The Financial Crisis -- The Aftermath

[harley]

Nords, please don't keep bringing "diversification" into this and singing that same old song. All sectors, all countries seem to be down roughly the same amount. Even gold is down. The crisis is just beginning. The dollar and Treasuries may well be challenged next:

Just because everything is down (if it really is) doesn't mean the world is over. It just means nobody will make much money investing for the next few days/weeks/months/years. So what? Diversification is still the best protection against the long term losses that can effect portfolios. Not guaranteed to never drop, just likely to perform well over time.

What we are going through right now is a snapshot. If it takes 10 years to recover it will be maybe 1/8th of my total lifespan (I hope). Same for most everybody here, no matter what age they are now.

The focus on the immediate here is a bit appalling. It's what happens over the long term that matters, and the record up to this point hasn't been so bad. My advise is, take a deep breath, quit freaking over what has happened recently, ponder your best response moving forward, set it in motion, and go on to the next big thing. Unless you are one of the few who are going to end up in a homeless shelter, you'll probably be OK. And if you do, it still isn't as bad as life in some other countries. Although I'd recommend a shelter in the southern states. I've been on the ropes before, and if you don't give up you can get past it. Consider this a character building exercise.

 

[chinaco]

Could you explain how you have lost half your wealth? ..

Sorry. You are correct I meant 1/2 of my equity. It is a large amount of money to us.

Oh, so this time it really is different!


What American conditions existed the last time it took 10-15 years for the markets to recover? The Great Depression? ~1966-~82? ((It's an expression, not a mathematical equation.) Do you really consider this year's volatility to be equivalent to those events?

What part of your portfolio do you need to spend in the next two years? Five years? We've been seeing this as the mother of all rebalancing & reinvesting opportunities.

...

I still sleep. That is not a problem. It is the prospect of delaying my ER plans or ER on less than planned that is bothering me.

I do not believe this situation is a normal condition (cyclical bear, typical recession). Hopefully it corrects within 5 years. If there was not govt intervention... There is little doubt we would have had a large number of businesses failures. (in addition to the ones that should due to their mistakes).

I agree with you on the rebalancing and reinvesting opportunity. I do have fixed assets that I could reinvest. But, if we are in a protractive bear... it would probably end any chance of ER. I have not been very good are predicting the economic/market outcome... except knowing that things will eventually improve... but how far out.

I have not been considering throwing part of the fixed into the stock market because of my ER plans. It is not about risk tolerance on the stock market... I can take the ups and downs. I have no intention of spend all of our money next year or in the next 5 years. My disappointment is directly related to my ER plans. They seem a bit shaky now or we may need to reduce our planned spending.

 

[Sandman]

I have not been considering throwing part of the fixed into the stock market because of my ER plans. It is not about risk tolerance on the stock market... I can take the ups and downs. I have no intention of spend all of our money next year or in the next 5 years. My disappointment is directly related to my ER plans. They seem a bit shaky now or we may need to reduce our planned spending.

Good thread. I have not posted here very often, but I do enjoy reading these forums and I have learned a lot from others' experiences. Lately, I have been very interested in reading how people are coping with the current financial upheaval, especially those very close to pulling the plug (like me).

I am with you on this Chinaco; this major financial downturn is a huge disappointment for all, but especially for those of us very close to FIRE and ready to make the plunge. My plan is to pull the plug in July 2009 when I am 55, also the same year that my oldest child will be starting college.
In a matter of a few short weeks we will now need to re-assess our ER plans. On the positive side, I sold a bunch of equities to purchase a home in October 2007 - at my portfolio peak and I am still gainfully employed with mega corp. making good $$.
I am still very optimistic regarding our plans to ER as we have worked hard to achieve it, only disappointed that my FIRE date might not be as early as originally planned. At this point I am not willing to cut back on our planned spending or my daughter’s education - personal choices.

 

[Texarkandy]

Nords, please don't keep bringing "diversification" into this and singing that same old song. All sectors, all countries seem to be down roughly the same amount. Even gold is down. The crisis is just beginning. The dollar and Treasuries may well be challenged next:



Jesse's Café Américain: In 2009 the US Will Be Forced to Selectively Default and Devalue Its Debt

Comments welcome, even and especially in contradiction of the above.

Comments?

Well, I read the entire article and at first blush my response would be that the world will have no choice but to continue to rely on the full faith & credit of the USG.

 

[HFWR]

Comments?

Well, I read the entire article and at first blush my response would be that the world will have no choice but to continue to rely on the full faith & credit of the USG.

If you look around, it's hard to find a country/economy in better shape than the US. Granted, that might not be saying much, but everything is relative...

 

[kaneohe]

Too late for this crash but perhaps one lesson that might be learned is the value of a stable income source. Don't know long it will be stable, but at least for now, I am greatly comforted by my/DW's SS which accounts for a significant part of our normal living expenses. I know EIAs have been the target of much ridicule here but if the underlying insurance cos. survive, I would guess the holders would be feeling pretty good right now. I would guess fixed annuity holders would feel similarly.

Has anyone looked at these charitable annuities that, e.g. , educational institutions give? What is the backing for those....an insurance co. or the educational institution or both? And returns.........lower than if you go directly to an insurance co?