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Old 10-11-2008, 09:06 PM   #221
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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.
Oh, but there's more. The floodwalls were bombed by the government, allowing the water to pour into and flood New Orleans. And the reason we couldn't return for so long was that they were going to make everyone abandon the city, and never let us return.
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Old 10-11-2008, 09:23 PM   #222
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Oh, but there's more. The floodwalls were bombed by the government, allowing the water to pour into and flood New Orleans. And the reason we couldn't return for so long was that they were going to make everyone abandon the city, and never let us return.
And how about the St Bernard stories(pick your decade) - blowing the levees to flood St Bernard and save New Orleans.

heh heh heh - my late Father carried a heartburn against the Red Cross to his grave when in the flood of 48(Columbia River) they wanted to charge 10 cents(1948 when a dime was a dime) for a cup of coffee and a 'stale' doughnut to the sandbaggers.

The G-7 guys are meeting this weekend - better get to store before there is a rush on tinfoil.

.

heh heh heh - Pssst - dividends! Hows that for a little change up? .
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Old 10-11-2008, 10:56 PM   #223
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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.
Sounds like a great strategy-- until the day Buffett retires or dies, the shares drop to trigger the -20% lowball limit orders, and then the shares drop another 20%...
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Old 10-12-2008, 01:11 AM   #224
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I've read a lot of posts discussing the virtues of the "investing in equities" strategy versus "100 percent cash" versus various combinations and permutations of the above. As for myself, I've been nearly 100 percent cash for many years -- for no better reason than it is the only strategy that fits my comfort zone. I have no doubt that my nestegg would be larger had I invested more in stock, but I would have been miserably during times such as these. Some have suggested that a 100 percent cash allocation simply won't generate enough income to fund a lengthy retirement. That's not entirely true. It will work -- you just need to start with a larger nest egg. While $1M might do the trick if you invest aggressively in stocks, it might require $1.5 or even $2M to ensure a retirement based on ultra conservative investments. For peace of mind, I deliberately chose the path less travelled by. Barring a catastrophic meltdown of the entire financial system -- rendering savings worthless -- I'm counting on a nestegg consisting of cash and cash equivalents (about $1.6M) plus a small cola'd pension ($20k/yr) to see me through to the end. The point is I don't believe either strategy (emphasizing stocks or cash) is necessarily superior -- there is aways a tradeoff. Retiring on a stock portfolio requires less capital, but also requires a stronger stomach. Retiring on cash significantly dampens the risk, but requires a substantially larger nest egg. Take your pick -- in my view both are legitimate strategies.
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Old 10-12-2008, 08:27 AM   #225
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I've read a lot of posts discussing the virtues of the "investing in equities" strategy versus "100 percent cash" versus various combinations and permutations of the above. As for myself, I've been nearly 100 percent cash for many years -- for no better reason than it is the only strategy that fits my comfort zone. I have no doubt that my nestegg would be larger had I invested more in stock, but I would have been miserably during times such as these. Some have suggested that a 100 percent cash allocation simply won't generate enough income to fund a lengthy retirement. That's not entirely true. It will work -- you just need to start with a larger nest egg. While $1M might do the trick if you invest aggressively in stocks, it might require $1.5 or even $2M to ensure a retirement based on ultra conservative investments. For peace of mind, I deliberately chose the path less travelled by. Barring a catastrophic meltdown of the entire financial system -- rendering savings worthless -- I'm counting on a nestegg consisting of cash and cash equivalents (about $1.6M) plus a small cola'd pension ($20k/yr) to see me through to the end. The point is I don't believe either strategy (emphasizing stocks or cash) is necessarily superior -- there is aways a tradeoff. Retiring on a stock portfolio requires less capital, but also requires a stronger stomach. Retiring on cash significantly dampens the risk, but requires a substantially larger nest egg. Take your pick -- in my view both are legitimate strategies.

IMO well said! Sleeping is something that is very good for you, and sleeping soundly, without nightmares, is even better.
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Old 10-12-2008, 08:53 AM   #226
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As soon as I get to $2-3m, I'm going all cash. That should happen in another 30 years. Is retiring at 84 considered early?
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Old 10-12-2008, 09:02 AM   #227
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As soon as I get to $2-3m, I'm going all cash. That should happen in another 30 years. Is retiring at 84 considered early?
I'm with you.
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Old 10-12-2008, 10:18 AM   #228
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-- you just need to start with a larger nest egg. While $1M might do the trick if you invest aggressively in stocks, it might require $1.5 or even $2M to ensure a retirement based on ultra conservative investments.
I agree, but not many have enough disposable income to get to $2M without investing in stocks during their working lives.
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Old 10-12-2008, 10:59 AM   #229
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While $1M might do the trick if you invest aggressively in stocks, it might require $1.5 or even $2M to ensure a retirement based on ultra conservative investments.
Well, there's a catch-22 kind of thing here. If I had $4 million, I could just put it in cash, and I would never have to worry. But, if I had $4 million, I could afford the wild swings in value, so I may as well invest it aggressively.
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Old 10-12-2008, 11:46 AM   #230
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I agree, but not many have enough disposable income to get to $2M without investing in stocks during their working lives.
Unless they invested in real estate instead of stocks.
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Old 10-12-2008, 11:47 AM   #231
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Well, there's a catch-22 kind of thing here. If I had $4 million, I could just put it in cash, and I would never have to worry. But, if I had $4 million, I could afford the wild swings in value, so I may as well invest it aggressively.
That is the cruel Catch-22 here. Those in a financial position to be able to not have plans derailed by huge downturns are exactly the ones who don't need to take the market risk.
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Old 10-12-2008, 11:54 AM   #232
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Unless they invested in real estate instead of stocks.
or got inheritance, or gambling or ....

Geoffrey's post didn't indicate how he was amassing his $2m, I should really have said "unless they invested in something other than cash"
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Old 10-12-2008, 11:55 AM   #233
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you just need to start with a larger nest egg. While $1M might do the trick if you invest aggressively in stocks, it might require $1.5 or even $2M to ensure a retirement based on ultra conservative investments..
You have a huge gap in your analysis. You've left out the option of delaying retirement, saving a larger nest egg and then retiring with a portfolio which includes stocks.

It isn't a choice between smaller portfolio including stocks and larger all cash portfolio. Some of us like the third choice of a larger portfolio (same size you'd suggest for all cash) but include an allocation of equities.
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Old 10-12-2008, 12:30 PM   #234
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Well, there's a catch-22 kind of thing here. If I had $4 million, I could just put it in cash, and I would never have to worry. But, if I had $4 million, I could afford the wild swings in value, so I may as well invest it aggressively.
Exactly, T-Al.

I just ran this on FireCalc. Used a $1M starting point and $35K spend (3.5% WR) and 40 year timeframe.

With the 'mixed' portfolio, I get 100% success, no failures.

With 100% in 1 month Treasuries, I get ZERO % success. I had to bump my starting point up to $2.5M to get back to 100%.

In a case like that, the real question could be directed to the heirs/charities. You could ask them - do you want the money 'safe' from market risk (and exposed to inflation), or would you prefer the a blend that has historically proven to perform over a long time period?

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Old 10-12-2008, 12:59 PM   #235
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Barring a catastrophic meltdown of the entire financial system -- rendering savings worthless -- I'm counting on a nestegg consisting of cash and cash equivalents (about $1.6M) plus a small cola'd pension ($20k/yr) to see me through to the end. The point is I don't believe either strategy (emphasizing stocks or cash) is necessarily superior -- there is aways a tradeoff. Retiring on a stock portfolio requires less capital, but also requires a stronger stomach. Retiring on cash significantly dampens the risk, but requires a substantially larger nest egg. Take your pick -- in my view both are legitimate strategies.
I think they're both extremes, too. And I'm saying that from the perspective of having a COLA pension dumbelled with an ER portfolio that's over 90% equities.

A reporter once asked Groucho Marx what he invested in, and he replied "Treasuries". The reporter finally realized that was Groucho's entire portfolio, and he said "You can't live off just the interest from Treasuries!" Groucho's response: "You can if you have enough of them."

Today it's Suze Orman with $55M in municipal bonds (so far). Or Oprah, who had to call her financial advisor to find out if she owned any of them there financials.

But the other side of the all-cash portfolio is my parents-in-law, who were born during the Depression. They didn't suffer (not more than any other Bronx kids, anyway), but they were raised by people who'd learned to squeeze nickels until the buffalo whimpered.

My FIL started his ER in 1994 with a large lump-sum buyout which he initally appeared to invest fairly conventionally in a mix of stock & bond mutual funds, CDs, & Treasuries. He even had some Berkshire Hathaway, although he sold it at $2500/share because it was "overvalued". By 2002, though, it became apparent that they were hugely risk-averse and had put their portfolio into 100% fixed-income & cash. The problem was that they were attempting to live off the interest/dividends (without touching the principal) at a time of record low interest rates.

Let's just say that the angst & drama was impressive and inflicted multi-generationally. He even paid a 2% penalty to redeem a 3% GIC because the SEC was forcing a change in their accounting rules and he was afraid that "the b******s would take all our money".

Now that they no longer live a few miles away from us, you would think that the angst & drama would diminish. But just like flashbacks from a bad acid trip, those cards & letters keep coming. The latest innovation is not making any Elderhostel trips that are farther than a tank of gas from home. Round-trip. I'm pretty sure that every light in the house is carefully monitored and that the winter thermostat stays around 64 degrees. I can only imagine what misery "those b******s at the Fed" have inflicted with their latest rate cuts, but I'm pretty sure that I'll be reading about it in next week's mail.

I'd shrug it off or, like spouse, learn to put it away in a little box that almost never gets opened. However I suspect that the ravages of inflation will inflict their toll for at least another 25 years, at which point we'll be subsidizing her parents for their fiscal fear & ignorance. Can we afford it? Probably. Can we afford not to? That question is never even discussed. Should I incorporate their eventual insolvency into our own financial planning? I don't see any other alternative.

My brother-in-law-the-CPA is managing his parents' money, and I know he's not happy with their approach. I'm just hoping he has a chance to persuade them back into inflation-fighting assets before dear ol' Mom & Dad are investing in Costco pallets of Friskies.
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Old 10-12-2008, 01:29 PM   #236
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But the other side of the all-cash portfolio is my parents-in-law, who were born during the Depression. They didn't suffer (not more than any other Bronx kids, anyway), but they were raised by people who'd learned to squeeze nickels until the buffalo whimpered.

My FIL started his ER in 1994 with a large lump-sum buyout which he initally appeared to invest fairly conventionally in a mix of stock & bond mutual funds, CDs, & Treasuries. He even had some Berkshire Hathaway, although he sold it at $2500/share because it was "overvalued". By 2002, though, it became apparent that they were hugely risk-averse and had put their portfolio into 100% fixed-income & cash. The problem was that they were attempting to live off the interest/dividends (without touching the principal) at a time of record low interest rates.

.
Without knowing how much their nestegg is, it's hard to tell whether they will do ok or not. But they obviously have practice with LBYM. They haven't gone broke yet, have they? Inflation might do them in, that's true.

Let's hope they do ok, for everyone's sake. I was concerned about my dad too, but then before this crash he told me he was mostly in bonds. Thank goodness for his depression mentality.
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