Tips on answering the question - What Should I Do?

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Postby sambuca08 » Thu Mar 25, 2010 12:01 am

I believe this thread should be closed at this point. We're at a near equilibrium where the 'what should we do' is no longer a pressing question (in a bogglehead sense).
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Postby oragne lovre » Thu Mar 25, 2010 1:01 am

sambuca08 wrote:I believe this thread should be closed at this point. We're at a near equilibrium where the 'what should we do' is no longer a pressing question (in a bogglehead sense).


I disagree.
This thread is probably one of the best I've seen on this forum.
For those who did "buy like crazy" at the end of 2008 and early 2009, "what should we do" question may still be relevant since their equities may be overweighing now.
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Postby peter71 » Thu Mar 25, 2010 8:31 am

oragne lovre wrote:
sambuca08 wrote:I believe this thread should be closed at this point. We're at a near equilibrium where the 'what should we do' is no longer a pressing question (in a bogglehead sense).


I disagree.
This thread is probably one of the best I've seen on this forum.
For those who did "buy like crazy" at the end of 2008 and early 2009, "what should we do" question may still be relevant since their equities may be overweighing now.


It looks like the S&P closed at 998 on the day of Rick's post (Oct 14, 2008) so while I have no objection to preserving the sticky we're only up about 17% (excluding dividends) from there . . . that's obviously a nice 18-month gain, but actually not all that far above the historical average.

All best,
Pete
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Postby Rick Ferri » Thu Mar 25, 2010 9:00 am

I could have made this post yesterday. It's not about market timing.

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Postby Bongleur » Wed Jan 26, 2011 8:40 pm

Rick Ferri wrote:Government statistics clearly show that an 85 year old will spend less in inflation adjusted dollars than they did when they were 75, and considerably less than when they were 65.
Rick Ferri


... until somebody falls & breaks a hip, as happened to my neighbor today. Another recently had a two strokes out of the blue & won't be coming back from a nursing home.

Discussions of retirement AA and SWR never explicitly mention that you ought to have a separate account for that Black Swan event. Nice if you have lump-summed a good insurance policy (although Long Term Care has gotten _really_ expensive at the moment, due to the 2008 crash & recent data on longevity costs). Otherwise some of that 4% SWR needs to be going into that insurance policy every year.


"People who are withdrawing 7% or more from a portfolio need to be conscious of their burn rate under different scenarios."

Boy, that's a good way of looking at things. A spreadsheet to create some graphs would be really useful to get a feel for the where the parameters suddenly go bad.
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Postby Cruncher » Tue Apr 05, 2011 3:06 am

Rick,

1st nice avatar (little picture or whatever it's called), this coming from a fellow 7523. I was never a Blue (not polished enough I guess), but I have a lot of friends who were at some point.

I was not a Boglehead in '08. I think the crash of 08 led me to search for another way. I don't remember exactly how or where I found Jack's ways but I am glad I did.

There is a tremendous amount of great guidance out there, thanks for being a great source of information!

Very nice thread!

s/f,
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Postby Rick Ferri » Tue Apr 05, 2011 8:21 am

Thanks for your post.

I wasn't a Blue Angel either. Just a wanna-be. Someday, though, when I slip the surly bonds of Earth.

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Re: Tips on answering the question - What Should I Do?

Postby Mogo1 » Fri Nov 04, 2011 8:06 am

I am currently doing index asset allocation using information from the Simba spreadsheet. My basic question is through simple observation. Why would anyone think that asset allocation or indexing in the future would do any better than any other managed investment system. It is also based on past probabilities. I have watched the markets for the last 20 years and they aren't the same beast they were 30 years ago. The huge firms are program trading and are of such a volume that they can drive the market. These guys are working in second by second trading with massive computer trading programs and I can visualize them leveraging their power enough to make the stockmarket go sideways while they take all the profits out of the market. Meanwhile they control the stockmarket news sources and ask the small investor to leave his money in the market and give him a 3 day clearing period in his retirement accounts. I can see these guys causing a run on the markets and them leaving with all the profits and the small investor taking the hit, similar to 2008. My gut feeling is that the top 1to 2% have enough leverage and have set the rules to rig the market enough to make the stockmarket go sideways are even down for perpetuity. I think we are seeing some of the evidences of this from 2008. If the old adage that for every loser there is a winner is true, someone made some big money shorting the market in 2008. Is there any justification or evidence in my gut feelings.
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Re: Tips on answering the question - What Should I Do?

Postby Rick Ferri » Sat Nov 05, 2011 7:01 pm

Mogo1,

Stay calm. Don't go off the deep end. This market is no different than 30 years ago.No one is controlling the news or the markets. The volatility today is no higher than the historically average. In summary, this time is NOT different.

Rick Ferri
Last edited by Rick Ferri on Sun Nov 06, 2011 9:48 pm, edited 1 time in total.
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Re: Tips on answering the question - What Should I Do?

Postby zagyzebra » Sun Nov 06, 2011 11:11 am

I have a hard time believing the markets are no different than they were 30 years ago, though I have no empirical evidence to support my belief. I wish my dad were still alive to discuss this with. I'd love to get his opinion. I don't think Mogo's concerns are unjustified. Jeez...look what happened with credit default swaps! The point is, huge corporations can make en masse decisions that alter entire sectors or markets (and economies), thus rendering the average investor as nothing more than a pawn in their game. I bought into that old adage of having a diversified portfolio and expecting an average 5% gain every year. Twenty years later (more than the last ten have been extremely turbulent) I am worse off than when I started. I never thought, when I first started investing, that there would be extended periods of time when the only way I could grow my investments would be to short my securities. My only consistently strong investments have been property -- and even then, to put it in Mogo's terms, the "top 1-2% had enough leverage and set the rules to rig the market" enough for it to go down. I'm hoping it won't be in perpetuity. I hate to be a pessimist. But I see it like Mogo.
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Re: Tips on answering the question - What Should I Do?

Postby Bongleur » Sun Nov 06, 2011 3:26 pm

Rick Ferri wrote:Mogo1,

Stay calm. Don't go off the deep end. This market is no different than 30 years ago. Controlling
No one is controlling the news or the markets. The volatility today is not higher than the historically average. In summary, this time is NOT different.

Rick Ferri


Investing boldly when there is blood on the financial streets is a risky way to make high returns. OTOH it requires correct timing...

I'd like to hear a case for & against for near-retirees who don't require a lot more lifetime gain, but who would be seriously impaired by a sequence of losses starting "now."

Seems to me that currently there is a much higher than average risk of a period of a "sequence of bad returns." Can anyone refute that perception?
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Re: Tips on answering the question - What Should I Do?

Postby Rick Ferri » Sun Nov 06, 2011 9:50 pm

zagyzebra wrote:I have a hard time believing the markets are no different than they were 30 years ago, though I have no empirical evidence to support my belief.


My point exactly. There is no difference in this market or any other market over the past 200 years.

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Re: Tips on answering the question - What Should I Do?

Postby zagyzebra » Sun Nov 06, 2011 11:58 pm

FERRI - Then can you address Boongier's question, as stated below?...

I'd like to hear a case for & against for near-retirees who don't require a lot more lifetime gain, but who would be seriously impaired by a sequence of losses starting "now."

Seems to me that currently there is a much higher than average risk of a period of a "sequence of bad returns." Can anyone refute that perception?
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Re: Tips on answering the question - What Should I Do?

Postby Rick Ferri » Tue Nov 15, 2011 11:59 am

zagyzebra wrote:FERRI - Then can you address Boongier's question, as stated below?...

I'd like to hear a case for & against for near-retirees who don't require a lot more lifetime gain, but who would be seriously impaired by a sequence of losses starting "now."

Seems to me that currently there is a much higher than average risk of a period of a "sequence of bad returns." Can anyone refute that perception?


There is no one-size-fits-all asset allocation method. If a person is retired or retiring with just enough assets to get by, they should not be taking a lot of risk.
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Re: Tips on answering the question - What Should I Do?

Postby Bongleur » Tue Nov 15, 2011 7:54 pm

Come to think of it, it follows that the portion used for risk should be in taxable accounts, so that if you have guessed wrong to can at least utilize tax loss harvesting.
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Re: Tips on answering the question - What Should I Do?

Postby zagyzebra » Tue Nov 15, 2011 8:08 pm

"Come to think of it, it follows that the portion used for risk should be in taxable accounts, so that if you have guessed wrong to can at least utilize tax loss harvesting."

Why didn't I think of that??!!
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Re: Tips on answering the question - What Should I Do?

Postby heirloom » Sat Dec 10, 2011 1:18 pm

Meanwhile they control the stockmarket news sources and ask the small investor to leave his money in the market and give him a 3 day clearing period in his retirement accounts.
'

I definately agree whith this assessment. Thirty yrs. ago we didn't have the media on television to help manipulate certain stocks. Just watch Jim Cramer or Fast Money and write the stocks they recommend. Look at them the next day and see how much they go up. I do believe a lot of the stocks are good picks, but some are stocks that their portfolio already hold and needs a bump up. When the stocks go up after us suckers purchase them, they sell. But, they never tell us they sold them until someone calls or writes in to inquire about them.

I took an early retirement in May and have selected Stabel Value and bond funds in my 401K...thats it, and I haven't lost anything. When the mkt goes down again...which I guarantee it will....I am going to invest in VTINX. It has done better than the bond funds and I think it is because it is invested in the inflation adjusted bond fund too. Inflation is definately going to go up. I'll stay there until Europe and China are stable, then I'll start investing in pure equity funds again.

I do admit I have an IRA for play that I have stocks in. I have lost money in it because of some bad picks, but they will go up again.....patience.
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Re: Tips on answering the question - What Should I Do?

Postby YoungBoglehead » Sun Dec 11, 2011 11:46 pm

Does anybody have a link where I can learn what equities are?


I'm doing the index fund part, don't know what equities are.

or if you will willing to explain here, I will bookmark & refresh soon

edit: Age 23
age: 25. Joined when I was 23.
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Equities ?

Postby Taylor Larimore » Thu Dec 22, 2011 12:01 pm

Hi Mason:

Here's your link:

http://www.investopedia.com/terms/e/equ ... z1hHPNDpmd

Best wishes.
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Re: Tips on answering the question - What Should I Do?

Postby hq38sq43 » Wed Feb 29, 2012 2:04 am

In addition to Jack Bogle; Jane Bryant Quinn,, Andrew Tobias, Warren Buffett and others of like stature remind constantly that equity investments are not just pieces of paper (or blips on a computer screen) whose value fluctuates, but part ownership of companies, whose value ultimate depends on financial success or failure of the companies. The difficulty, even impossibility, for most individual investors to meaningfully judge the financial prospects of individual companies is the reason all such commentators recommend index investing for most investors. As Mr. Bogle has stated many times in many ways, investing in a broad index like the S&P 500 or Wilshire 5,000 mathematically guarantees getting ones fair share of the earnings of the American economy: no more, no less. Jane, analogizes it to shooting par at golf, a score that all golfers aspire to but few attain consistently. Golfers who always go for the green and investors who try to beat the market play a losers game, i.e., go against the odds. Bogleheads recognize and act on this truth and conserve time, energy, and sanity by settling for par.
Harry at Bradenton
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Insightful post

Postby Taylor Larimore » Wed Feb 29, 2012 8:18 am

Harry:

Thank you for a very insightful post.

Best wishes
Taylor
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Re:

Postby conradjr » Fri Mar 23, 2012 6:51 pm

Roberteyewhy wrote:Calm, logical and non-emotinal words of wisdom from Rick Ferri!

"It's only a loss if you sell."

Thanks,
Robert

P.S. My mom at 78 finally retired in December '07 and I changed her portfolio to 100% Admiral Treasuries MMF early that month. Paid of ALL her existing debts too.


what if I don't sell and the stock flops, is that a loss?
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Re: Tips on answering the question - What Should I Do?

Postby Hexdump » Sun Mar 25, 2012 1:29 pm

This seemed like the best place to post my query rather than to start something new.

I am wondering if I need to anything different. Presently we are sticking to our 75/25 and maintaining our life style without depleting our capital.

------------Politics to be avoided-------------------------

However, I have been reading Paul Ryan's statements on the future of the U.S. economy and I think there is a chance that I will see the rolling over the cliff edge in my lifetime.
I think we will see super inflation and possibly another depression.

So, for my benefit, if now it truly is different, what is there I can do after I stock up on bullets, beans, and bandages ?
Or can you point me to a site that talks about a doomsday scenario like I posited ?

-------------- A hat tip to pundit and pundette
There’s a famous exchange in Hemingway’s The Sun Also Rises. Someone asks Mike Campbell, “How did you go bankrupt?” “Two ways,” he replies. “Gradually, then suddenly.” We’ve been going through the gradual phase so long, we’re kinda used to it. But it’s coming to an end, and what happens next will be the second way: sudden, and very bad.
----------------
I am trying to prepare for the "very bad "
thanks
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Re: Tips on answering the question - What Should I Do?

Postby yobria » Sun Mar 25, 2012 1:42 pm

Hexdump wrote:However, I have been reading Paul Ryan's statements on the future of the U.S. economy and I think there is a chance that I will see the rolling over the cliff edge in my lifetime. I think we will see super inflation and possibly another depression.


Don't forget zombies. They often show up at the End Times.
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Re: Tips on answering the question - What Should I Do?

Postby umfundi » Sun Mar 25, 2012 2:16 pm

I think we will see super inflation and possibly another depression.


Go and read what Zvi Bodie says. He has a site, and there are plenty of YouTube videos.

Basically, he will tell you to build a floor of TIPS, I-Bonds, and inflation-indexed annuities to provide at least your minimum retirement income needs.

I don't endorse what he says, but it sort of answers your question.

Keith
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Re: Tips on answering the question - What Should I Do?

Postby Bongleur » Mon Mar 26, 2012 12:05 am

umfundi wrote:
I think we will see super inflation and possibly another depression.

build a floor of TIPS, I-Bonds, and inflation-indexed annuities to provide at least your minimum retirement income needs.


If it gets "that bad" then all Govt bonds are in danger of taking a haircut; TIPs won't be exempted. And the insurance companies will be going belly up, and there won't be enough $$$ in the State Guarantee funds to refund all the principle -- and I don't think that those funds are even designed to do more than that (ie they don't continue the annuity payments to you).

Your concerns require you to figure out how to "get out in time" and structure your portfolio so that it _can_ be gotten out (will your bonds sell for your purchase price? Can you afford to lose the capital gains taxes if you sell all equities?).

And Depression = DEflation, not INflation.
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Re: Tips on answering the question - What Should I Do?

Postby Hexdump » Mon Mar 26, 2012 11:12 am

Bongleur wrote:
umfundi wrote:
I think we will see super inflation and possibly another depression.

build a floor of TIPS, I-Bonds, and inflation-indexed annuities to provide at least your minimum retirement income needs.


If it gets "that bad" then all Govt bonds are in danger of taking a haircut; TIPs won't be exempted. And the insurance companies will be going belly up, and there won't be enough $$$ in the State Guarantee funds to refund all the principle -- and I don't think that those funds are even designed to do more than that (ie they don't continue the annuity payments to you).

Your concerns require you to figure out how to "get out in time" and structure your portfolio so that it _can_ be gotten out (will your bonds sell for your purchase price? Can you afford to lose the capital gains taxes if you sell all equities?).

And Depression = DEflation, not INflation.


Thank you Bongleur, those are the kinds of thoughts I was looking for.
In my opinion, it's going to be depression or hyper-inflation, and the key is to recognize that it is about to happen.
What could I use as triggers/benchmarks that would indicate that the manure is about to hit the fan ?
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Re: Tips on answering the question - What Should I Do?

Postby Bongleur » Mon Mar 26, 2012 1:17 pm

>What could I use as triggers/benchmarks that would indicate that the manure is about to hit the fan ?

Dunno. Just noticed my crystal ball is actually made of Lucite... Personally I'm basically in Cash & Short Treasuries at present because I think things will either get nasty or recover in the next few years and Capital Preservation trumps Growth in my circumstances. The most I can lose is inflation, but short Treasuries will follow inflation up.

A 20-something might want to roll the dice and go 100% equities now and keep adding when the streets get bloody.
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Re: Tips on answering the question - What Should I Do?

Postby umfundi » Mon Mar 26, 2012 3:00 pm

What could I use as triggers/benchmarks that would indicate that the manure is about to hit the fan ?

Sorry, if you are a Boglehead, you are doomed. You believe that markets are efficient, and all available information is already factored in. There is no way you will recognize the situation in time to take advantage of it.

Keith

PS: Is there a spare room in your cabin?
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Re: Tips on answering the question - What Should I Do?

Postby hpowders » Fri Sep 07, 2012 4:54 pm

Another limiter on retirement spending is that many of us who retire move from expensive places to much cheaper ones. I moved from NYC to Tampa and the cost of living comparison is unreal. Glad I made the move! The cherry on the cake is you can drive 80 mph on the interstate in Tampa with no "input" from the authorities wheras in NYC if you drive 65, you start getting paranoid! :happy
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Re: Tips on answering the question - What Should I Do?

Postby woodedareas » Sat Sep 22, 2012 10:52 am

I have read this thread several times and forgive me but the very concept of asset allocation must be re-examined during these times. Many readers probably believe the Bogle of general index investing into a few groups and generally i do not agree. But that is where we are in a different world today.
Here a a few thought for retired or near retired persons, and I am not offering any investment advice but I am sharing my process of investing during these difficult times. Don't jump into any funds if you haven't already done so.DO NOT TAKE ANY RISK AT THIS TIME UNLESS YOU NEED TO IN ORDER TO SURVIVE. Afew thoughts that are guiding me at this time and for the next several months:
1. Don't do anything until after the election unless you have need to rebalance your portfolio for other reasons and have failed to do so.
2. If you can afford it, keep as much money in cash , especially if you do not need income at this time. Even 1% CD's.
3. Consider the possibility that inflation will be present over the next 1 to 3 years, and rates may go up.
4. Consider your cash as a great buying opportunity to lock into good rates for the remainder of your life.
5. Don't rush into the market simply because you read what supposed experts tell you. They are still working, and as I recall Mr. Ferri has an investment management firm that will take your money for a fee and mange it for you.In this respect he and others including your broker make a profit on your money while you take the risk.
6. I do like certain index mutual funds such as Vanguard because they are inexpensive and and in many instances do better than the brokers and mangers.I currently do not own any.
7. Read as much as you can and for now do nothing unless you have a pending problem that must be adjusted.
8.The folks that give advice won't be there to pick you up when you falter, but you will be there and be responsible for your own decisions.
9.Use different service providers and don't rely on one broker or advisor,I talk with about 4 brokers, banks, and others in order to determine the type of FIXED income opportunities available and often disregard all advice or select one Contact these people every few months to see what is available. the election it may be necessary to move into more highly rated corporate bonds but select a return that fits into you required projections. In other words if you need 4% on your total portfolio to live adequately do not be frightened to invest for a longer term bond.But invest only a small portion of your cash into such instruments one at a time, and very slowly so you will have buying opportunities to increase your return when they present themselves.Be careful of bonds that have LIBOR rate or anything else you do not understand and read the prospectus before buying. I often have made this mistake and the broker has given me incorrect advice.
10.GO very slow, and remember how many people in your life time have given you advice and yes you have figured it out by yourself.
11. If you feel you are completely lost and can not mange without competent help, get it. There are some vey large reputable banks that have high fees but at least they can give you guidance.
12. I am opposed to using money mangers as I have almost no voice in what they are doing with my money and I have worked to hard to give it to someone and hope for the best.
13. I am not opposed to listening or seeking help from a senior staff member of a reputable financial institution just as long as I make the final decision on each investment and I meet with them at least quarterly.
14. I visited an office of a national brokerage firm and I was introduced to a young man about 30 years of age. I asked for his educational credentials and his experience and I was impressed except for the fact he was too young and did not have enough years under his belt.Then as I was sitting there I realized that I had worked for 40 years to secure funds for retirement, and why would I seek the advice of a person with almost no experience other than what his brokerage house provides to him.I listened and left and learned.
15. A few weeks ago my wife and I visited a large bank. They of course were interested in managing our money. That will not happen, but I did meet a senior investment advisor and I do plan to listen to him periodically.
16. I guess by this time you understand that I am too conservative to rely on the Bogle theory, but do fully agree with asset allocation. As far as indexing I may use a small portion of my funds for that purpose, but like investment advisors I am not going to rely on it.
17. Stop and think about our economy. The US prints money and uses it to purchase and buy back our own investments. Foreign countries are in deep trouble and even China is looking less interested in our bonds.We have extraordinarily high unemployment,and we are in such debt that most of us will see no significant change in our lifetime.A high percentage of our population is reliant on government funds and our business environment is struggling.A very bleak outlook that we must understand and deal with.

Hope I haven't insulted anyone, but it is not business as usual, and we must view the stock market differently that we did a decade ago. Yes it is true the market recovered from some very dire circumstances, but the past is a not a predictor of the future, Ever hear this before.

Hope I haven'y insulted anyone but this is what I am doing at least for now.
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Re:

Postby woodedareas » Sun Sep 23, 2012 8:03 am

Heath wrote:Rick, with all due respect, I must disagree with what you are saying. I understand that your advice is straight from the Diehard playbook, but this time it is different. If one were to consult with the 10 most respected authorities on the economy (you pick) all would say that this crisis is at least the second worst since ’29. All would say that the economy will not recover for a long time. Most would say that at best the market will not increase but more likely the market will decline until recovery.

So my question is what is the hurry? Of course the market might rebound tomorrow, but the broad consensus is that it will not. Why not instead go with the probabilities and wait-and-see?

I fully agree as we are in a different world. Time to wake up and be cautious. keep in cash to the extent that you can afford todo so, and invest in whatever you want but VERY slowly.
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Re: Re:

Postby Rick Ferri » Sun Sep 23, 2012 6:42 pm

woodedareas wrote:
Heath wrote:Rick, with all due respect, I must disagree with what you are saying. I understand that your advice is straight from the Diehard playbook, but this time it is different. If one were to consult with the 10 most respected authorities on the economy (you pick) all would say that this crisis is at least the second worst since ’29. All would say that the economy will not recover for a long time. Most would say that at best the market will not increase but more likely the market will decline until recovery.

So my question is what is the hurry? Of course the market might rebound tomorrow, but the broad consensus is that it will not. Why not instead go with the probabilities and wait-and-see?

I fully agree as we are in a different world. Time to wake up and be cautious. keep in cash to the extent that you can afford todo so, and invest in whatever you want but VERY slowly.


woodedareas,

What YEAR was this response that you're agreeing with? You do know that my original post was in October 2008, correct? The S&P 500 has gained about 80% in total return since then.

Rick Ferri
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Re: Re:

Postby rustymutt » Sun Sep 23, 2012 7:14 pm

woodedareas wrote:
Heath wrote:Rick, with all due respect, I must disagree with what you are saying. I understand that your advice is straight from the Diehard playbook, but this time it is different. If one were to consult with the 10 most respected authorities on the economy (you pick) all would say that this crisis is at least the second worst since ’29. All would say that the economy will not recover for a long time. Most would say that at best the market will not increase but more likely the market will decline until recovery.

So my question is what is the hurry? Of course the market might rebound tomorrow, but the broad consensus is that it will not. Why not instead go with the probabilities and wait-and-see?

I fully agree as we are in a different world. Time to wake up and be cautious. keep in cash to the extent that you can afford todo so, and invest in whatever you want but VERY slowly.



Cash does nothing for an investor. In fact if can loose quite easy it's purchasing power with inflation happening. While it may sound good in principle to hold cash, reality shows it's a bad way for investors to go. Having a small cash balance is OK, but not a large one. Diversification, and time, are the keys to investing.
At the Very Least, Work Hard, Do Your Best, Know the Truth and the Facts and Always Be Honest!
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Re: Re:

Postby hpowders » Tue Oct 09, 2012 8:53 am

Rick Ferri wrote:
woodedareas wrote:
Heath wrote:Rick, with all due respect, I must disagree with what you are saying. I understand that your advice is straight from the Diehard playbook, but this time it is different. If one were to consult with the 10 most respected authorities on the economy (you pick) all would say that this crisis is at least the second worst since ’29. All would say that the economy will not recover for a long time. Most would say that at best the market will not increase but more likely the market will decline until recovery.

So my question is what is the hurry? Of course the market might rebound tomorrow, but the broad consensus is that it will not. Why not instead go with the probabilities and wait-and-see?

I fully agree as we are in a different world. Time to wake up and be cautious. keep in cash to the extent that you can afford todo so, and invest in whatever you want but VERY slowly.


woodedareas,

What YEAR was this response that you're agreeing with? You do know that my original post was in October 2008, correct? The S&P 500 has gained about 80% in total return since then.

Rick Ferri


That's like Andre Dawson being pulled out of the Wrigley Field ivy. "What year is it?" :mrgreen:
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Re: Re:

Postby sscritic » Tue Oct 09, 2012 9:26 am

Rick Ferri wrote:
woodedareas wrote:
Heath wrote:[stuff]

[stuff]

What YEAR was this response that you're agreeing with?

Heath's post is dated Fri Oct 24, 2008 11:38 am
Heath » Fri Oct 24, 2008 11:38 am

Not quite four years ago, but close.
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Re: Tips on answering the question - What Should I Do?

Postby Random Musings » Wed Oct 24, 2012 4:25 pm

woodedareas wrote:5. Don't rush into the market simply because you read what supposed experts tell you. They are still working, and as I recall Mr. Ferri has an investment management firm that will take your money for a fee and mange it for you.In this respect he and others including your broker make a profit on your money while you take the risk.
6. I do like certain index mutual funds such as Vanguard because they are inexpensive and and in many instances do better than the brokers and mangers.I currently do not own any.
11. If you feel you are completely lost and can not mange without competent help, get it. There are some vey large reputable banks that have high fees but at least they can give you guidance.


I don't believe that Mr. Ferri's 2008 guidance had instructed investors to "rush into the market". I would, however, prefer to use him as a low cost advisor (who uses index funds as per 6) rather than receive "guidance" from large "reputable" banks with high fees. In the long run, alpha is certainly hard to generate except for the diligent chosen lucky few.

Anywho, telling people in retirement or near retirement to be mostly in cash smacks of pure market timing. From prior posts, you are risk adverse in nature (which may be a function of your need/willingness/ability to take risk) and you have to remember than others are different. Perhaps you may be right, and perhaps you may be wrong. Volatility aside, I would bet that in the next 10 years, real returns on equities (let's say 60/40 domestic/int'l) will be higher than their bond counterparts. However, I'm not saying one won't be having to wear their big boy pants in order to stomach the most likely higher volatility that comes with owning equities. Perhaps the unpleasantness of downside volatility will come sooner rather than later, but that's a timing issue.

RM
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Re: Tips on answering the question - What Should I Do?

Postby lloydbraun » Fri Dec 21, 2012 9:51 pm

I hadn't been to the bogleheads site in a while, although I follow its core philosophies, and just saw some of the comments on this thread. Here's the take away: Rick Ferri gives good advice (I'm a big fan of his All About Asset Allocation book) and 25% of the respondents will only ever argue with him because it's all gold, doom, and gloom for them. I just want to take the time to thank Rick for his advice, which I heeded back when he first wrote it around the time I was still in my late 20s and had just found this forum.
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Re: Tips on answering the question - What Should I Do?

Postby Rick Ferri » Fri Dec 21, 2012 10:42 pm

Thanks! Happy Holidays to you and yours. :D

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Re: Tips on answering the question - What Should I Do?

Postby LFKB » Thu Jan 31, 2013 11:28 pm

I just read this thread for the first time. I wasn't investing other than my 401k in 2008 (my first year out of undergrad) but I found it very interesting to read and clearly Rick's advice was right on. We're lucky to have someone like him to provide posts like this in times like 2008 (and in all times really).
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Re: Tips on answering the question - What Should I Do?

Postby boggler » Fri Feb 22, 2013 4:13 am

Rick Ferri wrote:Here is how I believe people should handle the current situation based on how I classify investors;

* 1) Early Savers (20s and 30s) - buy equities index funds like crazy with what you can and do not look at your account balance for 10 years.



For mid-late 20s, how do you feel about leveraging up the equities to improve return over the long time horizon? Either using margin, options, or futures somehow.
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Re: Tips on answering the question - What Should I Do?

Postby Scott S » Tue Mar 19, 2013 3:19 pm

boggler wrote:
Rick Ferri wrote:Here is how I believe people should handle the current situation based on how I classify investors;

* 1) Early Savers (20s and 30s) - buy equities index funds like crazy with what you can and do not look at your account balance for 10 years.

For mid-late 20s, how do you feel about leveraging up the equities to improve return over the long time horizon? Either using margin, options, or futures somehow.

I'm not Rick, but that idea has been tried: viewtopic.php?t=5934 :wink:
My Plan: * Age-10 in bonds until I reach age 60, 50/50 thereafter. * Equity split: 50/50 US/Int'l, Bond split: 50/50 TBM/TIPS. * Everything over 2 months' expenses gets invested.
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Re: Tips on answering the question - What Should I Do?

Postby YoungBoglehead » Sun Mar 31, 2013 8:20 pm

Reading this thread for advice... the most frustrating thing about trying to learn anything these days is that there are 10 contradicting views on any given subject.

OP says for someone like me (24, saving, investing) I need to buy index funds with everything I can, and not look at my portfolio for 10 years. This is essentially what I'm doing now.

Then there are 20 posters after him that agree and 20 that post good arguments why this may not be a good idea and markets will decline, holding cash isn't a bad idea.


Oh well, guess I'll just keep buying and cross my fingers
age: 25. Joined when I was 23.
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Re: Tips on answering the question - What Should I Do?

Postby tj » Mon Apr 01, 2013 12:49 am

MasonSS wrote:Reading this thread for advice... the most frustrating thing about trying to learn anything these days is that there are 10 contradicting views on any given subject.

OP says for someone like me (24, saving, investing) I need to buy index funds with everything I can, and not look at my portfolio for 10 years. This is essentially what I'm doing now.

Then there are 20 posters after him that agree and 20 that post good arguments why this may not be a good idea and markets will decline, holding cash isn't a bad idea.


Oh well, guess I'll just keep buying and cross my fingers


Even the OP has suggested something entirely different. :)

See below:

http://www.rickferri.com/blog/strategy/ ... llocation/
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Re: Tips on answering the question - What Should I Do?

Postby Rick Ferri » Mon Apr 01, 2013 9:58 am

My advice in this late-2008 coversation was correct, although it is "perfect world" advice. In a perfect world, every young investor would have the experience to maintain a high level of equity in a deep bear market. We know it's not a perfect world. The Fligh Path approach to asset allocation acknowledges this reality. It offers a broad asset allocation solution for 401(k) plan participants etc where most investors have little or no experience.

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Re: Tips on answering the question - What Should I Do?

Postby OverTheHill » Thu May 30, 2013 10:56 am

I just read this for the first time, although I have seen it listed for a long time now. Given how old it is, I thought I would read it to see what Rick had to say back in the dark days. It's a really a good read, something that should be required reading by every investor. Well stated, Rick.
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Re: Tips on answering the question - What Should I Do?

Postby StarbuxInvestor » Thu Dec 19, 2013 11:06 am

Rick Ferri wrote:My advice in this late-2008 coversation was correct, although it is "perfect world" advice. In a perfect world, every young investor would have the experience to maintain a high level of equity in a deep bear market. We know it's not a perfect world. The Fligh Path approach to asset allocation acknowledges this reality. It offers a broad asset allocation solution for 401(k) plan participants etc where most investors have little or no experience.

Rick Ferri


I think it is excellent and touches on some of the real problems with other approaches.
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Re: Tips on answering the question - What Should I Do?

Postby siamond » Wed Jan 22, 2014 5:58 pm

OverTheHill wrote:I just read this for the first time, although I have seen it listed for a long time now. Given how old it is, I thought I would read it to see what Rick had to say back in the dark days. It's a really a good read, something that should be required reading by every investor. Well stated, Rick.

+1
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Re: Tips on answering the question - What Should I Do?

Postby Beliavsky » Mon Jun 30, 2014 12:42 pm

Rick Ferri wrote:* 3) Near Retirees and retirees (60s and 70s) - live off your cash flows from dividends, interests, Social Security, pensions, annuities, and other. Leave your principal alone. Rick Ferri[/b]

I don't think this is good advice because it could encourage people to take excessive credit risk to increase yield and avoid touching principal, when in fact taking credit risk (buying the high-yield bonds of one or a handful of companies) can put the entire principal at risk. "Spend down your principal gradually" is better advice than "leave your principal alone".
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Re: Tips on answering the question - What Should I Do?

Postby abyan » Sun Sep 14, 2014 1:56 am

Actually, a better tweak to Rick's advice, I'd argue, is not to say that people "should" spend their principal, even "gradually," but rather tell them not to spend principal, but also not to change their investment plan and suddenly switch to riskier investments in order to get more dividends or interest.
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