The market isn't as bad as it seems?

[tmm99]

Quote:

Originally Posted by REWahoo FIRECalc includes all the 'stuff' that has happened in the US markets going back to 1871. This link explains how it works and how far back FIRECalc goes.

Thank you REWahoo for pointing me to the right direction. I feel much better now (well, unless of course, the market goes down even more than it did during the Great Depression...)

tmm

[youbet]

Quote:

Originally Posted by tmm99 Thank you REWahoo for pointing me to the right direction. I feel much better now (well, unless of course, the market goes down even more than it did during the Great Depression...) tmm

Except that the Great Depression was not the worse time for retiree portfolio survival! Do some firecalc runs and use the option to download a spreadsheet of the outcomes. You'll see that the late 60's and early 70's were worse....... And, of course, data from the horror of 2007 through 2017 that brought all retirees to their knees isn't included yet......!

[Meadbh]

Iceland (the country) has approached Russia for a loan, to stave off bankruptcy.

I think this is pretty serious.

[al_bundy]

Quote:

Originally Posted by Dawg54 Old Harry also predicted the DOW would reach the 35,000-40,000 range back in the 90's. Page 2 of the below link. Harry Dent Forecasts Dow 20,000 by the Year 2009 - Are We in a New Bull Market? - Associated Content

his book from a few years ago said he was wrong and that the money went to commodities and housing instead. i don't believe everyone of his predictions, but he's probably halfway right. he did predict the 90's boom when everyone thought the US was done and gone and he did predict the 2000's boom unlike most of the doomsayers.

[cute fuzzy bunny]

Quote:

Originally Posted by Meadbh Iceland (the country) has approached Russia for a loan, to stave off bankruptcy. I think this is pretty serious.

I read the article about that. They were leveraged into european companies to a rate of about 7-8x their GNP.

Not a good idea.

[FUEGO]

Quote:

Originally Posted by Meadbh Iceland (the country) has approached Russia for a loan, to stave off bankruptcy. I think this is pretty serious.

Not to belittle the seriousness of Iceland asking Russia for a loan, but they only have 300,000 people and a small economy. California (about 150 times the population of Iceland) asking for a loan recently is more scary in my opinion. But I'm still not worried!

[haha]

I think from the Oct 07 top the Dow has lost 33%. In the 73-74 bear, the final bottom was at 577, off 45% from the early Jan 1973 top. Remember that during this time interest rates were rising, inflation was getting up a good head, there was the first Arab oil embargo and Nixon was forced to resign. A lot of scary stuff. If the Dow bottomed at -45% from the last October high, we would get to just below 8000.
http://www.fiendbear.com/bear1973.htm

The last week has showed me that anything is possible, so I wouldn't want to say that this or worse could not happen. However, the Dow was much more overvalued in Jan 1973 than it was in Oct 2007. If you look back into the older threads you will see that many posters in Oct 2007 argued that the Dow was at median valuations, or even cheap.

Of course we don't hear much of that when the bottom is falling out. And I grant that it is hard to allow for what appears to be unusual credit stress all over. But remember the 1997 Asian meltdown? Many said that Korea, Thailand, Taiwan etc. would never recover. Their banking system was corrupt and often insolvent, and most of these countries had large external debts, often in dollars. I believe taht this crash brought down several governments, most prominently Sukarno in Indonesia.

I bought every single-country NE Asian closed end fund I could find, often at huge discounts. I didn't have any way of knowing what was really happening over there, but I thought that if the US with its coddled whiny population can make it, the Asians could make it squared.

I sold when they had doubled, way too early.

So although I am today down big time and I wish I weren't, it will be essentially unprecedented if it just keeps falling without any break or even some big rallies.

I have no clue whether these rallies will be the bottom or not, that is a problem to look at when we get there.

Ha

[cute fuzzy bunny]

Quote:

Originally Posted by haha I sold when they had doubled, way too early.

Fortunes were made by selling too soon...

[2B]

I've had my asset allocation adjusted from 60/40 to 50/50 over the last six weeks. The end of August is my traditional rebalancing time and I was just barely under my 60% equity level. I decided that I would maintain my cash/fixed $$ amount and not rebalance.

I guess that makes me somewhat of a market timer but the reason wasn't to time the market. I decided that the cash level was adequate for a bare bones retirement. Why be aggressive with that? Equities have become dedicated to luxuries and travel.

On a related note, I may be joining you retirees. There have been some job cancellations. There was one person hired by another firm that was told not to come because they had lost some jobs. There's a rumor that one of the big E&C firms in Houston is about to have a "small" layoff.

[al_bundy]

Quote:

Originally Posted by haha I think from the Oct 07 top the Dow has lost 33%. In the 73-74 bear, the final bottom was at 577, off 45% from the early Jan 1973 top. Remember that during this time interest rates were rising, inflation was getting up a good head, there was the first Arab oil embargo and Nixon was forced to resign. A lot of scary stuff. If the Dow bottomed at -45% from the last October high, we would get to just below 8000. Dow Industrials: 1973-1974 Bear Market The last week has showed me that anything is possible, so I wouldn't want to say that this or worse could not happen. However, the Dow was much more overvalued in Jan 1973 than it was in Oct 2007. If you look back into the older threads you will see that many posters in Oct 2007 argued that the Dow was at median valuations, or even cheap. Of course we don't hear much of that when the bottom is falling out. And I grant that it is hard to allow for what appears to be unusual credit stress all over. But remember the 1997 Asian meltdown? Many said that Korea, Thailand, Taiwan etc. would never recover. Their banking system was corrupt and often insolvent, and most of these countries had large external debts, often in dollars. I believe taht this crash brought down several governments, most prominently Sukarno in Indonesia. I bought every single-country NE Asian closed end fund I could find, often at huge discounts. I didn't have any way of knowing what was really happening over there, but I thought that if the US with its coddled whiny population can make it, the Asians could make it squared. I sold when they had doubled, way too early. So although I am today down big time and I wish I weren't, it will be essentially unprecedented if it just keeps falling without any break or even some big rallies. I have no clue whether these rallies will be the bottom or not, that is a problem to look at when we get there. Ha

over the last year i've seen a chart that shows NYSE leverage going back to the late 1960's. 1973, 2000 and 2007 were the peaks in leverage and it took 2 years of a bear market to deleverage from the peaks.

[W2R]

Quote:

Originally Posted by 2B I've had my asset allocation adjusted from 60/40 to 50/50 over the last six weeks. The end of August is my traditional rebalancing time and I was just barely under my 60% equity level. I decided that I would maintain my cash/fixed $$ amount and not rebalance. I guess that makes me somewhat of a market timer but the reason wasn't to time the market. I decided that the cash level was adequate for a bare bones retirement. Why be aggressive with that? Equities have become dedicated to luxuries and travel.

Interesting! We are apparently thinking along the same lines. My 45:55 (equities:fixed) AA has changed to 38:62. I probably would have rebalanced had my equity allocation gone up instead of down, but I am loathe to rebalance right now. My reasoning is as follows.

If the market completely crashes, I still have enough in cash to last for several decades at my present level of spending so my plans to ER next year would not be endangered. That matters a lot to me.

If the market takes off and we begin a substantial bull market, I have enough in equities to maintain my buying power and then some. What's more, I really don't care if I double my money or not at this point. I am doing fine.

Quote:

Originally Posted by 2B On a related note, I may be joining you retirees. There have been some job cancellations. There was one person hired by another firm that was told not to come because they had lost some jobs. There's a rumor that one of the big E&C firms in Houston is about to have a "small" layoff.

Sorry to hear that, especially if you get laid off before your planned ER date. On the other hand, maybe you would get a severance bonus of some sort that would make the experience of being laid off more welcome.

[ziggy29]

Quote:

Originally Posted by Want2retire I probably would have rebalanced had my equity allocation gone up instead of down, but I am loathe to rebalance right now. My reasoning is as follows.

Same boat here, and it's interesting: almost everyone I know who keeps an asset allocation is saying the same thing: they know logically and mechanically it's time to rebalance -- but they can't emotionally get themselves to reach for the falling knife.

[W2R]

Quote:

Originally Posted by ziggy29 Same boat here, and it's interesting: almost everyone I know who keeps an asset allocation is saying the same thing: they know logically and mechanically it's time to rebalance -- but they can't emotionally get themselves to reach for the falling knife.

You have to actually WANT more money to take a risk to get it. Honestly, I am happy where I am and don't know what I would do with more money (relative to inflation, naturally). I guess I wouldn't turn down a few extra million if it fell in my lap, but no way am I going to risk my retirement for it.

[2B]

Quote:

Originally Posted by Want2retire Sorry to hear that, especially if you get laid off before your planned ER date. On the other hand, maybe you would get a severance bonus of some sort that would make the experience of being laid off more welcome.

My plan was to wait for my FIL to die. I realize it's kind of morbid but I don't have any reason to "retire" and stay in Houston. Also, DW will think I'm more available to visit him several times per week with her. I plan on moving out of Texas for better climate and recreational opportunities. As you know, the Ozarks are currently on the top of the list. Being a semi-perpetual traveler is also appealing if I can get DW to buy off on it.

I'm probably pretty safe until the end of 1Q09 but you never know. If a lot of jobs get cut, nobody will be safe. So far, it's all rumor and concern. The credit squeeze impacts companies planning new facilities and if a true recession hits hard there won't be any need for additional capacity.

I'm also no worried financially but I would prefer about 1 more year and a better net worth.

[audreyh1]

Quote:

Originally Posted by 2B I guess that makes me somewhat of a market timer but the reason wasn't to time the market. I decided that the cash level was adequate for a bare bones retirement. Why be aggressive with that? Equities have become dedicated to luxuries and travel.

I have been rebalancing during this downturn (which has been so parabolic that I am hoping for a V bottom - knock on wood!) but I still have my limits. I absolutely won't let my fixed income allocation (cash+bonds) go below 10 years of (somewhat padded) expenses, so if I reach that point I am out of rebalancing bullets and will just have to hunker down and wait.

10 years of fixed income, I feel for me, is a reasonable time to expect some level of recovery. And that is on top of 2.5 years of cash I have in a short term account. On one hand it seems scary. On the other hand - 12 years is a long time!

Audrey

[Ephemerides]

FUEGO,
what if a certain dry lake suddenly refilled? Would you worry then?

[FUEGO]

Quote:

Originally Posted by Ephemerides FUEGO, what if a certain dry lake suddenly refilled? Would you worry then?

Not sure I understand what you are getting at?? Are you saying would I worry if liquidity returned (the dry lake being the lack of liquidity)?

This time it might be different. Or it might not be different.

[audreyh1]

I think he's talking about the California Central Valley maybe?

Audrey

[BluesWannabe]

Like some others here, I have been rebalancing during this downturn... I am holding my nose, but it has to be done during all market cycles, not just up markets...

That said, as I click the Buy button, it's a queasy feeling since I "know" the market is going lower....

[Rustic23]

I thought this was a good article

As Dire as the Times May Seem, History Isn't About to Repeat Itself - WSJ.com