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Old 01-09-2010, 10:07 AM   #41
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Thanks to this thread I realized that we are only down 9% from our peak, which is much better than I'd thought.
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Old 01-09-2010, 10:57 AM   #42
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Yep, checked last nite. I am up from my all-time high in Oct 2007. $500 above the top. Who knew?

Oh, and this is just Vanguard. I have other stuff, like bonds and cash, and they're up too.

I know, nothing to crow about, but at least until Monday, the Eagle is flying again.
Congrats! However, we did have a conversation about high-flying eagles and jet engines, as I remember.
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Old 01-09-2010, 11:25 AM   #43
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Like many my high water mark of net worth was in 10/07. I entered a deacumulation phase in 4/08. I am down 11.8% from my high but a more important benchmark I look at it is where I am vs. when I started the deacumulation phase, that is down 8% (My spending accounts for 3% of that drop).

I am feeling better, let's hope it lasts. Last winter was not a fun time.
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Old 01-09-2010, 11:38 AM   #44
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My nest egg has almost recovered, but its still got a nasty headache...ssh
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Old 01-09-2010, 11:59 AM   #45
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On one hand I too hope it lasts, on the other hand I definitely benefitted from buying/rebalancing on the dips.

I'll take another 40% drop in the S&P this year as long as it recovers in the next 18 months...
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Old 01-09-2010, 04:29 PM   #46
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I've recovered and then some from my previous high. I'm wondering how long that will last. Some are predicting a double dip.
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Old 01-09-2010, 06:10 PM   #47
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Creeping back up there...still down about 10% from a May 2007 high water mark.
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Old 01-09-2010, 06:32 PM   #48
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No , my portfolio has not fully recovered but at least it's out of ICU .
You just can't take the nurse out of the girl, can you?

Since I'm still w*rking, I'm saving, and my NW is at an all time high. My three equity accounts are approximately back to their peaks. One in particular has increased by 31% since its nadir, mostly because of Canadian value and dividend stocks, while the US and foreign equities are down. I'm hoping that these sectors will benefit from the next market cycle.
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Old 01-09-2010, 08:26 PM   #49
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I don't want to sound insensitive, but wonder if many of us whose nest eggs have been scrambled would feel like posting here. The point is that most posters show better results than the market, whether the Dow or S&P500, as measured from trough till now.

And here is another point. It appears that many of us were shuffling money around in the last 2 years. Call it market timing or "rebalance" as you wish, but we as a group did quite a bit of that with various results.

Look at the S&P500, which peaked in Oct 07 at around 1550. The bottom was in March 09, at 735. It is now at 1145.

Now, suppose a person has 50% in SP500, and 50% in low yielding bond or cash at the top of the market. Suppose further that she did nothing and held on without adding money nor withdrawing. At the bottom of 09, she would be down 26% relative to the top in 07. At this point, she would still be down 13%.

Compared to the above, it looks like most people here were down more than 26%, and yet, recover at this point to better than 13%.

I therefore conclude that we as a group hold stocks with a higher beta than the S&P500. Either that, or our "rebalance" hurt us during the downdraft but helped during the upswing somehow. Comments?
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Old 01-09-2010, 08:31 PM   #50
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Or possibly a > 50% allocation to equities? I can't be bothered to do the math arithmetic.
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Old 01-09-2010, 08:40 PM   #51
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I therefore conclude that we as a group hold stocks with a higher beta than the S&P500. Either that, or our "rebalance" hurt us during the downdraft but helped during the upswing somehow. Comments?
There are other explanations:

Most bond funds were severely hurt during the downdraft - I mean absolutely creamed, yet they recovered dramatically too. I had bond funds up 16% or thereabouts with one of them up 31% in 2009.

That's why I was down so bad, yet recovered so well. Plus I did rebalance in mid-Jan.

And the S&P500 is a really narrow slice of the market. Other equity asset classes had quite different downdrafts and recoveries.

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Old 01-09-2010, 09:21 PM   #52
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I don't want to sound insensitive, but wonder if many of us whose nest eggs have been scrambled would feel like posting here. The point is that most posters show better results than the market, whether the Dow or S&P500, as measured from trough till now.

And here is another point. It appears that many of us were shuffling money around in the last 2 years. Call it market timing or "rebalance" as you wish, but we as a group did quite a bit of that with various results.

Look at the S&P500, which peaked in Oct 07 at around 1550. The bottom was in March 09, at 735. It is now at 1145.

Now, suppose a person has 50% in SP500, and 50% in low yielding bond or cash at the top of the market. Suppose further that she did nothing and held on without adding money nor withdrawing. At the bottom of 09, she would be down 26% relative to the top in 07. At this point, she would still be down 13%.

Compared to the above, it looks like most people here were down more than 26%, and yet, recover at this point to better than 13%.

I therefore conclude that we as a group hold stocks with a higher beta than the S&P500. Either that, or our "rebalance" hurt us during the downdraft but helped during the upswing somehow. Comments?
I was in accumulation phase so I did deposit almost 2% of my present portfolio, and didn't withdraw my 3.5%, but more than that - - I had a financial plan and I stuck to it, even when people were talking about taking all of their money out of the market because this time is different, and so on. My plan was to DCA my inheritance from Vanguard money market into Vanguard equity and bond funds throughout the year, which I did. During much of that time the market was way down, which is why my portfolio increased more than just the sum of my 2% contributions plus 3.5% withdrawals that I didn't take. You don't have to hit the bottom precisely to benefit from investing in a nasty bear market.

Although my transactions had the same effect as market timing the result wasn't really due to market timing at all but just the boring process of following my plan. Actually, it was not nearly as boring as I had expected. It was hair-raising, and I was scared to death! But luckily it's what you do, not what you feel, that counts.
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Old 01-09-2010, 09:40 PM   #53
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Nest egg is higher than it was in 2/2007 and in 8/2008, but still about 10% below the 10/2007 high point. It will get back there eventually --- only to drop again.

Certainly an all-stock portfolio suffered more than one with a significant amount of bonds. Also folks in the accumulation phase may be back to highs easily especially if annual contributions amount to more than 5% of the portfolio or an inheritance or lottery showed up. Folks in the decumulation phase or with very large portfolios may be a little less recovered.

I suspect most folks on this forum are near or in the decumulation phase, so that they have at least 30% fixed income. If they didn't in 10/2007, maybe they do now.
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Old 01-09-2010, 09:43 PM   #54
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And the S&P500 is a really narrow slice of the market. Other equity asset classes had quite different downdrafts and recoveries.
Yet, the S&P 500 captures a huge portion of all US equities. I do not know the percentage, but remember reading that it was something like 80% market capitalization of all US equities. The S&P represents 80% of the stock market wealth!

So, if you beat the S&P 500, you beat a majority of pension fund and MF managers out there. You have found your way into the winning "other" equities, which are of course again only a portion of the remaining 20% US equities. Let's say that of the 20% market cap outside the S&P500, half beat it and half trailed it. Then, is it reasonable to assume that many of us have found a way to concentrate our portfolio into that good 10%?

By the way, you are right about the more volatile corporate bonds. I have little of that and was thinking of the super-safe government bond funds that I held.

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I was in accumulation phase so I did deposit almost 2% of my present portfolio, and didn't withdraw my 3.5%, but more than that - - I had a financial plan and I stuck to it, even when people were talking about taking all of their money out of the market because this time is different, and so on. My plan was to DCA my inheritance from Vanguard money market into Vanguard equity and bond funds throughout the year, which I did. During much of that time the market was way down, which is why my portfolio increased so much more than the S&P. You don't have to hit the bottom precisely to benefit from investing in a down market.

Although my transactions had the same effect as market timing the result wasn't really due to market timing at all but just the boring process of following my plan. Actually, it was not nearly as boring as I had expected. It was hair-raising, and I was scared to death! But luckily it's what you do, not what you feel, that counts.
If you added to the portfolio during the downdraft, you would do well as many of our younger members have done.

However, I was comparing the typical poster here to an investor who did nothing. Such an investor would do better at the bottom, but would not recover as well. I believe that Bogle recommends rebalancing very infrequently, if at all. My hypothetical "lazy" investor would fit Bogle's model. No?
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Old 01-09-2010, 09:58 PM   #55
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Yet, the S&P 500 captures a huge portion of all US equities. I do not know the percentage, but remember reading that it was something like 80% market capitalization of all US equities. The S&P represents 80% of the stock market wealth!
It may, but it is still just a slice, and it's a market cap weighted slice which may make it work quite differently from many mutual funds. REITs, international, small-cap, mid-cap, value-bias - an individual investor can have much bigger slices of those in his allocation and so have his portfolio behave quite differently.

I certainly saw this during most of the 2000s when it was so easy to beat the S&P500.

And only the bond funds which had pretty low exposure to corporate and foreign debt didn't get hurt in 2008/2009. Most broadly diversified bond funds did - even those invested in top quality corporates.

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Old 01-09-2010, 10:08 PM   #56
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It may, but it is still just a slice, and it's a market cap weighted slice which may make it work quite differently from many mutual funds. REITs, international, small-cap, mid-cap, value-bias - an individual investor can have much bigger slices of those in his allocation and so have his portfolio behave quite differently.
Yes, but by definition only a small portion of all investors' money can be outside of the S&P500. The situation is similar to a poll where 75% or such of the people polled said they are better than the average driver. It just cannot be true.

My point again is that only a minority can be outside of the S&P500, and in the right slice at that, in order to beat it. And several here are in that minority. But many other forum members still remain silent.
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Old 01-09-2010, 10:10 PM   #57
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If you added to the portfolio during the downdraft, you would do well as many of our younger members have done.
I didn't ADD to the portfolio, other than the 1.x% I mentioned - - only a small fraction of the gain that my portfolio experienced during this time. Had I added nothing I would still have experienced considerable gain.

I slowly moved my investments from one fund in my portfolio into others according to my plan. That is what resulted in the gain.
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Old 01-09-2010, 10:27 PM   #58
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Yes, but by definition only a small portion of all investors' money can be outside of the S&P500. The situation is similar to a poll where 75% or such of the people polled said they are better than the average driver. It just cannot be true.

My point again is that only a minority can be outside of the S&P500, and in the right slice at that, in order to beat it. And several here are in that minority. But many other forum members still remain silent.
I guess I just don't get your argument, or think your "definition" applies to that extent. The S&P500 is a small number of stocks compared to total number of stocks available to the average investor through mutual funds. And then there is the weighting of the S&P500 which also makes a big difference in terms of behavior and makes it much more concentrated in an even smaller number of stocks.

I just know that during most of the 2000s, my portfolio - even the equity only portion of my portfolio - behaved quite differently than the S&P500, so I just don't think it matters how big the market cap of the S&P500 companies is for the investors on this forum.

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Old 01-09-2010, 10:50 PM   #59
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Suppose the market consists of only two companies A and B. A has 100 shares outstanding at $8/share. B has 10 shares outstanding at $20/share. The total "market wealth" is $8x100+$20x10 = $1000. A represents 80% of the total market cap. B represents the remaining 20% of the "wealth".

An investor is free to choose any mix of A and B she wants, and our smart investor chooses to buy only B.

Now, suppose company B outperforms company A. By definition, our smart investor, by owning only B, will outperform 80% of the "money" out there, the money owned by the other not-as-smart investors. She is definitely in the minority.

The S&P 500 consists of only 500 companies out of something like 7,000 publicly traded companies, but their total market capitalization dwarves the other remaining bitty companies. The majority of the "money" is in the S&P500.

Actually, one does not have to go outside the S&P500 to beat it. She can choose the "good" sectors inside it. Either way, she beats the "majority" of the money. And that, according to the market efficiency theorists, is very hard to do consistently.
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Old 01-10-2010, 01:57 AM   #60
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I suspect most folks on this forum are near or in the decumulation phase, so that they have at least 30% fixed income. If they didn't in 10/2007, maybe they do now.
20% actually (compared with 25% in 2007). But I have added other asset classes.
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