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have phone meeting tonight with ray lucia
Old 03-23-2009, 03:29 AM   #1
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have phone meeting tonight with ray lucia

tonights the night ray lucia is going to call me off the air to discuss the concerns alot of us had about the re-balancing of the buckets in times like these.... we will also discuss the percentage in returns that ray figures built in to his calculations..

it seems that going forward those numbers may not be achievable....

anyway i know quite a few of you here follow rays system of buckets or take his system and modify it to fit themselves better sooooo if you want me to ask ray anything just post your questions, just do it before 6:30 pm est as thats when hes calling
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Old 03-23-2009, 05:57 AM   #2
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tonights the night ray lucia is going to call me off the air to discuss the concerns alot of us had about the re-balancing of the buckets in times like these.... we will also discuss the percentage in returns that ray figures built in to his calculations..

it seems that going forward those numbers may not be achievable....
One of the tidbits of info he mentions alot is the stock market has never
lost money in a 15 year period, which is still true, the dow has basically
double since 1993, 3600->7200.

He has always skirted the question "when do I rebalance?", since he
always talks about the science of money, I would like more definitive
answer like "whenever your bucket 3 increases by 25%".

BTW, if you are thinking that non-traded REITs are the way to go (I
think he now uses them in a 4 bucket system, with stocks in the
4th bucket with a 25 yr time horizon), you might want to take the
opportunity to ask him about specific recommendations, something
he can't do on the air.
TJ
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Old 03-23-2009, 06:47 AM   #3
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I will
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Old 03-23-2009, 06:59 AM   #4
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Should be interesting to see how he advises avoiding being 85-90% in stocks as bucket 2 dwindles 12 years down the road. Thanks for setting up the call with him.
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Old 03-23-2009, 07:14 PM   #5
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AND THE ANSWERE IS: had our little phone chat, basically dont wait to rebalance, when your retired most of us want to trade larger gains for more security and by rebalancing whenever buckets 1 and 2 need money and bucket 3 is higher your cutting gain potential and getting more security by having full buckets....

as far as achieving the numbers that the planner assumes they use alot of various gic and annuity products to supply high levels of income... they use the high dividend pay out rates of the untraded reits coupled with individual investment grade corporate bonds to meet those returns..

quite frankly though im not convinced the high fees, commissions and other charges of alot of these products dont eat up alot of the benefits of using these products... pretty much they want to make you a client....


in this case they wanted to handle setting up and administrating bucket 2 while i did bucket 3 on my own.... i probley will pass but i think for someone without any knowledge of investing they could be well served by the brain power of this group... there is no question in my mind these guys are top notch at what they do... the question is at the end of the day when all expenses are paid is it better then i can do.
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Old 03-23-2009, 08:02 PM   #6
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quite frankly though im not convinced the high fees, commissions and other charges of alot of these products dont eat up alot of the benefits of using these products... pretty much they want to make you a client....
Now there's a shock.

ha
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Old 03-23-2009, 08:08 PM   #7
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Did Ray Lucia actually speak with you the whole phone call?
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Old 03-23-2009, 08:19 PM   #8
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AND THE ANSWERE IS: had our little phone chat, basically dont wait to rebalance, when your retired most of us want to trade larger gains for more security and by rebalancing whenever buckets 1 and 2 need money and bucket 3 is higher your cutting gain potential and getting more security by having full buckets....
So Ray's OK with 85% stock allocation at age 75? I guess with hefty SS and annuity income, that risk isn't as bad as it sounds (unless the market happens to be in the throes of its next recession that year).

Thanks for passing the information along. Was he basically doing his "Ray" thing or did you get the feeling he was listening to you?
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Old 03-23-2009, 11:28 PM   #9
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Sounds like you have to be on top of rebalancing into the immediate buckets all the time (which would make one sleep better at night, I imagine).

Thanks so much for passing his comments along. That is very informative.
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Old 03-24-2009, 03:20 AM   #10
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So Ray's OK with 85% stock allocation at age 75? I guess with hefty SS and annuity income, that risk isn't as bad as it sounds (unless the market happens to be in the throes of its next recession that year).

Thanks for passing the information along. Was he basically doing his "Ray" thing or did you get the feeling he was listening to you?

actually he wants you to rebalance regularly,,, the wait 15 years was more for illustration
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Old 03-24-2009, 12:58 PM   #11
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So Ray's OK with 85% stock allocation at age 75? I guess with hefty SS and annuity income, that risk isn't as bad as it sounds (unless the market happens to be in the throes of its next recession that year).
That's what I'm thinking. If you look at AA in terms of how many years of "safe" income you need instead of a typical percentage, the AA of someone who is rather old can be much higher than the conventional wisdom IF they need a very small portion of their portfolio for current income. I think that's where the "bucketizing" approach is a little different than conventional AA; you don't say "55 stocks / 45 bonds" but instead you say "15 years of income in safer stuff and the rest in stocks" -- or something like that.

So to use your example, if this 75-yo is only withdrawing 1% of his/her portfolio each year for income, you could have 15 years of more secure income even with an 85/15 allocation. (Of course, such a person is also in the position of not needing to take much stock market risk, if any. so it would really come down to their risk tolerance and how much they're willing to "gamble" for higher expected long-term returns. Chances are most of it would go to heirs anyway.) And if the market happens to recover strongly, then you may want to load up on your buckets 1 and 2.
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Old 03-24-2009, 02:01 PM   #12
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That's what I'm thinking. If you look at AA in terms of how many years of "safe" income you need instead of a typical percentage, the AA of someone who is rather old can be much higher than the conventional wisdom IF they need a very small portion of their portfolio for current income. I think that's where the "bucketizing" approach is a little different than conventional AA; you don't say "55 stocks / 45 bonds" but instead you say "15 years of income in safer stuff and the rest in stocks" -- or something like that.

So to use your example, if this 75-yo is only withdrawing 1% of his/her portfolio each year for income, you could have 15 years of more secure income even with an 85/15 allocation. (Of course, such a person is also in the position of not needing to take much stock market risk, if any. so it would really come down to their risk tolerance and how much they're willing to "gamble" for higher expected long-term returns. Chances are most of it would go to heirs anyway.) And if the market happens to recover strongly, then you may want to load up on your buckets 1 and 2.
Ray's scheme is no different than an AA scheme. Only new jargon and a different way of looking and naming the same things......

I've never failed to learn something by considering another person's (including "advisors" or financial subject matter authors, etc.) views and outlooks, Ray is no exception. But, to me, there is absolutely no difference between saying a person with an extrmemly generous retirement portfolio could safely have a 85/15 AA and saying that 15 years of expenses respresents only 15% of that person's portfolio. It's just a different way, new jargon, of looking at the same thing.

The only negatives I find about Ray are:

1. He seems to want you to follow his methodology/terminology/jargon exclusively without understanding it's relationship to other approaches. I'm concerned for folks who have bought in on his scheme in a manner where they simply want to fill in the blanks, turn the handle and be guarateed optimum results.

2. He's too flexible. He frequently uses hindsight to say that in many cases you would have "of course" done something differently than he seems to be prescribing after time shows that his prescription wasn't optimum. "Well in that case you would have....blaaah....blaaah....blaaah."

But, all in all, understanding what he's trying to do (other than the part where he's simply trying to reel you in as a client) as it relates to other schemes and theories adds to one's body of knowledge. I highly recommend understanding his stuff and especially how it relates to other approaches.

I give him a lot of credit for the amount of product differentiation he's gotten out of his "system." It's not all that different, you can easily do the same things within a more generic AA system, but his jargon sets it apart and gives him something to sell. Bright guy.
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Old 03-24-2009, 03:16 PM   #13
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The difference i see is you rebalance based on years of money left not by the traditional way which is market performance.... we may have an awesome few years but if i dont need to add money to buckets 1 and 2 i dont rebalance.... the conventional way you would rebalance regardless once things go out of percentages
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Old 03-24-2009, 03:49 PM   #14
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AND THE ANSWERE IS: had our little phone chat, basically dont wait to rebalance, when your retired most of us want to trade larger gains for more security and by rebalancing whenever buckets 1 and 2 need money and bucket 3 is higher your cutting gain potential and getting more security by having full buckets....

as far as achieving the numbers that the planner assumes they use alot of various gic and annuity products to supply high levels of income... they use the high dividend pay out rates of the untraded reits coupled with individual investment grade corporate bonds to meet those returns..

quite frankly though im not convinced the high fees, commissions and other charges of alot of these products dont eat up alot of the benefits of using these products... pretty much they want to make you a client....


in this case they wanted to handle setting up and administrating bucket 2 while i did bucket 3 on my own.... i probley will pass but i think for someone without any knowledge of investing they could be well served by the brain power of this group... there is no question in my mind these guys are top notch at what they do... the question is at the end of the day when all expenses are paid is it better then i can do.
Hedge fund guys are supposedly "top-notch" too,how well did they do?
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Old 03-24-2009, 05:26 PM   #15
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exactley why i cant see paying all those fees although with all due credit to them their income buckets are made of of all cash and various types of guaranteed annuity and gic vehicles and high quality investment grade bonds ..... they probley held up well thru this........ they do have a brilliant tax attorney and cpa as part of their team so if you need those services its probley a good deal for the less knowledgable folks out there,.... as far as the equities bucket i prefer to loose money the old fashion way... by myself
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Old 03-24-2009, 09:13 PM   #16
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exactley why i cant see paying all those fees although with all due credit to them their income buckets are made of of all cash and various types of guaranteed annuity and gic vehicles and high quality investment grade bonds ..... they probley held up well thru this........ they do have a brilliant tax attorney and cpa as part of their team so if you need those services its probley a good deal for the less knowledgable folks out there,.... as far as the equities bucket i prefer to loose money the old fashion way... by myself
I would only ask said "gurus" one question: WHEN did you adopt this strategy, may I see the date you were moving folks to the "safe bucket"? If it was after mid September 2008, they are no smarter than anyone else out there........
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Old 03-24-2009, 10:40 PM   #17
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with all due credit to them their income buckets are made of of all cash and various types of guaranteed annuity and gic vehicles and high quality investment grade bonds ..... they probley held up well thru this........
You can be sure that a "bucket" of cash and various types of guaranteed annuity and gic vehicles and high quality investment grade bonds did no better than an AA fixed category of cash and various types of guaranteed annuity and gic vehicles and high quality investment grades bonds.
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Old 03-25-2009, 02:56 AM   #18
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I would only ask said "gurus" one question: WHEN did you adopt this strategy, may I see the date you were moving folks to the "safe bucket"? If it was after mid September 2008, they are no smarter than anyone else out there........

well we started following rays system back in 2006 after going to a seminar and never hearing of him.. it was something to do that day as i remember it was soooo cold out.... it made sense to us and after being a 90% equities kind of guy my entire life we thought it was finally prudent of us to scale back.. Rays system forced us to cut back and establish 15 years worth of withdrawls.. we set it up as if we were retiring tomorrow even though we still had a few years left... its not to say a traditional system would be better or worse but for us i liked the security in knowing i could go 15 years without selling equities and it used a nice easy structure that gave me discipline...

needless to say when things were rising i was kicking myself for scaling back in equities to a lower percentage but then when the debacle struck man what a great thing we did by being in the buckets ....
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