Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Expect years of pain?
Old 11-30-2011, 07:28 PM   #1
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Chuckanut's Avatar
 
Join Date: Aug 2011
Location: West of the Mississippi
Posts: 6,322
Expect years of pain?

I just read the following article and have been thinking. What does it prove? In my mind, it proves that one must be diversified since we have no way of knowing which area will thrive at what time.

Expect Years of Pain before Market Gain
__________________

__________________
The worst decisions are usually made in times of anger and impatience.
Chuckanut 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 11-30-2011, 07:51 PM   #2
Thinks s/he gets paid by the post
73ss454's Avatar
 
Join Date: Oct 2004
Location: LaLa Land
Posts: 4,378
It proves that it's the same now as it's always been. Who really knows what's going to happen, it's always something. I'm sitting with my port, rebalance when need be and hope for the best. No Crystal Ball in my plan.
__________________

__________________
Work is something you do to get enough $ so you don't have to....Me.
73ss454 is offline   Reply With Quote
Here's Birchwood's interpretation.
Old 11-30-2011, 08:42 PM   #3
Recycles dryer sheets
 
Join Date: Aug 2011
Location: aberdeen
Posts: 267
Here's Birchwood's interpretation.

I think there will be a lot of pain, years of pain or stagnation before the market turns around.
The whole equity market may take some time to turn around.
The US market may take time to turn around.
45% of Americans are struggling to make it.
The real estate market is flat or may still go down.
Other future world power are on the rise, China and India.
America's debt has no end.
Our politicians are so polarized and would rather fight it out rather than find solution for the common problems.
Joblessness is a 9% and has no rapid sign of improving.
Our education system is worse than most industrialized nations.
Our savings rate is worse than other competition countries.
Our jobs are going abroad.
Most of the stuff we buy are made in China
Our working kids have less benefits than us.
Our health care is the most expensive, but results are mix.
Our students math and science scores are worse than our competitors.
Medicare benefits may go down

So yes, there will be years of pain, not just because of the cyclical stock market, it's because something terrible wrong is going on with us, and it will take a cataclysmic change or event to change it. Hold on tight!
__________________
Birchwood is offline   Reply With Quote
Old 11-30-2011, 09:49 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,484
Where's Wade cook when you need him? How about Charles Givens?
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Old 11-30-2011, 10:37 PM   #5
Recycles dryer sheets
 
Join Date: Jul 2011
Posts: 57
Quote:
Originally Posted by Birchwood View Post
Our politicians are so polarized and would rather fight it out rather than find solution for the common problems.

I think it would be more accurate like this:

Our politicians would prefer to split it up amongst themselves rather than serve the common good.
__________________
ER Fireball is offline   Reply With Quote
Old 11-30-2011, 11:21 PM   #6
Thinks s/he gets paid by the post
 
Join Date: Sep 2009
Location: Hong Kong
Posts: 1,571
As a general observation, there have only been relatively brief periods in history when conditions have been "easy" (insert definition of choice) for the populations of developed markets in general. The 1982-1999 period was one of the better ones (for many, not all) and is a pretty demanding benchmark.

Expecting times to be easy most of the time is, sadly, unrealistic.

Of course, I could be an optimist and take the article as another contrary indicator.
__________________
Budgeting is a skill practised by people who are bad at politics.
traineeinvestor is offline   Reply With Quote
Old 12-01-2011, 08:36 AM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Midpack's Avatar
 
Join Date: Jan 2008
Location: Chicagoland
Posts: 11,968
The author of the linked article concludes with:
Quote:
First, risk takes time to pay off and waiting a decade or more is common. Manage your portfolio risk accordingly. Second, diversification takes advantage of low correlation among risk at times. This lowers the length of time it takes to earn an excess return. Third, in no case should your total risk be above your ability to handle losses, and that includes long periods of marginal underperformance.

Making money in the markets takes time and patience. Don’t become discouraged if an asset class misbehaves for several years. That’s perfectly normal. Stay disciplined, use low-cost index funds and if you need help, seek a low-cost advisor. Give your portfolio time to work and you’ll earn your fair share of market returns.
Anything new?
__________________
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 12-01-2011, 08:52 AM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Ed_The_Gypsy's Avatar
 
Join Date: Dec 2004
Location: the City of Subdued Excitement
Posts: 5,292
The long periods of non-correlation of various asset classes with the S&P 500 tell us why a diversified portfolio with rebalancing is a good idea.

He talks about rebalancing every month. Wow. Considering the long periods of relative non-correlation, once every year or two (my slothful pattern) should do just as well. IIRC, Bernstein said as much once.

In the meantime, my dividends just keep rolling along, well above the SWR of 3.5% to 4%.
__________________
my bumpersticker:
"I am not in a hurry.
I am retired.
And I don't care how big your truck is."
Ed_The_Gypsy is offline   Reply With Quote
Old 12-01-2011, 09:55 AM   #9
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
Quote:
Originally Posted by FinanceDude View Post
Where's Wade cook when you need him? How about Charles Givens?
LOL -- in jail and feeding the worms, respectively.

At least Givens occasionally had some good ideas, even if most of them were reckless and some were arguably outright fraud. One that stuck with me from very young adulthood, on the few times I caught a little of his radio show and books, was the idea that investments and insurance should be kept separate -- both are necessary in a solid financial plan but one shouldn't be used to achieve the other. That, if little else he peddled, was very good advice.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 12-01-2011, 09:57 AM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Lsbcal's Avatar
 
Join Date: May 2006
Location: west coast, hi there!
Posts: 5,676
Quote:
Originally Posted by traineeinvestor View Post
As a general observation, there have only been relatively brief periods in history when conditions have been "easy" (insert definition of choice) for the populations of developed markets in general. The 1982-1999 period was one of the better ones (for many, not all) and is a pretty demanding benchmark.

Expecting times to be easy most of the time is, sadly, unrealistic.

Of course, I could be an optimist and take the article as another contrary indicator.
Looking back that 1982-1999 period was pretty sweet. But while we were investing during those years, things were not clear. There was the 1987 crash, the Gulf War and plenty of worries. Bonds looked pretty scary in 1982 as we'd just come off a scary inflation and the purge of it by Volcker. In Aug 1982, the 12 month inflation was "only" 5.9%.

There is a lot of liquidity out there. My bet is -- stocks will give double digit returns over the coming years. You heard it here first .
__________________
Lsbcal is offline   Reply With Quote
Old 12-01-2011, 10:00 AM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,484
Quote:
Originally Posted by ziggy29 View Post
At least Givens occasionally had some good ideas, even if most of them were reckless and some were arguably outright fraud. One that stuck with me from very young adulthood, on the few times I caught a little of his radio show and books, was the idea that investments and insurance should be kept separate -- both are necessary in a solid financial plan but one shouldn't be used to achieve the other. That, if little else he peddled, was very good advice.
The only "nugget" I remember from Givens was: "When interest rates are low, stocks will grow. When interest rates are high, stocks will die"........wonder what old Charlie would think these days if he were still around peddling?
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Old 12-01-2011, 07:10 PM   #12
Thinks s/he gets paid by the post
 
Join Date: Sep 2009
Location: Hong Kong
Posts: 1,571
Quote:
Originally Posted by Lsbcal View Post
Looking back that 1982-1999 period was pretty sweet. But while we were investing during those years, things were not clear. There was the 1987 crash, the Gulf War and plenty of worries. Bonds looked pretty scary in 1982 as we'd just come off a scary inflation and the purge of it by Volcker. In Aug 1982, the 12 month inflation was "only" 5.9%.

There is a lot of liquidity out there. My bet is -- stocks will give double digit returns over the coming years. You heard it here first .
Fair points - even during good times there are plenty of things to worry about.

I'd be happy to see double digit returns for the next forty or fifty few years - just so long as we don't see double digit inflation over the same period.

And if you want another bullish indicator: hedge funds reducing their exposure to stocks This was published just before the co-ordinated central bank move to add more liquidity to the markets.
__________________
Budgeting is a skill practised by people who are bad at politics.
traineeinvestor is offline   Reply With Quote
Old 12-04-2011, 04:01 PM   #13
Full time employment: Posting here.
 
Join Date: Mar 2010
Location: Chicago
Posts: 867
Quote:
Originally Posted by Birchwood View Post
I think there will be a lot of pain, years of pain or stagnation before the market turns around.
The whole equity market may take some time to turn around.
The US market may take time to turn around.
45% of Americans are struggling to make it.
The real estate market is flat or may still go down.
Other future world power are on the rise, China and India.
America's debt has no end.
Our politicians are so polarized and would rather fight it out rather than find solution for the common problems.
Joblessness is a 9% and has no rapid sign of improving.
Our education system is worse than most industrialized nations.
Our savings rate is worse than other competition countries.
Our jobs are going abroad.
Most of the stuff we buy are made in China
Our working kids have less benefits than us.
Our health care is the most expensive, but results are mix.
Our students math and science scores are worse than our competitors.
Medicare benefits may go down

So yes, there will be years of pain, not just because of the cyclical stock market, it's because something terrible wrong is going on with us, and it will take a cataclysmic change or event to change it. Hold on tight!
Now tell us what you really think.
__________________
ripper1 is online now   Reply With Quote
Old 12-04-2011, 04:27 PM   #14
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,077
Quote:
Originally Posted by Birchwood View Post
I think there will be a lot of pain, years of pain or stagnation before the market turns around.
The whole equity market may take some time to turn around.
The US market may take time to turn around.
45% of Americans are struggling to make it.
The real estate market is flat or may still go down.
Other future world power are on the rise, China and India.
America's debt has no end.
Our politicians are so polarized and would rather fight it out rather than find solution for the common problems.
Joblessness is a 9% and has no rapid sign of improving.
Our education system is worse than most industrialized nations.
Our savings rate is worse than other competition countries.
Our jobs are going abroad.
Most of the stuff we buy are made in China
Our working kids have less benefits than us.
Our health care is the most expensive, but results are mix.
Our students math and science scores are worse than our competitors.
Medicare benefits may go down

So yes, there will be years of pain, not just because of the cyclical stock market, it's because something terrible wrong is going on with us, and it will take a cataclysmic change or event to change it. Hold on tight!
Take heart, Birchwood. You'll be dead in a few years and you'll no longer have to be concerned.
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 12-04-2011, 05:05 PM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,382
Quote:
Originally Posted by REWahoo View Post
Take heart, Birchwood. You'll be dead in a few years and you'll no longer have to be concerned.
Interesting, but this while a bit more emotional, is not all that different from Kyle Bass's analysis.

IMO the sun is shining today, and even when it is rainy it is romantically rainy, so let the good times roll, and aprés moi, le deluge. I hope and believe that my kids and grandchild have the wits to ride the wave, whatever it may be.

Anything can happen, but I tend to believe that the US has played out its string.

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 12-04-2011, 05:14 PM   #16
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,077
Quote:
Originally Posted by haha View Post
Anything can happen, but I tend to believe that the US has played out its string.
Ah, ye of little faith.
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 12-04-2011, 06:08 PM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
bbbamI's Avatar
 
Join Date: Dec 2006
Location: Dallas 'burb
Posts: 9,039
Frank says...'don't be sad...be happy'.
Attached Images
File Type: jpg DSC02887.jpg (383.7 KB, 6 views)
__________________
There's no need to complicate, our time is short..
bbbamI is offline   Reply With Quote
Old 12-04-2011, 06:16 PM   #18
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2003
Location: Kansas City
Posts: 7,408
Quote:
Originally Posted by bbbamI View Post
Frank says...'don't be sad...be happy'.
Dead ringer for Milo who pees on floor and chews furniture right in front of the house sitter if I take longer than a two week trip in ER.

And some silly folks think the World has problems.

heh heh heh - staying the course since 1976. All praise to Bogle's Folly and 'the traditional pension 60/40 portfolio.'

'God Looks After Dunkards, Fools, and The United States of America.'

As for Pugs named Milo
__________________
unclemick is offline   Reply With Quote
Old 12-04-2011, 06:49 PM   #19
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
bbbamI's Avatar
 
Join Date: Dec 2006
Location: Dallas 'burb
Posts: 9,039
Quote:
Originally Posted by unclemick View Post
Dead ringer for Milo who pees on floor and chews furniture right in front of the house sitter if I take longer than a two week trip in ER.

And some silly folks think the World has problems.

heh heh heh - staying the course since 1976. All praise to Bogle's Folly and 'the traditional pension 60/40 portfolio.'

'God Looks After Dunkards, Fools, and The United States of America.'

As for Pugs named Milo
I love your posts unclemick......

--------------------------------------

I keep my eggs in different baskets. ...and not just for a fashion statement...
__________________
There's no need to complicate, our time is short..
bbbamI is offline   Reply With Quote
Old 12-04-2011, 09:02 PM   #20
Full time employment: Posting here.
urn2bfree's Avatar
 
Join Date: Feb 2011
Posts: 711
Quote:
Originally Posted by haha View Post

Anything can happen, but I tend to believe that the US has played out its string.

Ha
Mr Warren Buffet- who seems to have some experience being right about these things- disagrees.
__________________

__________________
urn2bfree 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


Similar Threads
Thread Thread Starter Forum Replies Last Post
Weird back pain wallygator69 Health and Early Retirement 44 07-03-2014 08:09 AM
Retirees Only Planning Finances Five Years Ahead mickeyd FIRE and Money 32 12-04-2011 02:38 PM
25 years Fire'd NYEXPAT Life after FIRE 5 11-30-2011 11:22 PM
Two Years Out robcanuck Life after FIRE 9 07-31-2011 11:01 AM

 

 
All times are GMT -6. The time now is 05:52 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.