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Old 03-04-2009, 09:39 PM   #121
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Do what we always have advised other countries to do. What we advised Japan to do but it didn't. Temporarily nationalize the banks. Don't bailout the banks and reward the owners for imprudence. Don't let them limp along and become zombie banks like in Japan. Take the insolvent banks over and sell them at the market value immediately to private investors. With the clean balance sheets they will be able to make loans again to qualified borrowers. Work out the bad crap through a Resolution Trust type organization.
Makes sense to me. There has to be a reason its not being done. Concern over the markets direction does not seem to be it.
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Old 03-04-2009, 09:43 PM   #122
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But if you think about it, it shows the overvaluation in 2007;
When you say you, are you referring to me or some indefinite you?

If you are talking to me, reread my post. I make no prediction whatsoever about the future, only mentioned what has been true, in the US, over the past 100+ years.

In general, I don't need to predict the future. I am fairly indifferent to whether the market rebounds or not. Best for me would be if some sectors that I own rebound strongly, and others that I have under represented would sit there. Some of my holdings require a reasonable but not necessarily strong economy. Others will do well no matter what. I live off my taxable portfolio earnings. My IRA just sits there. My only worries are in it, and I do hope they get well. (ISM/OSM mostly) I have had 6 dividend decreases out of 35 or so equities, and more than that have increased.

My main vulnerability is to negative (for me) political change. I think SeŮor POTUS would be happy to deliver that but he may not get to.

But many on this board are pure total return asset allocators, and unless they have other sources of income, or a very small equity allocation, they do need the major averages to come back.

ha
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Old 03-04-2009, 09:53 PM   #123
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Rich, in case you missed it, Youbet has just signed on as our newest member of your fan club.
Respectfully signed on as the newest member of his fan club.......
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Old 03-04-2009, 09:58 PM   #124
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What AA are you visioning the FIRE'd person has that only a couple of yrs into the downturn they have nothing left but equities and are now forced to sell low?

I'm 2.6 yrs into retirement, pretty pissed at the current situation, scratching trips and home improvements off the budget, but years away from needing to sell equities. And, at least by the tone of your posts, your portfolio would last even longer before liquidating equities would be necessary.
Well, with a 50% drop in a 60:40 AA, less 2 or 3 years of SWR, and maybe a few celebration toys it wouldn't take long.

I'm not in the situation I described above - it was a question for those a few years into FIRE, facing the situation REWahoo (4 years in and understandably concerned about having to adjust at the end of 09 if the recession continues) and others described. Just trying to hear their real-world decisions and plans. This thing sneaked up fast and hard on folks in that scenario.

FWIW, I'm at about 40:60 AA these days, much like many in this group. We all have our stories, but I'm not yet in the "made-in-the shade" crowd you seem to have assumed. But I am grateful for what I have, and my day will come. Just probably not this year . Glad you are able to hang in there and reduce expenses without worrying about selling off for a while. Tough times.

Oh... and welcome to the fan club. T-shirts available for $12.99 + postage.
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Old 03-04-2009, 10:14 PM   #125
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Oh... and welcome to the fan club. T-shirts available for $12.99 + postage.
Thanks. And don't undervalue that grandyoungin' time vs. the value of portfolio padding........ Just saying......
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Old 03-04-2009, 10:16 PM   #126
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The discussion begs the question: when you would consider going back to work, if you are currently FIREd and, say, under age 65?
Thatís me. No pension, minimum SS is years away. At current portfolio levels my WR is a bit above 4%. Back to work? NFW. As the song goes, I (we) will survive. Iíll find a way. Sell a kideny? Iíll sell my left testicle, but I ainít going back to work.

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I am wondering about the constant reference to the valuation of the market being really good at this point (usually by equity managers on CNBC). Isn't valuation related to earnings? What if our economy is undergoing a needed deleveraging and earnings do not improve back to 2007 levels? Then isn't the market valuation going to be much lower? I just don't see how relevant it is to compare the valuation now to what was when we don't know what our economy is going to look like in one year, much less five or ten.
People will work, companies will hire, there will be profits, and the economy will grow. We just need to purge the system a bit. And like all purging, itíll be messy.

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Economics and business are more or less self-righting. The killer is untoward political change
Right on.

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My gut feeling is that even after recovery "normal" earnings won't return to 2007 levels
Sure they will. Itíll just take a while Ė say, another decade or so.

I donít think stocks are inexpensive right now, but many are fairly priced and some are really good values. Thinking about the past isnít helpful. Basic principles of investing apply like never before.

Money you need over the next 5-7 years Ė needs to be in short term high quality fixed income funds. beyond that, money should be in equities or DCAíing in with a clear plan. At these levels it is just as risky to be out as in the equity markets.

US equities can go down or up, but after the next 7 years or so, the odds are much greater that they will be higher. Much higher.

I think one difference from the past decade Ė the next decade may be one for the stock pickers vs the indexeres. But this is a matter for another thread.

Michael
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Old 03-04-2009, 10:38 PM   #127
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Depends on what shape your kidney is in ?
Won't spare a kidney, but I've got some extra stomach to sell, heh, heh!

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Old 03-04-2009, 10:46 PM   #128
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Simple just take out a really huge low interest loan then stick that money in something like gold or unicorn figurines. When the dollar tanks you convert back to dollars and pay off the loan plus keep the excess.

That's really all shorting is. Having someone pay you for stocks(or whatever) at today's rate and then having you give them that thing at a later date. With a loan They are just paying you in today's dollars for some of tomorrow's dollars.
I probably framed my question the wrong way. When I said "short" the US$ I had something like buying alternate currencies in mind. Gpond and Dex mentioned some ETFs for me to look into. But thanks all the same.
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Old 03-04-2009, 10:52 PM   #129
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The discussion begs the question: when you would consider going back to work, if you are currently FIREd and, say, under age 65?


<groan>
Never! - based on my equities position, I assure you! Now if inflation rears its ugly rear, that could be another story. If my cash equivalents were under severe strain due to inflation, I'd probably be looking for w*rk at some point. But even if equities go to zero, I'll manage - all else being equal.
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Old 03-04-2009, 11:38 PM   #130
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Like other young dreamers, I am still DCA'ing into the stock market. The alternative is to just save cash, but I am not really smart enough to figure out when I should start buying into the market, so I figure DCA'ing all the way down is just as good as DCA'ing all the way up.

(and no, I am not selling no matter how low it goes)

I still have 20+ years to go until I can FIRE. In today's climate 25 years is more realistic. I looked at my pension and SS statements recently and figured that even if SS takes a big discount in 30 years, I can still afford to retire at 65, and that's my absolute worst-case scenario if I lost all my money in the stock market now and don't save a penny more.

Besides maximizing my 401K into the stock market, I'm not sure if I'll have money left over. If I do, will probably put into cash.

I do have over a year of living expenses in cash as my emergency fund.
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Old 03-05-2009, 02:49 AM   #131
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I've sometimes been unfaithful but will never leave the market completely and intend to leave my heirs some worthless shares.

Will continue beating myself up with alternate month DCAing--April 15th, that's the next day, skipping the Ides of March.
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Old 03-05-2009, 04:24 AM   #132
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I calculated that a drop in the DOW to 3000 would still leave us with sufficient funds according to FIRECalc for the duration. The key, however, is that we have zero debt and are totally capable of living our lives self-sufficiently. We both plan on going back to work in northern Wisconsin to cut our drawdown from our accounts. We can live on $25K a year very easily and happily. Being a part of history, ie. the SECOND Great Depression, isn't what we signed on for but I reckon that our current situation is called "Life"!!

Now, what was the question again? Oh yeah, we're not selliing anything. I reckon the stock certificates alone will be worth a fortune someday as historical mementos for a museum...
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Old 03-05-2009, 05:05 AM   #133
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Euroland down around 2%.

ES futures back under 700.

Buckle up.

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Old 03-05-2009, 08:22 AM   #134
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When you say you, are you referring to me or some indefinite you?
No, it was the royal "you."
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Old 03-05-2009, 08:37 AM   #135
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I calculated that a drop in the DOW to 3000 would still leave us with sufficient funds according to FIRECalc for the duration. The key, however, is that we have zero debt and are totally capable of living our lives self-sufficiently. We both plan on going back to work in northern Wisconsin to cut our drawdown from our accounts. We can live on $25K a year very easily and happily. Being a part of history, ie. the SECOND Great Depression, isn't what we signed on for but I reckon that our current situation is called "Life"!!

Now, what was the question again? Oh yeah, we're not selliing anything. I reckon the stock certificates alone will be worth a fortune someday as historical mementos for a museum...

I'm mostly out of the market, been so a while. So from a non-emotional point of view, do nothing, it will go down, then it will go up, above what its is now. Otherwise if we go way down, and don't go up, whether you have your shekels in the market or bank, we are all in the same boat.

So do nothing, ride it down, chances are it will go back up over 10,000 in due time. This is from someone who kept on the sidelines and can think without any fear or greed involved.

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Old 03-05-2009, 09:02 AM   #136
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Though I don't think I'll ever find myself planning on a 6-7% real return from stocks over the long term any more.
Yeah, I've always used 5% in my calculations. And I always thought I was just a pessimist.
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Old 03-05-2009, 09:23 AM   #137
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Though I don't think I'll ever find myself planning on a 6-7% real return from stocks over the long term any more.


Yeah, I've always used 5% in my calculations. And I always thought I was just a pessimist.
Seems I had always heard a range of 8%-12% for total returns over time (that might even be a one standard deviation thing on a 30 year time frame, or some basis like that).

So I always thought I was being conservative by picking the low end of the range, (8%), subtracting 3% inflation (another "popular" number I guess), and getting 5% as what could be expected as a "Real Return".

And then the alternate-ego accountant in me took off another 1%, just to round down. Shazaam - 4% SWR!

But that does not take into account volatility and drawdown effects, so I now view that as an upper limit, depending on your timeframe.

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Old 03-05-2009, 10:46 AM   #138
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It is a classic and one of my favorites. Slim Pickens is da bomb!
The local video rental had it. Best buck fifty spent in a long time. Good flick.
Now If I wanted to get banned from this board I could draw analogy's. Umm... I'll pass.
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Old 03-07-2009, 11:02 AM   #139
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I went to my Vanguard account ready to sell and go to all cash and I could not pull the trigger . I did sell some stock that I was tired of owning . I now have 10 years in cash and safe investments and I've turned off CNN and went back to enjoying my life and trying to ignore the markets . I was spending too much time worrying about them and I have found out that the things you worry about rarely happen . It is the other crap that ends up happening and changing your life .
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Old 03-07-2009, 11:10 AM   #140
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I went to my Vanguard account ready to sell and go to all cash and I could not pull the trigger . I did sell some stock that I was tired of owning . I now have 10 years in cash and safe investments and I've turned off CNN and went back to enjoying my life and trying to ignore the markets . I was spending too much time worrying about them and I have found out that the things you worry about rarely happen . It is the other crap that ends up happening and changing your life .
I'm glad for you that you came to that conclusion. 10 years is a long time in terms of the economy. You'll probably be glad you stayed in, even if stock performance is so-so. Time will tell.
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