24601NoMore
Thinks s/he gets paid by the post
- Joined
- Dec 8, 2015
- Messages
- 1,166
Great question..DW and I are in the same boat - very close to FIRE (2016 for sure for her, maybe 2016 for me) and are getting increasingly concerned about "sequence of returns" risk as we do not have as much time as we would have in our 20s/30s to come back from a large (30-50+%) dip.
We're in a very good position overall and have enough cash to pull everything out and live off of that, SS and interest from 2.5%+ CDs. The problem is, our purchasing power will drop due to inflation, even low as it is.
This is just a version of Berstein's "when you've won the game, quit playing" approach and it's very tempting. We technically don't "need" to take the risk, so why take it?
The other big concern is an article I read in this month's Money mag yesterday. They are predicting ONE PERCENT PER YEAR return (on average) for US equities for the NEXT DECADE (?!). So, the obvious question becomes..if my "upside" is ONE PERCENT PER YEAR on equities for the next 10 years, why would I want to subject myself to what is sure to be stomach-wrenching volatility for ONE FREAKING PERCENT on average? We'd literally be better investing in CDs and at least getting 2.5X that.
I love investing and have built a pretty decent portfolio - but am wondering if it's time to go all cash, avoid what's sure to be a crap 2016 (given what we saw in 2015, high current US equity PEs, etc) and just call it a day. I know we'd sleep better at night vs. watching our PF drop 10, 20, 30, 40 or even more % in the next crash - and if we are LUCKY, get back to "even" before we're too old to enjoy it, or worse (ie: game over).
Just my $.02, but I see way too much risk in this market and way too little reward. It's turned into Vegas IMHO. (Just look at what happens every day to every little bit of "news").
This ain't our father's stock market, so the "10% return since 1926" averages are not going to hold going forward - instead, I think the ONLY way to make money in this market is short-term trades. Buy on the dips and sell on the rallies. I did that with a small bucket of "play" money and that bucket is up ~10% YTD vs my RE PF that's down -.07% overall.
We're in a very good position overall and have enough cash to pull everything out and live off of that, SS and interest from 2.5%+ CDs. The problem is, our purchasing power will drop due to inflation, even low as it is.
This is just a version of Berstein's "when you've won the game, quit playing" approach and it's very tempting. We technically don't "need" to take the risk, so why take it?
The other big concern is an article I read in this month's Money mag yesterday. They are predicting ONE PERCENT PER YEAR return (on average) for US equities for the NEXT DECADE (?!). So, the obvious question becomes..if my "upside" is ONE PERCENT PER YEAR on equities for the next 10 years, why would I want to subject myself to what is sure to be stomach-wrenching volatility for ONE FREAKING PERCENT on average? We'd literally be better investing in CDs and at least getting 2.5X that.
I love investing and have built a pretty decent portfolio - but am wondering if it's time to go all cash, avoid what's sure to be a crap 2016 (given what we saw in 2015, high current US equity PEs, etc) and just call it a day. I know we'd sleep better at night vs. watching our PF drop 10, 20, 30, 40 or even more % in the next crash - and if we are LUCKY, get back to "even" before we're too old to enjoy it, or worse (ie: game over).
Just my $.02, but I see way too much risk in this market and way too little reward. It's turned into Vegas IMHO. (Just look at what happens every day to every little bit of "news").
This ain't our father's stock market, so the "10% return since 1926" averages are not going to hold going forward - instead, I think the ONLY way to make money in this market is short-term trades. Buy on the dips and sell on the rallies. I did that with a small bucket of "play" money and that bucket is up ~10% YTD vs my RE PF that's down -.07% overall.