Poll - What are Your Paper Losses?

[Helena]

So you've told us...and told us...and told us.

Yup... I've been singing the virtues of the no debt/cash position
for well over a year. Too bad so many are tone deaf.

 

[Dawg52]

Yup... I've been singing the virtues of the no debt/cash position
for well over a year. Too bad so many are tone deaf.

Well after the country goes bankrupt and the dollar becomes worthless, we will all be sharing our total loss in a new poll.

 

[NW-Bound]

To Helena,

In 2000, there are many millionaires owning stocks of Enron, Global Crossing, and countless other stocks. Granted, the dollar is not going to zero like the above companies - I sure hope not. But, please see my post above. The fat lady has not sung, and when she does, she does for each of us individually. If I had been 100% in cash, I would not make a "victory lap". The race has simply not ended.

I wasn't in this forum, when people probably picked on you for going 100% cash. I would not make fun of you, as they did. I think people tend to forget that we come here to exchange ideas, and for me, to also tell some jokes to cheer people up. No matter what other people chose to do with their money, I respect their decision. It's their money after all, no?

 

[Culture]

I put in another category of "I made money". Sounds like that's ok with you.

Thanks!

 

[Culture]

OK. How about this to alleviate your pain?

Actual dollar figure: $1B. Percentage: 95%. Do we all feel better now?

Seriously, this would probably have a big impact on your psychological health. I would be seriously depressed, despite the remaining $61M

 

[calmloki]

Everybody just calm down - the Department of Economic Security has matters well in hand.

 

[NW-Bound]

Well after the country goes bankrupt and the dollar becomes worthless, we will all be sharing our total loss in a new poll.

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.

 

[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.

 

[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!

 

[Texarkandy]

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.

Those folks consolation might be in how much of that 3 mil was earned via profits in past markets - whereas the greater percentage of my safer position (nowhere near 3 mil) was put there by me.

 

[ladelfina]

There's no choice for "have not looked yet"!!!

 

[Helena]

Well after the country goes bankrupt and the dollar becomes worthless,
we will all be sharing our total loss in a new poll.

If the dollar becomes worthless, we will all have much worse things to worry about...
I'm thinking of that lawless scene in Gone With the Wind when they were escaping from Atlanta.



btw

I have gold, silver and lead too


~

 

[Helena]

To Helena,

In 2000, there are many millionaires owning stocks of Enron, Global Crossing, and countless other stocks. Granted, the dollar is not going to zero like the above companies - I sure hope not. But, please see my post above. The fat lady has not sung, and when she does, she does for each of us individually. If I had been 100% in cash, I would not make a "victory lap". The race has simply not ended.

I wasn't in this forum, when people probably picked on you for going 100% cash. I would not make fun of you, as they did. I think people tend to forget that we come here to exchange ideas, and for me, to also tell some jokes to cheer people up. No matter what other people chose to do with their money, I respect their decision. It's their money after all, no?

Yes I get picked on here all the time... and from time to time...
I get to return the favor... every dog has his day.

People getting ready to retire should not be exposing themselves
and their hard earned money to undue risk... that is why I divested
myself of such before I retired. The younger people here easily have
the "5-10 years" to recoup their losses [after the Great Depression
it took 25 years.] People my age [over 55] and especially retired
people don't have that luxury.

 

[haha]

When I was a boy I realized that there were two basic postures with respect to assets- to own them, or lend to others so that they could own them.

I figured I would prefer to own them myself. It is more volatile, but also more profitable over a cycle. One has to try hard to exercise skill and restraint so as to not get washed out.

I'm with NW-Bound, who reminds us that this game is not over. For most of us it is at worst half-time.

ha

 

[DangerMouse]

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.

Moi, we are in Australian $'s, US$ as well as pound sterling. However, we are only 50% in cash. Before the crash we were at 45% cash, however over the past year we did start selling off our individual US holdings and when the latest down cycle started dumped the rest.

We are probably not hurting as much as others, because we were able to make money on the exchange rate from US$ to Aust$. In July it was nearly 1 to 1, but with the Aussie $ crashing we saw a 40% gain in our money by transferring back to Oz.

I certainly don't feel the need to rub anyone's nose in their losses as there is no enjoyment for me being more on the right side of the equation at this time. I would be happy for things to return to the good old days when we could all rely on a steady 8-10% return from the market.

In the meantime we are leaving our remaining holdings in our 401ks and mutual funds knowing that they will eventually come back.

 

[Helena]

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]

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]

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/opinion/17buffett.html?_r=2&oref=slogin&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]

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]

People getting ready to retire should not be exposing themselves

I can agree with that!

 

[Fastfade]

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?

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

 

[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.