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Old 06-28-2011, 12:49 AM   #21
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Exactly. Somebody who's 85 now had the incredibly good fortune to be investing during the biggest boom in US history. One could easily argue him giving investing advice is a bit like a lottery winner saying "it worked great for me, so I'm sure you'll win too if you just buy a ticket."

I know "it's different this time" gets laughed off the board, but ask the people in Japan how different it's been for them..
Gary I've made plenty of doom and gloom post recently. Just of the top of my head. I've warned about money market breaking the buck, title insurance companies not being able to pay of title claims in the event of massive mortgage foreclosure lawsuits. Any time somebody claims the US government bonds are 100% safe, I remind people that historically the US is in a minority of countries that haven't defaulted on their sovereign debt (yet!). I think that insurance guaranty provide very little protection of annuity holders in general. I particular am skeptical of insurance companies ability to pay off Equity Index Annuity owners in the event of a long bear market.

Plus don't get me started on the massive troubles with public pension, I've been bitching about that long before it became popular.

Most importantly, I think all asset classes are between slightly overvalued (stocks) to really overvalued (government bonds) which makes investing in the environment really challenging. In short I am no Pollyanna.

I also think it is more likely than not that investing the equity returns of the next 60 years will be worse than the last 60 years. Still I think there is a lot of wisdom in what Taylor from the Boglehead is saying. There is always bad news which makes it scary to invest in the stock market.
But betting on capitalism and the US economy has been a fantastic way to get rich. I still say that person consistently putting money into the market when they are young, is the easiest way of person becoming comfortable if not rich when they are old.
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Old 06-28-2011, 12:56 AM   #22
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And you have not mentioned the near miss by that asteroid last year. Had it hit, the S&P would have been totally wiped out.
Last year?

How about today?
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Old 06-28-2011, 04:45 AM   #23
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For those of us that probably do not have 60 years and are in the draw-down phase...Timing is everything (speaking in the longer view).

The historical charts seem to show pattern of secular bull markets and them some sideways cyclical action. These patterns (historically) seem to last for 15 - 20 years (at least that is what it looks like to me)

We seem to be in a sideways pattern (bubble/bust) for the last 11 years.

Do you think we will be in this type of market for another 4 years or a decade?

America seems to be able to reorient itself better than most other countries. I am confident that we will do it again.
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Old 06-28-2011, 06:39 AM   #24
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Do you think we will be in this type of market for another 4 years or a decade?
Yes ...
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Old 06-28-2011, 08:42 AM   #25
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Any actionable advice to dodge these end-of-the-US as we know it predictions?
DD
My question exactly. I am sticking to my plan as well. If the markets crash, we're all screwed (whether you drink the stock market "kool-aid" or not) and I have yet to be presented with a better alternative for my hard earned green backs.

In the mean time, I plan to top off my Roth IRA contribution for the year this week and look forward to a long weekend with my sister in Denver.

An aside: no one mentioned the end of the world is right around the corner?
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Old 06-28-2011, 09:55 AM   #26
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An aside: no one mentioned the end of the world is right around the corner?
In that case, there is nothing to discuss ...
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Old 06-28-2011, 09:57 AM   #27
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In that case, there is nothing to discuss ...
except how to spend your money so none of it is "left on table" come the end.
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Old 06-28-2011, 10:49 AM   #28
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except how to spend your money so none of it is "left on table" come the end.
That's not a problem, for me.

I would rather die with money than live without it. If any's left? So be it. There are others (and other organizations) that can do with my "excess" after I'm gone.

If I can continue to live the life in retirement (as I have been doing) with enough income/assets to achieve that goal, I don't care if anything is left. Money is for the living, not the dead...
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Old 06-28-2011, 12:35 PM   #29
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So, just keep on investing and everything will work out well in the end? I wonder how much of that is plain old good luck, timing, and survival bias?

My advice to my children is to work hard and live beneath their means. Saving is much more important than investing.
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Old 06-28-2011, 12:37 PM   #30
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Any actionable advice to dodge these end-of-the-US as we know it predictions? If not I guess I'll stick to a diversified AA that includes 50% non-US equities...

DD
For someone with your skillset, it is really very simple. Never stop doing clinical work that maintains your skills, for money, not only for the benefit of mankind.

There is no substitute for earned income, especially income earned at highly skilled relatively scarce yet needed occupations.

Ha
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Old 06-28-2011, 01:32 PM   #31
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For someone with your skillset, it is really very simple. Never stop doing clinical work that maintains your skills, for money, not only for the benefit of mankind.

There is no substitute for earned income, especially income earned at highly skilled relatively scarce yet needed occupations.

Ha
I've always figured I was good to go for the apocalypse. Physician skills, I can brew beer and we grow a lot of our own food.

DD
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Old 06-28-2011, 02:34 PM   #32
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There is no substitute for earned income, especially income earned at highly skilled relatively scarce yet needed occupations.

Ha
Well said.
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Old 06-28-2011, 03:31 PM   #33
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There is no substitute for earned income, especially income earned at highly skilled relatively scarce yet needed occupations.

Ha
I agree. I think about these things every day about all this "doom and gloom", which is largely based on some real facts. I am with the crowd that says that there WILL be an event or series of events that will totally change our relationship to our economy and all economies of the world for years to come.

With that said, I still contribute to long term investments, but I have found that the only solution that makes any sense is to learn skills that are and will be high in demand, that way you can weather the storm in bad times, and take advantage in good ones. Cover all bases.
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Old 06-28-2011, 06:28 PM   #34
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And if you picked the 'wrong market' or were born at the 'wrong time'?

Nikkei 225 (Year opening price)
1984 - 9,927
1985 - 11,543
1986 - 13,054
1987 - 18,703
1988 - 21,551
1989 - 30,166
1990 - 38,922
1991 - 23,827
1992 - 23,031
1993 - 16,980
1994 - 17,422
1995 - 19,725
1996 - 19,946
1997 - 19,364
1998 - 15,269
1999 - 13,779
2000 - 18,937
2001 - 13,898
2002 - 10,631
2003 - 8,669
2004 - 10,787
2005 - 11,458
2006 - 16,294
2007 - 17,322
2008 - 15,155
2009 - 8,991
2010 - 10,609
2011 - 10,352


How did US returns 1880-1940 compare to 1950-2010?

A lot of this is luck and beyond our control. Maybe we'll get lucky in the stock market. Maybe we won't. So far the odds of broad index funds have been better than playing the lottery at least.
Bad example to use Japan, it's under deflationary pressure for long time. I am sure there's strategy on how to invest in deflationary economy.

Speculators depend on luck. Real investors do not depend on luck such as Benjamin Ghram, Warren Buffet, Peter Lynch. They depend on logic and business skills.

We can lose money by doing nothing.With 3% inflation, in 40 years, money will have only 30% of its original purchasing power. I might as well invest in something that grow faster than inflation by big margin. GIC, saving account can barely keep up with inflation after tax.
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Old 06-28-2011, 06:31 PM   #35
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I agree. I think about these things every day about all this "doom and gloom", which is largely based on some real facts. I am with the crowd that says that there WILL be an event or series of events that will totally change our relationship to our economy and all economies of the world for years to come.
And that differs from all of recorded history how?

DD
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Old 06-28-2011, 09:09 PM   #36
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and as bad as that Japanese market looks, it does not reflect any gains from dividends that may have accrued. So as already mentioned with the erosion of inflation it still gotta be better to be in than out.
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