As God is my witness, I will never be in

OK, a summary.
I suggest myself going to a risk free mode.

Responses:
Hydroman - Likes the back to basics approach.  Self reliance.
Leonidas - Offers Nopalitos recipes but no H2
HaHa - warns of lack of Japanese girls and gays chaps.
mathjak107 - Aarons CD collection worth 195k but Joe's stocks 1.2mil
LOL - reminds me of same angst last year but points out 4-10% earnings
2B - remembers 1987 and 2000 as do I but points out he is only down 6%
mathjak107 - is also down 6% from high
Charles - reveals the Microhouse and touts nice areas of RAriz
DOG51 - remembers my portfolio amounts but no, it's nearly all in stock funds
Alex - pokes OAP with the you're a lilly livered sissy stick
CnFB- thinks God has more gold in store for us
Unclemick2 - Encourages buying Hummer and see Arizona, buy Wellesley
crazy connie - offers house for sale with beans and rice thrown in
Indexter - points out that I'm a 6 Sigma case for financial needs
brewer12345 - suggests equity-indexed annuity.  Wish I had his energy/saavy.
spideyrdpd - points out the lack of logic in my thinking
brewer12345 - suggest TIPS, inflation-linked bonds and Inflation is no worry
Gerald - likes brewer12345's idea above.  I'm intriqued also.
d - wonders what I'm holding to be down %7.5 YTD
HaHa- notes my faults, suggests stay put, rent, avoid car, TIPS, and short t-bills
ESRBob - suggests don't look but stay the course, don't trade volatility away
markr33 - points out some of my gripes can be the cause of inflation
REWahoo - points out you need some cash on hand in orde to ignore market
dex - points to article that is what really scares me.  I believe the article.
Jarhead - says not to worry about thing you can't control
LL - suggests viewing assets classes as a means of risk assessment, also worries.
Zathras - suggests it may be a buying opportunity
Zathras - comments on reducing stress may be worth the effort
bpp - says worst case of 50% drop still leaves me a living
mathjak107 - points out the stock market goes up 67% of time
Rich-in_Tampa - hits it on the head that I had individual stocks vs funds
LOL - suggests getting rid of losers and buying new potential winners
Leonidas - also suggests getting rid of INTC
Ben - Points out that he see's low risk if I get into my proposed new lifestyle
CnFB - Points out that once I'm safe, risk is meaningless so let it ride.
DOG51 - says keep 6 years of cash equivs and invest the rest
justin - points out that my plan puts me 40% market /60% cash/bond allocation
DOG51 - says he plans to hold IRA/401K for 15+ years.  Hey, me too.


There's the summary and if I put it into a few sentences the way I interpret it is.

OAP worries too much about the volatility of the market making him his money.
If it makes him feel safer, then it might be the right move.
Both brewer and Ha suggest TIPS and inflation-pegged bonds as good safe income source keeping up with inflation.
HaHa says stay put, unclemick2 says go for it, Momtwo welcomes me and Leonidas has some cactus recipes (Peyote?)
ESRBob says stay away from the TV and dex shares article that is what really scares me.

So what am I gonna do.
I'm going to enjoy another 11 months in SF and will continue to move to interesting pedestrian cities for at least another 3 years.  Take some of the advice above and sell some losers, take equal profits and get started moving to a less volatile portfolio.  I'll learn what I need to know to set up the TIPS and inflation-lined bond income scheme.  Then at the age of 60, Ill probably choose a place to settle down, buy that home for cash, get the long-life car, set back and set back taking ESRBob's advice and unclmick2's advice;Bon Temps Rolliere and take my 40' power boat to Tampa and give Rich and the 6 ladies a good time.

Thanks to all who responded it was very informative.
 
There is still meaningful volatility risk, but in the case of not having a lot of expenses to pay out, volatility has significantly lower gravity. Unless you give it some.

It seems like you have a lot of trouble with the volatility; the last couple of mini-drops we've had in the last couple of years seem to have really hit you hard. With that in mind, going in the direction of lower volatilty at the expense of long term growth and inheritable portfolio size seems to make sense for you.

TIPS and other such stuff is one way to do it, and in times of high inflation, would be a good choice. Something like Wellesley or Target Retirement Income would provide a dividend equal to or higher than the SWR, with very little volatility...
 
CnFB,
It's really strange because I want to die broke and I want to be clear that I don't mind volatility if I can understand the reason for it.

So, I tried really hard the last to weeks to understand what caused the 200+ days of drops and the flimsy excuses in the news made me wretch.

If there had been news like, high unemployment figures, sales down, bad earnings, etc., well fine I'm OK with that.

But nothing happened. Just some bizzare frensy amongst the markets.
 
OldAgePensioner said:
It's really strange because I want to die broke and I want to be clear that I don't mind volatility if I can understand the reason for it.
Click to expand...

Ahhh! Grasshopper, problem very obvious. You try to comprehend the incomprehensible. You SOL...
Better you get on with living and fugghetaboudit... ;)
 
REWahoo! said:
Ahhh! Grasshopper, problem very obvious. You try to comprehend the incomprehensible. You SOL...
Better you get on with living and fugghetaboudit... ;)
Click to expand...

You got that right. I was reading some studies on the 1987 Black Monday, which next to the great depression has to be about the most studied stock market movement, and all the experts still cannot agree on just why the market dropped that day.
 
OldAgePensioner said:
If there had been news like, high unemployment figures, sales down, bad earnings, etc., well fine I'm OK with that.

But nothing happened. Just some bizzare frensy amongst the markets.
Click to expand...

Nothing happened then the market sank. You forget the "frothy" run-up in the weeks preceding the great crash of May-June 2006. ;) Just a blip on the chart (hopefully). Just a correction.
 
OAP, You look like a perfect candidate for an RV. Buy the below baby and you can easily go live in any area of the country without leaving home. Live in Montana during the summers to stay nice and cool and move to Southern CA or Mexico during the winter months. You sound carefree enough for this to be a nice option. Waddaya say?

http://www.alpinerv.com/content.asp?id=3&iInvID=1839#
 
OldAgePensioner said:
OK, a summary.
I suggest myself going to a risk free mode.

Responses:................

Thanks to all who responded it was very informative.
Click to expand...

OAP, you sure do listen carefully! I am awed.

Ha
 
DOG51,
the darn steering wheel is on the wrong side. :D I hate driving but if I could get a joung Japanese girl that could drive an RV, now we're talking.

Ha,
speaking of listening, my neighbor just introduced herself. Here's what came out of her mouth.

Her name is Maggie and she grew up in Oxforshire, England and attended Oxford University and moved here several years ago with her late husband.

Now, translated, here's what I heard. "My name is Maggie, I'm 48 with a tight body and when do we do it". :eek: Talk about being a good listener. I was speechless.

Most of that was true. Here apt. is 2 bedroom and probably goes for about $4,500 to $5,000 a month. Hmmmmm, maybe my money worries are over baby. :D
 
I can help you with "what happened". I think. ;)

Everyone thought the fed was done raising rates. Everyone was anticipating a market move higher when the fed was done raising rates. So when Bad Ben seemed to signal that he was done, everyone did what they thought they were supposed to do: buy and drive up the prices. Note the nice run up that we all enjoyed.

Then Bad Ben decided a week later that he had been misinterpreted, and somehow he didnt notice all of the media frenzy and market action for that whole week. He changed his tune. Well, if the fed's not done then all that fresh buying was ill timed, so SELL!!! Market goes down.

I hope that cleared everything up for you. ;) :LOL:

Get a book on group psychology. This group has a couple of hundred million people in it...
 
OldAgePensioner said:
But nothing happened.  Just some bizzare frensy amongst the markets.
Click to expand...
You will probably never find a satisfactory "explanation" - things don't seem to happen that way.

The "real" macro reasons often get underreported in the media because, frankly, it's over their (and most viewer's) heads.

I suspect the main issue this go around is that easy money is over, and the speculators finally decided to believe that given various central banks raising rates around the world PLUS Ben Bernancke letting the US markets know he would do the same.

yes, speculators had been expecting the Fed to stop raising rates and thus a ridiculous run up. They were caught leaning the wrong way. They've been speculating with easy money across the globe, and this easy money is being taken away.

When speculative positions are unwound, it often causes a lot of pain.

As long as there are speculators, there will always be volatility.

Audrey
 
CnFB,
I love walking by the Chinese Food Stores in Stockton and looking at the glazed brown Ducks and wondering if they are spitting out pieces of their broken luck.

Ben seems shell-shocked.  We will be lucky if he lasts out the year.

I was all for Dr. Kroszner, give me a Harvard man over a Princeton man any day.

Any day.
 
audrey,
that's the real issue, speculators and then no real way to see the issures. It would take an average investor like me all day to just get some idea of the fundamentals but the media reports some "media IQ" reason for why the market reacted.

But, I'm most afraid all the; I want a larger house to keep up with the Jonses, and the biggest/bestest SUV I can afford, we need 4 cause we have 2 teenagers, my credit card limit still has $200 dollars on it, I really need that pair of jeans with the fuzzy cuffs, honey let's get the $200 plan so everone has a phone, I can borrow $10,000 on my CitiBank card interest free honey, and damn, they all decide that consumerism must end and we are in big, big, trouble.
 
Alex - pokes OAP with the you're a lilly livered sissy stick
Click to expand...

Seriously OAP, do whatever makes you feel comfortable. It's your money! ;)
 
OldAgePensioner said:
CnFB,
I love walking by the Chinese Food Stores in Stockton and looking at the glazed brown Ducks and wondering if they are spitting out pieces of their broken luck.
Click to expand...

Hey, Aqualung! (wasn't that a line from Jethro Tull?)

Re-Wahoo has it right. I used to work at a major wire service and the joke in the newsroom was to figure out 'reasons' to explain why things happened in the market. Market up? Ah yes, let's do a story about strong demand, optimism, improved sentiment or whatever facts supported a market run-up. Market Down? Find gloomy stuff to quote and report that 'explains' what is happening. All written by liberal arts grads with little money in the market, little understanding of economics and even less interest. Basically it is pandering to human's need to 'understand' something which is chaotic, complex, and essentially unfathomable in the short run. If you really understood, you'd be a macro hedge fund manager and you wouldn't be talking.

Far better for you to get to an asset allocation you like (60/40 bonds to equity perhaps in your case) get out of individual securities entirely (added volatility with the seductive kicker that you think you can understand why Company A's stock price is going to go up or down, without actually being on their Board of Directors), and then take a willful sit-on-your-hands approach to the inevitable market gyrations.

If you lost 80% of your net worth in 2000, you had a lot more than 40% equities, and you had a lot of individual (tech) stocks. Buy and Hold is not rational or recommendable until you've got the asset allocation and the diversification down first.

It's tough bringing an engineering mentality to investing -- you'll continually want reasons for everything. Lots of really smart people have bent their swords hacking at that particular stone. I say, give it a rest and concentrate you energies on your delightful English neighbor and the 40' cruiser in Tampa Bay. 8)
 
OAP: yikes! what were you holding to be down 7.5% YTD?

That quote actually scared me at first, because I figure I'm actually down about 8-9%! :eek: But then I had to go back and re-read that. What I'm actually down is about 8-9% from a new, all-time high I hit back in early May. YTD, I'm at about zero. So basically this little hiccup washed out most of my run-ups for this year.
 
So you are flat for the year. BIG DEAL!

If you had gone on a 5 month vacation and not looked at your portfolio for all that time, you wouldn't know any better. It was a case of easy-come, easy-go.

It was far worse in 2000, 2001, and 2002 when people were looking at year over year losses - over several years!

I guess I don't understand people getting so upset because their portfolios are off from their ALL TIME HIGH. Just because a portfolio reaches a new high doesn't mean that's somehow it won't sell off from that. The market drawing back from new highs is very common - especially if a market run up is accelerated.

It's really better to look at your performance year-over-year and ignore anything shorter than that. If by May 15 of 2007, if your portfolio shows a year-over-year decline, THEN you can get upset - LOL!

Audrey
 
audreyh1,
what worries me is that this may, could, might be the start of a sell off. Down again yesterday.

So I made nothing the last 12 months, with a very diverified portfolio and balanced to be a growth portfolio. hmmmmm, when does my money make me some money?
 
Personally I'm not that worried about things, yet, but I'm also in a different boat, as I'm only 36, still working, still growing the portfolio, and not depending on it for income. I'm sure if I were older and either closer to retirement or retired, I'd be sweating it a bit more. Hang in there, OAP!
 
Are you actually flat since May of last year?  2005 was a positive year for most people.  I think most of the gain came late in the year.  If you were up in 2005, and flat year to date, you are probably still "ahead".

The market has sell offs sometimes.  But the market doesn't sell off to then remain depressed for the rest of our lives.  It eventually recovers which is why we invest.  Otherwise we wouldn't bother investing.

Do you have X years of living expenses set aside in cash/ultra-short bonds?  If so, then why worry about the years past that?  If not, then that may be the root of your anxiety.

Investing in any equity market really requires at least a 5-year horizon.  If you need the money in less than five years, then don't put it in equities.  If you don't need the money within five years, then quit looking at it!!!

Even though I am retired, I am actually hoping the market will go down further.  Why?  I'd like to see at least a 10% correction.  We haven't had one in a while.  10% corrections help tame speculative excess. It's "healthy" for equities markets.  Investors need to have a little fear.  AND that would give me an opportunity to rebalance my portfolio and buy more equities at a good price.   Since my portfolio has to last several decades anyway, a down year here and there is an opportunity rather than a liability.

Of course I'd rather not see a repeat of 2000-2002 again.  That was a nasty bear.  And I expect I'll see another in my lifetime.  But many people with a diversified portfolio were made "whole" again by the end of 2003.  Four years.

Audrey
 
Hmmm

My dates are fuzzy - but here goes: circa 1972 the 4th ed of Ben Graham's Intelligent Investor came out - followed by the 73/4 er ah market adjustment. Some people actually read the book. Also a lot of people began to study Norwegian as a second language.

That was good clean fun.

Amazingly - the market did not cease to fluctuate after I retired.

heh heh heh heh heh heh - go figure.

P.S. There's always one of the Target Retirement Series - if you don't like pssst - you know who.
 
Here's yet another take on market volatility...

If your two million dollar portfolio can generate ~80k/year in pre-tax income using the 4% SWR,

Then don't look at a 7.5% market drop as a loss of $150k.

Just think that your new SWR income (depending on how you look at it) has now dropped to $74k/year. A $6k/year loss.

After paying your state and federal taxes maybe your income has dropped (depeding on your situation) by maybe $4500/year. Or around $86/week. That's a fair amount but nothing to lose sleep over.

That's less than you'll spend on gas for that Hummer.

By the way OAP, Now that you've been in "The City" for a few months how do you like it ? Is SF what you expected it to be ? How do you like that cold summer weather ?

Maybe Maggie (the 48 y.o. tight body) will help you stay warm. Perhaps you could post a picture of your neighbor for our continuing entertainment. After the picture more advice to you will then be forthcoming.
 
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