I can't believe I am thinking this [Panic and Survival 2008-09]

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Steve723
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Re: I can't believe I am thinking this

Post by Steve723 » Fri Jul 15, 2016 2:19 pm

Holy cow, I just went through this thread. I haven't read a book this good in years!

Seriously, I learned a ton and thank those whose path I humbly follow on this journey.

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Kevin M
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Re: I can't believe I am thinking this

Post by Kevin M » Fri Jul 15, 2016 6:24 pm

garlandwhizzer wrote: This is a lot like a Larry portfolio which makes a lot of sense for the very wealthy who will do just fine with preserving their wealth and taking very limited risk. Those who aren't so fortunate, those who need significant portfolio growth and who have a long time frame should at least consider a higher equity allocation with present market conditions.
This seems to be a common misunderstanding of "the Larry portfolio" (LP). You can take as much or as little risk with an LP as you want. The idea is that for a given level of risk you have a higher expected return, or for a given level of expected return you have less risk, and you reduce the fat left tail risk, by holding less equities than you would with cap-weighted blend equity funds to achieve similar expected risk/return. Of course this is all based on historical returns for a fairly limited time period (at least the historical returns Larry uses in his avoiding black swans book), but Larry argues that there are theoretical reasons that also support it.

With an LP, you use mostly small-cap value stocks and relatively safe fixed income. You can hold these in any ratio you want, depending on your desired expected risk/return.

I think "the" Larry Portfolio is a bit of a misnomer, since it implies there is only one such portfolio, which from my understanding of Larry's writing is not the case.

Kevin
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Re: I can't believe I am thinking this

Post by friar1610 » Fri Jul 15, 2016 7:57 pm

garlandwhizzer wrote:
30:70 worked very well in 2008 and it also works well on backtesting for longer periods in the past. No doubt it helped you to sleep at night during the 2007-9 crisis. For longer time periods going forward, however, like the next 30 - 40 years returns may not be as good as long term backtesting statistics of 30:70 would suggest. The last 34 years has witnessed the greatest bull market in Treasuries in history with 10 year Treasuries going from 15% to less than 1.4% and inflation doing almost likewise. Three decades plus of declining interest rates and declining inflation has artificially inflated Treasury returns on backtesting. Going forward from here with Treasuries at the lowest yields in history, lower than at the depths of the Great Depression or the horrors of WW2, it is not realistic to assume generous returns from the 70% of the portfolio dedicated to Treasuries whose yield is laughably low. 30:70 is safe at preserving principal (unless inflation rears its ugly head in which case purchasing power is relentlessly lost as in 1940 - 1980), but it is not safe at producing significant portfolio growth over a long period of time. In my view, 30% equities is insufficient to produce significant portfolio growth load no matter how sophisticated the factor approach one uses with 30%. It seems to me a reasonable choice for those who are already quite rich with a portfolio perhaps somewhere around 50 times anticipated annual living expenses going forward. One has to take into account increasing longevity in financial planning these days. For the majority of investors who need long term portfolio growth in order to meet financial goals like retirement 30:70 may shifting too many assets to safety and not enough toward asset growth. Backtesting such a portfolio produces more optimistic results than the future in likely to deliver and in my opinion should not be fully trusted for those who need substantial portfolio appreciation.

Garland Whizzer
I'd be interested in knowing what AA you'd recommend going forward if one wanted to keep it relatively conservative, track inflation and (maybe a bit more) but take no exhorbitant risk on the equity side. Figure a need for 25 years or so with a 3-ish% withdrawal rate. Also figure three-fund VG port. Would appreciate your insight. Thanks.
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Re: I can't believe I am thinking this

Post by technovelist » Fri Jul 15, 2016 9:17 pm

The Harry Browne Permanent Portfolio (discussed in a number of threads here) sailed right through the 2008-2009 crisis. It did have a 14% maximum drawdown from 1-1-2007 to 1-1-2010, but ended up ahead in 2007, 2008, and 2009.

Its CAGR is a bit lower, depending of course on the time frame, than AAs with much higher equity allocation, but it has a lot lower volatility, which makes it much easier to maintain course.
In theory, theory and practice are identical. In practice, they often differ.

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Re: I can't believe I am thinking this

Post by garlandwhizzer » Fri Jul 15, 2016 9:32 pm

friar1610 wrote:

I'd be interested in knowing what AA you'd recommend going forward if one wanted to keep it relatively conservative, track inflation and (maybe a bit more) but take no exhorbitant risk on the equity side. Figure a need for 25 years or so with a 3-ish% withdrawal rate. Also figure three-fund VG port. Would appreciate your insight. Thanks.
First of all I don't claim to have any special insight in this arena. Markets make amateurs of all of us on a regular basis. There are a lot of differing opinions on how to manage your situation and they vary widely. Larry portfolio has a very high allocation in the safest bonds (short and intermediate term Treasuries) and a relatively low equity allocation that is shifted heavily into factor investing in an attempt to juice equity returns while employing only modest equity exposure. That is a very good capital preservation approach but it may underperform (I suspect it will) other portfolios that use higher equity exposure with either cap weight indexing or factor approaches. Bogle who is a financial sage and saint extends his definition of quality bonds to include investment grade corporates in addition to government bonds and I personally agree with him in this approach. Larry points out that on backtesting taking corporate bond risk has been minimally if at all rewarded but this I believe to be due to our historic Treasury bull market of the last 34 years. I suspect that going forward with investment grade corporates or total bond market yielding almost twice what Treasuries of comparable maturity yield, investors who take that extra corporate bond risk or TBM risk will in fact be rewarded. Rick Ferri goes beyond this and include HYB which he believes have a unique risk/reward tradeoff, worth the risk for increased yield. If you choose this approach it's best in my view to consider HYB a hybrid between bonds for safety (which they're not) and stocks (which they're not). HYB are less risky than stocks but riskier than bonds and have higher expected long term returns than safe bonds. A further step along the risk/reward from high grade corporate bonds of intermediate or short term. Presently I avoid HYB but there are times when the spread between HYB and Treasuries becomes so great that I'll accept that increased risk like in 2008-9 for the large increased return when the crisis settles down. I don't recommend this market timing for others. It's highly risky but I'm not risk averse.

Treasuries are currently at all time lows in yield, that is to say all time highest valuation in history. History tells us that whenever any asset reaches an all time peak in valuation, never before experienced in a very long history with lots of severe crisis eras, be cautious. Reversion to the mean at some point (unknown and unpredictable when) has always occurred in the past and I suspect that it will in the future to Treasuries. Inflation when and if it occurs will burst the bond bubble rather quickly and the greatest casualties will be the bonds with the longest durations and lowest yields, the ones that are most highly valued at present, Treasuries. I see no such inflation on the horizon for the foreseeable future, but of course no one usually sees inflation until it is upon us. So when people say Treasuries have no risk it should be kept in mind that they have no risk as long as inflation remains moribund and decreasing and the world is in a state of uncertainty politically, and yields continue to drop. Treasuries do great in such circumstances. When that changes the risk of Treasuries shows up in proportion to its duration and the inflation rate. That happened from 1940 to 1980 during which real inflation adjusted returns on 10 year Treasuries were negative for 4 decades running, so this is not merely a theoretical concern.

So my 2 cents worth when it comes to bonds: (50% TBM, 50% Investment grade intermediate corporate fund) which is where I put the risk/reward tradeoff in bonds. As to how much of the asset allegation bonds should be that depends entirely on the individual's risk tolerance, personal preference, future and present financial needs, time horizon, legacy donations, etc. You state you desire a 3% withdrawal rate for a 25 year time frame. You do not have to take a lot of risk in that situation. If your portfolio merely keeps up with inflation, no real return at all, only the inflation rate, by the rule of 72, you should be able to withdraw 3%/yr. for 24 years before you run out of money with an asset base of that size. If for some reason you have unexpected longevity your safe withdrawal rate doesn't work without taking some increased risk. I believe it wise to assume you're going to need money for longer than you expect to. If you have too much at the end, no problem. If you run out of money at the end, big problem. The price of error is too great to neglect. So I suggest assuming you're going to need maybe 30 years and taking risk commensurate with that. If you're a conservative guy I think a 3 fund portfolio TSM/TISM/TBM at 25/25/50 or so would satisfy your needs for reasonable portfolio growth and reasonable safety. If that feels too risk 20/20/60 might be preferred. If you want to keep things simple (which I believe to be a good idea for many of us facing or in retirement) a 3 fund portfolio never needs to be tinkered with as the factor zoo changes, is lowest in cost, and by owning everything the most diversified in my opinion although strict factor adherents believe otherwise. Markets are getting more professionally managed and efficient all the time and as time passes it becomes harder and harder to beat the market net of costs. Financial graveyards are getting more and more full of those who try unsuccessfully to beat the market.

Hope this helps.

Garland Whizzer

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Re: I can't believe I am thinking this

Post by rick2427 » Sat Jul 16, 2016 4:45 am

Wow...what a thread!

Thank you Sheepdog for starting and sharing your experience and wisdom over the past 8-9 years. I am close to retiring early and this thread made me realize the need to have 5+ years living expenses in very SAFE cash like investments instead of just having a stocks/Bonds AA.

Thank you again Sheepdog and Taylor for all your help.

Best Wishes,
Rick

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Re: I can't believe I am thinking this

Post by friar1610 » Sat Jul 16, 2016 9:37 am

garlandwhizzer wrote:
friar1610 wrote:

I'd be interested in knowing what AA you'd recommend going forward if one wanted to keep it relatively conservative, track inflation and (maybe a bit more) but take no exhorbitant risk on the equity side. Figure a need for 25 years or so with a 3-ish% withdrawal rate. Also figure three-fund VG port. Would appreciate your insight. Thanks.
First of all I don't claim to have any special insight in this arena...

So my 2 cents worth when it comes to bonds: (50% TBM, 50% Investment grade intermediate corporate fund) which is where I put the risk/reward tradeoff in bonds. As to how much of the asset allegation bonds should be that depends entirely on the individual's risk tolerance, personal preference, future and present financial needs, time horizon, legacy donations, etc. You state you desire a 3% withdrawal rate for a 25 year time frame. You do not have to take a lot of risk in that situation. If your portfolio merely keeps up with inflation, no real return at all, only the inflation rate, by the rule of 72, you should be able to withdraw 3%/yr. for 24 years before you run out of money with an asset base of that size. If for some reason you have unexpected longevity your safe withdrawal rate doesn't work without taking some increased risk. I believe it wise to assume you're going to need money for longer than you expect to. If you have too much at the end, no problem. If you run out of money at the end, big problem. The price of error is too great to neglect. So I suggest assuming you're going to need maybe 30 years and taking risk commensurate with that. If you're a conservative guy I think a 3 fund portfolio TSM/TISM/TBM at 25/25/50 or so would satisfy your needs for reasonable portfolio growth and reasonable safety. If that feels too risk 20/20/60 might be preferred. If you want to keep things simple (which I believe to be a good idea for many of us facing or in retirement) a 3 fund portfolio never needs to be tinkered with as the factor zoo changes, is lowest in cost, and by owning everything the most diversified in my opinion although strict factor adherents believe otherwise. Markets are getting more professionally managed and efficient all the time and as time passes it becomes harder and harder to beat the market net of costs. Financial graveyards are getting more and more full of those who try unsuccessfully to beat the market.

Hope this helps.

Garland Whizzer
Thanks for a very comprehensive response. Your thinking and mine are pretty similar although I'm a little lighter on international. Right now I'm at 42/54/4 (42 rather than 40 because of recent up market.) I decided recently to move to 45 equity but not until things drop back a bit. (And if they don't, I'll just let the market carry me to 45.) :happy

I've also been thinking a lot about bonds. Right now both my wife and I are 100% VG TSM in our Rollover IRAs. That's probably where we'll add the 5% and I'd been considering using VG Wellesley Income rather than Total Stock Market Index (which would be my default choice). In addition to increasing equities, that has the benefit(?) of increasing the proportion of corporate bonds to the mix, albeit with a slight reduction in the overall quality of the bonds in the accounts.

Might be persuaded to go 50-50 further down the road, but for now I'll just take it in steps.

Thanks again for taking the time to respond!


PS As you probably inferred, I'm an old guy early in the RMD phase; wife to start next year. Good pension + SS although both will diminish if I am the first to go to the great Wall St. in the sky. Hence, wanting to keep things reasonably conservative so there is enough left for my wife to get along without scrimping.
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Re: I can't believe I am thinking this

Post by Johnnie » Sat Jul 16, 2016 10:24 am

A few years ago, before coming in to the buy-and-hold faith, at a time when "everyone knew" rates were going higher, I took a flyer on a 3x bond-bear etf. Of course I had my head handed to me on a platter, but like Charlie Brown trying to kick that football, went back and threw a little more into the fire later.

What's left of that holding remains in my portfolio, mostly as a finger-wagging-at-myself exercise now. I didn't really have any bonds when I bought it (I did it to beat the market, of course), but do have bonds now in VFSTX and a Schwab version of the same. And the darned bond funds keep generating cap gains, which just makes me nervous about what will happen when rates do reverse someday.

However, those short-term investment-grade bond funds have also had some setbacks recently, and when they do I notice my little rump of a leveraged bond bear etf is working as a hedge by partially offsetting the losses. It almost makes this Charlie Brown start eyeballing that football once again...
"I know nothing."

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Re: I can't believe I am thinking this

Post by garlandwhizzer » Sat Jul 16, 2016 2:17 pm

friar1610 wrote:
Thanks for a very comprehensive response. Your thinking and mine are pretty similar although I'm a little lighter on international. Right now I'm at 42/54/4 (42 rather than 40 because of recent up market.) I decided recently to move to 45 equity but not until things drop back a bit. (And if they don't, I'll just let the market carry me to 45.)
I'm at 50/50 US/INTL because I believe valuations do have significant influence on long term returns, 10 years of so. Currently while the US market is generously valued in my view, at or near all time highs, both DM and especially EM have been struggling for years. Their struggles may continue or at some point light may dawn once again in these downtrodden markets. There are reasons why they're at relative sale prices, but at some point in the near future I expect reversion to the mean, that US outperformance relative to INTL will reverse for a period of years just as it often has in the past.

In terms of your portfolio there is one more suggestion in addition to the ones I made yesterday that perhaps you should consider. Since you're conservative and somewhat risk averse and also wish to have a global portfolio, you might want to take a look at Vanguard's Global Minimum Volatility Fund. There are lots of detractors including Larry when it comes to low vol funds, suggesting that the low vol premium is overpriced at present and due for low future returns. In addition, this is an actively managed fund which is in itself an anathema to most Bogleheads. So there are lots of reasons not to like this fund. Those who criticize the low vol premium suggest that it will underperform the markets both cap weighted and factor over time. This may be true, but what is also true and undeniable on backtesting is that a well chosen low vol portfolio, while it may underperform the market, will produce greater equity returns per unit of risk, producing a higher Sharpe ratio than either a SCV or a market weight portfolio. Lower risk, similar return. Clearly if you're uncomfortable with the volatility of small value and cap weight equity approaches, this may be an all in one fund offering to consider for global exposure and a good risk/reward tradeoff.

The Larry portfolio increases bond exposure at the expense of equity and attempts to juice equity returns by heavily slanted exposure to SCV. It aims therefore to produce beta-like returns with less portfolio volatility. Low vol does the opposite, reducing equity volatility which allows one to slightly shift bond exposure to equity exposure, if desired, without increasing overall portfolio volatility. Opposite approaches with similar goals, lower volatility same return. Low vol is used by many financial institutions with fixed future financial obligations (annuities, life insurance, pensions) in this fashion since bond yields now are ridiculously low now and hence so are their expected returns. Increasing equity exposure at the expense of bond exposure while maintaining the same portfolio volatility appeals to them. Since its inception about 2 years ago, VMVFX has substantially and consistently outperformed Vanguard's Global Equity (active) and its Total World Index Funds (passive) with considerably less volatility. Something else to consider if you want to further simplify into just one equity fund.

Garland Whizzer

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Re: I can't believe I am thinking this

Post by RadAudit » Sun Jul 17, 2016 10:01 am

Sheepdog, thanks for starting this thread - even under what must of been very trying circumstances.

To all, I've been extremely impressed by the comments of support, encouragement and advice from the forum to one of its members going through a very rough spot. Best to all.
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Re: I can't believe I am thinking this

Post by friar1610 » Sun Jul 17, 2016 10:07 pm

garlandwhizzer wrote: I'm at 50/50 US/INTL because I believe valuations do have significant influence on long term returns, 10 years of so. Currently while the US market is generously valued in my view, at or near all time highs, both DM and especially EM have been struggling for years. Their struggles may continue or at some point light may dawn once again in these downtrodden markets. There are reasons why they're at relative sale prices, but at some point in the near future I expect reversion to the mean, that US outperformance relative to INTL will reverse for a period of years just as it often has in the past.

In terms of your portfolio there is one more suggestion in addition to the ones I made yesterday that perhaps you should consider. Since you're conservative and somewhat risk averse and also wish to have a global portfolio, you might want to take a look at Vanguard's Global Minimum Volatility Fund. There are lots of detractors including Larry when it comes to low vol funds, suggesting that the low vol premium is overpriced at present and due for low future returns. In addition, this is an actively managed fund which is in itself an anathema to most Bogleheads. So there are lots of reasons not to like this fund. Those who criticize the low vol premium suggest that it will underperform the markets both cap weighted and factor over time. This may be true, but what is also true and undeniable on backtesting is that a well chosen low vol portfolio, while it may underperform the market, will produce greater equity returns per unit of risk, producing a higher Sharpe ratio than either a SCV or a market weight portfolio. Lower risk, similar return. Clearly if you're uncomfortable with the volatility of small value and cap weight equity approaches, this may be an all in one fund offering to consider for global exposure and a good risk/reward tradeoff.

The Larry portfolio increases bond exposure at the expense of equity and attempts to juice equity returns by heavily slanted exposure to SCV. It aims therefore to produce beta-like returns with less portfolio volatility. Low vol does the opposite, reducing equity volatility which allows one to slightly shift bond exposure to equity exposure, if desired, without increasing overall portfolio volatility. Opposite approaches with similar goals, lower volatility same return. Low vol is used by many financial institutions with fixed future financial obligations (annuities, life insurance, pensions) in this fashion since bond yields now are ridiculously low now and hence so are their expected returns. Increasing equity exposure at the expense of bond exposure while maintaining the same portfolio volatility appeals to them. Since its inception about 2 years ago, VMVFX has substantially and consistently outperformed Vanguard's Global Equity (active) and its Total World Index Funds (passive) with considerably less volatility. Something else to consider if you want to further simplify into just one equity fund.

Garland Whizzer
Thanks. I'm traveling now but will study up on that fund a bit more when I get back home. Have to say, though, that my gut instinct is still to add equity using a total index fund or Wellesley. But I don't know enough about your suggested fund yet to say that conclusively.
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Re: I can't believe I am thinking this

Post by In The Weeds » Tue Jul 19, 2016 4:23 pm

A peek back in history....an eye opener for sure.

I had a busy weekend and was just kind of tired yesterday so I decided I wasn't going to do much. I don't get here all that much anymore but being a lazy blob yesterday, I found my way here and to this thread. I picked the thread back up somewhere in 2010 and then went back to the beginning and re-read the whole thing......Thankfully in 2008 I still had a nice income and was still putting money in. I almost capitulated in March of 2009, even went to cash with a some of it for a few day before putting it back in...... fast forward to yesterday afternoon. I checked the market and looked to see where I stood. A few years ago I stopped having the income available to continue to put money in. I was able to take dividends for a short time to fill the gap but now I have to take money out for living expenses. I looked at my bank balances and realized probably have enough till October or November....recollections of past October's not being so kind got me thinking so today I've taken action to pull at least 6 months expenses out while the markets are strong. Taking money out is an unpleasant thing for me, but it is where I am.

Thanks for the nudge.
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Re: I can't believe I am thinking this

Post by LukeHeinz57 » Mon Oct 23, 2017 7:33 am

Just read this thread, and wow is all I can say!

Since this hasn't been bumped in more than a year, I thought there might be a few retirees who might benefit from reading the valuable experiences shared here. Perhaps with the market regularly setting new all-time highs, it would be a prudent time to evaluate if you have enough months/years of living expenses set aside in "cash" or safe assets?

Thanks again to Sheepdog for his candid offering that has already helped so many and will continue to do so... :beer
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Re: I can't believe I am thinking this

Post by Sheepdog » Mon Oct 23, 2017 9:43 am

LukeHeinz57 wrote:
Mon Oct 23, 2017 7:33 am
Just read this thread, and wow is all I can say!

Since this hasn't been bumped in more than a year, I thought there might be a few retirees who might benefit from reading the valuable experiences shared here. Perhaps with the market regularly setting new all-time highs, it would be a prudent time to evaluate if you have enough months/years of living expenses set aside in "cash" or safe assets?

Thanks again to Sheepdog for his candid offering that has already helped so many and will continue to do so... :beer
Thank you for the compliment and because you did send your comment, it reminded me to review my investment allocation and just made an exchange (small one needed only) to get me to my plan to have over 3 years of normal withdrawals in my "safe" accounts. It is time to be careful and not greedy, isn't it?
Just because it isn't your fault doesn't mean it isn't your responsibility....Josh Reid Jones

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Re: I can't believe I am thinking this

Post by Sandtrap » Mon Oct 23, 2017 9:51 am

Sheepdog wrote:
Mon Oct 23, 2017 9:43 am
LukeHeinz57 wrote:
Mon Oct 23, 2017 7:33 am
Just read this thread, and wow is all I can say!

Since this hasn't been bumped in more than a year, I thought there might be a few retirees who might benefit from reading the valuable experiences shared here. Perhaps with the market regularly setting new all-time highs, it would be a prudent time to evaluate if you have enough months/years of living expenses set aside in "cash" or safe assets?

Thanks again to Sheepdog for his candid offering that has already helped so many and will continue to do so... :beer
Thank you for the compliment and because you did send your comment, it reminded me to review my investment allocation and just made an exchange (small one needed only) to get me to my plan to have over 3 years of normal withdrawals in my "safe" accounts. It is time to be careful and not greedy, isn't it?
This thread has been, and is, an ongoing "wake up call".
Priceless.

I've been having similar thoughts. :(
Please define "safe" accounts in your context, if you don't mind?
Money market, CD, Total Bond?

Thanks for the help.
j
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Re: I can't believe I am thinking this

Post by Sheepdog » Mon Oct 23, 2017 10:07 am

Sandtrap wrote:
Mon Oct 23, 2017 9:51 am

I've been having similar thoughts. :(
Please define "safe" accounts in your context, if you don't mind?
Money market, CD, Total Bond?

Thanks for the help.
j
Sandtrap. Thanks for your comment. My present "safe accounts" are comprised of cash, shorter (under 5 year) term CDs, short term investment grade bond fund, and 3 fixed term SPIAs purchased in 2012-16. (Money Market could be, but I do not consider Total Bond a "safe" instrument in the case of taking monthly withdrawals)
Last edited by Sheepdog on Mon Oct 23, 2017 10:14 am, edited 1 time in total.
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Re: I can't believe I am thinking this

Post by bertilak » Mon Oct 23, 2017 10:14 am

Sheepdog wrote:
Mon Oct 23, 2017 9:43 am
[several years of good stuff.
Sheepdog, thank you for starting and continuing to contribute to this thread. I have learned something from it: what a REAL emergency fund is. I always went on the assumption that I could afford to sell off a chunk of my investments and come out OK. I now see the distress this could cause and WILL be increasing the size of my emergency fund. This is true even though I was lucky enough to have a number of people convince me to take my pension as an annuity (50% joint survivor) and not as a lump sum.

In an earlier post (2016, I think) you referred to your EF as "safe" as opposed to "cash" or cash equivalent. I suspect there is a subtlety there I might benefit from knowing about! What DO you use as your EF's safe investment? Or was I reading too much into that earlier post?

OOPS! I see sandtrap has asked and you have answered my question already.

Thanks again for letting us share your thoughts and emotions through 2008-2009.
Last edited by bertilak on Mon Oct 23, 2017 10:18 am, edited 3 times in total.
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Re: I can't believe I am thinking this

Post by Sandtrap » Mon Oct 23, 2017 10:14 am

Sheepdog wrote:
Mon Oct 23, 2017 10:07 am
Sandtrap wrote:
Mon Oct 23, 2017 9:51 am

I've been having similar thoughts. :(
Please define "safe" accounts in your context, if you don't mind?
Money market, CD, Total Bond?

Thanks for the help.
j
Sandtrap. Thanks for your comment. My present "safe accounts" are comprised of cash, shorter term CDs, short term investment grade bond fund, and 3 fixed term SPIAs purchased in 2012-16. (I do not consider Total Bond a "safe" instrument in the case of taking monthly withdrawals)
Short Term Investment Grade Bond Fund . . as in Vanguard VFSUX ?
Do you consider Vanguards money market, VMFXX to fit the category of "safe accounts"?

I'm not as versed in the practicalities of "fixed term" SPIA vs (forever with "mortality credits") non-fixed SPIA's
but I think that's another thread to post.
thanks,
j
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Re:

Post by TonyDAntonio » Mon Oct 23, 2017 10:39 am

retired at 48 wrote:
Thu Oct 09, 2008 8:17 pm
Hi sheepdog.

C'mon Jim, first and most importantly, your moniker picture with that dog is always a pleasure to view. That dog seems pretty stable.

I know it's tough, as I am in consumption phase, too. But here's a few thoughts:

Warren Buffet says he buys businesses. The stock price is simply a quote/bid one is making each day for his businesses. Most days he ignores the quotes. Some days the quotes are even ludicrous. But every once in a while, someone makes an overvalued quote. Then he sells.

Consider your portfolio as a collection of businesses. The return is usually returned earnings (dividends) and perhaps some real growth, especially if one expands the company. Total future return is strongly dependent on dividends and dividend growth (Professor Seigel studies, and others.)

So let's get back to basics. What undergirds a portfolio is the dividend return. This is the safety cushion. Albeit such dividends may be lowered, we are reaching a point where dividends alone are exceeding anything you could earn in a money market or many bond funds.

Where will you run to with your money? I suggest you review your portfolio, and perhaps make some same day switches into businesses (stock funds) with high dividend payouts, is the answer. Steer clear of high financial based funds. By doing this, you would get the same returns as bond funds, but with a great chance for equity appreciation.

You would not be capitulating. Rather, performing a continuing portfolio assessment, which says: Gee, I'm retired, I should have been more cognizant of the protections afforded by dividend paying stocks. I'll switch into some now. You pick up safety, increase income returns, and maintain equity positions.

Gee, sounds so good I may do this :!: No, I am doing this.

And keep a little international in mind, as a candidate to switch into, as these funds are getting killed. Here's one, EFV, iShares MSCI EAFE Value Index (EFV) with about a 7% current dividend yield. Similar USA based funds exist.

Then, sit back with that dog and watch the hedge funds forced liquidation selling. In about 30 days it should be done, and a huge one-day rally probably ensue. But your comfort will be in owning businesses that will pay you for owning them...dividends.


To a fellow retiree, good luck.

retired at 48
Rereading this thread...what an eye opener. I could have replied to many of the posts but I chose this one although I'm only on page 1 of the entirety! Besides recently raising years of cash by selling stock funds that have risen greatly (MMF, I bonds, EE bonds, savings) I too have a portfolio that kicks off enough dividends so that I don't have to sell stocks and bonds in order to pay for my retirement bills. As best I can tell these dividend payers didn't shrink their dividends by much during the great recession. I don't want to rehash the debate about how dividends are an inefficient way of getting at the total return of a company's profits but I will say that I think my cash stash along with the dividend income will help me get through another great recession. And this thread and this post I'm responding to only reinforce my feeling. One of my biggest investment goals in retirement is to not have to sell stocks when they are down and especially when they are way down. But I do want to hold a fair amount of stock until I die. So thank you all who posted and I hope everyone came through the recession with their assets and wits intact.

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Re: I can't believe I am thinking this

Post by Dottie57 » Mon Oct 23, 2017 11:52 am

zaboomafoozarg wrote:
Sun May 29, 2016 9:06 am
Sheepdog wrote:So, what is the one thing I would recommend to help a young person through market turbulence? Don't be greedy in good times. Don't invest money that you will "need" in the next 3 to 5 years. Need might mean that you want to buy a new house or auto or take that big cruise in that period, but it also would mean, especially in retirement, what you will need for monthly expenses.
That makes me feel a little better about keeping at least $50k in savings, CDs and I Bonds.

Me too!

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Re: I can't believe I am thinking this

Post by Sheepdog » Mon Oct 23, 2017 12:27 pm

Sandtrap wrote:
Mon Oct 23, 2017 10:14 am

Short Term Investment Grade Bond Fund . . as in Vanguard VFSUX ?
Do you consider Vanguards money market, VMFXX to fit the category of "safe accounts"?

I'm not as versed in the practicalities of "fixed term" SPIA vs (forever with "mortality credits") non-fixed SPIA's
but I think that's another thread to post.
thanks,
j
Sandtrap,
My short term bond fund is (are) VFSTX and VFSUX (Admiral)

I'll make my comment on fixed term SPIAs rather than necessarily a new thread. I was taking monthly fixed amount withdrawals (occasionally more for a large expenditure). I decided to go to fixed term SPIAs (5 and 10 year) about age 80 to take care of that. They are not high interest earning, but neither are my "safe" savings. Since I was taking automatic monthly withdrawals from the "safe" investments anyway, for me these eliminated that need and these are automatic and safe. (And will simplify things for my wife when I can't handle things.) Actually, they are giving me more than I normally need, but I am and will be using that extra for some higher, not everyday needs, such as small vacations and not everyday dental/hearing/medical expenses, or just send them back to the investment pile (but that hasn't happened.). When they reach their full maturity in a couple of years, I may replace them with new fixed term policies. Meanwhile, my low stock allocation investments are still growing more than I am spending and giving away. :D
Just because it isn't your fault doesn't mean it isn't your responsibility....Josh Reid Jones

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Re: I can't believe I am thinking this

Post by Noobvestor » Mon Oct 23, 2017 1:12 pm

For the second time in the lat few years, I went back to the beginning and read this whole thread. Such amazing insights all around. :beer
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe

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Re: I can't believe I am thinking this

Post by linenfort » Mon Oct 23, 2017 2:02 pm

Great thread but, nearly a decade later I can't believe this vague subject title has no bracketed addendum explaining what it's about.

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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by Sheepdog » Mon Oct 23, 2017 3:50 pm

linenfort wrote:
Mon Oct 23, 2017 2:02 pm
Great thread but, nearly a decade later I can't believe this vague subject title has no bracketed addendum explaining what it's about.
Let me try to change it after these years. Is this better or worse?
Just because it isn't your fault doesn't mean it isn't your responsibility....Josh Reid Jones

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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by goblue100 » Mon Oct 23, 2017 4:03 pm

I think it's better. Apologies if I missed it, Sheepdog, but was your AA at the beginning of the decline? I know you said you didn't have enough cash on hand, but not sure what your S/B/C breakdown was?
Financial planners are savers. They want us to be 95 percent confident we can finance a 30-year retirement even though there is an 82 percent probability of being dead by then. - Scott Burns

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Re: I can't believe I am thinking this

Post by Sandtrap » Mon Oct 23, 2017 4:37 pm

Sheepdog wrote:
Mon Oct 23, 2017 12:27 pm
Sandtrap wrote:
Mon Oct 23, 2017 10:14 am

Short Term Investment Grade Bond Fund . . as in Vanguard VFSUX ?
Do you consider Vanguards money market, VMFXX to fit the category of "safe accounts"?

I'm not as versed in the practicalities of "fixed term" SPIA vs (forever with "mortality credits") non-fixed SPIA's
but I think that's another thread to post.
thanks,
j
Sandtrap,
My short term bond fund is (are) VFSTX and VFSUX (Admiral)

I'll make my comment on fixed term SPIAs rather than necessarily a new thread. I was taking monthly fixed amount withdrawals (occasionally more for a large expenditure). I decided to go to fixed term SPIAs (5 and 10 year) about age 80 to take care of that. They are not high interest earning, but neither are my "safe" savings. Since I was taking automatic monthly withdrawals from the "safe" investments anyway, for me these eliminated that need and these are automatic and safe. (And will simplify things for my wife when I can't handle things.) Actually, they are giving me more than I normally need, but I am and will be using that extra for some higher, not everyday needs, such as small vacations and not everyday dental/hearing/medical expenses, or just send them back to the investment pile (but that hasn't happened.). When they reach their full maturity in a couple of years, I may replace them with new fixed term policies. Meanwhile, my low stock allocation investments are still growing more than I am spending and giving away. :D
Appreciate your insight.
I take it that VFSTX (investor) makes up for the uneven, less than 50k, for VFSUX (admiral).
Question on the fixed term SPIA's. DW and I were looking at laddering in long term (till death) SPIA's but did not consider fixed term. Are there advantages to the fixed term SPIA's? And by 5 and 10 year do you mean duration of the SPIA's or period of time when they are laddered in?
Reason for asking is I have a substantial amount in "safe savings" and have been exploring ways to diversify within it as you have.
You have my attention.
Thanks for your help.
j :D
Wiki Bogleheads Wiki: Everything You Need to Know

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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by jebmke » Mon Oct 23, 2017 4:40 pm

It was interesting to re-read this. October, 2008 was a troubling time. Even the bond markets were shaken. Some time in October of that year I exchanged a large sum from STIG to individual Tips. Real rates were running around 3% on long Tips! It was tricky placing orders - you couldn't do it online because the trading was thin -- you had to call the bond desk. Late 2008 was more troubling than 2009 even though the equity market continued to drop. Once the debt markets stabilized I was less worried about the long term. I think the debt markets calmed down by December. But we still had three brutal months to go in equity.

I just went back and looked at confirmations of trades. I had retired in December, 2007.
From January to July 2008 I was re-balancing out of bonds and buying small cap value.
In the summer of 2008 I started harvesting losses in international. Harvesting went on in domestic equity and international from then until March of 2009.
I took November 2008 off to get my spine fused at Johns Hopkins (seriously!).
On March 16, 2009 I made my last big re-balance to large cap value. Some time in March was the bottom I think.

When I think back on all this I wonder today if it happened again would I have the discipline to make the re-balances. I hope so.
When you discover that you are riding a dead horse, the best strategy is to dismount.

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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by Dottie57 » Mon Oct 23, 2017 5:34 pm

This was a horrible time in investing.

However I van say that i've really done well since. Just pulled out my yearly 401k statement .

401k total 1/1/2009 : $164,820
401k total today: $675,230

It is hard to say, but the crisis gave my 401k new life.
Last edited by Dottie57 on Mon Jan 15, 2018 10:55 am, edited 2 times in total.

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Re: Re:

Post by Majormajor78 » Mon Oct 23, 2017 7:18 pm

TonyDAntonio wrote:
Mon Oct 23, 2017 10:39 am
I too have a portfolio that kicks off enough dividends so that I don't have to sell stocks and bonds in order to pay for my retirement bills. As best I can tell these dividend payers didn't shrink their dividends by much during the great recession.
If my figures are right it looks like Vanguard's S&P 500 (VFIAX) was paying $2.61 a share in 2007. In 2009 that had dropped to $2.10 which is a 19.5% decline. I don't think dividends fully recovered until the end of 2011. I believe most bonds funds were also slowly lowing their payouts since rates were decreasing and higher yielding bonds were maturing and being replaced by lower coupon ones.

It worked out in the end but keep in mind that your cash flow can be significantly impacted enough to force you to sell even if you're cash flow positive right now.
"Oh, M. le Comte, it is only a loss of money which I have sustained... nothing worth mentioning, I assure you."

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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by BlueEars » Mon Oct 23, 2017 7:34 pm

I posted a bit on this thread starting in 2008. A few thoughts:

1) The VPW tool was not available back then. It is excellent for showing how one's AA would fair with spending in a bad sequence. It can be modified easily (assuming some spreadsheet knowledge) to use a more common withdrawal plan then VPW's default algorithm. But I kind of like that default algorithm.

2) I've set up a reserve account using primarily VFSUX at this time. I also used VPW to show that this would plug spending holes in a bad historical sequence of returns. For us, the size of the reserve account is about 3% of assets. I believe the long term history of short term IG is a good one. Swedroe and others used to say that ST IG was acceptable risk/reward. Personally should the yield curve come close to inverting, I would just move that to something like short term Treasuries but note all our money is in tax free or tax deferred accounts (so no tax consequences).

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Re: I can't believe I am thinking this

Post by finite_difference » Mon Oct 23, 2017 8:15 pm

technovelist wrote:
Fri Jul 15, 2016 9:17 pm
The Harry Browne Permanent Portfolio (discussed in a number of threads here) sailed right through the 2008-2009 crisis. It did have a 14% maximum drawdown from 1-1-2007 to 1-1-2010, but ended up ahead in 2007, 2008, and 2009.

Its CAGR is a bit lower, depending of course on the time frame, than AAs with much higher equity allocation, but it has a lot lower volatility, which makes it much easier to maintain course.
A 3-fund portfolio with an AA of 30/70 would’ve sailed through pretty well, too. No need to speculate on commodities.
The most precious gift we can offer anyone is our attention. - Thich Nhat Hanh

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Re: I can't believe I am thinking this

Post by technovelist » Mon Oct 23, 2017 9:03 pm

finite_difference wrote:
Mon Oct 23, 2017 8:15 pm
technovelist wrote:
Fri Jul 15, 2016 9:17 pm
The Harry Browne Permanent Portfolio (discussed in a number of threads here) sailed right through the 2008-2009 crisis. It did have a 14% maximum drawdown from 1-1-2007 to 1-1-2010, but ended up ahead in 2007, 2008, and 2009.

Its CAGR is a bit lower, depending of course on the time frame, than AAs with much higher equity allocation, but it has a lot lower volatility, which makes it much easier to maintain course.
A 3-fund portfolio with an AA of 30/70 would’ve sailed through pretty well, too. No need to speculate on commodities.
Agreed, but the HBPP doesn't speculate. It holds fixed allocations of each of the 4 asset classes it is made up of, with rebalancing as necessary.
In theory, theory and practice are identical. In practice, they often differ.

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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by linenfort » Tue Oct 24, 2017 7:28 am

Sheepdog wrote:
Mon Oct 23, 2017 3:50 pm
linenfort wrote:
Mon Oct 23, 2017 2:02 pm
Great thread but, nearly a decade later I can't believe this vague subject title has no bracketed addendum explaining what it's about.
Let me try to change it after these years. Is this better or worse?
Far, far better! :beer

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Re: I can't believe I am thinking this

Post by Dottie57 » Tue Oct 24, 2017 6:50 pm

Sheepdog wrote:
Mon Oct 23, 2017 9:43 am
LukeHeinz57 wrote:
Mon Oct 23, 2017 7:33 am
Just read this thread, and wow is all I can say!

Since this hasn't been bumped in more than a year, I thought there might be a few retirees who might benefit from reading the valuable experiences shared here. Perhaps with the market regularly setting new all-time highs, it would be a prudent time to evaluate if you have enough months/years of living expenses set aside in "cash" or safe assets?

Thanks again to Sheepdog for his candid offering that has already helped so many and will continue to do so... :beer
Thank you Sheepdog for the telling of you story. It really helps me see more clearly how I should prepare for my retirement in the near future. No one will care about it more than me . So I better be prepared.

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Re: Re:

Post by TonyDAntonio » Tue Oct 24, 2017 7:28 pm

Majormajor78 wrote:
Mon Oct 23, 2017 7:18 pm
TonyDAntonio wrote:
Mon Oct 23, 2017 10:39 am
I too have a portfolio that kicks off enough dividends so that I don't have to sell stocks and bonds in order to pay for my retirement bills. As best I can tell these dividend payers didn't shrink their dividends by much during the great recession.

If my figures are right it looks like Vanguard's S&P 500 (VFIAX) was paying $2.61 a share in 2007. In 2009 that had dropped to $2.10 which is a 19.5% decline. I don't think dividends fully recovered until the end of 2011. I believe most bonds funds were also slowly lowing their payouts since rates were decreasing and higher yielding bonds were maturing and being replaced by lower coupon ones.

It worked out in the end but keep in mind that your cash flow can be significantly impacted enough to force you to sell even if you're cash flow positive right now.
And this is why I have recently sold some high priced funds and built 6-7 years of cash (MMF). I don't plan on using this money to rebalance, just to avoid having to sell in a down market.

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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by TheAncientOne » Tue Oct 24, 2017 8:05 pm

I hope someone remembers to bump this post up when the next bear market hits. Nothing like reading remarks from investors as they're going through the downward cycle rather than relying upon their memories several years later.

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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by TonyDAntonio » Tue Oct 24, 2017 9:31 pm

TheAncientOne wrote:
Tue Oct 24, 2017 8:05 pm
I hope someone remembers to bump this post up when the next bear market hits. Nothing like reading remarks from investors as they're going through the downward cycle rather than relying upon their memories several years later.
I'm actually glad it got bumped now when us retired folks can actually sell some 'winners' and hopefully build enough of a cushion to handle the next recession.
If you're young and adding money just remember that you are buying low during these type events. That's exactly what you should do.

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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by fipt2030 » Tue Oct 24, 2017 11:06 pm

I am sitting on cash and my AA asks for more bond funds in taxable account, with rates supposed to go up in Dec, want to invest only in short term bond funds (prefer Muni, higher tax bracket) to avoid the price volatility. Their yield is comparable to a CD, why not just place that money in 6-9 month CD and transfer them to bond funds after the rate hikes stabilize.

Scared to buy bond funds and risk lower NAV and wait a while to regain that decline.

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Re: I can't believe I am thinking this

Post by finite_difference » Wed Oct 25, 2017 8:36 pm

technovelist wrote:
Mon Oct 23, 2017 9:03 pm
finite_difference wrote:
Mon Oct 23, 2017 8:15 pm
technovelist wrote:
Fri Jul 15, 2016 9:17 pm
The Harry Browne Permanent Portfolio (discussed in a number of threads here) sailed right through the 2008-2009 crisis. It did have a 14% maximum drawdown from 1-1-2007 to 1-1-2010, but ended up ahead in 2007, 2008, and 2009.

Its CAGR is a bit lower, depending of course on the time frame, than AAs with much higher equity allocation, but it has a lot lower volatility, which makes it much easier to maintain course.
A 3-fund portfolio with an AA of 30/70 would’ve sailed through pretty well, too. No need to speculate on commodities.
Agreed, but the HBPP doesn't speculate. It holds fixed allocations of each of the 4 asset classes it is made up of, with rebalancing as necessary.
Jack Bogle is careful to point out that owning gold is not an investment, but is speculation on the price of a commodity that has little intrinsic value. He does say 1-5% gold is not “terrible”. There are people here that disagree with that stance — but as they say, disagree with Bogle at your own peril :)

So I would still argue for a conservative 3-fund portfolio, with maximum 5% gold. (Yeah Jack doesn’t like Intl either and suggests a maximum of 20% there.) So something like 5% Total Intl, 25% Total Stock, 65% Total Bond, 5% gold should be a Bogle-approved portfolio that would minimize losses in retirement but still allow for some growth. You don’t need all that gold.

I guess the main point is to not be too stock heavy if you depend on it for income. If you can buckle down for a year or more with SS/SS+pension then don’t need to be as conservative. However, even selling at a loss, doesn’t mean you might not come out ahead in the end. Sheep is doing pretty awesome I think. The real problem would be be if the market stayed down for a long time. Or if you sold at the bottom and stay out/bought in high, etc.

I wish the price of gold would come down so it could be used in more technological applications though :)
The most precious gift we can offer anyone is our attention. - Thich Nhat Hanh

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Re: Stay the course

Post by lazydavid » Thu Oct 26, 2017 8:51 pm

Taylor Larimore wrote:
Mon Jul 11, 2016 3:58 pm
The closing price of the S&P 500 Index was 969 on the last day in October, 2008 (the month you posted your message). Today the S&P 500 Index hit an all-time high of 2,137.
How soon we forget. It's been about 15 months since Taylor's post above, and literally yesterday I read another post complaining that the S&P 500 Index has "just been hanging around 2500 forever"--despite the fact that it hit that milestone for the first time ever just last month. I think greed is starting to set back in. Time to check my AA and see if I'm due for a rebalance....

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Re: Stay the course

Post by BlueEars » Thu Oct 26, 2017 9:07 pm

lazydavid wrote:
Thu Oct 26, 2017 8:51 pm
Taylor Larimore wrote:
Mon Jul 11, 2016 3:58 pm
The closing price of the S&P 500 Index was 969 on the last day in October, 2008 (the month you posted your message). Today the S&P 500 Index hit an all-time high of 2,137.
How soon we forget. It's been about 15 months since Taylor's post above, and literally yesterday I read another post complaining that the S&P 500 Index has "just been hanging around 2500 forever"--despite the fact that it hit that milestone for the first time ever just last month. I think greed is starting to set back in. Time to check my AA and see if I'm due for a rebalance....
I think I have read more posts from people worried about market heights then greedy people. Being a public market there are so many types of investors and every opinion under the sun.

I have to keep going back to my personal portfolio analysis to assure myself I am taking the appropriate risk. Like Goldilocks, not too hot and not too cold.

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Re: Stay the course

Post by Leif » Fri Oct 27, 2017 10:44 am

lazydavid wrote:
Thu Oct 26, 2017 8:51 pm
Taylor Larimore wrote:
Mon Jul 11, 2016 3:58 pm
The closing price of the S&P 500 Index was 969 on the last day in October, 2008 (the month you posted your message). Today the S&P 500 Index hit an all-time high of 2,137.
How soon we forget. It's been about 15 months since Taylor's post above, and literally yesterday I read another post complaining that the S&P 500 Index has "just been hanging around 2500 forever"--despite the fact that it hit that milestone for the first time ever just last month. I think greed is starting to set back in. Time to check my AA and see if I'm due for a rebalance....
And Taylors numbers, since they are closing prices, I presume they do not include dividends! As I move to retirement I think it is a good time to sell some stock to fund my retirement cash needs.

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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by hoops777 » Fri Oct 27, 2017 12:07 pm

I have a different take on my emergency fund for retirement.At 65,mine is 20 years.I guess it is pretty much Bernstein.
K.I.S.S........so easy to say so difficult to do.

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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by Patton » Mon Jan 15, 2018 12:38 am

Reading this thread from beginning to end is like watching the pressure of personal experience be applied with crushing force to partially-learned investment theories, until the excruciating process unexpectedly produces diamonds of insight. Thanks,

Patton

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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by runner540 » Mon Jan 15, 2018 10:34 am

TonyDAntonio wrote:
Tue Oct 24, 2017 9:31 pm
TheAncientOne wrote:
Tue Oct 24, 2017 8:05 pm
I hope someone remembers to bump this post up when the next bear market hits. Nothing like reading remarks from investors as they're going through the downward cycle rather than relying upon their memories several years later.
I'm actually glad it got bumped now when us retired folks can actually sell some 'winners' and hopefully build enough of a cushion to handle the next recession.
If you're young and adding money just remember that you are buying low during these type events. That's exactly what you should do.
zaboomafoozarg wrote:
Sun May 29, 2016 9:06 am
Sheepdog wrote:So, what is the one thing I would recommend to help a young person through market turbulence? Don't be greedy in good times. Don't invest money that you will "need" in the next 3 to 5 years. Need might mean that you want to buy a new house or auto or take that big cruise in that period, but it also would mean, especially in retirement, what you will need for monthly expenses.
That makes me feel a little better about keeping at least $50k in savings, CDs and I Bonds.
Just read this thread. Amazing perspectives, reflections and encouragement - thanks, Sheepdog and all others! A great reminder of the value of liquidity, flexibility and a plan.

I wasn't reading BH during the recession. I was young, working in finance, had studied the theory, and had a Vanguard account. I had a well funded emergency fund, so kept pouring money in the markets (retirement and taxable) practically every week in Q4 2008 and Q1 2009. I often see the "I don't need an emergency fund" threads here, and shake my head. I know from experience that it's much easier to keep investing and keep my cool at work when you have that cushion in cash. I don't think a HELOC, credit card, or taxable account with bond funds would have given me the confidence to continue investing in those days of stomach-jolting drops and weekly layoffs.

I've been fortunate to maintain a hefty cash emergency fund since then. There are opportunity costs to keeping it in 1% Ally accounts, but it helps me sleep well at night and take other calculated risks with career.

In 2017, I selected an asset allocation and rebalanced retirement funds to ~85/15, after a decade of 100% stocks. In both allocations, international has been at or close to market weight of stocks. Of course, I've missed out on some of the last year's bull run, but I am sticking to my plan and will have the ability to rebalance existing holdings.

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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by SimplicityNow » Mon Jan 15, 2018 12:08 pm

Thanks Sheepdog for this thread, for your candidness and humble demeanor. I think many here on BH could benefit greatly from reading it beginning to end whether they are accumulating or withdrawing from their portfolios. Especially the ones who are in or near retirement and are 100% stocks.

We're pretty conservative, average age in our mid 50's. I just retired but from a financial perspective still accumulating as my spouse is still working and won't be retiring for at least 2 years and then probably working part time for several years afterwards plus my pension.

So despite that and a moderate asset allocation (60%stock/40% fixed income assets) we have a large emergency fund/cash account with about 1 1/2 years expenses (in Cd's, High Yield Savings), which after my younger one completes college and we relocate will become 3 years expenses. I don't count that towards our AA.

With the markets run up we are at about 63% equities when last I checked in late December. My IPS states to rebalance once a year plus or minus 5% so when I check at the end of this month it will be close. Of course when things are good it's natural to want to just let it ride or consider a more aggressive AA.

Reading your posts just reaffirmed in my mind that I made the right choice when I wrote my IPS. If I hit 65% equities this month, I will rebalance and increase my fixed income balance.

Relating your experiences with candor helps all of us. Thanks for your contribution to this board. Many thanks to Taylor as well for all he does to help us as well.

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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by hoops777 » Mon Jan 15, 2018 12:48 pm

If I had been on this forum in 2008 and seen this thread I would have a lot more money than I do today.
K.I.S.S........so easy to say so difficult to do.

JiggyWillis
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by JiggyWillis » Mon Jan 15, 2018 2:46 pm

Patton wrote:
Mon Jan 15, 2018 12:38 am
Reading this thread from beginning to end is like watching the pressure of personal experience be applied with crushing force to partially-learned investment theories, until the excruciating process unexpectedly produces diamonds of insight. Thanks,

Patton
Well said, Patton. I think taking two hours to read this thread may prove to be a very valuable investment of time.

Of course I can take a two hour lunch today because I am the boss. As Sheepdog and countless others struggled with their emotions during those dark days, I watched from the sidelines with morbid fascination as the financial world seemed to be unraveling. Yet, only months before I began contributing to an employer's qualified retirement plan as an afterthought. Over seven years those contributions grew to a level that, in partnership with my wife's retirement assets, allowed us to fund the purchase of a profitable small business. I've already probably used up my investment luck and good timing.

I'm glad I found the resource of the collective BH wisdom and experience; It may just save me from myself.

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Sheepdog
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by Sheepdog » Tue Feb 06, 2018 9:25 am

I have seen a time like the present before, haven't I? Be calm, friends, this too shall pass. This may take a while or may just be a blip, but be prepared....including your emotions.
Just because it isn't your fault doesn't mean it isn't your responsibility....Josh Reid Jones

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MEA
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Re: I can't believe I am thinking this [Panic and Survival 2008-09]

Post by MEA » Tue Feb 06, 2018 10:22 am

I’m actually enjoying this one. I was beginning to think the market was broken. Good to see it acting normal again.
“Stay the course is the most important piece of advice I can give you.”-Bogle

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