Early Retirement & Financial Independence Community - View Single Post - Swedroe comments on buying individual stocks.

wabmester · 10-11-2005, 07:05 PM

CT, you're right.* *You deserve a simple answer to a complicated question.

The answer is 42.

Edit: Look, the odds are on the market doing pretty well over the long term. There's always the chance, however slim, that long-term returns will be negative. There's also a slim chance that long-term returns will be through the roof. So, the way I approach this is:

1) Start with more money than you need
2) Protect a core nest egg with very conservative investments (like TIPS) that will cover your basic needs
3) Keep some real assets for an unmitigated disaster in case you need to trade something with the invading forces, for example
4) Take the rest, and put it in more risky investments, like the stock market

I might have 50 years ahead of me. That's a frickin' long time. A *lot* could happen.

In my absolute worst-case scenario, my assets survive long enough for me to try to get back on my feet.

In my pretty-bad scenario, I have to tighten my belt.

In my best-case scenario, I become filthy rich.

I honestly don't spend time worrying about bad things happening, but I am interested in finding holes in my mitigation strategies and adjusting to new information.

10-11-2005, 07:05 PM	#13
wabmester Thinks s/he gets paid by the post Join Date: Dec 2003 Posts: 4,461	CT, you're right.* You deserve a simple answer to a complicated question. The answer is 42. Edit: Look, the odds are on the market doing pretty well over the long term. There's always the chance, however slim, that long-term returns will be negative. There's also a slim chance that long-term returns will be through the roof. So, the way I approach this is: 1) Start with more money than you need 2) Protect a core nest egg with very conservative investments (like TIPS) that will cover your basic needs 3) Keep some real assets for an unmitigated disaster in case you need to trade something with the invading forces, for example 4) Take the rest, and put it in more risky investments, like the stock market I might have 50 years ahead of me. That's a frickin' long time. A lot* could happen. In my absolute worst-case scenario, my assets survive long enough for me to try to get back on my feet. In my pretty-bad scenario, I have to tighten my belt. In my best-case scenario, I become filthy rich. I honestly don't spend time worrying about bad things happening, but I am interested in finding holes in my mitigation strategies and adjusting to new information.