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Back in the Green!
Old 04-30-2009, 10:17 AM   #1
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Back in the Green!

It has been a perplexing period of roller coaster riding in the markets. My basic all time high came in Oct of 2007. That was when I started a 72T early distribution on my pension rollover IRA. By the late summer of 2008 when the markets went schizoid the account was down by 5%. During the last 8 months it had gone down by as much as 50%. I have been active in daily management of trades and have refined my expectations a lot over the past few months. Today it is finally back to what I consider being in the green. PHEW!

That being said, I am very pleased to say the least. Now, I will focus more on my 401K which is still in the mud and down 40% from the high when I took over managing it last July.

I eliminated the Financial Advisor on everything in June of 07 but now feel comfortable enough to sail my own ship. My friends who are still with the FA are still 30+ % down and his expectation is maybe in second half of 2010 or 2011 for them to get healed.
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Old 04-30-2009, 03:56 PM   #2
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Congratulations , That was quite a fete .Just curious what percentage are you still down from Oct.2007 ? My portfolio has come back somewhat but is still down 28% from Oct.2007 and like you there were times when I was down a lot more . Did you buy beaten down stocks ? I really think last year taught me that buy and hold is not necessarily the way I'd go in the future . Buy and monitor and sell if necessary is my rule going forward .
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Old 04-30-2009, 04:57 PM   #3
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Moemg, thanks! While the market was up this morning, in my IRA account the balance was up to my all time high which was in Oct 07. I have worked on it virtually daily and bought beaten downs and ETF's in various sectors on the dips. The worst beating was on the buy and holds and that is currently not something I do much of at all. I kept buying GE and took a royal bath when I capitulated about 6 weeks ago. That was in my 401K which is still down 40%. Now my largest holdings are usually in the ETF's and my usual holding period is measured in days or a few weeks. If I can get 3 to 5 % two or 3 times a month I am quite happy.
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Old 04-30-2009, 10:12 PM   #4
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So, it appears that your IRA is back to its own high, but the possibly much larger 401k is not.

I can believe that, because with a smaller account you can be more active and 100% invested while bottom fishing. It would take more guts to trade similarly on a bigger account.

I surely missed the market bottom two months ago, as I was on assignment abroad and did not have free time to follow the market. However, I would admit that if I were following it daily then as I usually do, it was likely I would be scared into paralysis to do much buying.

By the way, our total portfolio spread across several accounts is still down 26% from Oct 2007 high. At this point, I am 50% in equities. In Oct 07, I was 70% in equities. I am still looking to buy.
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Old 04-30-2009, 11:55 PM   #5
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Congratulations. March was a good month and April wasn't too bad either.
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Old 05-01-2009, 09:49 PM   #6
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NW-Bound the IRA has always been the bigger account. I felt I had no choice but to get ultra involved when the nest egg totally was down by 40%. Being an early retiree with no SS for the next 7 years and on a 72T plan I had to try. When your SWR shifts (and you are locked in under 72T rules) from 4 to 8% you start smelling the coffee. It was smelling really burnt!

So true bssc, I only hope the summer is as kind! The Wall Streeters may not be going to the Hamptons this year and it might be a good thing!
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Old 05-02-2009, 12:56 AM   #7
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Then, please accept my belated congratulations. Somebody has to buy low, even if I myself did not muster the courage.

As mentioned, I went from 70% equities to 30% in 2008 when I sensed that this recession was bad. A bit late but it did help. I then slowly raised it back up to 50%. Now, I wish I were more gutsy like you were.

Stocks are still cheap. I will look for something to buy in the days ahead.
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Old 05-03-2009, 09:15 AM   #8
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My friends who are still with the FA are still 30+ % down and his expectation is maybe in second half of 2010 or 2011 for them to get healed.
It will take longer than a couple of years just to recover (60%+ return is required). Our YTD is in black now -- 1%, and it will take a long time to return to the last high.
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Old 05-03-2009, 10:31 AM   #9
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It will take longer than a couple of years just to recover (60%+ return is required). Our YTD is in black now -- 1%, and it will take a long time to return to the last high.
I know that this bit of return "wisdom" is often cited by many forums and publications, but as for me? I don't accept it in my world. Why? Simply stated, it ignores a big part of the "equation" - and that is time.

Let's take my/wife's retirement investment portfolios. We have (and continue to) have invested for the goal of retirement/retirement income for close to 30 years. I'm retired; my wife plans to do so - probably in the next year (we're the same age).

Using our respective total portfolios, which are 95% invested with Vanguard & Fidelity (at around a 50/50 split), our returns (based on the XIRR function) measured from 01/01/2008 through 05/01/2009 are:

Me: -35.65% She: -21.11

If we look at only this year (01/01/2009 through 5/01/2009):

Me: -0.90% She: +1.43

Our returns are based upon our "personal AA" (I take more risk; she does not). However, our joint AA target is measured against our total holdings.

What does this mean at first glance? Simply that we have a lot of ground to make up. Really?

Now lets look at the records that I have been keeping (limited to just our Vanguard IRA's). We've been contributing since 1982, but I've only been tracking (via spreadsheets) since 1990. When we look at the period of 01/01/1990 through 12/31/2008 (includes last year's "downfall") our returns are:

Me: +8.40 She: +7.66

This covers a 19 year period, and does reflect our contributions/gains over that time.

BTW, our respective "worst years"? Actually, there were only three years during the span of those 19 years - 2001, 2002, and 2008 (for both of us).

Our respective loss for those years:
Me: 2001: -9.82% 2002: -12.30% 2008: -22.95%
She: 2001: -9.78% 2002: -17:36% 2208: -19.98%

I'll repeat the important "fact" (in our case) is when measuring the entire 19 years, our respective returns are:
Me: +8.40 She: +7.66

It comes down to your own measurement of your own portfolio. General statements of what is "assumed" to get you back to a positive position are often are lacking in detail and ignore that critical input factor - time.

Anyway, in retirement I spend it the same way that I accumulated it over many years - that is, a year at a time. A few years of downturn does not mean that our plan failed. Do I have less (in value) than I had on 01/01/2008? Sure; but I did not spend that entire portfolio value during the year, nor did I sell one share of holdings (my last sale was in late 2007, when I took some profits - yes, 2007 was an "up" year, and added to my retirement cash bucket.

Being that I've forecast/planned through age 100 (even though we won't make it), I'm sure that I will have +/- years during the next almost 30 years of being in the market (although at a less exposure than my current ER AA).

Just a bit of thought - from my POV.
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Old 05-03-2009, 11:02 AM   #10
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Originally Posted by rescueme View Post

Now lets look at the records that I have been keeping (limited to just our Vanguard IRA's). We've been contributing since 1982, but I've only been tracking (via spreadsheets) since 1990. When we look at the period of 01/01/1990 through 12/31/2008 (includes last year's "downfall") our returns are:

Me: +8.40 She: +7.66

This covers a 19 year period, and does reflect our contributions/gains over that time.
This is a good perspective for those still contributing to their savings.

Also, it does point out that that to keep persepective on your investments it is helpful to know your investment basis so you can know what your individual investment return is. It does take work.
If you have not tracked your basis - I have not done it exactly - you can guestimate it with the following.
Compute the following by year:
Gross income
Subtract estimates for (use estimated % of total):
taxes
living expenses
large unusual expenses

Add the all net incomes and compare your total net income with your total net worth.

You can also do the same exercise with your gross income. I did this years ago. If I remember correctly; my total gross income equalled my total net worth - neither number adjusted for inflation.

I think comparing your investment basis (maybe adjusted for inflation) with your current net worth is a better measurement than comparing your current net worht with your net worth at the market high.
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Old 05-03-2009, 01:21 PM   #11
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I think comparing your investment basis (maybe adjusted for inflation) with your current net worth is a better measurement than comparing your current net worth with your net worth at the market high.
I agree with you 100%. Overall, I have been doing fine being in the market.

However, when eyeing the money "lost" since Oct 07, I am kicking myself over my failure to heed the warning signs of the oncoming run-away train. I was lulled into complacency due to the previous bull years. I thought by staying out of the financial sectors, I would be immune. To paraphrase Soros (he's not a hero of mine, but an interesting man nevertheless), your financial decision reflects your understanding of the world going on around you, your recognition of reality. This episode has shown how many self-proclaimed experts turned out to be living in their own fantasy world.

So, it is this quest of mine to understand this beast, the macroeconomic picture of the world. Having given up the corporate ladder, I have got to have some challenges. Needless to say, success can be very financially rewarding.

Or as Uncle Mick always says, it's the hormone. Heh heh heh...
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Old 05-03-2009, 09:52 PM   #12
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It should be the only way that you measure your investment performance.
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Old 05-04-2009, 11:42 AM   #13
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Connie, thanks for the kick up the butt. You post made me realise that I could do more than sit back and wait for things to return to how they used to be. You have motivated me to take a good hard look at what we have and how to best use it.
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Old 05-04-2009, 04:16 PM   #14
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Originally Posted by dex View Post
I think comparing your investment basis (maybe adjusted for inflation) with your current net worth is a better measurement than comparing your current net worht with your net worth at the market high.
For people already in ER, I think a better comparison is current value to value at ER.
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Old 05-05-2009, 12:17 PM   #15
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Originally Posted by rescueme View Post
I know that this bit of return "wisdom" is often cited by many forums and publications, but as for me? I don't accept it in my world. Why? Simply stated, it ignores a big part of the "equation" - and that is time.

Let's take my/wife's retirement investment portfolios. We have (and continue to) have invested for the goal of retirement/retirement income for close to 30 years. I'm retired; my wife plans to do so - probably in the next year (we're the same age).

Using our respective total portfolios, which are 95% invested with Vanguard & Fidelity (at around a 50/50 split), our returns (based on the XIRR function) measured from 01/01/2008 through 05/01/2009 are:

Me: -35.65% She: -21.11

If we look at only this year (01/01/2009 through 5/01/2009):

Me: -0.90% She: +1.43

Our returns are based upon our "personal AA" (I take more risk; she does not). However, our joint AA target is measured against our total holdings.

What does this mean at first glance? Simply that we have a lot of ground to make up. Really?

Now lets look at the records that I have been keeping (limited to just our Vanguard IRA's). We've been contributing since 1982, but I've only been tracking (via spreadsheets) since 1990. When we look at the period of 01/01/1990 through 12/31/2008 (includes last year's "downfall") our returns are:

Me: +8.40 She: +7.66

This covers a 19 year period, and does reflect our contributions/gains over that time.

BTW, our respective "worst years"? Actually, there were only three years during the span of those 19 years - 2001, 2002, and 2008 (for both of us).

Our respective loss for those years:
Me: 2001: -9.82% 2002: -12.30% 2008: -22.95%
She: 2001: -9.78% 2002: -17:36% 2208: -19.98%

I'll repeat the important "fact" (in our case) is when measuring the entire 19 years, our respective returns are:
Me: +8.40 She: +7.66

It comes down to your own measurement of your own portfolio. General statements of what is "assumed" to get you back to a positive position are often are lacking in detail and ignore that critical input factor - time.

Anyway, in retirement I spend it the same way that I accumulated it over many years - that is, a year at a time. A few years of downturn does not mean that our plan failed. Do I have less (in value) than I had on 01/01/2008? Sure; but I did not spend that entire portfolio value during the year, nor did I sell one share of holdings (my last sale was in late 2007, when I took some profits - yes, 2007 was an "up" year, and added to my retirement cash bucket.

Being that I've forecast/planned through age 100 (even though we won't make it), I'm sure that I will have +/- years during the next almost 30 years of being in the market (although at a less exposure than my current ER AA).

Just a bit of thought - from my POV.
If your 2008 return is -22.95% and your 2009 YTD return is -0.9%....how is your 1/1/2008 - 5/1/2009 return -35.65%??
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Old 05-08-2009, 07:37 AM   #16
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If your 2008 return is -22.95% and your 2009 YTD return is -0.9%....how is your 1/1/2008 - 5/1/2009 return -35.65%??
Since you asked, the return for the period you asked is -33.34%. The worksheet was last updated on 05/06, and also reflects the return on all my holdings, not just my Vanguard IRA, but also my Fidelity holdings. Of course, my wife's numbers are much less loss, since her holdings are more conserative.

Dosen't matter (in my case); I don't have to worry about the accumulation stage (e.g. "I got mine" ) - rather than management of my retirement portfolio. A good portion of cash (backed up by bonds) lets me sleep well through the current situation. That and conversion of my "prior year profits" into an SPIA to provide me a solid base of current income. I'm working on my third year of retirement and I can tell you (as any retiree can), it's a completly different "game" than portfolio management in the accumulation stage.

Again, the period you question is just a blip in my past investment horizon of 27 years. Add to that my forecast till age 100 (won't make it, but I do plan for those pesky black swans) and you're talking about a total possible investment horizon of 66 years.
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Old 05-08-2009, 07:40 AM   #17
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For people already in ER, I think a better comparison is current value to value at ER.
IMHO, I agree with your statement as long as you consider that initial amount adjusted for withdrawls for living expenses for the number of years of retirement.
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Old 05-08-2009, 09:36 AM   #18
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rescueme,

I wasnt making any statment about your returns being subpar or anything like that. I was just questioning your math. It didnt sound right. I hope you didnt take offense.
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Old 05-08-2009, 10:46 AM   #19
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Everybody gonna be well by next Friday!

Even pigs are flying today. FITB up over 50%. At $8 and change; this is an 8 bagger since early March 2009. 2 months, + 750%. Le6's see, annualized that makes 12/2*750%= 4500%

Pretty good return. My brother got it. He refuses to invest until there is a complete mess, then he buys total crap. No analysis, just fading revulsion.

I think it is a pretty low risk way to invest, if you keep the amounts low. No matter what, he will alway have a positive year, since the bulk of his assets are in CDs, and the amounts that he throws against the wall are small enough that even a total loss would not give him a down year. But turning $3000 into $24,000 in a few weeks is worth doing for sure.

Ha
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Old 05-08-2009, 02:04 PM   #20
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rescueme,

I wasnt making any statment about your returns being subpar or anything like that. I was just questioning your math. It didnt sound right. I hope you didnt take offense.
Nope - not at all ...
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