Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 09-30-2012, 07:56 AM   #61
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,615
Quote:
Originally Posted by Nords View Post
*Ahem.*

Works especially well on a military pension (COLA'd annuity).
I'm sure my objective opinion is entirely unaffected by personal circumstance. Compartmentation. Separate boxes, doncha know . . .

I'd think those without an annuity-like income stream (SS, company pension, govt pension, commercial annuity, etc) that constitutes a large part of their "must have" retirement spending amount would want a high cash allocation to allow them to weather the dips in equity prices.
__________________

__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is online now   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 09-30-2012, 08:14 AM   #62
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,424
Quote:
Originally Posted by samclem View Post
I'm sure
I'd think those without an annuity-like income stream (SS, company pension, govt pension, commercial annuity, etc) that constitutes a large part of their "must have" retirement spending amount would want a high cash allocation to allow them to weather the dips in equity prices.
Right. If dividend and interest income covers a very high % of total budget the need for cash might not be so extreme, but otherswise a large buffer of cash or liquid / low volatility fixed income helps.
__________________

__________________
MichaelB is offline   Reply With Quote
Old 10-03-2012, 05:04 PM   #63
Recycles dryer sheets
 
Join Date: Aug 2011
Posts: 89
Quote:
Originally Posted by brewer12345 View Post
Oh, please bring on another flash crash. They don't mean anything long term and the last one was a great buying opportunity. I have a chunk of cash lined up and just waiting to go.

+ 2!
In addition, if you have a stock portfolio that has a lot of dividend-paying stocks, the dividend payout in $ is unlikely to be affected by very short-term crashes (in other words, the % yield will go up), so your dividend income will be unaffected.
__________________
boatfishandnature is offline   Reply With Quote
Old 10-03-2012, 05:56 PM   #64
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,401
Do I trust the market? NEVER!

If it goes up too much, I will have to sell. And if it goes down a lot, I hope to have the courage to buy.
__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound is offline   Reply With Quote
Old 10-03-2012, 06:43 PM   #65
Thinks s/he gets paid by the post
obgyn65's Avatar
 
Join Date: Sep 2010
Location: midwestern city
Posts: 4,061
I have never trusted the stock market and will never do.
__________________
Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
obgyn65 is offline   Reply With Quote
Old 10-03-2012, 06:44 PM   #66
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,410
Quote:
Originally Posted by NW-Bound View Post
Do I trust the market? NEVER!

If it goes up too much, I will have to sell. And if it goes down a lot, I hope to have the courage to buy.
If you have a target AA and a disciplined approach to rebalancing, that is exactly what you will end up doing.
__________________
pb4uski is offline   Reply With Quote
Old 10-03-2012, 06:47 PM   #67
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,401
I have attempted to do even more. When I thought the market was cheap, I upped my stock AA. When I thought the market was expensive, I cut back on stock AA.

Only recently that I found they had a name for it: Tactical Asset Allocation. Whatever... It's pretty hard to do though, and my records have been mixed.
__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound is offline   Reply With Quote
Old 10-03-2012, 06:58 PM   #68
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,410
Works good as long as you are a good guesser. If not, then not so good.
__________________
pb4uski is offline   Reply With Quote
Old 10-04-2012, 09:07 AM   #69
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
HFWR's Avatar
 
Join Date: May 2005
Location: Lawn chair in Texas
Posts: 12,964
Quote:
Originally Posted by obgyn65 View Post
I have never trusted the stock market and will never do.
Sure, lots of people see the "market" as a lottery or roulette wheel or some magic black box, but Exxon and Microsoft and P&G etc. are real companies, selling real stuff, and paying real dividends...

Quote:
Originally Posted by haha View Post
Super. I am glad that you are comforted. The more happy people around the better.

Ha
Which is why we have drugs and alcohol!
__________________
Have Funds, Will Retire

...not doing anything of true substance...
HFWR is offline   Reply With Quote
Old 10-04-2012, 10:23 AM   #70
Thinks s/he gets paid by the post
photoguy's Avatar
 
Join Date: Jun 2010
Posts: 2,301
I guess the question is trust the market to do what? Provide short term gains? a definite no. Provide long term appreciation? yes.
__________________
photoguy is offline   Reply With Quote
Old 10-04-2012, 12:41 PM   #71
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Don't you fix all of these shenanigans by simply declaring that equities are intended to be a long term investment, and require a minimum 30 or 90 day holding period before you can sell them.

I haven't thought through all of the ramifications, but it seems that a simple change could eliminate all trading that isn't really beneficial for the ecosystem.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Old 10-04-2012, 12:44 PM   #72
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
HFWR's Avatar
 
Join Date: May 2005
Location: Lawn chair in Texas
Posts: 12,964
The argument is that all this flash trading etc. provides "liquidity"...
__________________
Have Funds, Will Retire

...not doing anything of true substance...
HFWR is offline   Reply With Quote
Old 10-04-2012, 01:55 PM   #73
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,401
Quote:
Originally Posted by HFWR View Post
The argument is that all this flash trading etc. provides "liquidity"...
... which wet the pants of the faint-hearted.
__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound is offline   Reply With Quote
Old 10-04-2012, 02:16 PM   #74
Thinks s/he gets paid by the post
 
Join Date: May 2006
Location: Largo
Posts: 1,945
Quote:
Originally Posted by H2ODude View Post
And as for trusting the market, where ELSE are you going to put your $$$ for the long term gains you need to beat inflation?
+1
__________________
Buckeye is offline   Reply With Quote
Old 10-04-2012, 02:41 PM   #75
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
If you look at the stock market as a place to transact business, and not something which is designed to make you rich, or tell you how much you should pay for the securities that are sold there, it is probably the most trustworthy market ever known to man. Or is Ebay better? Or Craig's List, or the local livestock auction, or your local real estate market, or Sotheby's or commodities markets?

A buyer on the NYSE can be a complete ignoramus, and still get a fair deal. Who among us has sold a listed security through a licensed member broker-dealer and not been paid in a timely fashion? Who has bought a stock and not received it?

In most buying and selling, the buyer is at a large disadvantage. He knows somewhere between nothing and very little about the item being sold, even though he may have done a large amount of research on that class of items. His ability to really find out the hidden flaws/problems/title issues/ et cetera, while not zero, is limited. But a used car seller may have put Bondo on a big rust spot and painted over it with cheap paint. I know a guy who when a medical resident did this and sold the VW van to a family. There's some real karma to deal with! I have even read recently about counterfeit Chinese gold coins- some sort of metal painted with very good gold paint. Even dealers have been taken.

People who ask questions like the OP usually have in mind some solution like annuities or unlisted REITs. Well, these markets are a very long step down from US and UK stock markets, and likely Singapore, Hong Kong and Japan also.


OTOH, if you are asking the stock market to take good care of you, and see to it that you make money, that is a lot to ask.


Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is online now   Reply With Quote
Old 10-04-2012, 02:51 PM   #76
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,401
Quote:
Originally Posted by haha View Post
If you look at the stock market as a place to transact business, and not something which is designed to make you rich, or tell you how much you should pay for the securities that are sold there, it is probably the most trustworthy market ever known to man. Or is Ebay better? Or Craig's List, or the local livestock auction, or your local real estate market, or Sotheby's or commodities markets?

A buyer on the NYSE can be a complete ignoramus, and still get a fair deal. Who among us has sold a listed security through a licensed member broker-dealer and not been paid in a timely fashion? Who has bought a stock and not received it?

In most buying and selling, the buyer is at a large disadvantage. He knows somewhere between nothing and very little about the item being sold, even though he may have done a large amount of research on that class of items. His ability to really find out the hidden flaws/problems/title issues/ et cetera while not zero, is limited.

OTOH, if you are asking the stock market to take good care of you, and see to it that you make money, that is a lot to ask.

Ha
+1Million

Some of my friends who had been buying high/selling low complained that the market was rigged. I tried to point out that some big dogs made lots of money, yet equally big guys lost billions too. Who was rigging whom?

No matter. They didn't get it. I then tried to point out to them how MF managers complained that because of their portfolio size, they could not swoop in and scoop up what they found as a good deal. Due to the volume of their trade, the word got out on the street, and the price would move up, then they could not get the good price that they wanted.

I remember reading about the internal working at a medium-sized MF, whose manager got something like $20-50B under management, which was not really huge. He said that when he wanted to build a position in a company, it took him a month or two to nibble here and there to get all the shares he wanted. For a small investor like us, one click of the mouse and we are done.

Small investors have advantages over bigger ones too, mainly the agility, to make up for the lesser inside knowledge that we have.
__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound is offline   Reply With Quote
Old 10-04-2012, 03:19 PM   #77
Thinks s/he gets paid by the post
growing_older's Avatar
 
Join Date: Jun 2007
Posts: 2,608
High Frequency Trading is just another source of volatility. At some fundamental level the values of stocks reflects the underlying value of the company who's shares they represent, but there are lots of reasons they track imperfectly. Unknown future developments, fashions in investing, cyclical economic factors, short term trading and HFT all introduce volatility and tracking imperfections. But if you are willing to be patient you can usually wait them out. Of all these HFT is the easiest to wait out, since the influence up or down is usually short lived.

Now, the two most sophisticated investors I personally know. both thought they could execute clever strategies and were essentially wiped out in flash crashes due to HFT. They each lost many millions. The many more people I know who are less sophisticated investors, who just plod along with mutual funds or stock investments and don't try to time or trade, have all barely been impacted by any HFT effects and have always quickly recovered.

If you are asking can you trust the stock market to accurately reflect the true value of securities over the short term, no. That answer has always been no, and HFT just makes it even more clear in very short time frames that it can be emphatically no. If your plan requires predictable price movements, you are going to get burned. If, on the other hand, your plan only requires general trend in your favor that money making companies are gradually worth more, then you can trust the market to do much like it's done before - be a convenient way for investors to participate in that and provide a way to diversify among many such companies.
__________________

__________________
growing_older 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


 

 
All times are GMT -6. The time now is 09:49 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.