wab wrote:We *still* don't know the magnitude of the impact on banks and the economy, at least partly because we don't know how much further house prices will fall.
Heard an economist on NPR suggest big tax incentives (tax credit?) for buying a home, to slow the housing price fall, and more directly address the root of the problem.
braceofbeagles wrote:In February of 2007 I sold Fannie Mae because of all the rumors of mortgage problems. What I did not know was how Fannie could bring the US financial markets down. Now I'm asking myself, "Why did I stop there?"
At least you did that much, far better than most.
And since I'm at 20/80, (without even rebalancing) the crash took care of that, I'll stay at 20/80. We are 4 years from retirement.
With stock prices what they are, I have a little bit of a hard time hearing things like this.
I hope you, and others, at least could generally avoid selling equites.
But I'm not an adviser. I don't know enough about how people (1) behave or (2) feel in bear markets, and if I for example, tried to talk you into rebalancing back to what your plan was (40%?) maybe I'd be asking you, as you were saying, to lose sleep, and in the end, would you be able to stick to it if the bear market lasted another five years? (Rhetorical question.)
Anyway, I will just mention: you may have read the suggestion that one have a minimum of 25% in equities. Having a little in equities can actually reduce risk compared to no equities, in some kinds of portfolios, but I think 20% is already more than needed for that, depending on what kinds of risk, and what kinds of bonds you have, etc. But 25% compared to 20% historically I think has offered good return vs risk.