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01-23-2023, 08:29 AM
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#1
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Recycles dryer sheets
Join Date: Feb 2012
Posts: 104
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Asleep At the Wheel
I retired in 2014 with a pretty standard asset allocation of around 60% stocks/40% bonds. This worked fine until recently. I thought I would just wait it out, so I still was not paying much attention. But today I did a check of the Prime Rate and was surprised to see it up to 7.50%. I guess I just have been having too much fun and not paying that much attention.
I had always planned to stay with my 60/40 asset allocation unless the interest rate got above the 7 to 8 percent range. I always thought that if you could get interest rates close to that, why not eliminate a lot of risk. So I guess its time to consider a big shakeup and a move to more fixed investments.
I have always been impressed with, and appreciative, of the advice from this forum so I want to ask what others here are thinking.
Have many others here moved out of stocks and bonds, and if so, where have you gone and what types of investments are you making (CD's, gold, etc.)? If holding on to stocks and bonds, at what point are you considering moving out of them?
Thanks!
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01-23-2023, 08:39 AM
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#2
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2013
Location: Texas
Posts: 10,836
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Quote:
Originally Posted by Dwhit
Have many others here moved out of stocks and bonds, and if so, where have you gone and what types of investments are you making (CD's, gold, etc.)? If holding on to stocks and bonds, at what point are you considering moving out of them?
Thanks!
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Moved to all fixed income by late last year... Mostly CD's. Ever since I retired, I've been a "I have won the game, why risk it" type of investor. True, CD's don't keep up with inflation but they help close the gap with ~no risk. I did a lot of short term equity trading with some surplus cash over the past few years, but I've had enough of that. (Too much work for little, if any return)
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20's "something" mind, trapped in a 70's "something" body
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01-23-2023, 08:41 AM
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#3
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Full time employment: Posting here.
Join Date: Nov 2008
Location: Louisville
Posts: 600
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I believe the Prime Rate is what you're charged if you want to borrow money. The rate on CD's and treasury bonds is around 4% +/- right now.
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01-23-2023, 09:14 AM
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#4
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Moderator Emeritus
Join Date: Jan 2007
Location: New Orleans
Posts: 47,467
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Quote:
Originally Posted by Dwhit
Have many others here moved out of stocks and bonds, and if so, where have you gone and what types of investments are you making (CD's, gold, etc.)?
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Nope, not me. I'm a broad index fund buy-and-holder, sticking with my AA, happy with what I've got.
Quote:
Originally Posted by Dwhit
If holding on to stocks and bonds, at what point are you considering moving out of them?
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Never? My hair's not on fire (yet? ) and I am doing fine, so no reason to freak out and sell everything.
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Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities. - - H. Melville, 1851.
Happily retired since 2009, at age 61. Best years of my life by far!
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01-23-2023, 09:24 AM
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#5
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,204
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Quote:
Originally Posted by Car-Guy
Moved to all fixed income by late last year... Mostly CD's. Ever since I retired, I've been a "I have won the game, why risk it" type of investor. CD's don't keep up with inflation but help close the gap.
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+1 but did it sooner... mostly but not all fixed income. Also, transitioned from bond funds and ETFs to CDs, UST, GSE/agency bonds and high IG corporates.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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01-23-2023, 09:32 AM
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#6
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Thinks s/he gets paid by the post
Join Date: Jan 2008
Posts: 1,644
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I'm keeping my equity forever. Will likely buy more and never sell.
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01-23-2023, 09:39 AM
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#7
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2017
Location: City
Posts: 10,308
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Quote:
Originally Posted by Masquernom
I believe the Prime Rate is what you're charged if you want to borrow money. The rate on CD's and treasury bonds is around 4% +/- right now.
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In theory, Prime is the rate that the highest quality borrowers get from banks. I think that concept is a little squishy. In practice I think it is used more as a reference rate where a business might be offered a loan at "two over" -- 2% over prime rate. Hence a variable rate. "LIBOR" used to be a popular reference rate but died due to some serious manipulation problems. Not sure anyone went to jail but it was that kind of thing.
Quote:
Originally Posted by Dwhit
... Have many others here moved out of stocks and bonds, and if so, where have you gone and what types of investments are you making (CD's, gold, etc.)? If holding on to stocks and bonds, at what point are you considering moving out of them? ...
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Plain old boring index funds and TIPS for us. Most other options for little guys have way too much juice squeezed out of them by the people selling them. I did small residential real estate for 25 years but I am too lazy to do that now, plus I really don't want to saddle our executor with a bunch of illiquid and hard to value assets.
A couple of other considerations: First, the need to resist recency bias, which tends to whip our attitudes around much too frequently. Second, absent SORR, volatility is not risk. A few years of equities up, a few years of equities down -- to be expected. History tells us that (so far) equities have had an upward bias that rewards long-term buy-and-hold investors.
Warren Buffet: " Much success can be attributed to inactivity. Most investors cannot resist the temptation to constantly buy and sell." ... "Lethargy, bordering on sloth should remain the cornerstone of an investment style."
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Ignoramus et ignorabimus
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01-23-2023, 10:08 AM
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#8
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Full time employment: Posting here.
Join Date: May 2015
Location: Charleston, SC
Posts: 524
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When the FED first started to raise rates in March 2022, I moved a large chunk of my QQQ holdings into Fido's FDRXX Money Market Fund. Rising rates tend to hurt the growth stocks that make up that index fund. That simple move has saved me from an excruciating downturn.
The FIDO money market is now paying around 4% thanks to those FED actions and I'm happy to collect the monthly stipend. You may say that 4% doesn't beat inflation....to which I reply that anything with a plus sign is welcome in my portfolio. I nibble at the TLT fund when it drops into the low $90 range, but that's about the extent of my buying. I still hold some QQQ, SPY and IWM so an up day like today still provides a boost.
Keep your eye on the general economic trends.
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Semiquincentennial -- A Republic, if we can keep it.
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01-23-2023, 11:13 AM
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#9
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Thinks s/he gets paid by the post
Join Date: Jan 2015
Posts: 1,536
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Might be the wrong thread but I couldn’t resist.
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Wisdom starts with wonder
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01-23-2023, 11:25 AM
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#10
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Full time employment: Posting here.
Join Date: May 2015
Location: Charleston, SC
Posts: 524
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Uh--Oh, we're off the rails now.....
Got 8 cylinders and uses 'em all !!
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Semiquincentennial -- A Republic, if we can keep it.
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01-23-2023, 12:17 PM
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#11
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Full time employment: Posting here.
Join Date: Oct 2020
Posts: 926
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The best thing about the current market rally (22% S&P total return since mid October) is that no one notices or believes in it. People are still mentally stuck on the past, they don't see that the market seems to be moving on.
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01-23-2023, 12:23 PM
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#12
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Full time employment: Posting here.
Join Date: Aug 2013
Location: New Jersey
Posts: 892
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It’s probably a good idea to check on your financial plan on a yearly basis. Last year many bond experts on this forum said sell your bond funds and switch to something more stable like CD or Treasuries. Bond funds behave quite differently from holding individual bonds if you hold them to maturity.
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01-23-2023, 12:29 PM
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#13
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 37,931
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Asleep At The Wheel - I was worried something had happened to them!
__________________
Retired since summer 1999.
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01-23-2023, 01:02 PM
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#14
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Full time employment: Posting here.
Join Date: May 2015
Location: Charleston, SC
Posts: 524
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Quote:
Originally Posted by Exchme
The best thing about the current market rally (22% S&P total return since mid October) is that no one notices or believes in it. People are still mentally stuck on the past, they don't see that the market seems to be moving on.
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Measuring from mid-October an interesting choice, since on October 15th SPY touched a bottom at $357. But 2 weeks later it hit $390 accounting for most of that recent run-up. And a month earlier, in mid-September SPY was at $410, so it's actually down a few percentage points measuring from that point.
Lat year has been a bumpy ride, for sure.
__________________
Semiquincentennial -- A Republic, if we can keep it.
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01-23-2023, 02:56 PM
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#15
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Thinks s/he gets paid by the post
Join Date: Feb 2014
Location: Syracuse
Posts: 3,501
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My favorite Texas Swing Band!
__________________
“No, not rich. I am a poor man with money, which is not the same thing"
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01-23-2023, 03:01 PM
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#16
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Full time employment: Posting here.
Join Date: Oct 2020
Posts: 926
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Quote:
Originally Posted by FiveDriver
Measuring from mid-October an interesting choice, since on October 15th SPY touched a bottom at $357. But 2 weeks later it hit $390 accounting for most of that recent run-up. And a month earlier, in mid-September SPY was at $410, so it's actually down a few percentage points measuring from that point.
Lat year has been a bumpy ride, for sure.
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Oops, thanks for the catch, bad math on my part.
Since I'm too lazy to look up dividends, I use the Yahoo S&P 500 Total Return index when I want a look at "the market" once we are past one dividend season. That bottomed (at least for now) on Oct 12 and the corrected number I should have used is that it is up 13% since (or is flat since end of November, depending on how you want to look at it!). I am hopeful that the bottom is in, but I gave up my market timing crystal ball decades ago.
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01-23-2023, 03:35 PM
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#17
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2011
Location: NC Triangle
Posts: 5,807
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Quote:
Originally Posted by GravitySucks
My favorite Texas Swing Band!
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They were just here in November, so not to worry, you can still go worship at Brother Ray Benson’s Church of the Broken Bottle.
__________________
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01-23-2023, 05:33 PM
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#18
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Full time employment: Posting here.
Join Date: Oct 2015
Posts: 900
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Quote:
Originally Posted by Dwhit
I retired in 2014 with a pretty standard asset allocation of around 60% stocks/40% bonds. This worked fine until recently. I thought I would just wait it out, so I still was not paying much attention. But today I did a check of the Prime Rate and was surprised to see it up to 7.50%. I guess I just have been having too much fun and not paying that much attention.
I had always planned to stay with my 60/40 asset allocation unless the interest rate got above the 7 to 8 percent range. I always thought that if you could get interest rates close to that, why not eliminate a lot of risk. So I guess its time to consider a big shakeup and a move to more fixed investments.
I have always been impressed with, and appreciative, of the advice from this forum so I want to ask what others here are thinking.
Have many others here moved out of stocks and bonds, and if so, where have you gone and what types of investments are you making (CD's, gold, etc.)? If holding on to stocks and bonds, at what point are you considering moving out of them?
Thanks!
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60/40 is just having a bad year, assuming your 40 is in bond funds/ETFs? I suppose it depends on your age and WR, but I subscribe to the "won the game, keep playing" approach, but I appease my conservative aka don't F it up gland with 10 years of planned spend (highly discretionary) in a bond ladder, letting everything else roll in a stock AA that is rebalanced annually.
That said, depending upon what you are underwriting as annual return, you can make an argument to go all fixed. Despite the fact that I have proforma of 5% annual average returns, I would rather play the game for the gravy and legacy. But that's just me...
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01-23-2023, 06:02 PM
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#19
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Thinks s/he gets paid by the post
Join Date: Apr 2005
Location: Midwest
Posts: 2,960
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Quote:
Have many others here moved out of stocks and bonds, and if so, where have you gone and what types of investments are you making (CD's, gold, etc.)? If holding on to stocks and bonds, at what point are you considering moving out of them
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My stock market money is just in the MMF sweep account at the brokerage awaiting redeployment. All my other fixed stuff stayed the same. I have the good fortune to have saved up a "play sized pile" of excess funds ever since starting Social Seguridad. I was solicited by my bank to open a brokerage account or an "automated investing" account. Robo-investing. I am tempted to try the Robo just to do something different and see how well it does vis a vis a bunch of SPY's and QQQ's.
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02-03-2023, 10:20 AM
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#20
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Thinks s/he gets paid by the post
Join Date: Jun 2004
Location: Diablo Valley (SF Bay Area)
Posts: 2,704
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I just deleted the app I've used to monitor investments (I used to do up to 300 trades a year) and have gone 100% to stock & tax free muni index funds plus 200sh BAC & 100sh CUK (pays me in onboard credits). Wow. Had to reread that. Active trader me is now: 75% broad market etf, 25% muni etf & cash. 12 months cash in emergency fund. Still living off pension but thinking about not saving my SSA.
Anyway deleted that app as it doesn't really matter
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