The hopeless optimist's break-even game!

[Grep]

Let's play an optimistic little game. A recent thread started by Ziggy29 dictated that the market bottom is now behind us, and it's just up, up, up from here. Fantastic!

So, how far do you have to go with respect to the S&P 500 in order to break even?

Break-even shall be defined as the point at which your total investment portfolio equals its basis. That is, when what you have now equals what you put in (you may wish to include any carried-forward capital losses from tax-loss harvesting). If you have been invested for a good while and wish to include the effects of inflation, please do.

In order for the results to be meaningful across the board and in the future, we need a standard of comparison in absolute terms, so reference your basis to the S&P 500, e.g., "I was even when the S&P 500 was at 1000." If so, you would check 1000.

If you only know the percentage gain you need to break even, multiply by the current S&P-500. So if you need a 50% gain (1.5 times where you are now), and the S&P is at 800, put down 800*1.5=1200.

Of course, the words beside the numbers are merely for entertainment.

Feel free to report back when you do break even!

Best of luck!

 

[newporttony]

I think I'm somewhere around 1100 as the result of aggressive buying on the way down (I had invested some lump sums at the 1300 - 1400 levels). I feel like the guy at the blackjack table just trying to get back to even so I can call it a day.

 

[youbet]

Of course, this survey doesn't account for inflation. So, if you bought the S and P 500 many years ago, you might still be ahead today in nominal dollars. But, you're probably losing your butt in real dollars.

Also, if you did any tax loss harvesting at dips along the way - say swap SPY for VTI - you re-established your basis.

In other workds, depends what ya mean by "break-even."

 

[haha]

I realy don't understand this. Unless you own the S&P 500 you will not track it very well.

Why not just ask what % gain (in your own portfolio, whatever it may be) do you need to get even?

Ha

 

[Grep]

In other workds, depends what ya mean by "breakeven."

True. Hence it's a "game."

But I suggested including the "loss" in your basis. Buy a fund at 1000, swap it for another at 700, and your basis is now 700. But if you sell at 700 you still have a loss. So add the 300 point loss to your basis, bringing it back up to 1000.

Inflation can be coped with too, and if you have been invested for a long time and want to add that in, please do.

Cheers.

 

[Grep]

Why not just ask what % gain (in your own portfolio, whatever it may be) do you need to get even?

That would work, but the S&P is a meaningful absolute number that will be more useful to those looking back on the thread sometime in the future.

If you need a 10% gain to break even, and the S&P is at 800, then multiply by 1.1 and put down whatever is closest to 880 (e.g., 900). Easy enough.

Cheers.

 

[haha]

Its difficulty wasn't what concerned me.

 

[SecondCor521]

If I did the math right, I need the S&P500 to get to about 1251.

That's for my retirement portfolio only, which is for the most part invested in S&P500-type index funds. I'm nearly 40, and a buy-and-hold index investor.

I did not adjust for inflation.

2Cor521

 

[Grep]

Its difficulty wasn't what concerned me.

I understand your concern, but let's keep it simple.

I think that, for a casual and fun poll, this one will help others appreciate where we all are in this mess. It can feel lonely out there when our portfolios are down by 10 years worth of expenses, etc. Knowing that one isn't alone, and feeling a sense that we're pulling for each other, can be a big benefit.

Cheers.

 

[dex]

Why not just ask what % gain (in your own portfolio, whatever it may be) do you need to get even?

agree

 

[Grep]

agree

So that later, people don't have to wonder "20% from where, and where would that be now?" Also so that, when people add their numbers at different times (after gaining or losing different amounts), they are all still responding with absolute numbers that are correlated on average (presuming the S&P is a reasonable stand-in for the average portfolio). But if you prefer, state your percentage too.

Let's keep it simple and enjoy the poll. It's not perfect (all polls have issues), but it should still be interesting. I know I'm curious about how it turns out.

Cheers.

 

[FIREd]

According to my calculations, the market would have to go up 38% from here for me to roughly break even. So that would be 1082 for the S&P500. But this number comes down every time I buy more equities at reduced prices, so it could be significantly lower by the time markets finally turn around.

 

[dex]

So that later, people don't have to wonder "20% from where, and where would that be now?"

No.
You pick dates in your survey when you present it
e.g. As of 3/20/09; what percentage increase in your assets would you need to be at your net worth as of 12/31/07 - exclude home from net worth calculation

 

[Grep]

With polls, as with many things, there is no way to please everyone. But thanks for your comments.

Cheers.

 

[NW-Bound]

I like this poll! I also do not have problem with grep using the S&P500 as the benchmark, although I usually pick high-beta stocks that outrun the S&P on both directions down and up.

Voted for 700, though I was tempted to go for "600 or under" until I was reminded of inflation. So, I tried to be conservative.

Heh heh heh... I am not as old as many here, but I didn't start to invest just last year, you know. Buy, buy, buy.

 

[Alan]

As of 3/20/09 if I invested $1,000 on 1/1/08 and had my personal ROI then I would be down 22%.

That would mean I would need the S&P to be 28% higher than it is today so I voted for 1000.

Not sure how meaningful the poll is since my AA is only 35% equities and a chunk of that is international + small cap so is not representative of the S&P.

 

[Grep]

Thus far, the average poster is looking for ~1050 on the S&P, with the mode at 1200.

Cheers.

 

[CuppaJoe]

....

Why not just ask what % gain (in your own portfolio, whatever it may be) do you need to get even?

Ditto to this and what others have said.

Three people responded “600 and under,” six say “700.” Can we assume that nine people are already even or better? As NW-Bound points out, it depends on the date(s) of the cost basis. I'm also up over cost but, frankly, this is not a fun game. Where is that curmudgeon certificate?

 

[Helen]

I'm not going to compute this. I've been DCAing plus made some really bad mistakes with the high tech crash (including a penny stock!) then pulled out of the market 2003 - 2005. I'm sure I have a long ways to go to break even. I don't want to know what my break even point is.

I console myself with the thought that it's better to learn while I'm employed than to make these mistakes in retirement.

If I ever roll my TSP into an IRA or receive an inheritance, I think I'll go with a stash of cash and 50/50 Wellington/Wellesly mix and be done with it. I suck at this therefore, KISS.

 

[audreyh1]

Well, I can't really calculate according to the criteria in the original post. Over the past years we have sold some assets and bought others as well as living off our investments. That kind of wreaks havoc with the investment basis calculation.

But I do know our net worth when we retired in August of 1999, and we finally got back to that number this past week. That feels like break even to me so that means S&P500 in the low 800s is our number!

Audrey

 

[kcowan]

As a Canuck, I do not relate to the S&P. My best investment lately has been a condo in PV MX priced in USD that is up 23% since I bought it in Dec 2007. Had to cash in some equities to cover the all cash offer. Whew!

Other than that, I need oil to rise to $80 to be ahead of my previous high. But I probably need none of the remaining equities to live to 95yo. The main hit has been our plans for a charitable trust to be administered by my kids. Hope that comes back because I was liking the idea.

 

[NW-Bound]

But I do know our net worth when we retired in August of 1999, and we finally got back to that number this past week. Audrey

If you have been living off it for 10 years, still having the same networth is pretty good, considering that inflation has not been that high.

 

[tryan]

I haven't made a donation since 2005 ... so ~1100 and I am "even".

 

[Steve O]

I was up a bit last week

I took a little off the table