When to decide to just quit investing?

[kcowan]

Quote:

Originally Posted by nun So I've stopped rebalancing and I'll let my AA drift up towards 75/25.

Maybe we are an indicator of the upcoming downdraft?

[kcowan]

Quote:

Originally Posted by jim584672 Borrow 30% ...

This word is unknown to me. I have been retired for 14 years. Why would I want to rent money?

[Ted_Shepherd]

Quote:

Originally Posted by nun My reason to stay in equities is to maximize potential return to leave more to my heirs.

I'm with you. That maximization is one of my reasons for staying in equities. The other important reason is what I mentioned before: I want to help provide the capital that helps people have jobs, passing along the benefits I have received. As I see it, the two goals are entirely congruent. Whatever I do to further one, furthers the other too. I welcome discussion of these points.

[Gumby]

Quote:

Originally Posted by Ted_Shepherd I'm with you. That maximization is one of my reasons for staying in equities. The other important reason is what I mentioned before: I want to help provide the capital that helps people have jobs, passing along the benefits I have received. As I see it, the two goals are entirely congruent. Whatever I do to further one, furthers the other too. I welcome discussion of these points.

Are you actually adding to the capital in the economy if you are just buying and selling existing stock?

[traineeinvestor]

Over the longer term, I worry more about the affect of inflation than market fluctuations, so reducing equities/increasing bonds = increasing risk IMHO. YMMV.

I'll probably change my view next time the market falls 20+%.

[Koolau]

Quote:

Originally Posted by traineeinvestor Over the longer term, I worry more about the affect of inflation than market fluctuations, so reducing equities/increasing bonds = increasing risk IMHO. YMMV. I'll probably change my view next time the market falls 20+%.

Yeah, if someone ever comes up with a fool-proof solution to significant inflation, let me know. As far as I'm concerned, that's the most likely doom for my plan. I lived through "high" inflation and saw what it could do. I was empl*yed at the time which helped since I got raises making up for most of the carnage. Now, I have to do all the "making up" for myself. I'm not convinced that equities will help a lot with "high" inflation (however one defines that).

All of the standard strategies (hold a mortgage, buy PMs, hold equities, TIPs, etc.) have their place, but nothing is guaranteed which is why I try to do a little bit of everything (not a mortgage, heh, heh.) One of the things which should help those of us who are older is that we no longer need to purchase a lot of things (with a little luck, I'll never need another lawn mower, mattress, furniture, carpet, man's suit, leather shoes, etc.) But I can foresee cost of health care skyrocketing even more than they are now and all kinds of other "services" which oldsters sill need (handyman, house-cleaner, plumber, etc.)

So these are the things that keep me "investing" even if it's only half-heartedly. YMMV

[Danmar]

Quote:

Originally Posted by jim584672 Those in #2, why not add some leverage as well? Borrow 30% and go 130% long.

Right. The 2008-2009 recession cured me of that strategy.

[daylatedollarshort]

Are there studies showing stocks are the best inflation hedge? I've read more articles and books along these lines:

"Broad equity returns have not intrinsically provided a good hedge against inflation."

https://www.pimco.com/en-us/insights/viewpoints/viewpoints/using-equities-to-hedge-inflation-tread-with-care/

and this:

"No surprise here. TIPS — Treasury inflation-protected securities — are indexed to inflation to protect investors from the negative impact of inflation — beat inflation 80% of the time, making it best of breed in this category."

Read more: 9 Top Assets for Protection Against Inflation

When we were first thinking about ER we noticed 30 year TIPS were at a 2% real yield. We looked at how much we'd have in income from our SS, pensions and 2% on the portfolio with minimal risk and thought cool, good enough. Real yields on TIPS went down since then but so have our expenses so it has worked out okay. We're not big risk takers so our focus has been more on low overhead and some easy side income streams than portfolio growth.

I made my own retirement spreadsheet and then we had a retirement planning session with a mutual fund company rep running their retirement calculator to make sure my numbers were on track. He kept telling us we needed stocks for growth and we pointed out his own company retirement calculator showed we'd be fine with a 100% AA of all short term bonds.

[Ted_Shepherd]

Quote:

Originally Posted by Gumby Are you actually adding to the capital in the economy if you are just buying and selling existing stock?

How do you measure the capital in the economy if you do not include the value of existing stock? What is the Total value of US stock market $14 trillion

[kcowan]

If we ever get back to 6% official inflation, I think stocks will become necessary to hedge.

But I am not betting on that anytime soon.

Gumby
I think a bouyant stock market makes it easy and cheaper for companies to have additional offerings to raise money for expansion.

[Gumby]

Quote:

Originally Posted by Ted_Shepherd How do you measure the capital in the economy if you do not include the value of existing stock? What is the Total value of US stock market $14 trillion

My point is that a company raises a finite amount of capital on the initial stock offering (minus the investment bankers' cut). What the stock sells for on the secondary market after that is irrelevant to the company's balance sheet.