4% of what?

[P.S.]

Quote:

Bookm I believe the early tries/pioneers?? of indexing attempted equal weight for the S&P and threw in the towel - mainly due to the mechanics/difficulty of making such a strategy work for a fund. Cap weighted won by 'ease of management/operating' issues' rather than performance.

Bernstein does discuss this in the first part of Four Pillars. Don't have the book on me right now but remember something like the idea orginator tried to sell his idea to a firm. Only Wells Fargo bit, as Bookm noted for a retirement fund, initially implemented the equal weight indexing which was not successfully, and then later changed to cap weighted. Only many years later was indexing made available to the investing public.

[peteyperson]

Quote:

Petey, are you thinking the S&P is in the crapper for 2 years or 20? *No crystal ball, I understand. *What do people here think of equally weighted index funds?

Hi Laurence,

If you have 25% there, I would suggesting reading Shiller's Irrational Exhuberance. This gives a better breakdown on how valuations & dividend yields affect future expected returns that one can put in a short post. Also John Bogle's Common Sense on Mutual Funds book has some data on the PE ratios thru the decades along with dividend yields and so forth. This is quite instructive even though his main message is index the US and hold thru regardless of price.

Put simply, markets revert to the mean. That is to say, they are a bit like a ball on some elastic. It can stretch out of place only so far and then it tends to bounce back. Sometimes it bounces into the other side (becomes undervalued) but this is what tends to happen. The timing is inexact as markets in the short-term are run not by rational behaviour but by investor psychology which tends to be irrational at best!

The fundemental returns on the market are initial dividend yield + real earnings growth +/- Valuation adjustment. The historical average valuation - the place the market comes back to, overshoots etc., is P/E 14-16. The US stands at between 20-22 now. Historical dividend yield for the US is around 4.5%. Dividends today are 1.8-1.9% for the S&P 500 and not much different for total market. Real earnings growth has been 1.8% for the S&P 500 over past 70 odd years. BTW, Bogle explains this really well, Shiller covers expected returns at different PE valuations really well.

Putting this together you get 1.8% dividend + 1.8% real growth +/- valuation adjustment. The degree of adjustment to the multiple of earnings depends on investor behaviour. Right now on various metrics (see above) the market looks quite overvalued. The odds therefore as that one will see earnings grow but the multiple of those earnings fall. That is a wrinkle that is hard for a lot of people to get their head around - kinda a subtle point! If the market were to come down in the price multiple by 20% over the next 10 years, that would remove some of your total return. This would mean you would receive less than the 3.6% fundamental real return on US total market. No one actually know what will happen when.

In his book Shiller has a chart which shows the returns one received based on different price-to-earnings multiples. The diagram was very clear in that it demonstrated clearly that owning the market much above the long-run average led to lower returns and then negative returns the higher you went. The Bogle argument is that if you have a long enough timeframe then you index thru the entire period and buy some stock cheaply, some at fair value, some expensive but you get average over time. This is not untrue but if one has data which shows those times when you've done badly because you bought/owned at expensive prices, then why not use it? Otherwise it is like being smart but acting dumb! It is also worth noting that the US market has never experienced three decades where PE multiples continued to expand by the decade end. This is now the third decade of expansion, the valuations are high, so the odds are not in our favor of a happy outcome. 15 in the 70s, 7.5 in the 80s, 15.5 in the 90s to 44 in 2000. Now it is 20-22.

People do talk about market timing and that it doesn't work. What this ignores though is that it does make some sense that at a certain price, one should refrain from buying (or holding what you already own). There has to be some sense in that. Jeremy Siegel's recent book also points out that overpaying for stock did not deliver good returns. There are many sources for that observation but Shiller's analysis actually takes a data and shows you how & why this happens.

It is of course possible that investors could bid up the price to earnings multiple some more. Make stocks even more pricey, like they were in the dot com boom. As Shiller points out, you only win there if you can time to sell before the music stops. Problem is, you can't hear the music, you don't know when it'll stop. People think they can do that and fail. So one could hold and hope for added speculative returns from the boomers bidding up stocks - this could happen - but it is unpredictable & history shows holding thru a boom that leads to an equal bust delivers poor returns. So this is an unsound strategy to rely upon.

Beyond Shiller, Jeremy Grantham puts out his monthly analysis of different asset classes and their expected returns based on dividends, real growth, adjustments to profit margins up or down & PE/PB/PFCF multiples vs market averages. He is highly respected. He was one of the few who pulled out of Japan when it was in a bubble. He lost half his institutional clients in the process. Presently he has a low allocation to US stocks principally because he is a US money manager and cannnot pull out completely. He says he would otherwise.
http://www.gmo.com/siteservercontent...1110218382.pdf

Petey

[peteyperson]

Quote:

Bookm I believe the early tries/pioneers?? of indexing attempted equal weight for the S&P and threw in the towel - mainly due to the mechanics/difficulty of making such a strategy work for a fund. Cap weighted won by 'ease of management/operating' issues' rather than performance. I can't remember where this was discussed - I can't find the article. Perhaps some posters know the history?? ??Wells Fargo??

Hey Uncle,

Yeah it didn't work the first time through. I'm not sure how the equal weighted ETF is managing.

The problem with it is the data doesn't go back like the S&P 500 data does presumably. That said, equal weighted is far less risky. There is less risk of underperformance I think because you're not weighted so much in the largest companies. Also, will the mid caps and small caps grow faster than the largest beasties? The research shows this to be the case which leads me to believe that equal weighted S&P 500 will beat out cap weighted. This assumes that one doesn't lose large amounts of dividend reinvestment by not owning mostly the biggest companies. The recent 5-year results look particularly good for equal weighted because the largest growth companies became so overvalued compared to the smaller weighted less growth-oriented counterparts, so the deflation in their values dragged down the SPY but not the equal weighted index as much due to owning more mid and small.

If one had to own an S&P 500 something, I would own the equal weighted one if I could satisfy the above criteria.

Petey

[Nords]

As much as I've enjoyed my front-row spectator's seat at this slugfest, several repeated comments are pulling me in.

If the S&P500 is allegedly a large-cap index, then why would it contain small-cap (or even mid-cap) companies?

If the S&P500 is "overpriced", why not invest in the value components of the S&P400 or S&P600?

[Hyperborea]

Quote:

Hyper, You make some cool points. In regular society where people are mostly chasing material things as a distraction from work, FIRE is impossible, also FI. It only really works if you are willing to reduce your expenses by carefully examining what you get the most bang-for-the-buck from, doing that and saving like crazy with the rest.

There is a large percentage of the population where even changing that doesn't help or doesn't help much. They are just earning too little to make it even possible to retire early or maybe even retire at all without SS.

Quote:

Boosting income helps too but that is only part of it. The less you need to run your life, the less you need to FIRE. Large salaries doesn't get around this point if you spend most of it, you just need so much more to FIRE at the same standard of living. I do think this is more key. For others they'll be requiring $2m, $4m and so on which really is almost impossible even on larger salaries.

Once your income gets over some "critical" amount then you can begin to consider FIRE. Not sure exactly what that amount is but it's got to be more than enough to provide the basics of modern life and probably some degree of simple comfort (most would be unwilling to live a monkish existence for decades only to cut retirement age by 5 to 10 years). After you've got to the point where you can live and enjoy life on your income then whether you can save and possibly FIRE depends on being able to put some of that "extra" income aside. Most people don't earn enough to make a large enough "extra" to be able to FIRE.

For many who make more than that "critical" amount they still can't get to really early retirement - they might only be able to retire somewhat earlier. They would probably be better served by finding a job that they really enjoy or failing that finding one they can tolerate and finding their joy in some outside activity. Save up what they can and maybe consider downsizing themselves when they're 40 or 50 to a more rewarding or less demanding job.

Quote:

If someone in the UK is willing move to a cheaper country (we don't call the place "rip-off Britain" for nothing!), then this can change the amount you need.

I don't know if you still have access to the TMF (I'm still comped out the wazoo) but there is a poster there named "WeeBeastie" planning to retire early back to Scotland. Moving in retirement can help costwise but it has to be balanced against being where you want to be - that makes you happy, that keeps you interacting with those you love, that lets you do the things you want to do. My top two final FIRE destinations (after planned years of travelling) are in two relatively expensive locations (cheaper than Silicon Valley though) that are close to family and also in big cities where we can do the kinds of activities that we want to do.

Quote:

All that aside, I agree that it is for a small minority who can retire early.

Mostly those with the right combination of early start, high income, and willingness to live on a lot less can even hope to achieve it. There are some who can do it because they've got sweet pension deals. Finally, there are those who lucked out - the equivalent of picking the right lottery numbers.

Quote:

I do think though that for the general population one should not rely on SS being there in 20 years time - or as a fallback half what the payout is today - and so saving is very important.

If SS goes away the US will become an even bleaker place for those at the bottom of the financial ladder. Those with high incomes or lots of assets (e.g. the FIREd) will become targets and the number of exclusionary communities will probably grow to shield these rich folks from watching poverty up close every day.

[cute fuzzy bunny]

Quote:

Hi Laurence, If you have 25% there, I would suggesting reading Shiller's Irrational Exhuberance... Petey

Nice post Petey...a lot of good points.

I've also made the same point about there being times you have to make a macroscopic judgement about owning certain asset classes. While buy-n-hold does have its noted positives...there are just times when you have to look at a huge situation and make a change. Nasdaq 5000, 9/11, etc. Sometimes its that things have gotten out of hand on the upside due to irrational exhuberance, sometimes its that they've been overly sold off due to irrational fear.

It is a good idea to pay mind to the points you make. In this vein I have largely steered clear of growth and large cap indexes. Most of my holdings are in high dividend value stocks and intermediate high quality bonds at the short end of intermediate, and a lot of sector plays such as energy, precious metals, reits and healthcare.

Its working out for me so far. Hopefully it'll help shunt off any of the potential downside effects going forward.

I hope to god for everyone involved that there is 'something different in the air' or 'its different this time', as a lot of folks here have fairly large holdings in TSM and S&P500...

[peteyperson]

Quote:

As much as I've enjoyed my front-row spectator's seat at this slugfest, several repeated comments are pulling me in. * If the S&P500 is allegedly a large-cap index, then why would it contain small-cap (or even mid-cap) companies? If the S&P500 is "overpriced", why not invest in the value components of the S&P400 or S&P600?

Hi Nords,

With regards to small & mid cap, I misspoke. I meant to say the smaller and mid size companies contained within the S&P 500 index (i.e the smallest of the large) which have a smaller weighting. This is why I believe the equal-weighted S&P 500 has performed better, the smallest large-caps were cheaper at the time.

One can always opt for value but even those aren't that cheap, hence how many a value investor is finding difficulty buying cheap. Another sign of that is the minor bump in dividend yield for S&P 500 Value vs S&P 500. Mostly I think they are buying cheaper than the market but not cheap vs historical metrics. Some like Nygren & Miller opt for this route, others like Buffett decide cheaper than market is not cheap and so mostly stay away.

Hope that clears it up.

Petey

[peteyperson]

Hi Hyper,

You have a very specific take on this, so I won't try to change your mind.

It does depend on your outlook and what your goals are. Living in the UK you get high costs, lousy weather, no decent beaches, etc. It is less than ideal. So there is some attraction for people to most into continental Europe or further out to SE Asia. The number of Brits buying holiday homes abroad is over a well million now (2%+ of the population). And this is only continuing. Most do not bother to learn Spanish when they move to Spain, for instance, which just amazes me! So here if you want better surroundings then moving is perhaps more attractive than it is for you. For me it is built into my planning.

Some places are more expensive, some considerably less. For every millionaire who was well qualified, earned the big bucks and retired well, there are those that are retired in cheaper locales with six figures and managing quite happily. So it depends what freedom means to you and how much that costs in different parts of the world. So I won't say that I agree with you, but if I were in the States my take may be somewhat different though I do know quite a few people who have retired there without the seven figure net worth too.

Petey

Quote:

There is a large percentage of the population where even changing that doesn't help or doesn't help much. *They are just earning too little to make it even possible to retire early or maybe even retire at all without SS. Once your income gets over some "critical" amount then you can begin to consider FIRE. *Not sure exactly what that amount is but it's got to be more than enough to provide the basics of modern life and probably some degree of simple comfort (most would be unwilling to live a monkish existence for decades only to cut retirement age by 5 to 10 years). *After you've got to the point where you can live and enjoy life on your income then whether you can save and possibly FIRE depends on being able to put some of that "extra" income aside. *Most people don't earn enough to make a large enough "extra" to be able to FIRE. For many who make more than that "critical" amount they still can't get to really early retirement - they might only be able to retire somewhat earlier. *They would probably be better served by finding a job that they really enjoy or failing that finding one they can tolerate and finding their joy in some outside activity. *Save up what they can and maybe consider downsizing themselves when they're 40 or 50 to a more rewarding or less demanding job. I don't know if you still have access to the TMF (I'm still comped out the wazoo) but there is a poster there named "WeeBeastie" planning to retire early back to Scotland. *Moving in retirement can help costwise but it has to be balanced against being where you want to be - that makes you happy, that keeps you interacting with those you love, that lets you do the things you want to do. *My top two final FIRE destinations (after planned years of travelling) are in two relatively expensive locations (cheaper than Silicon Valley though) that are close to family and also in big cities where we can do the kinds of activities that we want to do. Mostly those with the right combination of early start, high income, and willingness to live on a lot less can even hope to achieve it. *There are some who can do it because they've got sweet pension deals. *Finally, there are those who lucked out - the equivalent of picking the right lottery numbers. If SS goes away the US will become an even bleaker place for those at the bottom of the financial ladder. *Those with high incomes or lots of assets (e.g. the FIREd) will become targets and the number of exclusionary communities will probably grow to shield these rich folks from watching poverty up close every day.

[nfs]

Quote:

I hope to god for everyone involved that there is 'something different in the air' or 'its different this time', as a lot of folks here have fairly large holdings in TSM and S&P500...

Well, this is all a bit off-topic for an SWR forum but since it's come up, you might be interested in this soon-to-be-published paper. I excerpt from the penultimate paragraph of the abstract.

Quote:

In contrast to the interest rate variables, no strong or consistent evidence of predictability is found when considering the earnings- and dividend-price ratios as predictors. Any evidence that is found is primarily seen at the long-run horizon of 60 months. Neither of these predictors yields any consistent predictive power for the OECD countries.

[peteyperson]

Quote:

Nice post Petey...a lot of good points. I've also made the same point about there being times you have to make a macroscopic judgement about owning certain asset classes. *While buy-n-hold does have its noted positives...there are just times when you have to look at a huge situation and make a change. *Nasdaq 5000, 9/11, etc. *Sometimes its that things have gotten out of hand on the upside due to irrational exhuberance, sometimes its that they've been overly sold off due to irrational fear. It is a good idea to pay mind to the points you make. *In this vein I have largely steered clear of growth and large cap indexes. *Most of my holdings are in high dividend value stocks and intermediate high quality bonds at the short end of intermediate, and a lot of sector plays such as energy, precious metals, reits and healthcare. Its working out for me so far. *Hopefully it'll help shunt off any of the potential downside effects going forward. I hope to god for everyone involved that there is 'something different in the air' or 'its different this time', as a lot of folks here have fairly large holdings in TSM and S&P500...

Yes. I think that is where the smart money is for those that aren't stuck with capital gains issues and cannot reallocate. Some have moved out of REITs though due to their overvaluation. M* has them up to 35%. This conflicts with respected Green Street but it is widely commented that REITS are not exactly cheap.

One smart possible move there is out of US REITs and into the int'l REIT funds that are just being launched like the Cohen & Steers one. That fund isn't so great as it is 1/4 US which is overvalued, 1/4 Australia which is also overvalued and 1/2 everyone else who are roughly fair value. But you are just starting to get Int'l REIT funds and I hear that iShares are keen to offer an index product. Oddly, few are offering int'l ex-US which I think would suit US investors far more who already have access to dirt cheap US REIT indexing. Duplicating or removing that to buy a 1.2% e/r global REIT fund that has US exposure seems poor strategy at present on the part of the fund management industry. Somewhat surprising. Only Alpine have the right idea so far.

Healthcare has taken a beating but if you discount the possibility global gov't will force prices & margins down sooner rather than later or you discount the threat of more generics, then they're at an attractive price point for US investors. Not the same case for foreign investors. GlaxoSmithKline is taking a beating on their 50% USD exposure in revenues right now, 5% growth disappearing entirely the last 3 years running. This kind of a problem is widespread for foreign investors as US everything permeated so much. In the UK many companies are issuing earning warnings due to the dollar. Even companies like BHP Billiton are not delivering the same returning currency adjusted. So metals & gold & oil do not provide the safe haven-ish that they do Stateside. This is also one of the reasons why I like UK microcap and smallcap, because there is far less int'l revenue exposure.

It is generally tough to call markets. I guess I have more faith in the data than some. I can accept that. In many ways it is an interesting market because from what I understand it is very rare for everything to be this pricey. Sir John Templeton said he's never seen it like this in all his years so that is saying something. He's still finding pockets of opportunity but you really have to look.

Petey

[cute fuzzy bunny]

Quote:

Well, this is all a bit off-topic for an SWR forum but since it's come up, you might be interested in this soon-to-be-published paper. I excerpt from the penultimate paragraph of the abstract.

Which just goes to show my original point...pick something and you'll find one guy that compellingly explains why it works and another that just as compellingly explains why it doesnt.

Like your new tag line...looks like you finally 'got' the troll...

[Hyperborea]

Quote:

For every millionaire who was well qualified, earned the big bucks and retired well, there are those that are retired in cheaper locales with six figures and managing quite happily. So it depends what freedom means to you and how much that costs in different parts of the world. So I won't say that I agree with you, but if I were in the States my take may be somewhat different though I do know quite a few people who have retired there without the seven figure net worth too.

You're right that people can and do retire on 6 figure portfolios. *It can be done. *I think there are some issues with doing it though. *For most people of median income getting a sizeable 6 figure portfolio will still take decades - they are growing their portfolio by compounding as much as saving and that takes time. *For people of less than median income (half the population by definition) getting a sizeable 6 figure portfolio is unlikely to ever happen. *That was the main point of my original post. *FIRE is not a mass proletarian possibility despite the desires of one to make money selling them a book on it.

Most of the people who can FIRE (other than those with good pensions or who won the "lottery") are the (very) well paid. *The better option for those who aren't might be what is sometimes called "moving out of the fast lane" - getting out of debt, downsizing their lifestyle, and getting less stressful, more enjoyable work. *Living a joyless "monkish" life for 20 or 30 years only to cut 5 or 10 years off of your retirement age seems like a waste to me but each to their own I guess. *If the Silicon Valley tech industry implodes before I reach FIRE this "downsizing" is one possible fallback option for myself.

As for the moving to a cheaper country that too can be a good option for some. *The big issue again is distance from family and friends. *If you're already "distant" from them then moving and making it physically distant isn't really a problem. *However, it's possible that you can end up financially locked out of your home country. *If you've been living in some cheaper country in which you just afford to FIRE but don't have enough to live at "home" then after a number of years of FIRE when your job skills have withered you will have no way to return "home" if you wish. *Possibly forever. *If you've got a large portfolio you have far less risk of being locked out and you can afford to visit often.

[MRGALT2U]

I retired on LOW 6 figures, with no real planning,
no real structured savings, and living for most of my pre-ER life beyond my means. And you know what?
It was pretty easy. Again, brainpower and willpower are
awfully hard to beat.

JG

[preben]

Agree with every word Hyper!
FIRE are for the few. 1. cause it is impossible for many, and 2. cause they don't even know it might be possible (I was one of those) so more money just means more spending.

There might be a couple of other groups. Own little biz, or luck in the RE buy/sell timing or the single who rents and prefers LBYM lifestyle (you know; "I have HOW much! ), but we are certainly a RARE breed!

[hix9]

Hi Petey

Peteyperson wrote: Put simply, markets revert to the mean.

I remember circa 2002 just when the index fund boards were in the beginning of the big shuffle that took them from TMF to NFB and here, and ultimately to raddr's. Anyway there was, I thought, a great exchange/debate (that spilled over a bit) between raddr, *****, datasnooper, ataloss, others I'm sure about mean revision and the usefulness of market metrics.

I might be in the minority but I did follow the debate and I didn't think that mean revision was a certainty, at least not in a way that implies utility to the individual investor.

hix9

[bpp]

hix9 wrote:

Quote:

I might be in the minority but I did follow the debate and I didn't think that mean revision was a certainty, at least not in a way that implies utility to the individual investor.

I remember those debates, and came away feeling the same way you did. I also felt that even if mean reversion does exist, that counting on it to improve the SWR was an un-conservative thing to do and didn't make me comfortable.

Bpp

[eridanus]

Quote:

hix9 wrote: I remember those debates, and came away feeling the same way you did. I also felt that even if mean reversion does exist, that counting on it to improve the SWR was an un-conservative thing to do and didn't make me comfortable. Bpp

I remember those debates too. If I had followed the advice generally given, I would've missed out on a 40% run in VTSMX.

[peteyperson]

Quote:

You're right that people can and do retire on 6 figure portfolios. *It can be done. *I think there are some issues with doing it though. *For most people of median income getting a sizeable 6 figure portfolio will still take decades - they are growing their portfolio by compounding as much as saving and that takes time. *For people of less than median income (half the population by definition) getting a sizeable 6 figure portfolio is unlikely to ever happen. *That was the main point of my original post. *FIRE is not a mass proletarian possibility despite the desires of one to make money selling them a book on it. Most of the people who can FIRE (other than those with good pensions or who won the "lottery") are the (very) well paid. *The better option for those who aren't might be what is sometimes called "moving out of the fast lane" - getting out of debt, downsizing their lifestyle, and getting less stressful, more enjoyable work. *Living a joyless "monkish" life for 20 or 30 years only to cut 5 or 10 years off of your retirement age seems like a waste to me but each to their own I guess. *If the Silicon Valley tech industry implodes before I reach FIRE this "downsizing" is one possible fallback option for myself. As for the moving to a cheaper country that too can be a good option for some. *The big issue again is distance from family and friends. *If you're already "distant" from them then moving and making it physically distant isn't really a problem. *However, it's possible that you can end up financially locked out of your home country. *If you've been living in some cheaper country in which you just afford to FIRE but don't have enough to live at "home" then after a number of years of FIRE when your job skills have withered you will have no way to return "home" if you wish. *Possibly forever. *If you've got a large portfolio you have far less risk of being locked out and you can afford to visit often.

I think it comes down to assessing what brings most value to you. I think if one adopts the attitude that it will be a monkish existence and that it'll only allow you to retire a few years sooner, then that is no motivation! Reality really is that most people do not save at all and so any motivation is useful. Even if it doesn't lead to early retirement!

What I think a desire for freedom can provide is added impetus for ongoing education and a greater focus at work to develop higher income levels rather than settling. Many people give just enough to do a normal day and go home, providing little incentive for the boss to offer above inflation payrises or promotions. This tends to feed a negative attitude which can be pervasive across the organisation. Sort of a self-fulfilling thing. So I think if one has an ambitious savings goal, income can be made to rise over time to meet that. Thus someone who perhaps could save 5% of their net pay at the start can increase that over time as they boost their salary. Your argument above ignores this whole line of progress that is possible. Ultimately employers want to see productive, capable workers who are keen to learn new skills and offer more and it costs less to promote from within that go outside the organisation. So it works for both employer and employee. Granted not all employers are progressive and positive in that manner but some are.

Petey

[Bookm]

Quote:

As much as I've enjoyed my front-row spectator's seat at this slugfest, several repeated comments are pulling me in. * If the S&P500 is allegedly a large-cap index, then why would it contain small-cap (or even mid-cap) companies?

I just wanted to expound on this question, even though it is off-topic from the thread. There are a few varying definitions regarding what constitutes large-cap, mid-cap and small-cap. M* defines small-caps as having a market-cap between 250 million - 1 billion; mid-caps = 1 bil. - 5 billion; large-cap = 5 bil and up. I've also seen some more recent variations that have raised the caps to 300 million-2billion=SC; 2billion-10billion=MC, but I believe the former is more widely accepted.

The point is, going by these weightings, if you looked say at the portfolio of VFINX at M*, 9.9% of the fund is weighted towards medium-sized stocks, and .08% towards small-caps. So that shows us the S&P500 does certainly contain stocks other than large-caps. But it doesn't really say how many, only their weighting in the standard index. Not the EWI.

I used reuters investor screen builder (free registration) to find stocks considered small-caps, then mid-caps which were included in the S&P500 index. The screen returned three small-cap stocks in the S&P500. Tickers: DAL (562 million mkt. cap.), AMCC (955 million mkt. cap.) and VC (739 million mkt. cap.)

When I ran the screen for mid-caps in the index, 109 stocks were indicated. This is the reason why RSP has a higher correlation with the S&P mid-cap 400 index than the S&P 500, although not by all that much (both correlation coefficients are north of .85%).

So RSP's portfolio has over 22% of its portfolio weighted in stocks other than large-caps. Pretty ironic considering one of the several criteria the S&P committee use to select stocks for the S&P 500 is that they have a market cap of at least 4 billion.

So while it's always assumed this index holds the 500 largest U.S. companies, S&P's description actually states it consists of:

Quote:

a representative sample of 500 leading companies in leading industries of the U.S. economy.

Bookm

[yakers]

Peteyperson said in part: Reality really is that most people do not save at all and so any motivation is useful. Even if it doesn't lead to early retirement!

This was true of my father. He did not retire early, at 62 for mostly medical reasons. But he always had a plan or a dream, he was going to retire and convert the one room school house my Mom went to in rural Wisconsin. He bought it with an uncle many years before retirement.
Now he never ended up restoring the school house but it was an organizing principle throughmost of his life. Other folks would wonder or not think about what they would do in retirement but he had a plan. And in that way it worked well for him. Because of his health he sold the building to another uncle. He is burried vey near by, his heart was always there.