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Old 10-10-2008, 11:29 PM   #21
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Originally Posted by Want2retire View Post
There's just this one teeny little doubt - - I wonder if someday people will say something like this:
Quote:
Back in the 20th century, people used to gamble on "stocks" and the odds were pretty good because we were in a period of economic expansion. As we all know, economic expansion is a natural, but transient part of a country's evolution to a more stable, mature economy. Of course now, ever since the Great Bear of 2008, we realize that gambling only pays off when the odds are skewed. So, to make money we....w*rk...
LOL! I've had the same nagging thoughts as I've boldly bought into this drop, following the "buy when there's blood in the streets" and "be greedy when others are fearful" advice from the greats.

One thing I do believe that mitigates this kind of thinking is that you need to invest globally. There are plenty of developing/emerging markets/countries out there that just might (should?) provide the kinds of returns that the U.S. market has yielded over the last century. I'm about 40% International (10 of that EM) and considering moving it up to 50%. There's plenty of blood in those streets and it takes an iron stomach to dive in but they bounce up and quickly (and violently) as they go down. I hope my strategy is vindicated.
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Old 10-11-2008, 09:24 AM   #22
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3 months to retirement, down 8.76% YTD. Wish I would have paid more attention to Swedroe earlier. I am finding way too much correlation between my bond holdings and my stock!

Bob
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Old 10-11-2008, 10:08 AM   #23
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I've learned:

1) I waited too late to begin shifting out of equity (targeting 60/40 a couple years from now....another couple weeks like last week and I'll be there without trying).
2) I got too greedy with stock options...that were worth 500k after tax and are now worth nothing.
3) maybe I will get back in the slumlord business...not that I want to, and I still have a couple years before I ER (been saying that for 18 months or so...its getting further away rather than closer). Have a house I wanted to sell after ER, for tax reasons. However, if real estate does not start moving, and if the financial markets remain messy, I will need it to produce cash. (it is paid for and not rented out at this time, also for some convoluted expatriate tax issues).
4) I haven't really lost anything, because I haven't sold anything...and won't be selling for a while. I just wish I had a certain cash windfall I am expecting next spring in hand now...I'd be like a kid in a candy store buying up bargain priced high-yield stocks. (maybe its best I don't have the extra cash...see who survives the next 6 months).
5) I am surprisingly upbeat for someone who has lost as much as I have, although most of it is on paper, and in the form of real estate losses from their highs as opposed to where I bought them. The only REAL loss I had was WM, my bet that the situation was overblown was off the mark, lost 25k on that. I guess Warren has lost a tons more than I have, but he had the cash to buy in while the market was declining, I only had my cash reserve and nothing investable.

and finally...I knew this already, but family is more important than money. I can keep working and make a bit more if I have to. If I lost my family, that's irreplaceable.

R
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Old 10-11-2008, 10:29 AM   #24
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Originally Posted by Gardnr View Post
LOL! I've had the same nagging thoughts as I've boldly bought into this drop, following the "buy when there's blood in the streets" and "be greedy when others are fearful" advice from the greats.

One thing I do believe that mitigates this kind of thinking is that you need to invest globally. There are plenty of developing/emerging markets/countries out there that just might (should?) provide the kinds of returns that the U.S. market has yielded over the last century. I'm about 40% International (10 of that EM) and considering moving it up to 50%. There's plenty of blood in those streets and it takes an iron stomach to dive in but they bounce up and quickly (and violently) as they go down. I hope my strategy is vindicated.
After posting those nagging thoughts, I too boldly bought into this drop. Well, maybe not BOLDLY but I did it anyway! Like you, the phrase "buy when there is blood in the streets" was my motivation.

Bought a little more VTSAX (Total Stock Market) at a nice bargain-basement price, I hope. To make me feel better about that purchase, I also got a little more of my favorite fund - - VWIAX (Wellesley), which was also a "blue light special" yesterday.

In the coming week I am planning on buying some VFWIX (FTSE All-World Ex-US) and more VTSAX. Both purchases and those yesterday are consistent with my usual monthly DCA which I do manually. I just didn't want to throw all my DCA in on the same day this month, when prices are dropping so rapidly. This is almost like DCA'ing my DCA.

All of the above is more or less according to my investment plan, but it was still pretty unnerving! I hope that buying now pays off eventually. I like your idea that international purchases should help my state of mind when buying into this severe bear, since I will be buying some in the coming week. I hadn't really considered the state of economic development of emerging markets and it does differ from our own.
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lessons learned
Old 10-11-2008, 11:41 AM   #25
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lessons learned

Thanks for the thread, interesting read. I was going to start a "lessons learned" thread as well.

We are newly fired in the last month. Here's my lessons learned:

- don't underestimate single party risk. (AIG annuities, large positions in any one company, etc...)
- buy, hold, and rebalance --- everyone trying to time the market finding bargains only a month ago now looks like they were smoking crack. Of course, moving your yearly rebalance date in or out a few months seems allowable.
- never keep money in stocks that you will need in the next 5 years
- You will sleep better if you can live reasonably (if not lavishly) strictly on dividends and interest thrown off by your portfolio. For a 50/50 portfolio, this is more like 3% draw.
- the financial system is a house of cards. When there is 10 times as much money on the "side" bets (CDS, etc), than in the actual asset backed market (MBS), the assets in play become merely a side show.
- don't invest in anything you don't understand. (or as Warren Buffet put it "beware of geeks bearing formulas")
- given a windfall just into retirement, (like a stock option payout), pay off the mortgage! Unless you have a ridiculously low interest rate, the reduction on the expense side will most likely make your portfolio last longer.

-- dizzy
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Old 10-11-2008, 01:23 PM   #26
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What I've learned:

Past performance is no indicator of future results . I had biased my investments slightly to foreign investments since they seemed to be holding up better in the credit crisis. Of course, now it turns out they just hadn't been affected yet...

6 months ago everyone was worrying about the weakness of the dollar compared to the euro. Now it seems everything has flip-flopped.

My biggest "mistake" is that I reinvested most of the proceeds from a large stock sale too soon rather than wait with cash. But without the benefit of hindsight, I don't know if I really could have done anything differently.

At least I can do a lot of tax-loss harvesting to offset my winnings .

Droopy
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