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05-25-2022, 11:36 AM
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#21
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2013
Posts: 9,358
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Quote:
Originally Posted by wanaberetiree
If 50 basis points pushed bonds ~9% and stocks 20% I wonder what 100 points will do.
Thx for the article.
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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 clouds seem bright and breezy, 'Cause the livin' is free and easy, See the rat race in a new way, Like you're wakin' up to a new day (Dr. Tarr and Professor Fether lyrics, Alan Parsons Project, based on an EA Poe story)
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05-25-2022, 11:36 AM
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#22
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Full time employment: Posting here.
Join Date: May 2006
Posts: 857
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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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05-25-2022, 11:38 AM
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#23
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Full time employment: Posting here.
Join Date: Apr 2010
Posts: 717
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Quote:
Originally Posted by daylatedollarshort
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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Even better
__________________
“The problem with the world is that the intelligent people are full of doubt, while the stupid people are full of confidence.”
(—Charles Bukowski)
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05-25-2022, 01:08 PM
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#24
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2017
Location: Chapel Hill, NC
Posts: 5,296
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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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05-25-2022, 01:53 PM
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#25
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Thinks s/he gets paid by the post
Join Date: Feb 2007
Location: Upstate
Posts: 2,948
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Quote:
Originally Posted by daylatedollarshort
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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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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05-25-2022, 02:06 PM
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#26
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Moderator Emeritus
Join Date: Apr 2011
Location: Conroe, Texas
Posts: 18,642
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Quote:
Originally Posted by copyright1997reloaded
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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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)
__________________
*********Go Astros!*********
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05-25-2022, 02:07 PM
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#27
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2018
Location: Tampa
Posts: 11,226
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Quote:
Originally Posted by copyright1997reloaded
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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Generically agree that the Fed will not have 300 more basis points in increases, especially if it deteriorates the stock market.
__________________
TGIM
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05-25-2022, 02:35 PM
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#28
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Thinks s/he gets paid by the post
Join Date: May 2007
Posts: 1,576
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In the last year how much has cash dropped in value vs bonds?
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05-25-2022, 02:40 PM
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#29
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Full time employment: Posting here.
Join Date: Apr 2010
Posts: 717
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Quote:
Originally Posted by homestead
In the last year how much has cash dropped in value vs bonds?
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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?
__________________
“The problem with the world is that the intelligent people are full of doubt, while the stupid people are full of confidence.”
(—Charles Bukowski)
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05-25-2022, 02:43 PM
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#30
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Thinks s/he gets paid by the post
Join Date: May 2007
Posts: 1,576
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Quote:
Originally Posted by wanaberetiree
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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yes, but I didn't know the actual numbers of how much they lost.
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05-25-2022, 02:45 PM
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#31
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Thinks s/he gets paid by the post
Join Date: Sep 2006
Posts: 2,840
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Quote:
Originally Posted by homestead
yes, but I didn't know the actual numbers of how much they lost.
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Cash lost 10% less than bonds.
__________________
But then what do I really know?
https://www.early-retirement.org/forums/f44/why-i-believe-we-are-about-to-embark-on-a-historic-bull-market-run-101268.html
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05-25-2022, 02:49 PM
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#32
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Full time employment: Posting here.
Join Date: Apr 2010
Posts: 717
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Quote:
Originally Posted by homestead
yes, but I didn't know the actual numbers of how much they lost.
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The only correction - bonds lost 9% year to date, 5 months.
__________________
“The problem with the world is that the intelligent people are full of doubt, while the stupid people are full of confidence.”
(—Charles Bukowski)
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05-25-2022, 02:51 PM
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#33
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Recycles dryer sheets
Join Date: Jan 2013
Posts: 296
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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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05-25-2022, 03:13 PM
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#34
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2013
Posts: 9,358
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Quote:
Originally Posted by Dtail
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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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/
__________________
Even clouds seem bright and breezy, 'Cause the livin' is free and easy, See the rat race in a new way, Like you're wakin' up to a new day (Dr. Tarr and Professor Fether lyrics, Alan Parsons Project, based on an EA Poe story)
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05-25-2022, 03:32 PM
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#35
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Recycles dryer sheets
Join Date: Oct 2021
Posts: 468
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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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05-25-2022, 03:57 PM
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#36
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Thinks s/he gets paid by the post
Join Date: Jan 2020
Location: Milwaukee
Posts: 3,972
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Quote:
Originally Posted by RetiredAt49
(if left alone)
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But this is a vital caveat. In retirement, many (most?) people are withdrawing from the portfolio.
__________________
The closing years of life are like the end of a masquerade party, when the masks are dropped. -Arthur Schopenhauer, philosopher (1788-1860)
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05-25-2022, 04:33 PM
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#37
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Recycles dryer sheets
Join Date: Apr 2022
Posts: 212
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Quote:
Originally Posted by harllee
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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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?
__________________
Snark is the tool of the intellectually lazy.
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05-25-2022, 04:43 PM
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#38
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Recycles dryer sheets
Join Date: Oct 2021
Posts: 468
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Quote:
Originally Posted by Out-to-Lunch
But this is a vital caveat. In retirement, many (most?) people are withdrawing from the portfolio.
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“If left alone” really means “don’t pull out of the stock market completely (or mostly)”.
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05-25-2022, 04:49 PM
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#39
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Full time employment: Posting here.
Join Date: Apr 2010
Posts: 717
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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
__________________
“The problem with the world is that the intelligent people are full of doubt, while the stupid people are full of confidence.”
(—Charles Bukowski)
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05-25-2022, 04:55 PM
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#40
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Recycles dryer sheets
Join Date: Mar 2016
Location: SoCal
Posts: 353
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Quote:
Originally Posted by wanaberetiree
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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yes, I was at 72x, age 53, retired and don't even have bonds.
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