Change of heart on bonds

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staybalanced
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Change of heart on bonds

Post by staybalanced » Thu Jun 18, 2015 7:40 am

Currently my wife and I are age 29 with a low six figure portfolio at vanguard and net worth of around 400k (I own a small business with some real estate and other assets). We began investing in 2007 and at the time had very little money, our investments got crushed but we rode it out and kept buying. our income and assets have really exploded in the last 18-24 months. Probably on track to bring in 200-250k income this year.

Previously I was totally against bonds, but now that we actually have some money I don't know that I am as comfortable taking as much risk. I always thought I would be all stock all my life , even Peter lynch lays out a case in his book why one would never need to own bonds. But I have had an unexpected change of heart, thinking about phasing in a 10-20% FI allocation over next few years with new contributions. I feel like we can meet our goals with slightly less risks. I have read all the books popular on here , bogle, ferri, Siegel, graham, coffeehouse etc, so I understand the merits of the diversifying aspect of bonds. Has anyone else gone through this same psychology as they accumulated larger portfolios? it's easier to say you can handle a 50% haircut with a tiny portfolio and few responsibilities in life.

livesoft
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Re: Change of heart on bonds

Post by livesoft » Thu Jun 18, 2015 7:44 am

I wrote about this yesterday after a fashion:
livesoft wrote:I think it probably depends on how much one contributes each year to the portfolio, but not only in dollar amounts, but as a percentage of the existing portfolio. For instance, if one has a $500K portfolio now, but contributes $100K a year, then that is 20% of the existing portfolio. It makes it easy to recover and/or buy-low whenever equities drop and present buying opportunities. OTOH, if one is contributing $5,000 a year to a $500K portfolio, then when things drop, one has no resources to buy equities at a low point.
When one's annual contributions become only a small fraction of one's portfolio, then one sees that the portfolio does not recover so quickly.

Also, I think many people with large emergency funds kind of include that money in their portfolio and certainly in their net worth. At least it is always in the back of their minds. So a 100% $400K stock portfolio with a $100K emergency fund is really an 80/20 asset allocation.
Last edited by livesoft on Thu Jun 18, 2015 7:49 am, edited 1 time in total.
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Re: Change of heart on bonds

Post by Grt2bOutdoors » Thu Jun 18, 2015 7:48 am

Totally understandable, I would start adding fixed income when you reach the point of "we can still reach our goals if we hold less in riskier assets like equities". You've reached it, so you should adjust your asset allocation to reflect your need, ability and willingness to take risk.
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Re: Change of heart on bonds

Post by livesoft » Thu Jun 18, 2015 7:51 am

I think it is more about loss aversion than reaching goals. :) When folks see that they can replenish their portfolio relatively quickly with income, then they have less loss aversion. But when they see that the portfolio is so large that replenishing after a loss will take some time, that's when they have more loss aversion.
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Re: Change of heart on bonds

Post by nisiprius » Thu Jun 18, 2015 8:24 am

What livesoft is saying is exactly the way I experienced it personally. You can criticize it as "Beardstown Ladies" accounting* if you like, but what I found as my portfolio grew is that I really didn't mind losses as such, but I really hated seeing a lower total at the end of the year than at the beginning. I really hated it if the boat was sinking faster than I could bail. It's also why I personally detested car payments and mortgage payments--to continue the analogy, I felt more secure in a boat that didn't leak than in a leaky boat with a pump that could keep up with the leak.

Similarly, I found that whereas before 2008-2009 I would have guessed that a loss of, let's say 20% wouldn't hurt all that much--hey, it's just a percentage--when something like that actually happened I found that I was thinking of it in terms of absolute dollars and in years--the time it had taken me to save that much. Wow, all those years of not taking expensive vacations and not remodeling the house, all for nothing, shot to hell, just totally shot to hell.

Some will criticize my irrationality, but it's our money (I'm married) and our life, and we think we know what's right for us. It's OK to be bold and know it, it's OK to be timid and know it, but one of the ways investors do themselves serious harm is to be timid investors kidding themselves that they should invest like bold investors because someone showed them some statistics.

(*The Beardstown Ladies were a once-famous investment club, of women in Beardstown, Illinois, pop. 6,000, who got together to learn about stock picking. They wrote four books claiming to be beating the market and earning annual returns of 20%. Eventually it turned out that they didn't know how to calculate returns and were (innocently) including the money contributed by new members in their calculations, and the correct figure was (surprise, surprise) a few percent lower than they would have earned in an S&P 500 index fund. Their book fed into a common fantasy of that era--encouraged by Peter Lynch--that ordinary folk, with a few hours' a week study, common sense, and "investing in what they know" like their consumer brand preferences, could beat the market and the pros.
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Re: Change of heart on bonds

Post by staythecourse » Thu Jun 18, 2015 8:41 am

If most of your income comes from a young, growing small business then you are playing with fire being 100% stocks. What do you think will happen if another 2008 happens where your portfolio goes down AND your income goes down. There are not many small business (especially young ones) that don't get scathed during a market downswing.

Add that to any debts you may have (If any) and I would think having bonds would be very important OR at least EF to cover 2 yrs. of liabilities.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

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staybalanced
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Re: Change of heart on bonds

Post by staybalanced » Thu Jun 18, 2015 9:07 am

staythecourse wrote:If most of your income comes from a young, growing small business then you are playing with fire being 100% stocks. What do you think will happen if another 2008 happens where your portfolio goes down AND your income goes down. There are not many small business (especially young ones) that don't get scathed during a market downswing.

Add that to any debts you may have (If any) and I would think having bonds would be very important OR at least EF to cover 2 yrs. of liabilities.

Good luck.
Yea I just think that the cash drag of an emergency fund for 2 years would bad for my wealth over time. Keep in mind that this is long term money , I guess in the event of a deep recession I may have to access it but really the retirement accounts are judgement proof so probably wouldn't do that. We have other sources of liquidity and reserves in business accounts and real estate. Our revenue plummeted during the crash, but we weren't too highly levered so we rode it out. 7 lean years and 7 fat years, wife is also self employed but it's so much more fun than working for someone else :happy

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Re: Change of heart on bonds

Post by goodenyou » Thu Jun 18, 2015 9:13 am

Age has a lot to do with risk aversion as well. The older I get and the less energy I have, the less tolerant I am of loss. When I was young with a long career horizon, it didn't bother me as much. Morbidity and mortality realization has an influence on asset allocation.
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Re: Change of heart on bonds

Post by bigred77 » Thu Jun 18, 2015 9:21 am

staythecourse wrote:If most of your income comes from a young, growing small business then you are playing with fire being 100% stocks. What do you think will happen if another 2008 happens where your portfolio goes down AND your income goes down. There are not many small business (especially young ones) that don't get scathed during a market downswing.

Add that to any debts you may have (If any) and I would think having bonds would be very important OR at least EF to cover 2 yrs. of liabilities.

Good luck.
2 young, self-employed entrepreneurs, with a 100% stock allocation, and having never had much at stake during a market downturn is probably not where you want to be.

I would argue your income's are probably much more variable than that of a W2 employee (for better and worse, W2 employee's won't make what you'll make when times are good) and therefore you would be wise to have a conservative portfolio and/or keep a large stash of cash to help get you through the inevitable lean times. An emergency fund covering 2 years of liabilities sounds like the way to go for a double entrepreneur family.

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Re: Change of heart on bonds

Post by jimkinny » Thu Jun 18, 2015 9:41 am

Having 20K to me was not the same as having 200K as far as asset allocation and having ........and so was the idea of losing 50%, then I read a bit about the great depression and realized losing 90% was possible and the time frame that it would take to recover was longer than I could accept.

If you have not tried some of the retirement calculators, do so. You can find links in the Wiki. Try different savings amount, rate of returns and inflation to get ideas regarding the need to take risk etc.....

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Re: Change of heart on bonds

Post by scone » Thu Jun 18, 2015 9:44 am

I'm kind of going in the opposite direction myself, since we've exceeded our goal and are very close to retirement. We could raise our stock allocation by 10% and still be quite safe. One easy way to do that might be to withdraw from the bond/cash allocation in the early years of retirement.

For you, the situation is different: squirreling away some money in bonds now, while you are making money hand over fist, gives you more peace of mind and more options for the future. Maybe, somewhere down the road, you might want to retire early, or take a world trip, or work for the Peace Corps. Or start a new business, for which you need more capital. Bonds can give you more financial flexibility throughout your life.

So comparing our situations, we both need bonds, but for very different reasons. In my mind, bonds are like a battery, and stocks are like a generator. You need both "machines" to get the job done.
"My bond allocation is the amount of money that I cannot afford to lose." -- Taylor Larimore

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Re: Change of heart on bonds

Post by livesoft » Thu Jun 18, 2015 9:45 am

Another article making the rounds is Paul Merriman's re-hash on what percentage of bonds to have in one's portfolio:
http://www.marketwatch.com/story/how-mu ... 2015-06-17

The table linked there-in is old (but updated) and shows worst loss and standard deviation over various time ranges.
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Re: Change of heart on bonds

Post by Call_Me_Op » Thu Jun 18, 2015 9:52 am

Jack Bogle recommends "age in bonds" as a starting point. I think it's a good place to start. Then you can adjust up or down once you get a good read on your risk tolerance.
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Re: Change of heart on bonds

Post by bondsr4me » Thu Jun 18, 2015 10:34 am

InvestorAdam

The percentage of bonds in a person's portfolio does not necessarily coincide with their age.
It's all about risk (of loss), and yes, even volatility.
Stocks are perceived to be more volatile than bonds and they also carry a greater risk of loss if that volatility causes the investor to panic and sell, usually at the worst possible time.
Your own bond allocation should fit YOUR investor personality, not mine or any other BH.
If you worry about every wild fluctuation in stocks, than most likely a large bond allocation may be more suitable for you.
There are some people who are so conservative that they go through life owning only CD's.
There is absolutely nothing wrong with being this conservative.
My own parents (and grandparents) wanted nothing to do with the stock market.
They slept pretty well and never worried, so zero stocks was very suitable for them.
Whatever you decide, make sure you will be able to sleep well at night and not constantly be turning on the TV to see whats happening
in the market-that will only cause more problems for you.
Good Luck whatever you decide.
Don

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Re: Change of heart on bonds

Post by kaudrey » Thu Jun 18, 2015 11:18 am

10-20% bonds sounds reasonable, and doesn't place that much drag on your portfolio, while increasing diversification. I think it is perfectly normal to have changing feelings about risk as you get older and amass a larger portfolio.

I am 46, and am slowly working down to 80/20 now; I was 90/10 in the last downturn. I am not doing it because of the downturn (during which time I kept plowing money into stocks), I am just at a point in my life where taking a little more "off the table" makes sense.

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Re: Change of heart on bonds

Post by ThisTimeItsDifferent » Thu Jun 18, 2015 11:37 am

"Me too"

Long time, 25 year, 100% equity investor.
Consistent contributions.
No stock selling during 2000 or 2008.

40% t401k / 40% taxable (both in index equities) / 20% "cash"(CDs, 4 years of salary)

I never thought about, then had a hard time seeing a benefit to bonds specifically.

After seeing the large stock equity gains over the last 6 years and learning of the benefits of an explicit asset allocation, I see benefit to a pre-defined, almost programmatic, rebalancing to preserve gains and buy more low.

I just moved 20 % of my 401k (10% of investments) to the 401k's core bond index ER 0.06. I only plan to move any back into stocks if stocks fall to maintain the asset allocation.

I still have 100% of new contributions going 50/50 into us and international equities.

Would one consider my asset allocation to be now 90/10 excluding "cash" or 70/30 including the "cash"?

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Re: Change of heart on bonds

Post by lack_ey » Thu Jun 18, 2015 1:01 pm

ThisTimeItsDifferent wrote:"Me too"

Long time, 25 year, 100% equity investor.
Consistent contributions.
No stock selling during 2000 or 2008.

40% t401k / 40% taxable (both in index equities) / 20% "cash"(CDs, 4 years of salary)

I never thought about, then had a hard time seeing a benefit to bonds specifically.

After seeing the large stock equity gains over the last 6 years and learning of the benefits of an explicit asset allocation, I see benefit to a pre-defined, almost programmatic, rebalancing to preserve gains and buy more low.

I just moved 20 % of my 401k (10% of investments) to the 401k's core bond index ER 0.06. I only plan to move any back into stocks if stocks fall to maintain the asset allocation.

I still have 100% of new contributions going 50/50 into us and international equities.

Would one consider my asset allocation to be now 90/10 excluding "cash" or 70/30 including the "cash"?
CDs serve pretty much the same purpose and are structured the same as bonds (though with a put option, if you get one direct from a bank with some kind of early withdrawal penalty option). From a portfolio perspective, cash in savings/checking/money market has virtually the same role as short-term bonds, and in finance indeed short-term T-bills are considered to be cash and are frequently used to represent cash. You could reasonably just lump all these into a fixed income umbrella, if you're the categorizing type.

The significant part of all of these for most investors is (1) not having stock-like gyrations and (2) not being down when stocks are down, and not being up when stocks are up. There's no particular need to use any particular class of these investments as opposed to another, such as what most people think of as bonds, especially for someone with a high equity allocation. They all behave mostly the same for that purpose.

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Re: Change of heart on bonds

Post by ogd » Thu Jun 18, 2015 1:09 pm

ThisTimeItsDifferent wrote:Would one consider my asset allocation to be now 90/10 excluding "cash" or 70/30 including the "cash"?
70/30. Normally I would say it's up to you whether to include EF into asset allocation (I do); but that's one uncommonly large emergency fund. At the very least, it warrants a big footnote when reporting yourself as a 100% equity investor (or 90%).

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Re: Change of heart on bonds

Post by ThisTimeItsDifferent » Thu Jun 18, 2015 2:56 pm

I didn't rebalance or move "cash" to equities in 2000/2008 but just continued contributing the same amount of my salary to the equity purchases. Now that the total investment balances are much larger than what I contribute each year, I still wouldn't sell in a downturn, but see the benefit to have a fixed percentage in each asset type and do the rebalancing to sell high/buy low for volatile investments when in the accumulation phase.

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Re: Change of heart on bonds

Post by nolapepper » Thu Jun 18, 2015 4:15 pm

livesoft wrote:I wrote about this yesterday after a fashion:
livesoft wrote:I think it probably depends on how much one contributes each year to the portfolio, but not only in dollar amounts, but as a percentage of the existing portfolio. For instance, if one has a $500K portfolio now, but contributes $100K a year, then that is 20% of the existing portfolio. It makes it easy to recover and/or buy-low whenever equities drop and present buying opportunities. OTOH, if one is contributing $5,000 a year to a $500K portfolio, then when things drop, one has no resources to buy equities at a low point.
When one's annual contributions become only a small fraction of one's portfolio, then one sees that the portfolio does not recover so quickly.

Also, I think many people with large emergency funds kind of include that money in their portfolio and certainly in their net worth. At least it is always in the back of their minds. So a 100% $400K stock portfolio with a $100K emergency fund is really an 80/20 asset allocation.
This is very insightful information. I have the same issue with DH future uncertain income, not sure how to balance my portfolio. My current active investment is 403B, all in fixed income, and will be 12% of my current asset. If DH future income drastically decrease for a period of time, then I will have to exchange a lot of my Bond funds to stock funds in Vanguard. Not sure how much exactly I need to exchange now or should I exchange a portion every year.

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Re: Change of heart on bonds

Post by stemikger » Thu Jun 18, 2015 4:42 pm

InvestorAdam,

I didn't read the other replies yet, so forgive me if this was mentioned. You made a good point on the difference between a smaller portfolio and a larger one. During a major correction, it takes real fortitude to stay the course. Hold enough bonds to sleep well at night. I have struggled with this as of late, but the bottom line with me seems to be, that it is better to sleep at night because the alternative is worrying when the next downturn is going to happen, and we all know the answer to that one. No one knows nothing.

I went off course the last couple of years due to what my idol Warren Buffett advised. For a brief period I went with 90% equities. It was not worth the worry. I'm back to 60/40 and I now know that is my SWAN asset allocation. I'm 50 years old and half way to my goal, so it is a substantial amount of money. It would be hard to see that take a 50% haircut.
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Re: Change of heart on bonds

Post by nedsaid » Thu Jun 18, 2015 4:49 pm

InvestorAdam wrote:Currently my wife and I are age 29 with a low six figure portfolio at vanguard and net worth of around 400k (I own a small business with some real estate and other assets). We began investing in 2007 and at the time had very little money, our investments got crushed but we rode it out and kept buying. our income and assets have really exploded in the last 18-24 months. Probably on track to bring in 200-250k income this year.

Previously I was totally against bonds, but now that we actually have some money I don't know that I am as comfortable taking as much risk. I always thought I would be all stock all my life , even Peter lynch lays out a case in his book why one would never need to own bonds. But I have had an unexpected change of heart, thinking about phasing in a 10-20% FI allocation over next few years with new contributions. I feel like we can meet our goals with slightly less risks. I have read all the books popular on here , bogle, ferri, Siegel, graham, coffeehouse etc, so I understand the merits of the diversifying aspect of bonds. Has anyone else gone through this same psychology as they accumulated larger portfolios? it's easier to say you can handle a 50% haircut with a tiny portfolio and few responsibilities in life.
Yep. Welcome to the club. I primarily am a stock guy but have grown to appreciate the virtue of bonds. And yes, a 50% loss on a $10,000 portfolio is a lot easier to take than a 50% loss on $500,000. Also I am older, I will be turning 56 soon and I don't have as many years ahead to recover in the event of a really bad market. When I was in my thirties and early forties, a big loss wasn't such a big deal.

Before the 2000-2002 bear market, I had a portfolio that was 94% stocks and 6% bonds and cash. Fortunately I learned about asset allocation and portfolio and reduced my stocks to 80% just before the crash. My losses were limited to less than 35% rather than a potential 50% loss. The losses were still big but more tolerable. My portfolio settled to a 70% stock/30% bonds and cash split, where it has been for years.

You are on the right track and your thinking is entirely correct. Congratulations on making this discovery. Better to learn this now than after a very painful bear market.
A fool and his money are good for business.

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Re: Change of heart on bonds

Post by matjen » Thu Jun 18, 2015 4:57 pm

nisiprius wrote:What livesoft is saying is exactly the way I experienced it personally. You can criticize it as "Beardstown Ladies" accounting* if you like, but what I found as my portfolio grew is that I really didn't mind losses as such, but I really hated seeing a lower total at the end of the year than at the beginning. I really hated it if the boat was sinking faster than I could bail. It's also why I personally detested car payments and mortgage payments--to continue the analogy, I felt more secure in a boat that didn't leak than in a leaky boat with a pump that could keep up with the leak.

Similarly, I found that whereas before 2008-2009 I would have guessed that a loss of, let's say 20% wouldn't hurt all that much--hey, it's just a percentage--when something like that actually happened I found that I was thinking of it in terms of absolute dollars and in years--the time it had taken me to save that much. Wow, all those years of not taking expensive vacations and not remodeling the house, all for nothing, shot to hell, just totally shot to hell.

Some will criticize my irrationality, but it's our money (I'm married) and our life, and we think we know what's right for us. It's OK to be bold and know it, it's OK to be timid and know it, but one of the ways investors do themselves serious harm is to be timid investors kidding themselves that they should invest like bold investors because someone showed them some statistics.
^+1 This is how I look at it as well. However, I paid off my house first before diving headlong into bonds.
A man is rich in proportion to the number of things he can afford to let alone.

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Re: Change of heart on bonds

Post by burt » Thu Jun 18, 2015 7:07 pm

I consider myself to be very lucky with the fast recovery of stocks from 2008.
Most of the recovery is due to fiscal policy v.s. sound valuation.
Next time I might not be so lucky. (sequence of returns).

Age 59
30/70 stock-bond

burt

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Re: Change of heart on bonds

Post by john94549 » Thu Jun 18, 2015 7:56 pm

Bond funds are not the only fixed-income options out there. Do a little searching at Bogleheads and you'll find quite a number of FI alternatives. For example, want to double your money (guaranteed) in 20 years, with an effective rate of close to 3.5%, look into EE bonds. Worried about inflation? IBonds might be worth a peek. Worried about rising interest rates? Look into a CD ladder, better yet, an IRA CD ladder. Just a whole lot of "stuff" out there.

One good resource for FI is Ken Tumin's blog, http://www.depositaccounts.com/blog. Lots of tutorials to get you started, and daily/weekly updates on the "best deals."

Hint: your gut instinct is correct. The best time to start socking it away in FI is when Mr. Market is at an all-time high, your personal finances are rosy, and, well, "what could go wrong?" FWIW, I've been selling into this market for months, in my trading (aka "fun money") account. As I learned some time ago, it's ever so much easier to sell into a rising market. As one sage put it: "never let green fade to red". Book your profits, keep your core, and don't second-guess.
Last edited by john94549 on Thu Jun 18, 2015 8:36 pm, edited 3 times in total.

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Re: Change of heart on bonds

Post by Dandy » Thu Jun 18, 2015 8:23 pm

I actually started out with the opposite approach i.e. almost exclusively fixed income (ok it was a Stable Value Fund paying 11%!!).

But, over time and after reading some of those same authors I embraced equities -- up to almost 55% at its peak. As my portfolio grew I was glad not to see years of contributions wiped out in a bad market.

There is a reason why in theory young people might do better with 100% equities -- but in reality too many would likely abandon equities when equities dropped 50% - and might not return. And that is likely to happen once or twice in an investment lifetime.That is where theory meets reality.

For most people avoiding the extremes and having a well diversified portfolio of equities and fixed income strikes the right balance.
Risk tolerance is not a test of manhood or courage. It is selecting a path that fits your needs.

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Re: Change of heart on bonds

Post by Lafder » Thu Jun 18, 2015 9:17 pm

I rec a minimum of 20% bonds.

You can also "pay yourself" by paying down a mortgage if you have one.

Lafder

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Re: Change of heart on bonds

Post by BW1985 » Thu Jun 18, 2015 9:58 pm

nisiprius wrote:What livesoft is saying is exactly the way I experienced it personally. You can criticize it as "Beardstown Ladies" accounting* if you like, but what I found as my portfolio grew is that I really didn't mind losses as such, but I really hated seeing a lower total at the end of the year than at the beginning. I really hated it if the boat was sinking faster than I could bail. It's also why I personally detested car payments and mortgage payments--to continue the analogy, I felt more secure in a boat that didn't leak than in a leaky boat with a pump that could keep up with the leak.

Similarly, I found that whereas before 2008-2009 I would have guessed that a loss of, let's say 20% wouldn't hurt all that much--hey, it's just a percentage--when something like that actually happened I found that I was thinking of it in terms of absolute dollars and in years--the time it had taken me to save that much. Wow, all those years of not taking expensive vacations and not remodeling the house, all for nothing, shot to hell, just totally shot to hell.

Some will criticize my irrationality, but it's our money (I'm married) and our life, and we think we know what's right for us. It's OK to be bold and know it, it's OK to be timid and know it, but one of the ways investors do themselves serious harm is to be timid investors kidding themselves that they should invest like bold investors because someone showed them some statistics.

(*The Beardstown Ladies were a once-famous investment club, of women in Beardstown, Illinois, pop. 6,000, who got together to learn about stock picking. They wrote four books claiming to be beating the market and earning annual returns of 20%. Eventually it turned out that they didn't know how to calculate returns and were (innocently) including the money contributed by new members in their calculations, and the correct figure was (surprise, surprise) a few percent lower than they would have earned in an S&P 500 index fund. Their book fed into a common fantasy of that era--encouraged by Peter Lynch--that ordinary folk, with a few hours' a week study, common sense, and "investing in what they know" like their consumer brand preferences, could beat the market and the pros.
Great post! Thank you.
I started investing in 2008 so it's been pretty rosy. Now that I've reached the point where I can't replace potential losses, I wholeheartedly agree with the change in mindset.
"Squirrels figured out how to save eons ago. They buried acorns. Some, they dug up, for food. Others, they let to sprout, in new oak trees. We could learn from squirrels." -john94549

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Re: Change of heart on bonds

Post by hulburt1 » Fri Jun 19, 2015 7:15 pm

Why not just have 20% in a money market fund. The rest in sp500. Have dividends put into the money fund and live off of that. You lose no money in money fund and the stock fund will grow at about 8%. At 62 that's what I'm doing now. If thing get real bad I'll start my SS.

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staybalanced
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Re: Change of heart on bonds

Post by staybalanced » Fri Jun 19, 2015 9:20 pm

hulburt1 wrote:Why not just have 20% in a money market fund. The rest in sp500. Have dividends put into the money fund and live off of that. You lose no money in money fund and the stock fund will grow at about 8%. At 62 that's what I'm doing now. If thing get real bad I'll start my SS.
That's not a bad strategy but I think a smaller allocation like 10% to short duration bonds would work out better. At a 4%swr plus 2% dividend on equities that's nearly 3 years that you could live on during steep down turn.

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