2B Warned You

[harley]

What happened around 1995 to kick off such a run up of the stock markets? Was this when people started contributing en masse to 401k/403b/457/IRAs?

Umm...the internet/WWW was invented and found it's feet? The start of the information age?

How quickly they forget.

 

[user5027]

Umm...the internet/WWW was invented and found it's feet? The start of the information age?

How quickly they forget.

+1

Alan Greenspan called it "irrational exuberance."

 

[MRG]

Umm...the internet/WWW was invented and found it's feet? The start of the information age?

How quickly they forget.

Fund companies had invested in technology to take the onerous paper and move it around the workplace. Lined up perfectly, when e-commerce became more real.

Yes the market was warming/hot.

 

[2B]

I've been retired now for two whole weeks. I received my last paycheck last Friday and on Wednesday my 401k contribution was credited. Even with my unused PTO in my check, I managed to have less money as of last night and even less after the closing prices are posted later today than when I retired.

Nothing like a little market drop to wipe out what was about 10 weeks of pay. Even so, we're still within 3 or 4% of the top in late February.

Cobra is going to run around $1,170/month for both of us. That hurts but we would pay almost this much for a much higher deductible plan on the federal exchange or eHealthInsurance. The cheapest plans are very limited on what doctors can be used. I'm still undecided if I'll suppress income in 2016 to get a subsidized plan. Cobra will run until the end of next August.

 

[Fermion]

I need to convert our after tax 401K funds to Roth next week and the current market dip means little or no tax on that conversion. In order to guarantee the market doesn't shoot up before the conversion goes through, I purchased 300 shares of SPY today for 204.85 in my IRA (had cash from previous trading).

(purchasing 300 shares practically guarantees the market will continue to drop next week)

 

[robnplunder]

2B's warning is going to be nothing compare to what'd happen when I RE. The market will crash and stay in the dumps for the next 3 years immediately after I RE. I can feel it in my bones. But no worries. I am currently suffering from OMY syndrome and I will let you know one month in advance of my ER for heads up. When I do, you should sell everything and buy gold, annuities, and/or anything that can fair better in the crash. Fair warning.

 

[Redbugdave]

All I gotta say is...

 

[NW-Bound]

What happened around 1995 to kick off such a run up of the stock markets? Was this when people started contributing en masse to 401k/403b/457/IRAs?

That sounds logical, since it seems to me that was about the time that some employers started moving from pension systems to defined contribution systems.

Before people investing for themselves in the stock market, pension fund managers were doing that. Could individual investors still drive the demand higher for stock? I don't know.

What everyone has observed is the phenomenon of P/E expansion during 1983-2000. Investors were willing to pay more for the same earnings. There used to be all sorts of papers theorizing the cause, but I have trouble finding them now. Instead, my search on the Web now shows more articles talking about possible P/E contraction.

If P/E contraction happens, future stock returns will be subpar until the P/E gets lower. And that's part of the reason pundits like Shiller and even Bogle have cautioned us not to expect outstanding performance in the future. I can see that even if P/E stabilizes, we still cannot have the same stock performance as the boom years of 1983-2000. To grow like 1983-2000 is tough, because that P/E expansion can only happen once. Maybe it can grow even higher as Jack's beanstalk. Strange things have happened before, like the tulip mania, or the dot-com bubble, or the real estate market of 2003-2006...

 

[audreyh1]

Umm...the internet/WWW was invented and found it's feet? The start of the information age?

How quickly they forget.

Plus all the fear and loathing about the impending Y2K problem created a "wall of worry" for market prices to climb.

 

[Clone]

I had friends retire in 1999.

"Anybody can make 15% per year in the market!"

 

[aja8888]

I've been retired now for two whole weeks. I received my last paycheck last Friday and on Wednesday my 401k contribution was credited. Even with my unused PTO in my check, I managed to have less money as of last night and even less after the closing prices are posted later today than when I retired.

Nothing like a little market drop to wipe out what was about 10 weeks of pay. Even so, we're still within 3 or 4% of the top in late February.

Cobra is going to run around $1,170/month for both of us. That hurts but we would pay almost this much for a much higher deductible plan on the federal exchange or eHealthInsurance. The cheapest plans are very limited on what doctors can be used. I'm still undecided if I'll suppress income in 2016 to get a subsidized plan. Cobra will run until the end of next August.

Yes, it appears to be all your fault, Ken!

Oh, and too bad you are not 65 yet and could jump on Medicare ....(that's a strange thing to say these days!)

 

[tuixiu]

The headline unemployment number is down but only because people have exhausted their benefits and aren't counted.

Headline number is based partly on whether someone is getting benefits?

I've never heard of this, I thought headline number was U-3.