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Old 02-26-2018, 10:44 PM   #21
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This makes me glad I didn't bother.
Me too! Thanks for the snipet gcgang.
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Old 02-26-2018, 10:52 PM   #22
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I do wonder how all those folks who are just now hitting their numbers, and wanting to retire will fare. I feel a little more comfortable having been retired for 3 years, as the market has gone up quite a bit since then, so the first ~25% drop in value will return me to when I decided to retire.

But folks just making their numbers could end up quite a bit lower, if things go south.
This is my worry (one of them). Therefore, I'm going into retirement with a heavy weighting of cash and short term bonds. Haven't figured out all the particulars yet because this year is somewhat of a practice year (retired but received a year severance), so I'm taking this year to get everything in order. Main goal is to have enough to live on for 5 years (maybe more) without having to touch the equities if they go down significantly. As for bonds, no interest in a bond fund, but working on a bond/debt strategy to hold short to med length bonds/debt with the goal of this part of the portfolio holding value and producing income.
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Old 02-26-2018, 11:20 PM   #23
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The Berkshire Hathaway annual report came out last weekend, and for what it’s worth, Warren Buffett was very negative on bonds. (And implicitly negative on stock prices, essentially saying Berkshire has $116 billion in cash but can’t find anything decent to buy.) I doubt anyone can denounce Buffett’s track record the way that some are trashing the author of the article.
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Old 02-26-2018, 11:58 PM   #24
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The Berkshire Hathaway annual report came out last weekend, and for what it’s worth, Warren Buffett was very negative on bonds. (And implicitly negative on stock prices, essentially saying Berkshire has $116 billion in cash but can’t find anything decent to buy.) I doubt anyone can denounce Buffett’s track record the way that some are trashing the author of the article.
His context (vast resources and a very long term view) is quite different from a retiree living on their investable assets. He admits that in the short term stocks are riskier. A retiree has to strike a balance between short term and long term which is why most of us own some of both.
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Old 02-27-2018, 08:13 AM   #25
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Todd also seems to be making the rounds of the mentor group/FI blogger circuit. It’s all about fake it till you make it.
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Old 02-27-2018, 10:19 AM   #26
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Todd also seems to be making the rounds of the mentor group/FI blogger circuit. It’s all about fake it till you make it.
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Old 02-27-2018, 10:33 AM   #27
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His context (vast resources and a very long term view) is quite different from a retiree living on their investable assets. He admits that in the short term stocks are riskier. A retiree has to strike a balance between short term and long term which is why most of us own some of both.


I understand this. But Buffett pointed to an example where hi bonds were effectively yielding less than 1%, and that was during a period of falling rates. Now that we are in a rising rate environment (bond values move down when rates go up) why own bonds at all? Why not own short term CDs that yield just a much?
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Old 02-27-2018, 10:37 AM   #28
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Nothing sells books better than predictions of impending financial disaster - especially if he turns out to be right!
Speaking of predictions of impending financial disaster.... How many people remember this one:

BusinessWeek: The Death of Equities - The Big Picture

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Further, this “death of equity” can no longer be seen as something a stock market rally—however strong—will check. It has persisted for more than 10 years through market rallies, business cycles, recession, recoveries, and booms.
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Old 02-27-2018, 10:44 AM   #29
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Not just a chattering monkey, a huckster monkey!
Wow, this is a tough crowd. I enjoyed reading his post and I have visited his site off and on over the past few years as I prepared for my 2017 retirement.

I do not plan to purchase his course but I do find his writing thought provoking and it along with the analysis of others helped me to settle on my 50/50 asset allocation.

His writing also has me considering whether I should move at least some of my fixed income allocation to CDs rather than bonds.

I appreciate Darrow Kirkpatrick for posting a link to his blog and giving me something(s) to think about that might help me improve my portfolio at the margins.

Thank you Darrow and thank you Todd!
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Old 02-27-2018, 10:44 AM   #30
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I understand this. But Buffett pointed to an example where hi bonds were effectively yielding less than 1%, and that was during a period of falling rates. Now that we are in a rising rate environment (bond values move down when rates go up) why own bonds at all? Why not own short term CDs that yield just a much?
I think many folks here have bought CDs when they were yielding as much as the equivalent bond duration.

They aren’t always available. At the moment the 5 year treasury has almost reached 2.7%, running neck-and-neck with most of the best 5 year CD offerings. Although it looks like two places are offering 3% again.

One can also quibble whether locking in a 5 year CD during a period of rising rates is a good idea. Hopefully find one with minimal penalties. 365 days of interest is typical though.
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Old 02-27-2018, 10:47 AM   #31
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I think many folks here have bought CDs when they were yielding as much as the equivalent bond duration.

They aren’t always available. At the moment the 5 year treasury has almost reached 2.7%, running neck-and-neck with the best 5 year CD offerings.

One can also quibble whether locking in a 5 year CD during a period of rising rates is a good idea. Hopefully find one with minimal penalties.

A three year ladder might make sense in the current environment. Or perhaps a four year with the second and fourth year rungs composed of Ally's "raise your rate" CDs.
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Old 02-27-2018, 11:00 AM   #32
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Perhaps. More work than I am willing to deal with, probably.
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Old 04-02-2018, 09:38 PM   #33
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3/22/18 I sold all 880 sh of my SCHA and bought 2000 SPLB, another CD, & cash. No idea if it was right or wrong but hey, figured the increased dividends would be more beneficial than potential growth in SCHA. Plus I hadn't made a trade in March. Lousy reason
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Old 04-03-2018, 06:25 AM   #34
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From the article - "As of this writing, the only time the U.S. market has been more overvalued as measured by the CAPE ratio is the narrow window of months preceding the final 2000 top. "

Or we could just use a different metric and everything looks better. As of mid-afternoon yesterday the forward PE for the S&P was a little over 16. Problem solved. (calculated using Yardeni's 2018 consensus earnings of $157)

Yes, I know the problems with using forward PE as a metric. But, all valuation metrics have problems. "The problem with valuation metrics" is my point.
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Old 04-03-2018, 06:56 AM   #35
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3/22/18 I sold all 880 sh of my SCHA and bought 2000 SPLB, another CD, & cash. No idea if it was right or wrong but hey, figured the increased dividends would be more beneficial than potential growth in SCHA. Plus I hadn't made a trade in March. Lousy reason
What in Heaven's name are SCHA and SPLB?
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Old 04-03-2018, 07:39 AM   #36
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Ticker symbols in threads is one of my pet peeves These are Schwab small cap and an S&P ETF fund.
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Old 04-03-2018, 07:52 AM   #37
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Old 04-03-2018, 08:22 AM   #38
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SCHA = Schwab small cap etf
SPLB = SPDR Long Bond etf

Point is that when even long equity only investors are skitish, are we closing in on a bottom or cliff?
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Old 04-03-2018, 09:37 AM   #39
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Stocks as a group are overvalued at times, but there are always individual stocks that are not - at least since 1993 when I started paying attention. I have never had trouble finding reasonably priced stocks to invest in.

In 2000 when the market had stratospheric valuations, most REITs were paying well-covered dividends of 6-10% growing 4-10% annually. They became over-valued around 2005.

Currently, forward P/Es at big pharma (ABBV 10.5, AMGN 11.8, JNJ 14.6, PFE 11.4) and P/DCFs at pipeline companies (ENB 9.5, KMI 7.3, TRP 11.5) do not look overvalued.
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Old 04-03-2018, 10:12 AM   #40
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Wow, this is a tough crowd. I enjoyed reading his post ...
Tough? Maybe, but I"m going from very simple logic:

Every one of these chattering monkeys is in the same situation. If any of them actually had any skill, what would they be doing? They would be using their skill to make themselves rich. They would not be typing away on the internet desperately hoping to make a living from advertiser clicks, Amazon sales commissions, or selling training courses. And for sure they would not be publishing the recipe for the secret sauce so that everyone could use it. The surest thing in investing is that any publicly known trick that works will eventually be useless as the hoards try to take advantage of it.

What keeps things going is first that people want to believe in skill and luck. That's why the casinos and lotteries will never go out of business. But second, when something happens there are so many monkeys that one or a few of them will have predicted it. They will then be anointed genius monkeys and sit in that throne until their next few pronouncement turn out to be busts. Since there are always genius monkeys many people always have the hope of finding the genius monkey ahead of time. If they do, it is pure luck, but they will conclude from that luck that they, too, are geniuses.
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