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How has your portfolio performed
Old 09-16-2008, 05:05 AM   #1
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How has your portfolio performed

Trying to find calm in the midst of a storm. S&P 500 is down more than 24% today from it's October high. I am semi-retired and have a fairly conservative portfolio with a 50/50 mix of equities and bond/cash. It seems it has performed at that rate as I am down 12.4% from my October '07 high.

Stinks to see it go down.

My mind is at ease as I have a 7 year cash cushion that will take me to 59 years old without any income from P/T work. I have set a mental fail safe point that if the equity portion of my portfolio falls an additional 25% from where I am at now I will cash out and have complete security until age 66 where I can take the max social security. Hopefully 403b, IRA and Annuity will have grown over those 14 years to provide a comfortable life from age 66 forward. None of this plan uses or considers the equity in my home which I am saving as a fail safe.

How are you doing and what are your thoughts?
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Old 09-16-2008, 06:52 AM   #2
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we think alike...a little over a year ago, I parked my AA at 51/49 right after I FIREd.
overall portfolio is down 7.87% YTD as of Friday close.
10 yr return holding up at +6.27%.

to quote Jack Bogle, i will "Stay the course"

My attitude is this is yet another blip in a larger orbit. Admittedly, there are a lot of ugly conditions on Wall St right now. I pulled out my copy of Tobias' "The Only Investment Guide You'll Ever Need", last updated in 2002. It is a very good re-read right now.
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Old 09-16-2008, 06:53 AM   #3
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shotgunner, it sounds to me as though you are planning to sell low if the market drops severely, not always the best of actions. I wonder if perhaps (once we are through the worst of these rough economic times) it would help to tweak your asset allocation a little so that you have a smaller percentage in equities. (?) Just a suggestion.

Easy for me to say, since I happen to be in a good position due to unexpected good fortune. (So, I hope you do not take my suggestion the wrong way, as it is meant to be helpful.) Market behavior so far this year has not caused me much grief because I am still in the accumulation phase with an asset allocation is 45:55 (equities:fixed), and because of a large and totally unexpected windfall earlier in the year. Yesterday I lost 1.7%, which is not too bad considering the overall market losses. I slept an extra hour last night.

What happens to the market and the economy remains to be seen. I intend to retire next year at age 61, when I qualify for lifetime medical benefits. In a worst case economic/market scenario, I know that I would be able to economize severely and live off my SS and tiny pension, and wait for the market to recover. I would "pay myself SS" out of the cash portion of my portfolio from 61 to 66, most likely, and take SS at 66. I would rebalance each year. I would also be receiving dividends from Wellesley and other investments, and I could spend them too but would probably choose to reinvest while the market is low in this worst case scenario.

I think we have to believe that the market will eventually recover. If it doesn't and just plummets to zero and stays there, we are back to the Stone Age and nothing we do will matter anyway. I really don't think that is likely. If the market recovers, my strategy should work out nicely.
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Old 09-16-2008, 07:21 AM   #4
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I'm not looking. I also have several years of cash cushion and my only regret is I'm not in position to be dollar cost averaging in. Things would have to get alot worse for me to have to go back to work. If things got that bad there probably wouldn't be any jobs anyway.
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Old 09-16-2008, 07:23 AM   #5
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Quote:
Originally Posted by shotgunner View Post
Trying to find calm in the midst of a storm. S&P 500 is down more than 24% today from it's October high. I am semi-retired and have a fairly conservative portfolio with a 50/50 mix of equities and bond/cash. It seems it has performed at that rate as I am down 12.4% from my October '07 high.

Stinks to see it go down.

My mind is at ease as I have a 7 year cash cushion that will take me to 59 years old without any income from P/T work. I have set a mental fail safe point that if the equity portion of my portfolio falls an additional 25% from where I am at now I will cash out and have complete security until age 66 where I can take the max social security. Hopefully 403b, IRA and Annuity will have grown over those 14 years to provide a comfortable life from age 66 forward. None of this plan uses or considers the equity in my home which I am saving as a fail safe.

How are you doing and what are your thoughts?
Our numbers are almost identical. No annuity here and I will probably take SS at 62. Other than that, everything about the same. My mind is not at ease though.
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Old 09-16-2008, 08:04 AM   #6
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...fairly conservative portfolio with a 50/50 mix of equities and bond/cash.
The problem with the asset allocation mental model is that if a certain asset class is fundamentally a bad investment, then it's a bad investment in any amount. Determining whether an asset class is a bad investment requires research and thought, which is much more work than just shoveling money into a mix of investment classes and hoping for the best.

That said, I think I'm carrying more than sufficient exposure to equities with 7% exposure. My portfolio is up modestly, but with mostly bonds my portfolio is always up only modestly The riskiest investment I have if the economy continues to tank is Vanguard's High-Yield (i.e., Junk) Corporate Bond fund. So far, the fund isn't reporting any defaults, but if we enter a '30s style depression this could change. BTW, the fund is at 52-week lows for you contrarians out there.
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Old 09-16-2008, 08:24 AM   #7
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. It seems it has performed at that rate as I am down 12.4% from my October '07 high.
I think one of the psychological mistakes you are making is comparing it from a high.

A better way to look at it is - purchase price + a reasonable rate of return/year (6%?)

You might feel better about your investments.
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Old 09-16-2008, 08:29 AM   #8
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playing the technicals with at least a 30 day time frame, down 1.57% ytd

98% cash and 2% playing the market with some play trade money for learning purposes
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Old 09-16-2008, 08:29 AM   #9
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Originally Posted by shotgunner View Post
Trying to find calm in the midst of a storm. S&P 500 is down more than 24% today from it's October high. I am semi-retired and have a fairly conservative portfolio with a 50/50 mix of equities and bond/cash. It seems it has performed at that rate as I am down 12.4% from my October '07 high.
I have a more aggressive mix at 70 /30 and I'm down 12 % . I have to keep reminding myself that I' ve gone thru this before but when it is dropping I'm not a happy camper . I also have several years in cash ,a cola pension and a house with over $600,000 equity .
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Old 09-16-2008, 10:00 AM   #10
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Fund, % of my portfolio, YTD return through 9/15

Tax exempt money market 18% +1.6
I-bonds 17% +4.6
Total bond market index 17% +3.1
High dividend yield index 34% -16.0
Target retirement 2050 14% -17.0


Weighted average:100%, -6.0
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Old 09-16-2008, 10:29 AM   #11
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I am about 65/35 stocks/fixed&cash. I am down about 11.5% after yesterday. It sure is not fun to watch my net worth decrease.....but you have to expose yourself to risk to reap potential reward. I am staying the course and have a few years in MM/CDs to live off of intil the market stabilizes.
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Old 09-16-2008, 11:51 AM   #12
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I'm at an AA of about 80/20 (Equities/Bonds). MY YTD as of last Frid was -11 % +/-. In these times I try not to figure it any more often than once a week - (though I'm guessing about -16% as of 9/15).

I'm in the withdrawal phase so this includes a draw of around 2%.

From what I've read, I'm trying to brace myself for a drop of another 15-20% in portfolio value before it starts to recover. This is pretty unpleasant, but I think historically, it's so far not really been that bad of a bear - hence my expectation of more to come.

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Old 09-16-2008, 02:53 PM   #13
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Down about 14% this year, including the massive haircut I'm taking on my USO position bought near the high. Fortunately that position is only about 3% of my portfolio.

Even though a lot of people got mauled worse in the 2000-2002 bear, this one feels worse to most asset allocators because no broad equity asset class is avoiding the pain. In the last bear market, small caps, emerging markets and REITs did very well, reducing the pain. In this one, nothing seems to work.
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Old 09-16-2008, 03:08 PM   #14
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Market behavior so far this year has not caused me much grief because I am still in the accumulation phase with an asset allocation is 45:55 (equities:fixed), and because of a large and totally unexpected windfall earlier in the year. Yesterday I lost 1.7%, which is not too bad considering the overall market losses. I slept an extra hour last night.


It will be interesting to see how well you sleep when you are retired and that nest egg no matter how big takes a significant nose dive .
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Old 09-16-2008, 03:10 PM   #15
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It will be interesting to see how well you sleep when you are retired and that nest egg no matter how big takes a significant nose dive .
My understanding is that W2R is sticking it out long enough to receive a COLA'd pension and health insurance. Given that, it's a lot easier to take market swoons with a calm stomach than it is for someone who plans to need their personal retirement savings to provide almost all of their retirement income which also has to purchase health insurance.
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Old 09-16-2008, 04:36 PM   #16
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Old 09-16-2008, 04:42 PM   #17
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Given that, it's a lot easier to take market swoons with a calm stomach than it is for someone who plans to need their personal retirement savings to provide almost all of their retirement income which also has to purchase health insurance.

That's true depending on the size of your pension . I have a pension that covers 50% of my expenses with health benefits and I still get queezy with these major drops
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Old 09-16-2008, 04:59 PM   #18
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I'm with dm - I'm not looking either! We're still in the accumulation phase, and mostly in equities (especially the S&P) except for a rental property in So Cal (that's lost about 100K in value from the top).

The rental is still about 200K over where we bought it, so that's fine, and the equities...well, we're still ahead of where we'd be if we'd only ever been in cash and bonds.

We're still 7 years away from FIRE and I've been very conservative in estimating what our returns will be so I don't expect this to throw us off unless it gets really bad.
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Old 09-16-2008, 04:59 PM   #19
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That's true depending on the size of your pension . I have a pension that covers 50% of my expenses with health benefits and I still get queezy with these major drops
Sure, it's still not fun to watch your portfolio wither like this. (I've lost nearly $100K on paper since the day I almost talked myself into bailing out of the market last Halloween.) But I do think that knowing that even 50% of your retirement is secure takes at least some of the queasiness out of the equation compared to folks who expect to have no other sources of secure retirement income at all. And having almost all of your expenses met without needing personal savings and investments means that even a market meltdown won't likely devastate your standard of living.

I've recently started DCAing my mom back into the market. My dad did all their investing, and he cashed everything out in Vanguard money market funds when he was diagnosed as terminal. I know the fact that her pensions and SS meet all their expenses makes it a lot easier for her to accept market volatility -- so I've started making her money moves since she knows nothing about investing. (I should add here what I'm doing with a lot of it in the Vanguard account -- psssst...)
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Old 09-16-2008, 05:05 PM   #20
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That's true depending on the size of your pension . I have a pension that covers 50% of my expenses with health benefits and I still get queezy with these major drops
Maybe it would help to think about tweaking your asset allocation, once the market has recovered. That seems to be a great way to sleep better at night when the market is behaving like this. Hope you feel better after today's partial market recovery.

As for me, I will be able to get by after I retire, even in this kind of market drop. I will have SS, pension, and fixed income to rely upon, with a paid off house and few expenses. That doesn't mean I'll LIKE it when the market drops, though. You are right about that. But it won't keep me from sleeping at night.
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