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Re: Fear and Greed
Old 07-15-2006, 09:27 PM   #21
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Re: Fear and Greed

I got here (semi-ER) the slow way, through a diversified portfolio of boring index funds.

I did try buying/switching funds IAW guidance from a newsletter when I was just starting out. Glad I learned early to not try to beat the market--the tuition is lower the earlier you pay.

I don't think it is greed that causes folks to invest in high expense funds, or to try to pick winners/time the market/do technical analysis, etc. People just try to use the same thing that works in their jobs, their hobbies, etc. They believe that doing more research, studying and working at it hard will produce the best results. It's very hard to accept that this isn't the case, particularly with numerous TV, radio shows, print ads, newsletters, and other "financial pornography" reconfirming our existing biases.

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Re: Fear and Greed
Old 07-15-2006, 10:50 PM   #22
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Re: Fear and Greed

Originally Posted by PsyopRanger
My question here is this:

Those that have attained FIRE, have they done this by simply not getting greedy and also not letting the market scare them either?
I am borderline-FI and ER-ambivalent at 40, so not quite what you are looking for, but pretty close

Did you stay true to a long term investment plan?
I don't think I had a long term investment plan, although I suppose all those hundreds of hours I spent on learning everything there was to know about my field were an unintentional investment of sorts. By my late 30s I was making $100K and living on $15-20K, which left quite a bit of money to squirrel away.

Did you not buy into the tech stock hype of the 90s?
Nope, I was paying down my mortgage at an accelerated rate and payed it off right after the dotcom crash. Otherwise both my 401K and my taxable accounts were in cash, but then again I am always in cash.

Do you simply DCA, invest for the long term and have a proper asset allocation?
See above* May not be optimal, but I am very defensive by nature, so it works for me!*
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Re: Fear and Greed
Old 07-16-2006, 12:05 AM   #23
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Re: Fear and Greed

Did everything wrong, at the wrong time, and still managed to get my s#it together later in life (early 40s) to find the road to FI.

Bought Blue chips and tech. stocks before 1998. Lost 40% in 1999-2000. Lost a bunch in company stock and have ISO options that will never breath air again. Took quite a tax hit on some before I learned about AMT. Lost a bunch more on price drops after holding for LT gains and had to sell short.

Had a wife that could not save, would not stop spending and never understood the concept of living within your means let alone below it.

I learned a lot and made my share of stupid moves. Mostly, I saved, invested in companies whos products I knew and lived to a budget. I maxed out my retirement accounts and diversified within them with an emphasis on stock funds and index funds.

We are FI and have been for 4 years. I ER'd once in 2002 and will again in 2007 or sooner if things go bad. I did it the hard way and would not wish it on anyone. I am still learning. I don't enjoy trading stocks but do it because it was the only way I could see to get out of the rat race. I am planning on an autopilot portfolio in my next ER. Churning stocks is too much like work to me.
Work? I don't have time to work....I'm retired.
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Re: Fear and Greed
Old 07-16-2006, 08:08 AM   #24
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Re: Fear and Greed

In the face of either fear or greed, my best moves have been to do nothing.
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Re: Fear and Greed
Old 07-16-2006, 09:51 AM   #25
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Re: Fear and Greed

Originally Posted by PsyopRanger
How did you invest in your 20s versus their 30s, 40s, etc?
20's: Got married in 1982 while still in grad school.* No money, so not much in the way of investing, but lived below our means.* We knew about mutual funds and IRAs. CDs were paying 12% to 15% interest rates in those days and we had some.* A couple years later, moved to Europe and income dropped significantly, so did not add to investments until moved back to the US in* 1986.*

30's: My new job contributed 15% of my salary to the retirement plan and I could contribute an additional 15%, so that's what I did.* *At that time, I made a plan to be able to replace my salary from investments in about 12 years.* This plan required investing in equities, so I chose top-rated mutual funds from Vanguard, Fidelity, 20thCentury (now American Century).* Late 30's switched job to lower cost of living area with higher salary and bought first house.* Lived through October 1987 by taking tax losses.* Basically invested about half our combined income each year, since coming back to the States.* Spouse joined investment club as well which invested in mostly growth stocks.

40's: Met my goal of replacing my salary from investment returns, but taxes on investments were quite a drag.* Those pesky mutual fund distributions in after-tax accounts put a drag on return, so I decided in our early 40's (late 1990's) to buy individual stocks instead.* I work in hi-tech and could see that most internet stocks had no profit, so not invested as heavily in tech as some others, but did well with Intel, Microsoft, Cisco and Oracle (the 4 Horsemen of Tech).* As the market tanked, I booked losses for taxes each year and invested the proceeds into something else in order to stay fully invested.* Also sold covered calls on individual stocks to generate added boost.* Lost money in 2000-mid2002 (we also still have carried-forward losses from those days), but was fully invested through thick and thin, so very nice recovery in last of 2002, through 2006.* Always bought on dips ... always put something into the stock market each month, but tried to buy what had corrected and not the current momentum play.

Late 40's: Decided that individual stocks were not worth it with the rise of ETFs and tax-managed mutual funds.* Portfolio evolved into mostly mutual funds in retirement accounts and mostly ETFs in taxable account.* Finally got wind of asset allocation and now follow something like 40% large cap, 25% international, 20% small/mid cap value, 15% fixed, some REIT, etc in a tax-managed way.

I do not mind buying something and selling it the same day or next day to make a little lunch money.* So while I am mostly buy-and-hold (we have held some investments for more than 20 years now),* I do not mind having some stimulating fun every now and then.

So I think our "core" investment strategy has been the same for 20 years.* It's just the peripheral strategy has evolved.

We are still working, but have 25X of our annual expenses in investments, so I guess we are FI, but not retired.* I think we are all set for when we reach our 50's.
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Re: Fear and Greed
Old 07-16-2006, 12:15 PM   #26
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Re: Fear and Greed

I want to add the following:* Upon review of the 20 years of our investing life, it is pretty clear to me that if we had just done asset allocation with index funds and ETFs from the get-go, that we would be much further ahead than our present circumstances.*

We can take some solace in the fact that many ETFs and index funds did not exist in the first half of our investing time frame.* Also the literature on investing was a bit different in the early 1980s than it is now.* * *Benjamin Graham's books were classics in those days.* Peter Lynch and Magellan were household names.* Malkiel had published RandomWalk in 1973, but the Vanguard TotalStockMarket Index fund did not exist until 1992. The safe-withdrawal rate studies by Bengen were published in 1994; the Trinity study of Cooley in 1998.

Sure the index fund mantra has been around for 20 years, but now it has real-world compelling data to go with it.
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