The Next Bear Market, Ben Carlson

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Jcraz13
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The Next Bear Market, Ben Carlson

Post by Jcraz13 » Fri Nov 10, 2017 12:12 pm

http://awealthofcommonsense.com/

Very well done, and a nice BH emphasis .

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arcticpineapplecorp.
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Re: The Next Bear Market, Ben Carlson

Post by arcticpineapplecorp. » Fri Nov 10, 2017 12:31 pm

This is the actual link:

http://awealthofcommonsense.com/2017/11 ... ar-market/

The other link is just to his main site and while the first link on his main site is this artice you're referencing over time that article will drop lower on the page and be harder to find.
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

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Portfolio7
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Re: The Next Bear Market, Ben Carlson

Post by Portfolio7 » Fri Nov 10, 2017 3:36 pm

Ben has been posting solid material for years. His older blog posts are also worth perusal.
An investment in knowledge pays the best interest.

Random Walker
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Re: The Next Bear Market, Ben Carlson

Post by Random Walker » Fri Nov 10, 2017 5:50 pm

Excellent article. So important to do the severe extended bear market mind experiment in one’s head before experiencing it, unprepared, for real. Rick Ferri wrote an article where he described walking clients through a potential 1971-1972 bear market scenario. Best to do that experiment now, when past returns have been generous, current valuations very generous, future expected returns modest.

Dave

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galeno
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Re: The Next Bear Market, Ben Carlson

Post by galeno » Fri Nov 10, 2017 6:12 pm

It's important to have a rebalancing strategy and to execute it religiously.

1. Pick an annual rebalancing date and only rebalance then.

2. Use the 5% rule meaning if any major asset (equities, bonds, or cash) is out of balance by 5% or more you rebalance.
AA = 40/55/5. Expected CAGR = 3.8%. GSD (5y) = 6.2%. USD inflation (10 y) = 1.8%. AWR = 3.0%. TER = 0.4%. Port Yield = 2.0%. Term = 35 yr. FI Duration = 6.2 yr. Portfolio survival probability = 100%.

WhiteMaxima
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Re: The Next Bear Market, Ben Carlson

Post by WhiteMaxima » Fri Nov 10, 2017 6:21 pm

Nobody can predict the future. If you have a balanced AA, never worry about next bear market. This type of article is totally worthless.

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galeno
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Re: The Next Bear Market, Ben Carlson

Post by galeno » Fri Nov 10, 2017 6:55 pm

The AWR from our $40/$60 portfolio is 3.5%. If our stocks go down by 50% our bonds should go up by at least 5% ($20/$63) so our port should only lose 15%. Our AWR goes to 4.1%. I'll rebalance the port and keep taking our retirement withdrawals.
AA = 40/55/5. Expected CAGR = 3.8%. GSD (5y) = 6.2%. USD inflation (10 y) = 1.8%. AWR = 3.0%. TER = 0.4%. Port Yield = 2.0%. Term = 35 yr. FI Duration = 6.2 yr. Portfolio survival probability = 100%.

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Re: The Next Bear Market, Ben Carlson

Post by Fallible » Fri Nov 10, 2017 7:06 pm

Another good article from Ben Carlson. And it all comes down to this:
Regardless of when it happens, it’s intelligent behavior for investors to plan ahead to know what they’ll do when it does. If you can’t get comfortable with accepting losses you shouldn’t be in the stock market to begin with.
Thanks for the link.
Bogleheads® wiki | Investing Advice Inspired by Jack Bogle

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jmndu99
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Re: The Next Bear Market, Ben Carlson

Post by jmndu99 » Fri Nov 10, 2017 9:14 pm

Random Walker wrote:
Fri Nov 10, 2017 5:50 pm
Excellent article. So important to do the severe extended bear market mind experiment in one’s head before experiencing it, unprepared, for real. Rick Ferri wrote an article where he described walking clients through a potential 1971-1972 bear market scenario. Best to do that experiment now, when past returns have been generous, current valuations very generous, future expected returns modest.

Dave
Dave, would you have a link to said article to share?
Thanks, James

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nisiprius
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Re: The Next Bear Market, Ben Carlson

Post by nisiprius » Fri Nov 10, 2017 9:23 pm

Excellent.

I particularly liked:
There is near universal agreement that many investors will freak out during the next downturn in stocks yet no one assumes they will be part of this group that panics. Surely, everyone else will become hysterical when stocks get crushed but I’ll stay level-headed and make all the right moves.
This is yet another form of the behavioral error of overconfidence.

It calls to mind this quotation:
In 1940, in 'Where are the Customer's Yachts', in the chapter on 'Customers, That Hardy Breed, Fred Schwed wrote:
Like all of life's rich emotional experiences, the full flavor of losing important money cannot be conveyed by literature. Art cannot convey to an inexperienced girl what it is truly like to be a wife and mother. There are certain things that cannot be explained to a virgin either by words or pictures. Nor can any description that I might offer here even approximate what it feels like to lose a real chunk of money that you used to own.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

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arcticpineapplecorp.
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Re: The Next Bear Market, Ben Carlson

Post by arcticpineapplecorp. » Fri Nov 10, 2017 9:32 pm

jmndu99 wrote:
Fri Nov 10, 2017 9:14 pm
Random Walker wrote:
Fri Nov 10, 2017 5:50 pm
Excellent article. So important to do the severe extended bear market mind experiment in one’s head before experiencing it, unprepared, for real. Rick Ferri wrote an article where he described walking clients through a potential 1971-1972 bear market scenario. Best to do that experiment now, when past returns have been generous, current valuations very generous, future expected returns modest.

Dave
Dave, would you have a link to said article to share?
Thanks, James
I would also like to see that. Mostly because I'm not sure Rick was helping clients in 1971-1972. At least his bio on the wiki says:
My career in the investment adviser industry offers a remarkable history of empowering people to achieve ambitious goals with passive investments. In 1999, I founded a Registered Investment Adviser (RIA) firm. Prior to that, I gained 10 years of experience as an adviser in the brokerage industry where I was an early adopter of index funds and ETFs. I became a champion for low fee investing in the RIA industry. Dedicated to sharing best practices while leveraging in depth knowledge of markets, strategies, and portfolio growth techniques.
source: https://www.bogleheads.org/wiki/Rick_Ferri
If he founded a RIA in 1999 and said he gained 10 years experience as an advisor in the brokerage industry...then doesn't math tell us he started advising clients around 1989? That's a bit far off from 1971-1972. So yes, I'd very much be interested in seeing the source of this article as well.
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

Random Walker
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Re: The Next Bear Market, Ben Carlson

Post by Random Walker » Fri Nov 10, 2017 9:51 pm

Galeno,
That’s the exact equation I use: -0.5(%equity)+5% for bonds performing well in the really bad times.

Dave

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Taylor Larimore
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Ben Carlson --Gems

Post by Taylor Larimore » Fri Nov 10, 2017 10:00 pm

Jcraz13:

Thank you for the link to another fine Ben Carlson article.

Mr. Carlson's book, A Wealth of Common Sense, is one of the best in my Investment Gems.

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

SimplicityNow
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Re: The Next Bear Market, Ben Carlson

Post by SimplicityNow » Fri Nov 10, 2017 10:02 pm

Thanks for the link, good article. Just because it has been said before doesn't subtract from the value of saying it again.

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