Poll - What are Your Paper Losses?

[Helena]

Quote:

Originally Posted by NW-Bound Those in 100% cash need to keep more than dollars. Better to diversify to also hold euros, canadian and australian dollars, Swiss Franc, etc... I wonder how many of them are doing that.

Some fellow [sorry, I forget his name] who was interviewed
on FOX Business news last week said the Euro might not exist
in six months.

[NW-Bound]

Quote:

Originally Posted by aaronc879 I guess being young has hurt me. Since i'm 29 years old, I have about 90% in stocks and have personally gone down just over 30% since the recent high. However, I will hold strong and continue buying and be well above the "cash people" in 5 years... I hope!

Unless my quick calculation is wrong, your equity portion has beaten the S&P500, i.e. dropping less than the latter. That 30% drop of the total isn't bad.

[NW-Bound]

Quote:

Originally Posted by laurence Some people lost more than a million? Wow, how many times did you throw up? Then again, with a 40% drop, that only takes a 3 million dollar portfolio...but man, that sucks.

People with portfolio of that size have long learned to look at gains and losses as percentages. Buffet is up/down a few $B each week, maybe even $1B/day with recent volatility. Would you mind having that problem? He didn't get it by being 100% cash either.


PS. Here's the Op-Ed link by Buffet, in case it has not been posted. Note the last paragraphs in this piece, where he talks about cash.

http://www.nytimes.com/2008/10/17/op...in&oref=slogin

And by the way, at the peak of the dot-com gold rush, Berkshire shares dropped significantly. I remember several articles talked about how Buffet had lost his touch, that he was outdated for the "new economy". Well, we know what happened in the next few years, when BRK became the only stock that broke the $100K/share price.

If the Web site I use does not mislead me, a $10K investment in BRK in 1993 (15 yrs ago) turns into $65K now, and was as high as $86K last year. A $10K investment in S&P 500 is worth $23K now. All returns include dividends, and not adjusted for inflation.

Never owned BRK, but I think I will, once this dust settles.

[OAG]

Quote:

Originally Posted by NW-Bound Those in 100% cash need to keep more than dollars. Better to diversify to also hold euros, canadian and australian dollars, Swiss Franc, etc... I wonder how many of them are doing that.

All cash (FDIC CD's) and COLA'd "pensions". I diversified last week at the Grocery Store - bought LOTS of cans of soup and chili. Vote: Made money.

[gandalf42]

Quote:

Originally Posted by Helena People getting ready to retire should not be exposing themselves

I can agree with that!

[Fastfade]

Quote:

Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later.

I know it's at best a guess, but how long do you think it will take for the average 401K loser to recover his original value + inflation?

Since he is quoted as saying "over the next decade" do you think it will take that long?:confused:

A decade is a long time... what are the odds of another melt down during that decade?:confused:

[donheff]

Helena. You seem to be gloating that you went to cash. I assume you will stay in cash for the long haul. Otherwise your cautionary warnings make no sense. I chose diversification in the hope that I can leave something to my kids. I still do although I could be terribly wrong about that. Are you well covered with inflation protected securities? How do you fare if high or hyper-inflation sets in?

[deepc]

Just finished Scott Burns' book "Spend To the End" and there's an interesting discussion in there about who actually benefits from securities investments. Can't say that I agreed with everything in the book, and he and his coauthor hype their ESP planner more than may be appropriate, but there's some interesting nuggets within.

As for cash holdings, paper losses, and inflation, there is an article online today that discusses the threat of deflation, rather than high or hyper-inflation. The plummeting price of oil and real estate seems to indicate that deflation may be a closer threat (though our heating oil sure hasn't plummeted yet).

My question is: what is the effect of deflation on securities investments vs. cash investments? Would interest rates rise or fall for CDs and such? Will the paper losses increase far beyond what they are now with deflation?

[Sarah in SC]

I wanna be on Buffett's team, that is for sure. While my losses are disheartening, one of the primary reasons I spent 3 years studying for the CFP is so I could learn to distance my emotions from the reality of stock market investing. While I don't pretend to know how any specific asset will perform in any specific period, I did get beat to death with how economic cycles work. What I learned is that this, too, shall pass. Well worth the price of admission if it keeps me invested in my future instead of selling out in a panic.

[Bestwifeever]

Reading the $ amounts of losses is so disheartening even for those of us relatively unaffected by this so far, as we all, if we are lucky, have family and friends and we worry for them. The BWEs would not have the nest egg we have had we not been in the market for the run-up (and I know this is also true of Helena--although she cashed out of those investments before retiring she has acknowledged her nest egg had been invested in things other than all-cash until then). Only the grace of God and timing for us in the sense of DH's age and upcoming ER triggered the little voices in my head to go to something that makes virtually no money but also loses no money--it was a conscious choice to forego accumulation as we moved into decumulation.

But I feel no glee at being able to answer the "good" selection and I am sure those who have their money out of the markets, secure COLA'd pensions, and lifetime medical are also feeling no glee.

[unclemick]

Quote:

Originally Posted by donheff Helena. You seem to be gloating that you went to cash. I assume you will stay in cash for the long haul. Otherwise your cautionary warnings make no sense. I chose diversification in the hope that I can leave something to my kids. I still do although I could be terribly wrong about that. Are you well covered with inflation protected securities? How do you fare if high or hyper-inflation sets in?

Reminds me of my Sister who used to call back in the day and mention 'her condolences in passing conversion how the Saint's lost again and oh BTW the Pat's won.'

The she fell for Brett - who later retired and then recanted and ended up with the Jet's.

And I realized - hey - maybe the Pat's are a good football team.

A little of this, a little of that - try to stay balanced - what's a 1/4 mil down here, a 1/4 mil down there in market fluctuation as long as you think you have enough cash for your 16th year of ER?

Besides the Saint's may make the Superbowl - next year, just you wait.

heh heh heh -

[FinanceDude]

13 folks in the poll marked $1 million or more........yikes!!

[NW-Bound]

Quote:

Originally Posted by Fastfade I know it's at best a guess, but how long do you think it will take for the average 401K loser to recover his original value + inflation? Since he is quoted as saying "over the next decade" do you think it will take that long?:confused: A decade is a long time... what are the odds of another melt down during that decade?:confused:

Because you cited a quote from Buffet's op-ed, whose link I posted, I assume that you are asking me, and will give my 2c answers.

The recovery time would depend on your asset allocation, the type of equities you are holding, and your action in the future. For just a ballpark figure, the market has jumped more than 20%/year in the past. Or it may take a decade. Who knows? Buffet never claimed to know, yet he made that much money. Since I am not that smart, nor that rich (low 7-figure networth), I listen to Buffet more than other "experts".

I have several years of expenses in I-bonds and money market funds to wait out this storm. You can see how other forum members are doing the same. These are people who already ER'ed, and in their 50s like myself.

On the other hand, if I were an 80 yr old, I would probably have my health to worry about, more than my stocks. I would just hold cash and go out to enjoy the time I have left, and turn off CNBC. As it is, I am in my early 50s, and need to grow my money so I can live off it for a couple more decades at least.

About a decade being a long time, I think it depends on your age and your perpective. Looking back, I still remember 9/11 as clear as yesterday, and that's 7 years already. Well, I also remember my first job, and my first home purchase as yesterday too. I would have a larger portfolio, if I knew how to invest in addition to being LBYM then. Lost more than 10 yrs of investment time, hiding my stash under the mattress. Dumb! I couldn't turn back the clock to undo my mistake. So, I try to take the middle road now, and not go hardcore one way or the other.

Just my 2c, as promised.

[tightasadrum]

I've lost a ton on paper, but in fact I haven't lost anything unless I need the money, right? Let's say I take the conservative route (as my father did) and put everything in CD's, loaning money to the banks. As long as I don't outlive my money due to inflation and other expenses (medical for instance), I win. Which is to say, don't die before I can spend all my savings. Bottom line, you don't want to live too long.

The other approach is to invest in assets that have value or the hope of future value. Since the world's business is to increase value by increasing earnings, you're betting on a good business plan or the collective wisdom of the world's entrepreneurs. And despite the ebb and flow of the Mr. Market, long-term positive growth should always be the rule. The only way I can lose is by dying too young, before I realize the long-term growth of my investments. That's the bet I'll take every time. Of course there is that little problem about monthly living expenses to contend with when things look bad for the market.

Just keep enough cash on the sidelines to live through the market storms, and sleep soundly. And remember that bargains abound in every down market. And if world currencies become worthless, cash and investments will be the least of our worries. Not even hoarding gold and silver will protect you.

[maddythebeagle]

forgot the "dont know and dont care" response....

[freebird5825]

Quote:

Originally Posted by Sarah in SC I wanna be on Buffett's team, that is for sure. While my losses are disheartening, one of the primary reasons I spent 3 years studying for the CFP is so I could learn to distance my emotions from the reality of stock market investing. While I don't pretend to know how any specific asset will perform in any specific period, I did get beat to death with how economic cycles work. What I learned is that this, too, shall pass. Well worth the price of admission if it keeps me invested in my future instead of selling out in a panic.

very well spoken! i'm squarely in agreement with "don't panic".
i had enrolled in an online CFP program when i was still w*rking as an engineer, but had to withdraw for personal reasons. then i FIREd. i still have the CFP training books and i do read them. i don't know if i will return to that 2nd career change. FIREd is too much fun!

[calmloki]

I'm a piker compared to most of you - we're in the 25-50k stock market loss area - a bit tricky to figure since we have been adding to our declining balance as it goes down - think we've lost about 10k of the newer money added since the glory days of last fall. Now real estate losses - i dunno. The gal and i discussed what the different places were worth over a year ago, trying to be very realistic, and haven't changed the values in Quicken since. Just got our property tax statements and the tax man has a better opinion of most of their values than we do. OTH, real estate agents have been pretty pessimistic and the one place that is listed hasn't had a nibble. Rents keep coming in though, so maybe they are like those dividend paying stocks you all like.

[unclemick]

Quote:

Originally Posted by maddythebeagle forgot the "dont know and dont care" response....

Yep - and every year I make a solemn oath not to watch football till it 'really' counts aka bowl/playoff s near the end of season.

Does not work. Likewise - read the book, did the math, bought the lifecycle fund, have a portfolio with an SEC yield sufficient to provide my retirement.

And then watch the market(and football) - scream and yell, thrill of victory/agony of defeat, laugh, cry - and stay the course, hurry up just stand there while those Vanguard computers rebalance away.

And in the medicine cabinet to keep the hormones under control - I have a few good stocks on the side - in case the urge to 'do something' overwhelms me.

heh heh heh - . In theory don't care - in practice another story - and if I croak - the hot rumor is you can't take it with you. I wouldn't want to be bored anyway. .

[Bestwifeever]

I like Maddy's response too--it works for things like "how much do I weigh?" too

[Nords]

Quote:

Originally Posted by NW-Bound Never owned BRK, but I think I will, once this dust settles.

Quote:

Originally Posted by Sarah in SC I wanna be on Buffett's team, that is for sure.

You've been watching the stock price over the last year, right? Is there likely to be a better time to buy than this morning?

The quarterly report might be out this weekend but it'll probably come out on Fri 7 Nov after the market close. I'm betting that there'll be decent insurance earnings after a less-than-horrible hurricane season, with the home-building/furnishing businesses continuing to get pounded. And Buffett will recap all the investments that have been made over the last three months or that will be closing in the coming quarter.

Then he'll add more encouraging words about the future of the stock market and Berkshire's businesses. I think the "flight to quality" will begin shortly after the report comes out.

Frankly my biggest concern is that all of these exciting & stimulating equity values will cause the sudden deaths of him, Munger, or Simpson. I can only imagine how the markets would react to the news.

The best news is that the four Berkshire investment "interns" will certainly have had plenty of opportunity this year to show their stock-picking skills...