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Old 07-11-2008, 10:21 AM   #41
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This is why I divested myself of stocks before I retired last year.
Guess your crystal ball works. Can I borrow it?
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Old 07-11-2008, 10:23 AM   #42
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Originally Posted by tangomonster View Post

Citric Acid, yup, I would have no difficulty sitting tight and waiting for the rebound----except for the last two words of your post! Two decades! I'd be 75! That's what scares me---that it could take two decades. Here I was investing in stocks to deal with inflation and grow my principal, not erode it and/or then have it be stagnant.

It seems like y'all feel it is appropriate to hold....but isn't it also appropriate to re-evaluate your holdings once or twice a year? And to make changes? I understand that the US economy is always experiencing outside forces and challenges.....and always has been. But is it possible that the changes and conditions that are currently impacting the market are more significant, pervasive, and longer-lasting than any we have previously seen...and that US stocks are unlikely to recover, let alone increase? :confused:
This broker couldn't even see 6 months into the future and you trust a call of 20 years?

I don't know what the best move is currently. I won't until the future has has become the past and then I will see that had I made a specific move I would have done better. (Of course if I had know what the lottery numbers were going to be this works even better and quicker)

Because I can't know the future, the best action for me it to have a good basic plan. A cash bucket ( I have 10 years in a CD ladder) and an AA that fits my risk/reward profile. Is it the best approach? Without knowing the future I think it is better than rolling the dice trading.

Do what you feel you have to do but don't trust the broker - if he knew what the market was going to do he wouldn't be calling you he would be on his yaught.
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Old 07-11-2008, 10:30 AM   #43
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He thinks we need to decrease our mutual fundings at least 15% and get rid of the index funds, which are so heavily in the financial sector. He thinks that the only sectors that can make money are commodities and utilities. He also thinks that bond/funds, especially global, will be good (Brazil will supposedly be a major player in the new world economy) and to "overweight in cash, using cash as an asset class."
IMHO, in this paragraph you have every indication of why you shouldn't be listening to this guy.

1) He is telling you to switch your asset allocation, when the basis of good LTBH investing is setting your AA and staying the course. Occasional tweaking is OK, but not in response to current market conditions. That's called timing. Doesn't work.

2) He wants you to buy commodities now, after a huge run-up in prices. That's buying high. I'm sure when the price drops he'll decide it's the wrong place to be, and he'll call you yelling "sell, sell, sell!!"

3) International bond funds may be a good ivestment, I don't know. But they should be discussed in a regular consultation, and not chased just beause everything else is going down, or not going up.

4) Cash is an asset class, and you should have enough to last you a year or three or five, based on your original plan. The only way to increase it now (assuming you are retired) is to sell your losers, take a loss, and get the money out of the market where it might actually do you some good when the cycle changes.

I would fire this guy. Tell him to delete your phone number from his computer. Nothing wrong with Fidelity as a company, but if this guy knew anything, he'd be the one FIREd instead of out there messing up other people's finances.

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Old 07-11-2008, 10:30 AM   #44
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The difficult truth is that no one really could know what is going to happen, including me and most others on this board, For example, if Israel and Iran get going over there with nuclear warheads, things will not be good. A few days ago McCain ws quoted to the effect of "We can't let another holocaust happen". TO me at least, this doesn't sound like carefully measured speech.

The stock market tends to ignore threats like this until it doesn't.

Six months ago my Fidelity rep wanted to meet with me and his strategist cum asset allocator becasue I "Have too much cash, and too much energy." Having too much of these served me well. But now, I only wish I still had too much cash and too much evergy! That's just the way it tends to happen.

Not always but usually markets do not go straight down like they have been doing lately. If you want to lighten up, you might get a better opportunity. Or not, and that is the nub of the problem. Personally, I am not selling anything becasue I believe my investments to have been bought at considerably better than median values, so they should give good returns in dividends and eventually that will be reflected in stock prices. But even here a lot can go wrong- for example, risk free interest rates can go up-moving the whole discount rate for investments up along with it, and market values down.

One take home for me anyway is to beware of any generalizations. It is often said- even here on the board-oh, you can't have so much fixed income, inflation will kill you. Well, maybe so, but history shows that stocks will not prevent that murder, at lest over short to intermediate time frames

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Old 07-11-2008, 10:37 AM   #45
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I can easily imagine a strategy session at Fidelity that went something like this:

"Now that index funds are down, let's go capture some market share from Vanguard."

"Yep, folks are worried. We can get them to switch easily by praying on their fears."
I hope they were smart enough to refrain from writing emails or memos about this meeting! Having this get out would make even Henry Blodgett look good.

Ha
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Old 07-11-2008, 10:37 AM   #46
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He thinks we need to decrease our mutual fundings at least 15% and get rid of the index funds, which are so heavily in the financial sector.
A broker advised getting out of index funds. I'm shocked, and amazed!

Ideally, stay the course, which probably means restoring your 50/50 allocation by purchasing more equity index funds. If you can not bring yourself to do that, then at least just sit tight. If you can not even bring yourself to do that, then accept the fact that you are currently temperamentally incapable of investing 50% of your assets in equities, and look into inflation-adjusted immediate annuities at the Vanguard website. They will almost certainly not do as well as someone capable of maintaining a simple 50/50 asset allocation. However, an inflation-adjusted immediate annuity through Vanguard will easily beat the sell low, buy high crowd.
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Old 07-11-2008, 10:38 AM   #47
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Good call if you got enough money to do that. Or you plan on having a short retirement

I have zero debt... nada... even my real estate is paid off.
I have 100% company paid health and dental and a glorified
hobby [self employment from home] that brings in enough
income to cover everyday expenses. I am blessed
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Old 07-11-2008, 10:48 AM   #48
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Guess your crystal ball works. Can I borrow it?

No crystal ball involved... just living right before God...
and using the good sense God gave me... and sometimes
a little nudging from Him was necessary!
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Old 07-11-2008, 10:48 AM   #49
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There is an old saw that is trite, but perhaps worth remembering:

"The four most expensive words are 'this time its different.'"

I agree - we were living outside of Silicon Valley during the tech run-up, and the chorus of "new economy / this time it's different" was absolutely deafening. We weren't saving enough then to care either way, but having been through that there's no way I'm buying it this time.

What I am learning from the current mess is that when we're getting ready to FIRE, we'll probably feel better with more like 5 years' withdrawals in cash, rather than 3, which is was I was planning.
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Old 07-11-2008, 10:48 AM   #50
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I'll pay you to not call me
Deal.............shall I send the paperwork??
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Old 07-11-2008, 10:51 AM   #51
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I would fire this guy. Tell him to delete your phone number from his computer. Nothing wrong with Fidelity as a company, but if this guy knew anything, he'd be the one FIREd instead of out there messing up other people's finances.Harley
It's always easy to be an armchair quarterback........
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Old 07-11-2008, 10:54 AM   #52
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The Norwegian widow is getting fat - cause she doesn't have self employment or walk to the mailbox anymore with auto deduct.

Not as much as pssst Wellesley but VG Target 2015 SEC yield north of 3% gets the job done - ya gotta love plan B.

It still hurts when I look although those Vanguard computers are just merrily humming away rebalancing via happy electrons and stuff. .

And the Boglehead's linked an interview with Mr B(who was on vacation) who told everyone to buck up and stay the course - provided you were happy with your asset allocation.

If your nerves have you upchucking in the bathroom - asset allocation 'might' be adjusted a tad.

heh heh heh - he didn't say that - I did, although I prefer not looking and staying the course.
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Old 07-11-2008, 10:57 AM   #53
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No crystal ball involved... just living right before God...
and using the good sense God gave me... and sometimes
a little nudging from Him was necessary!
Helena: No need to defend your "all cash", "no debt" status. I suspect there are more "all cash", "no debt" members on this board. By "all cash" I mean CD's for the most part.
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Old 07-11-2008, 11:04 AM   #54
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When we ERd a couple of years ago, we swore we wouldn't panic with a down/bear market. We intended to just leave our money in for the long-term (50% in muni bonds, 50% in mutual funds)....

My husband made me call our Fidelity broker because he was tired of listening to my doom and gloom.... The broker thinks we need to decrease our mutual fundings at least 15% and get rid of the index funds, which are so heavily in the financial sector.... The broker said that everything we have been doing (and just discussed with him less than six months ago) is invalid (like allocating for growth, balance, diversity, looking at midcaps vs. small and large): "the paradigm has completely changed."

Fidelity is sponsoring a free seminar to advise investors and we will be discussing this further with the broker next week. I'm almost positive that we will reduce our positions and will focus on preserving our assets rather than growing them. So is this panic---or just following my broker's advice?
Can I ask how your investments have fared year to date? To me it sounds like your 50/50 is pretty conservative so I hope you haven't lost too much ground overall.

I have been reading a Nolo book, Get a Life by Ralph Warner, and he makes this side comment under the heading "When the Market Drops, So Do Index Funds": "At least in theory, actively management mutual funds that concentrate on the stocks of conservatively run companies may do better during market downturns [my addition: than index funds], since their managers are supposed to make investment decisions based on both their downside and upside potention (management funds may also hold cash reerves-something index funds don't do)."

So I wonder if this is why your broker is hearing the worry in your voice and thinking it might be good for your peace of mind to move out of index funds?

(I personally don't have a dog in this hunt but I am a good worrier so thanks for giving me something more to deposit in the worry bank . I am so grateful that you posted this as DH and I will likely be needing to make some AA decisions in the next 3 months if he takes a buyout and your post is very thoughtprovoking.)
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Old 07-11-2008, 12:17 PM   #55
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Hummm, interesting... Our FA called yesterday and left a message on our answering machine. After three months of silence he would like us to call him back "ASAP" all of the sudden. I wonder what he wants (could it have anything to do with the fact that the porfolio he manages on our behalf lost 15% since last year?). I'll know more in one hour...
Wow--sounds like panic has set in (incidentally, the VIX is approaching 30 which has signaled the beginning of previous relief rallies). Please let us know his thoughts.

I talked with a Merrill broker a few weeks ago who told me--after the obligatory "my clients have been in oil and commodities since the beginning of the crisis"--that long-term buy and hold investors are "dinosaurs". He said that this is a stock picker's market, a market you rent and not own, etc and that, more than ever you need the advise of an investment professional.
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Old 07-11-2008, 12:43 PM   #56
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I talked with a Merrill broker a few weeks ago who told me--after the obligatory "my clients have been in oil and commodities since the beginning of the crisis"--that long-term buy and hold investors are "dinosaurs". He said that this is a stock picker's market, a market you rent and not own, etc and that, more than ever you need the advise of an investment professional.
He must be right! He has nothing to gain from you spending all your money chasing stocks at Merrill, right?
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Old 07-11-2008, 01:03 PM   #57
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The broker said that everything we have been doing (and just discussed with him less than six months ago) is invalid (like allocating for growth, balance, diversity, looking at midcaps vs. small and large): "the paradigm has completely changed."
See generally The Motley Fool UK: Market Comment 8/01/2003.
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Old 07-11-2008, 01:23 PM   #58
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"This time it's different."

Sure is - the dang clock won't stop - after 15 yrs of ER - I'm gonna be a regular 65 year old phart by summer's end.

Gotta buck up - party harder and longer - not getting any younger - and the rumor is - you can't take it with you!



heh heh heh -
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Panic, Panic, Panic
Old 07-11-2008, 01:35 PM   #59
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Panic, Panic, Panic

I love it. Six weeks ago I started all this by posting that I was up slightly for the year. This whole "collapse" started in late May. I'm down about 8% for the year with my 40 bond/60 equity mix. My cash represents about 7 years of living expenses at my "midpoint life style" case. I'm not happy about it but I can't see any reason to panic but many are.

Is there any NEW information out there about anything? Pundits continue to wring their hands. Israel and the US still don't like Iran and visa versa. That means oil could go higher (if not lower). Analysts continue to downgrade financials due to the credit crisis but there has just been noise for at least 3 months.

In the midst of all this, company earnings continue to look pretty good against earlier projections. If you're not in a few isolated locations, housing prices are holding up pretty well. Unemployment is relatively low at 5%. The US govt ran a budget surplus last month. The trade deficit is down and exports are rising. People are standing in line to spend money on video games and fancy cell phones so the consumer can't be tapped out.

Please panic. Do it for the good of the country.
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Old 07-11-2008, 01:40 PM   #60
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I agree with all of you that this one broker is not all-knowing. If he was just It seems like y'all feel it is appropriate to hold....but isn't it also appropriate to re-evaluate your holdings once or twice a year? And to make changes? I understand that the US economy is always experiencing outside forces and challenges.....and always has been. But is it possible that the changes and conditions that are currently impacting the market are more significant, pervasive, and longer-lasting than any we have previously seen...and that US stocks are unlikely to recover, let alone increase? :confused:
It is appropriate to evaluate your holdings once or twice a year to see if your portfolio needs rebalancing, NOT to change your asset allocation based on market conditions.

It certainly might take another year or two for market conditions to improve. But your portfolio is invested for DECADES. As long as you have a cushion for the next 2 or 3 years (and you certainly have enough bonds), this is an investing opportunity, not a time to run for the hills.

Full disclosure - my portfolio rebalance flag just barely triggered a couple of days ago. I am tempted to wait a month or so simply because I don't think this bear market is done yet (it's so hard not to time) - I would expect close to another 10% down in equities, IMO. I see this as a buying opportunity even if it takes a couple of years to see the upside.

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