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Old 03-08-2008, 03:34 PM   #41
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What do you expect people to do? Cry and say the world is going to end?
I would say this is a certainty for all of us. Some sooner than others. Sort of puts the stock market in perspective .
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Old 03-08-2008, 03:46 PM   #42
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I move all my money I had in the stock market to a stable value fund last August. When the DOW hits 8000 I am getting back in.
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Old 03-08-2008, 03:48 PM   #43
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I move all my money I had in the stock market to a stable value fund last August. When the DOW hits 8000 I am getting back in.
And if it starts from where it is today and climbs slowly upward for the next 3-4 years? What will you do then?
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Old 03-08-2008, 03:50 PM   #44
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I move all my money I had in the stock market to a stable value fund last August. When the DOW hits 8000 I am getting back in.
On that stable value fund, what return are you getting? Is it available to the public outside of a tax deferred plan?
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Old 03-08-2008, 03:51 PM   #45
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Anybody else think that Dow 8000 is a really a small worry compared to.

Shadowy soldier of fortune companies getting their hands on nuclear devices and blowing dozen up cities in the US. [Jericho]
Traffic management computers becoming self-aware and destroying mankind with human looking Terminator units being sent back through time to finish the job.
If not now [Terminator: Sarah Connor chronicles] then in our great grand childrens time [Battlestar Galactica].

I guess I should strop watching regular TV and start watching CNBC to get really scared
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Old 03-08-2008, 03:59 PM   #46
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I guess I should strop watching regular TV and start watching CNBC to get really scared
Any truth to the rumor that CNBC hired Stephen King as a financial commentator?
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Old 03-08-2008, 04:17 PM   #47
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On that stable value fund, what return are you getting? Is it available to the public outside of a tax deferred plan?
Last 3 Months1.25% 1 Year4.57% 3 Year Annualized4.26%

It is JP Morgan 401K Fund. I don't know if it's available outside deferred plan. I sure slept better after I got out of stocks for awhile.
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Old 03-08-2008, 04:19 PM   #48
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Lets see Opec will not raise output, crude at 106 a barrel only to continue to go up since the Arabs have figured out that they need not blow up america with bombs, but just raise the price of oil so high that we cannot pay our bills.
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Old 03-08-2008, 05:12 PM   #49
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I still say all this talk about "what will happen next?" is just a powerful argument for building a diversified portfolio which thrives in good times and "survives" the bad times without ruination.

In 2000-2002, I had enough in REITs and small caps -- which performed well -- as well as gold stocks which also performed well, and in 2001-2002, I lost only 8% TOTAL in a time when the S&P was down about 35% and the Nasdaq down by more than 50%.

Even now, I have enough in bonds and gold mining funds that I'm down less than 6% compared to more than 11% for the S&P 500.

Oh, and in the up market from 2003 to 2006, I kept pace with the S&P 500 (or better) every year. I lagged it a bit in 2007 because small caps and REITs sucked, but I still eked out a positive return for the year.

If I were "all in" with one or two types of stocks, I'd worry like hell that the market would tank. If I were "all out" because of market timing and panic, I'd worry that the market would start rallying and I'd be out of it.

As it is? These aren't easy times for many people, but if you construct a diversified portfolio with a lot of non-correlating assets, chances are pretty good that you won't feel the carnage nearly as much as someone who just buys an S&P 500 index fund and nothing else.
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Old 03-08-2008, 06:19 PM   #50
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I still say all this talk about "what will happen next?" is just a powerful argument for building a diversified portfolio which thrives in good times and "survives" the bad times without ruination.

In 2000-2002, I had enough in REITs and small caps -- which performed well -- as well as gold stocks which also performed well, and in 2001-2002, I lost only 8% TOTAL in a time when the S&P was down about 35% and the Nasdaq down by more than 50%.

Even now, I have enough in bonds and gold mining funds that I'm down less than 6% compared to more than 11% for the S&P 500.

Oh, and in the up market from 2003 to 2006, I kept pace with the S&P 500 (or better) every year. I lagged it a bit in 2007 because small caps and REITs sucked, but I still eked out a positive return for the year.

If I were "all in" with one or two types of stocks, I'd worry like hell that the market would tank. If I were "all out" because of market timing and panic, I'd worry that the market would start rallying and I'd be out of it.

As it is? These aren't easy times for many people, but if you construct a diversified portfolio with a lot of non-correlating assets, chances are pretty good that you won't feel the carnage nearly as much as someone who just buys an S&P 500 index fund and nothing else.
I agree with what you said. Diversification is key in times like these. My self managed low corrolation portfolio (overall 65% stock / 35% bonds and cash) is down only about 6.8% from the top of the market (the S&P comparatively is down 17.4%). Compare that to my performance chasing Ameriprise financial advisor's performance: down 16.1% (80% stocks / 20% bonds and cash overall). Last year my self managed portfolio was up 7.1%, and my FA's managed portfolio was up 6.2%. As soon as I can break that VULI contract I am out of there...
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Stocks for the long run
Old 03-08-2008, 06:43 PM   #51
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Stocks for the long run

Stocks have always risen long term.Long term could mean 25 years before getting back to even(even worse taking inflation into account.)as happened 1929-1954.As long as you have the guts &cash to keep buying the market during that period you'd do great. If you were retired like me you'd be toast.
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Old 03-08-2008, 07:05 PM   #52
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It is interesting to read all the posts - it is really push and pull. I am in the same state - I have alot of cash on the sidelines from the sale of some investment property. I go back and forth on when to put it to work with my planned allocation. But, gotta tell you - when ever the market behaves like last week having that cash feels good....but I need to make sure that I outpace inflation......I am thinking of DCAing now and if we hit DOW 11,000 putting in a larger slug.
I gotta tell you all this pontificating is starting to feel like work!
Do any of you have a target for the market to hit before you take the leap of faith with cash on the sidelines?
I plan to keep enough cash so selling stock won't be necessary for 7-9 years, but, I want to get in low - I dropped a chunk in when we were at 13,300 and that did not work out so well -- thus far.
I am being a dirty market timer.....it comes natural I shop for the best deal on everything....
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Old 03-08-2008, 07:18 PM   #53
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Stocks have always risen long term.Long term could mean 25 years before getting back to even(even worse taking inflation into account.)as happened 1929-1954.As long as you have the guts &cash to keep buying the market during that period you'd do great. If you were retired like me you'd be toast.

Ah man - is time yet to trot out unclemick's unified lefthanded general theory of chickenheartedness? Hmmmm? I have absolutely no qualifications except I did survive 1966-1982 without filling my closet or attic with seven years of freeze dryed food. I did commit a few other sins like real estate, gold coins etc which I won't confess here.

All together now - pssst Wellesley! Quick now - what's the current yield/income of what you own versus your retirement expenses?

If you have your expenses covered/you are home free/if not/cut expenses.

Whining is optional. Some days I really get my jollies pissing and moaning - sort of a perverse pleasure - probably comes from watching the Saint's snatch defeat from the jaws of victory all those decades.

heh heh heh - I will conceed sell to the sleeping point is necessary for some.
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Old 03-08-2008, 08:18 PM   #54
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All together now - pssst Wellesley! Quick now - what's the current yield/income of what you own versus your retirement expenses?...

If you have your expenses covered/you are home free/if not/cut expenses.

I am with Unclemick concentrate on income. I have had half a dozen dividend increases this year vs one (my first ever) dividend cut. Now I've invested in some admitedly higher risk financial companies who may cut the dividends. So if the credit crisis to continues to deteriorate I maybe in trouble with some of these companies.

Still I am really not too concerned about the price of stocks only the earnings. The latest S&P earning estimate for the S&P 500 is $98.63for 2008. This gives an earnings yield of 7.6%% a number comfortably above a 4% SWR. As long as US companies earning keep up with inflation we should be fine. Even if this forecast is optimistic S&P earnings would have drop to about $52 to but the 4% SWR rate in serious risk.

I really think the secret to (pyschologically) surviving bear market is to stop viewing stocks or equity mutual funds as pieces of paper where you hope to buy them low and sell the to another sucker later at higher price.
That is gambling and if you aren't by nature a gambler you'll be miserable.

Instead treat stocks for what they actually are a claim on the future income stream of business. Whats important is; is the stream big enough to meet your expenses? I'm personally a fan of getting my money now (dividends) but trusting companies (in the aggregate) to reinvest their earning for future growth has also worked out well.


Wellesley has current yield of 4.63%, a big chunk of Wellesley, Vanguard Total Stock Market, a sprinkling of foreign stocks, a several years worth of expenses money markets, CDs and short term bonds you are fine.
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Old 03-08-2008, 09:03 PM   #55
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All together now - pssst Wellesley! Quick now - what's the current yield/income of what you own versus your retirement expenses?
So, if Wellesley yields 4% and Vanguard's junk bond fund yields 8%, does that mean I can double my SWR by switching to 100% junk bonds?
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Old 03-08-2008, 09:11 PM   #56
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Still I am really not too concerned about the price of stocks only the earnings. The latest S&P earning estimate for the S&P 500 is $98.63for 2008. This gives an earnings yield of 7.6%% a number comfortably above a 4% SWR. As long as US companies earning keep up with inflation we should be fine. Even if this forecast is optimistic S&P earnings would have drop to about $52 to but the 4% SWR rate in serious risk.
Although I agree with the thrust of you remarks, it is really the current cash yield and the expected rate of increase that confers security. Earnings yield is only tangentially related to cash payments, which are what you need to buy groceries.

With the 4% WR and the 7.6% earnings yield mentioned above, there is still plenty of room to get clipped by stock price volatility.

Ha
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Old 03-08-2008, 09:33 PM   #57
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I don't know where you got these figures from. The 10 year average annual return of Vanguard's S&P 500 fund through February 2008 is + 3.99%.

https://personal.vanguard.com/us/fun...BarChart=false

During the same period, Vanguard's Total Stock Market Fund had an average annual return of + 4.46%.

https://personal.vanguard.com/us/fun...BarChart=false
My data is from Robert Shiller at:
Online Data
I took the Excel file, computed a monthly real return, and compounded that. (Note that Shiller seems to use an average price for the month instead of an ending price.)

Our numbers are consistent. I have "real" returns, you have "nominal". I have a 9 year period, you have a 10 year period. The S&P 500 went from 963 to 1249 in the one year from Jan 1998 to Jan 1999. That's almost 30% on the price alone. The entire gain for your 10 year period is equal to the gain in the first year. The remaining years had ups and downs, but averaged approx zero.

You used the "every year" in your original post. I was trying to point out that the market is very erratic, and not just over short periods. It seems to go up until everyone believes it can only go up, then it drops. After that, it gets into a funk until everyone believes that stocks are never going to go anywhere, then it goes up. The funky periods can be pretty long. It has done this three times in the last 90 years. I was just pulling out the longest periods since WWII when the compound return was about zero as examples.

Of course, there is no guarantee going forward that history will repeat itself.
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Old 03-08-2008, 10:36 PM   #58
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I am with Unclemick concentrate on income. I have had half a dozen dividend increases this year vs one (my first ever) dividend cut. Now I've invested in some admitedly higher risk financial companies who may cut the dividends. So if the credit crisis to continues to deteriorate I maybe in trouble with some of these companies.

Still I am really not too concerned about the price of stocks only the earnings. The latest S&P earning estimate for the S&P 500 is $98.63for 2008. This gives an earnings yield of 7.6%% a number comfortably above a 4% SWR. As long as US companies earning keep up with inflation we should be fine. Even if this forecast is optimistic S&P earnings would have drop to about $52 to but the 4% SWR rate in serious risk.

I really think the secret to (pyschologically) surviving bear market is to stop viewing stocks or equity mutual funds as pieces of paper where you hope to buy them low and sell the to another sucker later at higher price.
That is gambling and if you aren't by nature a gambler you'll be miserable.

Instead treat stocks for what they actually are a claim on the future income stream of business. Whats important is; is the stream big enough to meet your expenses? I'm personally a fan of getting my money now (dividends) but trusting companies (in the aggregate) to reinvest their earning for future growth has also worked out well.


Wellesley has current yield of 4.63%, a big chunk of Wellesley, Vanguard Total Stock Market, a sprinkling of foreign stocks, a several years worth of expenses money markets, CDs and short term bonds you are fine.
don't believe everything you read

the so called analysts got the sp500 earnings growth wrong back at the start of 2007 and i wouldn't be surprised if these numbers turn out to be nothing more than dreams
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Old 03-09-2008, 12:13 AM   #59
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I think we're having a news induced recession. The extreme fear in the news seems to have come before the data. I guess that if we all try hard enough and stop buying things we could slow it even further.
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Old 03-09-2008, 08:27 AM   #60
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I think we're having a news induced recession. The extreme fear in the news seems to have come before the data. I guess that if we all try hard enough and stop buying things we could slow it even further.

Really? I was at the gas station yesterday and watched a family in a suburban late model they still owe money on it fill it and listened to the argument from the wife at the 81.50 they just pumped into the thing. There is financial trouble in that family. gasoline was 3.47 at that station.

Housing in my new not high priced neighborhood three homes are now foreclosed out of 80 homes, never saw that in my other neighborhoods even in the late 80s last bad time.

No its not media driven. I would hate to have to work everyday in this economy.
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