Anyone Out There Who Has Failed To Stick To Their Long Term Investing Plan?

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uberational44
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Anyone Out There Who Has Failed To Stick To Their Long Term Investing Plan?

Post by uberational44 » Fri Aug 11, 2017 11:37 am

I am just curious about this...

I have a plan to stick through things thick and thin, but I haven't lived through a bear yet

I want to 'be greedy when other are fearful', but I want to hear other people on this...
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Re: Anyone Out There Who Has Failed To Stick To Their Long Term Investing Plan?

Post by RadAudit » Fri Aug 11, 2017 11:42 am

Well, I did revise my plan to a more conservative slant during two bear markets. Found out my risk tolerance wasn't as high as I thought.

Does that count?
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Re: Anyone Out There Who Has Failed To Stick To Their Long Term Investing Plan?

Post by triceratop » Fri Aug 11, 2017 11:43 am

RadAudit wrote:Well, I did revise my plan to a more conservative slant during two bear markets. Found out my risk tolerance wasn't as high as I thought.

Does that count?
Yes.
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Re: Anyone Out There Who Has Failed To Stick To Their Long Term Investing Plan?

Post by Levett » Fri Aug 11, 2017 11:44 am

How long is "long term?" ;-)

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Re: Anyone Out There Who Has Failed To Stick To Their Long Term Investing Plan?

Post by uberational44 » Fri Aug 11, 2017 11:52 am

RadAudit wrote:Well, I did revise my plan to a more conservative slant during two bear markets. Found out my risk tolerance wasn't as high as I thought.

Does that count?
Yes it does. I'm wary of that as well - underestimating risk tolerance..

I suppose you don't know until you know...
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Re: Anyone Out There Who Has Failed To Stick To Their Long Term Investing Plan?

Post by chevca » Fri Aug 11, 2017 12:05 pm

I don't know that adjusting the plan is failing to stick to it. If that makes sense? As you said, you don't know until you know.

Making adjustments as you learn more about yourself and your style would be a wise move, IMO. As long as the adjustments aren't just made on a whim.

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Re: Anyone Out There Who Has Failed To Stick To Their Long Term Investing Plan?

Post by whodidntante » Fri Aug 11, 2017 12:14 pm

If you're going to adjust your allocation and you believe your risk tolerance is not as high as you previously thought, today would be an excellent day to make that change. Stocks are near their all-time highs. Doing it deep within a nasty bear market is more typical and will hurt your long-term wealth accumulation considerably.

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Re: Anyone Out There Who Has Failed To Stick To Their Long Term Investing Plan?

Post by bigred77 » Fri Aug 11, 2017 12:19 pm

This can be subjective, but in my opinion, if one changes their AA during a bear market because they overestimated their risk tolerance, that's a failure to stick to their long term plan. If one changes their AA after a bear market because they overestimated their risk tolerance, that's an adaptation of their long term plan.

You could also make the argument that if one changes their AA during a bear market because they overestimated their risk tolerance and keeps that change long term even after the recovery then that could be considered that's an adaptation of their long term plan. I could be talked into that line of thinking.

I think the main takeaway is that it's best to make AA and other long term portfolio decisions irrespective of market conditions. If you can help it, don't let the market behavior be your catalyst for changes. Try to avoid making big decisions when the market is at extremes. If you are going to derisk your portfolio, all else being equal, it would be nice to do that after a positive sequence of returns. Nobody says you have to be perfect, but try to keep those thoughts in the back of your mind.

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Re: Anyone Out There Who Has Failed To Stick To Their Long Term Investing Plan?

Post by MathWizard » Fri Aug 11, 2017 12:26 pm

My plan has evolved, but I'd say I have stuck with it for at least the last 25 years.

I stuck with it through the 2000's .

I was about $100K down new year's eve 2008/9 and was able to joke about it.
It went down even further through March 20009.

I am actually pretty conservative financially, but I think of the entire set of US businesses
which are public equity as having an intrinsic value which is approximately proportional to a
broad market index during normal times.
This is just an approximation, and can be wildly off during times of turbulence, but owning
businesses is the way to build wealth which is most likely to succeed.

Owning a broad stock market index along with enough funds to weather the financial storms that
come along seems to me to be the only path to success. If I'm on the best way to succeed, why should I
change course?

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Re: Anyone Out There Who Has Failed To Stick To Their Long Term Investing Plan?

Post by thangngo » Fri Aug 11, 2017 12:29 pm

uberational44 wrote:I am just curious about this...

I have a plan to stick through things thick and thin, but I haven't lived through a bear yet

I want to 'be greedy when other are fearful', but I want to hear other people on this...
IMO, plan is there to help someone staying on track. Plan can be revised under new goals and criteria. Plan should not be rigid. Plan is not principle.

I'm seeing my principles have not changed. My plan had a few changes because I added new goals to it.

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Re: Anyone Out There Who Has Failed To Stick To Their Long Term Investing Plan?

Post by uberational44 » Fri Aug 11, 2017 12:47 pm

I completely agree on changing at later stages of a bear market!

Personally don't think I would be able to live with myself as a devoted Buffet follower, selling like crazy during a crash - would be all talk no action

I think the capacity to think logically really helps. I used to be a nervous flyer, but when I looked at statistics of accidents on flights and I never felt nervous again. Historically since the S&P 500 was created (1870s if I am not mistaken), market crashed have been ripe opportunities for buying in.
Marketeer investing as a hobby. Interested in modern takes on value investing, passive investing and general contrarianism.

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Re: Anyone Out There Who Has Failed To Stick To Their Long Term Investing Plan?

Post by delamer » Fri Aug 11, 2017 12:51 pm

MathWizard wrote:My plan has evolved, but I'd say I have stuck with it for at least the last 25 years.

I stuck with it through the 2000's .

I was about $100K down new year's eve 2008/9 and was able to joke about it.
It went down even further through March 20009.

I am actually pretty conservative financially, but I think of the entire set of US businesses
which are public equity as having an intrinsic value which is approximately proportional to a
broad market index during normal times.
This is just an approximation, and can be wildly off during times of turbulence, but owning
businesses is the way to build wealth which is most likely to succeed.

Owning a broad stock market index along with enough funds to weather the financial storms that
come along seems to me to be the only path to success. If I'm on the best way to succeed, why should I
change course?
Agreed. Too many people don't really understand what they are investing in when they put money in the stock market. It is all about the underlying economics of individual businesses and the economy. If you don't have faith in the long-run prosperity of business and the economy, then you should not invest. But that is a pretty lousy way to live.

At the bottom of the 2008 recession, we were down about 1/3 in our retirement accounts from their peak. Today we have about twice what we did at that bottom. (Contributions continuing throughout.).

Stuck with the plan.

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Re: Anyone Out There Who Has Failed To Stick To Their Long Term Investing Plan?

Post by uberational44 » Fri Aug 11, 2017 1:14 pm

delamer wrote:
MathWizard wrote:My plan has evolved, but I'd say I have stuck with it for at least the last 25 years.

I stuck with it through the 2000's .

I was about $100K down new year's eve 2008/9 and was able to joke about it.
It went down even further through March 20009.

I am actually pretty conservative financially, but I think of the entire set of US businesses
which are public equity as having an intrinsic value which is approximately proportional to a
broad market index during normal times.
This is just an approximation, and can be wildly off during times of turbulence, but owning
businesses is the way to build wealth which is most likely to succeed.

Owning a broad stock market index along with enough funds to weather the financial storms that
come along seems to me to be the only path to success. If I'm on the best way to succeed, why should I
change course?
Agreed. Too many people don't really understand what they are investing in when they put money in the stock market. It is all about the underlying economics of individual businesses and the economy. If you don't have faith in the long-run prosperity of business and the economy, then you should not invest. But that is a pretty lousy way to live.

At the bottom of the 2008 recession, we were down about 1/3 in our retirement accounts from their peak. Today we have about twice what we did at that bottom. (Contributions continuing throughout.).

Stuck with the plan.
Very impressive!
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Re: Anyone Out There Who Has Failed To Stick To Their Long Term Investing Plan?

Post by Portfolio7 » Fri Aug 11, 2017 1:42 pm

What long term plan? I did some dumb stuff out of ignorance, but it worked out ok. Here it is, warts and such:

When I started I only knew I should diversify my 401K, without knowing what that meant except 'buy different stuff'. I had about every weird combination of assets you can imagine. I didn't sell a thing in 2000-2002, (~80% equities) just gritted my teeth and hung on. In Nov 2007 I was 100% equities, and started selling: 10% most months, buying FI. I reversed that trade in late 2009, 10% per month. It was an intentional scaling out and in, but too open-ended to call it a 'plan'. I really did need to reset Eq/FI ratios, that much I don't regret. Am up 250% off the low, so guess it didn't hurt.

2010-2015 I held a 60/40 portfolio, read a lot. 2015 I worked on long term portfolio AA, comparing portfolios, pro and con, figuring out anomalies. Jan 2016 I implemented my first long term AA (portfolio #7). The Eq/Bond split is 65/35, +/- 5%. I'm a tweaker by nature, and I know this, so my approach sets boundaries (primarily defined by portfolio structure and expected volatility/risk).

Over 23 years, my portfolio CAGR has been within 30 bpts of the S&P 500 CAGR. I had little idea what I was doing, but I was in the market and reasonably diversified - I took more risks than I knew (!), but had some luck, and did fine.
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Re: Anyone Out There Who Has Failed To Stick To Their Long Term Investing Plan?

Post by weltschmerz » Fri Aug 11, 2017 2:17 pm

Not me, I always stick with my long-term investing plan. However, I seem to change my long-term plan every 2-3 years. :D

Before to 2008 crisis, I had read William Bernstein's "Four Pillars" book, and I was following the strategy of Taxable Ted, with all the value tilts and slice-and-dice. I was about 60-40 stocks-bonds. Then the crisis hit. While the S&P500 drifted from about 1500 down to 1300, I was making big purchases, getting all those shares at a discount. But then when it hit 1200, I had lost so much money, that I bailed out entirely. It turned out to be a genius move! I sat on the sideline watching the S&P go all the way down to 666.

The hard thing about timing the market is that you have to get 2 moves right: you have to get out at the right time, then get back in at the right time. I never got back in correctly. As the stock market headed higher from 2009+, I only ever made small stock purchases. I didn't trust the market, in fact I still don't today. I messed around with the Permanent Portfolio for a few years, which was good because I got a lot of profits from the spike in gold to $1900+ and the big price spike in long-term Treasuries. However, I probably would have done just as well if I had simply stayed with stocks. Eventually I bailed on the Permanent Portfolio as well.

I learned a lot about myself over the years. I don't have the ability to stick with any plan for the long-term. I like to fiddle. A year ago, my stocks were 100% US. Then I had an epiphany and switched to 50/50 US/International. I don't know what it will be a year from now. Today, I have about a 35% allocation to stocks, the rest in cash and bonds. Even this feels pretty aggressive to me. I would like to think that I will be strong when the next crisis hits, but I fear I will not. That is why I keep my stock allocation low.

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Re: Anyone Out There Who Has Failed To Stick To Their Long Term Investing Plan?

Post by Dottie57 » Fri Aug 11, 2017 2:47 pm

delamer wrote:
MathWizard wrote:My plan has evolved, but I'd say I have stuck with it for at least the last 25 years.

I stuck with it through the 2000's .

I was about $100K down new year's eve 2008/9 and was able to joke about it.
It went down even further through March 20009.

I am actually pretty conservative financially, but I think of the entire set of US businesses
which are public equity as having an intrinsic value which is approximately proportional to a
broad market index during normal times.
This is just an approximation, and can be wildly off during times of turbulence, but owning
businesses is the way to build wealth which is most likely to succeed.

Owning a broad stock market index along with enough funds to weather the financial storms that
come along seems to me to be the only path to success. If I'm on the best way to succeed, why should I
change course?
Agreed. Too many people don't really understand what they are investing in when they put money in the stock market. It is all about the underlying economics of individual businesses and the economy. If you don't have faith in the long-run prosperity of business and the economy, then you should not invest. But that is a pretty lousy way to live.

At the bottom of the 2008 recession, we were down about 1/3 in our retirement accounts from their peak. Today we have about twice what we did at that bottom. (Contributions continuing throughout.).

Stuck with the plan.
The low for my IRA was 130k in february of 2009.

The ira, without contributions since now stands at 330k. Al of the finds at that tome were AMerican funds. Last year at this time I changemto fidelity funds.


My low point for 401k was 1/1 2009 at 164k. With constant additions I have over 600k.

It pays to keep what you have and to buy when the price is low. And even buy when high. DCA is good.
Last edited by Dottie57 on Fri Aug 11, 2017 3:25 pm, edited 1 time in total.

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Re: Anyone Out There Who Has Failed To Stick To Their Long Term Investing Plan?

Post by invst65 » Fri Aug 11, 2017 2:59 pm

I've never changed plans during market downturns or rumors of downturns or any extreme event. I've always thought that was probably one of the worse mistakes you can make. Like making major decisions after the death of a spouse.

After the dust has settled following a recovery I do ask myself if I have the stomach for this again and I did change plans after the 2008 debacle. That's when I went from keeping everything in a T. Rowe Price target date fund (-40%) to the permanent portfolio. After watching the permanent portfolio for several years, I was fairly well satisfied with the decreased volatility it offers. Gold had a major meltdown in 2011-2012 but the overall portfolio weathered the storm pretty well which helped convince me I'd made the right choice.

Last year I decided I'd rather take the risk of getting a bigger bang for my buck in stocks (instead of just 25%) and went with a modified version of it called the Golden Butterfly which calls for a 40% stock allocation split between large blend and small cap value. That might sound like a good decision but SCV hasn't actually done so well during the recent run-up in the stock markets. Still nothing to worry about however.
Last edited by invst65 on Fri Aug 11, 2017 3:12 pm, edited 3 times in total.

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Re: Anyone Out There Who Has Failed To Stick To Their Long Term Investing Plan?

Post by Nicolas » Fri Aug 11, 2017 3:08 pm

uberational44 wrote:I completely agree on changing at later stages of a bear market!

Personally don't think I would be able to live with myself as a devoted Buffet follower, selling like crazy during a crash - would be all talk no action

I think the capacity to think logically really helps. I used to be a nervous flyer, but when I looked at statistics of accidents on flights and I never felt nervous again. Historically since the S&P 500 was created (1870s if I am not mistaken), market crashed have been ripe opportunities for buying in.
The S&P 500 was created in 1957.
https://en.m.wikipedia.org/wiki/S%26P_500_Index

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Re: Anyone Out There Who Has Failed To Stick To Their Long Term Investing Plan?

Post by Levett » Fri Aug 11, 2017 3:13 pm

It is worth noting, as it has been noted before at this site, that a number (not all) of financial authors have themselves altered their recommendations for investing plans over time.

In truth, I don't find this at all surprising as humans have a desire to "improve" most anything as time goes by.

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Re: Anyone Out There Who Has Failed To Stick To Their Long Term Investing Plan?

Post by uberational44 » Fri Aug 11, 2017 4:24 pm

Nicolas wrote:
uberational44 wrote:I completely agree on changing at later stages of a bear market!

Personally don't think I would be able to live with myself as a devoted Buffet follower, selling like crazy during a crash - would be all talk no action

I think the capacity to think logically really helps. I used to be a nervous flyer, but when I looked at statistics of accidents on flights and I never felt nervous again. Historically since the S&P 500 was created (1870s if I am not mistaken), market crashed have been ripe opportunities for buying in.
The S&P 500 was created in 1957.
https://en.m.wikipedia.org/wiki/S%26P_500_Index
I am thinking of DJIA, but that was founded in 1896..
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Re: Anyone Out There Who Has Failed To Stick To Their Long Term Investing Plan?

Post by SimpleGift » Fri Aug 11, 2017 4:36 pm

uberational44 wrote:I want to 'be greedy when other are fearful', but I want to hear other people on this...
All I can say is, all fears are not the same. The Tech Crash of 2000 was mostly a stock market phenomenon for many investors (unless one was employed in tech or related fields), and was widely recognized at the time as a bubble of excessive speculation. Personally, though concerned, I was able to rebalance out of high-quality bonds into falling stocks throughout the period.

However, the Financial Crisis of 2008 was a completely different level of fear. Not only was the stock market crashing, but the entire international banking system was threatened. Only massive and timely bailouts prevented a possible collapse of the world financial system. Personally, I was frozen with fear. Not only did I not rebalance out of safe bonds into stocks, I quite opening my account statements after while. I was like a deer in the headlights until the markets settled down and recovered.

The lesson for me was that my risk tolerance had changed with age. In retirement now, with little need to take on additional risk, we’ve changed our IPS to indicate that rebalancing will only be a one-way street going forward — just from stocks to bonds. We won’t be selling any of our safe, high-quality bonds to purchase more stocks, under any circumstances.
Cordially, Todd

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Re: Anyone Out There Who Has Failed To Stick To Their Long Term Investing Plan?

Post by uberational44 » Fri Aug 11, 2017 4:50 pm

Simplegift wrote:
uberational44 wrote:I want to 'be greedy when other are fearful', but I want to hear other people on this...
All I can say is, all fears are not the same. The Tech Crash of 2000 was mostly a stock market phenomenon for many investors (unless one was employed in tech or related fields), and was widely recognized at the time as a bubble of excessive speculation. Personally, though concerned, I was able to rebalance out of high-quality bonds into falling stocks throughout the period.

However, the Financial Crisis of 2008 was a completely different level of fear. Not only was the stock market crashing, but the entire international banking system was threatened. Only massive and timely bailouts prevented a possible collapse of the world financial system. Personally, I was frozen with fear. Not only did I not rebalance out of safe bonds into stocks, I quite opening my account statements after while. I was like a deer in the headlights until the markets settled down and recovered.

The lesson for me was that my risk tolerance had changed with age. In retirement now, with little need to take on additional risk, we’ve changed our IPS to indicate that rebalancing will only be a one-way street going forward — just from stocks to bonds. We won’t be selling any of our safe, high-quality bonds to purchase more stocks, under any circumstances.
I think anyone approaching retirement age would be frozen with fear - very relatable, even if I am young. You didn't sell though it seems.

I really liked that point above about selling once things calm down, rather than after a huge correction.
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Re: Anyone Out There Who Has Failed To Stick To Their Long Term Investing Plan?

Post by indexonlyplease » Fri Aug 11, 2017 5:03 pm

AA question

Does it hurt your investmnet if you move the AA to lower or higher becuase you feel different about you portfolio. I am talking about not selling but adding new money to your investments until you get there.

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Re: Anyone Out There Who Has Failed To Stick To Their Long Term Investing Plan?

Post by selftalk » Fri Aug 11, 2017 5:15 pm

As the years went by and my knowledge increased pertaining to investments in stock and trading and finding this website by accident, I learned to really simplify my portfolio to the simplest form which is100% VTI / VTSAX and get "my share of the market`s returns if any" and be patient and "peek" a whole lot less and not to be influenced by the news or talking heads either in person or the tv. I really learned also to pay attention to what J. Bogle and W. Buffett have to say.

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Re: Anyone Out There Who Has Failed To Stick To Their Long Term Investing Plan?

Post by garlandwhizzer » Fri Aug 11, 2017 5:44 pm

Perhaps change the question to: Anyone out there who has actually stuck rigidly for long periods of time to their long term allocation plan? I think it's natural for portfolios to evolve over time. It often takes a bear market or two before you learn (sometimes the hard way) what your true risk tolerance is. Portfolio adjustments going forward are appropriate in that circumstance. Also the whole glide path thing to lower portfolio risk as you age and get closer to or in retirement. There are even a very few people actually sell bonds in bear markets and increase risk, moving to stocks (Warren Buffett) hoping for better expected long term returns, going against the selling exodus. Your financial needs and goals may change with employment status, financial emergencies, etc., and that may require adjustments to portfolios. I believe that it's important to have a long term plan and know basic investing principals, but small/modest changes to the portfolio may occur over time according to circumstances. Investing principals don't change over time. Small adjustments to asset allocation may appropriately change IMO over time.

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Re: Anyone Out There Who Has Failed To Stick To Their Long Term Investing Plan?

Post by Random Walker » Sat Aug 12, 2017 4:34 pm

This can be a fuzzy issue because it is very rational to make AA changes sometimes when personal circumstances change or new investment opportunities become available. The way I view it is that the investment policy statement is an anchor. The default is always to stick to the plan. When not sure what to do and fear or greed is taking over, revert to the plan. But there are times when the only rational thing to do is modify the plan and create a new anchor. It's just important for the investor to know himself well and to maximize his confidence in his decision by understanding the rationale behind the decision. We age, get closer to some goals, give up on others, take what the markets give us, and it's only rational to modify plans occasionally based on where we are relative to realistic goals.

Dave

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Re: Anyone Out There Who Has Failed To Stick To Their Long Term Investing Plan?

Post by dharrythomas » Sat Aug 12, 2017 9:35 pm

By the strictest definition, my guess would be almost everyone who's been at this longer than a week. In fact many of us started out without a long term plan, which is even more dangerous to long term financial success.

I have adjusted my plan, I took some risk off the table a couple of months ago. I've evolved from active to slice and dice, to whole market, and to balanced funds (index) in tax deferred accounts with less and steadily decreasing risk.

I do the best I can not to look when the market is doing badly because it really makes my wife mad. I know she's upset when she asks me how much money we lost today (even though compounding has been working wonders for us since the late 1980s and I'm really amazed at how well everything has turned out, her loss aversion shines through).

I'd recommend that you either figure you risk and back off 10% or (and most people would be better of doing this), invest in a LifeStretagy or Target Retirement Fund so that the stock losses are obscured in a widely diversified balanced fund.

The whole problem is that humans are not rational beings, we're emotional, the instincts and decision making shortcuts we developed to survive as hunter-gatherers aren't particularly well adapted to the current world (but we use them anyway to avoid paralysis by analysis), and humans are epically bad decision makers. Even people that understand logical fallacies walk right into them. All the rules and plans we set up are an attempt to overcome our human weaknesses. The more I understand, the more I realize how irrational we are most of the time. Combine irrationality with a cloudy crystal ball and the result is generally sub-optimal.

I told one of my SILs, that the problem with one of my brothers is that he's just as emotional as the rest of us, but he thinks he's rational. To quote Clint Eastwood "A man has got to know his limitations!"

Good luck

Harry

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Re: Anyone Out There Who Has Failed To Stick To Their Long Term Investing Plan?

Post by privatefarmer » Sat Aug 12, 2017 11:45 pm

uberational44 wrote:
Fri Aug 11, 2017 11:37 am
I am just curious about this...

I have a plan to stick through things thick and thin, but I haven't lived through a bear yet

I want to 'be greedy when other are fearful', but I want to hear other people on this...
My biggest struggle has been that I have gone back and forth between small/value tilt and total market. I've come to the conclusion that I really don't know much, certainly not enough to outsmart the market, and should just own the total market.

But I have actually been ~110% equities using a little bit of cheap margin, haven't been through a bear market yet but am fully expecting a 60-70% drawdown at some point. I think if you go into it expecting that bad of a drawdown it should make it more tolerable to hang through.

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Re: Anyone Out There Who Has Failed To Stick To Their Long Term Investing Plan?

Post by aramv » Thu Aug 31, 2017 6:27 am

I don't think one has to go through an entire market crash in order to know their risk tolerance. Simply buy a respectable amount of $ in individual tech stocks, or safer yet, follow a stock on paper... you'll know your risk tolerance really quick.

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Re: Anyone Out There Who Has Failed To Stick To Their Long Term Investing Plan?

Post by snarlyjack » Thu Aug 31, 2017 9:17 am

I've had a long term plan that I've switched around a couple of times.

I had a epiphany when I read Warren Buffett's book "The Snowball".
I've always been a long term investor, but what changed is what kind
of stocks I really like & feel comfortable with. Once I got that straightened
out I feel much more comfortable with my long term plan.

I would say studying Warren Buffett methods helped me more
than anything. His whole philosophy of what he does & why changed
my method of investing. I've studied Warren so much that I can visually
see him giving me advise on what to do. I feel 100% comfortable
with my plan & strategy now...Also the Bogleheads helped a lot!

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Re: Anyone Out There Who Has Failed To Stick To Their Long Term Investing Plan?

Post by DrGoogle2017 » Thu Aug 31, 2017 10:13 am

I've found out that I'm NOT very good with sticking to anything long term anything(except for marriage), I'm not a patient person. Even in 2008-2009 time frame, I was at least 90% or more in cash and I didn't buy in. I thought of doing something when the DOW was 6000, but my husband told me to wait because Cramer said it would drop lower. When it didn't drop lower is when I finally got back. Due to job change for both my husband and I, were finally in late 2009 and late 2010. I think the key is if you don't lose your job when the market is down, then you can be calm.
Real estate investing suits me better because I don't sell ever. Luckily I'm in California.
Last edited by DrGoogle2017 on Thu Aug 31, 2017 10:19 pm, edited 1 time in total.

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Portfolio7
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Re: Anyone Out There Who Has Failed To Stick To Their Long Term Investing Plan?

Post by Portfolio7 » Thu Aug 31, 2017 8:29 pm

This thread reminds me of the Tolstoy quote from AK: "Happy families are all alike; every unhappy family is unhappy in its own way." There are probably a thousand ways to not stick to a long-term investing plan, but buy and hold is pretty much just that. :beer
An investment in knowledge pays the best interest.

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Taylor Larimore
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The Boglehead Philosophy

Post by Taylor Larimore » Thu Aug 31, 2017 9:15 pm

Bogleheads:

I have been investing since 1950 when I was 26 years old. I've tried many ways to beat the market. Most failed (especially after taxes).

In 1986 I latched-on to The Boglehead Philosophy. It has given me a worry-free and comfortable retirement:
1 Develop a workable plan
2 Invest early and often
3 Never bear too much or too little risk
4 Diversify
5 Never try to time the market
6 Use index funds when possible
7 Keep costs low
8 Minimize taxes
9 Invest with simplicity
10 Stay the course
Thank you, Jack!

Best wishes
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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randomizer
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Re: Anyone Out There Who Has Failed To Stick To Their Long Term Investing Plan?

Post by randomizer » Thu Aug 31, 2017 9:19 pm

I've certainly made small mistakes, but they were more errors of execution than anything else (for example, I screwed up some tax-loss harvesting once, and another time I only narrowly avoided "buying the dividend" by sheer luck despite my ignorance). I've always followed my plan. It may sound perverse, but part of me is looking forward to the next bear market so that I can prove to myself that I have the ability to stick it out (still a couple decades out from true retirement so plenty of time to recover).

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Re: Anyone Out There Who Has Failed To Stick To Their Long Term Investing Plan?

Post by BanditKing » Thu Aug 31, 2017 10:10 pm

I just can't seem to stop fiddling around the edges. Adding tilts or tweaking to get a few extra bucks out of something. I'm sure when you factor in the time I've spent tracking and fiddling, vs any possible additional gain, it seriously isn't worth it. But I enjoy it.

I suspect at some point I'll get tired of putzing, dump everything into a TR fund in each of my accounts and call it a day.

That said, my "long term" plan hasn't changed. Save as much as I can. Don't live extravagantly. I do maintain a my target of AGE-20 in fixed incomes and the remainder in equities consistently, though, so by that token I've kept to my plan. I just like to keep experimenting here and there (recently tilted towards value, for example).

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TD2626
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Re: Anyone Out There Who Has Failed To Stick To Their Long Term Investing Plan?

Post by TD2626 » Thu Aug 31, 2017 10:14 pm

bigred77 wrote:
Fri Aug 11, 2017 12:19 pm
This can be subjective, but in my opinion, if one changes their AA during a bear market because they overestimated their risk tolerance, that's a failure to stick to their long term plan. If one changes their AA after a bear market because they overestimated their risk tolerance, that's an adaptation of their long term plan.

You could also make the argument that if one changes their AA during a bear market because they overestimated their risk tolerance and keeps that change long term even after the recovery then that could be considered that's an adaptation of their long term plan. I could be talked into that line of thinking.

I think the main takeaway is that it's best to make AA and other long term portfolio decisions irrespective of market conditions. If you can help it, don't let the market behavior be your catalyst for changes. Try to avoid making big decisions when the market is at extremes. If you are going to derisk your portfolio, all else being equal, it would be nice to do that after a positive sequence of returns. Nobody says you have to be perfect, but try to keep those thoughts in the back of your mind.
Nice post - very good points. Especially the point about not letting the market be a catalyst for changes.

Selling out at the market bottom can get people very, very poor returns and this must be avoided. One must gauge risk tolerance in advance and not have an excessively risky portfolio during the bull market. That being said, slow, carefully planned and thoughtfully considered changes to a portfolio due to differing investment opportunities, changes in risk tolerance, or changes in personal circumstances may be reasonable in some situations.

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