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Old 08-23-2015, 10:54 PM   #41
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On the contrary, the S&P has dropped 5% or more 92 times since 1960. So, pretty normal.

Still thinking this is normal variation?


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Old 08-24-2015, 12:22 AM   #42
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Your a better man than me! I can't stomach a 20% drawdown for the sake of staying invested.
I don't have the stomach for that either. The older we became and the closer to retirement we neared the absolute dollar value of the drops became too horrifying to me.

We had annual expenses like yours are now a few years ago and just decided to cut back on the excess and live on what we had available (savings, pensions, future SS and maybe some part-time work) and not have to work unless we wanted to. (Maybe you have enough to live on a $200K run rate as it is - I don't know much about real estate as an investment.)

We kept the house since that has been an appreciating asset most years, stayed in a high cost of living area because we like the climate, scenery and things to do and just cut out a lot of stuff like cable channels no one was watching, started keeping a price book and stopped shopping at over-priced stores.

Our young adult kids didn't seem to get the memo on our new, lower annual budget so that has been a challenge. But in a way I think it was good we became more frugal before they were completely off the payroll because they still have been forced to be a lot more budget conscious than they had been if we had stayed on the same spending trajectory we were on when we worked more.
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Old 08-24-2015, 07:27 PM   #43
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Still thinking this is normal variation?


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Yes, but I gave up my paranoia after October 1987

Having stayed invested through Oct. 1987, 2000-2001, the 2008-09 meltdown (35% haircut on values across the board on that one) and still finding myself in a place where I no longer need to work, I'm not sweating this.

Having some margin in your income/expense/net worth calculation helps, as does having enough liquidity to sit back and just watch the emotional market participants do what they're going to do.
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Old 08-24-2015, 08:05 PM   #44
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Still thinking this is normal variation?


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While I think selling before each downturn and buying before each uptick would yield great results, I'm just a little hazy on exactly when those events are going to be (the future ones I mean). So I'll stick with the market and its volatile but proven-in-the-long-term returns.

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Old 08-25-2015, 11:03 PM   #45
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Wow that's lots of $$$. Well, I must admit that the recent dip did have me re-checking my spreadsheet to determine how many years of expenses I have in cash and bonds. I guess I have enough and am more or less on my target AA. I know this because I had NO desire to chase equities in the dip.

Well, it's good that I'm lazy because I'm not too bright about this market stuff. Hopefully, I'm too lazy to get into trouble...

What's really got me worried... Well, I was invited to record an electric guitar track for someone on Bandhub (online music collaboration & band jam). The trouble is that I don't know the song very well and the style is outside of my comfort zone. I'm determined to do it, but this could me a bit w*rk, playing electric guitar all day... Life's tough in ER!
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Old 08-25-2015, 11:13 PM   #46
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As of the close of the market today - I have spared myself a $400k drawdown. I am considering getting back in tomorrow AM as i expect a bounce before heading lower again.
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Old 08-26-2015, 06:17 AM   #47
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Good luck! (You'll need it.)
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Old 08-26-2015, 06:27 AM   #48
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Good luck! (You'll need it.)

With futures popping again this morning I will not be a buyer here - I'm expecting another rug pull unless Yellen takes a Sept hike off the table.


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Old 08-26-2015, 07:06 AM   #49
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Agree with others - this is still normal variation. In fact, at least so far, it seems a lot like August 2011. I think there are three points to consider
1. If you had a well diversified (stock/bond) portfolio in 2008/9 and had just ridden it through, you would have been in great shape just a few years later.
2. There is always Marbene Faber's method of momentum trading where one moves in and out of assets periodically when the adjusted price drops below the 200SMA or, for a little less noise, when the 50SMA crosses the 200SMA. It does work, no it's not always perfect and yes, you may trigger more taxable events by doing this in a taxable account. It can whipsaw or trigger you to get in/out later than you would have desired. For fun, I do this in a very small account I have - it keeps my hands busy and away from doing anything in my "real" accounts.
3. Finally, if you are getting close to retirement or in retirement and don't think you stomach large drops in stocks, then perhaps you're too aggressively invested in equities to begin with and you might want to reconsider your asset allocation. But you have to honestly ask yourself what sort of drops from the historical record you could have stomached.

As for me: Being a relative newbie at the time, when close to the bottom in 2008/9, I panicked and sold. A couple of months later, I un-panicked and bought back in. It was still close to the bottom so I didn't fall very far behind. But I still have a loss carryover in my taxes from that event for my taxable account.

What do I do now? I have two account categories: my taxable accounts (40%) and my tax deferred accounts (60%). My desire is that when I quit w*rk, that I can live on my taxable accounts for a number of years before turning on SS and starting to withdraw from my deferred accounts. I tend to follow a glide-path. Since I'm single-digit-years away from FIRE, my taxable account is more conservatively invested than my deferred account. It's at currently around 55% equities. My deferred account is around 70% equities and I will drop over the coming years to around 50-55%. Some people go farther than that - lots of literature on glide-paths and "to" vs "through" glidepaths on the web.
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Old 08-26-2015, 08:57 AM   #50
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The purple line is the guy who stayed invested. The green line is the guy who jumped out at a 5% drop and back in after a 3% recovery. I'd rather be on the purple line.

Source: Worried About The Stock Market? Whatever You Do, Don’t Sell. | FiveThirtyEight

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45 years old, 3 teenage kids, recent $$ windfall, can i retire?
Old 08-30-2015, 07:17 AM   #51
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45 years old, 3 teenage kids, recent $$ windfall, can i retire?

OP got whipsawed, I'm afraid. Not my fault. I wished him luck! The rest of you should be ashamed of yourselves. I guess if he was lucky, he has close to the same amount as when he sold out, minus fees and taxes.
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Old 08-30-2015, 07:40 AM   #52
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Looks like a picked a pretty good time to move to an all cash position last week -- mostly based on intuition and clearly luck!
Now when to get back in , which is the 2nd and often harder part of the equaution!
The market was UP last week, so I suppose getting out on an up move is good.

A better time to go to cash would have been earlier this summer.
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Old 08-30-2015, 08:16 AM   #53
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OP got whipsawed, I'm afraid. Not my fault. I wished him luck! The rest of you should be ashamed of yourselves. I guess if he was lucky, he has close to the same amount as when he sold out, minus fees and taxes.

I didn't get whipsawed since I am still sitting in All Cash. I monitor the positioned I sold every day to track whether I am still ahead of the game or would have been better off staying the course.. As of the close on Friday, I am still ahead by $180k by going to cash taking into account fees, taxes, etc.

I'm expecting another test of the OCT 2014 lows over the coming weeks and it's highly likely we will blast through them to the downside... GLTA!


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Old 08-31-2015, 07:56 AM   #54
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I didn't get whipsawed since I am still sitting in All Cash. I monitor the positioned I sold every day to track whether I am still ahead of the game or would have been better off staying the course.. As of the close on Friday, I am still ahead by $180k by going to cash taking into account fees, taxes, etc.

I'm expecting another test of the OCT 2014 lows over the coming weeks and it's highly likely we will blast through them to the downside... GLTA!


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Futures deep in the red this AM -- clearly mkts are looking to sell rallies instead of buying the dips now and I expect that to continue until a retest of last Monday's lows and possible quite lower (174 SPY)


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Old 09-28-2015, 02:29 PM   #55
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Still sitting in all cash since my original post(s). Seems to have been the right move by saving myself $400k of paper losses.


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Old 09-28-2015, 02:43 PM   #56
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If you're just going to roll in here and post whenever the market temporarily validates your timing decisions, I'm afraid your audience is going to head somewhere else...
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Old 09-28-2015, 02:56 PM   #57
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Perhaps the audience wants a different perspective than the typical "buy and hold" or "set it and forget it"?


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Old 09-28-2015, 02:59 PM   #58
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Still sitting in all cash since my original post(s). Seems to have been the right move by saving myself $400k of paper losses.
I like it.

But there seems to have been some wonderful trading opportunities that you have missed. You could have not only not lost money, but you could have made hundreds of thousands of dollars, too!
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Old 09-29-2015, 05:51 PM   #59
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I like it.



But there seems to have been some wonderful trading opportunities that you have missed. You could have not only not lost money, but you could have made hundreds of thousands of dollars, too!

Absolutely - I tried to get short but ended up on the wrong side a couple times already...

But I actually bought SPY , QQQ, and IWM with about 25% of my cash at the close today. We had a decent retest of the non- flash crash lows around 187 so got long for a likely bounce.


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Old 09-29-2015, 06:42 PM   #60
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Why those ETFs instead of VTI, VXF, and VBR?
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