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Old 08-09-2011, 08:26 AM   #141
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Originally Posted by 73ss454 View Post
Since markets can't be timed, with 100% chance of a bear market why would you be in the market at all?
Because the chances of there being a bull market in the future is also 100% and the stock market goes up 66% of the time, the odds favor the bull over the long run.
TJ
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Old 08-09-2011, 08:30 AM   #142
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No one is making anyone invest in any manner...

I choose to use index funds/ETFs, allocate according to a SWAG based on my alleged risk tolerance and need for growth, then rebalance within fairly wide bands. This will hopefully keep me from doing something too stupid, whether the market is in "Wheee" mode, or "oh, shite" mode...
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Old 08-09-2011, 08:40 AM   #143
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Still sticking with -600?
yep
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Old 08-09-2011, 08:42 AM   #144
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One financial adviser I follow asks the following question: What do you think the odds of having another bear market in the future is? Most people would answer that question with 100% chance. So if there's a 100% chance of another bear market, why would anyone stay in the market all of the time?
Since markets can't be timed, with 100% chance of a bear market why would you be in the market at all?[/QUOTE]

And therein lies the myth...that markets can't be timed. I agree nobody knows exactly what is going to happen from one day to the next, but if everything in the economy is tanking, I seriously doubt the market is heading for new highs. So you have some idea that the market will either be flat or headed lower. You can buy and sell on long term swings in the market.
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Old 08-09-2011, 08:55 AM   #145
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Well, I can tell that the "buy and hold no matter what" sentiment dominates this forum. Interesting.
I agree with the other responses. What would really be interesting, is if you could provide us a documented, proven alternative to B&H with re-balancing.

It isn't 'sentiment' - show me a clearly better way, and I'll drop B&H/ReBal in a second. You act like we chose this path because our head is in the sand - it's just the opposite, many of us chose this because we looked at alternatives, and don't see one we can rely on. In the case of market timing, how can you rely on any 'system' to not only get you out at the right time, but get you back in. IF that was so easy, where are the 'market timing' mutual funds that consistently outperform the market - should be easy to buy one.

Avoid the stock market? Load that into FIRECALC and see how you do.

But please, please, please - show us the way.

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It took you four years on this forum to figure that out?
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It's buy, hold and REBALANCE" The last part kinda of forces you to sell high and buy low.
TJ
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Old 08-09-2011, 09:05 AM   #146
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When you figure out when the market will do these gyrations please let us all know. My experience has been that I don't know nothin and I don't see that changing.
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Old 08-09-2011, 09:06 AM   #147
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I agree with the other responses. What would really be interesting, is if you could provide us a documented, proven alternative to B&H with re-balancing.

It isn't 'sentiment' - show me a clearly better way, and I'll drop B&H/ReBal in a second. You act like we chose this path because our head is in the sand - it's just the opposite, many of us chose this because we looked at alternatives, and don't see one we can rely on. In the case of market timing, how can you rely on any 'system' to not only get you out at the right time, but get you back in. IF that was so easy, where are the 'market timing' mutual funds that consistently outperform the market - should be easy to buy one.

Avoid the stock market? Load that into FIRECALC and see how you do.

But please, please, please - show us the way.

-ERD50
The Dow closed lower yesterday than it was back in 1999. How is buy, hold and rebalancing working for you?
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Old 08-09-2011, 09:09 AM   #148
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You can buy and sell on long term swings in the market.
Sure you can.

But can you do it successfully and consistently over the long term? If so, you should be filthy rich and not hanging around a joint like this giving free advice to us unwashed BHR types!
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Old 08-09-2011, 09:09 AM   #149
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...but if everything in the economy is tanking...
But is this actually the state of the economy, or just the version some in the media/government/black helicopters want you to believe?

I see economic data as a mixed bag. GDP slowing, but just as likely due to Europe troubles, Arab spring, Japanese earthquake, political grandstanding, etc., than everything going to heck. Plus, the histrionics on both sides of the spectrum, trying to scare the bejeesus out of everyone, so they'll blame the "other" side.

Latest employment data was better than expected, corporate profits are high, lots of strong balance sheets, P/E reasonable. Lots of headwinds still, but it's far from certain, in my mind, that we're swirling down the toilet...

As always, YMMV...
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Old 08-09-2011, 09:16 AM   #150
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Sure you can.

But can you do it successfully and consistently over the long term? If so, you should be filthy rich and not hanging around a joint like this giving free advice to us unwashed BHR types!
My main goal is not to get filthy rich but to preserve what I already have while trying to participate in SOME of the market gains. Buy, hold AND SELL helps me in that goal.

And I see many buy and hold types around here and they don't seem to be filthy rich either.

I'm amazed how people defend this approach to the bitter end. There ARE alternatives.
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Old 08-09-2011, 09:17 AM   #151
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Well, I'm going to hold and if that doesn't work I'll just JUMP.
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Old 08-09-2011, 09:21 AM   #152
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My main goal is not to get filthy rich but to preserve what I already have. Buy, hold AND SELL helps me in that goal.

And I see many buy and hold types around here and they don't seem to be filthy rich either.

I'm amazed how people defend this approach to the bitter end. There ARE alternatives.
So BHR is about equal to your BHS (the good sells are offset by the bad sells), just less effort? Alternatives indeed, you're welcome to your approach, even defending it 'to the bitter end.'

BHR can definitely provide great results. But more people have lost money thinking they had the ability to BHS successfully than have lost money adhering to BHR. And your approach is the one recommended by all retail brokers on Wall St, who are we to disagree?
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Old 08-09-2011, 09:25 AM   #153
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Just curious or perhaps for another thread, but what "rules" do people use for rebalancing? are they written?
I took at look at what I'd written down, and here it is, in a document called "Rebalancing Info" (Amounts replaced with "x"). My rule is that I rebalance annually on the first business day of January, but I see that I hadn't actually written that down. I don't have any provision for rebalancing if things get out of whack during year.
Rebalancing Plan and Record
2008

Rebalancing Plan (2008/01/07):

Last year I rebalanced to 58%.
Today I rebalanced to an asset allocation of 57% stock.
My plan is to stay at 57% for at least several years.

2009

[Chart omitted]

2010

2010/01/04: I am decreasing the stock allocation to 54% stock.
We are currently at 60.3% with $x in total investments, thus I need to transfer $x out of stocks.

We have $x in the normal money market fund, so I'll move $x to that, giving us a year's expenses plus $x. I will also move $x from Lena's 500 index ira to her GNMA ira.

2011

2011/01/01: This year, I will be setting the stock allocation to 53% stock. We are currently at 57.9% stock and have $x. That means that we have $x in stock, and I need to change that to $x, meaning that I need to move $x from stocks to bonds and MM.

We have about $x in the money market, so I will move $x to the money market from the S&P 500 Normal (giving us $x in the MM), and $x from the Total Stock Market to the Total Bond Market. I did this on (1/2/2011).
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Old 08-09-2011, 09:29 AM   #154
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if everything in the economy is tanking, I seriously doubt the market is heading for new highs.
Except that every time everything tanked in the past, the market did eventually head back up, thus buy, hold, rebalance. It could be different this time but as ERD asks, what option are you proposing that will serve a 30 - 40 year ER?

Edit: I got my quotes wrong somehow - the quote above actually originated with DallasGuy not 73ss454. So what kind of user name is 77ss454 anyway?
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Old 08-09-2011, 09:35 AM   #155
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I'm amazed how people defend this approach to the bitter end. There ARE alternatives.
You have our 'system', now show us yours. I can't 'defend' it against a vague 'sell at the right time and buy back at the right time and you will do better' 'system'.

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The Dow closed lower yesterday than it was back in 1999. How is buy, hold and rebalancing working for you?
Several flaws in your statement:

1) You are cherry-picking a time frame. I could do that too, but I won't because it's meaningless and dilutes the discussion.

2) Nobody who does B&H&RB suddenly dumped all their money into the market in 1999. They DCA in during the accumulation phase.

3) It assumes that you could have correctly got in/out of the market and done better. It's very possible that a market timer would have got in/out at the wrong times, got whipsawed and done WORSE than B&H&RB.

If you are going to speak so boldly on this issue, put your cards on the table - where is the proof that you can market time better than a B&H&RB approach?

-ERD50
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Old 08-09-2011, 09:37 AM   #156
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My main goal is not to get filthy rich but to preserve what I already have while trying to participate in SOME of the market gains.
That's generally what BH types want, too. However, the reason to be afraid of not gaining enough when the market rises, because you don't have enough invested, is this: if the market gets wild, you'll need to make large amounts sometimes in order to balance out large losses at other times.
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Old 08-09-2011, 09:39 AM   #157
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We've got a nice wall of worry to climb.
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Old 08-09-2011, 09:41 AM   #158
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The Dow closed lower yesterday than it was back in 1999. How is buy, hold and rebalancing working for you?
Quite well, actually. It doesn't matter whether teh Dow is back to 1999 values or not. If you've been rebalancing all along (either yearly or at points where your AA gets a certain level out of whack) you've sold a number of times when stocks have been high, and bought a number of times when stocks have been low. I'm sure someone somewhere has done better doing intuitive market timing, but I doubt any particular scheme has done much better over the long run. But I'm with ERD, show me a better proven method and I'll jump right on it. I can be convinced, but it would take some effort.
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Old 08-09-2011, 09:46 AM   #159
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I consider myself as a buy and hold type, but I will rebalance tactically on occassion based on how I see the tea leaves blowing. I see nothing wrong with traditional buy/hold/rebalance, but I suspect a fair number of folks deviate from the rebalance algorithm vs following an unwaivering discipline.

I just hope that what ever any of us are doing that our ports and economy turnaround for the better, but after seeing all the finger pointing after this downdraft, I am not confident that DC will be helpful towards that end.
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Old 08-09-2011, 10:28 AM   #160
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I just hope that what ever any of us are doing that our ports and economy turnaround for the better, but after seeing all the finger pointing after this downdraft, ...
Has there ever been a downturn that wasn't accompanied by finger-pointing? Is it 'different this time'?

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I am not confident that DC will be helpful towards that end.


I am confident that your lack of confidence will be shown to be well placed.

-ERD50
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