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Old 07-06-2008, 10:23 AM   #141
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Nords, I'm not sure if you are intentionally avoiding the points I've tried to make or not. To begin with, I am not "poking fun" at anyone's pension.. I will come right out with it and say that I have an issue with you personally preaching from an ivory tower when your situation (which you earned and deserve) is far different from even someone relying on a purchased annuity. That's all. And I would not have brought it up if you hadn't "poked fun" at me first, please note!

My AA is fine. I have taken things in stride but like the animals who run away or act oddly before an earthquake or typhoon I am unsettled. Some well-meaning people here would like me to calm down and be more civilized.

I haven't consumed any principle, ever.
The principle is, and will continue to be, consumed for me, not just through market declines but through dilution of shares, cost inflation without concomitant increases in earnings, dividends or bond interest, and the decline of the dollar.

Nor have I ever sold ANY stock, ever*, until I did sell some on Thurs. to bring my cash position up to a whopping 13%. It was a very unpleasant feeling.

*ok, once I did sell one gold-mining position that had gone to $200 just because it irritated me to look at it. We all have our moments of pique.

Quote:
1973-4 or 1966-82 or 19 Oct 87 or even 2000-02
In the 70s, bond interest and wages were rising with inflation, now they are not.
1987 and 2000-02 bothered me not in the least.
Stop looking at the speed bump and focus on the brick wall.

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This economic climate is so different from the past in so many good ways


Quote:
proceeded to invest most of the money in financial stocks


rs0460a, I will bear witness to the near-universal annuity bashing of the past. Whether due to people being revisionist in their assessments or just new folks on the board, I don't know and haven't bothered to track.. but in recent months annuities have been discussed with greater respect and thoughtfulness if not outright approval, in the main.
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Old 07-06-2008, 10:38 AM   #142
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Nor have I ever sold ANY stock, ever*, until I did sell some on Thurs. to bring my cash position up to a whopping 13%. It was a very unpleasant feeling.
Ah hah! If I'd had to sell equities after they just took a 20% haircut to refill my "cash bucket", I'd be pissed too. I might also be convinced the financial world is headed to hell in a hand basket.
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Old 07-06-2008, 10:57 AM   #143
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Ah hah! If I'd had to sell equities after they just took a 20% haircut to refill my "cash bucket", I'd be pissed too. I might also be convinced the financial world is headed to hell in a hand basket.
Let's hope (at least for me ) that this market get's "straight" in the next 2.5 years (the amount I have in my cash bucket).

I'd hate to start selling the "seed corn".

- Ron
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Old 07-06-2008, 11:14 AM   #144
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i occasionally like to get a second opinion ... and refer to 1) the asset allocation of vanguard's asset allocation fund, and 2) morningstar's market valuation graph. both of these need, of course, to be taken with a large grain of salt but do distill what i expect to be reasonably informed opinion (more informed than my own).
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Old 07-06-2008, 11:17 AM   #145
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Ah hah! If I'd had to sell equities after they just took a 20% haircut to refill my "cash bucket", I'd be pissed too. I might also be convinced the financial world is headed to hell in a hand basket.


I think our young friend is in dire need of a stress remover.

Perhaps a good stiff one 3 times a day. (Talking about Jim Beam of Course).
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Old 07-06-2008, 11:56 AM   #146
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... it's easier to be less uneasy about the future if you have one.
This is an important point. If one "doesn't currently have a future," then that self-observation should be sufficient motivation to figure out how to get a future.

When I noticed I had very little in the way of retirement money set aside after hitting the big 40 many years ago (and entering my mid-life crisis as a result), I decided to do something about it. Today, retirement money is no longer an issue and I only wish now I had started saving for retirement when I was in my 20s because I would be that much farther ahead.

If this current stress test of one's portfolio points out some weaknesses in one's asset allocation, then it's a good idea to take remedial action when we pull out of these conditions at some point in the future, even if it means working a few more years than originally desired. You can be sure that we'll see market conditions like these again, so it's a good idea to be ready for the next occurrence (whenever that may be).

At the peak of the dot-com bubble, for example, I was calculating how many more months it would be when I would be able to pay off the mortgage and retire. It took me a few years longer than originally expected, but I made the necessary changes to my finances after the bubble burst and got there eventually anyway.
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Old 07-06-2008, 12:03 PM   #147
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Ah hah! If I'd had to sell equities after they just took a 20% haircut to refill my "cash bucket", I'd be pissed too. I might also be convinced the financial world is headed to hell in a hand basket.
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Let's hope (at least for me ) that this market get's "straight" in the next 2.5 years (the amount I have in my cash bucket).

I'd hate to start selling the "seed corn".

- Ron
I didn't "have to". This was a one-time thing to get cash cushion (accumulated from div. & interest) from about 2 years to about 4. Only at past/current spending levels, not sure whether that will really hold. I want to take this (at least 3 years' worth) and put it in a euro bank with 1 year's cash and 2 years euro short term bonds at 4.25% IF I can justify the [used to be .6%, gotta check that] currency fee AND the auto tax witholding that happens here (it comes straight off the top, no exemption levels). Don't say I can write off the foreign taxes because I do that already with ADRs and it's a convoluted process with form 1116 and I have only gotten ever back about half. Not sure if that changes with the levels reported for better or worse; it's only been in the few hundreds but they won't let you write all of it off.
I still have to figure out if that is worth the trouble or not; if not I will put the money in US treasuries and rend my garments and gnash my teeth.

I could sit around and wait for even a modest rebound of the dollar as I have for the last eight years but I think that will happen maybe in about another 20. For now, I am only considering selling what is likely to keep me out of the maw of the AMT, which I have never experienced and don't want to.
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Old 07-06-2008, 12:05 PM   #148
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Nor have I ever sold ANY stock, ever*, until I did sell some on Thurs. to bring my cash position up to a whopping 13%. It was a very unpleasant feeling.
I feel for you. Not only are you being hit by the slump in the stock market and inflation like the rest of us, but in addition, your cash reserves are probably being hit pretty hard by the weak dollar... DW and I are contemplating the possibility to retire in Europe so I like to read about your experiences and right now it sure is an eye opener... Hopefully someone is going to start propping up the dollar soon...
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Old 07-06-2008, 12:15 PM   #149
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Hopefully someone is going to start propping up the dollar soon...
My recent diversification into more bets against the dollar will see to that.
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Old 07-06-2008, 12:20 PM   #150
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Hey, we have had eight years, almost, of the "strong dollar policy"!!
"We're strong dollar people!" (Bush, just the other day)

Imagine if we WEREn't "strong dollar people"!!
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Old 07-06-2008, 01:31 PM   #151
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...In the 70s, bond interest and wages were rising with inflation, now they are not.
1987 and 2000-02 bothered me not in the least. ...
Ladelfina, hope you won't think I'm being picky here but we can benefit from knowing what nasty things happened in the past. Bonds were a bad bet in the 70's, they had negative real returns for several years. That's why in the 80's and 90's they were such a good investment as they overcorrected in the early 80's and had very high positive real returns for many years. Note I'm emphasizing real and not nominal returns. We had a spate of pretty poor bond returns around 2003. I don't have a good source for real rates in the 70's or 80's but we have TIPS now to show the current years:
St. Louis Fed: Series: DFII5, 5-Year Treasury Inflation-Indexed Security, Constant Maturity
I personally think real returns will increase in the future and so would try to stick with shorter term bonds. Sold my 10yr TIPS in January -- that was too early as I now know.

Yes wages were rising with inflation in the 70's but taxes, which were not indexed, made those real increases negative unless you got a big promotion. The only investment that I had that worked out in the 70's was my house in Silicon Valley -- don't know about the rest of the country though.

I will go out on a limb and say that I think this inflation will pass away. Either the Fed will raise rates in response or something will happen to reverse the upward commodity trend. The Fed is very cognizant of the 70's lessons. My guess is the trend will reverse within 9 months after the elections. But don't hold me to this .
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Old 07-06-2008, 05:13 PM   #152
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Perhaps a good stiff one 3 times a day. (Talking about Jim Beam of Course).
Whew! Thanks for the clarification!

Looks to me like the world is populated with optimists and pessimists, in varying degrees. I imagine some will worry more than others, and many will do things they'll regret later.

What I'm absolutely sure of is that none of us have any idea whats going to happen. Or that a pessimist will make an optimist like-minded or vice-versa.

What I'm pretty darn sure of is that if you're making decisions and moves based on whats happened over the last few months or a year or two rather than the ones planned out over decades...you'll probably be sorry about that.

What I'm really darn sure is that we wont gain much by kicking **** all over each others shoes.

As far as annuities go, I'm only aware of one or two guys that think they're all evil for everyone. Last time I did a poll something like 95% of the users here said they'd consider one or bought one.

So once again, perhaps the criticism of the borg collective is a bit overdone.
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Old 07-06-2008, 05:26 PM   #153
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I think our young friend is in dire need of a stress remover.

Perhaps a good stiff one 3 times a day. (Talking about Jim Beam of Course).
Jim Beam joined my team years ago.
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Old 07-06-2008, 05:28 PM   #154
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Jim Beam joined my team years ago.
He does the hammering, right?
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Old 07-06-2008, 05:35 PM   #155
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He does the hammering, right?
Must resist......
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Old 07-06-2008, 05:43 PM   #156
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He does the hammering, right?
Warped minds here.
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Old 07-06-2008, 05:56 PM   #157
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Warped minds here.
Thats an understatement!

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Old 07-06-2008, 06:46 PM   #158
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Ladelfina. You say your AA is fine but what is? You are correct interest rates on bonds are going up like they did in the 70s. Instead they are performing normally;, a recession/slowing leads to a drop in interest rates, increasing the value of bonds and mitigating the effects of dropping equities.

I just calculated my June 07 to June 08 portfolio and I am "only" down 12.1%, (including withdrawals of about 3%) Now this despite making three critical mistakes in the market the last year. Taking out a Home Equity loan to invest in the market, deliberately reducing my AA from 70/30 equities to 80/20 and buying financial stocks much too early. Now I suppose that it is possible for a retiree to screw up worse than I did but it isn't easy. A couch potato portfolio including withdrawals is down 6.5-7%. I understand you have currency risk which has certainly been painful. It seems to me that if you had >10% loses and it bothers you than either A. your AA is quite aggressive >75% equities, and you aren't as risk tolerant as you thought or B. you made some bad investment choices (like me) and you should re think your investment strategy.
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Old 07-06-2008, 06:53 PM   #159
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i occasionally like to get a second opinion ... and refer to 1) the asset allocation of vanguard's asset allocation fund, and 2) morningstar's market valuation graph. both of these need, of course, to be taken with a large grain of salt but do distill what i expect to be reasonably informed opinion (more informed than my own).
I too peek at VG's AA fund -100% stock, and -13.12% YTD - talk about standing on go waiting for throttle up!

So where is Harry Truman now that we need him. I may get frightened if BUD loses their battle to stay American - The World May Be Flat but sheesh.

Hurry up just stand there and psst Wellesley the Norwegian widow is still getting her dividends - but a few thousand more points may bring on some twinge and pucker.

May have to send for True Grit on NetFlix to buck myself up.

heh heh heh - meanwhile Vanguard's computers do their thing with my Target 2015 whether I look or not. . I did stay under $300 for fireworks this - subconsciously cutting back a tad.
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Old 07-06-2008, 07:37 PM   #160
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I personally think real returns will increase in the future and so would try to stick with shorter term bonds.
Could you share your reasoning on this Isbcal?

Ha
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