Missing the days of Dow 7000?

[bosco]

to clarify my previous post, I did not mean to imply that the Firecalc data series did not include any periods of war, bank failures, etc. Rather that nothing since the advent of Firecalc data approaches the level of catastrophe found on other continents, yet said catastrophes COULD happen in North America. The flip side of the shrinking world and globalization is more vulnerability. For example, what if a biological toxin were released and spread rampantly, or a nasty pandemic occurred?

Although the US has participated in several wars, none has occurred on home turf since the civil war. But think war of 1812--the US had the stuffing knocked out of it and Washington DC was sacked. Do any of us believe our portfolios would flourish in the event of a homeland invasion, or Germany-style inflation?

I think Bernstein's point is that some things can't be ancitipated or avoided, and therefore the difference between, say 90% and 100% survivability in Firecalc is more an illusion than anything in the face of greater uncertainties. I also think his references to other countries and events were by way of qualitative example, not offered to bolster his argument statistically.

 

[ERD50]

I think Bernstein's point is that some things can't be ancitipated or avoided, and therefore the difference between, say 90% and 100% survivability in Firecalc is more an illusion than anything in the face of greater uncertainties. I also think his references to other countries and events were by way of qualitative example, not offered to bolster his argument statistically.

Good points, and I pretty much agree with that and your previous post. It definitely isn't as simple as my math (real life never is), but since that seems to fit how how Bernstein presented it, I followed that for comparison.

On one hand, FIRECALC does include the Great Depression, and the "barely missed mass incineration in October 1962" so to call those out separately might be appropriate for a Monte Carlo simulator or other mathematical model, but not for FIRECALC as it does take historic events into account.

Bernstein may have been counting those other country events to try to calibrate his calculated 1200 years of history with a shorter and more recent time frame. He probably could have done a better/clearer job of the whole section.

However we slice the statistics, I'd still fall back on a combination of my 1969 retiree example, and NW-Bound's illustration of party versus panhandle. If things go OK, I think I'll be glad I planned ahead to have enough money to live my remaining years in comfort. If things go poorly, having something is better than having nothing. And if things go all to heck, and we are all in such deep doo-doo that money means nothing - all I gave up was having a higher life-style in the years before Armageddon.

I personally get more comfort from the first two scenarios versus the "opportunity cost" of the last.

This is another case where the math is all a bit irrelevant on an individual basis anyhow. Armageddon hits us or it doesn't. We can't really predict it, so we should be as prepared as we can for either case. For me, that means having a portfolio that survives if there is no Armageddon. Kind of like those 50% predictions for rain - you bring an umbrella. You're covered if it rains, and it didn't hurt much to carry it around if it doesn't rain. But you still get to enjoy the sunny day.

Although the US has participated in several wars, none has occurred on home turf since the civil war. But think war of 1812--the US had the stuffing knocked out of it and Washington DC was sacked. Do any of us believe our portfolios would flourish in the event of a homeland invasion, or Germany-style inflation?

I think that would be more valid if it meant that money had no value at all. But in most cases, I suspect that those with more money did better. The German inflation case probably is a good one - I don't know history well enough, but I'd suspect wealthy families still did better than poor ones? Or maybe just "connected" families?

-ERD50

 

[bosco]

The German inflation case probably is a good one - I don't know history well enough, but I'd suspect wealthy families still did better than poor ones? Or maybe just "connected" families?

-ERD50

From what I understand, a lot of fortunes were wiped out, as money, at least German money became essentially worthless. From the stories I read, inflation was so rapid that people would charge to the grocery store immediately upon getting paid, because any delay meant significantly fewer groceries would be afforded. There was actually an account of a woman who went to the store to buy a loaf of bread. She carried enough German currency to buy the loaf in a bushel basket. She set the basket down while looking at the bread. Someone came up, dumped all the currency on the floor and ran off with her empty basket.

But there were those who came through it with flying colors. I think it tended to be those in manufacturing, and probably those with the wherewithal to hold foreign currency, precious metals etc. I suspect you are right about having the right connections as well.

Ultimately, we seem to be in agreement about the value of being prepared, and the use of Firecalc as a tool. I happen to think that it is a tool that gives me a good general idea of where I stand, but I don't count on it for a lot of precision. There are too many unknowns outside the scope of the data series, which I think is Bernstein's point.

 

[NW-Bound]

I think you guys may have just rung a bell.
Ha

Uh oh! The Dow went down on Friday, then some more big time today. Fuego may get his wish after all.

Darn, back to "fear mode".

 

[W2R]

Figures. On Saturday I furtively moved half my TSP out of the (ultra-conservative) G Fund and into equity funds.

 

[Dawg52]

Darn, back to "fear mode".

 

[FUEGO]

Perhaps I will miss the Dow at 7000 no longer if we see that level again. It is ugly and painful but nonetheless music to my ears.

Maybe I should claim that I have special skills to time the market and that I called this correction?

 

[NW-Bound]

It is ugly and painful but nonetheless music to my ears.

I can see an additional item to be added to the list for possible expulsion from the forum.

 

[Notmuchlonger]

Figures. On Saturday I furtively moved half my TSP out of the (ultra-conservative) G Fund and into equity funds.

So you are to blame!

 

[NW-Bound]

Figures. On Saturday I furtively moved half my TSP out of the (ultra-conservative) G Fund and into equity funds.

On Saturday? Will it only get executed at market close today? Which means that it might work out for you yet. Tomorrow is another day, and the market may bounce back.

 

[W2R]

On Saturday? Will it only get executed at market close today? Which means that it might work out for you yet. Tomorrow is another day, and the market may bounce back.

It might, and I hope you are right! I don't really remember if they execute it at market open or market close, when you request it on the weekend like that. Yes, hopefully the market will bounce back.

I did it not out of logical analysis, but in a moment of irrational greed, which is not usually the best investment practice. Oops.

 

[CuppaJoe]

W2R, I'll try to remember to follow your lead and do the opposite. Got so inspired today, I overcame my lazy RE put-it-off-until-tomorrow ways and finally cleaned out my "Suze Orman get $100 free money market account." Plan to put the proceeds into equities, may wait a week or two, but W2R, let me know if you buy equities in the meantime.

 

[FUEGO]

So you are to blame!

Yes, let's focus blame where blame is due. W2R caused this market to pull back. I'm just sitting back enjoying it.

 

[W2R]

Yes, let's focus blame where blame is due. W2R caused this market to pull back. I'm just sitting back enjoying it.

Well don't enjoy it for too long, or you'll miss the short term bottom, or local minimum, or whateveryouwannacallit. Invest! Invest!

 

[NW-Bound]

Not! If the TSP is like mutual funds, it will get executed at today's close. I don't know if W2R is scrambling to cancel the order, or if it can even be cancelled. Still, we don't know if the market will bounce back tomorrow. And we may just be back to where we were last Thursday, when Audrey kicked herself for rebalancing too soon, many others were regretting about not going "all in", and I would be missing the money I could have made. And Dawg would stop posting the "head banger" emoticon.

Life just goes on, and the market goes up and down. And I am going to Costco to get my tires rotated and balanced now.

 

[W2R]

Not! If the TSP is like mutual funds, it will get executed at today's close. I don't know if W2R is scrambling to cancel the order, or if it can even be cancelled. Still, we don't know if the market will bounce back tomorrow. And we may just be back to where we were last Thursday, when Audrey kicked herself for rebalancing too soon, many others were regretting about not going "all in", and I would be missing the money I could have made. And Dawg would stop posting the "head banger" emoticon.

Life just goes on, and the market goes up and down. And I am going to Costco to get my tires rotated and balanced now.

No, I wasn't scrambling to cancel - - was just morosely thinking that eventually it would have to come up. So, good!! Maybe that WASN'T such a dumb decision, even if the base motivation was purely greed.

Oh yes, it was dumb. It was really dumb, because it violated my financial plan and asset allocation. I was just thinking that a rising tide floats all boats. Eventually I will have to move it back to G Fund though I don't plan to do that at the moment.

 

[Moemg]

Years ago I took a Chinese cooking class and Mrs. Wong told us the secret to good rice is to just ignore it and I have found this also works with the market . Most of my tweaking has not had positive results with rice or the market .

 

[tuixiu]

But what if she was Wong?

 

[audreyh1]

And we may just be back to where we were last Thursday, when Audrey kicked herself for rebalancing too soon, many others were regretting about not going "all in", and I would be missing the money I could have made.

There you go again NW-Bound! I never kicked myself for rebalancing "too soon". No such concept. I'm perfectly well aware that my system may have me moving early at times (and sometimes not), but either way doesn't bother me at all.

Audrey

 

[NW-Bound]

And I am going to Costco to get my tires rotated and balanced now.

Well, I am back from Costco. The wait was short; it appeared that not too many people were buying tires. Perhaps they can add another economic indicator, the average remaining thread on car tires.

Years ago I took a Chinese cooking class and Mrs. Wong told us the secret to good rice is to just ignore it and I have found this also works with the market.

But what if she was Wong?

But, but, but... she IS Wong!

There you go again NW-Bound! I never kicked myself for rebalancing "too soon". No such concept. I'm perfectly well aware that my system may have me moving early at times (and sometimes not), but either way doesn't bother me at all.
Audrey

Kicking is indeed too strong a word. I remembered a post from someone else that expressed a slight regret (not kicking!) about rebalancing a bit too soon, and got confused. You indeed said that if the market kept on rallying, you would be selling more.

No, I wasn't scrambling to cancel - - was just morosely thinking that eventually it would have to come up. So, good!! Maybe that WASN'T such a dumb decision, even if the base motivation was purely greed.

Oh yes, it was dumb. It was really dumb, because it violated my financial plan and asset allocation. I was just thinking that a rising tide floats all boats. Eventually I will have to move it back to G Fund though I don't plan to do that at the moment.

"Greed is GOOD!" Gordon Gekko (character in "Wall Street")

So, what? I admit to having "fear and greed" emotions all the time. However, I usually do not do anything about it. Have not been selling nor buying anything lately. One day doesn't a trend make. If the market kept going down every day for a week or two, that would be worrysome. If enough people believe that we are going into a W-shaped recovery, we just might... More than the effect on stock prices, I don't like to see more people getting fired, and don't want to read sad stories about people facing hardship...

Though I do not day trade, I still like to follow the market. Seems like many people here do too. Is it morbid curiosity? Can any of us heed the advice of Bogle I read a while back somewhere, to open your brokerage statement only once a year?

I do not have a fixed criteria for rebalancing, and have no current plan to buy nor sell anything. If the market kept rising, I may let my stock AA get up to 80% from the 65% now. If it is going down, well, I don't know yet...

Right now, I want to "see" the market direction to make plan for my discretionary spending in the next 6-month to 1 year: travels and the potential RV. If more people like myself stay in the perpetual planning stage, it is tough to get the recovery going.

PS. The man whose plight was discussed in a recent thread (and who could have had his ethanol fix cheaper per our jokes) worked at Jayco, an RV manufacturer whose models I considered. So many RV makers are in big trouble.

The truth is that most of the things being consumed in our society belong in the discretionary class, if not the luxury class. But is that not the distinction between developed nations and third-world countries where the only thing people look forward to is a bowl of rice?

 

[audreyh1]

Well, I am back from Costco. The wait was short; it appeared that not too many people were buying tires. Perhaps they can add another economic indicator, the average remaining thread on car tires.

Well, we're doing our part. Right now we're in Knoxville TN trying to get the tires we really want. You have to replace tires every 5 years on motorhomes. Had to special order these and call Goodyear directly (again!) to make sure they made them available to the local distributor. Have to wait another week for them. Lots to do around here so no problem.

$475 a piece! (includes install) and need 6 of them! Like I said - we're doing our part to help the economy.

Audrey

 

[FUEGO]

$475 a piece! (includes install) and need 6 of them! Like I said - we're doing our part to help the economy.

Did I ever tell you about the time I got 4 brand new high quality tires for my honda civic for $160 delivered and installed? <where's that hiding under the chair icon again>

This will probably come back to bite me because I'm taking DW's car in to get new tires later this week most likely... They'll probably gouge me for $300-400. For all 4! <hiding under chair again>

 

[freebird5825]

Figures. On Saturday I furtively moved half my TSP out of the (ultra-conservative) G Fund and into equity funds.

Whoooo I am impressed!
But I'll betcha this move pays off for you in the long run.
I'm still putting the majority of my monthly DCA into equities (MFs).
And I plan to continue to do that until next year or longer. Why? Because I want to.

 

[NW-Bound]

Another gutsy lady. I like it!

BUY BUY BUY...

 

[W2R]

Whoooo I am impressed!
But I'll betcha this move pays off for you in the long run.
I'm still putting the majority of my monthly DCA into equities (MFs).
And I plan to continue to do that until next year or longer. Why? Because I want to.

Thanks. I hope so, though it was probably a dumb thing to do. But if it pays off, I can sell high and end up with all G Fund in my TSP like before, but more of it.