So how are we really doing?

[Ready-4-ER-at-14]

I was reading the thread about returns of fellow forum members which seemed to run from one negative 10%? to up around a positive 20%? in three months.
Good job overall for most.

I was also looking at some of the huge net worth of famous individuals such as super stars in sports and acting... think 400 mil and up.

It dawned on me that we did have a huge amount of liquidity added via the fed and such and I went hmmm....

It seems that collectively we were in a race and to the extent that we had investments that profited by cheap money we all got moved along this game board of life we are playing. Certainly our posters profited based on stock/bond ratio leaning heavily to stock side. Some moved a few spaces others moved a bunch.. some none.

So with all this build up now to the final question I asked myself.
Say we had an enormous warehouse with all the girl scout cookies in the world in it.. (or gold or silver or brka). We owned a certain % of the net worth of this country. So what happened with a bunch of money added?

Yes our assets went up.. but did we run ahead as much as we should have to stay even? Reminds me of Alice in the looking glass with the red queen:
"Now, here, you see, it takes all the running you can do, to keep in the same place."

I really don't know the answer.. should we brag or did we not run fast enough?

I know it sounds deep, but is mentioned casually just for discussion and a different look at things..

 

[Gumby]

To my mind, the important issue is my relative standing, not my absolute standing. To use your analogy, if my share of the stuff in the warehouse is now greater than my original share, I have advanced relative to others and will enjoy a better lifestyle. If my share is now smaller, I will have a worse lifestyle. That is true regardless of whether the amount of stuff in the warehouse has increased, stayed the same or decreased.

Over the course of my adult life, and certainly in the past ten years, those people who own financial assets have gained in share relative to those whose only asset is their human capital (i.e. - wage earners).

 

[ugeauxgirl]

I guess the older I get the less I care how I compare with everyone else, and I never cared a whole lot to begin with. My withdrawal rate keeps going down against my desired spend amount. At this point, even when the market (and our equity heavy portfolio) goes down like it did at the end of last year, the withdrawal rate is still plenty safe.

 

[RobbieB]

Doing great, no worries. No ACA subsidies to worry about, no cliff to consider. Low overhead allows high discretionary spending. Made a lot of dough in the market, bonds treading water as usual.

Spring time in CA is wonderful, filet mignons on the grill were fantastic. Now on fifth year of retirement and all is peaches and cream.

Life is good!

 

[flintnational]

OP, if I understand your analogy, IMO it is only partially correct. The number of cookies in the warehouse (wealth of the country) is not fixed. There are new cookies being added to the warehouse. That increase is reflected in the growth in productivity. So, it complicates your question. Is the run up mostly productivity growth or monetary policy or some of both? Monetary policy would represent the running in place you mention. Productivity growth would represent true forward movement. I don't think anyone will know where the line is drawn. But, IMO, over the last few years, it has been a combination of both.

ETA: As always, RobbieB has the best answer!

 

[CRLLS]

Hmmmm. We're up ~11% so far this year, but that is after a year of -9%. About 2% up over the last 1yr and 3 mo, just enough to keep up with Inflation. We must be one of those running ahead just to stay even.

I really don't care how others are doing, or how we compare to the total $ in the pipeline just so long as I can pay our way until we are both 6 ft under. And then leave what little bit is left over to our heirs.

 

[W2R]

I agree with those who don't give a hoot about how much others are making from the market. Part of the reason behind this is that I am now 70 years old. I think those insecurities of youth ("OMG, am I doing as well as the cool people?") have diminished and finally vanished with the onset of old age. I just don't care if others have more income than I do, any more.

What I DO care about, is the fact that I am making enough to support my preferred lifestyle without inordinately decreasing my portfolio size.

I am enjoying my retirement, and despite very conservative investments, I have all that I need or want. For me, retirement has been the nirvana that I always hoped and dreamed it would be.

 

[pacergal]

W2R-- I love your posts! You are a Wise Woman, I always count on you to be logical, practical, and down to earth.

 

[W2R]

W2R-- I love your posts! You are a Wise Woman, I always count on you to be logical, practical, and down to earth.

Aw!!! Thanks! What a nice thing to say. That really made my day.

 

[Red Badger]

No interest in my "share" of the cookies. We just have enough cookies to go with our coffee. After coffee and cookies? A nap, of course!

 

[marko]

Not sure I understand the question, but here's my take:
On each December 31, as long as all my bills are paid AND my portfolio/NW balance is greater than it was the previous January 1, I'm in good shape. I've done well.

I plan my portfolio for a conservative 6% growth each year....a rising tide that can have setbacks that may last months but over time is relatively stable. Exceptions like 2008, 2015 and 2018 are compensated by a stronger few following years. In actual fact, my performance over the past 15 years has been ~7.5% which includes the horrors of '08.
Hold a 50 year chart of the Dow at arm's length and see a steady upward (unstoppable?) trend.

As far as monetary policy or influx of cash to the system, I believe it helps but the aforementioned 6% is the result of judicious investing; had I put all my portfolio in Blockbuster Video, Sears or GE, my 6% would certainly be in trouble.

 

[Walt34]

What I DO care about, is the fact that I am making enough to support my preferred lifestyle without inordinately decreasing my portfolio size.

That pretty much summarizes our feelings on it too. There will always be people with more than we have and that doesn't trouble us a whit. What does matter is that we have an intact roof overhead, and if it leaks we can easily afford a new one. The pantry is full, we have good health, friends and family, and it would take an earth-shaking calamity to affect that, in which case we'd probably still be better off than most. If not, well, we'd have plenty of company to commiserate with.

What we are both very much aware of is that we have never been better off in our lives and never been more relaxed and at peace with ourselves and the world.

 

[brucethebroker]

That pretty much summarizes our feelings on it too. There will always be people with more than we have and that doesn't trouble us a whit. What does matter is that we have an intact roof overhead, and if it leaks we can easily afford a new one. The pantry is full, we have good health, friends and family, and it would take an earth-shaking calamity to affect that, in which case we'd probably still be better off than most. If not, well, we'd have plenty of company to commiserate with.

What we are both very much aware of is that we have never been better off in our lives and never been more relaxed and at peace with ourselves and the world.

Well stated.