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Old 01-01-2010, 07:43 PM   #21
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If I recall correctly you also had the good fortune brilliant timing of being mostly out of equities during the big 2000 sell off and averaged in after the bubble had burst. That must have helped a lot relative to what would have happened if you were fully invested through that whole time. No?
I averaged in 1999-2002 so I was adding to equities during that entire time, not mostly out of equities until 2002. I was probably already 75% finished with my averaging in by the beginning of 2002.

And that was specifically for my retirement portfolio. I still owned quite a chunk of company stock early in the 2000s (i.e. equities).

It definitely helped that many of the asset classes I was buying into during that period did not suffer like the S&P500 did during that time, and many of these handily outperformed the S&P500 in subsequent years.

Nevertheless, the early easier ride through the 2000-2002 bear market didn't save me from being clobbered in 2009. I was killed last year like everyone else - at the end of Feb 2009 total net worth down 40% from peak in Oct of 2007 and about 6.5% below where I started in August of 1999!!!!! I am still down about 14% from peak. But since I am also up 33% from my retirement date, I am a happy retired camper!

Basically, I think that "lost decade" story is pretty specific to the S&P500 - i.e. large-cap growth stocks.

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Old 01-01-2010, 08:57 PM   #22
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For what it's worth, here are the 10-yr annualized returns of the 3 most often mentioned Vanguard MFs. I do not own any of these, but am seriously thinking about putting a big percentage into Wellesley. I admit Uncle Mick's not-so-subliminal message is getting to me. Heh heh heh... (what did I just write?)

Vanguard Wellesley Admiral: 6.93% /yr
Vanguard Wellington Admiral: 6.30%/yr
Vanguard SP500 Index: -0.65%/yr

I have not looked but would guess Vanguard SP Index would outperform during the decade of 1990 to 2000, when the market kept going up and up.

Did my own performance beat Wellesley? I do not have exact figures, but I believe I outperformed it if counting from my lowest point in Oct 2002. If I include the earlier period of my insanity from 1999 to 2002, I would trail Wellesley badly. Looking ahead, who knows?

Another fund that I still own, Dodge and Cox Balanced, performed very well until 2007, when they stumbled badly. They held too much financials! Curiously, Bogle spoke well of Dodge and Cox, even after they fell from grace. I think it was because of Dodge and Cox management's unquestionable integrity, compared to other shenanigans pulled by other mutual fund managers. Still, they should have known that these stinkin' financials outsized profits due to sham mortgages could not go on forever.
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Old 01-01-2010, 09:28 PM   #23
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Here is an interesting take on the lost decade:
Video - CNBC.com
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Old 01-01-2010, 11:35 PM   #24
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A decade is long time to track stuff :-).

From 12/1999 to 12/2009, a period which included 8 months of unemployment, two additional kids, buying a new car, a divorce, an MBA, several moves, saving a bunch in 401k's and IRA's and ESA's, and probably some other stuff, my net worth has grown at a CAGR of 8.71%.

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Old 01-02-2010, 02:47 AM   #25
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Although I stayed about 100% in individual large/mid cap domestic equities, the last decade went well for me (allowing me to retire in 2006) mainly due to 3 'whole portfolio' decisions :

1) shifting very heavily into (undervalued IMHO) REITs in late 1998 (completely missing the 2000-2002 downturn)
2) shifting back into blue chips in 2005 (when REITs became fully valued and regular blue chips better values than REITs IMHO)
3) shifting the part of my investments from no-longer-blue-chip financials into other blue chips in early 2008 when I felt unable to analyze them anymore, softening the 2008 decline

Overall IRR for the decade : 17.8% / year
More important to me : average increase in dividend generating ability (my own standard) of almost 17% / year (my current portfolio is not as undervalued IMHO as my portfolio at the end of 1999 was).
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Old 01-02-2010, 07:25 AM   #26
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Here is an interesting take on the lost decade:
Video - CNBC.com
Good post. Thank you.
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Old 01-02-2010, 08:00 AM   #27
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Another fund that I still own, Dodge and Cox Balanced, performed very well until 2007, when they stumbled badly. They held too much financials! Curiously, Bogle spoke well of Dodge and Cox, even after they fell from grace. I think it was because of Dodge and Cox management's unquestionable integrity, compared to other shenanigans pulled by other mutual fund managers. Still, they should have known that these stinkin' financials outsized profits due to sham mortgages could not go on forever.
Actually, it wasn't just the equities in DODBX that was hurt. The bond portion did just as poorly. I know, because I also own DODIX. It was creamed! Why? Because for the previous year DODIX had eschewed treasuries and other govt debt for corporate bonds. I had no idea DODIX had become so concentrated. Fortunately, DODIX recovered very well rest of 2009.

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Old 01-02-2010, 08:09 AM   #28
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Originally Posted by CyclingInvestor View Post
Although I stayed about 100% in individual large/mid cap domestic equities, the last decade went well for me (allowing me to retire in 2006) mainly due to 3 'whole portfolio' decisions :

1) shifting very heavily into (undervalued IMHO) REITs in late 1998 (completely missing the 2000-2002 downturn)
2) shifting back into blue chips in 2005 (when REITs became fully valued and regular blue chips better values than REITs IMHO)
3) shifting the part of my investments from no-longer-blue-chip financials into other blue chips in early 2008 when I felt unable to analyze them anymore, softening the 2008 decline

Overall IRR for the decade : 17.8% / year
More important to me : average increase in dividend generating ability (my own standard) of almost 17% / year (my current portfolio is not as undervalued IMHO as my portfolio at the end of 1999 was).
Very impressive CyclingInvestor! If I were willing and able to do the company/segment analysis you do, I would time asset classes too!

Audrey
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Old 01-02-2010, 09:19 AM   #29
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Originally Posted by CyclingInvestor View Post
Although I stayed about 100% in individual large/mid cap domestic equities, the last decade went well for me (allowing me to retire in 2006) mainly due to 3 'whole portfolio' decisions :

1) shifting very heavily into (undervalued IMHO) REITs in late 1998 (completely missing the 2000-2002 downturn)
2) shifting back into blue chips in 2005 (when REITs became fully valued and regular blue chips better values than REITs IMHO)
3) shifting the part of my investments from no-longer-blue-chip financials into other blue chips in early 2008 when I felt unable to analyze them anymore, softening the 2008 decline

Overall IRR for the decade : 17.8% / year
More important to me : average increase in dividend generating ability (my own standard) of almost 17% / year (my current portfolio is not as undervalued IMHO as my portfolio at the end of 1999 was).
Good forecasting!
Just wondering if your name is related to your love of biking or your love of cyclical investing?
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Old 01-02-2010, 09:22 AM   #30
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WaPo jumps on the bandwagon:

Aughts were a lost decade for U.S. economy, workers

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It was, according to a wide range of data, a lost decade for American workers. The decade began in a moment of triumphalism -- there was a current of thought among economists in 1999 that recessions were a thing of the past. By the end, there were two, bookends to a debt-driven expansion that was neither robust nor sustainable.
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Old 01-02-2010, 09:41 AM   #31
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Good forcasting!
Just wondering if your name is related to your love of biking or your love of cyclical investing?
Bicycling - touring, commuting (when I worked) and shorter rides.I have enjoyed it since my first paper route at 9 in 1967 and first overnighter (LA-Santa Barbara) in 1983.

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If I were willing and able to do the company/segment analysis you do, I would time asset classes too!

Audrey
Thanks. I actually only look at individual companies (30-40 at any time, which are all I can find that clear the bar). The big shifts were done one company at a time over a period of months as relative values changed.
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Old 01-02-2010, 10:04 AM   #32
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Fortunately for me, 1999-2007 was my best earning years and the majority of my net worth was equity in the company I worked for(private co and equity not affected as a public co). Too bad I didn't keep working until 12/31/09, adding even more to my net worth and missing most of the down turn as I would have still been invested primarily in my company stock, but that's the way it goes. Like most, 2007-2009 was not pretty but at least I did OK for the last 10 years as a whole. I have enjoyed not working the last 2 years though.
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Old 01-02-2010, 10:28 AM   #33
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A very interesting exercise. Fortunately I used MS Money the entire decade and just had to push a few buttons to come up with the numbers.

A few qualifiers...

1. I worked the entire decade, except the last six months of 2009, at increasingly higher salary, bonus, stock options, etc.

2. Half of the NW went to the ex in March of 2000 in a divorce.

3. I was more than 80% in equities the first six years of the decade.

The results...

IRR
1/00 to 12/02 -28% IRR
1/03 to 12/05 +12% IRR
1/06 to 12/09 +11% IRR
For the decade +5% IRR

Net Worth Increase
For the Decade +500%
From Divorce date (3/00) +850%
From low point (4/01) +1400%

The lessons to be learned.

1. Stay invested, time is your greatest ally.
2. If you make more save a higher % each year. Guess this is the classice LBYM argument.
3. Diversify and be faithfull to your AA.

All in all a great decade as far as I'm concerned.
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Old 01-02-2010, 10:30 AM   #34
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A very interesting exercise. Fortunately I used MS Money the entire decade and just had to push a few buttons to come up with the numbers.

A few qualifiers...

1. I worked the entire decade, except the last six months of 2009, at increasingly higher salary, bonus, stock options, etc.

2. Half of the NW went to the ex in March of 2000 in a divorce.

3. I was more than 80% in equities the first six years of the decade.

The results...

IRR
1/00 to 12/02 -28% IRR
1/03 to 12/05 +12% IRR
1/06 to 12/09 +11% IRR
For the decade +5% IRR

Net Worth Increase
For the Decade +500%
From Divorce date (3/00) +850%
From low point (4/01) +1400%

The lessons to be learned.

1. Stay invested, time is your greatest ally.
2. If you make more save a higher % each year. Guess this is the classice LBYM argument.
3. Diversify and be faithfull to your AA.

All in all a great decade as far as I'm concerned.
You missed a lesson:
4. Don't get married
TJ
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Old 01-02-2010, 10:43 AM   #35
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You missed a lesson:
4. Don't get married
TJ
Yes I learned that one the hard way.
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Old 01-02-2010, 01:00 PM   #36
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You missed a lesson:
4. Don't get married
TJ
or the corollary
4. Don't get married without a prenup.
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Old 01-02-2010, 02:16 PM   #37
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A decade is long time ...
A decade is getting shorter and shorter for me. It is not that long. Sigh...
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Old 01-02-2010, 02:23 PM   #38
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You missed a lesson:
4. Don't get married
TJ
Perhaps "Don't get married if you have significant $$$". I feel my relatively early marriage and divorce (before I had significant savings) served as a low cost inoculation against any later, much more expensive feelings that I could beat the odds or that "this one will last forever".
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Old 01-02-2010, 05:44 PM   #39
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I think it was the lost decade for me. Unfortunately I only have my net worth calculation from Jan 2003, but I have been doing them at the beginning of the year for almost 20 years.

IIRC my net worth now is about 5% below what in Jan 2000. This isn't all do to stock or bond investments. Between the house, a business venture, and some Angel investments which are unlikely be worth much I've lost more than $200,000. If I hadn't done those things I'd be up a bit. Despite living in a Hawaii for 10 years and not working.

In fact, I feel a bit more confident about not having to get a job. If I managed to get through this decade with only minor loses to my portfolio. I should be ok in a better environment.
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Old 01-02-2010, 10:20 PM   #40
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Interesting exercise. I maintained my AA and had no major changes like inheritances etc. My IRR over the last decade was 2.75%/year and net worth increased 725%. It was the decade of largest income for me plus we put 2 kids through college and saw them get jobs plus DW ESR'ed 5 years ago.

Looks like I would have been much better off if I'd been in Wellesley and Wellington but not possible as limited to 401(k) options.

Overall though, quite a pleasing result and so fortunate not to have ER'ed 2 years ago.
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