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Coming of age as an investor
Old 01-17-2011, 12:17 PM   #1
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Coming of age as an investor

I read an article yesterday that said the investment climate at the time you "come of age" as an investor has a disproportionately large influence on your lifelong investing outlook.

I checked it on myself. I started investing seriously in the mid-late 90s, and, sure enough, to this day I am incurably bullish on stocks, even after everthying that's happened since.

What about you?
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Old 01-17-2011, 12:21 PM   #2
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I started investing in 2000. I tend to be more conservative (50/50 AA) than I probably should. However, I also come from a culture which favors safety over speculation.
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Old 01-17-2011, 12:26 PM   #3
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Interestingly (to me anyway), I went all in on Wed Oct 21, 1987, two days after "Black Monday." That was my first foray into investing. I've always been moderately aggressive, all equity until my late-40's, now 65/30/5 FWIW...
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Old 01-17-2011, 01:46 PM   #4
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I started investing on the late 80's.

As a novice, I had a Finacial Planner who hooked my IRA to a Market Timing model (according to them, no worry, they had a computerized model). No doubt I couldn't sleep well at nights and said bye-bye to this planner soon.

So that was my coming of age....to not believe in everything I read/hear...If I don't understand it, I have no idea investing in it and that index investing can be beautiful.
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Old 01-17-2011, 02:33 PM   #5
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I started in the early '80s. Rather than when you start, maybe it is what you've been through. My experience is that after 1987, things recovered quickly. After 2000-2002, things recovered in a couple of years. After 2008, things recovered in a couple of years, too.

So I've been through two different 50% drops in big market averages without any damage. You can imagine what I think the next 50% drop will do to me.
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Old 01-17-2011, 08:55 PM   #6
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I started investing in 1979, when I got my BS. Up until then it was just paper route proceeds into CDs.

I started with a random mix of CDs, bonds, stocks, and even options. After a couple years I dropped the options and CDs and spent most of my money buying a house, with the 401k into stock funds.

Around 1993 I went to a 100% individual equity allocation for IRAs and regular savings, with stock index funds for my 401k. I have no opinion on stock prices, but am bullish on long-term earning and dividend increases.
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Old 01-17-2011, 09:15 PM   #7
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I started investing in the early 1980s when inflation in my home country was still in double digits. Having experienced several bull markets and several crashes (1987 share market crash, 1997 Asian crisis, 2001 tech crash, 2003 SARS and 2007 banking crisis), I still prefer equities and real estate to bonds, CDs and bank deposits as longer term protection against the ravages of inflation.
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Old 01-17-2011, 11:06 PM   #8
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I would say it all depends on one's knowledge of the market as a greater factor rather than the environment when you start (with uneducated investors definitely impacted by when they start out).

I started investing in 1992 at the ripe young age of 16 with a pool of my (25% share) and my older siblings money. Began by buying treasuries at the auction, then flipping them for some fractions. In a declining rate environment, it's easy money. Then began salivating at how much more I could make by simply flipping stocks for just a mere 1/2 point! Tried that and also was a bottom feeder by looking for stocks making 52 week lows. I made a few ok decisions, but made more blunders (like listening to my majority share brother who said "never sell a stock at a loss! Just hold it!" )

Between 92 and 99, I made a few very bad investments - I went from starting out to -40%, back to roughly break even, back down -50%, back to break even, then down -30%, then back to break even, as I learned to day trade quite a few stocks for small 1/4, 1/2 or 1 point gains and cut and run and recover the portfolio. So, I was somewhat of a risk taker (by necessity to try and recover the portfolio).

So after 7 years, it was still at break even, despite being in a great bull market.

At that point, getting ready to graduate college, I began to be tempted to invest in internet stocks, after staying away from the high flyers with PEs of 10,573 (if they were positive at all). In the end, I said "to hell with stocks, I'm going for the easy 7% (post-tax) in muni CEFs and REITs". Turned out to be an excellent, well-timed choice (FINALLY!).

Gradually grew the portfolio, but still was heavily weighted in REITs/preferred bonds/muni CEFs for the relative safety - and seeing my grandparents having a very comfortable retirement with their 100% Treasury Bond portfolio didn't sway me away from the 'steady Eddie' 7% annual returns of my holdings.

However, stumbled onto this forum circa 2005, and began to learn about the benefits of stock holdings to beat inflation long-term. Finally began to be more aggressive and began moving big chunks to international holdings. Currently about 30% foreign stocks, 20% US stocks (with some international exposure), a big chunk (15%?) in oil/mostly pipeline MLPs (debating on whether to liquidate them given their current yields), and the rest in savings bonds and preferred stocks.

To sum it up - in the beginning, even though I've seen the markets around me rising, and I knew the market overall was a good place to be, I thought I could do better than some mutual fund manager (perhaps there was a little 'control freak' issue going on as well, mixed in with my teenage hormones). I then ended up becoming (what I saw as) far more risk-averse because of my specific experiences in investing, rather than the general market. And then full-circle to reach my current outlook.

For me, if the 90s had been a bear market, I simply would have still done my research to find investment opportunities and stayed the course, rather than recoil and be controlled by knee-jerk reactions.

Of course, for the average Joe and Jane who invest in many mutual funds that do worse than the market, a bear market means Joe and Jane's funds will do even worse...definitely making them even more risk averse when they rush to sell on the way down/at the bottom, and take far longer to recover than if they had just stayed the course like an educated investor would do.
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Old 01-17-2011, 11:16 PM   #9
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I started investing in my 401(k) in 1986. We had few choices in funds (2) and in percentage allocations (25% increments). I was 3/4 in the Stable Value fund for several years.

In 1990, after I recovered financially from the purchase of my apartment and had some money to invest in taxable accounts, my mother introduced me to Fidelity Investments and their tax-free muni bond funds. A few years later I began investing in funds which had all or a majority of stocks, just in time to catch the booming market of the late 1990s. It was in the mid-1990s I targeted my AA at 55%/45% for both my taxable and 401(k) accounts (not counting the free-money company ESOP).

Now an ER, I have had to change my AA but am still somewhat bullish on stocks despite the declines in 2001-2002 and 2008-2009, the latter of which I have not fully recovered from. My AA is more bond-oriented in the taxable account but still stock-majority in the Rollover IRA.
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Old 01-17-2011, 11:58 PM   #10
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Quote:
Originally Posted by Onward View Post
I read an article yesterday that said the investment climate at the time you "come of age" as an investor has a disproportionately large influence on your lifelong investing outlook.

I checked it on myself. I started investing seriously in the mid-late 90s, and, sure enough, to this day I am incurably bullish on stocks, even after everthying that's happened since.

What about you?
I don't think I really have an outlook on stocks and bonds. I expect to be surprised, sometimes pleasantly and sometimes not. I do have an optimistic outlook about residential real estate which was probably formed more by long term exposure than anything else. My parents bought a house when I was in grade school that they sold 15 years later for between four and five times what they paid for it. I sold the first house that I ever bought after twelve years for nearly three times what I paid for it. If I'd been in a position to sell my current residence in 2006, it would have gone for over twice what I bought it for, after only nine years. All in all that's nearly 45 years of almost constantly rising value and in my heart of hearts I expect the price of this house will eventually go back up to the appraised value from 2006. But in my head, I'm pretty sure I won't be the one to pocket the gain. I think "eventually" might well be longer than I'm willing to delay my retirement.
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Old 01-18-2011, 01:22 AM   #11
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I think it depends on how you define "coming of age". To me, that refers to your first 15% monthly loss.
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Old 01-18-2011, 01:29 AM   #12
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Originally Posted by kyounge1956 View Post
All in all that's nearly 45 years of almost constantly rising value and in my heart of hearts I expect the price of this house will eventually go back up to the appraised value from 2006. But in my head, I'm pretty sure I won't be the one to pocket the gain. I think "eventually" might well be longer than I'm willing to delay my retirement.
Are you certain that you cannot retire in place?

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Old 01-19-2011, 01:27 PM   #13
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Both my wife and I came of age in fall of 2008 when we saw our portfolio drop almost in half and all gains plus some contribtions we made over 15 years of contibruting were gone on paper over $400K. Wife and I spoke about selling in the panic and remember saying I would be more upset selling and taking the losses and watching the market recover while I was on the sideline but I did consider selling out . I kept saying to myself the market has 100% of the time has come back it was just a matter of time. I wanted to hold and not fold. During the wicked days of October 2008/Nov 2008 I will never forget the call from my wife saying the dow was down another 1000 points and she said I qoute "I will not sell a dime of my stocks to these *&$# crooks on wall street I have decided I want to hold". I remember saying to her you just became a long term investor. As the months wore on we kept watching it drop until end of March. Two days after the bottom I bought stocks with some cash I had parked for a rainy day and bought Ford, GE, JPM, Apple and today we have much more $$$ than we did in 2008/2009. Our 401K are worth more as well as dollor cost averaging does work. I have recently unloaded much of the stock we bought with the rainy day $$ and replenished the cash plus much more and await another rainy day. We did sell some funds and buy new funds same day outside 401K and IRA to take Tax advandage of the paper loss but was never out of the market. What I learned was Warren is Right. Buy when people are scared and sell when they ar greedy and what it really meant.
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