it's the crash of October 2014 all over again

[tuixiu]

Quote:

Originally Posted by mathjak107 basically the last 15 years all the sp 500 saw is a real return of 1.30% a year as a return with dividends reinvested..

When I run Dec 1999 -> Dec 2014 here: S&P 500 Return Calculator - Don't Quit Your Day Job...

I get annualized real returns of slightly over 2%, not 1.3%.

Sure that doesn't seem like much of a difference but over 15 years it isn't insignificant, especially if one is pulling out 3-4% annually.

Also interesting is if you go two years in either direction (17 or 13 years) you get real returns over 4% which would support the classic 4% rule, granted in an simplistic view without actually digging into the actual year over year return and it's impact early versus late on total balance. When you start getting into the early 90s real returns are usually over 6 or 7%.

[mathjak107]

i show from the peak in march 2000 a 1.74% real return over just about 15 years. . 1000 bucks is now 1288.00 .

while it would take 15 years at less than a 2% real return for the 4% rule to fail the returns the last 15 years have been well below average going up or down a few years. .

in fact the 18 years from 1987 to 2004 saw incredible growth averaging 14% a year for 18 years and that untypical run influenced quite a few shorter time frames making them look better with residual gains then they really were as time went on...

it is no different than all of us here looking at our balances when we peaked a few weeks ago.

in all our minds i doubt anyone ever imagining that balance omly growing 1.74% in real return 15 years from now assuming you weren't spending down.

basically it was only newer money that saw much growth, our old equity balances grew quite poorly.

includes reinvested dividends

[jerome len]

Great news! I just heard stocks are going on sale again.....guess I better go out and buy some.....but there may be even better sale prices next week.....so I'll save some cash, just in case! Barron's Mag financial panel predicted this week that stocks will go up in 2015.....I'd better buy now so I don't have to pay increased prices next year!

if only we really knew the future......but......looking at the past gives us a good indication of the future. Good Luck to all.

[Options]

Quote:

Originally Posted by NW-Bound It's OK if you missed it. There's a replay going on right now, and perhaps more exciting. Sit back and enjoy the show.

'

Thanks. Think I'll break out the popcorn and lite beer and put on Cramer.

[NW-Bound]

Quote:

Originally Posted by tuixiu When I run Dec 1999 -> Dec 2014 here: S&P 500 Return Calculator - Don't Quit Your Day Job... I get annualized real returns of slightly over 2%, not 1.3%. Sure that doesn't seem like much of a difference but over 15 years it isn't insignificant, especially if one is pulling out 3-4% annually. Also interesting is if you go two years in either direction (17 or 13 years) you get real returns over 4% which would support the classic 4% rule, granted in an simplistic view without actually digging into the actual year over year return and it's impact early versus late on total balance. When you start getting into the early 90s real returns are usually over 6 or 7%.

Quote:

Originally Posted by mathjak107 i show from the peak in march 2000 a 1.74% real return over just about 15 years. . 1000 bucks is now 1288.00 . while it would take 15 years at less than a 2% real return for the 4% rule to fail the returns the last 15 years have been well below average going up or down a few years. . in fact the 18 years from 1987 to 2004 saw incredible growth averaging 14% a year for 18 years and that untypical run influenced quite a few shorter time frames making them look better with residual gains then they really were as time went on... it is no different than all of us here looking at our balances when we peaked a few weeks ago. in all our minds i doubt anyone ever imagining that balance omly growing 1.74% in real return 15 years from now assuming you weren't spending down. basically it was only newer money that saw much growth, our old equity balances grew quite poorly. includes reinvested dividends

In a cyclical market like what we have had since 2000, the stock returns counting from peak to trough, or peak to peak, or trough to peak differ widely, and can be used by one to make any kind of argument.

But one thing for sure is that timing becomes important, unlike the secular bull market of 1983-2000 when one was assured of always winning. But that said, because timing to buy low/sell high is difficult, rebalancing can capture some gains from that up/down stock movements, but the individual's performance depends much on the execution.

Quote:

Originally Posted by Options ' Thanks. Think I'll break out the popcorn and lite beer and put on Cramer.

I no longer have access to CNBC, so just come here to watch the teeth gnashing and the Wh***'s. It's interactive and cheaper too.

[mathjak107]

while i agree the points you pick are going to determine the results being humans we all maintain a high water mark in our heads.

it is only natural that now that we hit a new peak our benchmark for moving forward is greater.

there is not one of us that does not feel sad we are down from where we were a few weeks ago. after all that nice balance we saw is now the high water mark and whether we are ahead or behind where we were is kind of based on that number.

if our portfolios hit the old balance again 6 months from now you won't feel that was such an accomplishment. after all you were there 6 months ago.

well in the same light 15 years ago many of us had sizeable portfolios and the balance we hit back then had not been seen again for almost 15 years .


so while yes time frames picked matter some carry far more weight in our minds.

[Live And Learn]

While I agree that this is nothing to panic over, I do worry about the complacency demonstrated in this thread. People not worried about the market, 3% down minimums on mortgages and the latest barrage of "buy your Christmas gifts on credit" ads on TV makes me think that we are indeed heading towards something more than a correction.
If I say more Porky will be coming for a visit, so I'll just leave y'all to ponder.

[REWahoo]

Quote:

Originally Posted by Live And Learn While I agree that this is nothing to panic over, I do worry about the complacency demonstrated in this thread.

For the long-term investor, complacency has proven to be a winning strategy.

[Live And Learn]

Quote:

Originally Posted by REWahoo For the long-term investor, complacency has proven to be a winning strategy.

Since I am a long term investor at 3% WR at peak, I'll take it. But how many average folk are "long term investors"?

[REWahoo]

Quote:

Originally Posted by Live And Learn Since I am a long term investor at 3% WR at peak, I'll take it. But how many average folk are "long term investors"?

I don't think the majority of those on this board are 'average folk' when it comes to investing.

[samclem]

Quote:

Originally Posted by 2B I lost enough last week to buy a brand new, high end luxury car that I wouldn't dream of buying.

But, you still own the same number of shares, you still own the same claim to the future earnings of all those companies. And are the companies themselves, and their likely future earnings, and their future share prices, really diminished by the share price judgements of a fickle market over the past week? Surely not. You're in just the same position you were a week ago.
Or, that's what I tell myself when share prices take a tumble (big or small).

[RAE]

Quote:

Originally Posted by Live And Learn While I agree that this is nothing to panic over, I do worry about the complacency demonstrated in this thread. .

I agree, and I also agree with mathjak's comments. We've never experienced a drop in oil prices this large over such a short period of time, so no one knows what effect it will have on the markets. You potentially have major political shake-ups to consider (think Russia, Iran, Venezuela), in addition to the economic impact of such a massive price drop. If I was young, with many years to go before retirement, and actively adding $$ to my investments every month, it wouldn't concern me all that much.......but if you're retired and your time horizon is not nearly as long, it's a bit of a different situation. Perhaps we'll have a nice quick 10% drop here with a rapid rebound to new highs after that, and everyone will be happy - but it's definitely not a sure thing in my book.

[audreyh1]

Quote:

Originally Posted by REWahoo For the long-term investor, complacency has proven to be a winning strategy.

+1

Unless you can sit on your hands and ignore the yearly volatility, and just keep working the investment plan, ignoring the noise, you will screw up.

[Options]

Quote:

Originally Posted by NW-Bound ... I no longer have access to CNBC, so just come here to watch the teeth gnashing and the Wh***'s. It's interactive and cheaper too.

Thanks, NW, but I've found that watching Cramer in even the smallest amounts is very good for my digestive system, if you know what I mean.

Quote:

Originally Posted by REWahoo For the long-term investor, complacency has proven to be a winning strategy.

+1

"The only thing associated with the market's daily ups and downs that is predictable is the pontifications of analysts who attempt to explain the often unexplainable."
--Alan Roth, "How a Second Grader Beats Wall Street"

[audreyh1]

Quote:

Originally Posted by RAE I agree, and I also agree with mathjak's comments. We've never experienced a drop in oil prices this large over such a short period of time, so no one knows what effect it will have on the markets. You potentially have major political shake-ups to consider (think Russia, Iran, Venezuela), in addition to the economic impact of such a massive price drop. If I was young, with many years to go before retirement, and actively adding $$ to my investments every month, it wouldn't concern me all that much.......but if you're retired and your time horizon is not nearly as long, it's a bit of a different situation. Perhaps we'll have a nice quick 10% drop here with a rapid rebound to new highs after that, and everyone will be happy - but it's definitely not a sure thing in my book.

Yes we did, in 2008 it was even worse.

[mathjak107]

i am getting to old to wait another 15 years to see my old balance come back.

sometimes i i just want to buy a nice giant size immediate annuity which spins off more income than i can even spend , life insurance for the heirs and call it a day.

no more market reports..

now back to reality.

[Live And Learn]

Quote:

Originally Posted by REWahoo I don't think the majority of those on this board are 'average folk' when it comes to investing.

Completely agree. On this this board we won't find many average folk. The average folk (I fear) are applying for 3% down mortgages and buying holiday gilfts they can't afford in "30 easy payments".

[haha]

Quote:

Originally Posted by samclem But, you still own the same number of shares, you still own the same claim to the future earnings of all those companies. And are the companies themselves, and their likely future earnings, and their future share prices, really diminished by the share price judgements of a fickle market over the past week? Surely not. You're in just the same position you were a week ago. Or, that's what I tell myself when share prices take a tumble (big or small).

This is definitely not true if you follow the total return portfolio liquidating over one's lifetime approach. There, the cash value of your shares is what counts. IMO this is not a particularly clever approach, but it is the approach usually favored on this and most other boards.


Ha

[NW-Bound]

Following is the recent historical price of a barrel of WTI crude, linked from Wikipedia.

The price plummet in early 2009 is easy to understand in the context of the demand destruction due to the then-current financial crisis. What is harder to explain is the price run-up immediately preceding that crash, when oil got up to $140/bbl in mid 2008. I still remember some posters lamenting paying $5+/gallon for gas to drive to work. And there were politicians demanding investigation into alleged collusion or conspiracy for price fixing. Then, 6 months later, I was shocked to find gas below $2. Crazy!

[tuixiu]

Quote:

Originally Posted by mathjak107 i show from the peak in march 2000 a 1.74% real return over just about 15 years. . 1000 bucks is now 1288.00 .

But this doesn't validate what you said.

A 1.74% return from March 2000 does not make your previous claim of 1.3% over the past 15 years true.

Sorry if I'm busting your balls but as other poster alluded to it sue seems like you are cherry picking timeframes to try to make a point, and in fact providing questionable information as well that you then attempt to correct with a shrug and new data.