Some perspective

[Marquette]

I appreciate Leonidas' points except that I have to agree with ziggy29: this IS different because diversification is not helping as much as it traditionally has. This time I see bigger, more systemic problems than mere misallocation.

Well, if we're all going down, then that's ok too because we'll all be in the comparatively same spot. A falling tide lowers all boats. You won't need $x to retire any more because $x will go from being 'enough' to 'rich'. Now you'll just need f($x).

Or, we learn to live by growing our own food and we still get by. The only time I'll be convinced that it really is different is when the species is in danger of being wiped out. Otherwise, from a survivability standpoint, mankind will march on.

 

[statsman]

I appreciate Leonidas' points except that I have to agree with ziggy29: this IS different because diversification is not helping as much as it traditionally has. This time I see bigger, more systemic problems than mere misallocation.

I'm seeing that too. I'm heavily into bonds, but bonds were flat or even down last quarter, so no help there. US stocks are down, but foreign stocks are down just as much this year. The one area that was performing decently for us, mid-cap and small-cap stocks, are now taking their lumps too.

Well, if we're all going down, then that's ok too because we'll all be in the comparatively same spot. A falling tide lowers all boats. You won't need $x to retire any more because $x will go from being 'enough' to 'rich'. Now you'll just need f($x).

Believing that would actually make investing a lot easier, at least for myself. But I tend to believe that if our portfolio is dropping, someone else's is going up (or at least not dropping nearly as much). Wrong assumption?

 

[ziggy29]

I'm seeing that too. I'm heavily into bonds, but bonds were flat or even down last quarter, so no help there.

Even "flat" is a big help compared to the S&P 500 being down 13% YTD.

A 30% allocation to "flat" brings a 13% loss down to about a 9% loss.

 

[statsman]

Even "flat" is a big help compared to the S&P 500 being down 13% YTD.

A 30% allocation to "flat" brings a 13% loss down to about a 9% loss.

For me, it appears to be one of timing. Realizing that the AAs in our 401(k)s were not properly diversified and too stock heavy for our risk tolerance, I changed the AAs on May 2. YTD to May 2 we were slightly up at +0.28%. From May 2 through July 3, we are down 5.1%.

For the first time in my adult life I am taking control of our investments and we end up losing 5% in two months. Despite understanding that the stock markets as a whole are dropping most everywhere, I question whether I am comfortable being in the stock market at all.

 

[Moemg]

The thing that is different this time is we are also having the real estate melt down at the same time . When the tech meltdown was happening the real estate market was going up so you still felt like you were gaining ground . This just feels like quicksand .

 

[statsman]

This just feels like quicksand.

That aptly describes investing for me the past two months.

 

[cute fuzzy bunny]

Is it too late to suggest a deer and a cow going down with the ship? You get to pick which one was the captain.

For some reason I'm totally unfazed by this. 2000-2002 scared the whiz out of me. For a while the media hype made you feel like we were going to be attacked daily by mobs of terrorists. You couldnt get anything for cash interest. There were asset classes you could still make money on but a lot of those were a little scary.

Thats why I decided to make volatility a little less of a factor in my investing approach.

The old folks in my dads retirement community are calling it the worst they've ever seen, worse than the depression. Sorry, but thats not what I'm feeling.

 

[ziggy29]

The old folks in my dads retirement community are calling it the worst they've ever seen, worse than the depression. Sorry, but thats not what I'm feeling.

That's probably because from their perspective, there is nothing more menacing to their well-being than high inflation.

 

[statsman]

That's probably because from their perspective, there is nothing more menacing to their well-being than high inflation.

And simultaneous loss of net worth of assets.

 

[cute fuzzy bunny]

Yahbut, you'd think that people who actually lived during the depression would see the differences. We're not looking at the stock market going completely bust, mass losses of property and jobs, and an economy that is totally flat on its back and out cold.

We've got some real estate speculators and people with poor judgment that lost money on their homes. Unemployment up a little. The financial markets beaten up here and there. Some credit issues.

Basically if oil drops $40-50 a barrel, the job market picks up a little bit, the stock market stops dribbling down and the real estate market hits bottom this all looks perfectly fine.

Theres no reason why all those things wont happen in the next year or so.

But for the stricken pessimists, theres also no reason why things wont keep going down...especially if everyone thinks they will and plans accordingly.

 

[unclemick]

Pssst - Wellesley. Please nobody search how many times I've posted this!



Back in my account VG Target 2015 = current yield a tad north of 3%. I can continue my 15th year of ER with that.

To paraphrase that legendary guri - Yogi, Dividends are sorta like cash which is almost as good as real money.

ok ok so I butchered the quote - but you get the idea.

heh heh heh -

 

[Ronnieboy]

The old folks in my dads retirement community are calling it the worst they've ever seen, worse than the depression. Sorry, but thats not what I'm feeling.

I sure hope not. I wasn't old enough to see or even experience the depression, but from what I have heard/read, thousands of people were standing in cheese lines, not working, skipping meals, when they did eat is was tongue of shoe soup, etc. I haven't seen anything that bad, if anything - around here - the Hummers have slowed down to 10mph over the speed limit

P.S. How do I add an Avatar?

 

[REWahoo]

I wasn't old enough to see or even experience the depression, but from what I have heard/read, thousands of people were standing in cheese lines...

And the cheese lines only served bread & soup - no cheese!

P.S. How do I add an Avatar?

Click on "User CP" near the top of the page
Click on "Edit Avatar" on the left

 

[Notmuchlonger]

WWSOD

What would Suze Orman do? Hey she will be in Dallas Aug 15. Maybe I will go see her

 

[clifp]

Purely by numbers the bear market of 2000-2002 was worse. Outside of financial smost stocks are down 10-25% today. In contrast the Nasdaq plunge was far worse and not only did you have the pets.com go broke but the tech giants like Intel, Microsoft, Cisco dropped 75% and even blue chip companies like GE, IBM, P&G, HP took a beating.

It is true that real estate went up but for those of us with real estate that wasn't much of a help. To me 9/11 was the other shoe dropping it is why I was far more concerned back in 2001/2002 than now. I recall for several month after 9/11 walking around Waikiki and thinking a neutron bomb had been dropped, there are plenty of people this 4th of July, despite $140 oil.

 

[Nanita8140]

I sure hope not. I wasn't old enough to see or even experience the depression, but from what I have heard/read, thousands of people were standing in cheese lines, not working, skipping meals, when they did eat is was tongue of shoe soup, etc. I haven't seen anything that bad, if anything - around here - the Hummers have slowed down to 10mph over the speed limit

P.S. How do I add an Avatar?

The only lines I've been standing in lately are those at Disney World(and they were long...wait time for some rides was up to 90 minutes)...also, I've been standing in lines at the movies theaters....theaters are still full. That being said, it does not appear that we are anywhere close to being like in the Great Depression. Things are "not good" but neither are they "bad"....perhaps I should interject the word "YET"..."not bad yet". If I had to bet as to what will happen , I think I will place my bet on things stabilizing.....of course this is comming from a person that lived through 5000% inflation during the 1980 in Argentina. I can assure you all that this is nothing(so far).

 

[Moemg]

I was in an investment club during the late 90"s . One of our picks was Oracle and luckily we decided it had become too large a percentage of our portfolio so we sold right before the tech melt down .

 

[HFWR]

WWSOD

What would Suze Orman do? Hey she will be in Dallas Aug 15. Maybe I will go see her

I see you're using her photo for an avatar...

 

[NW-Bound]

But... but... but... what if this time it's really really different?!?

The oil price worries me more than anything else. We will survive this housing bubble, just like earlier housing bubbles, and the recent dot-com bubble. The earlier energy crises of the 70's were not caused by the fundamental "supply-and-demand" principle. Surely, technology may be able to come to the rescue with alternative energy sources, but it takes time. Once we come out of this period, things may be different. For example, car industry will not be cranking out SUVs as earlier. New houses may be smaller to reduce energy cost, etc...

I just try to be aware of economic trends to steer my investment choices. After waiting in line to buy gas in the early 80's, people switched to small cars, such as the VW Rabbit (remember those?). That didn't last long as 4-cyl cars were slowly replaced by bigger cars. I still remember when the Japanese makers produced few 6-cyl engines, leave alone the behemoth 8-cyl they do now.

I will be very surprised to see gas back to the $2, unless there is a 2nd Great Depression that suppresses all demand. It's all because of the Peak Oil Theory, that is difficult to dismiss.

 

[kumquat]

The old folks in my dads retirement community are calling it the worst they've ever seen, worse than the depression. Sorry, but thats not what I'm feeling.

That's probably because from their perspective, there is nothing more menacing to their well-being than high inflation.

WADR, how many of of the folks in the retirement community remember the depression. They'd have to be born before 1925, making them a minimum of 83. Even then, I'd want them to be 15 in 1930 making them 90+.

I believe one of the worst problems of the depression was deflation. No one would spend a cent if it would buy more next year (although, where my parents grew up eating was a problem). Inflation was a problem in the 70's. I think most of us saw it although not from an ER perspective.

 

[ladelfina]

For a while the media hype made you feel like we were going to be attacked daily by mobs of terrorists.

and today is largely different? Now we have "elect Obama and expect more terror attacks" apparently. "We" talk about torture as though it is normal, and people think it's acceptable that a presidential candidate sings "Bomb Iran!" to a snappy pop tune. It's not the country I knew. That's philosophy, however I wouldn't put it past the current wankers to unleash their longed-for Armageddon. Reports are we are already doing covert actions and legislation is up for naval blockades.

I don't know what people are reading but I see bankruptcies up, foreclosures up, unemployment up, jobs down, credit tightening and cash short everywhere.. and my biggest question that no one wants to answer: where are the future growth/earnings going to come from? The US economy is contracting and it's been like pulling teeth the last few months here to get any number of people to admit to even that.

 

[Notmuchlonger]

Where is chicken little when you need him.

 

[ladelfina]

Hah! Chicken Little has already been at my place.. I am putting myself to sleep reading Bernstein on discounting future earnings and contemplating the (since 2002) 43% drop already in the value of VFINX in euros.

Nighty-night, sleep tight, and don't let the bedbugs bite.

 

[brewer12345]

Where is chicken little when you need him.

ladelfina is pinch hitting for him and appears to be very effective at sprinkling chicken droppings around liberally.

 

[newporttony]

and today is largely different? Now we have "elect Obama and expect more terror attacks" apparently. "We" talk about torture as though it is normal, and people think it's acceptable that a presidential candidate sings "Bomb Iran!" to a snappy pop tune. It's not the country I knew. That's philosophy, however I wouldn't put it past the current wankers to unleash their longed-for Armageddon. Reports are we are already doing covert actions and legislation is up for naval blockades.

I don't know what people are reading but I see bankruptcies up, foreclosures up, unemployment up, jobs down, credit tightening and cash short everywhere.. and my biggest question that no one wants to answer: where are the future growth/earnings going to come from? The US economy is contracting and it's been like pulling teeth the last few months here to get any number of people to admit to even that.

Strange, but I see multi-million dollar homes selling (albeit at at 15% haircut from the peak), crowded restaurants, and long waits for admission to private schools and for golf club memberships. I see an economy that has slowed a bit, but has not receeded. Maybe it will, but maybe it won't.

If you want to talk politics, I don't see people being hauled off to gulags for regular torturing sessions, but I have noticed that we have not had a terrorist attack on our soil since 9/2001--even though most Americans polled after the attack said they fully expected us to me attacked again.

IMHO, things are not that bad.