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Old 01-07-2016, 05:54 PM   #41
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But you owned VIG ETF or KO, PEP, MO, PM and you counted on dividend yield you got a income bump in 2008 and 2009.

That is exactly why I very often recommend VIG and SCHD. I would expect no decline in dividend from those 2 ETFs which VIG actually demonstrated in 2008.
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Old 01-07-2016, 06:09 PM   #42
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I would too. But for me, that is now water under the bridge. I will have to cope, using whatever I have on hand, plus the early SS.
With that RV up in the mountains sounds to me like you got everything covered. Maybe blowing up volcanoes and Rewahoo's asteroid excluded...
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Old 01-07-2016, 06:23 PM   #43
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Don't worry if so many posters still talk about buying. The day is still young. If the market drops to 1/2 as it did in early 2009, there will not be so many posts about buy, buy, buy... I can guarantee it. People will be too scared, and the talk will be about drawing early SS or buying annuities. In the past couple of years, there were so many posts about delaying SS to 70. That could have served as a contrarian signal.
Currently still working with 25 years to retirement so I'll probably still be buying.
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Old 01-07-2016, 06:32 PM   #44
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If the market goes down to that level or somewhere near it, would you invest more money in the stock market? Would you even take some money out of your cash reserves and buy more equity? What would you buy?
Tax loss harvest, and rebalance as needed, just like last time.
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Old 01-07-2016, 07:12 PM   #45
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With that RV up in the mountains sounds to me like you got everything covered. Maybe blowing up volcanoes and Rewahoo's asteroid excluded...
Yes, that humble class C will shelter me from the rain and the cold. And with gasoline as cheap as it is now and still getting cheaper, travel will be affordable.

Me worry?
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Old 01-07-2016, 08:54 PM   #46
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Buy total market index or S&P 500 index.Those two indexes are almost guaranteed to always eventually go back up. An individual stock is not guaranteed to go back up, and could possibly go down to zero.Remember that some tech stocks almost went to zero in 2000-2002, and never came back ! Although the very large indexes will go back up if you never sell.Please don't panic and sell , because then you are converting a paper loss into a real loss. Stay safe everyone, keep informed, educate yourself, and good luck.
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Old 01-07-2016, 11:17 PM   #47
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If it goes down to 2008 levels, I'd be out of surplus cash long before it hit those numbers. I have bought stocks every day (all in the Dow 30) so far this year. I have a lot of spare cash just waiting for bigger dips. The bigger the drops, the more I seem to buy. So by the time it got to 2008 levels I'd be out of my surplus that I've set aside for buying opportunities. Of course if I really thought we'd see those levels again, I'd wait.
+1 I rolled my employer DC plan into my Vanguard IRA in December. The DC plan sold an S&P 500 fund on November 30 and they sent me a check. I turned around the check the same day and it came available in my IRA on December 11. I've made purchases on some down days since then and especially the last week. I figure that I have 5% more shares now than if I had left it in the DC plan, but that cash is almost tapped out.

The big mistake that I made in 2008 was standing pat with what I had. My asset allocation was literally SCREAMING at me to sell bonds and buy stocks and I was too chicken to do so.
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Old 01-08-2016, 03:18 AM   #48
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I won't buy any stocks until the Schiller cape ratio gets down to at least it's long term avg of 16. Right now it is about 25. I would be planning on early SS most likely.

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Old 01-08-2016, 07:08 AM   #49
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Argh. Another situation where risking some strategic market timing is tempting. Unfortunately, picking the best time to jump is always a problem. Will China keep falling for a while before they lock up their market? Or will it bounce back today before I can jump?
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Old 01-08-2016, 07:20 AM   #50
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I won't buy any stocks until the Schiller cape ratio gets down to at least it's long term avg of 16. Right now it is about 25. I would be planning on early SS most likely.

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Unless you are rich and don't need stocks then that is a silly strategy. Since 1991 (25 years ago) the ratio has only been lower than 16 once (2009).

Shiller PE Ratio by Year
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Old 01-08-2016, 07:40 AM   #51
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Just continue to do what I've done since ER 13 years ago. Nominal 50/50 equities/bonds within 10% rebalance band. Valuations get outside the band? - rebalance. Valuations still within band? - do nothing. Rinse and repeat.

Just turn off the noise. Nobody knows nothin' just wild a$$ guesses...
I know this is what I should do too but I just can't keep myself from tinkering. Have you always been this resolute or did you have to train yourself to ignore it?
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Old 01-08-2016, 08:06 AM   #52
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I meant to say I won't buy any ADDITIONAL stocks unless the cape ratio moves back towards it's long term avg.

The fact that it has only been below it's avg once since 1991 seems like some kind of a sign to me. Have stocks been living in an overvalued world all this time?

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Old 01-08-2016, 08:08 AM   #53
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Rebalance as needed and my planned AA will dictate where the money flows.
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Old 01-08-2016, 09:24 AM   #54
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Argh. Another situation where risking some strategic market timing is tempting. Unfortunately, picking the best time to jump is always a problem. Will China keep falling for a while before they lock up their market? Or will it bounce back today before I can jump?
Hence, why dollar cost averaging or value averaging works psychology-wise.
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Old 01-08-2016, 10:12 AM   #55
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I know this is what I should do too but I just can't keep myself from tinkering. Have you always been this resolute or did you have to train yourself to ignore it?
Oh no, I had extensive tinkering training in my early investing career (started seriously in 1987 right before the crash of 87 - before it had been all CD's ,savings accounts and really stupidly gold and silver). At that time I subscribed to money magazine, fortune magazine and such. Every bright idea they presented I was convinced was the holy grail of investing. Every shinning new fund star I had to have. I think at one time I had about 35-40 mutual funds in a horrendous hodgepodge with the only common thread being that they were recommended as the latest best by one of the aforementioned media. (Of course, by the time I bought a lot of them they were already starting to revert to mean)

At least in my hodgepodge I had bought Wellesley and Wellington and Index 500 so got exposed to the Vanguard philosophy. Over time, slowly I started to realize that this provided a measure of sanity. I stopped paying attention to the magazines, tv commentators etc. Discovered that Bogle was worth listening to, started cutting back drastically on the number of funds, thought long and hard about the asset allocation I felt comfortable with. Low and behold funds accumulated and ER became possible by 2002.

By then I had my 50/50 philosophy with wide bands rebalance bands firmly in place but lordy, many tumbles to get there.

Sorry for the lengthy rambling response to your simple question.
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Old 01-08-2016, 10:22 AM   #56
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Thanks ejman. Interesting info. I hope I can learn to tune out the noise. I've been a fund collector also at times. I'm trying to simplify and keep hearing the whispers of Wellington in my head. I should probably listen to those whispers.

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Old 01-08-2016, 11:15 AM   #57
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I'm with VTI, same as the last time.
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Old 01-08-2016, 01:16 PM   #58
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I meant to say I won't buy any ADDITIONAL stocks unless the cape ratio moves back towards it's long term avg.

The fact that it has only been below it's avg once since 1991 seems like some kind of a sign to me. Have stocks been living in an overvalued world all this time?

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My guess is that higher demand for stocks caused by the general population being more interested in investing in stocks and the advent of 401ks caused a shift in CAPE ratios seen on that table. It could have been that stocks were undervalued all the other time. For me, 25 years seems to signal some sort of shift.
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Old 01-08-2016, 03:00 PM   #59
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We are in a different reality in terms of economic growth due to technology.
http://theemergingfuture.com/docs/Sp...dvancement.pdf

I believe this has a significant effect on future performance. In the 70's before fax machines, I used carbon paper and a Selectric IBM typewriter. I learned to do my work several times more efficiently over the past 40 some years. Living proof which may correlate to the increase in CAPE ratio in my mind. We just keep getting more advanced and better in execution of new technology. According the the link, we should see this grow, not diminish. Production of Goods and Services should be at an ever expanding lower cost over time making companies more efficient, profitable, and realizing higher valuations based on future earnings. Comments?
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Old 01-08-2016, 03:14 PM   #60
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Argh. Another situation where risking some strategic market timing is tempting. Unfortunately, picking the best time to jump is always a problem. Will China keep falling for a while before they lock up their market? Or will it bounce back today before I can jump?

This is always hard, catching falling knives. I kept buying on the way down in 2008 and will do the same here. It looks like after today we've dropped about 5%. It seems like a good place to buy some more. This puts me back in the upper range of my equity allocation. If we drop some more, then I'll be tempted to up my equity allocation by 5% and keep buying.

I have a big advantage though. I'm still working and saving. These are shares that I can hold on to for 5-10 years easily. So buying at lower prices now is a no brainer.
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