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Old 03-06-2012, 04:24 PM   #61
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Wh... Wh.... Wh(eee!)... Party like it's 1929

W2R, you jinxed us with your excitement.
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Old 03-06-2012, 05:05 PM   #62
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Braumeister, I don't want to hijack this thread, but noted you are from near Cincy and you apparently like beer. Have you heard about the new Moerlein lagerhouse downtown Cincy? I live 90 minutes from there, and plan to go in 2 weeks.
Yes, I have been a consultant helping them out for the last couple of years.
I think you'll be very impressed when you visit, with the food as well as the beer. Two weeks from now they should have all the opening kinks worked out.
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Old 03-06-2012, 05:13 PM   #63
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Wh... Wh.... Wh(eee!)... Party like it's 1929

W2R, you jinxed us with your excitement.

Its not a jinx . When you see a Whee thread it just means its time to take some profits . It's a better indicator than any news letter .
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Old 03-06-2012, 05:32 PM   #64
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Inflation of 12% from Jan 2007 to Jan 2012! Wow!

Take that out from my portfolio gain, and my own return is not all that great! I dunno about y'all, but some people keep say'in there has been no inflation, perhaps even deflation!

Yeah, just wait until inflation is so high that everybody agrees that there IS.
Yes. I had the same experience. My net worth Dec 2011 compared to Dec 1999 is -10% when adjusted for inflation. But then again that was compared to a market peak and after a down year. Other years I have been well ahead.

And realize that even "ideal" inflation like 2% or 2.5% adds up over time. These are not considered high rates, yet 2% means 22% loss in spending power over a decade, and 2.5% means 28% loss. Over a decade, things add up!

I think when people say "no inflation", they really mean inflation close to 2% per year on average. Rates below 2% are usually associated with struggling or awful economic periods. I don't think we want to go there! But even at a nice "friendly" 2% annual inflation rate, over a decade your investments better grow 22% to stay even in real terms.

We did recently have a negative inflation year in 2010 I think?

Latest inflation rate Jan 2011 to Jan 2012 came in at 2.93%. Yeah, not that low considering we averaged 2.56% from 2000-2009.

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Old 03-07-2012, 07:18 AM   #65
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Yes. I had the same experience. My net worth Dec 2011 compared to Dec 1999 is -10% when adjusted for inflation. But then again that was compared to a market peak and after a down year. Other years I have been well ahead.

And realize that even "ideal" inflation like 2% or 2.5% adds up over time. These are not considered high rates, yet 2% means 22% loss in spending power over a decade, and 2.5% means 28% loss. Over a decade, things add up!

I think when people say "no inflation", they really mean inflation close to 2% per year on average. Rates below 2% are usually associated with struggling or awful economic periods. I don't think we want to go there! But even at a nice "friendly" 2% annual inflation rate, over a decade your investments better grow 22% to stay even in real terms.

We did recently have a negative inflation year in 2010 I think?

Latest inflation rate Jan 2011 to Jan 2012 came in at 2.93%. Yeah, not that low considering we averaged 2.56% from 2000-2009.

Audrey
Gov't definition of inflation vs real household inflation are two different animals. Given the real effect, its a wonder anyone can live within a budget/SWR that very well may be predicated on gov't inflation #s and likely to become more of an issue over the next 10 year period.
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Old 03-07-2012, 10:49 AM   #66
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Last year's (2011) official inflation rate was 3.5%, hardly the "no inflation" some people refer to.
And even *before* 2011, when inflation was reported even lower, those who were buying primarily essential items like food, energy, health care and such would likely dispute the "low inflation" claim which could only be made by including the falling cost of housing, big screen TVs and cruise vacations in the overall numbers.

I should also point out that the market pretty much peaked when W2R wrote the original post, and while it hasn't tanked since then, it nevertheless seems to have confirmed a market top...
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Old 03-07-2012, 11:09 AM   #67
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Gov't definition of inflation vs real household inflation are two different animals. Given the real effect, its a wonder anyone can live within a budget/SWR that very well may be predicated on gov't inflation #s and likely to become more of an issue over the next 10 year period.
Yeah, yeah. I know!

Fortunately for us our "personal household inflation" during retirement from 2000 to 2011 turned out to be 0.21% per year. Yep - you read that right - less than a 1/4 % per year. After 12 years, our spending on regular expenses only increased by 2.33% compared to where we started. And we weren't trying to stick to a budget either.

So don't let the "official" numbers completely scare you either. Best to plan on them (or worse) and if people DON'T have invested assets that will help them beat inflation over the long run and have a tight budget are totally dependent on a COLA adjusted pension or SS, then, yes, things could get very tough. But personal inflation has everything to do what you spend your money on year after year. Track your own personal case.

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Old 03-07-2012, 11:23 AM   #68
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Yeah, yeah. I know!

Fortunately for us our "personal household inflation" during retirement from 2000 to 2011 turned out to be 0.21% per year. Yep - you read that right - less than a 1/4 % per year. After 12 years, our spending on regular expenses only increased by 2.33% compared to where we started. And we weren't trying to stick to a budget either.


Audrey
My tracking stinks, but if you were able to acquire the same goods and services every year as you did in 2000 and only realized .21% inflation year over year above that base expenditure level thats amazing. Good job!
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Old 03-07-2012, 11:29 AM   #69
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My tracking stinks, but if you were able to acquire the same goods and services every year as you did in 2000 and only realized .21% inflation year over year above that base expenditure level thats amazing. Good job!
It's that "same goods and services" thing that is the issue here. Sure, it's possible to have very little inflation if you "substitute" the way the CPI does (steak becomes too expensive, so we substitute with chicken and call it a drop in food prices).
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"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

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Old 03-07-2012, 11:34 AM   #70
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It's that "same goods and services" thing that is the issue here. Sure, it's possible to have very little inflation if you "substitute" the way the CPI does (steak becomes too expensive, so we substitute with chicken and call it a drop in food prices).
Exactly, unless your the worlds greatest negotiator
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Old 03-07-2012, 11:35 AM   #71
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My tracking stinks, but if you were able to acquire the same goods and services every year as you did in 2000 and only realized .21% inflation year over year above that base expenditure level thats amazing. Good job!
It could be that we really splurged during 2000 when we started! But actually, our peak spending year was in 2002, and the next highest year was 2011 - which I expected because we moved into a slightly more expensive situation.

I can't say that we had the equivalent in good and services year after year. Rather, our spending varied based on what we "felt like" doing any given year or sometimes other circumstances intervened. But even though some things definitely went way up (like health insurance, food and fuel) it didn't impact the bottom line that much.

And we also got a lot smarter about how we spent our money over the years - thus getting a lot more bang for the buck. And that has had a lot to do with not really experiencing any personal inflation and feeling like we are experiencing at least the same standard of living.

So, in planning ahead, don't discount the power of learning how to do more of what you enjoy most on the same or less money. It does wonders for the bottom line!

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Old 03-07-2012, 06:59 PM   #72
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Fortunately for us our "personal household inflation" during retirement from 2000 to 2011 turned out to be 0.21% per year. Yep - you read that right - less than a 1/4 % per year. After 12 years, our spending on regular expenses only increased by 2.33% compared to where we started. And we weren't trying to stick to a budget either...
Cumulative inflation from Jan 2000 to Jan 2011 is 30.5%!

So, after inflation, your spending dropped quite a bit in 11 years. Can we say "Bernicke's spending model"?

Actually, you have an "advanced" case of Bernicke affliction, perhaps because you retired quite early. And by the way, Bernicke's model calls for a 3.7%/yr drop, starting at the age of 55, while other researchers have argued that 2.2%/yr is closer to the norm. You are somewhere in the middle.
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Old 03-07-2012, 07:32 PM   #73
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Cumulative inflation from Jan 2000 to Jan 2011 is 30.5%!

So, after inflation, your spending dropped quite a bit in 11 years. Can we say "Bernicke's spending model"?

Actually, you have an "advanced" case of Bernicke affliction, perhaps because you retired quite early. And by the way, Bernicke's model calls for a 3.7%/yr drop, starting at the age of 55, while other researchers have argued that 2.2%/yr is closer to the norm. You are somewhere in the middle.
Since I was comparing whole year 2000 spending to other years, I calculated the 11 year range Dec 2000 to Dec 2011: 29.7% Virtually the same .

But yes, our average spending was essentially flat over a 12 year period, but obviously dropped quite a bit in "real" terms.

I went to this trouble because I looked at the cumulative inflation number - actually over the twelve year period starting Jan 2000 it was something shocking like 34% - and I knew that did not match my personal experience. So I looked at our year to year spending. I published it (in % terms) on the "Spending as Retirement Progresses" thread.

Between here and the Morningstar forum, quite a few retirees report that their spending after being retired for many years has essentially been flat. So I am not alone!

Maybe we've just been getting 2.3% more resourceful and clever each year on average! Hey - that's pretty close to the 2.2% per year reported by other researchers!

Audrey
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Old 03-13-2012, 10:57 AM   #74
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The Dow is up more than 100 points as I write this.

Please, please, no more "Wh***".
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Old 03-13-2012, 12:03 PM   #75
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The Dow is up more than 100 points as I write this.

Please, please, no more "Wh***".
At least not from "The Oracle of New Orleans"
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Old 03-13-2012, 04:23 PM   #76
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The Dow is up more than 100 points as I write this.

Please, please, no more "Wh***".
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At least not from "The Oracle of New Orleans"
WHEEE!!!!

Your pleas fall on deaf ears. The Dow closed above 13,000, life is good, and my portfolio looks fantastic. Might as well enjoy it. "Eat, drink, and be merry, for tomorrow we die" as the saying goes.




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Old 03-13-2012, 04:34 PM   #77
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WHEEE!!!!

Your pleas fall on deaf ears. The Dow closed above 13,000, life is good, and my portfolio looks fantastic. Might as well enjoy it. "Eat, drink, and be merry, for tomorrow we die" as the saying goes.




You're really tempting fate, aren't you?
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Old 03-13-2012, 04:39 PM   #78
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That poor lady has lost complete control of her whee-er. Guess that happens to some folks when they age...
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Old 03-13-2012, 04:39 PM   #79
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WHEEE!!!!

Your pleas fall on deaf ears. The Dow closed above 13,000, life is good, and my portfolio looks fantastic. Might as well enjoy it. "Eat, drink, and be merry, for tomorrow we die" as the saying goes.

In anticipation of a wheee from our own W2R, I went ahead and rebalanced today before the market close since the 1.5%+ gain was what I needed to trigger the rebalance.

I even wrote a fix to my spreadsheet to compute today's equity gain and bond loss so I could get the right ratios before close. Normally, I wait until the next day and hope the gains hold, but not with W2R's finger on the trigger!!!

And look at this - W2R has a super Wheee! for us

The NASDAQ 3040 close is the most impressive IMO. Last time the NASDAQ closed above 3000 was Dec 2000!!!!

Now I can go to sleep for the rest of the year.... Just wake me up if the market goes up or down another 10%, OK?

Audrey
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Old 03-13-2012, 04:41 PM   #80
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That poor lady has lost complete control of her whee-er. Guess that happens to some folks when they age...
Yep! Totally unglued...

Wheeeeeeeeeeeeeeeeeeeeeeeeeeeeee!!!!!!!!!!
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