Hi, New & wanting to retire early

[nash031]

Already mentioned by seraphim, deflation. I have been doing a lot of research, or rather other's I read have. 76-82?=High Inflation; 82-99=Disinflation (Great for financial assets, we saw that.) 2000-date Deflation leading to Depression. Right Bear markets are shorter than Bull markets. Bear market is usually quick & painful. As, most people, sad to day, buy high, sell low. Today, after 5 years individuals are all in, while insiders a cashing out at a very fast rate. Just don't see how we after disinflation, it will bounce at 0 inflation and head back up, why not break 0 inflation to the downside; deflation, then back up?

I think you and most others are talking about "inflation" and "deflation" differently. "Inflation" to me indicates the rise in prices paid for consumer goods (or the decline in the purchasing power of a dollar). You seem to be using the terms in the sense that the equity market (S&P, Dow, take your pick) goes up or down, and the rate at which that occurs?

In the end, it still sounds like you're more concerned with timing the market in the short term than setting up a long-term investment plan that gives a great chance of winning over the long haul.

 

[seraphim]

Good response, Nash...

 

[rjohnla]

One economist has repeatedly said and shown statistically as well, that the 'general public' is always fighting the last battle - inflation. While deflation creeps up and wipes them out. (Prechter, EWI)

His and other's forecast: DOW 6000 next couple years, course many stock will go to zero. Next round of housing 30% down. (Why not Japan went down 90% in real estate and was at 40,000 in market.)

Why has it have to so complex these days, used to by bonds and forget about money and live.

 

[seraphim]

Wave

Yes, most people follow trends and 'hot stocks' and end up buying high and selling low. Those folks tend to look short term for immediate gain. Hopefully, we are much better educated here lol.

 

[seraphim]

There are lies, there are greater lies, and then there statistics. Statistics are easily manipulated to the whim of those quoting them. I ignore forecasts as irrelevant to my plan - right or wrong, they're covered.

And then, if the members of this forum were average investors, we wouldn't have FIRE'd. I don't consider us 'general public'.

 

[rjohnla]

Good Points

I'm not a good typist, sorry for spelling or missed words.

Yes, I do believe the people on this forum are more advanced with regards to financials. It's why I joined and am asking questions. I never had an investment advisor, always made all decisions myself. Well, lost about $30k speculating in 40 years. Please be sure does not make me brilliant at all, I also did not make as much as you guys & gals, if I did - gone baby gone - lol

 

[nash031]

One economist has repeatedly said and shown statistically as well, that the 'general public' is always fighting the last battle - inflation. While deflation creeps up and wipes them out. (Prechter, EWI)

His and other's forecast: DOW 6000 next couple years, course many stock will go to zero. Next round of housing 30% down. (Why not Japan went down 90% in real estate and was at 40,000 in market.)

Why has it have to so complex these days, used to by bonds and forget about money and live.

He's right, but the part that's being ignored in his assessment is behavior. Most people are wiped out because they buy in high, panic and sell out at the low point, then wait to buy in again until it's high. If you ignore timing and stick it out, the dips in the market (the corrections, etc.) end up being a blip on the RADAR.

As I said, you're reading a bunch of noise. YES, the market WILL decline again at some point (this is not deflation, by the way), and people WILL lose money in the short term.

But I will guarantee that your current plan will do markedly WORSE in the long term as inflation insidiously erodes your purchasing power.

You sound exceptionally risk-averse, so equities may not be your thing. By what you're reading and what you're saying, you sound like the type of person who would do exactly what I mentioned in my first paragraph: buy high, sell low and get wiped out. This is the folly of market timing: you think you can do it because you're smart, but you fail to account for your emotions and risk tolerance.

My only advice for you is to consider the risk of lost purchasing power in your cash/equivalents. While the number in your account will remain stable, you WILL lose significant purchasing power in the long run, most likely far more than if you invested a portion of your money in equities and ignored the short term fluctuations.

Stop reading the noise.

 

[rjohnla]

Nash031, like your historical write-up, recommended to the person in thread "fed-up". A lot (not saying you) of people get inflation /deflation incorrect. Inflation is an increase in the money supply, e.g., QE. Deflation, is a decrease in money supply (default on debts, other losses deflate supply of money, so it's worth more and buys more, no change in price of goods, they are just cheaper because your money is worth more. That's, after some years what I (with much help from others) concluded.

 

[seraphim]

"Stop reading the noise"

+1 Nash. Big time.

 

[seraphim]

"A general decline in prices, often caused by a reduction in the supply of money or credit. Deflation can be caused also by a decrease in government, personal or investment spending. The opposite of inflation, deflation has the side effect of increased unemployment since there is a lower level of demand in the economy, which can lead to an economic depression. Central banks attempt to stop severe deflation, along with severe inflation, in an attempt to keep the excessive drop in prices to a minimum."

Investopedia

 

[rjohnla]

Nash031 " By what you're reading and what you're saying, you sound like the type of person who would do exactly what I mentioned in my first paragraph: buy high, sell low and get wiped out. This is the folly of market timing: you think you can do it because you're smart, but you fail to account for your emotions and risk tolerance

If got it right, if your trading above your risk tolerance you will trade emotionally and lose. That's why 90+% day traders so. I don't trade and am basically a contrarian. Not a favorite at the party.

 

[seraphim]

http://www.morningstar.com/cover/videocenter.aspx?id=620292

Bob Johnson is an analyst - not a FP- whom I follow weekly. Morningstar - in general - is an excellent analytical site. They should be. They sell data and analysis, not funds. A free account accesses all the info most investors will need. They have an excellent portfolio manager - again, free.

 

[seraphim]

"If got it right, if your trading above your risk tolerance you will trade emotionally and lose. That's why 90+% day traders so. I don't trade and am basically a contrarian. "

You don't have to be a trader to exceed your risk tolerance, panic, and accrue losses, IMO. A coworker once told me he lost $80k in the last depression. He was a buy and hold investor, not a trader. I asked how he managed such a realized loss, when he had no need to withdraw the funds. He replied, "I chickened out."

 

[rjohnla]

Thanks, I'll look into it. You all will get me moving yet. But check this site, maybe you know it: Elliott Wave International: Expert Market Forecasting Using the Elliott Wave Principle At min. interesting read. Prechter is a psychologist and musician (Yale, if important?) by training, but has spent most of his life forecasting market trends. Lot's of interesting free info. on his site as well.

 

[seraphim]

I'll check them out, but Morningstar does not FORECAST. Therein lies the root of our disagreements, I think. It's foolish to rely of forecast - that leads to market timing, and even the best 'forecasters' are sometimes right, sometimes wrong. As Nash words things better than I, go back to his comment that people market time because they think they are smart enough to do so successfully.

You seem willing to gamble on the some forecasters' predictions of deflation for immediate disposition of investments. I prefer to keep looking 20 years down the road. My plan has succeeded successfully for 36 years - since I was 21. I don't read the forecasters. I read analysts because I enjoy learning and understanding. Everything I read reaffirms I'm still on the right track. I wonder how many of those forecasters have been as financially successful lol.

Investing is not quick and easy. There no algorithms, statistics or magic trends that will predict upcoming performance.

 

[MichaelB]

Thanks, I'll look into it. You all will get me moving yet. But check this site, maybe you know it: Elliott Wave International: Expert Market Forecasting Using the Elliott Wave Principle At min. interesting read. Prechter is a psychologist and musician (Yale, if important?) by training, but has spent most of his life forecasting market trends. Lot's of interesting free info. on his site as well.

For members, the link is to a paid subscription site that promotes the view that market performance can be broken down into predictable cycles. Elliot Wave is one such theory, there are many others. WAVE3 looks to be a follower, based on the link and choice of username.

Caveat Emptor.

 

[seraphim]

Apparently I can't get any 'free peeks' - which he has never offered before - at Elliot's site without entering a credit card number for a 'free trial' of his 'legendary' analysis. I'm not willing to do that.
My scam alarm goes off at such wording.

Addendum - NOW I see Michael's warning...lol

Wave - if your primary function joining here was to promote this philosophy and website, your efforts were better spent at other forums. If your stated purpose about learning valid investment techniques was accurate, my personal suggestion is stop listening to these psychologist/musicians posing as forecasters with a miracle sure-fire legendary ability...

Listen to people who have done it, not those looking at your pocket book.

 

[ERD50]

For members, the link is to a paid subscription site that promotes the view that market performance can be broken down into predictable cycles. Elliot Wave is one such theory, there are many others. WAVE3 looks to be a follower, based on the link and choice of username.

Caveat Emptor.

Apparently I can't get any 'free peeks' - which he has never offered before - at Elliot's site without entering a credit card number for a 'free trial' of his 'legendary' analysis. I'm not willing to do that.
My scam alarm goes off at such wording.

Addendum - NOW I see Michael's warning...lol

I was a poor student of Lingua Latina, but I 'm pretty sure 'Caveat Emptor' translates to "Great Ceaser's Ghost! Is this a joke!".

Elliot Wave Theory! Gimme a break! (Brewer will probably be along shortly with more colorful language)

-ERD50

 

[seraphim]

I thought it meant: let the sucker - ER, I mean buyer - beware

 

[MichaelB]

 

[robnplunder]

Sounds like Annuity is the best way to go for you. The reasons why I say this is ...

You have about $2M in cash (deduction from your post). You are very conservative, may be even be afraid of losing financial security with any investing strategy. Single - no need to leave money to anyone. My crude estimate says you can get more than $60k per year by going with Annuity, depending on what type of annuity you go with.

If you want little more flexibility, perhaps, Annuity + some other investment may work for you.

Good luck.

 

[rjohnla]

Just some drab: Yes, I'm very risk adverse. Without going into details I've taken care of myself since I was 13. But having $ then losing it, probably better not to have had to begin with. While I've done well, would much rather live off the gains in investment than pure capital. I'll be around, you guys are good & to the point. Just going to have to switch gears. Maybe start with annuity.

 

[nash031]

Nash031 " By what you're reading and what you're saying, you sound like the type of person who would do exactly what I mentioned in my first paragraph: buy high, sell low and get wiped out. This is the folly of market timing: you think you can do it because you're smart, but you fail to account for your emotions and risk tolerance

If got it right, if your trading above your risk tolerance you will trade emotionally and lose. That's why 90+% day traders so. I don't trade and am basically a contrarian. Not a favorite at the party.

This is true. Being a contrarian is fine so long as you appreciate that by taking "no risk", you are virtually guaranteeing a loss over the long term (which is, in itself, a risk).

 

[nash031]

Thanks, I'll look into it. You all will get me moving yet. But check this site, maybe you know it: Elliott Wave International: Expert Market Forecasting Using the Elliott Wave Principle At min. interesting read. Prechter is a psychologist and musician (Yale, if important?) by training, but has spent most of his life forecasting market trends. Lot's of interesting free info. on his site as well.

I have little interest in, nor use for, market forecasts. Over time, they are usually wrong and of little utility to the average investor. There are plenty of people who have timed the market correctly once or twice, and no one will argue that "buy low, sell high" is the best strategy possible.

The problem is executing that strategy: you have to be right twice. You have to buy at the low and sell at the high without knowing when the lows and highs are. You could sell everything today and miss out on another 30% gain. You could sit with hundreds of thousands of dollars on the sideline convinced of a market correction that never comes and miss a subsequent 30% gain.

It is that behavior - that GUESSwork - that hinders the performance of most average investors. The theory is sound; the practice is nearly impossible. Professional market forecasters are wrong far more often than they are right.

By not trading - being a contrarian - you are eliminating that guesswork and thus market risk, but you are maximizing inflation risk. In the end, you will almost certainly lose a great deal of your purchasing power for the remainder of your life.

 

[rjohnla]

Hi Nash*, Thanks once again. Some questions / clarifications: 1) Curious - do you use technical indicators, price/volume/p/e,... to determine when to buy/sell, or buy & hold? 2) Contrarian - never considered I eliminated market risk, but it does. 3) What theory are you referring too? 3) Agree most forecasters are only right some of the time, maybe only x1; 4) liked Nash: "The problem is executing that strategy: you have to be right twice. You have to buy at the low and sell at the high without knowing when the lows and highs are. You could sell everything today and miss out on another 30% gain. You could sit with hundreds of thousands of dollars on the sideline convinced of a market correction that never comes and miss a subsequent 30% gain."

But as we get older and cannot accept a long-term risk, what to do? We need $ to live. Thanks!