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Old 08-15-2013, 05:16 PM   #61
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I first put money into the market about a year ago. I lost $8000 within the first month. That was fun. My stomach sank a little and I started to doubt my decision. However, a year has passed, and now I'm up by $27,000. It's just the way the market works. One day it's up; the next day it's down. You just ride it like a roller coaster -- but to reduce the nausea, try not to pay attention to the daily (or weekly) fluctuations. They don't mean a whole lot. It's the long horizon that matters.

I do question putting so much into bonds. I would've chosen a balanced fund.
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Old 08-15-2013, 06:10 PM   #62
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I first put money into the market about a year ago. I lost $8000 within the first month. That was fun. My stomach sank a little and I started to doubt my decision. However, a year has passed, and now I'm up by $27,000. It's just the way the market works. One day it's up; the next day it's down. You just ride it like a roller coaster -- but to reduce the nausea, try not to pay attention to the daily (or weekly) fluctuations. They don't mean a whole lot. It's the long horizon that matters.
There you go.

Today the S&P500 was down by 1.43% so I cycled to Target, bought some coffee, 24 cans of Fancy Feast for the kitties, and 60 rolls of bathroom tissue. Then I cycled back home, made lunch, and watched a couple more episodes of Twin Peaks on Hulu.

That was my strategy for today. If the market drops precipitously over the next few weeks, I'm secure in the knowledge that I have 60 rolls of bathroom tissue here However, it will go back up at some point - probably in the next few days.
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Old 08-15-2013, 06:15 PM   #63
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If the market drops precipitously over the next few weeks, I'm secure in the knowledge that I have 60 rolls of bathroom tissue here .
You're fishing for a "wiped out" joke but I'm not taking the bait!
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Old 08-15-2013, 06:15 PM   #64
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There you go.

Today the S&P500 was down by 1.43% so I cycled to Target, bought some coffee, 24 cans of Fancy Feast for the kitties, and 60 rolls of bathroom tissue. Then I cycled back home, made lunch, and watched a couple more episodes of Twin Peaks on Hulu.

That was my strategy for today. If the market drops precipitously over the next few weeks, I'm secure in the knowledge that I have 60 rolls of bathroom tissue here However, it will go back up at some point - probably in the next few days.
And something to eat if things get really bad! The cats can catch their own dinner!
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Old 08-15-2013, 07:07 PM   #65
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You're fishing for a "wiped out" joke but I'm not taking the bait!
I'm not aiming to make myself the "butt" of anyone's jokes, trust me
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Old 08-15-2013, 07:14 PM   #66
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My equity portion is down only 0.99% today, so not too bad compared to S&P. I even have a position that goes up 8%, if one can believe that. The next best one goes up 4%.

On the other hand, the worst one is -7%. Next worst one is -5.5%.

Nah, no need to buy "Depend" yet!
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Old 08-15-2013, 07:21 PM   #67
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Nah, no need to buy "Depend" yet!
Although, after what you went through at the hands of your doctor yesterday, you could be forgiven for doing so.

Hope you're feeling recovered by now!
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Old 08-15-2013, 07:27 PM   #68
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Although, after what you went through at the hands of your doctor yesterday, you could be forgiven for doing so.
Exactly right!

Man, when you are physically suffering, money means little! Even a billionaire would have to suffer the same at the hands of these doctors, I would think.

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Hope you're feeling recovered by now!
I am, thank you! Would not be posting otherwise. Can hardly wait until the next torture er procedure.
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Old 08-15-2013, 08:21 PM   #69
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My wife's 401k has just reported in. It is early today, as I often have to wait for another hour or 2.

Total equity including her funds: -1% today.
Total portfolio: -0.75%.

So what? It's only money, folks. It's better to be living poor than not living at all, or worse, living in pain.
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Old 08-15-2013, 08:27 PM   #70
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My wife's 401k has just reported in. It is early today, as I often have to wait for another hour or 2.

Total equity including her funds: -1% today.
Total portfolio: -0.75%.

So what? It's only money, folks. It's better to be living poor than not living at all, or worse, living in pain.
Yes indeed. This is when dollar cost averaging kicks in.
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Old 08-15-2013, 09:17 PM   #71
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Talk about health and the market, I still have the fight in me. Else, I would not look at my portfolio. However, as most retirees, I do not have fresh money from earned income to do dollar cost averaging. And the market has to be a lot lower to buy or to rebalance, no matter what you call it.

So, I will be just watching for a while. As I own stocks in different sectors and often overweight one sector over another depending on my interpretation of the world economy, I always have something to watch. Watching just the indices like the Dow, S&P, or Nasdaq is not exciting enough for me.
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Old 08-15-2013, 09:23 PM   #72
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Talk about health and the market, I still have the fight in me.
Yeah boy, and you got some cheerleaders right here!
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Old 08-15-2013, 09:27 PM   #73
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It was pointed out (time and time again) that a 100% fixed income portfolio historically has a low success rate with a 30 year time frame at a 3.5% WR - only 79.3%. An AA of anywhere from 30% to 85% equities however, provided a 100% success rate. That's not 'critical' - that's information. And it gets worse at 40 years - 27% success with all fixed, and 98% success with higher equities (~ 50/50 to 65/35).
-ERD50
Obgyn has said before that he accepts his portfolio will lose out to inflation. If you enter a figure of 0% for inflation in Firecalc and run it for a 100% fixed income portfolio, you can take up to 4.5% out, based on the starting value and get 100% success over 30 years. In fact, you can get 100% success with a WR of 3.5% and a constant inflation rate of 1.75%.

We all know that inflation is almost certainly going to run higher than that and most of us want our income to keep track of inflation, but Obgyn has already said that he is comfortable with losing spending power over time, so who are we to question that? He keeps telling us he's risk averse (in almost every post, it feels like) so I think he just might be telling us the truth

Ob - if you ever change your mind and decide that you want your retirement income to keep pace with inflation, we'll be here for you
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Old 08-15-2013, 10:33 PM   #74
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He keeps telling us he's risk averse (in almost every post, it feels like) so I think he just might be telling us the truth
I have an issue with calling wanting no equities something you do when you are risk averse. This is because having no equities is risky, actually very risky. "Risk averse" seems to really be a code for "averse to the risk of any volatility in the nominal amount of my portfolio." Risk averse does not mean averse to reduction of the real value of my portfolio since someone who was averse to that kind of risk wouldn't have a no equity portfolio.

Of course, Obgyn can choose to take whichever of those risks he wants to take, but I don't think he is at all risk averse. I think he is risk seeking. Again, that is fine if he doesn't care that his course of action minimizes volatility at the cost of loss of real value of his portfolio.
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Old 08-15-2013, 10:40 PM   #75
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I think risk aversion is not obgyn's profile. He craves numerical predictability. Hence, he is variability averse.
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Old 08-15-2013, 10:59 PM   #76
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Again, that is fine if he doesn't care that his course of action minimizes volatility at the cost of loss of real value of his portfolio.
+1. Volatility is an entirely unsatisfactory way to describe "risk" as we know it in the real world. I can bury my money in a hole, have zero volatility (and "zero risk") and be virtually assured it will eventually be worth almost nothing. If I'm counting on that money for my living expenses, have I really taken the low-risk path?
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Old 08-15-2013, 11:38 PM   #77
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"Risk averse" seems to really be a code for "averse to the risk of any volatility in the nominal amount of my portfolio." Risk averse does not mean averse to reduction of the real value of my portfolio since someone who was averse to that kind of risk wouldn't have a no equity portfolio.
I agree. Whenever Ob says that he is risk averse (which is often), I do the translation in my head and take that to mean that he is uncomfortable with volatile investments. That's what most people mean (with regards to investments) when they say they are risk averse.

As Meadbh says, he craves numerical predictability.
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Old 08-16-2013, 04:48 AM   #78
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We all know that inflation is almost certainly going to run higher than that and most of us want our income to keep track of inflation, but Obgyn has already said that he is comfortable with losing spending power over time, so who are we to question that? He keeps telling us he's risk averse (in almost every post, it feels like) so I think he just might be telling us the truth
He can do whatever he want with his money. I think advising others to do like him is a bad idea in most cases. But people coming here for advice are getting it for free, they should realize they may be only getting their money's worth!
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Old 08-16-2013, 08:06 AM   #79
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I think risk aversion is not obgyn's profile. He craves numerical predictability. Hence, he is variability averse.
Yeah, or another way to look at it is that he is averse to letting go of control. Putting money in the market means, to some degree, that you lose control over what happens to it. He prefers having outcomes in his control.

Makes sense. A lot of doctors I know are like that. They need to feel like they are in control. Especially being an OB, he's in a high-risk profession where the threat of lawsuits is always looming. He has to make sure he stays on top of all the variables, gets everything right ... i.e., stays in control of the situation.

Putting money in the stock market requires letting go of control. I don't think OB likes to do that.

Which is fine. My brother is the same way. Everything in CDs. This way he knows it is secure; he doesn't have to worry about market fluctuations, when the next big crash is coming, etc. He knows exactly how much he'll have, down the road. Some people are willing to pay for that sense of predictability and control.
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Old 08-16-2013, 08:14 AM   #80
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Why does anyone care about what OBGYN does?? ...
His choice, and that's fine.

But what I do care about is, other readers seeing these statements from a prolific poster that a portfolio for an early retiree, w/o equities, and a 3.5% WR (which was in his sig for a long time) is 'conservative', or 'risk adverse'.

If that statement is not challenged, it might be accepted by others as truth. And as one can see from the numbers I posted earlier, you need to get to a very low WR to support a 40 year retirement w/o equities. If someone chooses that route, fine. But don't misrepresent it.

Meadbh hit the nail on the head with the differentiation between 'risk adverse', and 'craving numerical predictability'. And most of know that numbers that are not adjusted for inflation over time are numbers that are hiding reality from us. That 'numeric predictability' is an illusion, because inflation causes its buying power to vary, and inflation is not predictable.

TANSTAAFL.

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