Balance is overrated

[Ready]

Quote:

Originally Posted by REWahoo Still, I have to ask the question: if this is the bottom line - my mind is made up, I'm sticking with bonds no matter what - why did you start this thread? It doesn't appear that this is the case.

Well...some people perceive arguing to be a valid form of discussion. I've had many "discussions" with friends where I finally ask them "why are you arguing so much with me?" And their response is "whose arguing, we're just having a discussion!"

[lawman]

Quote:

Originally Posted by REWahoo It isn't so much that "many" think you are wrong - it's the fact that history says you are. I can understand where you are coming from here. Each of us has our own risk tolerance and limits on how comfortable we are in riding the equity rollercoaster. Still, I have to ask the question: if this is the bottom line - my mind is made up, I'm sticking with bonds no matter what - why did you start this thread? It doesn't appear that this is the case.

I don't understand why you feel that way..Some good counterpoints have been made and I have acknowledged that..The fact that I seek advice from others and don't immediately change my position doesn't mean I'm not interested..

[karluk]

Lawman, the fact that you have a secure source of income in your three pensions means that you can do whatever you want with your money. If you want 95% allocated to bonds or CDs, I say, "Go for it." But I'm really wondering why you started this thread in the first place. Your OP says "The stock market valuations are not justified at these levels" and that we should tell you why you're wrong. Now it develops that you have a 20 year time horizon. All right then. Current valuations aren't that significant over such a long time frame and bonds are MUCH less likely to keep up or beat inflation over a 20 year holding period. Those are terrific reasons to believe you're wrong, but I don't detect any change in your underlying determination to move to bonds. So you seem to have started this thread just to argue a point that you had already decided in your own mind was non-negotiable.

If your holding period were shorter, say five years instead of 20, then I think you could make a better case for bonds. You are probably much less likely to suffer large outright losses in intermediate term bonds than in stocks over the next five years. But your posts in this thread don't support the position that your holding period is that short.

[lawman]

Quote:

Originally Posted by karluk Lawman, the fact that you have a secure source of income in your three pensions means that you can do whatever you want with your money. If you want 95% allocated to bonds or CDs, I say, "Go for it." But I'm really wondering why you started this thread in the first place. Your OP says "The stock market valuations are not justified at these levels" and that we should tell you why you're wrong. Now it develops that you have a 20 year time horizon. All right then. Current valuations aren't that significant over such a long time frame and bonds are MUCH less likely to keep up or beat inflation over a 20 year holding period. Those are terrific reasons to believe you're wrong, but I don't detect any change in your underlying determination to move to bonds. So you seem to have started this thread just to argue a point that you had already decided in your own mind was non-negotiable. If your holding period were shorter, say five years instead of 20, then I think you could make a better case for bonds. You are probably much less likely to suffer large outright losses in intermediate term bonds than in stocks over the next five years. But your posts in this thread don't support the position that your holding period is that short.

Once again I agree.. I remember how I felt in 2008..I don't want to go there again..My primary goal is preservation..Some good arguments have been made for owning stocks to achieve that goal..

[lawman]

Quote:

Originally Posted by karluk You are probably much less likely to suffer large outright losses in intermediate term bonds than in stocks over the next five years.

I think you have really nailed down here what is driving me...

[audreyh1]

Quote:

Originally Posted by braumeister Avoided?

For the record, braumeister, your graph must be of NAV only which is not an accurate view of the fund return over the period. Reinvested dividends must be included. M* gives an accurate picture compared with S&P 500 Total Return.

HSGFX Chart Hussman Strategic Growth Fund Chart

Interesting - the S&P and Hussman funded started and ended at about the same spot since the fund opened - but took wildly different paths.

[brewer12345]

Quote:

Originally Posted by audreyh1 For the record, braumeister, your graph must be of NAV only which is not an accurate view of the fund return over the period. Reinvested dividends must be included. HSGFX Chart Hussman Strategic Growth Fund Chart

So it is a growth fund that hasn't grown since 2004? No wonder it has one start from Morningstar.

[sengsational]

Quote:

Originally Posted by audreyh1 For the record, braumeister, your graph must be of NAV only which is not an accurate view of the fund return over the period. Reinvested dividends must be included. M* gives an accurate picture compared with S&P 500 Total Return. HSGFX Chart Hussman Strategic Growth Fund Chart Interesting - the S&P and Hussman funded started and ended at about the same spot since the fund opened - but took wildly different paths.

Nice chart. Thanks for that. But yeah, like Brewer says, one star!

[redduck]

I think the chart audreyh1 brought up depicted a time period that covers about 14 years (the maximum). If you look at the charts that depict 3, 5, 10 year results I think it shows much different results. If not, let me know and at least I will learn something more about chart reading.

[lawman]

Quote:

Originally Posted by redduck I think the chart audreyh1 brought up depicted a time period that covers about 14 years (the maximum). If you look at the charts that depict 3, 5, 10 year results I think it shows much different results. If not, let me know and at least I will learn something more about chart reading.

Hussman's claim to fame is to protect investors from from steep losses while beating the S&P over a complete market cycle (whatever that is). From fund inception through 2013 he has done that..Should the market drop another 35% as it did in 2008 he'll be considered a financial genius. If there is no big drop in the next few years he'll be considered and idiot..He may not be a genius but I don't think he's an idiot just because he has missed out on this rally which most agree may well be over extended..

[Walt34]

Quote:

Originally Posted by lawman I just am not willing to experience the volatility and uncertainty that goes with stocks.

That's an issue that I had for a very long time. Too long. But it is an emotional reaction to what should be a mathematics-driven decision. And the hard part is convincing yourself to take the emotions out of the decisions.

You have to think like Mr. Potter in the movie "It's a Wonderful Life" and Montgomery Burns on "The Simpsons".

The three books that finally made it all sink in for me were A Random Walk Down Wall Street, The Millionaire Teacher, and How a 2nd Grader Beats Wall Street. I highly recommend them to anyone.

With a 20-year horizon you are almost certain to lose out on substantial gains by being too conservative. I say "almost" because the future is uncertain and unknowable. But history also says that anyone who claims to know what the future will be is almost always wrong.

[nash031]

Quote:

Originally Posted by lawman I just am not willing to experience the volatility and uncertainty that goes with stocks. Also, I want to be in a position to withdraw my dividends on a regular basis if I want to.. My logic is that I'm much less likely to experience loss over the next 20 years in good bond funds as opposed to good stock funds..I know many think I'm wrong that's just my thinking..

The first part of your sentence is really what sells your opinion.

You are not the least bit concerned with performance. You are concerned with volatility.

In that respect, your strategy is perfectly fine for you.

Your second statement may also be true. You are less likely to experience "loss" over that 20 year period in bond funds. In exchange for that "no loss" (which is really a misnomer), you will also receive much, much less gain and could very well lose purchasing power to inflation... which is a LOSS no matter how you cut it.

The bottom line is your risk tolerance is very, very low. So do what you will knowing that.

But don't expect everyone to agree with you when you open the thread with "tell me why I am wrong." That's what trips me out... you asked for people to tell you why you are wrong, and now appear preturbed that many have.

[Texas Proud]

Quote:

Originally Posted by lawman I agree with you. However of course there are always exceptions as is shown here.. https://www2.troweprice.com/iws/wps/...58dfe7296ee75c I just am not willing to experience the volatility and uncertainty that goes with stocks. Also, I want to be in a position to withdraw my dividends on a regular basis if I want to.. My logic is that I'm much less likely to experience loss over the next 20 years in good bond funds as opposed to good stock funds..I know many think I'm wrong that's just my thinking..

I will say it again since nobody has made much of a comment to my other post...

Bonds funds have volatility also... maybe not to the same degree, but it is there... we also know that the chance of rates going down to have gains is much less than rates going up and losing capital...

So why not CDs That takes all your capital loss risk out of your equation... You can buy 3 and 5 year CDs and lock the current rates...

This removes all the problems that you state you want to get rid of...

[lawman]

Quote:

Originally Posted by Walt34 That's an issue that I had for a very long time. Too long. But it is an emotional reaction to what should be a mathematics-driven decision. And the hard part is convincing yourself to take the emotions out of the decisions. You have to think like Mr. Potter in the movie "It's a Wonderful Life" and Montgomery Burns on "The Simpsons". The three books that finally made it all sink in for me were A Random Walk Down Wall Street, The Millionaire Teacher, and How a 2nd Grader Beats Wall Street. I highly recommend them to anyone. With a 20-year horizon you are almost certain to lose out on substantial gains by being too conservative. I say "almost" because the future is uncertain and unknowable. But history also says that anyone who claims to know what the future will be is almost always wrong.

Absolutely!

[lawman]

Quote:

Originally Posted by Texas Proud I will say it again since nobody has made much of a comment to my other post... Bonds funds have volatility also... maybe not to the same degree, but it is there... we also know that the chance of rates going down to have gains is much less than rates going up and losing capital... So why not CDs That takes all your capital loss risk out of your equation... You can buy 3 and 5 year CDs and lock the current rates... This removes all the problems that you state you want to get rid of...

I guess the answer to that question is that I expect to do better than 1% per year for the next 5 years in PONDX. My tolerance for risk is low but not that low..I believe the managers of that fund are good enough and have enough latitude in that fund to do better...

[Katsmeow]

Quote:

Originally Posted by Ready Well...some people perceive arguing to be a valid form of discussion. I've had many "discussions" with friends where I finally ask them "why are you arguing so much with me?" And their response is "whose arguing, we're just having a discussion!"

That would be me. DH does sometimes say that to me. I'm usually surprised to hear it because I thought we were just discussing/debating the issue.... I was open to changing my mind....

[lawman]

Quote:

Originally Posted by Katsmeow That would be me. DH does sometimes say that to me. I'm usually surprised to hear it because I thought we were just discussing/debating the issue.... I was open to changing my mind....

Bingo!

[braumeister]

Cue Monty Python...

Argument Clinic - YouTube

[redduck]

Quote:

Originally Posted by lawman Haven't checked in here for quite a while but now that I'm re adjusting my portfolio I'm interested in other points of view..I'm 57, have three pensions, a modest lifestyle and no debt for the last 30 years..I've saved up a sizable amount of money..Preservation of this capital is all that matters..I don't need more money I just need to be able to maintain my purchasing power..The stock market valuations are not justified at these levels... .I'm going to a 90 - 95 % bond funds position..Tell me why I'm making a mistake..Thanks

Well, if you’ve forgotten why you haven’t checked in for awhile, I guess this thread has refreshed your memory.

It sounds as if you’ve been financially conservative/cautious/careful these last 30 years. Now you plan to become what seems to be ultra financially conservative/cautious/careful. Anyhow, I have no idea where you should place 90-95% of this money that is headed for the bond funds. (Actually, I have some ideas, but I can’t justify them). In your posts you talk of your “logic”. However, your logic doesn’t seem to have really persuaded even a few (so far) that your logic is sound logic--and you are dealing with some very logical people (I guess). Now, even I know that putting 90-95% of your money into a fund—or the same kind of funds—is not considered wise. However, you have explained what you want to accomplish (maintain your purchasing power) and how you plan on going about achieving this goal (going into a 90-95% bond funds position). Do you have any idea what you may need to hear to dissuade you from your plan?

Have you considered hiring a financial planner?

[Texas Proud]

Quote:

Originally Posted by lawman I guess the answer to that question is that I expect to do better than 1% per year for the next 5 years in PONDX. My tolerance for risk is low but not that low..I believe the managers of that fund are good enough and have enough latitude in that fund to do better...

Heck, you can get over 2% on 5 year jumbo CDs....

Yes, you can do better (maybe) with a bond fund, but if interest rates go up to say 6%, I bet you will not...