Big Question is "Yes or No"

[brewer12345]

Exactly my realization too.  If you're trying to really retire early (early 50's and younger) then it really does become a savings exercise rather than an investment exercise.  Sure a home run smash in the investment side of things would help but do you want to take the risk involved to get it?
.

Hmmm, I think this also an age/progress thing. When I was just starting out, swinging for the fences was a good thing. Relative to lifetime savings, the amount invested was modest and I had the longest investment horizon in my adult life. Month to month or even year to year volatility didn't matter, since I could easily wait it out. Now that I have gotten myself reasonably far along, I have more to lose. If I cripple my nest egg now, I am really in trouble, unlike when I was in year 1 of the plan.

 

[charlie]

I have nothing against tweaking your asset allocation
at the margin in response to long term predictions
of future return a la the "Gordon Equation". This
sentiment has been expressed by Bogle and codified
by Vanguard's creation of the Asset Allocation fund
for like minded investors.

What I think is silly, however, is the "all or nothing"
mentality.

Young investors in the accumulation mode should
decide on an AA they can sleep with and stick with
it, IMHO. Time in market will heal all wounds over
the long run, according to history. Old pharts like
myself should cut back on the throttle in the
distribution phase but never abandon the market altogether.

And, old pharts with a little juice left can feel free to
do a little dirty market timing at the edges but
don't bet the ranch on anything.

Cheers,

Charlie

 

[johnblake]

You're a wise man.

 

[hocus]

What I think is silly, however, is the "all or nothing mentality."

I don't believe that you were making reference to JWR1945 or me with this comment, Charlie. Just in case anyone has gotten any funny ideas in his or her head, however, I thought it might not be a bad idea for me to note that I do not endorse an all-or-nothing approach either.

My view is that the typical aspiring early retiree should go from about a 30 percent stock allocation at times of extreme high valuation to 50 percent at times of moderate valuation to 70 percent at times of extreme low valuation. There is no one rule that can sensibly be applied across the board, however. Investors who are in a position where they can afford to take on more risk can afford to go with higher stock allocations and investors who are in a position where they cannot afford normal levels of risk might want to look into the option of going with lower stock allocations.

 

[charlie]

:

 

[preben]

Hi ***** ,
about a 30 percent stock allocation at times of extreme high valuation to 50 percent at times of moderate valuation to 70 percent at times of extreme low valuation. There is no one rule that can sensibly be applied across the board, however. Investors who are in a position where they can afford to take on more risk can afford to go with higher stock allocations and investors who are in a position where they cannot afford normal levels of risk might want to look into the option of going with lower stock allocations.


He,he that is VERY broad guidelines. OK, I will apply them to my situation. Believing the we are in the 30% range according to the tool - but I can take a bit more risk(single/no debt/can work longer) so 40% is ok! I am there! As long as reits/mining stocks are not included.

I will sleep better tonigh *****, knowing that I have the FIRE-proof stamp of the data based swr tool. Cheers!

 

[laurence]

Charlie, good post. I've heard it before, but for me it's important to read again and again, especially in volitile markets. I'm too young and too early in my plan to sweat daily swings.....

 

[Beachbumz]

You made a comment in your earlier post re "market timing," BeachBumz. . It may be that you are not aware of this history. But I can hardly blame Mikey for reacting when he sees a claim that has been used for purposes of deception many times in the past surfacing once again.

*****, I am aware of the history between you and Intercst, I think most are. I'm not at all sure that Mikey reacted the way he did because of this history. He simply asked was my post just 'arguing' with you or rejection of the whole thesis. I think I answered that in my previous post.

The suggestion that you put forward, that my views on the use of cash as a strategic asset are somehow the result of some sort of thought that short-term timing may be an effective approach to investing, is a false one that has caused us great trouble in the past, BeachBumz.

*****, below is my entire post, could you please show me where I said anything about short-term market timing.

"That sounds suspiciously like market timing. Ever since my crystal ball got a crack in it, I have had trouble determining the best entry point(s); except in hindsight

Reminds me of years ago, when I just knew the market was too high (the DOW had just pasted 3000), so I put my IRA money in a money market account. I finally put it in the market at DOW 5000. "

No where did I 'SUGGEST' anything about short-term timing. I don't play word-games *****, so if you have a question about my post then feel free to ask me like Mikey did, but don't read anything in to them that isn't there! FTR, it is very obvious to me that your market timing is of a Long-term nature.

It is my sense that you simply were not aware of the history of these discussions as I do not recall you participating much in the past.

The fact that someone like you would end up making the mistake you made reveals to all community members why we need to rein in intercst-type posting practices when we see them appear on our boards.

*****, I made NO mistake in my post and I REALLY don't appreciate you saying so. You stated YOUR opinion and I stated MY opinion. I believe we both have that right. As I stated previously, MY, that's MY experience has not been very good timing the market. I would prefer letting those more knowledgeable do that.

we would not have someone like you now unwittingly putting foward the timing argument as a point against the validity of my views, BeachBumz.

Once again, there was nothing in my post that was done 'unwittingly', you are really reaching here in my opinion. I simply don't believe in market timing, I've tried it and it didn't work for me. If you want to do it, that's fine by me, I hope it works out for you.

The result of our long-running tolerance for nonsese is that fine posters like BeachBumz are not able to make sense of the discussions.

Where did that come from *****? Do you think I'm an idiot? I graduated from the sixth grade highest in my class (I was 5' 11' ). Seriously *****, get a grip! I am quite able to make sense of the discussions, just like almost everyone else on these boards.

I have never said a word in favor of short-term timing, and no one in our community should ever have been led to believe that I had.

I, for one, was never led to believe that, nor have I ever made any mention thereof.

Beachbumz :

 

[hocus]

I will sleep better tonigh *****, knowing that I have the FIRE-proof stamp of the data based swr tool.

Now you are getting the concept, Ben. There is no one right way for all aspiring early retirees to invest. The quest to find one is an exercise in pure silliness. Each investor needs to take into consideration his particular life goals and financial circumstances in putting together an effective Retire Early plan.

 

[hocus]

Re: Big Question is "Yes or No"know for

It is very obvious to me that your market timing is of a Long-term nature.

That's good.

The distinction between long-term timing and short-term timing is a critical one. 99 percent of the references to "market timing" that you see in the personal finance literature are references to short-term timing. So it's hardly surprising that many of those who have participated in the SWR discussions have been misled by statements saying that the Data-Based SWR Tool "sounds like a market timing scheme" into thinking that the tool requires the use of short-term timing.

Nohing could be farther from the truth. But we have had seen many suggestions along these lines and in some cases we have even seen direct assertions. For example, TH has said that the Data-Based SWR Tool "did not work" in the 1990s. Obviously there is no way yet of knowing whether the SWRs it reported for the 1990s will end up working or not since we won't know for 30 years whether the retirements using those SWRs will have gone bust or not.

We know today that the REHP study "does not work" because we know that it makes no adjustment for changes in valuation levels and we know that changes in valuations affect long-term returns as a matter of "mathematical certainty" (Bernstein's phrase). Whether the future will turn out something like the past or not is something we will just have to wait and see about. It may be that the Data-Based Tool will work and it may be that looking at how stocks have performed in the past will just not be good enough for investors retiring today. We will have to wait for another 30 years to pass to know the answer to that one.

 

[haha]

Just sold some appreciated stock today. At the beginning of the year, I had about $100,000 LT gain in one US stock. I have sold about half of that.
I want to get a better picture of my 2005 tax situation before selling any more. Given OK tax, I would feel fine going to 0% stocks, although practically speaking that is unlikely to happen.

After the sale, I have 55% fixed income, including 10% foreign intermediate term bonds and the rest cash. But only 14% US stock other than energy and mining.

This is partly age and stage of life. But I fully expect to be at least 80+% in stocks again, given appealing prices. It may be a while before this comes about!

I made my first investment in 1962, and started in earnest in 1974. One thing I have figured out over the years is that although circumstances can cause very abrupt spikes and crashes, there are also very long term mega-tides that underlie whatever is going on day to day.

Around the time of the top in S&P and Nasdaq in 2000-2001 there were amazing bargains in some stocks. Energy, REITs, tobaccos are were cheap; and I bought them all.

Right now I am almost out of REITs, holding but unsure on energy, and mostly out of tobacco. Energy in particular, while obviously no bargain, may be the beneficiary of a buying panic sometime. My discipline is almost solely based on valuation and psychology, and so I am unprepared for things like the $64,000 energy question- "Are we indeed running out of cheap oil?" Whether we are or not, if this idea gets widely accepted look out! At some time it may be better to approach this opportunity via LEAP call options than by owning stock- especially if one does not have a legacy position of already appreciated energy shares.

So I muddle along, always with ideas but never sure of anything other than "stuff happens".

Mikey

 

[cute fuzzy bunny]

Anyone else enjoying a discussion of cash position turned into the usual ***** troll? Are you enjoying skipping past page long drivels to get to the meat?

He really doesnt care about SWR's.

He really doesnt care if you believe him or not.

There isnt a valid substantiated point.

But that doesnt matter to him, really...

 

[hocus]

Please find something constructive to do with your time, TH.

 

[cute fuzzy bunny]

Funny, I was thinking the same thing about you.

All this energy wasted trying to make up for your personal shortcomings, trying to fill that empty space with attention from people you'll never even meet.

Well, for your sake, lets hope you never meet them

 

[hocus]

lets hope you never meet them

I always enjoy meeting people I know from the boards.

Wanderer visited the states one time and we had a long lunch talking over all sorts of fun stuff in a restaurant not too far from me. He even picked up the bill!

PeteyPerson and I have never met, but we have had lots of e-mail exchanges. I've had lots of e-mail exchanges with JWR1945 too. When I sent him my book, he asked me to send a copy to his daughter too. I did, and she had some great suggestions. One of the things she suggested was that I publish a workbook for it. I hope to be able to get that out by the end of the year.

Me and intercst and TheBadger did an interview together when we were selling our Retire Early reports. I advertised my report at intercst's web site, and we had lots of e-mail exchanges as a result of that. I wouldn't be surprised if we end up doing some joint radio interviews or debates or something like that down the road.

There's a guy over at the Motley Fool board who is trying to get a group from the boards to meet at his house. Someone took a poll as to who would come, and there were a number who said that they would come only if intercst and I made it. I certainly will be there if unless some big conflict comes up.

My guess is that you are not a bad person in the real world, TH. My sense is that you just feel that you are playing a role in some sort of game when you are posting on the internet.

I don't see it that way. I know how hard I worked to make my plan as strong as I could make it. I think that people reading my posts deserve to hear the straight story. I can't promise that I will never make a mistake. I can promise that I will always tell it straight and to the best of my ability.

There are real living human beings reading the stuff we put forward here, TH. I think it is good to remind ourselves of that from time to time. That's one of the reasons why I like to include in my posts references to the screen-name of the person who wrote the post to which I am responding. It's a reminder that our posts are not just aggregations of words. We are communicating with people and we should behave in the same manner as we would if we were talking to people at a picnic or at the swimming pool or whatever.

Civility matters.

 

[cute fuzzy bunny]

The big question is "do you do that with your right or left hand"?

 

[haha]

Do you own a photo bureau?

Mikey

 

[cute fuzzy bunny]

I do! Its called "The Internet"

Actually this is rather easy. go to google.com, up above the search engine you see a link that says "images". Click on that, and put in a search for what you'd like photos of. Voila.

And yes, you can get THOSE kind of photos with it too...its very indiscriminate.

 

[peteyperson]

A lot of funds, and buffett as well, are holding an awful lot of cash.  And they hate to hold cash.

Should tell us something.

The problem with this strategy is that you end up paying a high fee for them holding the cash. I can hold cash myself and not pay the fee!

If cash is the issue, they should be closing the funds much sooner than they are. That is the real problem. Oakmark Select is just one case where Oakmark have greedily taken more money in but the manager is now stuck often high in cash or buying the very largest caps because he has too much capital to deploy and is trapped.

Berkshire Hathaway is now a glorified balanced fund. 25% stocks, 25% private equity, 25% bonds, 25% cash. I can get better returns elsewhere.

Petey

 

[haha]

Berkshire Hathaway is now a glorified balanced fund. 25% stocks, 25% private equity, 25% bonds, 25% cash. I can get better returns elsewhere.

Maybe for a while, but not likely over time. Buffet is not an asset allocator, he is an opportunistic and very skillful allocator of capital. Furthermore he is honest.

Mikey

 

[unclemick]

10% INCREASE IN BOOK VALUE!

Not flakey market value. And no I don't own any BRK.