January was a real kick in the teeth!

My AA tends to move slowly between my rebalance band because close to half of my liquid NW is in Wellesley/Wellington/Van Ret Income which automatically rebalance but it's getting closer...


With the bulk of my PF in these same three, I think like you. Then again, there are those two international and emerging markets funds over in the Roth. While they only represent 8% of PF, they are admittedly a bit too much out of whack. Yet after 2000 and 2008, I find myself so unbothered by this latest. And I say this with retirement only a few months away...
 
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wheeeee...........S and P up 36........Wheeeeeee.......on the way down 50 on Monday.

:ROFLMAO: :ROFLMAO: My thinking as well!

I am not worried but also not wildly optimistic. Today, I started keeping a record of what my portfolio looked like on its lowest day after yesterday.

It looks much better than it did on 3/9/2009. :)
 
:ROFLMAO: :ROFLMAO: My thinking as well!

I am not worried but also not wildly optimistic. Today, I started keeping a record of what my portfolio looked like on its lowest day after yesterday.

It looks much better than it did on 3/9/2009. :)
+1...........For entertainment value only. I think a lot of us have seen this movie before
 
it's so much more fun to think of the value of our portfolio based upon the highest valuation, rather than the lowest, or anywhere in between.
A friend of mine bought a house in Florida before the bust of 2008, just about at the top of the bubble. He paid over 500K for a house that a year later wouldn't have sold for 275K. Yet, he insisted that his house was "worth" 500K. He would always refer to it as a "500K house I own in Florida"...It has come back from the depths, but not to the 500K he paid for it. He'd love to sell it, and get out because he and his wife don't really like Florida as much as they thought they would, but he won't sell it for less than it is "worth".
 
it's so much more fun to think of the value of our portfolio based upon the highest valuation, rather than the lowest, or anywhere in between.
A friend of mine bought a house in Florida before the bust of 2008, just about at the top of the bubble. He paid over 500K for a house that a year later wouldn't have sold for 275K. Yet, he insisted that his house was "worth" 500K. He would always refer to it as a "500K house I own in Florida"...It has come back from the depths, but not to the 500K he paid for it. He'd love to sell it, and get out because he and his wife don't really like Florida as much as they thought they would, but he won't sell it for less than it is "worth".
Would he feel the same if the price appreciated to 1 million? Would he still refer to it as his 500K has then?
 
What is funny is if you bought a stock at 10 and sold it at 15 we would be thrilled . Yet if we held the stock and it went to 20 and fell to 15 we would be upset.

Like somehow every new high is our benchmark as if we would ever really catch the exact high or low of anything.
 
Like somehow every new high is our benchmark

DW & I are both unable to (completely) reconcile with the mantra that "They're only paper losses".........no, that was our money, IF we'd've cashed in at that point. :LOL:
 
Like many mantra's they are usually wrong.

Paper losses are as real as real can be. Selling is only a taxible event maybe.

Closing out your position daily and buying a new one each morning is no different then keeping the same asset in play over night .

The mantra is wrong about only being paper losses because your net worth is what it is at any point in time whether you choose to care or not.

What matters is not whether you sell or not but whether if you sell and buy something else is there the same opportunity to recover or not when things reverse.

But your value at any point in time is your value. Opportunity to get whole again is something else . That can be the same whether you ride the same asset back up or a comparable asset.
 
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Would he feel the same if the price appreciated to 1 million? Would he still refer to it as his 500K has then?

oh no. it's always worth whatever someone said it was worth at the pinnacle of optimism. At the nano-second prior to the bursting of the bubble. That is what we want to believe it's worth.

Same thing with our portfolios.
 
Except for transaction costs and taxes... which are significant.

If you buy and sell the same equity every day for 5 years and I buy it once and hold it for 5 years, our numbers are very different.

I agree with the paper losses comment though.

I think if it like this
Risk = chance if permanent loss... like GM in 2008-2009 or .com stocks in 2000 or (maybe) some social media stocks today.

Volatility = the roughness of the ride.

I think stuff like VTI have low risk, moderate to high volatility whereas stuff like Greek banks have high risk and high volatility.

I've learned by being smashed in the face a few times to avoid things that seem risky by that definition. That includes
-single stocks with lots of debt or unsustainable dividend payouts

-single stocks that don't make sense to me (most banks, most insurance companies)

-single stocks in fields that seem like they change direction a lot (most tech and pharma)

-any other fancy investments :).

So what I have is mostly stock/bond low cost index funds and a few stocks I feel like are cheap-ish and safe-ish.

Also most of the S&P components were down last year... the index seemed better because a few companies did insanely well... and that seems to be changing now.

Sent from my HTC One_M8 using Early Retirement Forum mobile app
 
The concept of loss is different for accumulators and those who are spending down. It's a paper loss when I make contributions. Something else when I go to fill a yearly bucket.
 
Not really . It is still all it is worth. You may not care at the moment as to the value.

But if it never bounces it back whether you sell or not it still is a loss if that is all it is worth.

We still have hope of making our money back when we don't sell but whether we hang in there and ride the same investment back or sell and ride another one back it is the same thing.
 
Our National Debt is very huge and not possible to repay without inflation as rightfully noticed on this forum, the deficit continue to grow as well. On the other hand current deflation would make this Debt even more expensive. The Feds have no choice but make moves to cheapen the dollar what eventually would make all assets back to what it was worth or even more expensive.
 
The concept of loss is different for accumulators and those who are spending down. It's a paper loss when I make contributions. Something else when I go to fill a yearly bucket.

+1

See this:

How Retirement Became So Risky

Risk management is most sophisticated in the investment industry, which now regularly uses tools, such as value at risk to examine credit and market risks. Once the risk is quantified, professionals can employ a number of hedging alternatives.

Of course, none of this is readily available to individual investors who don’t have the tools or ability to hedge their 401(k) s during recessions or market declines. This means average investors have only a few choices when it comes to risk management: They can accept it, manage it, or transfer it.

My bet is that most choose to accept it mainly because they never see it coming. And this is exactly why retirees who have stopped working and are living off of a fixed accumulation of liquid assets are now facing more financial risk than at any other time in their lives.

Emphasis added


and this

I'm Retired So Now What Do I Do With My 401(k)?

There are 4 ways to handle risk; you can manage it, avoid it, accept it or transfer it, just as the corporations did with their pension plans.

Avoid Risk - Investors try to avoid risk by investing in low yielding money markets, CDs and short term bonds; however this may bring about another type of risk, the risk that they may not keep up with inflation.

Accept Risk - More retirees are being forced because of a low interest-rate environment to accept risks in investments such as stocks and high-yield bonds without perhaps fully understanding the risks that they have undertaken. And what the potential loss to their portfolio would be in a bear market.

Transfer Risk - Some retirees have turned to fixed annuities in an attempt to transfer risk to an insurance company. It's important to fully understand the costs and fees associated with annuities.

Manage Risk - This is where proper portfolio allocation and management can be used to attempt to minimize risk while maximizing returns using a combination of Modern Portfolio Management coupled with hedging techniques during bear markets. [-]The management of risk versus return is where the seasoned investment professional seeks to enhance the life of retirees[/-]. The management of risk is where the rubber meets the road [-]and financial advisers earn their fees[/-].

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification and asset allocation do not protect against market risk.

Emphasis added and strikethrough mine
 
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