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Wrong decade or what??
Old 07-07-2008, 02:39 PM   #1
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Wrong decade or what??

I'm having a real hard time seeing the benefits of being invested in the market. I got invested around 2001 and preceded in losing 100K. It took 6-7 yrs to get that back. Now in the last month I've lost 30K and it doesn't look like it's going to stop there. I really can't wait another 6-7 yrs to get that back. I'm diversified or so I think, I try to weather the storms. My wife and I contribute the max to our 401K's ( which is another joke), with all that money going in when the market is down, our 401K's are worse than our out of retirment funds. We probably put 40K in our 401K's a yr and still have lost miserably. Did I start investing in the wrong decade or what?? Cletis
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Old 07-07-2008, 02:42 PM   #2
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It may feel that way (certainly does to me sometimes), but you have to keep something in mind: you are buying little pieces of businesses every time you make a 401k deposit. Market gyrations notwithstanding, most of those businesses have enduring value beyond what the next quarter's results are and most of them grow over time. When you buy in down periods, you are accumulating chunks of those businesses at very attractive prices. Dunno about you, but I'd rather buy cheap than dear.
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Old 07-07-2008, 02:42 PM   #3
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there's always real estate
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Old 07-07-2008, 02:45 PM   #4
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there's always real estate
Lazy, if you ever needed to rustle up some ducats, you'd do great on the comedy circuit.
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Old 07-07-2008, 02:46 PM   #5
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I'm having a real hard time seeing the benefits of being invested in the market. I got invested around 2001 and preceded in losing 100K. It took 6-7 yrs to get that back. Now in the last month I've lost 30K and it doesn't look like it's going to stop there. I really can't wait another 6-7 yrs to get that back. I'm diversified or so I think, I try to weather the storms. My wife and I contribute the max to our 401K's ( which is another joke), with all that money going in when the market is down, our 401K's are worse than our out of retirment funds. We probably put 40K in our 401K's a yr and still have lost miserably. Did I start investing in the wrong decade or what?? Cletis
Wish I could make you feel better. But were all hurting. Many of us here retired within the last couple of years and now were faced with a frigging bear market. That's not very comforting either.
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Old 07-07-2008, 03:03 PM   #6
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Just wondering if this is your psychological profile:

When you are losing, you worry that you are losing.

When you are winning, you worry that you might lose.
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Old 07-07-2008, 03:08 PM   #7
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Originally Posted by cletis View Post
I'm having a real hard time seeing the benefits of being invested in the market. I got invested around 2001 and preceded in losing 100K. It took 6-7 yrs to get that back. Now in the last month I've lost 30K and it doesn't look like it's going to stop there. I really can't wait another 6-7 yrs to get that back. I'm diversified or so I think, I try to weather the storms. My wife and I contribute the max to our 401K's ( which is another joke), with all that money going in when the market is down, our 401K's are worse than our out of retirment funds. We probably put 40K in our 401K's a yr and still have lost miserably. Did I start investing in the wrong decade or what?? Cletis
I'll just echo what others have said here--it sucks. I went through what you are describing in the 2000 - 2002 bear market where I has shoveling money into a declining market week after week. Just keep in mind that when the market turns around, it does so with a vengence. If we are nearing a bottom, it is more dangerous to be out of the market than to remain in it.
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Old 07-07-2008, 03:23 PM   #8
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Just wondering if this is your psychological profile:

When you are losing, you worry that you are losing.

When you are winning, you worry that you might lose





Well, I don't think so. I just would like to see a return, basically a reason to stay invested after 7+yrs. I feel like I'm feeding the wealthy investors. I buy and they sell.
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Old 07-07-2008, 03:31 PM   #9
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I feel like I'm feeding the wealthy investors.
Oh man, I love that quote. Someone is making money on this market, and certainly isn't us. I truly wish I could believe that the vast majority of US investors are losing at the rate we are. Even those who invested 100% in bonds lost value last quarter.
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Old 07-07-2008, 03:41 PM   #10
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The solace I take is that I'm not losing as much, over time, as the people who try to time the market. I strongly believe that the way most wealth is transferred from everyday investors to the elite is through excessive trading.

The only case for timing the market that makes some sense to me is to take advantage of illogical investor psychology. My theory is that the few people who are able to beat the market with technical analysis are doing so by predicting investor sentiment, not by predicting the market fundamentals.

I don't think I'm good enough to do it myself, but there are plenty of traders who have elaborate tech screens that try and determine when investors will do stupid things like sell near bottoms or buy near peaks, for emotional reasons. While it's tricky to predict the direction the market is heading, it may be simpler to predict that people will do stupid emotional things like they have done in the past. Whenever I make a trade, I'm very aware that I could be transferring my wealth to these arbitragers, especially if I'm trading for emotional reasons. That makes me want to reduce the number of trades I do, because each one is an opportunity for a loss.
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Old 07-07-2008, 03:44 PM   #11
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The past 4 to 5 years were not that bad for stocks. Time to give a little back
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Old 07-07-2008, 03:51 PM   #12
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Well, I don't think so. I just would like to see a return, basically a reason to stay invested after 7+yrs.
Seven years? OMG - that's short term, IMHO.

Let's see. I (and my DW) started investing for retirement in '82 (both age 34), after our respective "pensions' (aka "defined benefit plans) were eliminated. I retired last year (age 59). She still goes to w*rk (not emotionally ready to retire).

The advantage to her "still being there" is that I was able to continue to contribute this year to my Roth (and will do so as long as she is "out there" ).

That means that each of us have been "in the market" for retirement funding 27 years (each). With a retirement plan "termination" of age 100 , with another 40 years to go, each of us has a projected "maximum market exposure" of 67 years ...

Jack Brennan (Vanguard) has some thoughts of his own on an article that I'll link below. However, here's some key comments of his view on the subject:

For the owner of an individual stock, long-term could be measured in years. For a mutual fund investor, it's more often measured in decades. Mutual fund investors (particularly those investing for retirement) are better able to withstand market declines—even extended ones.

I'll admit that my own perspective on the concept of long-term investing has evolved since I joined Vanguard in the early 1980s as a relatively young man (not yet 30 years old). Back then, three years seemed like the long term, and ten years, an eternity.

https://personal.vanguard.com/us/Van...012008_ALL.jsp
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Old 07-07-2008, 03:57 PM   #13
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For a mutual fund investor, it's more often measured in decades. Mutual fund investors (particularly those investing for retirement) are better able to withstand market declines—even extended ones.
How, especially if the market is going down or sideways while you are withdrawing funds to live on during retirement? This past year would have been an awful one to have started retirement on, although nowhere near as bad as late 1999, early 2000 right before the 2000-2002 bear market. Those who have solid pensions or are 15+ years away from retirement can usually ride through these stretches.
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Old 07-07-2008, 04:19 PM   #14
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Just wondering if this is your psychological profile:

When you are losing, you worry that you are losing.

When you are winning, you worry that you might lose.
Well uhh yeah. Pretty sad, isn't it?
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Old 07-07-2008, 04:21 PM   #15
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How, especially if the market is going down or sideways while you are withdrawing funds to live on during retirement?
Good question - here's (my) the answer.

As part of my "preperation for retirement" (started when I reached my mid 50's), I laid out a plan of what I wanted in retirement (e.g. lifestyle), how much "net income" I wanted (no flimsy "80% of final pay" rule ), assumed long term tax and inflation forecast data.

Since I already had a stated budget (I'm sort of "anal" about where my $$$ get consumed), I felt confident in the numbers.

Over a period of about 3 years, I moved from a 90/10 portfolio to a 60/40 (shifted after I did extensive investigation on the bond/fixed income 40% portion, since this was "new territory" for me).

About 12-18 months before I had a "firm date" (age) that was my target, I started investigation of how I would handle the monthly "income requirements" within my investments, and more importantly what "tool" I would use. Since my/DW's retirement portfolios are both split between Vanguard and Fidelity, I looked at their methods for "monthly income". I decided on Fidelity's Income Management Account (IMA), primarily because it seemed more flexible and "fit the need".

At that time, I also started investigation of (oh no!) a possibility of an "annuity" (to replace what would have been a pension, if I still had one). After a long, drawn out process, I went with a SPIA (different thread on that process).

The next thing I needed to do was to establish a "cash bucket" (everybody knows what that is ) and my target was for 3-4 years. I slowly filled that "bucket with gains over an approximately 18 month period.

Medical expenditures also part of the equation. I pay (through my former employer) around $450/mo for both me and my DW (BTW, our increase over last year was $4 total $2 for each of us. Much better than the 7-10% I had budgeted for ).

It comes down to when you are wor*ing and accumulating your assets for retirement, your eye is on "the number". After you retire (and feel comfortable with the money management portion - took me a few months) your view on how to handle "times as this".

The easiest answer is that I sleep well. I guess that means that I'm confident with my plan (or I'm just crazy ). In addition, I'm not planning on taking SS till age 70 (9.5 years from now) nor is our home part of our "retirement assets". That's a bit of insurance. I could always claim SS in another 18 months, and of course at the same time take out a reverse mortgage, but those "options" are not part of our plan.

- Ron
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Old 07-07-2008, 06:11 PM   #16
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rs0460a,

Sounds like you have it well planned, while at the same time can stomach the ups and downs of the stock market. I envy you.

Thanks for the feedback and information.
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Old 07-07-2008, 06:39 PM   #17
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How, especially if the market is going down or sideways while you are withdrawing funds to live on during retirement? This past year would have been an awful one to have started retirement on, although nowhere near as bad as late 1999, early 2000 right before the 2000-2002 bear market. Those who have solid pensions or are 15+ years away from retirement can usually ride through these stretches.
I am going to retire next year, but my investments are pretty much in my planned retirement asset allocation this year. I can already tell that relying on dividends will be very helpful to me during times like these. So far this year my dividends have provided plenty to meet my basic needs such as food, utilities, and a modest allowance for discretionary spending.

As UncleMick says, "pssst!! Wellesley!" and Wellesley has been among those funds providing some adequate dividends in my portfolio.
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Old 07-07-2008, 06:51 PM   #18
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I am going to retire next year, but my investments are pretty much in my planned retirement asset allocation this year. I can already tell that relying on dividends will be very helpful to me during times like these. So far this year my dividends have provided plenty to meet my basic needs such as food, utilities, and a modest allowance for discretionary spending.

As UncleMick says, "pssst!! Wellesley!" and Wellesley has been among those funds providing some adequate dividends in my portfolio.
Someone stole my thunder.

1966 - 1982 was a rather long and chewy period but I was fresh out of college and working. Just don't fall for gold, PM, freeze dryed food and real estate.

Actually on balance real estate was a modest success - just don't buy any timberland where those stinking Spotted Owls might want to move in.

If we get long and drawn out stagflation/ bumpy markets - I may have to clone my Curmudgeon Certificate!

heh heh heh -
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Old 07-07-2008, 07:13 PM   #19
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Someone stole my thunder.
Hee hee!! I didn't know if you'd see it or not.

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If we get long and drawn out stagflation/ bumpy markets - I may have to clone my Curmudgeon Certificate!

heh heh heh -
I think I might have to invent a PollyAnna ("The Glad Girl") Certificate for myself if these bumpy markets continue - - I'm so GLAD that I get those dividends!! I'm so GLAD that I have a liveable asset allocation!! I'm so GLAD that I read all those books off the Diehards booklist! That ought to be enough to make most people here feel a little nauseous...
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Old 07-07-2008, 07:36 PM   #20
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I'm having a real hard time seeing the benefits of being invested in the market. I got invested around 2001 and preceded in losing 100K. It took 6-7 yrs to get that back. Now in the last month I've lost 30K and it doesn't look like it's going to stop there. I really can't wait another 6-7 yrs to get that back. I'm diversified or so I think, I try to weather the storms. My wife and I contribute the max to our 401K's ( which is another joke), with all that money going in when the market is down, our 401K's are worse than our out of retirment funds. We probably put 40K in our 401K's a yr and still have lost miserably. Did I start investing in the wrong decade or what?? Cletis
Well, here's a short version of large cap stock history in the last 90 years:

A big bull market ended in 1929. After stocks crashed, it took about 15 years to recover.
The next big bull market ended in 1966. After stocks dropped a lot, it took about 15 years to recover.
The next big bull market ended in 2000. After stocks dropped a lot, stocks stayed down for 8 years and counting ... .

I guess the periods of "lousy" following big bull markets have been pretty long. So we shouldn't be surprised that we haven't recovered yet.
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