So what has your learnt from the past month?

[DangerMouse]

I don't see anything on this thread that really indicates a lot of whining. I am sure we all would like to return to our previous net worth, however I believe there is always something to be learnt by looking back.

For example, after the tech wreck of 2000 I instituted 2 rules - no margin lending and any time I had a 100% gain in any holding I would sell half. By instituting these rules I probably saved myself from a lot of pain this time around.

[harley]

Quote:

Originally Posted by DangerMouse I don't see anything on this thread that really indicates a lot of whining. I am sure we all would like to return to our previous net worth, however I believe there is always something to be learnt by looking back.

I guess my thread placement wasn't ideal. I wasn't talking about this thread in particular, more the general forum tone, although there were some examples in the "what I've learned" lists that stood out to me. And maybe whining was too harsh. Although I'll stand by spoiled.

I was reacting to the overall attitudes on the forum, the death/doom/destruction stuff. It seems a little overblown to me, since I firmly believe we will recover from this market in time, and not 30-40 years either. It is very interesting to see the number of people who had misjudged their risk tolerance. It will also be very educational to see their reactions in the (not too far?) future when the market starts it's way back upslope and they are all sitting in cash and bonds. Nothing wrong with either, but I'm sticking with the AA model, which includes stocks for growth. I've got hopefully 30 or more years to live, and I want to live it in comfort and style.

Again, there are definitely people being hurt by this financial meltdown, as there always are. My daughter is just starting out as a low income single mom, and I'm worried to death that she'll lose her job. However, the concepts taught by the various investing models (whichever one you choose to follow) should protect the people who tend to congregate here (ER.org) from having to suffer too greatly from the fallout. The man on the street who doesn't have a plan or a cushion is aways going to be more at risk, as are the gamblers. But most of the forum members have a pretty good understanding of finances, and have followed intelligent if diverse savings and investment strategies. And although it's painful to watch the meltdown the plans they have in place should be able to take both the big and little bumps in the road into account, giving them some comfort/optimism during these trying times. That's all I'm saying.

Trust the Force.

[DangerMouse]

Harley, what I have enjoyed about this thread is the level of personal responsibility people have expressed. It hasn't been all about blaming the Feds, or the banks or anyone else, people have mentioned what they personally did that they would do differently.

I think this market is probably harder on those who have already retired or those who are over 60. For someone in their 30s there is time to sit back and wait for things to improve, however for the poor guy who posted this week who is in his late 60s and seeing his portfolio depleted going back into the workforce is not really an option nor is sitting back 10 years to see how this all plays out.

I don't feel all doom and gloom, the next couple of months are going to tell the story of what we can expect going forward. I'm hoping that October 2008 is just a brief hiccup before normal programming returns without sub prime lending.

[Moemg]

I've learned that having an aggressive portfolio takes guts and a strong stomach . I've also learned to put an amount on when to go to the sidelines for awhile and lastly I've learned that having all that padding in my 4% was a smart move .

[Meadbh]

Quote:

Originally Posted by Spanky A buy-and-hold strategy may strive over the long haul, but I do not live forever.

Great quote!

[SkisALot]

I've learned not to doubt what I believe is right for me. Against all the "guru's" advice, I have over 70% of my money in CD's and I've spent every night asleep and glad that I went against the tide. I don't know what I'll do down the line with this low interest rate environment, but at least I haven't lost that money.

[redduck]

I've learned to listen to my younger sister even though she knows nothing about investing, AA, diversification, etc. Her secret: she tunes in to CNN a lot. She totally left the market 1 1/2 years ago (against the advice of her financial planner and against my rather weak prostestations). She listened to news and figured that all this wasn't going to end very well. . My sister has no idea what a REIT is. She also has no idea what it's like to be down 30-40%. She did learn something in about 2002(?),or whenever the tech bubble took place. She didn't understand the tech bubble and got 50% out of the market. So, it seems she got it completely right this time. She's really happy. What channel is CNN on, anyway?

[TargaDave]

Learned:

1. that striving to enjoy working for pay (as a dreamer or in semi ER) while still having an outside life is one heck of a great asset, especially if you have a spouse that feels the same way
2. that spending too much time looking at portfolio totals and surfing forums like this (in spite of all its positive aspects) is simply unhealthy
3. that we're generally comfortable with our 45/45/10 equity/cash/precious metal allocation given our no debt semi ER approach. That allocation was as of late spring. Haven't look at the totals since then!, and no real buying or selling. Maybe I'll take a peak at tax time

Unless the world goes to hell in a handbasket we are still buying an older 37' cruising monohull to park at the dock and explore from Annapolis down to Morehead City. If it delays full retirement by a year or two, so be it (we're already in our dream location).

Dealing with our rebel-without-a-clue college freshman has been far more stressful for us than the current market slide. That is something we can't ignore but cannot control either:confused:

[freebird5825]

an update - i gained some real perspective this week. my housecleaner is a young 30 something. she just changed her life for the better by exiting a bad union with her 2 young sons. she has a lot of courage.
all her friends and acquaintances, including myself, are donating whatever we have extra to get her outfitted in her new apartment. she is literally starting over. we gave her an old computer and TV and DVD player that were replaced last year. that made her day!
i asked her if she liked plants, and she said she did but couldn't afford extras like that right now. i made her up 2 houseplants from cuttings i had rooted. i thought she was gonna cry when i handed them to her. she almost got me going.

Now that gives a person some serious perspective. be grateful for what you have, for there are folks who have very little right within arm's reach.

lessons learned...hmmm...several actually...
- stay with 55/45 AA. i shall continue to be a chicken!
- my self perceived stomach for risk was about right. no smiles here, but no insomnia.
- i shall continue to frequent this site as my best resource for info and real live experience. i feel a lot smarter for reading all the posts, especially from folks who have been FIREd longer. TY!
- in spite of the recent shellacking, my MF 10 year returns are still positive. that is the number i look at, since it roughly equals my remaining time to "real" retirement age. as that time horizon gets smaller, gradual rebalancing is planned and will occur. i'm using Bogle's rule about age and exposure to stocks for my target AA.

[REWahoo]

Quote:

Originally Posted by freebird5825 - in spite of the recent shellacking, my MF 10 year returns are still positive.

Yep, it helps to look at the effing returns over the long run...

[freebird5825]

Quote:

Originally Posted by REWahoo Yep, it helps to look at the effing returns over the long run...

[Free To Canoe]

I learn every day to count my blessings.

I am now more afraid of market risk than inflation risk.

Free to Canoe

[walkinwood]

- 60/40 works for me. I took big losses, but didn't lose any sleep or sell out. (see note)
- Still believe in asset allocation. Treasuries went up.
- Keep your spouse informed on what's happening and the steps you're taking. Your marriage may depend on it.
- I found it hard to rebalance in one shot. I'm dollar cost averaging from fixed to equities over 12 months with spouses full agreement. (hopefully, the equity markets will rally & I'll get there quicker. I use a 20% band to trigger re-balancing.
- Corporate bond (even ST bonds) are not an ideal asset class to offset equities. Treasuries are better. I think Larry Swedroe argued for that or maybe it was Bernstein.

Note: My investment plan called for 65/36 equity/fixed split with a gradual move to 60/40, but having just ER'd, I had moved money from 401K plans to my IRA account and had not moved them into the right funds when all the fun started. I got lucky there.
My ER plan post : http://www.early-retirement.org/foru...ted-32396.html

[siamamerican]

I learned that my belief of not following the masses and basing investments on the numbers works. The popular advice received from friends and TV analysts to invest for the longterm isn't wise if equities are overvalued. Also learned that I can feel like a genius one day and finacial moron the next.


I've been predominately in cash all of 2008 with a few brief periods where I unsuccessfully tried to jump into equities after big drops. I don't have the stomach to be a day trader and in the end just managed to break even the last Monday.


What I struggle with now is not knowing when to get back into stocks. After this week's rally, stocks aren't as cheap as I would like, considering the poor economic environment. I plan on ER at 41 in the next few months and the 3.5% I'm earning on my cash investments isn't going to work over the long haul.


I could invest 70% of my savings in stocks and keep the rest in cash. The cash would be enough to support my lifestyle for 7-10 years. It's hard to pull the trigger in this environment.

[BUM]

What have I learned.... Hmmm. For one thing I didn't have delusions of grandeur when the Dow hit 14000. Same equal but opposite reaction at 8000.
Don't live life on the chart line.
Don't worry. In E/R money will be the least of your problems.
Don't walk across my nice clean floor.