What would you advise I do?

[freddyw]

I have followed this forum for several months now and am most impressed with the financial savy of the group participating. I would like to pose a question to the group to get your feedback. I will be investing a sizeable amount of money in about 2 months and given the economic climate we are facing, I'm concerned as to the best way to invest.

Here are the variables that I would ask that you consider in giving me your advice as to how to invest this money especially in the short term (next 12 months or so). Hopefully by then the stock market will have stabilized.

• Approximately $1.4 Million to be invested in traditional IRA type account(s). This money comes from a 401K and lump sum pension.
• Would like to invest all within Vanguard group of funds
• Want to invest in low fee funds especially Admiral type funds
• Index funds are preferred over managed due to fees
• I am VERY concerned about the stock market right now and it's stability. My short term goal is to retain the initial principal ($1.4M) until the market stabalizes even if returns are not that great rather than risk loosing the initial principal in a downward spiralling stock market. Since these funds are currently not invested in the stock market presently, I will not incur any losses by moving to your recommended portfolio.
• I don't plan on tapping these funds for 5-7 years however this will be my retirement "nest egg" and I need to take some risk to beat inflation and grow the principle over the next 5-7 years. I am looking to have around $2 Million in these accounts within 7 year timeframe.

I know there is no crystal ball that will ensure everything will go as planned, however I believe based upon the feedback provided by this forum that there are financially sound ways to ride out these tumultuous times without taking unwarranted risks or being too conservative to the point of allowing inflation to eat away at this nest egg.

Thanks for your advice in advance and I look forward to your recommendations.

 

[W2R]

I have followed this forum for several months now and am most impressed with the financial savy of the group participating. I would like to pose a question to the group to get your feedback. I will be investing a sizeable amount of money in about 2 months and given the economic climate we are facing, I'm concerned as to the best way to invest.

Here are the variables that I would ask that you consider in giving me your advice as to how to invest this money especially in the short term (next 12 months or so). Hopefully by then the stock market will have stabilized.

• Approximately $1.4 Million to be invested in traditional IRA type account(s). This money comes from a 401K and lump sum pension.
• Would like to invest all within Vanguard group of funds
• Want to invest in low fee funds especially Admiral type funds
• Index funds are preferred over managed due to fees
• I am VERY concerned about the stock market right now and it's stability. My short term goal is to retain the initial principal ($1.4M) until the market stabalizes even if returns are not that great rather than risk loosing the initial principal in a downward spiralling stock market. Since these funds are currently not invested in the stock market presently, I will not incur any losses by moving to your recommended portfolio.
• I don't plan on tapping these funds for 5-7 years however this will be my retirement "nest egg" and I need to take some risk to beat inflation and grow the principle over the next 5-7 years. I am looking to have around $2 Million in these accounts within 7 year timeframe.

I know there is no crystal ball that will ensure everything will go as planned, however I believe based upon the feedback provided by this forum that there are financially sound ways to ride out these tumultuous times without taking unwarranted risks or being too conservative to the point of allowing inflation to eat away at this nest egg.

Thanks for your advice in advance and I look forward to your recommendations.

You could begin by putting it into VMMXX (money market) for the short term, until you feel more confident investing it. That would achieve your short term goal, which I have highlighted in blue above. Returns will not be that good, and you'll make more once you are ready to invest.

I think I have finally met someone with more conservative investing tendencies than mine!

 

[jIMOh]

I have followed this forum for several months now and am most impressed with the financial savy of the group participating. I would like to pose a question to the group to get your feedback. I will be investing a sizeable amount of money in about 2 months and given the economic climate we are facing, I'm concerned as to the best way to invest.

Here are the variables that I would ask that you consider in giving me your advice as to how to invest this money especially in the short term (next 12 months or so). Hopefully by then the stock market will have stabilized.

• Approximately $1.4 Million to be invested in traditional IRA type account(s). This money comes from a 401K and lump sum pension.
• Would like to invest all within Vanguard group of funds
• Want to invest in low fee funds especially Admiral type funds
• Index funds are preferred over managed due to fees
• I am VERY concerned about the stock market right now and it's stability. My short term goal is to retain the initial principal ($1.4M) until the market stabalizes even if returns are not that great rather than risk loosing the initial principal in a downward spiralling stock market. Since these funds are currently not invested in the stock market presently, I will not incur any losses by moving to your recommended portfolio.
• I don't plan on tapping these funds for 5-7 years however this will be my retirement "nest egg" and I need to take some risk to beat inflation and grow the principle over the next 5-7 years. I am looking to have around $2 Million in these accounts within 7 year timeframe.

I know there is no crystal ball that will ensure everything will go as planned, however I believe based upon the feedback provided by this forum that there are financially sound ways to ride out these tumultuous times without taking unwarranted risks or being too conservative to the point of allowing inflation to eat away at this nest egg.

Thanks for your advice in advance and I look forward to your recommendations.

You need $2 M in 7 years. You have $1.4 M now. I assume 4% withdraw rate for expenses of 80k per year. You did not supply the income needed for retirement, I am assuming 80k.

Put 7 years income in cash and bonds. 7*80=560k. Put the rest in equities. $840k is what I came up with. If the 840k doubled in 7 years (10% return), you would have just over $2 M. This is 40% to bonds and 60% to equities, and does not factor in any gains from the bonds at all. 560k at 4% yield is 22k, so in 7 years you have 9 years expenses in cash instead of the 7 you started with anyway (assuming you can find a mix of bond funds which yields you 4%).

I would invest the equity piece in a mix of large caps, mid caps, small caps, foreign large, foreign small and emerging markets. Maybe 35-10-10-25-15-5 type allocation. I would decide on a rebalance frequency and stick to it. I would also invest this sooner rather than later (the market is at a bottom- or close to it- right now).

If you find yourself at $2 M sooner, I would consider adding an asset class for commodities and maybe real estate and tone down the mid caps, small caps and emerging markets. Keep a position in all, just make it lower to preserve capital.

Worst case- it takes 9 years to double, not 7, but you still have 7 years expenses in cash.

If you want to get more conservative, I would put 9 or 10 years expenses in cash, then the goal is for equity portion to double twice in 11 or 12 years to hit target 60-40 allocation.

If you need less than 80k, this plan becomes much easier to implement.

In addition, check my math.

 

[DblDoc]

You could begin by putting it into VMMXX (money market) for the short term, until you feel more confident investing it. That would achieve your short term goal, which I have highlighted in blue above. Returns will not be that good, and you'll make more once you are ready to invest.

I think I have finally met someone with more conservative investing tendencies than mine![/quote]

Who would have thought that was possible!

freddyw - I would recommend you read some of the books here: Investment Books and then once you have a better sense of how you want to invest you will be able to get plenty of advice here or at the diehards site about specifics.

I agree 100% with W2R's advice about parking that money for now in Vanguards prime money market account until you figure things out.

DD

 

[W2R]

Who would have thought that was possible!

So true!

Love my Wellesley and my 45:55 AA...

 

[RunningBum]

How do you know when the market stabilizes? It may have bottomed out last month. If you wait, you may miss out on a 5-10% recovery before you decide things are ok. And at that point, the recovery may be temporary and it could dip back 10%. You just don't know.

That's why I like to stay invested in the market rather than try to time it. It's too easy to get sucked in when the market is high (and likely to tumble), and be steered away when it is low (and primed for a recovery). If you believe the stock market is a good place to be, my advice is to ride it out, and also stay diversified.

jIMOh's plan looks very reasonable. You could look at the total stock market index rather than large/medium/small indices, though either way you probably have enough for admiral funds. I like the total market index because I don't have to balance between the three.

 

[RunningBum]

I also agree that parking the money in a MM for a short time is good if you aren't certain where you want to be, but I think you want to establish a diversification plan and execute it once you have it, rather than trying to time the market.

 

[soupcxan]

Put it all in Vanguard's Wellesley (VWIAX), a balanced fund that has returned 6.55%/year over the last 10 years. If that continues, you'd hit $2MM in about 6 years. You'd qualify for admiral-class shares which are yielding 4.3% right now.

 

[freddyw]

You could begin by putting it into VMMXX (money market) for the short term, until you feel more confident investing it. That would achieve your short term goal, which I have highlighted in blue above. Returns will not be that good, and you'll make more once you are ready to invest.

I think I have finally met someone with more conservative investing tendencies than mine!

That's my thinking as well however I wanted the group's feedback as to whether investing in TIPs or ST Treasuries might be a better hedge against inflation in the short term (about 1 year)
BTW ,,,I haven't been in the conservative mode until this point. I just retired April 1st and it's amazing how my perspective on investing has changed now that I am no longer getting a steady paycheck each month. I am very concerned about having my IRA funds decline in the first couple of years of retirement. Professionals say its very difficult to recover from low earnings in the first couple of years in retirement so I am trying to minimize this as much as possible. Thanks for the feedback.

 

[Nords]

That's my thinking as well however I wanted the group's feedback as to whether investing in TIPs or ST Treasuries might be a better hedge against inflation in the short term (about 1 year)

Eh, bummer.

We see this question a lot, and sometimes it's from people who just want to be pointed to the nearest stack of reference books to educate themselves.

Other times it's from posters who have a lot of "Yeah but" questions that are based on the lack of educating themselves from the nearest stack of reference books. It begins with "want some advice, starting out simple" and before you know it we're debating inverted yield curves and contago'd commodities. Sometimes it feels as though the OP is reacting to the latest poster's advice instead of digging through the books and forming their own opinions.

BTW ,,,I haven't been in the conservative mode until this point. I just retired April 1st and it's amazing how my perspective on investing has changed now that I am no longer getting a steady paycheck each month. I am very concerned about having my IRA funds decline in the first couple of years of retirement. Professionals say its very difficult to recover from low earnings in the first couple of years in retirement so I am trying to minimize this as much as possible. Thanks for the feedback.

I recommend inoculating yourself against fear & confusion by educating yourself and THEN deciding on your asset allocation. Plunk the assets into a money market and hold the asset-allocation questions until you've done some reading. You've seen this board's list of recommended books and there are asset allocation guides in the back of Bernstein's "Four Pillars" or on his efficientfrontier.com website. You can also read about flexible spending (withdrawal rates) in Bob Clyatt's "Work Less, Live More".

I think you're misinterpreting the professionals. They're correct about recovering from high withdrawals in a down market, but they're referring to excessive spending in scenarios that use a constant withdrawal rate. If you lower your withdrawals in the first few years of ER, whether that's by spending less or working part-time, then you'll do just fine.

The key is to read enough to have the self-confidence to choose an AA that will handle the volatility that will recur throughout your retirement. Whether that's done through asset allocation, variable withdrawals, part-time work, or some other scheme is up to you. But no matter how much you debate the merits of the responses in this thread, the only way to have "sleep at night" confidence in your decisions is to do the reading and to choose your own AA. You can't do that by tabulating our votes...

 

[freddyw]

You need $2 M in 7 years. You have $1.4 M now. I assume 4% withdraw rate for expenses of 80k per year. You did not supply the income needed for retirement, I am assuming 80k.

Put 7 years income in cash and bonds. 7*80=560k. Put the rest in equities. $840k is what I came up with. If the 840k doubled in 7 years (10% return), you would have just over $2 M. This is 40% to bonds and 60% to equities, and does not factor in any gains from the bonds at all. 560k at 4% yield is 22k, so in 7 years you have 9 years expenses in cash instead of the 7 you started with anyway (assuming you can find a mix of bond funds which yields you 4%).

I would invest the equity piece in a mix of large caps, mid caps, small caps, foreign large, foreign small and emerging markets. Maybe 35-10-10-25-15-5 type allocation. I would decide on a rebalance frequency and stick to it. I would also invest this sooner rather than later (the market is at a bottom- or close to it- right now).

If you find yourself at $2 M sooner, I would consider adding an asset class for commodities and maybe real estate and tone down the mid caps, small caps and emerging markets. Keep a position in all, just make it lower to preserve capital.

Worst case- it takes 9 years to double, not 7, but you still have 7 years expenses in cash.

If you want to get more conservative, I would put 9 or 10 years expenses in cash, then the goal is for equity portion to double twice in 11 or 12 years to hit target 60-40 allocation.

If you need less than 80k, this plan becomes much easier to implement.

In addition, check my math.

Thanks for the recommendation and details for the various types of investments to reach $2M in the next 7 years. As others have pointed out regarding market timing ...it's better to ride out the market rather than to attempt to time it.

 

[freddyw]

Eh, bummer.

We see this question a lot, and sometimes it's from people who just want to be pointed to the nearest stack of reference books to educate themselves.

Other times it's from posters who have a lot of "Yeah but" questions that are based on the lack of educating themselves from the nearest stack of reference books. It begins with "want some advice, starting out simple" and before you know it we're debating inverted yield curves and contago'd commodities. Sometimes it feels as though the OP is reacting to the latest poster's advice instead of digging through the books and forming their own opinions.


I recommend inoculating yourself against fear & confusion by educating yourself and THEN deciding on your asset allocation. Plunk the assets into a money market and hold the asset-allocation questions until you've done some reading. You've seen this board's list of recommended books and there are asset allocation guides in the back of Bernstein's "Four Pillars" or on his efficientfrontier.com website. You can also read about flexible spending (withdrawal rates) in Bob Clyatt's "Work Less, Live More".

I think you're misinterpreting the professionals. They're correct about recovering from high withdrawals in a down market, but they're referring to excessive spending in scenarios that use a constant withdrawal rate. If you lower your withdrawals in the first few years of ER, whether that's by spending less or working part-time, then you'll do just fine.

The key is to read enough to have the self-confidence to choose an AA that will handle the volatility that will recur throughout your retirement. Whether that's done through asset allocation, variable withdrawals, part-time work, or some other scheme is up to you. But no matter how much you debate the merits of the responses in this thread, the only way to have "sleep at night" confidence in your decisions is to do the reading and to choose your own AA. You can't do that by tabulating our votes...

Nords..very good advice and I appreciate your feedback. I have read Clyatt's book and feel comfortable with his AA recommendations over the long term. I guess what I was attempting to find out in posting my question was to see what others thought given what I consider the extreme volatility currently within the stock market these days that hopefully is a short term phenom (Less than 18 mo). If I'm properly interpreting the feedback from those who responded, the lesson learned is that the AA recommended by Clyatt and other recommended reads on the forum list are sound long term investment strategies and the best advice is to decide on an AA that I am comfortable with and stick with it rather than try to time market changes in the short term. Again thanks for your feedback. It is much appreciated.

 

[RockOn]

But no matter how much you debate the merits of the responses in this thread, the only way to have "sleep at night" confidence in your decisions is to do the reading and to choose your own AA. You can't do that by tabulating our votes...

It must be nice to have no fear or confusion and complete confidence about the outcome when it comes to investing. Is that the true power of positive thinking? Past results may not......, even for the seemingly unquestionable Bernsteins AA.

 

[Notmuchlonger]

It must be nice to have no fear or confusion and complete confidence about the outcome when it comes to investing. Is that the true power of positive thinking? Past results may not......, even for the seemingly unquestionable Bernsteins AA.

Just ignore CPI RockOn you will be fine

 

[Alan]

Approximately $1.4 Million to be invested in traditional IRA type account(s). This money comes from a 401K and lump sum pension.

When I roll over my 401(k) I plan to roll into similar funds to those it is invested in now. Reason being that I have been settled with my current 401(k) allocation for some years and figure that if I don't maintain similar allocations then I will be forcing myself into a major re-allocation, quite possibly selling low and buying high. eg I have an international fund (Euro Pacific) and I'll roll that into Vanguard's index equivalent.

For the pension cash, I'd park it in MM until you are better educated on what you want to do.

 

[RockOn]

Just ignore CPI RockOn you will be fine

I'll try. It's sooooo hard. The numbers will be out for the month soon. I'll try really hard to just let it go.

 

[samclem]

If I'm properly interpreting the feedback from those who responded, the lesson learned is that the AA recommended by Clyatt and other recommended reads on the forum list are sound long term investment strategies and the best advice is to decide on an AA that I am comfortable with and stick with it rather than try to time market changes in the short term.

FreddyW,
Yep, that's about it. The traditional "compromise" solution for somebody who is intellectually in agreement with having a fixed allocation strategy but emotionally uneasy about committing to an allocation because "now may not be the right time," ("the market is volatile," "the market is overvalued," This long uptrend can't continue", "my neighbor's cousin says to wait," etc) is to put a certain amount (maybe 40%??) into the desired asset allocation at first, putting the rest into a MM fund and dollar-cost-averaging (DCA) into the allocation over some arbitrary time period (maybe a year). On a historical basis, this approach hasn't done as well as simply plunking the money into the desired allocation immediately, but it may provide the emotional support you need. If the market (or big hunks of your allocations) go down further, you'll be buying cheaper stocks over the course of the year, which takes some of the sting out of things. Likewise, if everything gyrates up and down for a year, you'll be buying more shares when they are cheaper, less when they are pricier. Again, if history is a guide you'd be better off by jumping in entirely, but DCAing can be a good way to recognize the power of your emotions and address your concerns. It's far more likely to produce a favorable result than waiting around to plunge in at the right time.
BTW, if you want to really take this to extremes, do value averaging instead of DCA. It's more complex, but some analyses show that it produces better results in most cases. It is work. Here's a comparison of approaches.

http://www.studyfinance.com/jfsd/pdffiles/v13n1/marshall.pdf

Edleson truly "wrote the book" on Value Averaging.
Amazon.com: Value Averaging: The Safe and Easy Strategy for Higher Investment Returns (Wiley Investment Classics): Michael E. Edleson,William J. Bernstein: Books

Good luck!

 

[RunningBum]

It must be nice to have no fear or confusion and complete confidence about the outcome when it comes to investing. Is that the true power of positive thinking? Past results may not......, even for the seemingly unquestionable Bernsteins AA.

I think the message is to do your own homework, and understand your own situation and level of risk, so that you know why you made your decisions. If someone else makes them for you, you'll question why you listened to them. If you make your own, you know why you did it. If you put enough effort into your decisions, you'll know you've done the best you can.

I had a co-worker who had a real knack for picking tech stocks. I know with some people you only hear about the winners and not the losers, but this guy had a lot of winners. So I started following his lead some of the time. The problem was, he'd only start talking about them after they'd risen quite a bit. And some of them would start tanking a month later, and I'd say something, and he'd say "Oh, I got out of that 2 weeks ago." So I stopped following him. I'd listen and congratulate him on his wins, and try to pick his brain on his method for why he took that stock so I might learn how to find the next one on my own, but I never again bought a stock just because he did.

 

[DblDoc]

I think the message is to do your own homework, and understand your own situation and level of risk, so that you know why you made your decisions. If someone else makes them for you, you'll question why you listened to them. If you make your own, you know why you did it. If you put enough effort into your decisions, you'll know you've done the best you can.
.

My take also - and the implicit message in my earlier post but Nords said it much better.

DD

 

[clifp]

FreddyW,
Yep, that's about it. The traditional "compromise" solution for somebody who is intellectually in agreement with having a fixed allocation strategy but emotionally uneasy about committing to an allocation because "now may not be the right time," ("the market is volatile," "the market is overvalued," This long uptrend can't continue", "my neighbor's cousin says to wait," etc) is to put a certain amount (maybe 40%??) into the desired asset allocation at first, putting the rest into a MM fund and dollar-cost-averaging (DCA) into the allocation over some arbitrary time period (maybe a year). On a historical basis, this approach hasn't done as well as simply plunking the money into the desired allocation immediately, but it may provide the emotional support you need. If the market (or big hunks of your allocations) go down further, you'll be buying cheaper stocks over the course of the year, which takes some of the sting out of things. Likewise, if everything gyrates up and down for a year, you'll be buying more shares when they are cheaper, less when they are pricier. Again, if history is a guide you'd be better off by jumping in entirely, but DCAing can be a good way to recognize the power of your emotions and address your concerns. It's far more likely to produce a favorable result than waiting around to plunge in at the right time.
BTW, if you want to really take this to extremes, do value averaging instead of DCA. It's more complex, but some analyses show that it produces better results in most cases. It is work. Here's a comparison of approaches.

http://www.studyfinance.com/jfsd/pdffiles/v13n1/marshall.pdf

Edleson truly "wrote the book" on Value Averaging.
Amazon.com: Value Averaging: The Safe and Easy Strategy for Higher Investment Returns (Wiley Investment Classics): Michael E. Edleson,William J. Bernstein: Books

Good luck!

Sam and I often agree and his post is worth re-reading IMO.

Investing in retirement is a battle between doing what is financially optimal, (stick at least 1/2 the money in the stock market ASAP) and enjoying a good nights sleep. DCA is quite a reasonable compromise.

It is important to note that huge percentage of the "12%" average annual gains from the stock markets come from up months, up weeks, and even up days. These period are far more likely to occur during turbulent troubled times, than when everything is going along smoothly. If you wait tell the market stops gyrating up and down like yo-yo you'll have almost certainly missed out on a lot of money (in your case probably $200K+)


100% Safe investments (i.e. CD's Money Market) seldom beat inflation after taxes are taken into account. So it pretty much an imperative to have a significant portion of your money in an investment which can go down. This does not necessarily have to be stocks, long-term bonds, junk bonds, and real estate also aren't 100% safe but provide positive real rates of return.

 

[W2R]

Investing in retirement is a battle between doing what is financially optimal, (stick at least 1/2 the money in the stock market ASAP) and enjoying a good nights sleep. DCA is quite a reasonable compromise.

This is very true.

FreddieW, this would be something to consider. Personally, I received a large windfall on Valentine's Day and I am a fairly conservative investor.

Here is what I did, though it is not guaranteed to preserve your capital in the short term. I put 30% into Vanguard's Wellesley (VWIAX), fully investing in it according to my plan immediately, since Wellesley is pretty stable. Then I began DCA'ing into VTSMX (Vanguard's Total Stock Market index) and VFWIX (Vanguard's FTSE All-World Ex-US Stock Index). I have been moving between 1/5th and 1/10th of my full planned eventual investments into each of these two funds each month. The rest is in money market for now.

I sleep well at night, and in fact right now this taxable account is 101.4% of what it was on Valentine's day. It has been as low as 99.1%, though, back in March.

 

[freddyw]

This was the type of feedback I was hoping to get as a result of my original post. There have been several very good suggestions from others as well with viable ideas as to how to "compromise" between doing what is intellectually recommended via some of the forum's recommended reading list and actually putting those AA strategies into practice given the emotional turmoil one has now that a paycheck is no longer forthcoming. There's plenty of outside noise going on as financial experts try to predict where the economy is going over the next few quarters. The disconcerting result of all this is the predictions are all over the board and not really pointing in one general direction or the other. I know this has always been the case however it seems to be magnified as to the potential extremes more so this time. Thanks again for taking the time to provide your insight.

 

[Spanky]

I am a big fan of DCA. Just identify your AA between equity and fixed-income and stat the course - it's that simple.

Let's suppose you have decided a 50/50 (equity/fixed-income) would meet your financial goals while keeping you sleeping soundly, the following simple allocation should suffice:
25% -- Vanguard Total Market
25% -- Vanguard Total International
25% -- Vanguard Total Bond Market
25% -- Vanguard TIPs


Naturally, some people prefer to slice and dice more as an attempt to optimize more.

 

[Lsbcal]

That's my thinking as well however I wanted the group's feedback as to whether investing in TIPs or ST Treasuries might be a better hedge against inflation in the short term (about 1 year)

Freddy, I just browsed this thread quickly but this sentence stood out to me. TIPs and ST Treasuries have enjoyed a great ride because of flight to quality. I personally thought TIPS were a great buy last June but NOT now because real rates (TIPS yields) are at historic lows. Take your time in learning about stocks and bonds. Bonds can be particularly confusing and the bond market is very efficient.

Why don't you make use of Vanguard's free consultation if you're shifting a large hunk of assets their way? When I ER'd their consultation helped me a lot even though I did not follow their suggested allocation to the letter.

 

[Nords]

... given what I consider the extreme volatility currently within the stock market these days that hopefully is a short term phenom (Less than 18 mo). If I'm properly interpreting the feedback from those who responded, the lesson learned is that the AA recommended by Clyatt and other recommended reads on the forum list are sound long term investment strategies and the best advice is to decide on an AA that I am comfortable with and stick with it rather than try to time market changes in the short term.

As measured by the VIX volatility index, this ain't nothin' compared to 2001-2002 or Oct 1987 or 1966-82. If you're feeling alarmed by these little ripples then you either need to find a big, safe liferaft or sit on the shore for a while watching the water. Of course you could also just hang on for the ride, but that type of investor psychology tends to result in selling low and buying high.

I think it's far better to pick an AA that you can live with than to try to pick the market that you can live through.

It must be nice to have no fear or confusion and complete confidence about the outcome when it comes to investing. Is that the true power of positive thinking? Past results may not......, even for the seemingly unquestionable Bernsteins AA.

Yeah, it is nice, and I worked pretty darn hard to get there-- thanks for appreciating it. Asset allocation seems to be the only factor to consistently have the most influence on investment returns-- some studies say it's as high as 90% of the returns.

I've cut through my fear & confusion through worrying constructively by learning more about investing & economics. That "positive thinking" comes from all the dozens of books & websites that I've been reading over the last decade and from having our ER portfolio nearly double since 2001.

Maybe you'll gain some more perspective from reading Dimson & Marsh's "Triumph of the Optimists" than you will from CNBC's screaming or the alarmist columnists reporting sky falling on MSN or CBSMarketwatch.

And as I've pointed out on other threads, Bernstein's not unquestionable-- but he's good at explaining and he backs it up with the studies/math to support his point. Iif you're gonna make fun of Bernstein then you have to read "The Intelligent Asset Allocator" or plow through Milevsky's math. Those guys have the chops. You have... well... I guess that awareness is always the first step.