|
|
01-07-2021, 02:57 PM
|
#21
|
Thinks s/he gets paid by the post
Join Date: Aug 2015
Posts: 1,890
|
Quote:
Originally Posted by Montecfo
The content of this thread appears to be refuting its title.
|
Different demographic. Us RE folks are a little odd when it comes to finances.
__________________
Consistently sets low goals and fails to achieve them.
|
|
|
|
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!
Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!
You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!
|
01-07-2021, 03:01 PM
|
#22
|
Recycles dryer sheets
Join Date: Jan 2013
Posts: 162
|
The past is often referenced as evidence that markets will bounce back. Personally, I don't think the relevant sample size is significant enough to draw conclusions with a high degree of confidence and often think of Japan's last 35 years as something we could easily experience. When one revisits the past of bubble like valuations that exist today, they have all ended terribly. When that will happen is anyone's guess as is if a rebound will occur during most of our lifetimes. At this stage of life, return of capital is so much more important than return on capital. Bernstein winning the game resonates with me.
|
|
|
01-07-2021, 03:06 PM
|
#23
|
Thinks s/he gets paid by the post
Join Date: Apr 2008
Posts: 2,024
|
Quote:
Originally Posted by GravitySucks
I'm thinking now the market pricing is unrelated to reality.
|
Sure seems that way, for quite some time.
|
|
|
01-07-2021, 03:10 PM
|
#24
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2016
Location: Northern Virginia
Posts: 7,591
|
Quote:
Originally Posted by enjoyinglife102
The past is often referenced as evidence that markets will bounce back. Personally, I don't think the relevant sample size is significant enough to draw conclusions with a high degree of confidence and often think of Japan's last 35 years as something we could easily experience. When one revisits the past of bubble like valuations that exist today, they have all ended terribly. When that will happen is anyone's guess as is if a rebound will occur during most of our lifetimes. At this stage of life, return of capital is so much more important than return on capital. Bernstein winning the game resonates with me.
|
I don't disagree with the Japan thought, but what is your evidence of a "bubble"?
I also agree with your statement regarding return of capital. In fact regularly I seriously consider reducing my allocation to equity sharply. But not because I think we are in a bubble.
|
|
|
01-07-2021, 03:34 PM
|
#25
|
Thinks s/he gets paid by the post
Join Date: Aug 2015
Posts: 1,890
|
Quote:
Originally Posted by Montecfo
I don't disagree with the Japan thought, but what is your evidence of a "bubble"?
I also agree with your statement regarding return of capital. In fact regularly I seriously consider reducing my allocation to equity sharply. But not because I think we are in a bubble.
|
It does intrigue me that the success rate goes up in firecalc the more conservative I get. 20/80 is 100% while 60/40 is 99%. But I can't resist getting some return for my heirs. I could go to a liability matching portfolio, but that seems overkill to me. I need $1.1M in today's dollars to fund all of my budget minus travel/blow that dough. I will have $800k in bonds when I retire (actually it's all in a stable value fund in my 401k yielding 2.1%). I figure that's close enough to safe with some upside for the kids.
__________________
Consistently sets low goals and fails to achieve them.
|
|
|
01-07-2021, 03:38 PM
|
#26
|
Recycles dryer sheets
Join Date: Jan 2013
Posts: 162
|
Quote:
Originally Posted by Montecfo
I don't disagree with the Japan thought, but what is your evidence of a "bubble"?
I also agree with your statement regarding return of capital. In fact regularly I seriously consider reducing my allocation to equity sharply. But not because I think we are in a bubble.
|
I don't know of any valuation metric that says we are not in a bubble or at the very least extremely expensive. No one can time anything so I just periodically rebalance my conservative portfolio knowing I can adapt to a worse case scenario and live a good life.
|
|
|
01-07-2021, 03:41 PM
|
#27
|
Thinks s/he gets paid by the post
Join Date: Aug 2015
Posts: 1,890
|
Quote:
Originally Posted by enjoyinglife102
I don't know of any valuation metric that says we are not in a bubble or at the very least extremely expensive. No one can time anything so I just periodically rebalance my conservative portfolio knowing I can adapt to a worse case scenario and live a good life.
|
We are getting pretty heady, aren't we?
__________________
Consistently sets low goals and fails to achieve them.
|
|
|
01-07-2021, 04:09 PM
|
#28
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2016
Posts: 9,521
|
Quote:
Originally Posted by corn18
It does intrigue me that the success rate goes up in firecalc the more conservative I get. 20/80 is 100% while 60/40 is 99%. But I can't resist getting some return for my heirs. I could go to a liability matching portfolio, but that seems overkill to me. I need $1.1M in today's dollars to fund all of my budget minus travel/blow that dough. I will have $800k in bonds when I retire (actually it's all in a stable value fund in my 401k yielding 2.1%). I figure that's close enough to safe with some upside for the kids.
|
Why is that??
|
|
|
01-07-2021, 05:31 PM
|
#29
|
Thinks s/he gets paid by the post
Join Date: Dec 2017
Posts: 2,555
|
Quote:
Originally Posted by street
Why is that??
|
I believe it is because historically, equities have outperformed bonds in the US. So while an 80/20 portfolio might have more volatility over the long run, it should outperform a 60/40, based on historical data. SORR is the major concern. Along with how long we can kick the national debt and deficit down the road.
__________________
Balance in everything.
|
|
|
01-07-2021, 05:41 PM
|
#30
|
Full time employment: Posting here.
Join Date: Oct 2009
Posts: 640
|
I sense a general bullishness as well. I thought we were overdue for a major correction when the pandemic hit. It's possible the pandemic has thrown the cycle out of whack and the post-pandemic rebound might keep the party rolling. Who knows? We're in a unique situation.
I do worry more about inflation, because I think the Fed is playing with fire and should have taken a more measured approach.
I used to be 60/40, but I've been 50/50 for a while. That's had an interesting effect psychologically. It makes me much less likely to try any moves.
__________________
-
"Wealth consists not in having great possessions, but in having few wants."
--Epictetus
|
|
|
01-07-2021, 06:20 PM
|
#31
|
Thinks s/he gets paid by the post
Join Date: Jul 2009
Location: Miraflores,Peru
Posts: 1,992
|
I am expecting rising-yield deflation over the next 2 or 3 years!
|
|
|
01-07-2021, 06:35 PM
|
#32
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,145
|
Quote:
Originally Posted by statsman
Give it time. I think you will be proven right after the propping up has run its course.
|
The propping up could last a year, or two.
S&P 500 earning are still way below a year ago. Global economies are still way down. It will take a while to recover, but markets have already anticipated it and then some.
__________________
Retired since summer 1999.
|
|
|
01-07-2021, 06:52 PM
|
#33
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2008
Posts: 35,712
|
Stocks are priced by people who count their chicken before the eggs hatch.
__________________
"Old age is the most unexpected of all things that happen to a man" -- Leon Trotsky (1879-1940)
"Those Who Can Make You Believe Absurdities Can Make You Commit Atrocities" - Voltaire (1694-1778)
|
|
|
01-07-2021, 06:57 PM
|
#34
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,145
|
Certainly during the upswing!
__________________
Retired since summer 1999.
|
|
|
01-07-2021, 07:02 PM
|
#35
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2008
Posts: 35,712
|
Quote:
Originally Posted by audreyh1
Certainly during the upswing!
|
More than that. They expect twins and triplets out of them eggs.
__________________
"Old age is the most unexpected of all things that happen to a man" -- Leon Trotsky (1879-1940)
"Those Who Can Make You Believe Absurdities Can Make You Commit Atrocities" - Voltaire (1694-1778)
|
|
|
01-07-2021, 07:20 PM
|
#36
|
Thinks s/he gets paid by the post
Join Date: Dec 2016
Location: DC area
Posts: 2,495
|
Quote:
Originally Posted by enjoyinglife102
I don't know of any valuation metric that says we are not in a bubble or at the very least extremely expensive. No one can time anything so I just periodically rebalance my conservative portfolio knowing I can adapt to a worse case scenario and live a good life.
|
Here's one. The zero interest rate environment has made earnings yield the only game in town. Earnings yield versus the ten-year treasury yield says the only place to put money is stocks. Especially considering inflation and ignoring non-productive commodity speculation.
https://www.yardeni.com/pub/valuationfed.pdf
I'm not arguing that the Fed Model is correct, but it is at least as believable as CAPE. Regarding CAPE, why do earnings 8, 9, 10 years ago have anything to do with expected returns today? They don't, but current interest rates do. But if there is a risk premium, equities will still beat the alternatives.
Oh, and people have been saying interest rates have to go up for a decade...
FWIW I'm staying conservative. IMO, the Fed Model is about relative returns and locking in negative real yield (bonds) is a non-starter, so bailing on equities is a non-starter for me.
__________________
FI and Semi-ER March 24, 2017
Consulting to stay engaged
"All models are wrong, some are useful." - George Box
“There is always a well-known solution to every human problem: neat, plausible, and wrong.” - H.L. Mencken
|
|
|
01-07-2021, 08:18 PM
|
#37
|
gone traveling
Join Date: Aug 2020
Posts: 682
|
Quote:
Originally Posted by corn18
We are getting pretty heady, aren't we?
|
@corn18
What is your take on the interest rate trend, compared with the p/e chart that you posted?
Interest rates 20 years ago were about 400% higher than they are today. What effect does that have on asset prices?
|
|
|
01-07-2021, 08:18 PM
|
#38
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2016
Location: Northern Virginia
Posts: 7,591
|
Quote:
Originally Posted by enjoyinglife102
I don't know of any valuation metric that says we are not in a bubble or at the very least extremely expensive. No one can time anything so I just periodically rebalance my conservative portfolio knowing I can adapt to a worse case scenario and live a good life.
|
Ok. I think from your response you simply view stocks as "expensive". It's a very different statement than saying we are in a bubble..
In a bubble stocks have lost their connection to any rational basis for their valuation. One could argue rather effectively I think that Tesla is at such a valuation, but we are not at that point on equities generally.
But I do not think you mean bubble in that way. If you did you would probably be selling all of your stocks, not simply rebalancing.
|
|
|
01-07-2021, 08:25 PM
|
#39
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2016
Location: Northern Virginia
Posts: 7,591
|
USGrant I think has it largely correct. You cannot make sense of stock values while ignoring interest rates. They are the most critical single metric driving equity valuations and they are at historic lows.
|
|
|
01-07-2021, 08:30 PM
|
#40
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2016
Posts: 9,521
|
Quote:
Originally Posted by HI Bill
I believe it is because historically, equities have outperformed bonds in the US. So while an 80/20 portfolio might have more volatility over the long run, it should outperform a 60/40, based on historical data. SORR is the major concern. Along with how long we can kick the national debt and deficit down the road.
|
Thanks for explaining that for me.
|
|
|
|
|
Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
|
|
Posting Rules
|
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
HTML code is Off
|
|
|
|
» Recent Threads
|
|
|
|
|
|
|
|
|
|
|
|
|
» Quick Links
|
|
|