I don't understand this. Your assumption is the market will never move higher?crowd79 wrote:Never lump sum when the market is at all-time highs. I'm way more confortable DCA'ing at these levels.
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If it's seven years away, what's the point of dribbling in the investments over the next year or two?
To clarify an apparent misunderstanding:
I segregate six years worth of cash like you and immediately begin to draw from this cash for the next six years. I also immediately begin to VCA the rest for, let's assume, 10 years. So, when I run out of cash six years from now, I would reduce the balance of the VCA amounts by the cash needed for four more years. Again, we only differ on choosing VCA instead of LSI, the assumption being to try to lose less in early retirement.
Richard, perhaps they are misinformed because of comments that mislead, such as yours. I certainly hope the deficit is decreasing from its highest levels since WW2 (%GDP), but that doesn't mean it's sustainable, and it's projected by the CBO to go back up. If you're going to tell part of the story, please tell it all.richard wrote:I share your frustration on the subject, although it is not entirely surprising. You might want to look at a recent survey asking people if the deficit is increasing or decreasing, if you really want to get depressed. A whopping 6% got it right. Even without considering that it's a subject which often dominates the headlines, it's amazing how misinformed people are
I respect you opinion and but I meant CORE CPI,Nisi.nisiprius wrote:NO NO NO NO NO. Why DO people keep saying this? It's some kind of urban legend that just keeps getting repeated because it keeps getting repeated. What bothers me is that it literally takes less than ten minutes to go the BLS website and see for yourself that it ain't so. Sometimes I think there is another urban legend that the CPI values are computed in total secrecy and that nothing is ever revealed except the final number... and that the BLS releases that number by burning paper money and emitting green smoke from the BLS's chimney.Ed 2 wrote:"official" inflation with out food and gas prices and not the real oneCall_Me_Op wrote:To add to the above, on an inflation-adjusted basis, the S&P 500 is about 30% below its high.
"The" CPI, CPI-U, which is the one that is used to index TIPS and I bonds and the one that's always used when "real returns" are stated, includes food and fuel. So does CPI-W, which is what Social Security is indexed to.
Please, Ed, do me a favor. Please please please go to the BLS website, and look for yourself.
CPI Detailed Report, January 2013
Table 1, starting on page 25.
Food accounts for about 15% of the CPI.
Gasoline accounts for about 5% of the CPI.
Breakfast cereal constitutes 0.289% of the CPI. Bananas constitute 0.081% of the CPI.
A special version of the CPI that excludes food and fuel is used by the Fed for planning and policymaking purposes. Excluding food and fuel produces an index with less short-term volatility. Whether this is legit for policy planning I don't know, but this is not the CPI that's used to calculate "real returns" or to adjust benefits.
"The fund industry doesn't have a lot of heroes, but he (Bogle) is one of them," Russ Kinnel
Thinking of your portfolio more as a lump sum? It's always going to be a lump sum. At any moment your portfolio is a "lump sum" of whatever AA it is. Right now it's a lump of 100% equities. It can be changed to some other type of lump with a mouse click or two. If you have decided a 3 fund portfolio with a different AA would be better for you, change to it ASAP while cap gains will be minimal. This notion of selling all equities and going to all cash and then DCAing back in makes zero sense. IMO, it's a pure market timing bet based on your gut feel that the market is high and a drop is coming. If you think you can outsmart the market most all of us here think that's very unlikely. Just go to your AA and stay there.bobbobobbo wrote:I've done quite a bit of research before coming upon the 3 fund portfolio. The inheritance is almost a year old now. It has been sitting in a 100% equity portfolio. It will have the same cost basis (from last year) 10 years from now yes, but if I'm fully restructuring a portfolio, it makes sense to do it while the cost basis is low. Too much capital gains all at once I thought is a bad thing to have? Liquidating my portfolio now would create very minimal capital gains, thus can be treated more as a lump sum if anything.
(my only point in bringing that up was that to the psychological effect of it already being "invested" and riding the waves. If it tanks, it would just be me watching what it would have done naturally, untouched from before. I simply have a nice reset button allowing me to liquidate the full amount, and reinvest. A likely one time thing. That or I have something quite off regarding the "hold" aspect of the investing and cost basis/capital gains, etc.)
Because you can make trades with little tax consequences right now doesn't mean you should. You might consider that in IRAs/401k and the like, there are never any tax consequences for trading. You can market time without taxes as often as you want. If/when you have such accounts, are you going to go to cash every time you feel the market is getting to a top? Not a great idea.
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