, in a conversion today, or when the account is worth more in the future — it made sense that now is the time, when the funds are at their lowest value, thus the lowest amount of tax will be due.

I know it ignores a lot of things, like changes in tax rates past present and future, and what the money I’ll pay the tax with could have earned if invested, but the online calculators seemed to back it up that this was a good choice.

I’ve been intrigued with CNBC particularly the High-Def channel where they’ve got room for all sorts of statistics on the right portion of the screen. So many little red down-arrows for almost every company, even in long-term results, and they show the percentages there. (I did see one yesterday had something like 45150% gain over 5 years, must have started out at 25 cents.)

Personally the timing has been right for me, I left my job at the end of June which means left the 401(k) contribution plan at that time. With costs of starting up my home office (computer, office furniture, internet access) then quarterly income tax payment, I couldn’t afford to make any other kind of tax-deferred investments.

My schedule was to make Roth IRA contributions in October, November, and December of this year, and made the first one last week. Long-term that account should look pretty good when market valuations get back to normal range. Regardless of that happening, the account looks better than if I had continued making 401(k) contributions through employment in July, August, and September.

To answer the question why Roth IRA, because the rules are fuzzy about traditional IRA when you are participating in an employer-sponsored 401(k). I could not find any clear answer to part-of-the-year participation in a 401(k), all the tax publications seem to presume you never change jobs during a year. Roth IRA is independent of any other plan participation. And opening a Roth IRA account is a lot easier than setting up a SEP-IRA or SIMPLE plan.

That is why I watch point value changes in the market instead of percentage changes, it is a little more truthful.

Like they saying goes “There are lies, damn lies and statistics” they will use whatever makes it the biggest topic for the news. Hopefully more people will see your post and keep me from having to explain it to them again.