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Re: The sky is falling, the sky is falling
Old 08-10-2005, 11:00 PM   #41
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Re: The sky is falling, the sky is falling

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Originally Posted by Cut-Throat



"More money has been lost waiting for the correction, than the actual correction itself."
Sometimes just resting for a while prepares you for the next day's work. I agree with you though, doing the correct things at the correct times is important .

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Re: The sky is falling, the sky is falling
Old 08-11-2005, 10:57 AM   #42
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Re: The sky is falling, the sky is falling

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Originally Posted by Apocalypse . . .um . . .SOON
This is because I'm not sure yet whether we are going to have anihilation due to hyper-inflation or anihilation due to deflationary depression . Or something in between.
I vote inbetween.

None of us will get out of this alive, is my prediction. 8)
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Re: The sky is falling, the sky is falling
Old 08-15-2005, 07:07 PM   #43
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Re: The sky is falling, the sky is falling

After all these years when out and about with the DW I sometimes sneak a peek at a young lady—to look, to dream, to fantasize, etc. I’m sure the DW does the same (but with boys, I hope). No harm, no foul. There are a number of things going on in this process, but there are two that I’d like to extract and examine—in this forum—and then apply to FIRE..

First, there’s the dream world-real world dichotomy. As humans we always live in both worlds. Even the ninety-nine year old man on his death bed dreams he’ll make it to the commode the next morning (or the commode will come to him) and he’ll be able to use it. Dreams are very important.

To my mind, John Bogle lives in a very well constructed, conventional, and back tested dream world: It’s a dream world of projected 7-8% growth that is mostly captured by the investor. But until that money is harvested and spent, it is fantasy. We have huge dream factories: Model Portfolio Theory, FIRE/Calc programs, etc. that can modify dreams to suit the “present pleasure.”

Determining the balance between the dream world and the real world can only be determined by the individual (with some assistance/hindrance by the spouse).

Second, gentlemen, we have our emotions. If we frustrate them too much, bottle them up, it creates serious problems (ask the DW or a psychologist). If we don’t let some of our natural impulses out where they need to, they back up and come out where they shouldn’t. Conventional thinking isn’t bad, but it mostly has been predetermined by the social contract “stops,” ‘balances,” and “slice and dice.”

Bogle portions out reality in broad, conventional chunks: S&P Index Fund, Small Cap Growth, Mid-Cap Value, etc., etc.—some good and some less good. All created very rationally using the mind, subduing the rawer (more fun?) spirits. But over time our minds and emotions tend to creep around, refine, and seek the stimulations, i.e, we start messing with our own portfolios. Enough said.

I have a Smartypants-Hormone Investment Portfolio that takes some of the above into account. There are two separate but not necessarily equal portions to this scheme. The first part is the smartypants part of the portfolio. (When a child, whenever I was doing something wrong, my mother would always say “Hey, smartypants, bla, bla, bla . . . .” I knew the jig was up when I heard that word. I came back to the real world (Mom) and left the one where I was instigating trouble.) It’s the stable part of the portfolio. You put dividend payers in there, bonds, etc., anything that pays money now, monthly, quarterly, yearly. Cash payers now! Cash payers here! Nothing else. Then you let it compound, Ben Graham style (read the book)—and compound some more. Heh Heh! When you start messing with the first principle of this portfolio, you become a, ah, ah, ah market timer. This can be dangerous. Just ask some of the people who have jumped out of windows when their portfolios disappeared. Keep your workhorses separate; they’re too important.

The second part is the hormone portfolio where you corral everything else. You put your sector bets here, your foal that may be sold as a racehorse someday (the ten bagger), your rental property with the mortgage goes here. You play with these things. Have fun. These are your dreams and fantasies. By segregating it this way it is easy to watch. Also, it allows you to predetermine your risk status in the real world (without that Alpha-Beta stuff). If your feeling frisky at the start, do a 50%-50% split. If you’re laughing too hard at colonoscopy/commode jokes, then 80% smartypants-20% hormone might be right for you. If you have five plays in the hormone part and one drops 50%, you lose 2% of your total portfolio. If you get a couple of five baggers, transfer some of the extra money to your smartypants and buy your spouse a hot dog or trip to Disney World. Greed, fear, surprise, excitement. Put your PM shares here. Put your zeros here.

You can do some asset allocation in the smartypants part. Slice and Dice if desired: Put in international dividend payers, put in bonds and rebalance them if you like. But only put in things that you think will still be paying good dividends even if the market dumps . The payments will protect you in the drop. Your portfolio will go down less than everyone else’s (see Ben Graham). If you really want to play it safe, do your due diligence with the idea that the individual components ‘must’ pay even at Dow 4000—safety second in this portfolio.

The exit strategy: Live in the real world most of the time. The smartypants dividends are your base. Your core budget equals your core dividends. You want a new car, make sure the payments come out of your smartypants. You hit the jackpot, pay cash for the car and go on a splurge. Double enjoy the jackpot now-enjoy being smart about your picks and smart about how and what you bought. You don’t want to live in the desert with an old, regular 4% withdrawal year after year while your Bogle Indexes ride the ups and downs (remember indexed funds are owned by the herd—you go where the herd goes). Enjoy the ups and downs of the terrain as smatypants chugs along throwing off real excess cash in good times and bad.

The above is my portfolio: 70% smartypants/30% hormone—everything else is just slice and dice.

And then I turn my head away from the blonde waitress and look into my wife’s eyes and know that ‘here and now’ is the real thing—and I’ve got it.*

So, Uncle Mick, do I get your seal of approval or no?

--Greg

*I said this mainly for brownie points and the hope that DW now won’t really waste $100,000 of our retirement funds on Johnny Depp.
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Re: The sky is falling, the sky is falling
Old 08-15-2005, 07:25 PM   #44
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Re: The sky is falling, the sky is falling

Yep

75% Lifestrategy mod
10% REIT Index
15% DRIP dividend type stocks

aka: a mini Boglesque 'core and explore' with a tad(REIT's) of Bernstein - correlation wise - in MPT speak.

And, and with SS in the bag - the Norwegian widow can lighten up - take up square dancing, ballroom, or with the proper stretching exercises - disco

Insurance is ballpark 3% current yield - in case she gets toooo - wild and free with some stocks.

P.S. When I get the shopping list - going during normal hours - looking is my er ah non monetary commission - so to speak.

Women are not men - I think I finally got that part - the male actors I pick are not the ones she thinks of - and the females she thinks are attractive - well - let sleeping dogs do the sleeping dog thing.

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Re: The sky is falling, the sky is falling
Old 08-16-2005, 12:03 AM   #45
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Re: The sky is falling, the sky is falling

I just want to weigh in on this once. Male hormone investing comes up fairly regularly. I think it's fine that some of you want to do this hormone investing thing, but it has no appeal to me. My hormones can make me as competitive as the next guy on a wide range of issues. I can be stupid and stubborn and get in your face for minor things. But I don't invest that way. My goal is not to gain the most. I don't have hobby stocks. My goal is to have enough and reduce my odds of running out too soon.
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Re: The sky is falling, the sky is falling
Old 08-16-2005, 08:38 AM   #46
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Re: The sky is falling, the sky is falling

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Originally Posted by ((^+^)) SG
I just want to weigh in on this once. Male hormone investing comes up fairly regularly. I think it's fine that some of you want to do this hormone investing thing, but it has no appeal to me. My hormones can make me as competitive as the next guy on a wide range of issues. I can be stupid and stubborn and get in your face for minor things. But I don't invest that way. My goal is not to gain the most. I don't have hobby stocks. My goal is to have enough and reduce my odds of running out too soon.
I concur with this 100%. Play defense with your investments. I think Buffett advocated "the power of negative thinking" when it comes to investing. What can go wrong, and can you live with it, should it do so? As a great old southern comedian used to say, "Where you wanna be when the big bomb hits?" Answer: "Anywhere I can say, whut was that?"
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Re: The sky is falling, the sky is falling
Old 08-16-2005, 09:12 AM   #47
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Re: The sky is falling, the sky is falling

Picking stocks or timing the market is like gambling in a casino. Let me explain. In a casino, the house always has an edge, however slight it is. Your expected payout on a given game may be .90 to .99. On average, you will lose a small portion of what you bet. But everyone thinks they can beat the house because of their superior skill and/or luck. Some do, but most don't. It is simple math.

If you buy Bogle's and Bernstein's argument that on average, individual investors (or mutual funds) can't beat the market overall, it seems you are best served by buying the lowest expense ration index fund(s) and then dollar cost averaging over time. Any attempts to beat the market will fail, on average, since the expenses incurred in trading (or holding high ER mutual funds) will reduce your average returns below those of the market.

Some may win, but most will lose compared to the market indexes. The reason people gamble must be for the thrill, excitement and entertainment value (plus the delusional thought that they can beat the house). I think actively trading stocks/bonds/options/mutual funds gives the same "thrill, excitement and entertainment"as gambling in a casino. Actively trading in the market is just another form of gambling. And a more socially acceptable form of gambling.

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Re: The sky is falling, the sky is falling
Old 08-16-2005, 09:23 AM   #48
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Re: The sky is falling, the sky is falling

Now suppose you know of a well located casino - at a good price and you happen to have the money. So you buy the casino - because you plan on being alive for a while - and could use the income. Now the price of casino's may fluctuate in the ensuing years - but as long as the casino gets it's cut - you are happy.

The Norwegian widow offers her appolgies to Ben - Graham that is.
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Re: The sky is falling, the sky is falling
Old 08-16-2005, 09:31 AM   #49
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Re: The sky is falling, the sky is falling

Unclemick, I'm not exactly sure what you're saying. I think I agree with you though... Own the casino (whole market?)... Or pick the dividend payers and let em pay? It sounds like your approach is essentially the latter. That approach works too. But that approach is certainly atypical of the average stock picker's behavior.

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Re: The sky is falling, the sky is falling
Old 08-16-2005, 10:12 AM   #50
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Re: The sky is falling, the sky is falling

12 years into ER:

Think about this - two sled dogs:

Vanguard Lifestrategy moderate - 2.53% current yield

Consolidated Edison - 4.84% current yield

There are a lot of dogs out in the world - BUT as long as your dogs are pulling your sled?

Let golfers and fishermen chase performance - tell tall tales/make bets/etc., etc., etc.

Fishing wise - the last couple years - I done good on AET(Aetna) - maybe this fall - I may go fishing for BUD - or with Bud if the fishing is bad - or just stay home and watch the Saints try to play football.
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Re: The sky is falling, the sky is falling
Old 08-16-2005, 02:37 PM   #51
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Re: The sky is falling, the sky is falling

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Originally Posted by ((^+^)) SG
My goal is to have enough and reduce my odds of running out too soon.* *
My hobby stocks may reduce those odds to zero. If I blow up and lose them all, then I still have the retirement portfolio. It's a can't-lose situation that has helped me evade countless hours of yardwork!
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Re: The sky is falling, the sky is falling
Old 08-16-2005, 02:45 PM   #52
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Re: The sky is falling, the sky is falling

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My hobby stocks may reduce those odds to zero.* If I blow up and lose them all, then I still have the retirement portfolio.* It's a can't-lose situation that has helped me evade countless hours of yardwork!
That's good. And like I mentioned, I think it's great that some of you guys enjoy this kind of investment game. You clearly understand what you're doing and are successful. But me . . . I'd rather do yardwork. I'm not suggesting my approach to investing is better, just that it is my preference. I don't feel the testosterone drive to invest that keeps getting mentioned.
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Re: The sky is falling, the sky is falling
Old 08-16-2005, 02:48 PM   #53
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Re: The sky is falling, the sky is falling

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Originally Posted by ((^+^)) SG
But me . . . I'd rather do yardwork.
Excellent! Can we trade? Your yardwork for my stock tips? Did I mention that my backyard may be an archeological repository of great interest?
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Re: The sky is falling, the sky is falling
Old 08-16-2005, 03:03 PM   #54
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Re: The sky is falling, the sky is falling

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Excellent!* Can we trade?* Your yardwork for my stock tips?* Did I mention that my backyard may be an archeological repository of great interest?
I don't think there's anything archaeological in Hawaii that's older than about 500 AD -- maybe later. But I could get interested in a prehistoric lithic scatter or architectural unit. Did I mention that my yardwork would be done on a 1 meter by 1 meter square grid and would involve digging your yard out 10 cm at a time?
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Re: The sky is falling, the sky is falling
Old 08-16-2005, 03:39 PM   #55
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Re: The sky is falling, the sky is falling

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Originally Posted by ((^+^)) SG
That's good.* And like I mentioned, I think it's great that some of you guys enjoy this kind of investment game.* You clearly understand what you're doing and are successful.* But me . . . I'd rather do yardwork.* I'm not suggesting my approach to investing is better, just that it is my preference.* I don't feel the testosterone drive to invest that keeps getting mentioned.* *
I don't feel it either.

JG
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Re: The sky is falling, the sky is falling
Old 08-16-2005, 04:14 PM   #56
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Re: The sky is falling, the sky is falling

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Originally Posted by ((^+^)) SG
I don't think there's anything archaeological in Hawaii that's older than about 500 AD -- maybe later.* But I could get interested in a prehistoric lithic scatter or architectural unit.* Did I mention that my yardwork would be done on a 1 meter by 1 meter square grid and would involve digging your yard out 10 cm at a time?* *
I've seen neighborhoods here that are full of those lithic architectural scatter styles...

My worst fears were realized last week when I unearthed ancient bones.

Luckily they were feline.
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Re: The sky is falling, the sky is falling
Old 08-16-2005, 06:38 PM   #57
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Re: The sky is falling, the sky is falling

I'm back from jury duty. The best part was the sequestering. We're in the middle of the trial and they told us (while looking at me) to keep our mouths shut. :P .

The portfolio stands on its own. I've been headed in this direction for at least four years. It took a fifteen year old girl from Missouri to clarify my thinking. No one should follow any theory that doesn't strike an intellectual and emotional chord for them. Uncle Mick has already back-tested it for me. That's a bonus.

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Re: The sky is falling, the sky is falling
Old 08-17-2005, 05:20 AM   #58
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Re: The sky is falling, the sky is falling

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Originally Posted by Apocalypse . . .um . . .SOON
The really scary middle of the road stuff, for me, is all the indexers, right in the middle of the herd, who tweak Vanguard Funds for an extra 1/2 percent/yr. When all these thirty somethings with too much leveraged investment RE get crunched in a liquidity squeeze, guess where they're going to find the mortgage payments? Maybe their 401K retirement funds filled with . . . index funds.

I feel much safer in the middle of the road than in the middle of a herd. IMO

--Greg
Greg, I get the "scared about the indexers" herd concern of yours. It seems the good doctor Bernstein is sticking his neck out and saying it's likely future stock returns will be low for awhile (7%) and that a high ratio of safe cash-dividend payers to stocks, say 75:25 will pay almost as well (6%) without the risk. So he is basically saying make the 25% stock an index fund(s). You mention in previous posts doing about the same (75 smartypants:25 hormone) except your hormone stuff is different from the index. I guess I don't see much of a difference between the two approaches as long as someone isn't throwing big percentages into the indexes. Is that about right?
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Re: The sky is falling, the sky is falling
Old 08-17-2005, 10:39 AM   #59
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Re: The sky is falling, the sky is falling

Greg
I like the smarty pants part but I don’t know about the hormonal part (which I think is different from some hobby stocks).

I can understand the attraction of playing with risk. But the way I see it is a mental game same as dividing money accounts for pre-SS and post-SS. You only have one portfolio and one overall risk profile. For myself, I don’t like the idea of a low risk and high risk seesaw. If the sides are put too far apart to keep balance, the high risk side could lose money while the low risk side could make nothing. I prefer a more balanced profile with risk as a continuum that is moderate overall. Not too hot not too cold. But it all depends on what you mean by hormonal and how you actually stock the vault. There’s risky and then there is risky.*

Also the hormone side seems too high maintenance for my tastes. Rather get my excitement elsewhere. Investing like revenge is a dish best served cold.*

Mike
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Re: The sky is falling, the sky is falling
Old 08-17-2005, 04:31 PM   #60
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Re: The sky is falling, the sky is falling




Taking some of this to heart, I eyeballed my portfolio today with an eye toward selling some equity funds and sweeping the proceeds into the VG mm fund. After awhile I decided not to touch a thing.

I'm already 50% cash. That made the decision easier.

BUM

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