You can't drink a fat girl thin

[John Galt]

Hello boys and girls. My topic this morning comes from
'The Bob and Tom Show' where I get most of my news
on world events, along with the Rush LImbaugh Program and MAD
Magazine. The complete quote is "You can drink an
ugly girl pretty, but you can't drink a fat girl thin."
This is a metaphor for my investment philosophy, which
the regulars are all too familiar with. However, for you Newbies.....

I own bonds, mostly long term. No stocks of any kind
except in my own PHC (personal holding company)
which does not count. I understand all of the arguments
pro and con, Zipper's questioning of my IQ notwithstanding. Stocks would make a lot more sense
to me if I was 40 instead of 60, but I still wouldn't hold them if I was planning to ER. What I value most is
predictability. Anything can effect stock values/dividend
yield. Wars, famine, good laws, bad laws,
plagues, good news, bad news, or just plain old herd
mentality. The thing is (absent default) I will keep getting my 7% every month, no matter what else is going on. True, as time goes by that 7% will be worth less, and the NAV may drop. But if I hold to maturity
there is the money, every month. Also, it is possible
that the stock market may plunge and stay there for
decades, or maybe you will still be getting your 3%
10 years from now, while I still am getting my 7%.
If inflation goes nuts, I either cut back my spending
or sell real estate. No problem.

So stocks are the "fat girl" sitting
in The John Galt Bar. Someone will ask her to dance,
but it won't be me.

JG

 

[hocus]

Stocks are the "fat girl" sitting in The John Galt Bar. Someone will ask her to dance, but it won't be me.

What is it about this post that makes me want to break down and buy some stocks?

(Just kidding around, John.)

 

[johnblake]

I think a little stock would improve predictability by reducing the risk of inflation eroding your returns. High quality stocks may also balance the risk of default in the low quality bonds you are holding (as I recall, you are holding some 'junk'). This note isn't intended to persuade you (I know that's impossible ), but to balance your view for others who might be considering the same strategy. In addition, you mention 7% return, no matter what. Are you planning to outlive any of those bonds? If you do (and you probably will), you'll (probably) be faced with reinvesting at lower rates.

--JB

 

[Cut-Throat]

So stocks are the "fat girl" sitting
in The John Galt Bar.  Someone will ask her to dance,
but it won't be me.  

JG

John,

That 7% bond you're dancing with right now has anorexia, and may not live longer than you

 

[haha]

So stocks are the "fat girl" sitting in The John Galt Bar.  Someone will ask her to dance, but it won't be me.  JG

Congratulations John, you have unseated me as most insensitive poster on this forum.

FYI, if those high BMI ladies at your bar are getting lonesome, you might advertise to an Arab clientele. There was a very interesting WSJ article this morning about the desirability of fat young women in the Arab world, and the steps that mothers may take to fatten up their daughters for marriage. One such step is the practice of gavage, or force-feeding. This is the same technique the French are trying to outlaw in the production of the delicacy foie gras.

Mikey

 

[cute fuzzy bunny]

John, I believe I might have to disagree about that drinking a fat girl thin thing. I'm fairly sure I did exactly that once, but my recollection is rather foggy.

Analogy aside, according to the almighty numbers, less than 20% in equities gives you lower returns without lowering volatility, while less than 20% stocks increases your volatility without increasing your return.

In other words, an 80%+ strategy of either isnt worthwhile.

John...have you ever considered convertibles? Not the car mind you. I think vanguards fund is closed, but there are others. A little smidgeon of them might do you good. Hello? Hello? (tap tap) Is this thing on?

 

[mickeyd]

JG,

I totally disagree with your "no stocks" philosophy however, I am totally impressed by your determination to stand by the asset allocation plan that fits you and your circumstances regardless what the rest of the world (or ER forum) thinks.

I am so sick of seeing various posts, here and elsewhere, from folks asking advice on where to invest their meager savings. Why would they want to invest as I do? as you do? as anyone else does?

Stay the course.

 

[hocus]

I am totally impressed by your determination to stand by the asset allocation plan that fits you and your circumstances regardless what the rest of the world (or ER forum) thinks.

Go, Mickyd!

There is no one right way to invest for early retirement. 

 

[cute fuzzy bunny]

I'm quite sure that psychohypnotic drugs, water torture and a really snappy wet noodle couldnt make john consider other options.

But its fun to prod him about it

 

[John Galt]

I just love reading my own stuff (surprise surprise),
and I just love "You can't drink a fat girl thin"
even if it wasn't original. BTW Mikey, as for
being "the most insensitive poster on this forum".
You were not unseated. Once I started you never had a chance

JG