S&P 500 has worst decade ever.

[Maurice]

According to this Times piece, the S&P's real annualized return was -5.1% in the 10 years ended January 2009. That's the worst 10 years in its history.

http://www.nytimes.com/2009/02/07/business/07charts.html?_r=2&ref=business

 

[LOL!]

Well, I guess that proves you can still retire no matter what the stock market does because there have been lots of FIREd folks showing up here for the last 10 years.

 

[2B]

Well, I guess that proves you can still retire no matter what the stock market does because there have been lots of FIREd folks showing up here for the last 10 years.

Unfortunately, the part that made this the worst 10 years in history is the last 6 months.

We were not doing too poorly until then.

 

[Maurice]

Yeah, keep in mind that graph isn't displaying return over time, its displaying 10 year annualized return over time. As recently as 24 months ago that number was ~5% or so.

And we certainly have seen people who had to go back to work in the last 6 months.

And a lot more who have pushed back their FIRE date.

 

[unclemick]

Whisper - psssst Wellesley to all your friends and then party til you puke.

After all going into 16th year of ER not getting any younger plus I've heard this vicious rumor you can't take it with you.

Next thing you know the dang market will go up the next ten years and just take all the fun out of being a really cheap ba bas - well you know.



heh heh heh - .

We all did notice that other pesky period 73-83 ish - right. That was a lot fun to dollar cost average thru. So in another 10-15 years we'll be ready for an uptick eh?

 

[Dennis]

Well, Wall Street Better do whatever it can to Have a Very Good Next couple of Yrs and beyond if they expect to remain In Business..Seeing as besides myself, many others I've talked to are just going to hold on until get even and just about all but dump Equites, even if they only make 3% apy on bonds..which i doubt they will and more like 6-7% apy..

BTW..thru 2007, LT Treasuries had ave about 6% the previous 10 yrs, compounded out to being worth a total of over 80% and after 2008, it's now over +7.6% apy for the past 10 yrs and on a per $100k basis? Worth over $180,000 today

Guess who has done nothing but put his Money into LT treasuries all those past yrs? Allan GreenSpan.. The Sly Old Fox....LOL

Wonder how He's Felt since 2008 and they did over +22%?
even if they drop by -5 or 10% this yr, he's still way ahead of the game..for a 2 yr ave.

 

[Dawg52]

Well, Wall Street Better do whatever it can to Have a Very Good Next couple of Yrs and beyond if they expect to remain In Business..Seeing as besides myself, many others I've talked to are just going to hold on until get even and just about all but dump Equites,

All I ask is please let me dump mine before y'all dump yours.

 

[REWahoo]

You guys are assuming those of us over the age of 50 will live long enough to "get even"? Optimists...

Dawg, why not [-]take a[/-] dump now and avoid the rush?

 

[Nords]

Seeing as besides myself, many others I've talked to are just going to hold on until get even and just about all but dump Equites, even if they only make 3% apy on bonds..which i doubt they will and more like 6-7% apy..

These are probably the same people who were going to get out of tech stocks forever-- and never ever ever invest in precious metals or commodities again either.

So... anyone remember the 10-year periods where bond returns beat inflation?

 

[CuppaJoe]

really cheap ba bas....

We've gotta get that one into the glossary ba but quick.


"Really cheap ba bas...."

I aspire to learn from the master.

 

[Dawg52]

You guys are assuming those of us over the age of 50 will live long enough to "get even"? Optimists...

Dawg, why not [-]take a[/-] dump now and avoid the rush?

I know that is what you want, but I'm not. I'm going to hold and you guys will suffer right along with me until the end of of time. Hold stocks that is. Heh heh heh

 

[2B]

I lost about 75% of my assets in 73/74 - fortunately I didn't start with much but I learned to be a little more conservative and diversified. I kept buying stocks in my various thrift plans and it's grown to a decent sum despite its violent ups and downs even considering the 2008 swoon.

There's a lot of woulda, coulda, shoulda going on. After every big drop I hear people saying that they're never going to buy stocks again. They're going to put everything into Treasuries, etc. I don't personally know anyone that really did it. They may have bailed out but at some point they see the market going up and hear about all the money people are making. They buy back in and successfully missed most or all of the recovery.

If I knew what was going to happen I'd certainly take advantage of it. Unfortunately, I don't. Fortunately, I know I don't. I am glad I went to 40% cash/CD in 2007 but that was more a strategic realignment of my portfolio in anticipation of retirement. My cash is now about 55% but the $ amount is the "basic retirement" cash funding needed.

 

[Tadpole]

Human nature, on average, will follow the money. Many people who say they will get out will ride it day by day thinking one more dollar. People already out will, unfortunately, get in late as they abandon assets losing to inflation hoping to make more in the market. The latter will also get back out too late again. Isn't it all fun? If what I say isn't what happens then human nature is one of the only things more unpredictable than the market. Where are those behavioral economists placing their bets?

 

[Maurice]

So... anyone remember the 10-year periods where bond returns beat inflation?

Do tell...

 

[FIRE'd@51]

So... anyone remember the 10-year periods where bond returns beat inflation?

I don't have the monthly data, but on a year-end basis, long-term treasuries have beaten inflation (CPI) every 10-year period since 1974-1984.

 

[Nords]

I don't have the monthly data, but on a year-end basis, long-term treasuries have beaten inflation (CPI) every 10-year period since 1974-1984.

Well, I really was asking a question and not administering a pop quiz.

My imperfect memory of Dimson & Marsh (which I'm going to have to look up) is that stocks outperformed inflation in every 10-year period of the 20th century while bonds had a significant number of 10-year periods where inflation won.

I can't remember if that data took taxes into account. For example, there's this post (which popped up on a Google search):
http://www.early-retirement.org/forums/showpost.php?p=522398&postcount=13

And pages 11-12 of this PDF, although it's not broken down into 10-year rolling periods:
http://it.csam.com/it/documents/EU_Trends_020308_eng.pdf

Given the average recession of 12-24 months three or four times out of at least 30 years of retirement, I'd find it hard to forsake stocks for bonds. But by gosh we can sure put those short-term returns under a microscope, especially when we're still within the 12-24 month period.

As for long-term Treasuries, your claim is significantly at odds with the behavior of my parents-in-law and their 100% Treasury/CD portfolio. But they've only been doing that for about 8-10 years.

 

[Marcretire]

Whisper - psssst Wellesley to all your friends and then party til you puke.

After all going into 16th year of ER not getting any younger plus I've heard this vicious rumor you can't take it with you.

Next thing you know the dang market will go up the next ten years and just take all the fun out of being a really cheap ba bas - well you know.



heh heh heh - .

We all did notice that other pesky period 73-83 ish - right. That was a lot fun to dollar cost average thru. So in another 10-15 years we'll be ready for an uptick eh?

Wellesley was fown 10 percent last year and is down nearly 5 percent this year, so, why is Wellesley so great?

 

[2B]

Wellesley was fown 10 percent last year and is down nearly 5 percent this year, so, why is Wellesley so great?

I don't own Wellesley but my balanced portfolio was down 25% in 2008 and I'm down about 3% so far in 2009. I would have been better off in Wellesly.

I don't like bond funds but Wellesley is heavy in fixed income. That shielded it from a lot of the stock fund decline.

 

[clifp]

Wellesley was fown 10 percent last year and is down nearly 5 percent this year, so, why is Wellesley so great?

You are kidding right? The second worse economic conditions in the last 100+ years and you don't think a balanced fund that only dropped 15% is good. I'd love to have my portfolio down only 15 percent instead of 30%.

 

[73ss454]

clifp, I guess to someone in all CD's, 15% down is bad. I also wish I had I held more of it.

 

[FIRE'd@51]

Well, I really was asking a question and not administering a pop quiz.

And I really was answering your question.

My imperfect memory of Dimson & Marsh (which I'm going to have to look up) is that stocks outperformed inflation in every 10-year period of the 20th century

A quick glance at the graph Maurice provided in his opening post will show you that this isn't true.

Given the average recession of 12-24 months three or four times out of at least 30 years of retirement, I'd find it hard to forsake stocks for bonds.

I never said anything about foresaking stocks for bonds. In fact, on a year-end basis, stocks have also outperformed inflation in every 10-year period since 1974-1984 except for the most recent, 1998-2008. In all but three (1992-2002, 1997-2007, and 1998-2008) of those ten-year periods, stocks also out-performed long-term treasuries.


BTW, my results are all pretax.

 

[Marcretire]

You are kidding right? The second worse economic conditions in the last 100+ years and you don't think a balanced fund that only dropped 15% is good. I'd love to have my portfolio down only 15 percent instead of 30%.

I see your point, although, from my newbie vantage point, Wellesley performed relatively well last year because of its dominant bond holdings. I'm considering Wellesley to combine with my Wellington holdings but am also considering Vanguard Total Bond Index, which was +5% last year.

 

[Lusitan]

Whoo-hoo! This is the first 10 years of my investing career ... if I can stomach this, I should be OK. After all, it can't get worse than this.



Can it?

 

[W2R]

Whoo-hoo! This is the first 10 years of my investing career ... if I can stomach this, I should be OK. After all, it can't get worse than this.



Can it?

The baby boom generation is just NOW beginning to approach retirement age. Just wait until all the consumption and productivity of my generation and their effects on the economy begin to diminish...

 

[FinanceDude]

The baby boom generation is just NOW beginning to approach retirement age. Just wait until all the consumption and productivity of my generation and their effects on the economy begin to diminish...

I wouldn't count on that....for everyone of you FIRE guys there are 10 others that can't help themselves, and will self-liquidate or borrow into retirement oblivion........I think reverse mortgages will be the bubble of 2010 and beyond.......