Another perspective on a high-equity portfolio

Interesting. I was 100% stocks for a while. My current target is 60/40, but I can't seem to get bonds above 25%...mostly because I'm buying more stock/reit. I can definitely handle the volatility, and going heavier into bonds just doesn't feel right even though with my limited analysis I decided 40% bonds was right.

I don't think you need a decent-paying job, just a job to reduce or eliminate withdrawals to give the portfolio a chance to recover.

This high-equity thread is making me think...
 
BigMoneyJim said:
Interesting. I was 100% stocks for a while. My current target is 60/40, but I can't seem to get bonds above 25%...mostly because I'm buying more stock/reit. I can definitely handle the volatility, and going heavier into bonds just doesn't feel right even though with my limited analysis I decided 40% bonds was right.
Click to expand...

BMJ, IIRC you are single and in your 30's. If that's the case, 60/40 seems way too conservative to me.

I have a "roller coaster" theory of asset allocation: The younger you are the more thrill you get from riding the ups and downs of a highly equity weighted portfolio. The older you are, the less you enjoy it and the greater the chance a steep dip will result in heart failure. :)

I see no reason you would want to have more than 20-25% in bonds, if that much.
 
The mathematical arguments for a very high stock portfolio are persuasive, BUT...I gotta sleep at night. I'm retired, DH semi-retired, mid-50s, I get no pension, DH will get somewhere between 0 and 1000/month...closer to zero is more likely. So I set up our AA to provide minimum required living expenses--$3k/month at the moment, $1k each from cash, bond interest, and dividends. The additional nice-to-have $2-3k/month will come from Social Security, and SS plus capital gains plus laddered CDs and bonds (and maybe some lifestyle adjustments!) will cover inflation--more or less.
 
Nords said:
Find your own comfort level on the risk/reward curve, but my parents-in-law have been extremely unhappy these last five-six years with their 100%-bond portfolio.
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Nords:  Hope you're not contributing to your parents-in-law unhappiness, by telling them what your all-stock portfolio has been doing. ;)

Hell, at your age with two cola'd pensions, you have the entire spectrum of investing wide open to you, and I have no doubt given your obvious
talent and inclination to devote a lot of psychic energy in this area, you are going to be a very wealthy guy in the years to come.  

I don't know whether your father-in-law has a pension or not, but I do recall he is about my age,  (give or take a few years).

I have noted a lot of young investors, (working)
that claim they have a high tolerence for risk.

Trust me, on this point, that tolerence is ratched down a few notches, if you are in the withdrawel stage, and counting on your funds to last you a lifetime.  (A 40% drop will definantly get your attention). ;)

In any case, for me personally, I can't afford to go completely without equities, but if your father-in-law has a large enough base, and doesn't need equities to allow him to live the way he wants to more power to him.

After close to 20 years of withdrawels, I'm still able to afford green fees.  (The other insignificant things like food, housing, etc., I'm not so sure of). ;)
 
astromeria said:
The additional nice-to-have $2-3k/month will come from Social Security
Click to expand...

I should've said "from SS and/or withdrawals, depending on the year." For now, DH makes enough as a college instructor to keep us near the top of the nice-to-have range, so we aren't hitting on the stash yet.

If we had $2k+ in reliable govt pensions coming to us, I would invest more aggressively. On the other hand, when DH stops working, I may get even more skittish ::)
 
Jarhead* said:
Nords:  Hope you're not contributing to your parents-in-law unhappiness, by telling them what your all-stock portfolio has been doing. ;)

Hell, at your age with two cola'd pensions, you have the entire spectrum of investing wide open to you, and I have no doubt given your obvious
talent and inclination to devote a lot of psychic energy in this area, you are going to be a very wealthy guy in the years to come.  

I don't know whether your father-in-law has a pension or not, but I do recall he is about my age,  (give or take a few years).

I have noted a lot of young investors, (working)
that claim they have a high tolerence for risk.

Trust me, on this point, that tolerence is ratched down a few notches, if you are in the withdrawel stage, and counting on your funds to last you a lifetime.  (A 40% drop will definantly get your attention). ;)

In any case, for me personally, I can't afford to go completely without equities, but if your father-in-law has a large enough base, and doesn't need equities to allow him to live the way he wants to more power to him.

After close to 20 years of withdrawels, I'm still able to afford green fees.  (The other insignificant things like food, housing, etc., I'm not so sure of). ;)
Click to expand...
Uhm, I've learned to filter our conversational topics.

FIL is turning 72 this month and has a lump-sum pension from a CBS buyout in the early '90s. The irony is that they're doing fine with a well-funded bond/CD portfolio and their Depression-era spending habits, but they just can't stand to watch the effect of declining interest rates on their income. For example they sold their home and banked the profits in CDs. When their five-year 7% CD rolled over at 3% he was down in the dumps for months. I grow tomatoes & tangerines partly so that he doesn't harangue his wife about spending for store-bought. I've learned not to buy ornamental plants anymore but rather to ask him to grow them from seeds or cuttings. He enjoys the gardening (he's VERY good at it) and it saves us having to listen to his perpetual comments on buying retail plants.

Although I look forward to my spouse's plans to redo the yard, the back lanai, & our treacherous stone steps, I dread having to engage in the discussion of sod vs the virtues of propagating 1000 sq ft from a single runner of El Toro zoysia.

I guess that they're only happy when they're kvetching, but geez. A few hours with them usually produces a "Life is good" high in us that lasts a couple hours. At least he's thrilled with our solar array-- he immediately grasped those economics.

Sometimes I wonder if our aggressive investing strategy is fueled as much by their example as by our faith in the math.

At one point he seemed fascinated by the idea of shorting stocks so we went through all my books and my experience. (I felt that if I didn't engage him in these discussions that he'd focus them on his spouse...) At the time I'd shorted KMart at $77/share shortly before the new owner decided to merge it with Sears. When he saw that it blew through my buy stop to $120/share and nailed me for $8000, I thought he was going to have a cardiac incident. It doesn't matter how much money I've made shorting stocks before that incident or since it, the fact that I could lose $8000 on that one investment has firmly branded me as an idiot who's messing with his daughter's financial security. In another decade or so I should regain my credibility but I'm certainly not discussing anything more exotic than Berkshire Hathaway.

Typical family I guess. I love the guy and he certainly loves his granddaughter, but there are times when a little goes a long way!

On a completely different topic, Jarhead, a Kaneohe Marine was just awarded the Silver Star from his Afghanistan tour. Here's the article.
 
REWahoo! said:
I'll bet you don't get on any roller coasters either... :)

http://early-retirement.org/forums/index.php?topic=5808.msg103534#msg103534
Click to expand...

Amen to that brother ReWahoo.!

Beings my wife was a stay-at-home mom, and
has no intentions of changing, and I'd never work at this point, for anybody that would have me as an employee, we better be able to stretch it out. ;)

Having no pension, the Cavalry (Soc. Sec.), showed up trumpets blaring, in the knick of time. ;)

By the way, speaking of my wife, it's our 43rd. Anniversary today.  (Yes, we were married on Groundhogs Day). :D

Couldn't decide whether to take the shuttle to Paris, or 3 or 4 days in LaPaz.  We decided that sounded like too much of a hastle, so we're just going to get off the "hill" and have dinner and a couple of "shooters" locally. ;)

Jarhead
 
Jarhead* said:
Amen to that brother ReWahoo.!

Beings my wife was a stay-at-home mom, and
has no intentions of changing, and I'd never work at this point, for anybody that would have me as an employee, we better be able to stretch it out. ;)

Having no pension, the Cavalry (Soc. Sec.), showed up trumpets blaring, in the knick of time. ;)

By the way, speaking of my wife, it's our 43rd. Anniversary today.  (Yes, we were married on Groundhogs Day). :D

Couldn't decide whether to take the shuttle to Paris, or 3 or 4 days in LaPaz.  We decided that sounded like too much of a hastle, so we're just going to get off the "hill" and have dinner and a couple of "shooters" locally. ;)

Jarhead
Click to expand...

Take her out for a round of golf!  :D
 
Jarhead* said:
By the way, speaking of my wife, it's our 43rd. Anniversary today. (Yes, we were married on Groundhogs Day). :D
Click to expand...

Congratulations to you Jarhead and my deepest condolences to your wife. :D

My parents made to 59 and here's hoping your DW can put up with you for several years beyond that... ;)
 
Nords said:
Typical family I guess.  I love the guy and he certainly loves his granddaughter, but there are times when a little goes a long way!

On a completely different topic, Jarhead, a Kaneohe Marine was just awarded the Silver Star from his Afghanistan tour.  Here's the article.
Click to expand...

Nords: Funny stuff with your FIL. (Being a PIA at his and my age goes with the territory). :D

Thanks for the article on that young Lt. He'll have a lifetime of being able to keep things in perspective after his experience.

Jarhead
 
Nords said:
I guess that they're only happy when they're kvetching, but geez. A few hours with them usually produces a "Life is good" high in us that lasts a couple hours.
Click to expand...

So, their kvetching is good for you!

They say the Greek tragedies were supposed to make people feel better about their own lives.

Girlfreind and I watched Wild Strawberries last night, and it seemed to make her feel better about our relationship. And probably about me. :)

(Hmm, interesting manipulative strategy: expose potential significant other to lots of bad examples of other people of your sex, and you start to look good. Better wait till he/she knows you though, or it can backfire. ;))
 
(Cute Fuzzy Bunny) said:
Whats the age threshold for becoming a PIA?  I want to start a countdown...
Click to expand...
That's the phase just before becomming a full curmudgeon. unclemick can tell us the exact timing. :D :D :)
 
Congrats Jarhead! You're ahead of us; but.... you're older. Tell me, the day you got married, did you see your shadow?
 
Ohh...wait...the one i'm really interested in is the phase when i'm allowed to become opinionated...when is THAT one?!?
 
Happy Anniversary Jarhead, to you and Mrs.J.  Many more to come for a deserving couple!!

Ha
 
(Cute Fuzzy Bunny) said:
Ohh...wait...the one i'm really interested in is the phase when i'm allowed to become opinionated...when is THAT one?!?
Click to expand...
How old are you now? That's apparently when it happens. :LOL: :LOL: :LOL:
 
Happy anniversary Mr and Mrs Jarhead.

As to opionated pain in the a## - that's just an uninformed opinion by those not clued into Curmudgeonism as an art form - no age requirements - but they DO tend to cut us older pharts more slack. Although I've heard 'excentric' - muttered in my direction more than once - grumpy Old F@#*, also.

Perhaps - a Walmart/Office Depot business card kit and:

C.I.T. - curmudgeon in training cards to hand out.

To my knowledge there are no State exams - like E.I.T - en-ga-neer in training.

Rather be a Curmudgeon than a financial advisor!

heh heh heh heh - recognition has to be fought  for.
 
((^+^)) SG said:
How old are you now? That's apparently when it happens. :LOL: :LOL: :LOL:
Click to expand...

Dang. All this time I could have been opinionated and I was holding off waiting to reach the right age...

Oh well, think i'll have another bratwurst...
 
Well, Shucks, thanks for all the congratulations on our anniv.

We can't use the kids for an excuse to stay together anymore, as they are long gone.

Over dinner last night, we were talking about "Buddy", my 3 year old Lab, who has turned out to be the best Duck Dog I've ever had. Absolutely loves the water, and likes to
show off his skills.

In any case, we decided to "soldier on" until Buddy goes to his "happy place". We'll review our situation at that time. ;)

Buddy and I are tough to handicap at this point, to see which one of us reaches the finishing line first. :D

Jarhead
 
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