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Old 05-25-2022, 11:36 AM   #21
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Originally Posted by wanaberetiree View Post
If 50 basis points pushed bonds ~9% and stocks 20% I wonder what 100 points will do.

Thx for the article.

I'm not sure we have to wonder too much. The Fed members said early in the year they had 6 - 7 rate increases penciled in. Unless things change, 6 50 point increases would mean 300 points for the year.
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Old 05-25-2022, 11:36 AM   #22
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I use to be 100% in stocks.... until 2008 housing bubble hit. Then I realized 1) my tolerance for risk wasn't as high as I thought it was and 2) Your mental health can affect your physical health. I was lucky to learn that lesson in my mid 40s rather than in my 60s.
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Old 05-25-2022, 11:38 AM   #23
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I'm not sure we have to wonder too much. The Fed members said early in the year they had 6 - 7 rate increases penciled in. Unless things change, 6 50 point increases would mean 300 points for the year.
Even better
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Old 05-25-2022, 01:08 PM   #24
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In 2008 I had about 80% stocks and 20% bonds, very little cash. The 2008 Great Recession was a terrible time for me, I could not sleep at night. I did not want to sell stocks at a huge loss so I had to cut way back one my spending. I held on and did not sell but I learned that I cannot tolerate a 80% in the stock market. After my stocks recovered I sold a chunk of stock and now have about 50% stocks, 20% bonds and 30% cash (primarily CDs). I do not even checking the markets now, I sleep much better.

IMO everyone needs to consider their risk tolerance and needs and come up with a plan they can live with without panicking. For me anyway I definitely could not tolerate 100% stocks.
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Old 05-25-2022, 01:53 PM   #25
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I'm not sure we have to wonder too much. The Fed members said early in the year they had 6 - 7 rate increases penciled in. Unless things change, 6 50 point increases would mean 300 points for the year.
Here's a prediction that I've already made (on ER.org) but I will repeat: The Fed will pivot by the end of the year. (As time goes on, I am inclined to think it might even be sooner.) Why? Because economic conditions are deteriorating quickly. Even though they have a dual mandate, there will be intense pressure on them when it becomes obvious (even to the dense) that we are in a recession. They will declare victory as inflation "moderates", and everyone will celebrate only to eventually see inflation kick higher.

That's why I am now up to 6.5% of my assets in PM's/commodities. Could I be wrong? Sure, that's why the % isn't 50% or 100%.
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Old 05-25-2022, 02:06 PM   #26
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Here's a prediction that I've already made (on ER.org) but I will repeat: The Fed will pivot by the end of the year. (As time goes on, I am inclined to think it might even be sooner.) Why? Because economic conditions are deteriorating quickly. Even though they have a dual mandate, there will be intense pressure on them when it becomes obvious (even to the dense) that we are in a recession. They will declare victory as inflation "moderates", and everyone will celebrate only to eventually see inflation kick higher.

That's why I am now up to 6.5% of my assets in PM's/commodities. Could I be wrong? Sure, that's why the % isn't 50% or 100%.
Yep, once everybody gets used to the high prices of everything, a celebration will be in order. Of course, everyone will be poorer so the celebrations will be low key and minimal cost! (I think we have done this before)
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Old 05-25-2022, 02:07 PM   #27
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Originally Posted by copyright1997reloaded View Post
Here's a prediction that I've already made (on ER.org) but I will repeat: The Fed will pivot by the end of the year. (As time goes on, I am inclined to think it might even be sooner.) Why? Because economic conditions are deteriorating quickly. Even though they have a dual mandate, there will be intense pressure on them when it becomes obvious (even to the dense) that we are in a recession. They will declare victory as inflation "moderates", and everyone will celebrate only to eventually see inflation kick higher.

That's why I am now up to 6.5% of my assets in PM's/commodities. Could I be wrong? Sure, that's why the % isn't 50% or 100%.
Generically agree that the Fed will not have 300 more basis points in increases, especially if it deteriorates the stock market.
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Old 05-25-2022, 02:35 PM   #28
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In the last year how much has cash dropped in value vs bonds?
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Old 05-25-2022, 02:40 PM   #29
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In the last year how much has cash dropped in value vs bonds?
Hmm

That's actually a great point.

So if cash's buying power is 8.5% down due to inflation and bonds 9%, but bonds pay ~1-5% in dividends then the picture is looking differently.

That's what you meant?
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Old 05-25-2022, 02:43 PM   #30
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Hmm

That's actually a great point.

So if cash's buying power is 8.5% down due to inflation and bonds 9%, but bonds pay ~1-5% in dividends then the picture is looking differently.

That's what you meant?
yes, but I didn't know the actual numbers of how much they lost.
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Old 05-25-2022, 02:45 PM   #31
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yes, but I didn't know the actual numbers of how much they lost.
Cash lost 10% less than bonds.
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Old 05-25-2022, 02:49 PM   #32
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yes, but I didn't know the actual numbers of how much they lost.
The only correction - bonds lost 9% year to date, 5 months.
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Old 05-25-2022, 02:51 PM   #33
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Sold all bond funds last year. Own some individual corp. bonds. The rest is T-Notes & some T-Bills. Waiting for rates to increase and then move more into T-Bonds ladder. 55% Stocks index ETF's, age 67
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Old 05-25-2022, 03:13 PM   #34
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Generically agree that the Fed will not have 300 more basis points in increases, especially if it deteriorates the stock market.
They said 6 - 7 increases for the year, so it wouldn't be an additional 300. They've already implemented 2 rate hikes.

(From March) Fed raises interest rates modestly, plans seven rate hikes in total this year -
https://www.washingtonpost.com/us-po...fed-rate-hike/
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Old 05-25-2022, 03:32 PM   #35
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I have a CS degree with an emphasis in math and the reason my AA is 100% stock is due to having a ton of historical data (since 1920's) and there's never been a time where an all stock portfolio has lost money (if left alone) for 12 or more years and the returns are often higher than any other AA. Now, I get that I'm only 50 years old and I know/believe that I have at least 20-30 years to go if not more... If I were in my 80's I'd perhaps rethink my AA but I'm staying put for the next 25-30 years.

A website for reference: http://www.lazyportfolioetf.com/allo...lling-returns/
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Old 05-25-2022, 03:57 PM   #36
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(if left alone)
But this is a vital caveat. In retirement, many (most?) people are withdrawing from the portfolio.
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Old 05-25-2022, 04:33 PM   #37
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In 2008 I had about 80% stocks and 20% bonds, very little cash. The 2008 Great Recession was a terrible time for me, I could not sleep at night. I did not want to sell stocks at a huge loss so I had to cut way back one my spending. I held on and did not sell but I learned that I cannot tolerate a 80% in the stock market. After my stocks recovered I sold a chunk of stock and now have about 50% stocks, 20% bonds and 30% cash (primarily CDs). I do not even checking the markets now, I sleep much better.

IMO everyone needs to consider their risk tolerance and needs and come up with a plan they can live with without panicking. For me anyway I definitely could not tolerate 100% stocks.
You deserve double congrats here! You figured out your risk tolerance AND you didn't make a knee-jerk reaction. People often do both at the same time.

With the markets going practically straight up since then, do you ever get a tinge of FOMO?
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Old 05-25-2022, 04:43 PM   #38
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But this is a vital caveat. In retirement, many (most?) people are withdrawing from the portfolio.

“If left alone” really means “don’t pull out of the stock market completely (or mostly)”.
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Old 05-25-2022, 04:49 PM   #39
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Lots of great points.

Thanks to all!

Let me add one more variable to the initial mix - would a assets’ size make a difference in making decision of 0 bonds?

E.g. 2m vs 7m portfolios for example
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Old 05-25-2022, 04:55 PM   #40
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Lots of great points.

Thanks to all!

Let me add one more variable to the initial mix - would a assets’ size make a difference in making decision of 0 bonds?

E.g. 2m vs 7m portfolios for example
yes, I was at 72x, age 53, retired and don't even have bonds.
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