Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Is the prevailing opinion that stocks stink?
Old 02-11-2005, 02:13 PM   #1
Moderator Emeritus
laurence's Avatar
 
Join Date: Feb 2005
Location: San Diego
Posts: 5,234
Is the prevailing opinion that stocks stink?

I've noticed a lot of poo-pooing of stocks and stock based mutual funds throughout the boards here. Is there a consensus thought here that stocks will underperform for the long term future compared to history? Is it just the volitility of stocks, and that most people posting are ER'ed and need income security? I'm 30, and everything I've read said be heavy in equity funds and slowly shift into bond/fixed as I get closer to retirement. Is this wrong? P.S. not trying to beat the market, influenced by coffee house (not as bond/cash heavy as they recommend, however), love index funds, in low expense (.18%-.4%). But I only have a ten percent stake in bonds right now. Am I cruising for a bruising at this point?
__________________

__________________
laurence is offline   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!

Re: Is the prevailing opinion that stocks stink?
Old 02-11-2005, 02:18 PM   #2
Recycles dryer sheets
 
Join Date: Aug 2004
Posts: 113
Re: Is the prevailing opinion that stocks stink?

Quote:
Is there a consensus thought here that stocks will underperform for the long term future compared to history?
It depends on what you mean by the term "long term".
__________________

__________________
Robert<br />http://www.austinexplorer.com/<br />http://www.texashiking.com/
Austin_Explorer is offline   Reply With Quote
Re: Is the prevailing opinion that stocks stink?
Old 02-11-2005, 02:23 PM   #3
Moderator Emeritus
laurence's Avatar
 
Join Date: Feb 2005
Location: San Diego
Posts: 5,234
Re: Is the prevailing opinion that stocks stink?

how about ten years?
__________________
laurence is offline   Reply With Quote
Re: Is the prevailing opinion that stocks stink?
Old 02-11-2005, 02:29 PM   #4
Dryer sheet aficionado
 
Join Date: Mar 2004
Posts: 39
Re: Is the prevailing opinion that stocks stink?

Quote:
Is there a consensus thought here that stocks will underperform for the long term future compared to history?
I think that many people are concerned that the market will be flat for 10 years or so.

The concern here is more justified than elsewhere; if you retired a couple years ago before the market went south, and then have too many flat years, you run a major risk of running out of money in retirement.

I think diversification is helpful here (going beyond an S&P 500 index fund, and looking at mid- and small-cap, foreign stocks, etc.).

I personally have the majority of my money invested in stocks (I'm in my mid-30s and getting ready to ER).
-Scott
__________________
IDunno is offline   Reply With Quote
Re: Is the prevailing opinion that stocks stink?
Old 02-11-2005, 02:50 PM   #5
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
Re: Is the prevailing opinion that stocks stink?

yeah I think they stink.

I imagine either a big dumper sometime in the next couple of years, or a long flat sideways period. Considering interest rates and the deferred slam to the bond markets, we could be looking at another period like the 65-73ish period when both stunk.

I'm still 100% stock in my IRA (and they're volatile funds to boot), and 50/50 in my regular investment account. But my stocks in the regular account are heavy in value, energy, precious metals, europe and japan.
__________________
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
Re: Is the prevailing opinion that stocks stink?
Old 02-11-2005, 03:01 PM   #6
Thinks s/he gets paid by the post
 
Join Date: Aug 2004
Location: Houston
Posts: 1,435
Re: Is the prevailing opinion that stocks stink?

What really concerns me is the possibility of dismal returns from both stocks AND bonds. But where else are you going to put your money and keep up with inflation? As a youngster with something of a nest egg, downside risk hurts me a lot more than excessive returns help me.

At the moment, I'm heavy in I-bonds and the rest is a diversified mix of stock funds (mostly indexes) and bond funds (nothing beyond intermediate term). That's the best I can come up with at this point, but I'm always interested to hear what others are doing.
__________________
soupcxan is offline   Reply With Quote
Re: Is the prevailing opinion that stocks stink?
Old 02-11-2005, 03:38 PM   #7
Thinks s/he gets paid by the post
BigMoneyJim's Avatar
 
Join Date: Feb 2003
Location: DFW
Posts: 2,627
Re: Is the prevailing opinion that stocks stink?

At 34 I'm around 60% domestic stock funds and continue to buy at this ratio.

If I start worrying too much about returns and future disasters I start thinking I'm better off spending my money now and working through the disasters rather than accumulate and lose it. So I try to strike a balance between spending and savig and investment mix...my personal diversification I guess...so if the future is lost I enjoy now, and if now goes south I have saved for the future, etc..

As an INTP I'm more of a micro-planner than micromanager. I spend a lot of time thinking and formulating a plan, but once I have the plan I let it ride. Second guessing myself is boring, and as experience shows, counterproductive. So I'm not likely to change my plan due to doom-and-gloom or even flat predictions.
__________________
BigMoneyJim is offline   Reply With Quote
Re: Is the prevailing opinion that stocks stink?
Old 02-11-2005, 04:22 PM   #8
Thinks s/he gets paid by the post
 
Join Date: Dec 2003
Posts: 1,375
Re: Is the prevailing opinion that stocks stink?

Quote:
yeah I think they stink.

I imagine either a big dumper sometime in the next couple of years, or a long flat sideways period. *Considering interest rates and the deferred slam to the bond markets, we could be looking at another period like the 65-73ish period when both stunk.

I'm still 100% stock in my IRA (and they're volatile funds to boot), and 50/50 in my regular investment account. *But my stocks in the regular account are heavy in value, energy, precious metals, europe and japan.
TH: Slight correction, just to keep in the spirit of the subject at hand. The Bond Mkt. did very poorly from 65 to 73, but really went in the dumper from 73 to 81. (Scar tissue to prove it).
O.k. now that I kept on subject.
Yesterday, in the Jounal, they published a survey, and nationwide, showed most unaffordable areas. Naturally, Calif. was in 8 of the categories.
Chico was the most unaffordable in the country.
No surprise to me. Have long figured that the prices were way out of whack, regarding the low average income in the area.
Bay area Refugees, and L.A. Deserters, have effectivelly
shut out most of the young locals seeking a starter home.
Crazy, huh?
Jarhead
__________________
Jarhead* is offline   Reply With Quote
Re: Is the prevailing opinion that stocks stink?
Old 02-11-2005, 04:39 PM   #9
Moderator Emeritus
laurence's Avatar
 
Join Date: Feb 2005
Location: San Diego
Posts: 5,234
Re: Is the prevailing opinion that stocks stink?

Good insights, all. I feel more and more strongly that I will not retire before the house (my only debt) is paid off. Garanteed 5% rate of return, can't beat it!
__________________
laurence is offline   Reply With Quote
Re: Is the prevailing opinion that stocks stink?
Old 02-11-2005, 05:04 PM   #10
 
Posts: n/a
Re: Is the prevailing opinion that stocks stink?

Hold off on equity purchases until the current regime in the White House is gone. They are poison for the financial and economic future of this country.

Wait until the deluge starts. It won't be much longer.
__________________
  Reply With Quote
Re: Is the prevailing opinion that stocks stink?
Old 02-11-2005, 05:43 PM   #11
 
Posts: n/a
Re: Is the prevailing opinion that stocks stink?

Quote:
yeah I think they stink.

I imagine either a big dumper sometime in the next couple of years, or a long flat sideways period. .
Len Walter, a longtime WBBM-AM business reporter and technical analyist, was interviewed on Chicago's PBS station tonight. Len's prediction of the Dow dropping to 9000 after March 2005 sure got my attention.
__________________
  Reply With Quote
Re: Is the prevailing opinion that stocks stink?
Old 02-11-2005, 06:48 PM   #12
Moderator Emeritus
laurence's Avatar
 
Join Date: Feb 2005
Location: San Diego
Posts: 5,234
Re: Is the prevailing opinion that stocks stink?

Well, I'm so early into investing, even if the market drops 10% this year, I won't be losing a lot of cash value, and then via dollar cost averaging of my and my wife's 401k, I'll be getting a sale! But I'm going to stay conservative outside of my tax deffered accounts, pay down the house, build up some cash reserves, maybe even live a litttle...
__________________
laurence is offline   Reply With Quote
Re: Is the prevailing opinion that stocks stink?
Old 02-11-2005, 09:53 PM   #13
Thinks s/he gets paid by the post
 
Join Date: Jul 2003
Location: Pasadena CA
Posts: 2,695
Re: Is the prevailing opinion that stocks stink?

Its not obvious to me what to do with investments. I am avoiding bonds although I do have my Roth in a Vanguard Asset Allocation fund which I really like (VAAPX) as it tends to match the S&P500 with less volitility. Other than that it is index funds and a few DRIP stocks. The house is paid. Oh, I do a small contribution to ibonds. The alternative to a major decline in the market is serious inflation. With all the debt out there at the govt, corporate and personal level I would bet on inflation as the biggest issue to deal with in the future. Of course I could be wrong.
If you have a good job or other income and enough time I don't think it matters what happens in the short run, just dollar cost average into stock index funds. But I expect to retire in the next 2 or 3 years so I am paying close attention to financial trends.
__________________
T.S. Eliot:
Old men ought to be explorers
yakers is offline   Reply With Quote
Re: Is the prevailing opinion that stocks stink?
Old 02-12-2005, 04:01 AM   #14
 
Posts: n/a
Re: Is the prevailing opinion that stocks stink?

Bonds and real estate! That's my story and I'm sticking with it.

This is interesting. I never made any money in stocks really, even though I "dabbled" starting about 1967
and sold my last publically traded stock about 1998.
Thus, I passed up a lot of gains but as you all know
I had no real savings plan or program until very late
in the game. That said, if I could turn back the clock
about 30 years (not knowing what the DJIA would be
doing), I still would mostly have avoided stocks.
Back then I really enjoyed real estate. Now, I really
enjoy max. predictability. Avoiding stocks has been kind
of a life long habit of mine.

JG
__________________
  Reply With Quote
Re: Is the prevailing opinion that stocks stink?
Old 02-12-2005, 04:17 AM   #15
Full time employment: Posting here.
 
Join Date: Oct 2003
Posts: 570
Re: Is the prevailing opinion that stocks stink?

Is it just the volitility of stocks, and that most people posting are ER'ed and need income security?

It's partly that, but it's not entirely that.

You see a lot of discussion of safe withdrawal rate (SWR) analyses at Retire Early boards. SWR analysis only applies in a direct sense to people who are retired and living off their investments. It has implications for those in the accumulation stage, but the same numbers don't apply for those who are taking out of their portfolios and those who are adding to their portfolios. The long-term numbers for stock investing are a good bit more appealing for those in the accumulation stage.

That said, I think it makes sense even for those in the accumulation stage to lower their stock allocations at times of extreme overvaluation. To the extent that you preserve assets as prices are coming down, you have capital available to purchase more stocks when prices are lower. I make use of long-term timing strategies (but not short-term timing strategies) when making stock purchases.
__________________
hocus is offline   Reply With Quote
Re: Is the prevailing opinion that stocks stink?
Old 02-15-2005, 10:09 AM   #16
 
Posts: n/a
Re: Is the prevailing opinion that stocks stink?

Probably an unpopular choice on this board but a good size portion of cash in a rising rate environment is not a bad option. MM, short-term CD rates (~3%) and Stable Value Funds (6% - 7%) seem to rise more rapidly this year than last year.
__________________
  Reply With Quote
Re: Is the prevailing opinion that stocks stink?
Old 02-15-2005, 11:55 AM   #17
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
Re: Is the prevailing opinion that stocks stink?

I have a silly amount of cash on hand right now thats simply going to get sillier when my wifes old house finally sells.

Mostly because there isnt anything I want to buy at these prices, and 3% 11 month and 4.61% 5 year CD's are making me perfectly happy for now.

But heck, I must have almost 10% of my total holdings in cash, MM and CD's right now.
__________________
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
Re: Is the prevailing opinion that stocks stink?
Old 02-15-2005, 02:53 PM   #18
Dryer sheet wannabe
 
Join Date: Jan 2005
Posts: 10
Re: Is the prevailing opinion that stocks stink?

An analyst on the Financial news network predicted a big drop in the market during the next year, providing all the logical reasons. I started to think about delaying my ER.

But as luck would have it, the next day another analyst predicted a a banner year, he also provided all the reasons for it. Now I feel better about starting ER.
__________________
searcher is offline   Reply With Quote
Re: Is the prevailing opinion that stocks stink?
Old 02-15-2005, 03:29 PM   #19
 
Posts: n/a
Re: Is the prevailing opinion that stocks stink?

Hello TH! I have about 10% in cash, MM and CDs also.
In my case though, I am not waiting for opportunities,
and quite frankly am a bit surprised that many interest rates
have stayed down. Some rates are actually down from
a year ago. Whoda thunk it?

JG
__________________
  Reply With Quote
Re: Is the prevailing opinion that stocks stink?
Old 02-15-2005, 03:37 PM   #20
 
Posts: n/a
Re: Is the prevailing opinion that stocks stink?

Quote:
An analyst on the Financial news network predicted a big drop in the market during the next year, providing all the logical reasons. I started to think about delaying my ER.

But as luck would have it, the next day another analyst predicted a a banner year, he also provided all the reasons for it. Now I feel better about starting ER.
Bernstein was certainly correct about this. It's mostly nonsense. I do watch it for entertainment purposes though. There are as many 'experts' predicting up markets as down markets.

I do my best, when I do nothing. As long as I'm fishing, I don't screw up. 8)
__________________
  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


Similar Threads
Thread Thread Starter Forum Replies Last Post
Why Do Stocks Go Up? wabmester FIRE and Money 75 08-14-2006 12:17 PM
The "New" Value Stocks wildcat FIRE and Money 26 03-04-2006 09:43 AM
Stocks or Mutual Funds renferme FIRE and Money 7 03-01-2006 07:14 PM
Swedroe comments on buying individual stocks. Nords FIRE and Money 27 10-12-2005 10:20 PM
Question on Dividend Stocks or Funds modhatter FIRE and Money 43 10-03-2005 10:11 AM

 

 
All times are GMT -6. The time now is 07:43 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.