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Old 04-27-2016, 11:36 AM   #21
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Originally Posted by Gone4Good View Post

A funny thing happens after a big equity market run like we've had. Suddenly my need for large equity market returns goes way down relative to where it was. I'm in a much better position today than I was when I retired in 2010. Why would my ideal AA be the same today as it was then?
I never thought of it this way but it makes sense. My plan works even if I only generate 0% real returns from here on out, so I have no need to keep shooting for outsized returns. It seems like the risk premium on equities is not expected to produce much in the way of excess returns at those valuations. I have been using valuation to tune my AA for several years now so my equity allocation is currently pretty low. But I still keep at least 30% in equities to hedge my bet.

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Old 04-28-2016, 05:19 AM   #22
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Besides the winning the game aspect, 30% equity exposure is already a solid base. Most calculators indicate that historically it gives already a good boost to returns for minimal risk.

Incidentally it's the % where I want to keep my mother in uncertain markets like this one, so this might be a case of my agreeing with myself ..

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Old 04-28-2016, 07:50 AM   #23
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Originally Posted by FIREd View Post
My plan works even if I only generate 0% real returns from here on out, so I have no need to keep shooting for outsized returns.

When it comes to retirement planning, there's nothing wrong with sitting on a lead.

If opportunities arise in the future where you're feeling well compensated for taking more risk, you have the option of taking more risk at that time. If not, simply sit back and enjoy your retirement.
Retired early, traveling perpetually.
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Old 04-28-2016, 08:52 AM   #24
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Originally Posted by haha View Post
This fool's errand idea is just a handy way to shut down concern about valuations. Remember, the business goal of mutual funds and ETFs is to have steady, high amounts of capital for them to levy their management fees against. Also this idea is very handy for FA's and the entire money management industry. It's hard to get into trouble if your inaction as a manager is to avoid being a fool.

I never did invest in the late 90s mania, because I am not a fund investor and I did not and do not like industries as dynamic as tech. If the market is not stable, which certainly is the case in "tech", then long term investment is very difficult. Essentially impossible for me.

Still, I do buy my groceries with cash, not shares, so what I am most concerned about is losing cash, not being caught out of a market that I consider overvalued. I struggle to understand the concern about "when do I get back in".

+1 What seems so logical to me I have learned over time is foolish to a great many individuals and attempts to have this understood seem impossible.
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Old 04-28-2016, 09:27 AM   #25
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Negative Rates Are Dangerous to Your Wealth

Here's another view, that basically agrees w OP.

Arnott, of Research Affiliates, disagrees with those who say you can't predict the market. Valuations have a very strong correlation with what future returns will be.

Summary-US market overvalued, EM and other foreign still provide decent opportunities.
In theory, there's no difference between theory and practice. In practice, there is. YB
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Old 04-28-2016, 10:26 AM   #26
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Soo - the bouncing ball says I have used 22 out of my 30 yr planned retirement and full auto balanced index is sliding toward 40/60 from 60/40. I hope to live longer and I believe the retirement portfolio can survive a minor 50% drop in stocks from here to croak time.

I think Mr B as in Bogle thinks stocks are going to return below historical trend using his method of estimation.

heh heh heh - Football and a few good stocks for mad money. Full auto for the rest. And some good defense wins Superbowls.
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Old 04-28-2016, 01:15 PM   #27
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Originally Posted by Senator View Post
I have no doubt that stocks are over-extended and due for a correction, or consolidation. I also know if I get out, I will likely think the same as they go higher.

If stocks go lower after I am out, I will think they will continue to go lower as they make a turn. And I will continue to wait for the 'great time to buy'. Then, I will gradually move back in, and most of my cash will miss the next run-up.

After all that, I will not make as much than if I stayed 100% in, and I would miss any dividends. I would constantly be looking at the charts, opinions, etc. and stay awake at night.

If I am my own financial adviser, I need to follow the advisers advice. They would say, "Stay the course, 130+ years of history can't be all wrong". Asset allocations and dividend cash flow will take care of any volatility and cash needs, along with other diversified income streams.

In the meantime, I keep buying.

I have a 'play money account that I hold outside my primary investment accounts, with a few grand in there. That play account is where I try my 'market timing' experiments with S&P ETF's (usually leveraged ETF's like SPXL and SPXU). I won some and lost some, but over time I'm pretty much where I would be if I were to just stay in. What I've learned from that is I will never try to time the market with my primary investment accounts. I may keep more cash during times of high valuations, ready to put to use in pullbacks (yes this is timing too, but much less risky). But I'm not going to move large sums in and out of the market. The cash flow is such that it's easier and more sensible to stay the course.

But right now in my play account, I'm all in with SPXU!

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