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This is probably preaching to the choir...
Old 02-05-2005, 08:23 PM   #41
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This is probably preaching to the choir...

... but you already know that you LBYM, you save more than enough, and you have enough investing time to ride out anything-- even another Great Depression.

So perhaps it's time to review Bernstein's "Four Pillars", pick an asset allocation you can sleep with, and start DCA'ing into it. Leave the I bond portfolio where it is for a house down payment (or for the next crash in rental properties) and start building a new portfolio from scratch!
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Re: Question specifically for the older/wiser (50+
Old 02-06-2005, 03:46 AM   #42
 
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Re: Question specifically for the older/wiser (50+

Hello soupxcan! Well, if you move all the time your
real estate options are limited. However, I am 60
years old and have never seen a bubble which popped
everywhere. There are always opportunities, although
at times they are harder to find. I never owned an REIT
although I have considered it. Prefer to own direct and have control (control freak). Anyway, my asset alocation
is pretty offbeat but I like it just fine.

JG
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Re: Have a long horizon or sleep at night?
Old 02-06-2005, 12:09 PM   #43
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Re: Have a long horizon or sleep at night?

Quote:
Hey, you're in good company. *Warren Buffett claims to be sitting on $38B. *

What about putting it in a money market until you find something you're comfortable with-- a low P/E like MRK (admittedly a low P/E for some very good reasons) or a sector with a lower P/E than the rest of the S&P or TSM. *Or try a different screener like P/B or P/S.

I guess you have to decide which makes you sleep better at night-- being in cash while the market keeps rising despite poor fundamentals, or being fully invested while it's turbulent, sideways, & falling.

Disclaimer-- our retirement portfolio is 98% equities. *Last month that looked like a bad idea, this week it's been very profitable. *FWIW, my personal portfolio is locked up in last month's "losers" like Nortel (NT), Sun (SUNW), Las Vegas Sands (LVS), Overstock.com (OSTK), & Cascade Microtech (CSCD). *I'm also short Build-a-Bear Workshops (BBW) & Greenfield Online (SRVY).
Nords, can you favor us with your investment thesis to short BBW?
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Re: Have a long horizon or sleep at night?
Old 02-07-2005, 04:35 AM   #44
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Re: Have a long horizon or sleep at night?

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Nords, can you favor us with your investment thesis to short BBW?
Uh, sure: I have a kid.

I hope you weren't expecting an Asensio-style in-depth research project, complete with fraud warnings and links to organized crime. Or a Buffett-Munger DCF with heartland homilies. This "analysis" (worth what you paid for it) barely even reaches Peter Lynch's level. But I am counting on the retailing boom/bust cycle repeating itself, especially in the face of trying to manage aggressive expansion.

I see these guys as the next Krispy Kreme-- great publicity campaign, commercials that make everyone go "Aaawwww", wonderfully sweet artery-clogging product, huge expansion-- yet something that inevitably saturates your tastes and isn't fun after the first couple attempts.

I've watched the cycle several times-- we profited mightily from 4Kids Entertainment when they started distributing Poke'mon videos/movies, and then we shorted them right back down when it faded. (I was forced to watch the first Pokemon movie in a theater. Afterwards I would have paid extra to short the stock.) Same cycle-- ironically on the same company-- with Yu-Gi-Oh! products. You could almost predict when the big institutional timers investors would finally look at their credit-card statements and notice what their kids were buying.

BBW is today's version of the wave of "build your own ceramics" franchises that swept the country a few years ago. Although our kid is now 12 and way too cool to be caught dead in a BBW, we've checked with the neighborhood's younger analysts. Most of them have been invited to an affair involving this product, and have perhaps gone back on their own for one more, but where's the rest of the repeat business? How many bears can one kid persuade their parents to buy for them? This isn't Discovery Zone or Chuck E. Cheese or McDonald's. I'm sure Warren Buffett would have a handle on the American population of eight-year-old girls along with an estimate of their annual bear purchases.

I give this a year or until the death-phrase "declining same-store sales". Kids will move on to the next cool thing, same-store sales will start dropping, and marketing costs will start rising. One analyst will edge nervously to the exit and then the crowd will stampede.

$29.57 last Nov and I'm considering going back for more this month or next. All those lockups are expiring in a couple more months. I haven't done my quarterly research yet but I admit that I was relieved to see their first correction last month.

Disclaimer-- I've only been shorting for a couple years and I do it in a personal account, not the retirement portfolio's brokerage account. Due to my penchant for being early at calling the bottom/top, I have a high tolerance for volatility. Although I've made money from 4Kids, Janus, Pfizer, and the NASDAQ, I also shorted KMart at $77 and paid dearly for it.

[rant]But I'll never challenge Eddie Lampert ever again on the basis of fundamental analysis and declining same-store sales-- he manipulates buzz better than I can remain solvent. In fact if I learn that he's buying BBW shares then I'll immediately cover.[/rant]

As UncleMick has mentioned before, I suspect that this testosterone-poisoned putzing will burn out in another year or two and I'll put it all in a small-cap value ETF. Or, if I finally spend the time to develop a system that doesn't interfere with surfing, it may take me even longer to get over it...

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Re: Question specifically for the older/wiser (50+
Old 02-07-2005, 02:09 PM   #45
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Re: Question specifically for the older/wiser (50+

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My problem with sitting on cash is that I worry I'll be sitting in cash forever. There's always a reason to avoid investing...a fear of whatever lies just over the horizon. I don't want to get stuck in "perpetual bear" mode...a 20-something with $55k in I-bonds? Come on! Making things worse is the fact that I have low expenses with a decent salary - I have too much free cash flow (I know, a terrible problem).
Soup:
If you are looking for a place to put cash, you can stick up to 400k (as a couple, insured) into Penfed 5 year CDs at 5% with nice options for pulling out if interest rates go up in the meantime. (Thanks to MJ) Beats the heck out of short term corporate or anything else. Since you have free cashflow, you dont need the cash.

But your real problem is you think everything is expensive out there and so don't want to buy anything. It is a tough one -- no easy answers there. I think you just have to at some level make a DCA plan, bite the bullet, hold your nose, whatevery your image is, and 'just do it'. Get your Bernstein/CoffeeHouse research done, figure out how your current asset allocations are out of whack to an ideal asset allocation, and then ignore whether a single asset class feels "over valued" or 'Under valued" (humility from years of wrong calls makes me realize that I don't ever really know) and just get there.

Occasionally things 'feel cheap' and you can pile into them, but then you'd just have to figure out when to sell them, and you'd have a lopsided though bigger portfolio.

So you'll never get away from this conundrum. Doing nothing is its own sort of decision, too. And in this case not a r great one.

But don't worry about investing fashion or demonstrating sufficient amounts of studliness or testosterone. Bad idea to go into investments needing to prove something. Just try to own the whole world, match the markets, nothing fancy, nothing difficult. You'll have risk, but it will be diversified and so manageable. And it will be rewarded in little fractions of a percent gain here and another percent there. Easy, cool. Nothing fancy.

Good luck!
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Re: Question specifically for the older/wiser (50+
Old 02-07-2005, 02:33 PM   #46
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Re: Question specifically for the older/wiser (50+

Quote:
Occasionally things 'feel cheap' and you can pile into them, but then you'd just have to figure out when to sell them, and you'd have a lopsided though bigger portfolio.
C'est dommage! Whenever any of you guys have that big lopsided portfolio problem, just call me and I'll trim it down for you.
Mikey
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Re: Question specifically for the older/wiser (50+
Old 02-07-2005, 05:22 PM   #47
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Re: Question specifically for the older/wiser (50+

Hi ESRBob,

How can a couple put $400k into Penfed with full
FDIC coverage? I can see $300k with "his", "hers"
and "theirs" but don't get it for the extra $100k.

Thanks,

Charlie
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Re: Question specifically for the older/wiser (50+
Old 02-07-2005, 06:16 PM   #48
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Re: Question specifically for the older/wiser (50+

Quote:
How can a couple put $400k into Penfed with full FDIC coverage?
With a credit union, technically it's NCUA coverage. But I think this naming works for any credit union or bank account:

His alone, with transfer on death (TOD) to beneficiary.
Hers alone with TOD.
His with her as joint owner.
Hers with him as joint owner.
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Re: Question specifically for the older/wiser (50+
Old 02-07-2005, 06:21 PM   #49
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Re: Question specifically for the older/wiser (50+

Thanks Nords, Now if I just had $400k .......

Cheers,

Charlie
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Re: Question specifically for the older/wiser (50+
Old 02-08-2005, 03:58 AM   #50
 
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Re: Question specifically for the older/wiser (50+

Hi Charlie. I never had enough money to worry about
the 100K insurance limit. I do recall once that I got up to about 125K in one account and looked up the bank's
rating just for grins. But, let's face it, it's a rare problem
and certainly way down on the list of the dangers to
a typical ER portfolio.

JG
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Re: Question specifically for the older/wiser (50+
Old 02-08-2005, 02:02 PM   #51
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Re: Question specifically for the older/wiser (50+

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But, let's face it, it's a rare problem and certainly way down on the list of the dangers to a typical ER portfolio.JG
True I suppose JG.

Nevertheless, it is sometimes good to remember that what counts is not the danger to a "typical portfolio", but the danger to one's own particular portfolio.

Mikey
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Re: Question specifically for the older/wiser (50+
Old 02-22-2005, 02:36 PM   #52
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Re: Question specifically for the older/wiser (50+

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I'm not thrilled with the fees on PCRDX and I might eventually open an account with Vanguard or someone like that just so that I can get access to PCRIX, but for now it isn't worth the trouble. *I am OK with ponying up in the meantime because the data was so compelling, and commodities have a relatively high negative correlation with small caps, which I am heavily over-weighted in.
I'm just off the phone with the account representative at my local branch office of TD Waterhouse and he says that you can buy PCRIX through them for $1000 initial and $500 follow on investments or half of that in an IRA.
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Re: Have a long horizon or sleep at night?
Old 06-03-2005, 07:14 PM   #53
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Re: Have a long horizon or sleep at night?

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Originally Posted by brewer12345
Nords, can you favor us with your investment thesis to short BBW?
I shorted at $29.58 last November. It was no fun watching the stock rise to $36.

Today the other shoe dropped with a loud thunk when they cut their earnings forecast and the stock dropped 20%. I covered at $22-- no reason to be greedy.

Cost of the round trip-- $16.28 minus short-term cap gains. Time to go longboard shopping. In Australia.

I think I'm done nursing my grudge over Eddie Lampert & KMart...
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