Search found 7564 matches

by HomerJ
Fri Jul 31, 2015 9:08 am
Forum: Investing - Theory, News & General
Topic: Are equities really as risky as anyone thinks?
Replies: 203
Views: 7698

Re: Are equities really as risky as anyone thinks?

10 years isn't long run enough. Anything can happen in 10 years. But if you wait another 10 years, and if that's insufficient, another 10, etc. eventually you will be able to capture increasing shares of the fundamental return, converging to 100% as the holding period is extended. If you have to wa...
by HomerJ
Thu Jul 30, 2015 8:41 pm
Forum: Investing - Theory, News & General
Topic: Can I be a Boglehead and a UAW?? [Under Accumulator of Wealth]
Replies: 27
Views: 2266

Re: Can I be a Boglehead and a UAW??

That formula is junk. My wife "retired" 3 years ago.... Suddenly, we became PAWs with half the income! We were fine with her quitting, but it seemed weird that suddenly we were doing so much better AFTER she quit. Two main problems with that formula... Age and Income... Income does not mat...
by HomerJ
Thu Jul 30, 2015 4:56 pm
Forum: Investing - Theory, News & General
Topic: Are equities really as risky as anyone thinks?
Replies: 203
Views: 7698

Re: Are equities really as risky as anyone thinks?

rca1824 wrote:if price falls but earnings remain constant, your long run return will be unaffected.


Why would earnings remain constant?
by HomerJ
Thu Jul 30, 2015 4:51 pm
Forum: Investing - Theory, News & General
Topic: Scott Burns – Don’t quit your day job.
Replies: 103
Views: 10362

Re: Scott Burns – Don’t quit your day job.

Likewise, I'm betting there were a few generations of folks in ancient Rome saying "this time it's different". They were all wrong except for the last generation. :) Heh, good point... :) To be clear I'm not trying to argue that this time it's different is really the case here. It very we...
by HomerJ
Thu Jul 30, 2015 4:42 pm
Forum: Investing - Theory, News & General
Topic: How has the 4% rule held up since the tech bubble and the 2008 crisis
Replies: 22
Views: 2485

Re: How has the 4% rule held up since the tech bubble and the 2008 crisis

It's not like 4% is bare-bones survival for most of us... "Failure" of the 4% rule of thumb means I may have to cut back to only 2 vacations a year for a couple of years instead of 4 vacations of year. What's this bit about vacations? I thought retirement was one big vacation! :) Trips I ...
by HomerJ
Thu Jul 30, 2015 4:27 pm
Forum: Investing - Theory, News & General
Topic: How has the 4% rule held up since the tech bubble and the 2008 crisis
Replies: 22
Views: 2485

Re: How has the 4% rule held up since the tech bubble and the 2008 crisis

If I understand the 4% rule correctly, you calculate you initial annual withdrawal amount (in dollars) as 4% of your portfolio. You then adjust the dollar amount up for inflation each year. I (and I suspect many people) won't really spend this way, so why should we care? Yeah, I just plan to pull 4...
by HomerJ
Thu Jul 30, 2015 4:24 pm
Forum: Investing - Theory, News & General
Topic: Are equities really as risky as anyone thinks?
Replies: 203
Views: 7698

Re: Are equities really as risky as anyone thinks?

If the price of a stock with a former earnings yield of 5% dropped 90% arbitrarily you could just buy more shares of it from your cash reserves and new dividends and you would be getting a 50% earnings yield on the new shares. What cash reserves? You're using them to buy food after you got laid off...
by HomerJ
Thu Jul 30, 2015 4:12 pm
Forum: Investing - Theory, News & General
Topic: How has the 4% rule held up since the tech bubble and the 2008 crisis
Replies: 22
Views: 2485

Re: How has the 4% rule held up since the tech bubble and the 2008 crisis

We are planning on a 2.4% withdrawal rate. If there is a boatload of cash left over, my heirs will think fondly of me for at least a few days. A low withdrawal rate does not mean living in poverty, however. We do not plan on lowering our standard of living; we just plan on saving enough that we kno...
by HomerJ
Thu Jul 30, 2015 4:04 pm
Forum: Investing - Theory, News & General
Topic: How has the 4% rule held up since the tech bubble and the 2008 crisis
Replies: 22
Views: 2485

Re: How has the 4% rule held up since the tech bubble and the 2008 crisis

We are planning on a 2.4% withdrawal rate. If there is a boatload of cash left over, my heirs will think fondly of me for at least a few days. A low withdrawal rate does not mean living in poverty, however. We do not plan on lowering our standard of living; we just plan on saving enough that we kno...
by HomerJ
Thu Jul 30, 2015 3:55 pm
Forum: Investing - Theory, News & General
Topic: How has the 4% rule held up since the tech bubble and the 2008 crisis
Replies: 22
Views: 2485

Re: How has the 4% rule held up since the tech bubble and the 2008 crisis

4% rule is far from safe unless you are planning for a very short retirement. You can go to cfiresim.com and run simulations. Vanguard also has one that seems more conservative https://retirementplans.vanguard.com/VGApp/pe/pubeducation/calculators/RetirementNestEggCalc.jsf I would personally aim fo...
by HomerJ
Thu Jul 30, 2015 1:48 pm
Forum: Personal Finance (Not Investing)
Topic: Priorities
Replies: 45
Views: 3109

Re: Priorities

My wife and I had always dreamed of retiring someday to a big lake house with a boat and a couple of jetskis. You know, someday... when we're 60 and retired. Two years ago, a good friend of hers from high school felt sick, went to the doctor, they found Stage IV cancer and she was dead 10 weeks late...
by HomerJ
Thu Jul 30, 2015 12:57 pm
Forum: Investing - Theory, News & General
Topic: Are equities really as risky as anyone thinks?
Replies: 203
Views: 7698

Re: Are equities really as risky as anyone thinks?

My main risk factor that I'm trying to avoid is a stock market crash followed by a very long recovery (or no recovery). I'm not worried about "only" getting 2% real over the next 10 years, or even the next 30 years. I'll be doing fine if that happens. I won't be rich, but I'll be fine. Wha...
by HomerJ
Thu Jul 30, 2015 12:49 pm
Forum: Investing - Theory, News & General
Topic: Are equities really as risky as anyone thinks?
Replies: 203
Views: 7698

Re: Are equities really as risky as anyone thinks?

I guess to some the process is to choose a desired return, say 6-7% real because that's the historical return, even though it's fairly clearly too high as an estimate of the expected return, then gauge 'risk' as the likelihood of undershooting the desired return. In which case 'risk' by that defini...
by HomerJ
Thu Jul 30, 2015 8:33 am
Forum: Investing - Theory, News & General
Topic: Are equities really as risky as anyone thinks?
Replies: 203
Views: 7698

Re: Are equities really as risky as anyone thinks?

It depends on what you define as risk and what your time frame is. Over the long run, the threat of inflation poses a bigger risk than the short-term gyrations of the stock market. In that sense, you might think of bonds as being risky investments too. ... So, if I put all my money in TIPS, it woul...
by HomerJ
Thu Jul 30, 2015 8:32 am
Forum: Investing - Theory, News & General
Topic: Are equities really as risky as anyone thinks?
Replies: 203
Views: 7698

Re: Are equities really as risky as anyone thinks?

Are equities really as risky as anyone thinks? I agree with the OP that Bogleheads generally overstate the risk of equities. When I see someone with a horizon of 30 years with 40% bonds because they fear the annual volatility, I believe they are being too timid. Serious question: Is there any chanc...
by HomerJ
Thu Jul 30, 2015 12:17 am
Forum: Investing - Theory, News & General
Topic: Are equities really as risky as anyone thinks?
Replies: 203
Views: 7698

Re: Are equities really as risky as anyone thinks?

We frequently hear the claim that "historically stocks always have beaten bonds if you wait thirty years," but it isn't so unless you carefully throw away the periods of history when they didn't. Heh, I wish I could post as well as nisiprius... :) Another reason for me to stick with my 50...
by HomerJ
Wed Jul 29, 2015 4:02 pm
Forum: Investing - Theory, News & General
Topic: Are equities really as risky as anyone thinks?
Replies: 203
Views: 7698

Re: Are equities really as risky as anyone thinks?

OP may not know that this topic has been discussed extensively in previous forum posts over the years. Try a search like this to find some of them: stocks risky long run site:bogleheads.org People seem to separate into two camps. One camp looks at historical results, especially for US stocks, and c...
by HomerJ
Wed Jul 29, 2015 3:27 pm
Forum: Investing - Theory, News & General
Topic: Malkiel on Chinese Stock Markets
Replies: 10
Views: 1391

Re: Malkiel on Chinese Stock Markets

Artsdoctor wrote:There are very, very smart investors and mentors on this forum who have advocated going heavy on the Chinese market.


There are? I don't remember seeing this.
by HomerJ
Wed Jul 29, 2015 2:47 pm
Forum: Investing - Theory, News & General
Topic: Are equities really as risky as anyone thinks?
Replies: 203
Views: 7698

Re: Are equities really as risky as anyone thinks?

Once your savings buffer is high enough that you can commit to never selling principle, the risk of stocks is nonexistent. Any temporary loss in market value will be recovered as the earnings and dividends come raining down. So you're saying that once you have so much money that you never need to s...
by HomerJ
Wed Jul 29, 2015 2:35 pm
Forum: Investing - Theory, News & General
Topic: Scott Burns – Don’t quit your day job.
Replies: 103
Views: 10362

Re: Scott Burns – Don’t quit your day job.

I'm surprised nobody has yet mentioned William Bernstein's paper, "The Paradox of Wealth and the End of History Illusion". (Here's one link where it's available.) I haven't read it in a while, but it has made a lasting impression on me... I don't recall if he specifically says what future...
by HomerJ
Wed Jul 29, 2015 1:29 pm
Forum: Investing - Theory, News & General
Topic: Are equities really as risky as anyone thinks?
Replies: 203
Views: 7698

Re: Are equities really as risky as anyone thinks?

Also, when people talk about a loss, they talk about a loss from the last peak. Typically, there has been a runup runup before a big loss due to a bubble forming (the bull goes up the stairs, the bear goes out the window), so the loss is not nearly as large as that from peak to trough. I'm not sure...
by HomerJ
Wed Jul 29, 2015 1:26 pm
Forum: Investing - Theory, News & General
Topic: Are equities really as risky as anyone thinks?
Replies: 203
Views: 7698

Re: Are equities really as risky as anyone thinks?

I just don't see why most people here have extreme bond-heavy allocations of only 30-60% equities. Also, I seem to remember you posting that you plan to buy enough SPIAs to cover all your expenses in retirement, and then just put the rest 100% equities... That is pretty much exactly the same as a h...
by HomerJ
Wed Jul 29, 2015 1:23 pm
Forum: Investing - Theory, News & General
Topic: Are equities really as risky as anyone thinks?
Replies: 203
Views: 7698

Re: Are equities really as risky as anyone thinks?

I keep coming back to the Mike Tyson quote "Everyone has a plan until they get punched in the face." I don't think OP has been rocked by the market before and 100% equities is fighting with your gloves down. Nothing in investing is certain, not even your time horizon. I don't plan to be 1...
by HomerJ
Wed Jul 29, 2015 12:50 pm
Forum: Investing - Theory, News & General
Topic: Are equities really as risky as anyone thinks?
Replies: 203
Views: 7698

Re: Are equities really as risky as anyone thinks?

The recovery might take a decade, but it always recovers with enough time. You mean "so far it always has recovered with enough time" Past-tense. May not apply to the future... And I submit that the recovery took a pretty long time during the Great Depression... I'm not sure how well a 10...
by HomerJ
Tue Jul 28, 2015 6:58 pm
Forum: Investing - Theory, News & General
Topic: Scott Burns – Don’t quit your day job.
Replies: 103
Views: 10362

Re: Scott Burns – Don’t quit your day job.

Context is important. You are 100% correct... Your case is indeed not as extreme I was making out since you plan to retire earlier than most and need your money to last many more years. So my apologies about the "ultra-conservative" comments... But you are in REALLY good shape if you have...
by HomerJ
Tue Jul 28, 2015 4:29 pm
Forum: Personal Finance (Not Investing)
Topic: Divorce [financial implications]
Replies: 72
Views: 6735

Re: Divorce

This is academic, but it's interesting how many times the 50/50 split came up. It seems so fair doesn't it. Regardless of the specific situation, starting net worth, relative participation in savings and discretionary spending, future income potential, etc. Somehow, the assets just ooze about and l...
by HomerJ
Tue Jul 28, 2015 4:06 pm
Forum: Personal Finance (Not Investing)
Topic: Divorce [financial implications]
Replies: 72
Views: 6735

Re: Divorce

Thanks for your responses. I'll check the divorce help site. I'm hoping to find some examples of parenting plans and financial distributions. I suspect my wife and I will be able to workout a good (in the context) plan for the kiddo. Assets are another story. I have assets that were accumulated pre...
by HomerJ
Tue Jul 28, 2015 1:56 pm
Forum: Investing - Theory, News & General
Topic: Scott Burns – Don’t quit your day job.
Replies: 103
Views: 10362

Re: Scott Burns – Don’t quit your day job.

This is sort of my take. I plan/test "nominally" with a relatively conservative number for returns (3.5% real over 30 years), targeting a relatively conservative withdrawal load (2.5% average). Just to be clear, 2.5% withdrawal is a super extreme conservative withdrawal rate, not "re...
by HomerJ
Tue Jul 28, 2015 1:43 pm
Forum: Investing - Theory, News & General
Topic: Scott Burns – Don’t quit your day job.
Replies: 103
Views: 10362

Re: Scott Burns – Don’t quit your day job.

The only actionable takeaway I see from the Burns article is to be conservative in planning for retirement, but what Boglehead didn't already know that? The problem of course is defining conservative. Is the 4% rule the more or less survived the great depression and the 70s conservative enough? Hal...
by HomerJ
Tue Jul 28, 2015 1:28 pm
Forum: Personal Finance (Not Investing)
Topic: Divorce [financial implications]
Replies: 72
Views: 6735

Re: Divorce

Thanks for your responses. I'll check the divorce help site. I'm hoping to find some examples of parenting plans and financial distributions. I suspect my wife and I will be able to workout a good (in the context) plan for the kiddo. Assets are another story. I have assets that were accumulated pre...
by HomerJ
Tue Jul 28, 2015 8:30 am
Forum: Investing - Theory, News & General
Topic: The Futility of Predicting Future Returns
Replies: 87
Views: 4017

Re: The Futility of Predicting Future Returns

I am a 3 fund guy myself, but we should recognize that the boglehead philosophy involves one key ingrained assumption. "Stuff always goes up over the long term" We are assuming that the future will roughly resemble the past, and that you can define the concept of a "long term", ...
by HomerJ
Tue Jul 28, 2015 8:25 am
Forum: Investing - Theory, News & General
Topic: The Futility of Predicting Future Returns
Replies: 87
Views: 4017

Re: The Futility of Predicting Future Returns

Being in value stocks in '96 you'd have missed about 10% of the upside of a bubble, and 90% of the downside when it burst; Citation please... ALL value stocks or value stock funds performed this way? Or, looking back, you've found a couple of value stock funds (out of a hundred) that did this well ...
by HomerJ
Mon Jul 27, 2015 10:39 pm
Forum: Investing - Theory, News & General
Topic: The Futility of Predicting Future Returns
Replies: 87
Views: 4017

Re: The Futility of Predicting Future Returns

Again, valuation is not a market timing tool - it can be a market sentiment and an indicator of future returns An indicator of short-term future returns... and still not that accurate (look at CAPE in 2012 and 1996) Moving from one market to a different market based on valuations is market timing.....
by HomerJ
Mon Jul 27, 2015 10:08 pm
Forum: Investing - Theory, News & General
Topic: The Futility of Predicting Future Returns
Replies: 87
Views: 4017

Re: The Futility of Predicting Future Returns

Analysts can see when a sector's overheating, but they can't bring it down themselves; they can just avoid it Really? Seems like we always have analysts on both sides of the table all the time... We have analysts calling for a crash in 2009 and being right... We have analysts calling for a crash in...
by HomerJ
Mon Jul 27, 2015 9:21 pm
Forum: Investing - Theory, News & General
Topic: The Futility of Predicting Future Returns
Replies: 87
Views: 4017

Re: The Futility of Predicting Future Returns

I'm curious... what does the 30-year chart look like? The first chart below shows long-term government bonds yields and their subsequent 20-year returns for 1926-1990 (the best I could do). The basic relationship between starting yield and eventual return still holds, but with a bit more noise: htt...
by HomerJ
Mon Jul 27, 2015 5:09 pm
Forum: Investing - Theory, News & General
Topic: The Futility of Predicting Future Returns
Replies: 87
Views: 4017

Re: The Futility of Predicting Future Returns

For bonds, there has been a fairly tight relationship between current yields and future returns (R^2 = 0.92, chart below), over various historical periods: http://i.imgur.com/193FlmO.png Source: Wade Pfau et al. I'm curious... what does the 30-year chart look like? http://i.imgur.com/InZchVp.jpg So...
by HomerJ
Mon Jul 27, 2015 5:05 pm
Forum: Investing - Theory, News & General
Topic: The Futility of Predicting Future Returns
Replies: 87
Views: 4017

Re: The Futility of Predicting Future Returns

longinvest wrote:It is so liberating to toss future return predictions aside and simply embrace accepting market returns, as uncertain as they are.


Such a great post.
by HomerJ
Mon Jul 27, 2015 4:18 pm
Forum: Investing - Theory, News & General
Topic: Scott Burns – Don’t quit your day job.
Replies: 103
Views: 10362

Re: Scott Burns – Don’t quit your day job.

And I don't see a conflict between 10 and 30 yr estimate of E[r] being of much significance as long as we remain laser focused on not confusing expected return with realized future return. Can you explain this? I must be confusing the two. if there's a real reason to think the *expected* EPS growth...
by HomerJ
Mon Jul 27, 2015 2:21 pm
Forum: Investing - Theory, News & General
Topic: Scott Burns – Don’t quit your day job.
Replies: 103
Views: 10362

Re: Scott Burns – Don’t quit your day job.

But 'reversion to the mean' from here should mean lower returns than historical, because valuations have risen very significantly above the historical mean, especially going back a whole 100 yrs. I do not believe this is accurate, unless you are speaking only of the short-term. The historical mean ...
by HomerJ
Mon Jul 27, 2015 1:51 pm
Forum: Investing - Help with Personal Investments
Topic: How long until a $10,000 loss matters?
Replies: 39
Views: 3320

Re: How long until a $10,000 loss matters?

But I would like insight into how my mindset might change once I am dependent on my portfolio to help take care of me. Again, I would suggest looking at the big picture... If your portfolio is up $400,000 over the last 3 years, then maybe you can change your mindset to see it reduced to a $390,000 ...
by HomerJ
Mon Jul 27, 2015 1:27 pm
Forum: Investing - Theory, News & General
Topic: Why do people buy annuities?
Replies: 73
Views: 7795

Re: Why do people buy annuities?

Imagine if you gave me $1000 today, and in 10 years I promised to give you $2000... BUT you could only use that money to buy from my store where everything costs 25% more than normal... Did your $1000 really grow to $2000 or to $1600? An insurance salesman will swear up and down that he's giving you...
by HomerJ
Mon Jul 27, 2015 1:22 pm
Forum: Investing - Theory, News & General
Topic: Why do people buy annuities?
Replies: 73
Views: 7795

Re: Why do people buy annuities?

HomerJ For GWLB annuities, as I have stated before, the Income Account is not a "cash value" account. It is a value which the Income is calculated when the Income option is called. The Actual/Account Value is the liquidation account. You are perpetuating a fallacy that the Income Account ...
by HomerJ
Mon Jul 27, 2015 12:36 pm
Forum: Investing - Help with Personal Investments
Topic: How long until a $10,000 loss matters?
Replies: 39
Views: 3320

Re: How long until a $10,000 loss matters?

Besides, you gain and lose $10,000 all the time... That's 1% of a million dollars... 2% of $500,000... If you retire with $500,000 in stocks, you're going to see 2% changes up and down all the time... Losing or gaining $10,000 from your portfolio better not materially affect your retirement, or you ...
by HomerJ
Mon Jul 27, 2015 12:29 pm
Forum: Investing - Help with Personal Investments
Topic: How long until a $10,000 loss matters?
Replies: 39
Views: 3320

Re: How long until a $10,000 loss matters?

VTSAX (Vanguard Total Stock Market) is up 2.3% for the year...

VBTLX (Vanguard Total Bond Market) is up (barely) 0.28% for the year...

I haven't lost any money yet this year.

If you gain $12,000 first, I don't think losing $10,000 should be a scary event.
by HomerJ
Mon Jul 27, 2015 8:20 am
Forum: Investing - Theory, News & General
Topic: Why do people buy annuities?
Replies: 73
Views: 7795

Re: Why do people buy annuities? Because Its All About Risk

You need to look deeper... Almost all those policies have some kind of limits... Some will say 12% max gain a year, usually even sneakier by saying 1% max a month, so if the market goes up 5% in one month, you only see 1% of that. Almost all won't give you dividends, so there's 2% you would have go...
by HomerJ
Mon Jul 27, 2015 12:11 am
Forum: Investing - Theory, News & General
Topic: Why do people buy annuities?
Replies: 73
Views: 7795

Re: Why do people buy annuities? Because Its All About Risk

The other insurance feature of annuities for us, is the Protective Put, in GWLB deferred Variable Annuity. I get to limit the downside risk by paying the insurance company a known premium yet keep my ability for unlimited upside gain. I'm sorry to contradict you, but you do NOT have "unlimited...
by HomerJ
Sun Jul 26, 2015 7:27 pm
Forum: Investing - Theory, News & General
Topic: Scott Burns – Don’t quit your day job.
Replies: 103
Views: 10362

Re: Scott Burns – Don’t quit your day job.

I haven't used firecalc in a while, but if it relies on long-term historical returns, then I personally wouldn't base my planning on it - I'm sure others differ, but in the current yield/risk premium environment I think that would be wishful thinking. So what you are saying is the next 30 years wil...
by HomerJ
Sun Jul 26, 2015 4:17 pm
Forum: Investing - Theory, News & General
Topic: Scott Burns – Don’t quit your day job.
Replies: 103
Views: 10362

Re: Scott Burns – Don’t quit your day job.

EmergDoc wrote:So if 4% worked retiring in 1929, you've got to really wonder how bad it has got to be that you personally need to go to a 3% rate.


This.
by HomerJ
Sun Jul 26, 2015 4:14 pm
Forum: Investing - Theory, News & General
Topic: Scott Burns – Don’t quit your day job.
Replies: 103
Views: 10362

Re: Scott Burns – Don’t quit your day job.

I haven't used firecalc in a while, but if it relies on long-term historical returns, then I personally wouldn't base my planning on it - I'm sure others differ, but in the current yield/risk premium environment I think that would be wishful thinking. So what you are saying is the next 30 years wil...
by HomerJ
Sun Jul 26, 2015 4:07 pm
Forum: Investing - Theory, News & General
Topic: Scott Burns – Don’t quit your day job.
Replies: 103
Views: 10362

Re: Scott Burns – Don’t quit your day job.

Someone who postponed retirement 1-3 years in 2010 would be financially much better off than the person who didn't. Anyone who postpones retirement for 1-3 years is ALWAYS financially better off than the person who didn't. What does 2010 have to do with it? Of course, there are always other conside...

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