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Old 11-22-2009, 11:17 AM   #21
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There have been real global disasters in the past. I do not think we will see anything like them again. Honestly. Nothing a good asset allocation won't survive.

Gold will not survive a real meltdown. Only ammunition and a secure camp in the woods will. If you don't run into someone bigger than you. If your ammunition doesn't run out. If you don't run out of food or water. If you don't get sick. If you have someone who can stand night watch. (Don't fall asleep!)

Now, will one be able to maintain an unchanging lifestyle forever while depleting his assets at the rate of 10% a year? Those people are living in a dream world and certainly will have their own personal disaster.

One ultimate solution might be to buy a good boat and learn how to navigate and fish and then disappear to sea for a few years.

People did survive the Great Depression. Some better than others.
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Old 11-22-2009, 01:31 PM   #22
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... Gold will not survive a real meltdown. Only ammunition and a secure camp in the woods will. If you don't run into someone bigger than you. If your ammunition doesn't run out. If you don't run out of food or water. If you don't get sick. If you have someone who can stand night watch. (Don't fall asleep!)

Now, will one be able to maintain an unchanging lifestyle forever while depleting his assets at the rate of 10% a year? Those people are living in a dream world and certainly will have their own personal disaster.

One ultimate solution might be to buy a good boat and learn how to navigate and fish and then disappear to sea for a few years...
Recently, I have been obsessed with getting an RV for extended travel. Though I do not see myself not having a permanent home (not yet anyway), I have read blogs of people who live a nomadic life in a class C RV, or even a small travel trailer. They seem to enjoy their life. Some even post their expenses. Heck, it still costs more than SS, but I hopefully should always be able to supplement it with my shrinking assets even if the market tanks again. Do I sound optimistic here?

So, me worry?

By the way, knowing that you are in the oil industry, I remember that in the late 70s when I was getting my undergraduate degree, the graduating seniors talked about how the chemical engineers were getting the highest offer. Then, in the early 80s, when I was working, there were talks about how the U-Haul one-way rent was cheaper going into Texas than the rent going out, due to the en-masse exodus from the oil state. Good grief! I am glad I am not in that field.
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Old 11-22-2009, 06:19 PM   #23
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Was there ever a time in history where the future was certain? Put a plan together that your comfortable with, rebalance once a year and hope for the best.

Otherwise put your money in CD's and get eaten up by inflation.
I have heard that statement for 25 years yet I am still in pretty good shape. I invested $300,000.00 in 2007 yielding 5% for 5 years. I split these up in mine and DW names. When they mature in 2012 I will be 65 and start SS. I have never invested anything in the market other than my state retirement and I have no say on that.
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Old 11-22-2009, 06:31 PM   #24
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Good timing, how did you do during the previous 23 years?
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Old 11-22-2009, 06:41 PM   #25
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I remember reading a book in the 70's that said that when interest rates went over 10% you should move strong into bonds, below that stocks.
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Old 11-22-2009, 08:01 PM   #26
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Good timing, how did you do during the previous 23 years?
I am still here. I just never invested in stocks. I have quite a few friends who have and many are sad now. One real good friend lost $200,000 in the market and I dare not mention the stock market to him. I know, many people have got rich investing in stocks. Timing is everything and I kind of seem what was coming in the middle of 2007. Kind of like telling if you have a full house of two pair when playing poker. I call it gut feeling.

I know I am not the smartest person when it comes to investing money but I do consider myself a good money manager. In 1990 I bought $100,000 worth of US treasuries that came due in 1997. I had the checks sent to me. I took those checks and sent my Son to college (Auburn University) and never once touched my $100,000. I guess you can say the government sent my Son to college. I wish those rates were available today.

The CD's are not all the net worth I have. I also own real-estate and a little gold, some guns and lots of ammo. I just try to stay healthy and if I had to look at a stock ticker everyday my blood pressure would rise

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Old 11-22-2009, 08:27 PM   #27
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I have heard that statement for 25 years yet I am still in pretty good shape. I invested $300,000.00 in 2007 yielding 5% for 5 years. I split these up in mine and DW names. When they mature in 2012 I will be 65 and start SS. I have never invested anything in the market other than my state retirement and I have no say on that.
If you are living off your State retirement and not taking 4% of your own money then it doesn't matter. If you had to roll those CD's over at this point you wouldn't be covering inflation with the rates available. Your life, your money, do what ever floats your boat.
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Old 11-22-2009, 08:28 PM   #28
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In 1990 I bought $100,000 worth of US treasuries that came due in 1997. I had the checks sent to me. I took those checks and sent my Son to college (Auburn University) and never once touched my $100,000.
Did that turn into 300K in 2007? Sounds like you spent the interest? Where was the money from 1997 until 2007?
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I invested $300,000.00 in 2007 yielding 5% for 5 years.
Where did that money come from? Is there more to this story?
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Old 11-22-2009, 09:34 PM   #29
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What, am I on the witness stand ?/ Did that turn into 300K in 2007. NO

I only made a statement about Cd's and it looks as some here take offense in that.
And for your information the money was earned . I did not know I had to tell where I got it. Gezzzzz
I never said I was living off State retirement. Go back and read again. For your information I still work. I have since 1964 but I plan on retiring in 2012.
Sure I spent the interest on the $100,000. I paid for 4 years of college with the interest. I would think that was a good way but maybe some here think that was dumb. I guess I should have borrowed the money.
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Old 11-22-2009, 09:42 PM   #30
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What, am I on the witness stand ?/
I only made a statement about Cd's and it looks as some here take offense in that.
And for your information the money was earned . I did not know I had to tell where I got it. Gezzzzz
I never said I was living off State retirement. Go back and read again. For your information I still work. I have since 1964 but I plan on retiring in 2012.
Sure I spent the interest on the $100,000. I paid for 4 years of college with the interest. I would think that was a good way but maybe some here think that was dumb. I guess I should have borrowed the money.
oldtrig
I'm not sure about others, but I interpreted the questions as curiosity as to how you were retired without being in the market at all. I certainly was curious about it. Obviously from this post there's a lot more going on (like not being retired ) so your situation doesn't apply to mine. I personally would love to find a way to be retired, not in the market at all, able to live on a 4% SWR, preferrably without having to be a slumlord landlord in the process. Oh well, my search for safety continues.
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Old 11-22-2009, 09:45 PM   #31
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oldtrig, I think you misunderstand.
People want to know how the investment plan you used works.
That is why you have questions about the fund and if they were coming from the capital/interest gains or, as is the case as you stated, additional inflow of money from working.
If you have a large enough stockpile, CD ladders work great. Bonds can work great too IF they are paying out an interest rate high enough above inflation.
Again, I think both of these play roles in a good diversified portfolio. As do stocks
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Old 11-22-2009, 10:48 PM   #32
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What, am I on the witness stand ?/ Did that turn into 300K in 2007. NO
You're not on the stand and IANAL (love to use that phrase).

You suggested that for 25 years you'd stayed out of the market and put 300K into CD's in 2007. When I asked about the previous 23 years, you mentioned $100k in 1990 and spending the interest. I saw this as suggesting you put $100K into CDs in 1990, spent the interest and had $300K to put into CDs in 2007.

OK, me wrong. I thought it was an answer to the question I asked. Silly me.
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Old 11-22-2009, 11:10 PM   #33
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oldtrig, report back once you retire and are living off 4% SWR of your CD's. Your going to need a lot of them. (heh) Many of the folks on this forum are living off of there assets with no pensions or SS.
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Old 11-23-2009, 09:37 AM   #34
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If you are expecting those outcomes, I don't think cash is where you want to be. Your cash will be losing value as inflation eats it away. Yes, you will probably be able to then get higher interest rates later, but not before inflation has eaten away a good chunk of your earnings power.

My advice for that environment--

Buy Coke. Inflation won't damage Coke's business. They will just raise prices to match.

Likewise, I suspect that McDonald's, Walmart, General Mills, and Proctor and Gamble will be able to raise prices to match inflation. If they can't, then we almost can't have meaningful inflation, since the stuff we need to buy isn't going up in price.

Many of these companies are also strongly international. That will help with the falling dollar.

I think your outcome is widely expected by the investing population.

That is why stocks have been going up.


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Buying dips in the market seems like gambling and doesn't appeal to me--I prefer to stay out of the stock market altogether.

There's never been a time when the future was certain, but when you're facing retirement certain assumptions have to be made. The future certainly seems more uncertain now than it has in the past when it was clear the bull market was unsustainable ("if something can't go up forever, it won't.")

So I'm assuming the following will happen:

1. Higher inflation
2. Higher taxes
3. Higher interest rates

I'd be interested if anyone shares my view that keeping cash for the next couple years might be a good strategy. I've done well in gold and am willing to cash in, wait, and then buy government bonds at some point in the future. I don't have a good feeling about the typical asset allocation model which requires that one put money in stock index funds and bonds... at least right now.

Thanks
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Old 11-23-2009, 11:50 AM   #35
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Samclem, it was much easier to foresee economic trends than to buy and sell specific stocks. I don't follow the stock market, but I do follow macroeconomic trends.
I am going to have to go with ultimo here. Marco-economic trends are sometimes discernible. While I certainly did not call it on the nose, the dot-com tech bubble, REIT bubble and housing bubble were clear as a bell to me in advance. What I missed on both the dot-com and housing bubbles was how much they would affect the broader market. I sold 50% of my REIT holding about two month prior to the peak. Market timing? I call it tilting my allocation. After all, I kept 50%.
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Old 11-23-2009, 01:48 PM   #36
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sigh, first time, i have 30% cash. Same time, i am looking at some Gold junior. Gold price is telling us something very ugly may happen. Maybe US, more possible JP.
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Old 11-23-2009, 03:23 PM   #37
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How do you interpret what the gold price is 'telling you' though?
Is it telling you that it is going to crash soon as it is at a decade long high (or multi year, or something of that sort)?
Or is it telling you that you should buy a bunch of it because it is still only at half of what it went for in the 70's (inflation adjusted)?
And no matter what it does, there will be people (I am NOT suggesting you are one of those) that will use whatever gold does to say "It was sooooo obvious"
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Old 11-23-2009, 07:07 PM   #38
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I am one who believes in equities, but take no offense at people who tout the safety of CD, or Treasuries. Some people simply cannot stomach the risks and fluctuations of the market.

The truth of the matter is that although we all try to practice "buy low/sell high" by rebalancing, we all have different trigger points, different strategies, different allocations of various sectors. Our investment returns vary quite a bit, though we strive to practice the same principle. There never was any guarantee, was there?

Some people want some certainty and stability in life. Heck, many of us hang on to jobs that we hate, in order to get that 401k match or that pension. Very few took the step to try to strike out on their own, like I did (and I have financial scars to show for it ).

So, if someone is satisfied with a safer investment in order to preserve his principal, it is his choice to do so. I have some relatives like that. I leave them alone.
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Old 11-23-2009, 07:26 PM   #39
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oldtrig, report back once you retire and are living off 4% SWR of your CD's. Your going to need a lot of them. (heh) Many of the folks on this forum are living off of there assets with no pensions or SS.
That may be a long time from now.
When I do decide to retire I have this
SS
State Retirement
CD's
Rent from commercial property
Rent from other property
Work part time if able
As I said, I have never been and never will be in the stock market and that has worked for me.
Buying stocks work for some people and I applaud them. It just is not my way.
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Old 11-23-2009, 08:13 PM   #40
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Gold price is telling us something very ugly may happen.
The only thing gold is telling us is that people love to chase the latest, greatest, can't miss, investment of a lifetime.
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