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Old 10-11-2008, 02:10 PM   #201
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Originally Posted by Helena View Post
That's fine... I can hold my own in a debate.
But when I do, I'm the one who is accused of
taunting/mocking.

As I said in my 9-11 post... a lot of people
have lost a lot of money because some ideas
are more equal than others [ala, Animal Farm]
Mocking others out of spite or payback after they have lost 1/3 or more of their retirement is a little different than people disagreeing with your position before anyone was losing much money.

It's the difference between kicking someone and kicking them when they are already down. You're kicking and pouring salt in the wounds while people are down.
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Old 10-11-2008, 02:23 PM   #202
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Oh come on Zig...after all a cash position has been the place to be for four out of the last 34 years!

So let her have her short period of gloating. In 20 years when her money has lost 1/3 of its buying power and our 25-75% equity portfolios have gained considerable ground, we'll see who has the last laugh.

The real mystery is why someone would find a discussion group where people disagreed with them, yet choose to stick around waiting for the right time to mock people.

[mod edit]
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Old 10-11-2008, 02:33 PM   #203
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Quote:
Originally Posted by Helena View Post
I don't post here that often, but when I do...
if I post something about deflation or question
the "buy and hold" philosophy [which depends
upon ongoing inflation]... posters here seem
to gang up on me. I have seen the same thing
happen to other posters here who attempted
to discuss deflation.

That's fine... I can hold my own in a debate.
But when I do, I'm the one who is accused of
taunting/mocking.

As I said in my 9-11 post... a lot of people
have lost a lot of money because some ideas
are more equal than others [ala, Animal Farm]

Deflation isn't a new concept and we've even seen it in modern markets. Have you done any modelling on how your current 100% cash position would weather those conditions? I'd be curious to see how a retiree that was, say, 40/50/10 versus a retiree that was 0/0/100 would fair.

You'll have to forgive me for still not following on the some ideas are more equal than others. I've read Animal Farm several times, but I think my last read-through was when I was 11.
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Old 10-11-2008, 02:58 PM   #204
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Quote:
Originally Posted by Helena View Post
I don't post here that often, but when I do...
if I post something about deflation or question
the "buy and hold" philosophy [which depends
upon ongoing inflation]... posters here seem
to gang up on me.
I have no interest in 'ganging up' on you. But I am trying to understand. What is this alternative to Buy & Hold that you use?

To make that answer useful, can you put it in terms of a strategy that someone would be likely to be able to follow. IOW, is it reproducible?

To be clear - no one can predict whether a B&H strategy will 'work' over a given time period. But, they can describe the process, and we know the results will match the AA chosen.

If you are going to say something like 'go into cash at the peaks', well, you have to define 'peaks'.

Is that fair?


-ERD50
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Old 10-11-2008, 03:05 PM   #205
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You can always create a "perfect storm" where any investment scenario looks good (except ArtG ). The deflation scenario is possible but the only time in the 20th century it happened was for a few years in the 1930s. It was quickly replaced with varying levels of inflation which are not favorable to a 100% cash position. The country went through another substantial deflationary period in the 1870s but that also coincided with the industrialization of America. I wouldn't use that as a credible event that might reoccur.

We all buy our ticket and take our chances. You are certainly welcome to your opinion. You can even point out to people how wonderful it worked over some period of time. Don't be upset if someone points out it hasn't worked very well in the past century or so.

BTW - I'm down about 25% YTD (ouch) but it puts my net worth back to about where it was in late 2003. I was FI then and I'm FI now. I certainly wish I had a clear vision of the collapse before it happened but I didn't. I used to think I could time the market but eventually proved to myself I can't.
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Old 10-11-2008, 03:19 PM   #206
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Yeah, I didnt see it going down, but the day after the crash in 1987 at 251 I didnt see it going to the 899 its at today either.

Yep, after this miserable beating, people who have been in the market for 20 years have merely increased their holdings by more than 3 and a half times.

Horrifying. Give me some cash holdings where I can make one or two percent after inflation and taxes. PLEASE!!!
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Old 10-11-2008, 03:33 PM   #207
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Originally Posted by Gotadimple View Post
You're assuming people close to retirement have an asset allocation that is mostly equities, without any dividend income?

-- Rita
No I am saying people close to early retirement that lost 40% of their portfolio might have to postpone retirement because they don't have time to make up the loss. Many people close to retirement do have a lot in equities because they wanted to maximize growth in a short time. I am glad I didn't, but many people I know are screwed unless there is a big comeback.
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Old 10-11-2008, 03:40 PM   #208
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No I am saying people close to early retirement that lost 40% of their portfolio might have to postpone retirement because they don't have time to make up the loss. Many people close to retirement do have a lot in equities because they wanted to maximize growth in a short time. I am glad I didn't, but many people I know are screwed unless there is a big comeback.
Its a real tragedy if someone was really close and this pulled the cheese out from under them. Of course, if they have a good plan they should have plenty of cash or cash equivalents to isolate them, or another income stream to get by until things get better.

I guess the really good news is they're still employed and can do some buying at cheap prices, keep an eye on things, and see how it goes.

The people crapping themselves are the ones who retired two or three months ago. Having retired at the precipice of the 2000-2002 dumper, I can relate to that.

Good news there was I didnt have any debt, so I just stopped spending money for a while and it worked itself out.
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Old 10-11-2008, 03:52 PM   #209
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I wonder how someone 60 (and above) who retired in the last 5 years and "stayed in the market" as usually recommended (Stocks = 100 - age)); maybe 40 to 50% Stocks) is faring after the last year. An example would be a 50/50 bonds/stocks. I understand the Stock part MAY be down as much as 40% but not sure how the typical Bond side would have fared. Especially if it was a "buy and hold" portfolio. If the portfolio was all they had (no Pension/before SS). If the portfolio provided (4% withdrawal) and annual gross (before taxes) of $80K (in 07 and this year). Is it safe to say if the withdrawal remains at 4% they would be withdrawing about $64K, or would the Bond portion given them enough of a return to maintain the $80K level?

BTW I am, and have been, virtually total cash for the past 30 years or so (but I do have a COLA'd pension so I, am not personally impacted very much by the Stock Market).
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Old 10-11-2008, 04:10 PM   #210
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I retired last October. I went to about 50/50, not counting a paid for house and no other debts. My total invested net worth is probably down 15%-20%. Stocks are what enabled me to retire at 50. I reduced my stock exposure because I new times like these were possible, but I don't plan taking the risk of living on fixed investments. I am planning on doing a little rebalancing soon.

I'm not real happy with the market being down, but I'll stay the coarse and I still sleep fine at night.
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Old 10-11-2008, 04:27 PM   #211
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Originally Posted by OAG View Post
I wonder how someone 60 (and above) who retired in the last 5 years and "stayed in the market" as usually recommended (Stocks = 100 - age)); maybe 40 to 50% Stocks) is faring after the last year. An example would be a 50/50 bonds/stocks. I understand the Stock part MAY be down as much as 40% but not sure how the typical Bond side would have fared. Especially if it was a "buy and hold" portfolio. If the portfolio was all they had (no Pension/before SS). If the portfolio provided (4% withdrawal) and annual gross (before taxes) of $80K (in 07 and this year). Is it safe to say if the withdrawal remains at 4% they would be withdrawing about $64K, or would the Bond portion given them enough of a return to maintain the $80K level?

BTW I am, and have been, virtually total cash for the past 30 years or so (but I do have a COLA'd pension so I, am not personally impacted very much by the Stock Market).
If you want to get technical, FIRECalc accounts for the market drops in the success calc so if you began with a number you could stick with it and even adjust it for inflation. In reality, I think most would cut back a bit and start thinking about cutting back a lot.

I had a 60/40 AA at the beginning of the year. It is now 50/50. I have no COLAd pension and longterm growth is required to have a meaningful probability of success in FIRECalc.

I don't know where your pension comes from but failing municipalities have been known to cancel their pensions. They may or may not be insured by the federal plan and if they default they aren't covered with a COLA from what I recall. You may have more skin in the game than you think. I'm not an expert in this area but there have been ugly situations.

Failed municipal pensions might be an interesting thread to run alongside the traditional VA rants. I don't think very many have failed and I am pretty sure that state and federal pensions are without blemish. Since the feds print the money and get the fat pensions themselves, they are probably as safe as the FDIC or safer.
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Old 10-11-2008, 04:35 PM   #212
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Aren't people close to retirement running out of time to make up their losses. They are going to need income generated by all the assets they have accumulated in their lifetime. They don't have time to start over if they are retiring soon.
Ah, no. Who said anything about starting over?

The 4% SWR theory states that even in these bad times, your portfolio should live on. Of course, that doesn't even account for the human element of cutting back a little to a rate under 4% as an option in bad times.
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Old 10-11-2008, 05:01 PM   #213
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Just got back from Houston and logged into our accounts. Gosh, kinda missed a busy week in the markets!

We're down nearly 17% YTD and 35% from our all-time 2007 high. Not as bad as our 9/11 plunge of 40% but certainly noteworthy.

Or maybe not. That 35% plunge is from a high that came from over five straight years of double-digit returns. I don't remember the S&P500's peak but 8451 is probably 40% off its high, and our portfolio has a high small-cap value/international tilt. Our portfolio values last year had gone from "Wow!" to "You gotta be kidding me"... a sentiment last felt in 1999. After over 25 years of DCA investing, cash and loaded mutual funds and everything else, our lifetime return is still over 11% APY. It's gonna take a lot of -17% years to make a ding in that record.

I was ambivalent when the S&P500 was still in five digits, but this week's market is a ridiculous number of standard deviations from the mean. So Monday I'm going to follow the herd take a bucketful of tax losses, buy other index ETFs, wait 31 days, and go back to our original allocations. Pretty wild-eyed day-trading hard-partyin' stuff. If I'm lucky I'll get to take two sets of tax losses in 32 days...

Along with "Psssst.... Wellesley", Berkshire shares are on sale again. The quarterly report comes out the first weekend in November, and I'm sure Buffett has asked the SEC to let him stay quiet on a number of investment decisions. For guys like Buffett this is one of those once-in-a-decade years.

Allocate your assets, diversify, have a rebalancing plan, and go surfing.
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Old 10-11-2008, 05:35 PM   #214
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Along with "Psssst.... Wellesley", Berkshire shares are on sale again. The quarterly report comes out the first weekend in November, and I'm sure Buffett has asked the SEC to let him stay quiet on a number of investment decisions. For guys like Buffett this is one of those once-in-a-decade years.
Apparently at the open on Friday morning, someone issued a panic sell of several thousand shares of Berkshire B shares at 3000 a pop.

Many Berkshire investors I know of have had long standing good-til-canceled lowball limit buy orders and had their orders filled at 3000. They made an instant 20% profit.

Even at its current price below 3800, Berkshire shares are a buy and these are the situations where Buffett shines.
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Old 10-11-2008, 06:29 PM   #215
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The road less traveled folks might want to check in with Buffett's teacher - there is yet a new Jason Zweig edited edition of Ben Graham's Intelligent Investor out.

Hormones and the heart beat of a dirty market timer will beat faster rereading this ancient tome on quiet (as in no football) evening.



If you are bound and determined to be bad to the bone - this is the way to go. Only a 'little' bad - stick with appdx 4 - although it took me 20 yrs to 'get' his point about the 'middle way.'

heh heh heh - so with Oklahoma going down , who's no 1? .
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Old 10-11-2008, 07:02 PM   #216
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I understand the Stock part MAY be down as much as 40% but not sure how the typical Bond side would have fared.
I have a 40/50/10 mix (stocks/bonds/cash) and am at -19% ytd. In my 401(k) for my Schwab Total Bond Market is -5.9% ytd. The cash portion of my stash is at +2.8% ytd
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Old 10-11-2008, 07:14 PM   #217
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Had I been fortunate enough to listen to the voices telling me to bail out last October 31...
One more, and I'm going to start counting how many times you've said this.
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Old 10-11-2008, 07:28 PM   #218
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One more, and I'm going to start counting how many times you've said this.
Are you counting my ?
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Old 10-11-2008, 08:51 PM   #219
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October 8, 2008

WMR has learned from knowledgeable Federal Emergency Management Agency (FEMA) sources that the Bush administration is putting the final touches on a plan that would see martial law declared in the United States with various scenarios anticipated as triggers. The triggers include a continuing economic collapse with massive social unrest, bank closures resulting in violence against financial institutions, and another fraudulent presidential election that would result in rioting in major cities and campuses around the country.
In addition, Army Corps of Engineer sources report that the assignment of the 3rd Infantry Division’s 1st Brigade Combat Team (BCT) to the Northern Command’s U.S. Army North is to augment FEMA and federal law enforcement in the imposition of traffic controls, crowd control, curfews, enhanced border and port security, and neighborhood patrols in the event a national emergency being declared. The BCT was assigned to duties in Iraq before being assigned to the Northern Command.
On April 3, 2008, WMR reported on a highly-classified document regarding the martial law scenario: WMR has learned from knowledgeable sources within the US financial community that an alarming confidential and limited distribution document is circulating among senior members of Congress and their senior staff members that is warning of a bleak future for the United States if it does not quickly get its financial house in order. House Speaker Nancy Pelosi is among those who have reportedly read the document. The document is being called the “C & R” document because it reportedly states that if the United States defaults on loans and debt underwriting from China, Japan, and Russia, all of which are propping up the United States government financially, and the United States unilaterally cancels the debts, America can expect a war that will have disastrous results for the United States and the world. “Conflict” is the “C word” in the document. The other scenario is that the federal government will be forced to drastically raise taxes in order to pay off debts to foreign countries to the point that the American people will react with a popular revolution against the government. “Revolution” is the document’s “R word.

[moderator edit: Source for above is: http://www.infowars.com/?p=5165]
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Old 10-11-2008, 08:54 PM   #220
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This is old news to us conspiracy theorists. This has been in the making since Katrina. he whole concept of "evacuation" is rounding people up and getting them in guarded camps.

And yes, I do have a tin foil hat.
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