Burned more than once by the market

[Lawrencewendall]

Guilty as charged. 90/10 but I'm young, have a 10 year horizon and other sources of guaranteed income.

[easysurfer]

I'm more in fixed income than stocks.

Use the 100 - age rule to keep my allocation honest and my emotions out of the picture .

[euro]

Quote:

Originally Posted by TJFogelberg The recovery from DOW 5000 in 2008 happened because of QE, zero interest rates, and other artificial interventions. Savers have been crushed and often persuaded to invest in "higher yielding" securities and annuities that often pay 6-8% commission to the agent who talks them into it. I'm not against stocks, just disagree with conventional wisdom that one should be heavily invested. I'm using a fixed rate of return of 2% with inflation the same. We pay no income taxes upon full retirement. Everything is paid for. Our big purchases are behind us. Health is generally above average despite problems causing desire to retire early. We definitely won't be investing aggressively to try to fully fund LTC costs. (Few spend any length of time in a LTC facility). Currently 70% CD, zeroes, ST Vang bond. 30% index stock funds, a few ind securities, and high yield and longer duration bond funds. 2 low cost annuities. We have very low fixed costs now and in retirement. A significant portion of our budget is discretionary, which is a wonderful thing. If you have 3X the money you need to fund actual cash needs, I see no harm in ramping up risk and playing the market. (You're playing with money you will never touch anyway. )

Sounds like a perfectly reasonable portfolio if that's what it takes to make you sleep at night! I seriously doubt that yours is the most conservative portfolio on this board.

[travelover]

Quote:

Originally Posted by TJFogelberg The recovery from DOW 5000 in 2008 happened because of QE, zero interest rates, and other artificial interventions. Savers have been crushed and often persuaded to invest in "higher yielding" securities and annuities that often pay 6-8% commission to the agent who talks them into it. I'm not against stocks, just disagree with conventional wisdom that one should be heavily invested. I'm using a fixed rate of return of 2% with inflation the same. We pay no income taxes upon full retirement. Everything is paid for. Our big purchases are behind us. Health is generally above average despite problems causing desire to retire early. We definitely won't be investing aggressively to try to fully fund LTC costs. (Few spend any length of time in a LTC facility). Currently 70% CD, zeroes, ST Vang bond. 30% index stock funds, a few ind securities, and high yield and longer duration bond funds. 2 low cost annuities. We have very low fixed costs now and in retirement. A significant portion of our budget is discretionary, which is a wonderful thing. If you have 3X the money you need to fund actual cash needs, I see no harm in ramping up risk and playing the market. (You're playing with money you will never touch anyway. )

I don't understand what you are trying to accomplish, but showing up on a forum with minimal introduction and basically accusing the members of being naive rubes, smacks more of trolling than any real desire to become a respected participant.

[Carol1862]

Conservative here. If we had a guaranteed pension we'd possibly be more aggressive. Our portfolio is at a comfortable place for us. Others would scoff at it. We do not panic, just stay the course. Keep educating myself.

[TJFogelberg]

Quote:

Originally Posted by travelover I don't understand what you are trying to accomplish, but showing up on a forum with minimal introduction and basically accusing the members of being naive rubes, smacks more of trolling than any real desire to become a respected participant.

I think my original question is very valid..."why take risk if you don't have to?" I've posted a lot of personal information. Not accusing anyone of anything, and yes I'm new and haven 't fully explored historical posts yet.

[Midpack]

Quote:

Originally Posted by TJFogelberg Currently 70% CD, zeroes, ST Vang bond. 30% index stock funds, a few ind securities, and high yield and longer duration bond funds.

So you're well within the broad range of AA's here, 72% of us have between 25-75% in equities - that's the "group think" here. The data was in post #4 earlier. And your plan assumes you've 'already won the game' like many here.

Though you've overlooked the distinction between SIRE and FIRE, a large factor in each of our plans.

But your title and uninformed assumptions were a nice ruse though...

[audreyh1]

Quote:

Originally Posted by TJFogelberg I think my original question is very valid..."why take risk if you don't have to?" I've posted a lot of personal information. Not accusing anyone of anything, and yes I'm new and haven 't fully explored historical posts yet.

Then why this statement?

Quote:

I am surprised at the group think on this board that seems to have most fully invested in stocks.

You barely even know this group, your first post was yesterday, yet you open this thread painting everyone else here with this broad brush that isn't even true. And declaring us all of group think - that was an accusation.

[easysurfer]

Quote:

Originally Posted by TJFogelberg I think my original question is very valid..."why take risk if you don't have to?" I've posted a lot of personal information. Not accusing anyone of anything, and yes I'm new and haven 't fully explored historical posts yet.

I think the answer is would the person be happy.

Some folks are more than happy to sit on the money and run out the clock. For others, that's not what they want.

Football analogy, why didn't the Falcons (sorry Falcons fans) run, then kick the FG to ice the game? The end game was definitely in sight. But not how they rolled. A valid comparison, I think.

[Meadbh]

Welcome to the forum. A superficial glance at financial posts may give the impression that many forum members have a "high" allocation to equities. After participating in the forum for some time, you will become aware that (a) some posters are more vocal than others and (b) there is considerable variation in asset allocation. I myself currently have 30-33% each in real estate, equities and fixed income, and 5% in cash. In the past I have also had precious metals. Stick around and you will learn a lot. But please don't lecture.

[target2019]

We need a groupthink poll...

Some opinions are very dogmatic (and that's ok), but I'm sure most here are adapting to changing circumstances. I don't consider that groupthink.

[ERD50]

Quote:

Originally Posted by audreyh1 Then why this statement? You barely even know this group, your first post was yesterday, yet you open this thread painting everyone else here with this broad brush that isn't even true. And declaring us all of group think - that was an accusation.

+1.

Now a question for the OP - when and how did you get "burned by the market" multiple times?

Every market drop our investing lifetimes has seen a pretty quick comeback. As others have pointed out, a buying opportunity for those sticking to a fixed AA. Those people did great, no one got burned.

What happened?

-ERD50

[Chuckanut]

Quote:

Originally Posted by Totoro Also, don't confuse chatter about equities with a high allocation in equities. Mulligan as a prime example.

A lot of people follow Mulligan's example. Proof is how happy people are when they "take a Mulligan". !!rimshot!!

From what I see there is a lot of agreement on index funds vs. managed funds . And even more negative agreement on Variable Indexed Partialy Recursive Limited Guarantee Reverse Payment Annuities with 65 pages of detailed legal jargon no buyer understands.

Other than the above two, I think we are all over the map. And sometimes the participants in a thread are using different maps!

[Ready]

I see no problem with having 30% in equity index funds. That should be enough to handle inflation while still presumably allowing you to sleep at night.

[Major Tom]

Quote:

Originally Posted by travelover I don't understand what you are trying to accomplish, but showing up on a forum with minimal introduction and basically accusing the members of being naive rubes, smacks more of trolling than any real desire to become a respected participant.

That wasn't my read on it. Some folk have a more "direct" communication style that can come across the wrong way. I think he/she was just being straightforward without paying attention to the social niceties. I guess everyone has a different approach, and mine is usually to "read the mail" on a forum for quite a long time before beginning to post. That way, I can get the "lay of the land" before diving into it. But then, I am more of a reader/listener than poster/speaker.

Hey, you're here now, and welcome. There is quite a wide range of investment styles and degrees of knowledge here, which keeps it interesting. There are also a surprising number of knowledgeable and helpful folk who, along with the mods, keep us all on the straight and narrow. You've landed in a good spot!

PS - the title of this thread reminds me of my Dad, who once *gasp* invested in stocks. I don't know what the investment vehicle was - it was something offered through his bank in England (where I grew up). He described to me the guarded excitement at seeing the value of his investment go up over time, then the horror of seeing it, at some point, go down. He couldn't handle the "going down" part, so sold his investment, and never invested in stocks again. If he were still around, he'd probably have a heart attack if he saw how my money is invested! Each to their own - we all should do what we are comfortable with, though it doesn't hurt to push the boundaries of the comfort zone from time to time.

[Chuckanut]

FWIW, anybody who thinks this group or a sub-group is engaging in group think would be doing us all a great favor by offering another view and an argument to support it. We would owe that person a big Thank You.

That said the OP has a good question. If one has won the game, why keep playing and putting the prize at risk?

Of course, answering that question opens up a whole bag of issues on such topics as a person's individual risk tolerance, risk/reward ratios, and the long term uncertainties of life.

Good luck getting agreement on that.

[nash031]

As DashMan pointed out in a roundabout way, you can find a reason to doubt the future prospects of just about any asset class. He chooses to invest in individual stocks, largely, in order to avoid the impact of debt in the future as he's speculating on a global market crash sometime in the future which would affect the markets writ large, but take less a toll on his individually selected stocks. He accurately points out that bond prices are high, likely to decline in the future as interest rates increase. He also mentions that cash isn't safe in such a situation since it's all about good faith in the government which prints it.

Gold or physical assets like it are often hedges against this, but can be crippling against inflation. Real Estate can be a good hedge as well, if you're in the right market. Insurance "investments" are a drain due to fees and loads, but can provide guaranteed income which historically underperforms other asset classes in the long term...

Etc. Etc.

There are a whole slew of options, none of which is fool proof, otherwise everyone would be doing it... and then you'd see the groupthink.

That many of us have high allocations in equities is not indicative of groupthink, but rather a deliberate decision based on the information at hand respecting our individual situations. With a significant pension in the works, it makes little sense for me to be heavily invested in cash or perceived "safe" investments in the accumulation phase. Maybe when the game is won, I'll reevaluate that.

[Which Roger]

As Mr. Bogle points out, asset allocation should be based on one's willingness, need, and ability to take risk. We're all different in this regard, thus allocate our assets differently.

My observation on this forum is that our asset allocations more or less follow a bell curve: Most are somewhere in the middle with somewhere between a 60/40 and 40/60 allocation, but there are a few on the extremes - almost all stock or hardly any stock, but these are the ones who tend to stand out in our minds because they are different from the majority.

[Ready]

The main argument for having at least a modest investment in equities is to protect against runaway inflation. With 100% invested in CDs or other low yield investments, a significant runup in inflation could dramatically reduce spending power of the dollars saved. Without knowing the OP's situation, we have no idea how much cushion he has to protect against this.

[daylatedollarshort]

We can live mainly off SS, pensions and some side income so we decided to not have a high percent of our assets invested in the stock market in retirement. We always had a decent income most of our working lives, and if I had to do it over again I would have had not invested much in stocks at all even when we were younger. I prefer to have income and expenses I can control and I can't control the stock market. For inflation protection we use a matching strategy. I'm more concerned with avoiding big losses than I am with market gains in retirement.

We've noticed that the mantra from the mutual fund advisers is always "you need stocks for growth" even for those who do not. The last time we talked to reps from one of the big mutual fund companies for a portfolio review we pointed out that we would be fine even if we kept all our assets in short term fixed income based on their own retirement calculator.