Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 02-20-2013, 03:22 AM   #81
Thinks s/he gets paid by the post
obgyn65's Avatar
 
Join Date: Sep 2010
Location: midwestern city
Posts: 4,061
As mentioned in other threads I am very risk averse. Trying to change this by reading others' success with equities here but it's not easy. Also I have little time to study this (did you notice most of my posts are written at night ?) :-) I am exhausted most of the time.
Quote:
Originally Posted by HFWR View Post

Everyone's entitled to my opinion their own opinion, but what is it about "stock", i.e. partial ownership in a business, that deserves such a negative view? And I do mean "ownership", not day trading?
...
__________________

__________________
Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
obgyn65 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 02-20-2013, 03:43 AM   #82
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2005
Posts: 5,413
Quote:
Originally Posted by audreyh1 View Post
Huh? By that measure, you would still have been "killed" if your VBISX has been UP 5% year to date. But gosh, if you'd been in the S&P 500, you'd have still blown it, because you could have been in FSCRX which is up over 13% year to date instead of just 11%.

You must be pulling our leg.
i understand what he means. i look at my income mix in hindsite and look and see it is a little down for the year. then i look at the growth model i used to use and i go damn!..

but that is human nature , we feel like a genius when what we own is doing nice but then we have buyers remorse when you watch everything else pass you by.
__________________

__________________
mathjak107 is online now   Reply With Quote
Old 02-20-2013, 04:40 AM   #83
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 16,471
Quote:
Originally Posted by mathjak107 View Post
i understand what he means. i look at my income mix in hindsite and look and see it is a little down for the year. then i look at the growth model i used to use and i go damn!..

but that is human nature , we feel like a genius when what we own is doing nice but then we have buyers remorse when you watch everything else pass you by.
Yes I can understand that in general.

But to regret the "opportunity cost" because a very conservative short-term bond fund well under performs the S&P 500 over a short period of time - well, that's just not a surprising outcome.

Unless that investor made his choice because he was totally convinced that an equity correction was imminent.......

[which could still happen any day now ]
__________________
Well, I thought I was retired. But it seems that now I'm working as a travel agent instead!
audreyh1 is online now   Reply With Quote
Old 02-20-2013, 04:46 AM   #84
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2005
Posts: 5,413
deep down in inside i think all of us that have gone very conservative have that feeling that a big correction is coming at some point.
we just want to side step it and not stress over it if we don't have to.

but the fact is boy do i miss my nice aggressive days when a few hundred point rise translated to a 5 figure change in my portfolio.

but like we say why keep playing if you won the game and the answer is we still miss playing and we hate being left behind..

kind of like i retired as a drummer, and really hated the business after so many years but boy do i miss it all now, but it is a lifestyle i really no longer want to live if that makes sense. lol.


i am just waiting for a roll back and i think the smarter thing to do at this stage is to leave about 10 years withdrawals in the fidelity insight income model i have been using and the rest move into the growth and income model going forward.
__________________
mathjak107 is online now   Reply With Quote
Old 02-20-2013, 04:59 AM   #85
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 16,471
Seems to me the sensible thing for any investor is to hedge your bets (i.e. diversify broadly), and also accept that by hedging your bets, at any moment in time, you are going to own some "winners" and some "losers". But you still don't know which ones will be the winners or losers next week, or next month, or next year, so you stay diversified (and rebalance if the AA gets way out of whack when, god forbid, you sell some of your "winners" and buy more of your "losers").

This investing business is psychological torture if you spend a lot of time on the woulda-coulda-shoulda game on a regular basis.

Audrey

PS - you already know I don't subscribe to Bernstein's "Why play the game if you've already won" philosophy because I think it applies to people who get hurt by panic selling after a crash and then unable to get back in. And it ignores the long-term inflation risk.
__________________
Well, I thought I was retired. But it seems that now I'm working as a travel agent instead!
audreyh1 is online now   Reply With Quote
Old 02-20-2013, 05:02 AM   #86
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2005
Posts: 5,413
i edited and added a little more to the post above about my future plans.
__________________
mathjak107 is online now   Reply With Quote
Old 02-20-2013, 05:15 AM   #87
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 16,471
Quote:
Originally Posted by mathjak107 View Post
i am just waiting for a roll back and i think the smarter thing to do at this stage is to leave about 10 years withdrawals in the fidelity insight income model i have been using and the rest move into the growth and income model going forward.
That would seem like a more reasonable approach than being mostly in fixed income funds at an early retirement age.

I have the X years of withdrawals approach covered simply by having a certain amount of cash, short-term bond funds, and intermediate term bond funds in my AA that can be spent down whenever the equity portion of the portfolio goes through one of its spectacular crashes.

P.S. the "just waiting for a roll back" part can be pretty tough too.
__________________
Well, I thought I was retired. But it seems that now I'm working as a travel agent instead!
audreyh1 is online now   Reply With Quote
Old 02-20-2013, 05:39 AM   #88
Recycles dryer sheets
 
Join Date: Feb 2012
Posts: 78
Check out today's CNN Money article which also quotes Jeremy Siegel:

Bonds are riskier than stocks - Feb. 20, 2013
__________________
KMyer is offline   Reply With Quote
Old 02-20-2013, 08:19 AM   #89
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Midpack's Avatar
 
Join Date: Jan 2008
Location: Chicagoland
Posts: 11,976
Quote:
Originally Posted by KMyer View Post
Check out today's CNN Money's article which also quotes Jeremy Siegel:

Bonds are riskier than stocks - Feb. 20, 2013
And on the same website, same day this... Premarkets: Close to record highs - Feb. 20, 2013

Good reason not to pay much attention to the news cycle (financial) sites, they're just filling content space with any and every POV. That way they'll always be able to point to how they got it right later.

Like many of us have said, 'there's no place to hide right now...' so you diversify (or become a market timer, good luck with that).
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57

Target AA: 60% equity funds / 35% bond funds / 5% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
Midpack is online now   Reply With Quote
Old 02-20-2013, 08:31 AM   #90
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,433
Quote:
Originally Posted by obgyn65 View Post
As mentioned in other threads I am very risk averse. Trying to change this by reading others' success with equities here but it's not easy. Also I have little time to study this (did you notice most of my posts are written at night ?) :-) I am exhausted most of the time.
Why don't you dip your toe into the Vanguard Dividend Appreciation fund? Not a bad place to start.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is offline   Reply With Quote
Old 02-20-2013, 09:22 AM   #91
Full time employment: Posting here.
Tyro's Avatar
 
Join Date: Aug 2012
Location: Upstate
Posts: 699
Quote:
Originally Posted by fritz View Post
did you ever have the feeling you were standing in the wrong line?
All the friggin' time.

Tyro
__________________
Yeah well, that's just, ya know, like, your opinion, man. ~ The Dude
Tyro is offline   Reply With Quote
Old 02-20-2013, 10:10 AM   #92
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 16,471
Quote:
Originally Posted by KMyer View Post
Check out today's CNN Money's article which also quotes Jeremy Siegel:

Bonds are riskier than stocks - Feb. 20, 2013
This seems to be yet another article big on the sensational quotes, and sloppy on the supporting "evidence" - in other words, spin.

Quote:
The 10-year Treasury yield has been falling since the early 1980s, but experts are predicting interest rates will turn higher, creating a challenging market.
The so-called "experts" have been loudly predicting interest rates would soon turn higher for several years now and have been dead wrong. Sure, they'll be right eventually, but this expert "prediction" for higher rates is nothing new.

Quote:
Investors with stakes in long-term Treasuries are already feeling the pain.
Yep, pretty tough if you invested long US government bonds - i.e. in 10-year and 20-year US treasuries - last July when they reached a peak (in value), but most intermediate diversified bond funds have done quite well since mid-2012. My intermediate bond funds are up between 4 and 6% since mid-June of 2012.

Quote:
If the 10-year yield rises back to the level it was before the financial crisis (around 5%), bond funds could plunge 25%, said Fred Dickson, chief market strategist at KDV Wealth Management.
The 10-year yield crossed 5% a few times in the 2000s, but it also spend a great deal of time in the 3.5% to 4.5% range. Having it suddenly pop right back up to 5% seems unrealistic. More likely it will return to it's more typical range first, but even to get there we have a ways to go, and no one, no one knows how long that might take. If you look at the historical chart of the 10-year treasury yield, the time in the troughs seem to be shallow and extended. 10 Year Treasury Rate - multpl

The warning of a "25% plunge" in the 10-year treasury seems quite sensational considering that the worst year since 1970, 1980, the "plunge" was -16%, and most bad years had drops in the -9 to -12% range. And again, this is a long bond, and hopefully investors aren't piled into long-term bonds. I suspect most are in short-term to intermediate term bonds and bond funds. PRAGMATIC CAPITALISMStock and Bond Drawdowns - Historical Perspective - PRAGMATIC CAPITALISM

Quote:
The risk is even more alarming when you consider valuations, added Dickson. The bond market "looks eerily similar" to the overvaluation of the stock market at the height of the Dotcom bubble, he said.

By comparison, the S&P 500, which is near a new record high, is trading at less than 14 times 2013 earnings estimates. Even at its all-time high in October 2007, the S&P 500's valuation was just above 17.
Give me a break! First of all it's totally ridiculous to use a "2013 earnings estimate" to compare valuations to the past. No one knows what the 2013 earnings are going to be, and estimates are notoriously inaccurate. So lets compare trailing P/E instead. Current trailing S&P500 PE is around 17.36, at the same level as Jan 2007 which was 17.36. I don't think you can make the case that stocks are "undervalued" relative to 2007 at all. S&P 500 PE Ratio by Year

Conclusion? Financial porn - just like most of the articles published today - cherry picking data and quotes to present their sensational case. Very few of these articles present a balanced, informative view. That is not their intent.

I'm not saying that the outlook for bonds is rosy. I doubt there will be any more capital gains like we have enjoyed over the past several years, and instead we will likely suffer some gradual capital losses in our bond funds, whether or not the total return (helped by interest income) is able to make up for those losses. I still don't think I'd declare them "riskier than stocks" in the short term.
__________________
Well, I thought I was retired. But it seems that now I'm working as a travel agent instead!
audreyh1 is online now   Reply With Quote
Old 02-20-2013, 11:08 AM   #93
Full time employment: Posting here.
 
Join Date: Jan 2013
Posts: 660
Quote:
Originally Posted by Midpack View Post
And on the same website, same day this... Premarkets: Close to record highs - Feb. 20, 2013

Good reason not to pay much attention to the news cycle (financial) sites, they're just filling content space with any and every POV. That way they'll always be able to point to how they got it right later.

Like many of us have said, 'there's no place to hide right now...' so you diversify (or become a market timer, good luck with that).
I agree with this comment 100%. There is no doubt in my mind that all of these ominous warnings about the danger of investing in bonds right now is going to drive many people into the stock market, just as it's reaching its record high. I can't predict the future, so I don't know how that will work out, but I'm positive that the best time to make a big move into the stock market was four years ago, not now. If you set an asset allocation that you're comfortable with and stick to it, you can ignore all of the noise and be satisfied with periodic rebalancing to adjust the amount of any asset class that has declined in value.
__________________
karluk is offline   Reply With Quote
Old 02-20-2013, 11:12 AM   #94
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
HFWR's Avatar
 
Join Date: May 2005
Location: Lawn chair in Texas
Posts: 12,964
Quote:
Originally Posted by karluk View Post
If you set an asset allocation that you're comfortable with and stick to it, you can ignore all of the noise and be satisfied with periodic rebalancing to adjust the amount of any asset class that has declined in value.
Ding ding ding, we have a winner...
__________________
Have Funds, Will Retire

...not doing anything of true substance...
HFWR is offline   Reply With Quote
Old 02-20-2013, 11:17 AM   #95
Thinks s/he gets paid by the post
nun's Avatar
 
Join Date: Feb 2006
Posts: 4,836
The arguments on this whole thread basically come down to whether you're an active market timer or passive AA rebalancer.
__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”

Current AA: 65% Equity Funds / 20% Bonds / 7% Stable Value /3% Cash / 5% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
nun is offline   Reply With Quote
Old 02-20-2013, 11:17 AM   #96
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 16,471
I'm not going to do any more article "deconstructing" - it's exhausting. But I did want to add a reference from Vanguard that will be helpful to folks trying to inform themselves on the issues:
The outlook for bonds: Are the good times about to end? | Vanguard Blog
__________________
Well, I thought I was retired. But it seems that now I'm working as a travel agent instead!
audreyh1 is online now   Reply With Quote
Old 02-20-2013, 11:48 AM   #97
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Everyone posting here obviously has a firmly held opinion (and you know what they say about opinons) on the subject of bonds. Fair enough. However, I would suggest that most might be willing to agree that the future is likely to be less bright than the last several years in the bond market. yields are lower, borrowers are extending maturities at low spreads and yields, and we are in a market that is being fooled with and is consequently in something of a never-never land environment. All that adds up to more risk compared to the potential reward, with that skew getting scarier the farther out you go on the curve. Watch your six and make sure you haven't let your duration and quality get out of whack with your risk tolerance.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 02-20-2013, 11:48 AM   #98
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Midpack's Avatar
 
Join Date: Jan 2008
Location: Chicagoland
Posts: 11,976
I just did a search here on "bond bubble" and read several popular posts from 2009-10. Interesting to read 3-4 years later, they'll definitely be right - eventually...like any market prediction.

Like the post above noted, "this whole thread basically come down to whether you're an active market timer or passive AA rebalancer." Or a newly minted tweener?

YMMV
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57

Target AA: 60% equity funds / 35% bond funds / 5% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
Midpack is online now   Reply With Quote
Old 02-20-2013, 12:28 PM   #99
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,615
Quote:
Originally Posted by karluk View Post
If you set an asset allocation that you're comfortable with and stick to it, you can ignore all of the noise and be satisfied with periodic rebalancing to adjust the amount of any asset class that has declined in value.
When I set my AA it was based on the existing free market (independent buyers and sellers trying to maximize their gain in conjunction with their willingness to assume risk). There was no policy by the Fed to artificially hold interest rates down. When they change that policy and get their thumb off the scale, I'll increase my bond holdings.

It makes sense to respond if/when underlying conditions are changed.
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is offline   Reply With Quote
Old 02-20-2013, 12:32 PM   #100
Recycles dryer sheets
 
Join Date: Jul 2008
Location: Sacramento area
Posts: 444
Yup. I do my own thing. Live by the sword.....

I am happy.
__________________

__________________
AWeinel is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


 

 
All times are GMT -6. The time now is 10:09 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.