Are we headed for a "fall"?

[Zathras]

...
As for me, I am sure we are headed for a "fall"... and a "rise", lather rinse and repeat. I don't really know how big the ups and downs will be, but I am sure we have many of each ahead of us.

Life is a rollercoaster, and so is the market. My approach is to hang on, expect ups and downs, be agile/adaptable (because there WILL be changes), and enjoy the ride immensely and completely because we only get one.

+1

 

[LARS]

The advantage of living in a developed country, and a large one like the US, is that it would not be a fall, but a decline, a slide, giving us time to react, to ponder the gloomy predictions of doomsayers, and to take corrective actions if necessary. Citizens of little countries like Lebanon, Zimbabwe, Cuba, North Korea, Vietnam, did not have such luxuries. ).

Pre WW II German's might disagree with your observation; however, I think your point has validity.

 

[bbbamI]

Man Selling Spots In Hidden Bunker Called Vivos As Last Hope - cbs2.com

From the article....

Would you want to survive or would you want to sit on the porch with chardonnay or Jack Daniels and watch the show?" Vicino asked.

Jack Daniels for me please.....

 

[Pete]

Dex, I agree with you 100%.

Dr. Ridley writes. “And the reason that economic growth has accelerated so in the past two centuries is down to the fact that ideas have been mixing more than ever before.”

Probably just as likely it was the spreading use of cheap and easy energy found in fossil fuels.

Our progress is unsustainable, he argues, only if we stifle innovation and trade, the way China and other empires did in the past.

What happens to a country who gets out-innovated and has a 30 to 60 billion dollar monthly trade deficit?

 

[Dawg52]

Screw all this doom and gloom crap. I'm gonna have a med and watch Andy and Barney.

 

[W2R]

Screw all this doom and gloom crap. I'm gonna have a med and watch Andy and Barney.

Wave hello to Opie for me!

I have the same attitudes but don't need the meds to get there (yet). It will all work out.

 

[73ss454]

Screw all this doom and gloom crap. I'm gonna have a med and watch Andy and Barney.

Now that you have most of your $ tucked away in CD's, what are you worried about. Or is this just an excuse for medication.

 

[DblDoc]

Now that you have most of your $ tucked away in CD's, what are you worried about.

Inflation?

I just ran my numbers to see what is lagging and low and behold I don't need to invest in bonds this month. And my NW took its biggest $ hit in a month ever...

I'll need some of Dawg52's liquid courage to help me stomach buying international equities tomorrow...

DD

 

[Pete]

I've found it curious in ER forums, that to be negative about the economy (or a portion of it) quickly leads to "doom and gloom" ridicule. Were there any doom and gloom forecasts about the tech bubble or eventual real estate crash? Were they ridiculed? Did anyone listen and save themselves a lot of heartache?

 

[haha]

I've found it curious in ER forums, that to be negative about the economy (or a portion of it) quickly leads to "doom and gloom" ridicule. Were there any doom and gloom forecasts about the tech bubble or eventual real estate crash? Were they ridiculed? Did anyone listen and save themselves a lot of heartache?

I am not the world's best board historian, but as I remember most negative forecasts or reports of negative forecasts have been riduculed all along.

I believe that Firecalc and also the whole (doubtful) SWR idea have made people focus almost exclusively on the market value of their holdings, instead of the earning and dividend power of the portfolio. So a fall in market value implies a lower standard of living, and people who are very eager to leave work do not like this.

This focus on market values is suboptimal, unless one plans to annuitize. Building a retirement on a total return liquidating model is very risky, and will every now and then create havoc.

Platitudes are also very popular, such as "never bet against America". As if America or any other process were an unchanging stable value for all eternity. America today is completely different from America 150 or 100 or 50 years ago, as is most of the rest of the world and the world's competitive and economic and geopolitical realities.

Ha

 

[LARS]

I believe that Firecalc and also the whole (doubtful) SWR idea have made people focus almost exclusively on the market value of their holdings, instead of the earning and dividend power of the portfolio. So a fall in market value implies a lower standard of living, and people who are very eager to leave work do not like this.

This focus on market values is suboptimal, unless one plans to annuitize. Building a retirement on a total return liquidating model is very risky, and will every now and then create havoc.

Would you mind expanding your thoughts? Not exactly sure where you are coming from, especially focus on market value, unless you are saying income generation is more your focus?

 

[Dawg52]

Or is this just an excuse for medication.

Now you know why I watch cnbc.

 

[brewer12345]

Yes, we are due for fall in about 4 months. What's the official date this year? September 22 or so?

Seriously, we did not have a correction all the way up in the recovery from the abyss. So we are having an overdue one. I think Europe will sort its issues out and this will prove to be the "pause that refreshes.". But as always, you pays your money and you thes your chances.

 

[lets-retire]

Yes, we are due for fall in about 4 months. What's the official date this year? September 22 or so?

Seriously, we did not have a correction all the way up in the recovery from the abyss. So we are having an overdue one. I think Europe will sort its issues out and this will prove to be the "pause that refreshes.". But as always, you pays your money and you thes your chances.

Not only that, but I think this recession wasn't long or hard enough for people to correct their bad financial behaviors that led to the problems to begin with. Few people were forced to take responsibility for their actions and those who did act responsibly were forced to pay for those who didn't. It will happen again, relatively soon.

 

[Gone4Good]

I believe that Firecalc and also the whole (doubtful) SWR idea have made people focus almost exclusively on the market value of their holdings, instead of the earning and dividend power of the portfolio. So a fall in market value implies a lower standard of living, and people who are very eager to leave work do not like this.

Earnings and dividends are only marginally more reliable than market values. Short-term interest rates have fallen more than 90% in the past 5-years, 5 year CD rates are down about 50%, market earnings last year went negative, and SPX dividends fell almost 25% from their peak. Someone who put together an income portfolio in 2005 hoping to live off the yield is on a pretty strict diet right now (especially if they filled that portfolio with yieldy financials and RETIs).

There is no "safe" way to do what we're all trying to do. So to even attempt it implies some level of optimism. What's surprising is that folks who tend toward pessimism would even think about something as uncertain as early retirement . . . which is probably why they find strong resistance here.

 

[REWahoo]

I've found it curious in ER forums, that to be negative about the economy (or a portion of it) quickly leads to "doom and gloom" ridicule. Were there any doom and gloom forecasts about the tech bubble or eventual real estate crash? Were they ridiculed? Did anyone listen and save themselves a lot of heartache?

What I've had difficulty in doing is separating the folks who warned about the Y2K crash, the tech bubble or the real estate disaster from the permabears who see financial Armageddon around every bend. An additional complication is so many of those who post here to tell us the sky is falling seem to have developed abrasive online personalities (one recent gold bug comes to mind) which may be a reaction to the reception they've received on this and other forums. Nevertheless, it is difficult for me to take all the gloom & doom prognostications seriously since so many of them have proven to be wrong - and the results of trying to time the market have been dismal, at least for me.

I'm more comfortable choosing an asset allocation I can snuggle up to at night and going along for the market ride with the faith the long-term trend will continue to be favorable.

 

[Pete]

What's surprising is that folks who tend toward pessimism would even think about something as uncertain as early retirement . . . which is probably why they find strong resistance here.

True. But for me, the pessimism was motivation to over prepare. And of course I wasn't always pessimistic. More than 10 years ago I might have been overly optimistic.

 

[bbbamI]

I'm more comfortable choosing an asset allocation I can snuggle up to at night and going along for the market ride with the faith the long-term trend will continue to be favorable.

Oh c'mon it's much more fun in retirement to worry, wring your hands and pull your hair out every day isn't it? At least that way you'll have an answer when someone asks "What do you do all day?"

As far as snugglin' goes, I'll be cozying up to my teddy bear the next couple of nights. DH has gone on a road trip (he's soaking up every moment of retirement). Silly man...he's enjoying himself.....

 

[Pete]

I'm more comfortable choosing an asset allocation I can snuggle up to at night and going along for the market ride with the faith the long-term trend will continue to be favorable.

This has proven to be a fairly good idea, but I just couldn't help having my "faith" shaken when so many people around me were all of a sudden able to buy million dollar homes here in SoCal. I had to become bearish (about real estate), get off my pillow, and sell some real estate.

I think I might have become a perma bear (I think just a realist) in the 80's. I looked back to the 60's and saw how much manufacturing was gone and saw how much the gov't was growing and couldn't help it. It didn't stop me from investing in it, but....

 

[LARS]

There is no "safe" way to do what we're all trying to do. So to even attempt it implies some level of optimism. What's surprising is that folks who tend toward pessimism would even think about something as uncertain as early retirement . . . which is probably why they find strong resistance here.

Ah yeah, there’s a safe way: its call having a boatload of capital relative to your expenses. Worked fine for me despite my "pessimistic", though I consider it cautious, approach…

 

[W2R]

What I've had difficulty in doing is separating the folks who warned about the Y2K crash, the tech bubble or the real estate disaster from the permabears who see financial Armageddon around every bend. An additional complication is so many of those who post here to tell us the sky is falling seem to have developed abrasive online personalities (one recent gold bug comes to mind) which may be a reaction to the reception they've received on this and other forums. Nevertheless, it is difficult for me to take all the gloom & doom prognostications seriously since so many of them have proven to be wrong - and the results of trying to time the market have been dismal, at least for me.

I'm more comfortable choosing an asset allocation I can snuggle up to at night and going along for the market ride with the faith the long-term trend will continue to be favorable.

+1 Sticking with our chosen asset allocations and rebalancing when indicated got many of us through the worse market crash since the Great Depression during 2008-2009. Even given the severity of that crash, those of us who did this have recovered most or all of our net worth already, whereas some others unfortunately suffered great portfolio damage.

(Edited to add: here's a link to a thread about how much our portfolios had or had not recovered, from a few months ago: http://www.early-retirement.org/forums/f28/has-your-nest-egg-fully-recovered-yet-48116.html )

Like REWahoo, I have found that nearly all of my market timing efforts have bombed spectacularly. I do not envision myself as some sort of big investing guru or market wizard and it would be dangerous for me to do so. Greed is not an advisable basis for my financial decisions and could result in losing everything. I am just a quiet retired person successfully living off my portfolio as it grows in the long term.

 

[kcowan]

I am largely in cash and cash equivalents. I am happy to be on the sidelines except for some blue chip stocks, some funds for BRIC and Europe, and my bond ladder. Every takeout in the last two years: Petrocanada, Shell Canada, and Corriente sits on the sidelines. Until some fundamental value returns to the markets, I am happy to wait for it.

I also have the proceeds of two houses sold before the crashes in their respective markets on the sidelines. YMMV

(I have bought a condo in PV but that was a lifestyle purchase.)

 

[REWahoo]

I am largely in cash and cash equivalents. I am happy to be on the sidelines except for some blue chip stocks, some funds for BRIC and Europe, and my bond ladder. Every takeout in the last two years: Petrocanada, Shell Canada, and Corriente sits on the sidelines. Until some fundamental value returns to the markets, I am happy to wait for it.

I also have the proceeds of two houses sold before the crashes in their respective markets on the sidelines.

Congratulations on your successful effort to time the market and know when to exit.

Until some fundamental value returns to the markets, I am happy to wait for it.

Please let us know when it is safe to go back into the water.

 

[Leonidas]

There are a fair number of members/visitors here who seem to have compiled a ER financial plan that depends on a lot of things going just right, and almost nothing going wrong. That's just too risky for my tastes. When things go wrong in their plans they don't have much of anything to fall back on. For them it's a short fall from ER to a job as the greeter at Wal Mart with Sam's Choice cat food for dinner.

If you're in that position the world sure can be a scary place.

For me, it's multiple streams of income, multiple years of expenses covered, the ability to be a cheap bastard and live on beans and rice if I have to, a 10+ year horizon on investments, and an asset allocation that can withstand a lot of brutal treatment from Mr. Market and his friends Recession, Inflation, Deflation, et. al.

Most importantly, I didn't write my ER plan, cover it with shellac and stick it on the wall while crying, "done!" Things change in this world and I have to be prepared to deal with it. Where my money is today may not be where I want to have it 20-years from now. As the Tau of Uncle Mick teaches us: "To survive retirement, one must be agile, mobile and hostile".

So, I will beat up on the permabears and the nutjobs who constantly shout "the world is ending." I have limited patience for the poor planners who suddenly wake up to risk. But for anyone who wants to talk about how to make money on the changing economy or markets - I'm ready to talk.

 

[Meadbh]

Hear Hear!