Am I understanding you correctly? 30x annual expenses in VERY safe money vehicles? Do you mean the 'necessary' expenses or all annual expenses? If say a couple has $60k/year, it's almost $2M in cash and bonds. Of course, I'm not retired and I'm either not that conservative or I am missing something in your post.
Will the "Other Shoe" EVER Drop?
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Am I understanding you correctly? 30x annual expenses in VERY safe money vehicles? Do you mean the 'necessary' expenses or all annual expenses? If say a couple has $60k/year, it's almost $2M in cash and bonds. Of course, I'm not retired and I'm either not that conservative or I am missing something in your post.
Out of Steam
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The other shoe from COVID is far more likely to be supply chain disruptions than anything else. Adding to the existing computer chip disruption, the auto industry is now dealing with a rubber shortage.
https://www.bloomberg.com/news/news...est-rubber-shortage-worries-the-auto-industry
Unless you're running a nightclub or an indoor sports arena, talk of lockdowns and states being closed is highly overstated in the US. The vast majority of people have made the decision that current illness and death rates are an acceptable long-term risk, and governments have acted on their judgement.
Just when all the 'famous names' talk and say all will be fine for the foreseeable future, that's when 'something else' happens. The infamous 'investors were spooked' market happens, 'shock and awe' happens, and those who KNOW this market is close to, if not already there to, 'irrational exuberance' will say, gee, I wish I was in cash...like me.
Montecfo
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This fear is what keeps money on the sidelines and drives the market higher.
The economy has not grown this fast since the 80s. We still have a long way to go and lots of fuel.
Biggest concern for me is an external shock but those are usually buying opportunities.
Last year there was so much hand-wringing I found myself explaining a few times why equities were so highly valued with economy so bad. Well, we are experiencing the "why".
The economy has not grown this fast since the 80s. We still have a long way to go and lots of fuel.
Biggest concern for me is an external shock but those are usually buying opportunities.
Last year there was so much hand-wringing I found myself explaining a few times why equities were so highly valued with economy so bad. Well, we are experiencing the "why".
RetireeRobert
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Suze Orman thinks we will be hearing a shoe dropping "soon":
https://finance.yahoo.com/news/suze-orman-thinks-market-crash-120000578.html
https://finance.yahoo.com/news/suze-orman-thinks-market-crash-120000578.html
I cover all expenses after ss and a very small pension with safe money. 30x a number less than 60k. I don't separate essential from discretionary since I don't expect my lifestyle to change. BTW as of today it also translates to a 49% equity 51% safe split.
Many of us believe that the stock market is brutally efficient. Maybe there are some securities out there that are mis-priced by some amount, but I don't try to find them. Don't look for the needle just buy the hay stack and hold on for Warren Buffets favorite holding period.....for ever. The most observed metrics, profitability and valuation, aren't going to tell you anything about what will happen in the future. The stock market will deal us more surprises. After all, stocks are risky and that's why they have higher expected returns. Going forward fear will cause many to sell on the way down and buy back in when future looks like smooth sailing....wash, rinse, repeat....the perfect recipe for under performance. In the words of Jack Bogle "I said stay the course 1000 times and I meant it ever time" My vote is to get back in with an AA that is appropriate and don't peak going forward.
lem1955
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Agreed. I have stayed with my AA strategy but have shifted a portion of equities from Growth to Value. The strength of the equity market is primarily a few over-valued growth stocks. It isn't wide spread.
Markola
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Everyone is different but I find the 50/50 allocation we’ve had for several years “feels right.” It balances my FOMO with my risk tolerance, and I feel I’m ready for whatever happens.
I’ve been trying to think of a metaphor for the purpose that stocks serve vs. bonds. If stocks are the alpine mountain climber, bonds are the safety points she drives in the wall periodically. When she inevitably slips, she only falls a little ways before resuming her climb, while the free climber is going to take a beating.
I’ve been trying to think of a metaphor for the purpose that stocks serve vs. bonds. If stocks are the alpine mountain climber, bonds are the safety points she drives in the wall periodically. When she inevitably slips, she only falls a little ways before resuming her climb, while the free climber is going to take a beating.
Markola
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Geez. I guess when you’re a “well-known financial guru” words must come out of your mouth periodically. I read that piece and felt like a mosquito at a barbecue.
audreyh1
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Yeah, pretty much why we stay around 50%. Balanced odds. Feels comfortable since I never have any idea what is going to happen next. I just rebalance when warranted and get on with my life.
audreyh1
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
That CAPE10 indicator has really climbed this year! Back at serious nose bleed territory approaching (exceeding) 37.
I go straight to the Shiller data these days as multpl.com no longer seems to stay updated with earnings. S&P 500 earnings continued to shrink slightly thru Dec which is the most recent data available. http://www.econ.yale.edu/~shiller/data.htm
So, all the good news about growing earnings is already baked in and index should tread water for a while for earnings to catch up?
Or what?
I go straight to the Shiller data these days as multpl.com no longer seems to stay updated with earnings. S&P 500 earnings continued to shrink slightly thru Dec which is the most recent data available. http://www.econ.yale.edu/~shiller/data.htm
So, all the good news about growing earnings is already baked in and index should tread water for a while for earnings to catch up?
Or what?
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Montecfo
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
well except for all of this year's growth.
Lsbcal
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
The SP500 can be viewed as a blend of value and growth. Lately value has been on an upward trend. Just focusing on the SP500 could be misleading. Plus small and midcap value that are not in the SP500 have done really well in recent months. They may have more to go as the PE's have not gotten too stretched. Then I expect at some point international stocks will beat US stocks ... so I watch the trend there.
So basically I think viewing the market as a collection of asset classes can give a much different picture.
BTW, Schiller had a nice piece in the NY Times "Looking Back at the Roaring Twenties" with this photo showing:
link: https://www.nytimes.com/2021/04/16/business/roaring-twenties-stocks.html?referringSource=articleShare
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2021.04 says 36.6 OMG!! Roaring 20's better get it in gear to get the earnings going RSN.
SoReadyToRetire
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Well, looks like the other shoe is at least in the air after the past 3 days ... I feel a bit better about buying now.
RetireeRobert
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Yes, DOW down over 1100 points. Drop may just be getting started.
S and P 500 is 4 pct off of the all time high. If that unnerves people or makes them reconsider their asset allocation they shouldn't be invested in stocks.
street
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Not sure I would wait to buy just when the bottom falls out. The opportunity to get back in was the last 12 moths. The DJI has went up ~13,500 points and that is a lot of gain.
I believe if you invest in the markets, the best time to invest was yesterday.
I believe if you invest in the markets, the best time to invest was yesterday.
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HarveyS
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Closet_Gamer
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If I looked it up properly, the Dow was at 33,503 when this thread was started.
After the drops of the last few days, it opened this morning at 33,624.
If that was a shoe dropping, it was some sort of antigravity boot!
After the drops of the last few days, it opened this morning at 33,624.
If that was a shoe dropping, it was some sort of antigravity boot!
disneysteve
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It closed 4/7, the day before the thread started, at 33,446.If I looked it up properly, the Dow was at 33,503 when this thread was started.
After the drops of the last few days, it opened this morning at 33,624.
If that was a shoe dropping, it was some sort of antigravity boot!
24601NoMore
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Watching the S&P 500 charts, it sure looks like the markets are barely hanging on by a thread at this point.
4,111 (literally 1.5 points below where we closed today) seems to be a potential turning point. Below that or the 50 DMA roughly 60 points south..look out below.
There's a guy on Twitter that believes 4,111 is "the" pivot point and has posted a series of Tweets with Gandalf (from Lord of the Rings) and how 4,111 is the same as the famous "run, you fools!" quote after the Balrog takes him out..here's the latest from today..
Whether he's right or not..this market sure feels unstable and indeed ready for "the other shoe to drop" watching the action of the past few weeks.
ETA - I was watching the close for the last 10 minutes or so and it was almost predictable that things dropped significantly, almost exactly to 4,111 (OK, 4112 final #). Hmmmm....on the one hand, that could be seen as support..or it could be seen as the make it or break it / pivot point..only time will tell..
4,111 (literally 1.5 points below where we closed today) seems to be a potential turning point. Below that or the 50 DMA roughly 60 points south..look out below.
There's a guy on Twitter that believes 4,111 is "the" pivot point and has posted a series of Tweets with Gandalf (from Lord of the Rings) and how 4,111 is the same as the famous "run, you fools!" quote after the Balrog takes him out..here's the latest from today..
Whether he's right or not..this market sure feels unstable and indeed ready for "the other shoe to drop" watching the action of the past few weeks.
ETA - I was watching the close for the last 10 minutes or so and it was almost predictable that things dropped significantly, almost exactly to 4,111 (OK, 4112 final #). Hmmmm....on the one hand, that could be seen as support..or it could be seen as the make it or break it / pivot point..only time will tell..
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Watching the S&P 500 charts, it sure looks like the markets are barely hanging on by a thread at this point.
4,111 (literally 1.5 points below where we closed today) seems to be a potential turning point. Below that or the 50 DMA roughly 60 points south..look out below.
There's a guy on Twitter that believes 4,111 is "the" pivot point and has posted a series of Tweets with Gandalf (from Lord of the Rings) and how 4,111 is the same as the famous "run, you fools!" quote after the Balrog takes him out..here's the latest from today..
Whether he's right or not..this market sure feels unstable and indeed ready for "the other shoe to drop" watching the action of the past few weeks.
ETA - I was watching the close for the last 10 minutes or so and it was almost predictable that things dropped significantly, almost exactly to 4,111 (OK, 4112 final #). Hmmmm....on the one hand, that could be seen as support..or it could be seen as the make it or break it / pivot point..only time will tell..
[FONT="]"A guy on Twitter says..."....
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[FONT="]
[/FONT]
[FONT="][/FONT]
[FONT="]For every chart you show me indicating a pattern leading to an expected result, I can show you many more where the exact same pattern leads to nothing at all.[/FONT][FONT="]
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[FONT="]Stocks are what a statistician would call "not serially correlated." Which means when a stock is heading in a particular direction, the odds are 50/50 the stock continues in that direction or reverses course.[/FONT][FONT="]
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[FONT="]Anyone can see what a stock has done. What we want to know is what a stock will do. But no one can. We can’t because despite what someone may have told you, no amount of charting tells us anything about what a stock will do other than the random occasion of unexpected luck.[/FONT]
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