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Old 06-30-2008, 05:38 PM   #181
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Well I just tried jumping out of a window, but I only fell 3' to the ground..



My uncle Guido had a fairly successful bus. in New York city, during the depression, and the Crash.

He was working one morning in the Wall St. Area, and one of the Brokers jumped out of a 4th. floor bldg. and landed right in the middle of Uncle Guido's Push cart.
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Old 06-30-2008, 06:05 PM   #182
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My uncle Guido had a fairly successful bus. in New York city, during the depression, and the Crash.

He was working one morning in the Wall St. Area, and one of the Brokers jumped out of a 4th. floor bldg. and landed right in the middle of Uncle Guido's Push cart.
Uncle Guido should have paid the protection money to my Uncles Vinnie & Gino. The broker might have 'jumped' on someone-else's Push cart. Moral: there are recession-proof businesses.
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Old 06-30-2008, 06:48 PM   #183
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Well I just tried jumping out of a window, but I only fell 3' to the ground.
Some people even muck up the easiest duties of life.
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Old 06-30-2008, 07:25 PM   #184
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II found this article in Sunday WSJ market blog pretty interesting. The essential point is that sales numbers are pretty hard to fake especially over a year. Although folks like Enron managed, and presumably some financials can figure ways of cooking the books also.

The rest is here
I think you have to be very careful with using price to sales data going back to 1990. (The DOW went from 2500 to 12,000 in that period, that may never happen again.) Try to find a chart going back to 1900, I bet the current price of stocks will look high historically when you do.

As far as the current 23 PE on the SP500, that does reflect the recent earnings of financials. Are those earnings here to stay? I don't know but some think the losses to be written off are no where near over, maybe only $300 billion of $1.25 trillion. Of course there is always another point of view. Being risk adverse, a current PE of 23 looks too rich for me to get excited about the market.

P.S. just came across this on current PE's

Earnings: The Next 12 Months? Or the Last 12? - Seeking Alpha
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Old 06-30-2008, 10:30 PM   #185
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I remember my dad getting raises of 10-15% during the worst of the late 1970s inflation era. Many others did as well. Because they were getting raises that kept up with rising costs (or close to it), that gave producers an opportunity to pass higher costs along -- meaning earnings could keep up with inflation. So stocks, primarily priced through earnings, could also come close to keeping up with inflation.

I could be wrong and my evidence is only anecdotal, but it just doesn't *feel* like wages will keep up with inflation or even close to it for a while. I got my usual 2% "raise" this year, and I think we know most of us need a lot more than 2% a year to break even with inflation. I don't know many people getting much more than 3% raises these days.
As I remember, the large wage increases weren't in sync with the inflationary costs. I spent the late 70's suffering high prices with low wage increases, then in the early 80's I made a ton in raises, which felt even better because the price pressures had slowed down.

I suspect that pattern might play out again this time, which is why we are feeling the pain so much now. Also, that late 70's experience taught me to live at or below my means. I think there are an awful lot of people who could use a dose of that right now. I blame all this on the credit card companies, in collusion with the MSM.

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Old 07-01-2008, 09:13 AM   #186
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We are probably headed for 5-7% average returns over the enxt 10 years, if we are fortunate and wind ourselves through the current perfect storm of issues........

The govt WILL raise interest rates, and taxes ARE going up, just a question of when..........
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Old 07-01-2008, 01:37 PM   #187
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We are probably headed for 5-7% average returns over the enxt 10 years, if we are fortunate and wind ourselves through the current perfect storm of issues........

The govt WILL raise interest rates, and taxes ARE going up, just a question of when..........
And if cd rates get back to the 5-6% range again, going to be hard for many to stay in the stock market. I know I love my 6% PenFed cd. Best case scenario for me is the market gets back to 13,000, cd rates get in the 6% range, I bail from stocks, load the truck on cd's, and I live happily ever after.
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Old 07-01-2008, 01:47 PM   #188
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And if cd rates get back to the 5-6% range again, going to be hard for many to stay in the stock market. I know I love my 6% PenFed cd. Best case scenario for me is the market gets back to 13,000, cd rates get in the 6% range, I bail from stocks, load the truck on cd's, and I live happily ever after.
Problem is, infaltion will be running 10-12% a year, so your CDs will be getting eaten by the inflation demon.........
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Old 07-01-2008, 01:51 PM   #189
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Problem is, infaltion will be running 10-12% a year, so your CDs will be getting eaten by the inflation demon.........
So will your 5-7% stock returns.
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Old 07-01-2008, 02:05 PM   #190
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One side of the coin: inflation eating away at fixed income assets. The other side: stock returns expected to be measurably less than the past. Sounds like someone rigged the coin.
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Old 07-01-2008, 02:34 PM   #191
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One side of the coin: inflation eating away at fixed income assets. The other side: stock returns expected to be measurably less than the past. Sounds like someone rigged the coin.
High inflation...... low investment returns..... sounds like the 70's all over again.

The reason the stagflation of the 70's was tougher on retirees than the Great Depression was that there was no place to hide, no way to get real after tax returns for the typical passive investor..... and it lasted a long time.

Very well could be what we have to look forward to now. Oh boy.......
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Old 07-01-2008, 02:36 PM   #192
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So will your 5-7% stock returns.
Don't worry...........I'm always too conservative in my predictions.......
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Old 07-01-2008, 04:04 PM   #193
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Problem is, infaltion will be running 10-12% a year, so your CDs will be getting eaten by the inflation demon.........
A falling stock market could eat your money faster than the demon inflation. People that live below their means survive inflation better than those that don't. They adapt, cut back, substitute and make due.
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Old 07-01-2008, 06:46 PM   #194
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And if cd rates get back to the 5-6% range again, going to be hard for many to stay in the stock market. I know I love my 6% PenFed cd. Best case scenario for me is the market gets back to 13,000, cd rates get in the 6% range, I bail from stocks, load the truck on cd's, and I live happily ever after.
I'm not sure about your stance on SPIA's but if you live to the mortality table age you can get an IRR of over 5%, if you think you will live another 6 or 7 years (mid to upper 80's)you can get an IRR of over 6%. As long as the company doesn't default you can lock that in for life at age 55. You don't have to wait for cd rates to come up or have to hope they stay up. So why are they so bad?
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Old 07-01-2008, 06:56 PM   #195
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And if cd rates get back to the 5-6% range again, going to be hard for many to stay in the stock market. I know I love my 6% PenFed cd. Best case scenario for me is the market gets back to 13,000, cd rates get in the 6% range, I bail from stocks, load the truck on cd's, and I live happily ever after.
Happily ever after or until your CDs come due at a time when CD rates are pathetic. But I guess you can cross that street when it gets there.

How do you think I feel? I'm the one who ignored the voice in my head telling me to bail out on Halloween last year when the markets (and my portfolio) were at an all-time high, and now I sit 12% below that...
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Old 07-01-2008, 07:08 PM   #196
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How do you think I feel? I'm the one who ignored the voice in my head telling me to bail out on Halloween last year when the markets (and my portfolio) were at an all-time high, and now I sit 12% below that...
I wonder how many people have asked that question over the last few months? True enough on the CD rate renewals. Thats what people are facing right now if they have CD's maturing.
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Old 07-01-2008, 07:33 PM   #197
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I'm not sure about your stance on SPIA's but if you live to the mortality table age you can get an IRR of over 5%, if you think you will live another 6 or 7 years (mid to upper 80's)you can get an IRR of over 6%. As long as the company doesn't default you can lock that in for life at age 55. You don't have to wait for cd rates to come up or have to hope they stay up. So why are they so bad?
I haven't ruled out buying one at some point. I will be 54 next month and have tried to set up a portfolio where I could live off of cd/bond interest and dividends. So far so good but worrying about the market is a downer. As I grow older, I would expect my fear of the market will be even greater. So I think buying a small SPIA might not be a bad way to go for this worry wart. A small SPIA + SS = monthly cash requirements, now that doesn't sound too bad to me. With my cash flow taken cake of, I probably could sleep with a small % in stocks with the majority in cd's/bonds.

Who knows, as Unclemick would say......"there is more than one way to skin a cat". Of course he also says he doesn't want any stinking annuity!
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Old 07-01-2008, 07:57 PM   #198
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I haven't ruled out buying one at some point. I will be 54 next month and have tried to set up a portfolio where I could live off of cd/bond interest and dividends. So far so good but worrying about the market is a downer. As I grow older, I would expect my fear of the market will be even greater. So I think buying a small SPIA might not be a bad way to go for this worry wart. A small SPIA + SS = monthly cash requirements, now that doesn't sound too bad to me. With my cash flow taken cake of, I probably could sleep with a small % in stocks with the majority in cd's/bonds.

Who knows, as Unclemick would say......"there is more than one way to skin a cat". Of course he also says he doesn't want any stinking annuity!
You might be a good candidate for a small annuity at some point, especially in another ten or more years if you can hold out.

So far I seem to be OK with my Wellesley and conservative AA. I am still working, though, so despite being a natural worrier I can't really know what you are going through, completely.
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Old 07-01-2008, 08:09 PM   #199
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How do you think I feel? I'm the one who ignored the voice in my head telling me to bail out on Halloween last year when the markets (and my portfolio) were at an all-time high, and now I sit 12% below that...

I feel your pain, but I also have to remind myself that same voice told me to bail out of all stocks and stay out the day after Oct 19,1987 crash (still the biggest). If I had followed my gut I'd be a lot poorer.
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Old 07-01-2008, 08:23 PM   #200
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I haven't ruled out buying one at some point. I will be 54 next month and have tried to set up a portfolio where I could live off of cd/bond interest and dividends. So far so good but worrying about the market is a downer. As I grow older, I would expect my fear of the market will be even greater. So I think buying a small SPIA might not be a bad way to go for this worry wart. A small SPIA + SS = monthly cash requirements, now that doesn't sound too bad to me. With my cash flow taken cake of, I probably could sleep with a small % in stocks with the majority in cd's/bonds.

Who knows, as Unclemick would say......"there is more than one way to skin a cat". Of course he also says he doesn't want any stinking annuity!
I hate to do this to you, but we think very similar. I'd like to see more discussions about how to get a pretty safe and fairly steady 5 or 6 or 7%. Investing in overpriced (as I see it) risky assets doesn't do it for me. I suspect there are more than the two of us out here.

I don't really like the whole concept of an insurance annuity but it is one of the only ways I currently see to get close to meeting the goal of a pretty safe and steady 5 or 6%. I'm not really ready to pull the plug on one, but I might in a few years.
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