My dad says I should pull out of the market before "they" steal it all

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wojo8625
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My dad says I should pull out of the market before "they" steal it all

Post by wojo8625 »

He is referring to the heavy hitters on wall street.

We were talking about the latest market volatility and he said he is cashing out and suggested that I do the same. He is retirement age and has had an index fund for the last 20 years and not happy with its performance as of late. Fortunately he has a pension to fall back on. I do not.

When I tried to explain 60/40, diversification, having almost 20 years before I could withdraw from a 401, etc....he would hear nothing of it and asked "didn't you learn your lesson last time?" (2008 - when I was in 100% stocks, sold, and stopped contributing for awhile, which was a mistake). He said that the stock market was for rich people when he started working and complained that Reagan did away with pensions and the 401k pretty much replaced it.

He suggested saving more into CDs, FDIC savings accounts, etc.

I must admit that he has me thinking, with the recent volatility, but I should resist the advice and stay the course, eh?
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WarAdmiral
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Re: My dad says I should pull out of the market before "they" steal it all

Post by WarAdmiral »

Sorry to say but your dad is wrong.

You with 60/40 diversification and 20 years to go are on the right track.
Last edited by WarAdmiral on Sat Mar 14, 2020 4:20 pm, edited 1 time in total.
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Cheez-It Guy
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Re: My dad says I should pull out of the market before "they" steal it all

Post by Cheez-It Guy »

Why is he asking whether you learned your lesson when in fact he is doing what you did back then, and so far you are staying put? Makes no sense.
dukeblue219
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Re: My dad says I should pull out of the market before "they" steal it all

Post by dukeblue219 »

There are many people who believe it is impossible to match "the market" (usually they mean the Dow). They'll tell you that those indices are not real, or only keep the winners, or whatever excuse for the fact that their own stocks stink. These kind of people will settle for CD returns gladly...
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Re: My dad says I should pull out of the market before "they" steal it all

Post by whereskyle »

wojo8625 wrote: Sat Mar 14, 2020 4:07 pm He is referring to the heavy hitters on wall street.

We were talking about the latest market volatility and he said he is cashing out and suggested that I do the same. He is retirement age and has had an index fund for the last 20 years and not happy with its performance as of late. Fortunately he has a pension to fall back on. I do not.

When I tried to explain 60/40, diversification, having almost 20 years before I could withdraw from a 401, etc....he would hear nothing of it and asked "didn't you learn your lesson last time?" (2008 - when I was in 100% stocks, sold, and stopped contributing for awhile, which was a mistake). He said that the stock market was for rich people when he started working and complained that Reagan did away with pensions and the 401k pretty much replaced it.

He suggested saving more into CDs, FDIC savings accounts, etc.

I must admit that he has me thinking, with the recent volatility, but I should resist the advice and stay the course, eh?
In a way, he is right. The stock market is for rich people. It's for rich people in the sense that it is for people who can afford to invest in stocks. To make investing in a diversified portfolio worthwhile, you need to have the time to let your portfolio work its magic. If you don't have time in the sense that you as a less wealthy person may need to access the liquid value of your investments at any given time, then your investments are simply not good investments because of unacceptable risk. If you can afford to invest, a diversified portfolio is a good investment.
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Re: My dad says I should pull out of the market before "they" steal it all

Post by mortfree »

The ride down isn’t as fun as the ride up.
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Re: My dad says I should pull out of the market before "they" steal it all

Post by lessismore22 »

Your dad could be right if the Corona virus completely destroys democracy as we know it.

If it doesn't, you'll likely be miles ahead 20 years from now if you just stick with your 60/40 portfolio and keep contributing on a regular basis.
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Re: My dad says I should pull out of the market before "they" steal it all

Post by Sandtrap »

Be careful of any dialogue that starts with "They. . . . ". . . VS . . .others. . .

Also. . . .
". . you people. . "
". . like them. . . "
". . . like us . . . "
". . . our money. . . "
". . . their money. . . "

j :happy
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wojo8625
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Re: My dad says I should pull out of the market before "they" steal it all

Post by wojo8625 »

WarAdmiral wrote: Sat Mar 14, 2020 4:10 pm Sorry to say but your dad is wrong.

You with 60/40 diversification and 20 years to go are on the right track.
I hope so. I'm glad I'm only down 15% instead of 25%. Having some bonds would have helped cushion the blow in 2008.
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wojo8625
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Re: My dad says I should pull out of the market before "they" steal it all

Post by wojo8625 »

Cheez-It Guy wrote: Sat Mar 14, 2020 4:11 pm Why is he asking whether you learned your lesson when in fact he is doing what you did back then, and so far you are staying put? Makes no sense.
Apparently he thinks I should not have went back into the stock market, and I should get out now before "the bottom drops out".
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Cheez-It Guy
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Re: My dad says I should pull out of the market before "they" steal it all

Post by Cheez-It Guy »

Wrong. Keep buying when people are panicking.
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Re: My dad says I should pull out of the market before "they" steal it all

Post by hagridshut »

wojo8625 wrote: Sat Mar 14, 2020 4:07 pm He is referring to the heavy hitters on wall street.

We were talking about the latest market volatility and he said he is cashing out and suggested that I do the same. He is retirement age and has had an index fund for the last 20 years and not happy with its performance as of late. Fortunately he has a pension to fall back on. I do not.

When I tried to explain 60/40, diversification, having almost 20 years before I could withdraw from a 401, etc....he would hear nothing of it and asked "didn't you learn your lesson last time?" (2008 - when I was in 100% stocks, sold, and stopped contributing for awhile, which was a mistake).
I think your dad is incorrect.

Remember that in every stock transaction, there is a Seller and a Buyer. If you pull out of the market by selling your shares, someone else is buying those shares. Selling low out of nervousness due to volatility, means that someone else is picking up shares at low cost, and may eventually profit from them when the markets recover.

In 2009, many of my co-workers were bailing from their funds. Some sold at the bottom. Meanwhile, I was increasing my contribution % to my 401(k) and vacuuming up twice as many shares as I would normally have acquired for the same money before the crash. That was massively profitable in the next 10 years. I basically "stole" it all from the people who bailed out.

The people who pull out of the market when things look bad, are the ones who are getting robbed. Not the people who hold their shares for the long term.

He said that the stock market was for rich people when he started working and complained that Reagan did away with pensions and the 401k pretty much replaced it.

He suggested saving more into CDs, FDIC savings accounts, etc.

I must admit that he has me thinking, with the recent volatility, but I should resist the advice and stay the course, eh?
I think he is mostly correct that average workers back then could count on pensions (defined benefit plans) rather than 401(k) (defined contribution plans) prior to the Reagan era. The pension system does have is advantages. Individuals managing their own accounts are prone to making emotion-driven mistakes. I believe that many people do not have the psychological characteristics necessary to hold in bad times, and that pension funds managed by outside committees are a way to prevent people from harming their own financial interests.

The problem with CDs and Savings Accounts is that inflation will slowly eat away at them. Inflation averages about 2%/year. Savings accounts have paid 0.1-0.2% interest at Brick and Mortar banks, while Online Banks have generally paid a bit less than 2%, unless they were running a promo rate to get more capital. After taxes, Savings Accounts lose ground to inflation.

Investing is, for most people, the only practical way to grow wealth over time when inflation is taken into account. Building one's own business is another way, but this is far riskier and not everyone has an entrepreneurial personality.
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fwellimort
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Re: My dad says I should pull out of the market before "they" steal it all

Post by fwellimort »

wojo8625 wrote: Sat Mar 14, 2020 4:37 pm Apparently he thinks I should not have went back into the stock market, and I should get out now before "the bottom drops out".
And now you learn why retail investors underperform to the market.

I really wish people were more educated about the stock market. It's quite unfortunate.
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Re: My dad says I should pull out of the market before "they" steal it all

Post by zxllxz »

Look at the S&P500 100 year chart. Starts in the lower left and goes to the upper right. A few bumps along the way but always upward, long-term.
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wojo8625
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Re: My dad says I should pull out of the market before "they" steal it all

Post by wojo8625 »

whereskyle wrote: Sat Mar 14, 2020 4:30 pm In a way, he is right. The stock market is for rich people. It's for rich people in the sense that it is for people who can afford to invest in stocks. To make investing in a diversified portfolio worthwhile, you need to have the time to let your portfolio work its magic. If you don't have time in the sense that you as a less wealthy person may need to access the liquid value of your investments at any given time, then your investments are simply not good investments because of unacceptable risk. If you can afford to invest, a diversified portfolio is a good investment.
He did say something about not everyone having a stash of cash to invest. Being retired and on a fixed income, I can see why he would not want to deal with market ups and downs. While I have no reason to believe that he isn't looking out for my best interest, that same advice counters the research I've done. Parents do have wisdom to share but they are not always right. It's not like I'm playing around with random individuals stocks. He cannot see the difference between that and investing in a broad index fund because he's not happy with his fund or the people in charge of it.
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Re: My dad says I should pull out of the market before "they" steal it all

Post by 7eight9 »

This is an interesting chart that gives you an idea of what could happen if you stay in the market --- viewtopic.php?f=10&t=307415&start=50#p5094877
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Re: My dad says I should pull out of the market before "they" steal it all

Post by Stinky »

wojo8625 wrote: Sat Mar 14, 2020 4:07 pm ..... and complained that Reagan did away with pensions ....
Huh?

That’s news to me.
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Re: My dad says I should pull out of the market before "they" steal it all

Post by RadAudit »

wojo8625 wrote: Sat Mar 14, 2020 4:07 pm We were talking about the latest market volatility and he said he is cashing out and suggested that I do the same. He is retirement age and has had an index fund for the last 20 years and not happy with its performance as of late. Fortunately he has a pension to fall back on. I do not.

When I tried to explain 60/40, diversification, having almost 20 years before I could withdraw from a 401, etc....he would hear nothing of it and asked "didn't you learn your lesson last time?" (2008 - when I was in 100% stocks, sold, and stopped contributing for awhile, which was a mistake). He said that the stock market was for rich people when he started working and complained that Reagan did away with pensions and the 401k pretty much replaced it
OP, I rarely argue with the folks older than I - partly because of the way I was raised and partly because there are so few of them nowadays. I came to understand that a number of folks opinions concerning investments are a function of their experiences and education. In my younger days, Dad and I use to discuss investments. He was raised on a tobacco farm during the Depression. He favored individual stocks, newsletters for guidance, and broker's (EJ) recommendations. Because of my MBA, which he paid for, I favored balance sheet analysis for stock selection. I came to understand that I wasn't good at either analyzing or selecting. In the mid-1990s, I tripped over Jack's "Bogle on Mutual Funds" and my thinking started to evolve.

Your Dad is in a different situation than you are. He's older. Closer to retirement. Has SS and a pension. Your situation is different. You need to do what you consider to be right for you because you are going to have to be the one to live with the outcome, not your Dad.
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Re: My dad says I should pull out of the market before "they" steal it all

Post by ruralavalon »

wojo8625 wrote: Sat Mar 14, 2020 4:34 pm
WarAdmiral wrote: Sat Mar 14, 2020 4:10 pm Sorry to say but your dad is wrong.

You with 60/40 diversification and 20 years to go are on the right track.
I hope so. I'm glad I'm only down 15% instead of 25%. Having some bonds would have helped cushion the blow in 2008.
Your dad is wrong.

An asset allocation of 60/40 is reasonable at 20 years from retirement.

Keep up your regular contributions every pay period. Don't panic. Rebalance as necessary to adhere to your desired asset allocation.
Last edited by ruralavalon on Sat Mar 14, 2020 5:00 pm, edited 1 time in total.
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wojo8625
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Re: My dad says I should pull out of the market before "they" steal it all

Post by wojo8625 »

7eight9 wrote: Sat Mar 14, 2020 4:51 pm This is an interesting chart that gives you an idea of what could happen if you stay in the market --- viewtopic.php?f=10&t=307415&start=50#p5094877
I did see that and found that to be concerning. The market is more volatile now than it's ever been, breaking new records that were set in 2008.
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Re: My dad says I should pull out of the market before "they" steal it all

Post by Call_Me_Op »

wojo8625 wrote: Sat Mar 14, 2020 4:07 pm He is referring to the heavy hitters on wall street.

We were talking about the latest market volatility and he said he is cashing out and suggested that I do the same. He is retirement age and has had an index fund for the last 20 years and not happy with its performance as of late. Fortunately he has a pension to fall back on. I do not.

When I tried to explain 60/40, diversification, having almost 20 years before I could withdraw from a 401, etc....he would hear nothing of it and asked "didn't you learn your lesson last time?" (2008 - when I was in 100% stocks, sold, and stopped contributing for awhile, which was a mistake). He said that the stock market was for rich people when he started working and complained that Reagan did away with pensions and the 401k pretty much replaced it.

He suggested saving more into CDs, FDIC savings accounts, etc.

I must admit that he has me thinking, with the recent volatility, but I should resist the advice and stay the course, eh?
Surprised you feel the need to ask this. Those ultra-safe vehicles have ultra-low expected returns right now. If you're a billionaire, you would probably be OK investing that way. We mere mortals need a bit more return.
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Re: My dad says I should pull out of the market before "they" steal it all

Post by Call_Me_Op »

wojo8625 wrote: Sat Mar 14, 2020 4:58 pm
7eight9 wrote: Sat Mar 14, 2020 4:51 pm This is an interesting chart that gives you an idea of what could happen if you stay in the market --- viewtopic.php?f=10&t=307415&start=50#p5094877
I did see that and found that to be concerning. The market is more volatile now than it's ever been, breaking new records that were set in 2008.
There is always a theoretical possibility that money invested in stocks can go to zero. That's why God created bonds. But really, we need to have faith that the world is not going to end.
Last edited by Call_Me_Op on Sat Mar 14, 2020 5:03 pm, edited 1 time in total.
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Re: My dad says I should pull out of the market before "they" steal it all

Post by wojo8625 »

Stinky wrote: Sat Mar 14, 2020 4:52 pm
wojo8625 wrote: Sat Mar 14, 2020 4:07 pm ..... and complained that Reagan did away with pensions ....
Huh?

That’s news to me.
I'm not sure he meant Reagan himself did away with the pensions. That's around the time pensions started going away, and replaced by 401s. Actually I think late 70s was when it started but someone feel free to correct me if I'm wrong.
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Re: My dad says I should pull out of the market before "they" steal it all

Post by wojo8625 »

RadAudit wrote: Sat Mar 14, 2020 4:54 pm OP, I rarely argue with the folks older than I - partly because of the way I was raised and partly because there are so few of them nowadays. I came to understand that a number of folks opinions concerning investments are a function of their experiences and education. In my younger days, Dad and I use to discuss investments. He was raised on a tobacco farm during the Depression. He favored individual stocks, newsletters for guidance, and broker's (EJ) recommendations. Because of my MBA, which he paid for, I favored balance sheet analysis for stock selection. I came to understand that I wasn't good at either analyzing or selecting. In the mid-1990s, I tripped over Jack's "Bogle on Mutual Funds" and my thinking started to evolve.
That's interesting he was still into stocks after the Depression. Many people that lived through that era didn't trust banks, let alone stocks.
RadAudit wrote: Sat Mar 14, 2020 4:54 pm Your Dad is in a different situation than you are. He's older. Closer to retirement. Has SS and a pension. Your situation is different. You need to do what you consider to be right for you because you are going to have to be the one to live with the outcome, not your Dad.
That is true. Unless I somehow manage to find a government job (unlikely), I'm not going to have any kind of a pension and who knows what SS will look like by the time I retire.
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Re: My dad says I should pull out of the market before "they" steal it all

Post by wojo8625 »

ruralavalon wrote: Sat Mar 14, 2020 4:57 pm
wojo8625 wrote: Sat Mar 14, 2020 4:34 pm
WarAdmiral wrote: Sat Mar 14, 2020 4:10 pm Sorry to say but your dad is wrong.

You with 60/40 diversification and 20 years to go are on the right track.
I hope so. I'm glad I'm only down 15% instead of 25%. Having some bonds would have helped cushion the blow in 2008.
Your dad is wrong.

An asset allocation of 60/40 is reasonable at 20 years from retirement.

Keep up your regular contributions every pay period. Don't panic. Rebalance as necessary to adhere to your desired asset allocation.
That's what I need to do. Best to just stay the course as often posted here.

And I need to stop looking at my 401 and IRA balance until it's time to rebalance.
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Re: My dad says I should pull out of the market before "they" steal it all

Post by Triple digit golfer »

Look back at any 15 or 20 year period of regular periodic investments and compare the performance of the stock market terminal portfolio value vs. cash or CDs. Do a period ending on a market low and see where it ends up.

Don't focus on the big drop. Focus on the entire picture.
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Re: My dad says I should pull out of the market before "they" steal it all

Post by wojo8625 »

Call_Me_Op wrote: Sat Mar 14, 2020 5:00 pm Surprised you feel the need to ask this. Those ultra-safe vehicles have ultra-low expected returns right now. If you're a billionaire, you would probably be OK investing that way. We mere mortals need a bit more return.
His logic is that us mere mortals are not rich nor will get rich and shouldn't be risking our hard-earned money. I can see the point but when pensions are pretty much a thing of the past (along with interest rates on savings/CDs) then we don't really have much choice other than to be in the market.
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Re: My dad says I should pull out of the market before "they" steal it all

Post by junior »

wojo8625 wrote: Sat Mar 14, 2020 4:34 pm

I hope so. I'm glad I'm only down 15% instead of 25%. Having some bonds would have helped cushion the blow in 2008.
Why are you glad you're only down 15%? Do you need the money tomorrow?

If you don't need the money until decades in the future and you are investing every paycheck you'd be better off if you were down 25% because you'd be getting new stock cheaper.
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Re: My dad says I should pull out of the market before "they" steal it all

Post by wojo8625 »

Triple digit golfer wrote: Sat Mar 14, 2020 5:15 pm Look back at any 15 or 20 year period of regular periodic investments and compare the performance of the stock market terminal portfolio value vs. cash or CDs. Do a period ending on a market low and see where it ends up.

Don't focus on the big drop. Focus on the entire picture.
Right. It's a long term thing. Instant gratification and long term results are usually mutually exclusive.
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Re: My dad says I should pull out of the market before "they" steal it all

Post by palaheel »

I was laid off in early 2009. I was 55 and almost 100% stocks at the time. I was upset that I'd literally forgotten to start adding bonds at age 50, which had been my plan. The contributions were automatic, and it was otherwise out of sight/out of mind.

MegaCorp's 401(k) is excellent, so I left my money there even though I could no longer contribute. I very slowly began adding bonds, and am now 55/45 stocks/bonds. My stock funds are similar to Trev H's approximation of Merriman's UBH, and I'm 50/50 US/Int'l. In short, I've had a very sub-optimal strategy for the last 11 years. (Not that I'm considering changing it.)

At the end of last year, my balance was over 2.5 times my 2009 amount. Since the end of last year, I've taken around a 17% hit, and I recently rebalanced back to 55/45.

In short, even with the "wrong" portfolio, and having to (very slowly) take some money off the table after a bear market, staying in turned out pretty well.

YMMV.

I wish you the best.
Markets crash. Markets recover. Inflation takes your money FOREVER.
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wojo8625
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Re: My dad says I should pull out of the market before "they" steal it all

Post by wojo8625 »

junior wrote: Sat Mar 14, 2020 5:16 pm Why are you glad you're only down 15%? Do you need the money tomorrow?
Good questions. I guess I'm just thinking too much in the present.
junior wrote: Sat Mar 14, 2020 5:16 pmIf you don't need the money until decades in the future and you are investing every paycheck you'd be better off if you were down 25% because you'd be getting new stock cheaper.
Wish I had that outlook in 2008. I remember thinking that things may never go back to "normal". This current crisis will end eventually, and if it doesn't, there would be bigger things to worry about.
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Re: My dad says I should pull out of the market before "they" steal it all

Post by Phineas J. Whoopee »

My father told me to stay away from stocks, because they're the way them rich people get rich -- by using stocks to steal from we poor people.

His reasoning was when business is good you have a little extra money so you buy stock with it. Then later, when business isn't as good, you need the money so you sell, but the price has gone down. The difference between what you paid and what you received is the amount they stole.

PJW
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Re: My dad says I should pull out of the market before "they" steal it all

Post by ruralavalon »

"The stock market is a wonderfully efficient mechanism for transferring money from the impatient to the patient." Warren Buffett. azquotes
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Re: My dad says I should pull out of the market before "they" steal it all

Post by whereskyle »

wojo8625 wrote: Sat Mar 14, 2020 4:47 pm
whereskyle wrote: Sat Mar 14, 2020 4:30 pm In a way, he is right. The stock market is for rich people. It's for rich people in the sense that it is for people who can afford to invest in stocks. To make investing in a diversified portfolio worthwhile, you need to have the time to let your portfolio work its magic. If you don't have time in the sense that you as a less wealthy person may need to access the liquid value of your investments at any given time, then your investments are simply not good investments because of unacceptable risk. If you can afford to invest, a diversified portfolio is a good investment.
He did say something about not everyone having a stash of cash to invest. Being retired and on a fixed income, I can see why he would not want to deal with market ups and downs. While I have no reason to believe that he isn't looking out for my best interest, that same advice counters the research I've done. Parents do have wisdom to share but they are not always right. It's not like I'm playing around with random individuals stocks. He cannot see the difference between that and investing in a broad index fund because he's not happy with his fund or the people in charge of it.
The way to prove his advice wrong is to hold for the long term.
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Re: My dad says I should pull out of the market before "they" steal it all

Post by Christine_NM »

Too bad we can't develop herd immunity to stock market volatility.

You and your dad are both partly right. In retirement it is good to have a healthy respect for cash, especially FDIC-insured cash. I would not fault him for that, but you are right too that you need to take the risk to have enough cash to live on. With index funds you escape the worst excesses of Wall Street.

I'm thinking that sometime after age 80 I'd cash in, make my bequests, and live on the remainder. Sort of a do-it-yourself trust. Oddly enough, I started thinking like this during the 2020 upswing, which I could only see as the prelude to a crash. I never really believed in anything above Dow 22000 anyway.
18% cash 44% stock 38% bond. Retired, w/d rate 2.5%
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Re: My dad says I should pull out of the market before "they" steal it all

Post by retire2022 »

7eight9 wrote: Sat Mar 14, 2020 4:51 pm This is an interesting chart that gives you an idea of what could happen if you stay in the market --- viewtopic.php?f=10&t=307415&start=50#p5094877
Any BHer knows the DOW which is 29 stocks, (GE is no longer part of dow) is not a good index to measure performance.

https://www.investopedia.com/terms/d/djia.asp

What Is the Dow Jones Industrial Average (DJIA)?

The Dow Jones Industrial Average (DJIA) is an index that tracks 30 large, publicly-owned companies trading on the New York Stock Exchange (NYSE) and the NASDAQ. The Dow Jones is named after Charles Dow, who created it in 1896, and his business partner, Edward Jones.

How the Index Is Calculated

Stocks with higher share prices are given greater weight in the index. So, a higher percentage move in a higher-priced component will have a greater impact on the final calculated value. At the Dow's inception, Charles Dow calculated the average by adding the prices of the twelve Dow component stocks and dividing by twelve with the end result being a simple average. Over time, there have been additions and subtractions to the index, such as mergers and stock splits that had to be accounted for whereby an arithmetic mean would not suffice any longer.


Most people follow the SP500 or NASDAQ which is closer to VTI/VSTAX
Trader Joe
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Re: My dad says I should pull out of the market before "they" steal it all

Post by Trader Joe »

wojo8625 wrote: Sat Mar 14, 2020 4:07 pm He is referring to the heavy hitters on wall street.

We were talking about the latest market volatility and he said he is cashing out and suggested that I do the same. He is retirement age and has had an index fund for the last 20 years and not happy with its performance as of late. Fortunately he has a pension to fall back on. I do not.

When I tried to explain 60/40, diversification, having almost 20 years before I could withdraw from a 401, etc....he would hear nothing of it and asked "didn't you learn your lesson last time?" (2008 - when I was in 100% stocks, sold, and stopped contributing for awhile, which was a mistake). He said that the stock market was for rich people when he started working and complained that Reagan did away with pensions and the 401k pretty much replaced it.

He suggested saving more into CDs, FDIC savings accounts, etc.

I must admit that he has me thinking, with the recent volatility, but I should resist the advice and stay the course, eh?
I am a long-term investor and I am not "pulling out of the market". I am staying the course.
Vanguard Fan 1367
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Re: My dad says I should pull out of the market before "they" steal it all

Post by Vanguard Fan 1367 »

wojo8625 wrote: Sat Mar 14, 2020 4:07 pm He is referring to the heavy hitters on wall street.

We were talking about the latest market volatility and he said he is cashing out and suggested that I do the same. He is retirement age and has had an index fund for the last 20 years and not happy with its performance as of late. Fortunately he has a pension to fall back on. I do not.

When I tried to explain 60/40, diversification, having almost 20 years before I could withdraw from a 401, etc....he would hear nothing of it and asked "didn't you learn your lesson last time?" (2008 - when I was in 100% stocks, sold, and stopped contributing for awhile, which was a mistake). He said that the stock market was for rich people when he started working and complained that Reagan did away with pensions and the 401k pretty much replaced it.

He suggested saving more into CDs, FDIC savings accounts, etc.

I must admit that he has me thinking, with the recent volatility, but I should resist the advice and stay the course, eh?
Your Dad's advice is often taken. Typically the worst time to sell is after a big drop. If you read Bogle's books he would advise to stay the course. I am staying the course. We shall see what happens.
Upton Sinclair: "It is difficult to get a man to understand something when his salary depends on his not understanding it."
capran
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Re: My dad says I should pull out of the market before "they" steal it all

Post by capran »

wojo8625 wrote: Sat Mar 14, 2020 5:02 pm
Stinky wrote: Sat Mar 14, 2020 4:52 pm
wojo8625 wrote: Sat Mar 14, 2020 4:07 pm ..... and complained that Reagan did away with pensions ....
Huh?

That’s news to me.
I'm not sure he meant Reagan himself did away with the pensions. That's around the time pensions started going away, and replaced by 401s. Actually I think late 70s was when it started but someone feel free to correct me if I'm wrong.
He might have been referring to a proposal by Reagan to allow companies to reduce the money they were holding in Pension funds. I think this old times article talks about it. https://www.nytimes.com/1987/02/03/busi ... rules.html
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1789
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Re: My dad says I should pull out of the market before "they" steal it all

Post by 1789 »

zxllxz wrote: Sat Mar 14, 2020 4:43 pm Look at the S&P500 100 year chart. Starts in the lower left and goes to the upper right. A few bumps along the way but always upward, long-term.
One cant live 100 years to see the result. 2000-2010 wasn't that good for SP500
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Point
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Re: My dad says I should pull out of the market before "they" steal it all

Post by Point »

I always ask myself based on past market performance, how many doubles are potentially in front of me?
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cos
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Re: My dad says I should pull out of the market before "they" steal it all

Post by cos »

I worry that you might have a little too much respect for this guy and his opinions. I'm just some other guy on the internet, but the bad advice, the "us versus them" mentality, and the "I know what's best and you don't" attitude all look like red flags in terms of trustworthiness and intelligence.

Do your own research and operate using hard facts and evidence, not fleeting feelings and opinions (not your own and especially not those of others). I might be biased (again, I'm just some other guy on the internet), but I recommend checking out the Bogleheads wiki: https://www.bogleheads.org/wiki/Boglehe ... the_market

If you're feeling especially independent, maybe try running some of your own backtests over historical periods similar to the present: https://www.portfoliovisualizer.com/backtest-portfolio
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Brianmcg321
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Re: My dad says I should pull out of the market before "they" steal it all

Post by Brianmcg321 »

:oops:

Your dad doesn’t know anything about investing.

SHM.
Last edited by Brianmcg321 on Sat Mar 14, 2020 6:17 pm, edited 2 times in total.
Rules to investing: | 1. Don't lose money. | 2. Don't forget rule number 1.
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Orbuculum Nongata
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Re: My dad says I should pull out of the market before "they" steal it all

Post by Orbuculum Nongata »

wojo8625 wrote: Sat Mar 14, 2020 4:07 pm but I should resist the advice and stay the course, eh?
Advice? Sounds like a lot of blaming, complaining and sour grapes to me.
Potential - distraction = performance.
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hagridshut
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Re: My dad says I should pull out of the market before "they" steal it all

Post by hagridshut »

Phineas J. Whoopee wrote: Sat Mar 14, 2020 5:29 pm My father told me to stay away from stocks, because they're the way them rich people get rich -- by using stocks to steal from we poor people.

His reasoning was when business is good you have a little extra money so you buy stock with it. Then later, when business isn't as good, you need the money so you sell, but the price has gone down. The difference between what you paid and what you received is the amount they stole.

PJW
That is actually logical. People who don't earn much and don't have the reserves to weather a downturn, can't take the same risks that a higher income person can take.

If that person needs to buy food while they are out of a job, they are going to liquidate assets rather than starve.

Being able to invest, and grow a nest egg, is a luxury that some people don't have. Valuable job credentials and an emergency fund are prerequisites to successful long-term investing, IMO.
First Principles: (1) Diversify (2) Low Cost (3) Stay the Course | 3-Fund Index Portfolio
Farmboyslim83
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Re: My dad says I should pull out of the market before "they" steal it all

Post by Farmboyslim83 »

What’s a “rich people?” 50 bucks a month for 35-40 years into a TSM index fund can make a rich people.
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wojo8625
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Re: My dad says I should pull out of the market before "they" steal it all

Post by wojo8625 »

Christine_NM wrote: Sat Mar 14, 2020 5:41 pm Too bad we can't develop herd immunity to stock market volatility.

You and your dad are both partly right. In retirement it is good to have a healthy respect for cash, especially FDIC-insured cash. I would not fault him for that, but you are right too that you need to take the risk to have enough cash to live on. With index funds you escape the worst excesses of Wall Street.
Agreed. It's not like I'm gambling with individual stocks.
Christine_NM wrote: Sat Mar 14, 2020 5:41 pmI'm thinking that sometime after age 80 I'd cash in, make my bequests, and live on the remainder. Sort of a do-it-yourself trust. Oddly enough, I started thinking like this during the 2020 upswing, which I could only see as the prelude to a crash. I never really believed in anything above Dow 22000 anyway.
Considering it only took a year to go from 23000 to 3000, you make a good point.
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Re: My dad says I should pull out of the market before "they" steal it all

Post by junior »

Farmboyslim83 wrote: Sat Mar 14, 2020 6:44 pm What’s a “rich people?” 50 bucks a month for 35-40 years into a TSM index fund can make a rich people.
This is untrue. Despite the claims of some public personalities about the "magic" of compound interest a person putting 50 bucks a month in stocks will never be rich.
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wojo8625
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Re: My dad says I should pull out of the market before "they" steal it all

Post by wojo8625 »

capran wrote: Sat Mar 14, 2020 6:03 pm He might have been referring to a proposal by Reagan to allow companies to reduce the money they were holding in Pension funds. I think this old times article talks about it. https://www.nytimes.com/1987/02/03/busi ... rules.html
Interesting article
BTW I noticed it mentioned steelworker pensions. I have a distant relative who was laid off after 29.5 years as a steel worker after his company was bought out. He took a big hit on his pension and was only able to collect a fraction of what he was originally told he would receive, after the company went under. I have heard many people complain about pensions going away but very few people stay at a job that long anymore.
delamer
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Re: My dad says I should pull out of the market before "they" steal it all

Post by delamer »

Why didn’t he “learn his lesson” during the Great Recession? If he believes what he says, then why does he now own a stock index fund?

He’s talking out of both sides of his mouth.
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