Carry on or Take your toys and go home ?

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
flyingaway
Posts: 3167
Joined: Fri Jan 17, 2014 10:19 am

Re: Carry on or Take your toys and go home ?

Post by flyingaway »

When you said "go home", I think you meant "sell and wait for a lower point to get back".

It is a gamble. You could be right or you could be wrong, as long as you are not talking about "go home" and never come back. I know it is a market timing, what if you time it correctly by chance.

For those who said "carry on", they just don't want to do anything. I think the odds are the same.
User avatar
SB1234
Posts: 273
Joined: Sat Mar 10, 2018 7:41 pm
Location: Laniakea

Re: Carry on or Take your toys and go home ?

Post by SB1234 »

I am constantly taking some of the older toys home. Plan to have 7-8 years worth of toys at home at some point. But at the same time more new toys are going in to the game. I have more toys at home than ever, but also more toys outside then ever.
anecdotes are not data
daacrusher2001
Posts: 60
Joined: Sat Oct 24, 2015 11:42 am

Re: Carry on or Take your toys and go home ?

Post by daacrusher2001 »

I've hesitated to get involved in these discussions since I'll likely get criticized, but...wth...

For me, it came down to timing. I plan to retire in a year. I'd be lying if I said I know what my retirement expenses will be - while that sounds absurd, I'm sure, the reality is I know what it costs to live where I am now. I don't anticipate staying here. We have not settled on a retirement location yet.

So, I looked at what I've accumulated, and my minimum level of fixed income (meaning, taking SS at 62, 100% survivor on pensions) - I realized I can lock in a pretty reasonable retirement income and even stay in my current house if I really wanted to. If I kept a substantial stock allocation, and we have a prolonged downturn, many things change. So, I moved to a significantly more conservative AA in mid-2019 - aka, took my gains off the table.

I do not plan to stay as conservative as I am right now - but will do so until I get a good handle on what I really need.

Probably seems crazy to many, but I won't be in accumulation mode soon and don't want to get caught in a major down market right as I retire.

Longer term, once I'm confident I understand my expenses, I'll be re-entering the market and establishing a long term AA I'm comfortable with since I hope it'll have to last me 30 years!
rustymutt
Posts: 3969
Joined: Sat Mar 07, 2009 12:03 pm

Re: Carry on or Take your toys and go home ?

Post by rustymutt »

It never has real risk is what I hear them telling you, and it's up, up and away in our beautiful balloon of stocks. Heaven on earth. A never ending shower of money, and growth. And I'm sure the very wealthy are not worried about losing some of theirs. But most American's are not there yet.
Government spending is holding up this market. Does this go on forever? I don't know, but I do know that with high risk come high returns.
But as we've heard and read here so many times, if you won the race get out. People are out of work, and that's not looking good forward. Next year isn't an election year, and I will sleep good nights. Best wishes to all. No need to be greedy. I have more than enough.

:sharebeer
Even educators need education. And some can be hard headed to the point of needing time out.
nigel_ht
Posts: 1565
Joined: Tue Jan 01, 2019 10:14 am

Re: Carry on or Take your toys and go home ?

Post by nigel_ht »

fatcoffeedrinker wrote: Thu Aug 06, 2020 7:32 pm
7eight9 wrote: Thu Aug 06, 2020 7:25 pm Imagine the Japanese investor in December 1989.

Those who took their toys home are still patting themselves on the back three decades later.

Markets don't always go up.

Sometimes they go down and stay down for decades.
[Yawn] When will people realize we aren't Japan? And certainly nowhere near where Japan was in 1989.
LOL, folks will parrot "nobody knows nothing" as nauseum until they want to claim we aren't Japan and the market will always rise.

Someday we will be Japan. Is it worth worrying about? Probably not since there will be significant indicators that we have become Japan first but there will be a large number of folks here that will arrogantly claim that "nobody knows nothing" and everything is fine even after we see those indicators happen.

The other amusing thing is these folks will confidently ignore Japan and forget that 2000 required 152 months (13 years) to reach 0 real returns when accounting for inflation.

If you are mid to late in your career and retirement savings getting 0 returns for a decade on what you already saved will suck. If you are 5-10 years from retirement it really really sucks.

Image

From the perspective of getting to 5% real returns the answer is not yet and probably never...

Image

https://earlyretirementnow.com/2019/10/ ... ar-market/

Jack Bogle took money off the table in 2000 and went 35/65. He didn't believe in taking your ball and going home but taking 10% off the table was reasonable. He went back up to 60/40 and then dropped to 50/50 (sometime around 2015) which I think was his final AA.
aristotelian
Posts: 8575
Joined: Wed Jan 11, 2017 8:05 pm

Re: Carry on or Take your toys and go home ?

Post by aristotelian »

What do you mean that COVID is at all time high? Of course the case count and death count are always going to increase. Daily new cases are elevated but below mid-July and deaths are significantly below April peak. Regardless, market should have priced this in as the trends are all public information and it has been clear for a while now that this thing is not going away any time soon.
nigel_ht
Posts: 1565
Joined: Tue Jan 01, 2019 10:14 am

Re: Carry on or Take your toys and go home ?

Post by nigel_ht »

fatcoffeedrinker wrote: Thu Aug 06, 2020 7:43 pm
skor99 wrote: Thu Aug 06, 2020 7:34 pm
fatcoffeedrinker wrote: Thu Aug 06, 2020 7:32 pm
7eight9 wrote: Thu Aug 06, 2020 7:25 pm Imagine the Japanese investor in December 1989.

Those who took their toys home are still patting themselves on the back three decades later.

Markets don't always go up.

Sometimes they go down and stay down for decades.
[Yawn] When will people realize we aren't Japan? And certainly nowhere near where Japan was in 1989.
Can you please provide your reasoning for that ?
Demographics and valuation. Our population is still growing due to continued net immigration. Japan's fall in population is accelerating. And the CAPE10 for Japan in 1989 was around 90. The US CAPE10 right now is around 30.
In 1990 Japanese population still was growing. They didn't go negative until 2010.

We are trying hard to zero out immigration. If we ever manage to succeed then we really are screwed.
User avatar
Doom&Gloom
Posts: 3679
Joined: Thu May 08, 2014 3:36 pm

Re: Carry on or Take your toys and go home ?

Post by Doom&Gloom »

software wrote: Fri Aug 07, 2020 8:39 am
7eight9 wrote: Thu Aug 06, 2020 10:50 pm
GoldenFinch wrote: Thu Aug 06, 2020 8:42 pm
7eight9 wrote: Thu Aug 06, 2020 7:03 pm If you have won the game why not pick your ball and go home?

I remember one night years ago when Bobby was running the dice pit. It was a slow weekday and only one table was still open. Around 1:00am the table was ahead six figures. So what did Bobby do? He closed the game and sent the crew home. There was no way that he was going to risk giving back a six figure win.

It is good to quit a winner.
But Bobby was gambling. People here are investing. So it’s not the same. At least, that’s what I like to think.
Bobby wasn't gambling. Bobby was the casino. He had the edge. And he still opted to quit winners.
So does Bobby no longer fundamentally believe in the profitability of dice pits? Does Bobby not plan on re-opening his dice pit the next day or the next week? Why is his six figure loss any more likely to happen the night he closed rather than the next time he reopens.

Hopefully you see where these questions are going, market timing is a fool’s errand.
If Bobby was actully the casino, he was presumably going to open the dice pit again the next day. If the night's few patrons had little cash remaining, it was an ok move. If they were still flush, Bobby was simply letting his expected profits go to his competitor next door. I probably would not want to buy stock in Casino Bobby.

If Bobby was a pit supervisor and he wanted his 8-hour shift to book a big profit, then what he did makes sense.
7eight9
Posts: 1679
Joined: Fri May 17, 2019 7:11 pm

Re: Carry on or Take your toys and go home ?

Post by 7eight9 »

Doom&Gloom wrote: Fri Aug 07, 2020 11:50 am
software wrote: Fri Aug 07, 2020 8:39 am
7eight9 wrote: Thu Aug 06, 2020 10:50 pm
GoldenFinch wrote: Thu Aug 06, 2020 8:42 pm
7eight9 wrote: Thu Aug 06, 2020 7:03 pm If you have won the game why not pick your ball and go home?

I remember one night years ago when Bobby was running the dice pit. It was a slow weekday and only one table was still open. Around 1:00am the table was ahead six figures. So what did Bobby do? He closed the game and sent the crew home. There was no way that he was going to risk giving back a six figure win.

It is good to quit a winner.
But Bobby was gambling. People here are investing. So it’s not the same. At least, that’s what I like to think.
Bobby wasn't gambling. Bobby was the casino. He had the edge. And he still opted to quit winners.
So does Bobby no longer fundamentally believe in the profitability of dice pits? Does Bobby not plan on re-opening his dice pit the next day or the next week? Why is his six figure loss any more likely to happen the night he closed rather than the next time he reopens.

Hopefully you see where these questions are going, market timing is a fool’s errand.
If Bobby was actully the casino, he was presumably going to open the dice pit again the next day. If the night's few patrons had little cash remaining, it was an ok move. If they were still flush, Bobby was simply letting his expected profits go to his competitor next door. I probably would not want to buy stock in Casino Bobby.

If Bobby was a pit supervisor and he wanted his 8-hour shift to book a big profit, then what he did makes sense.
Bingo. Bobby wasn't the actual casino - he was the dice pit supervisor that evening. The last time I saw him he had moved on to Caesars.
I guess it all could be much worse. | They could be warming up my hearse.
bikechuck
Posts: 861
Joined: Sun Aug 16, 2015 9:22 pm

Re: Carry on or Take your toys and go home ?

Post by bikechuck »

000 wrote: Thu Aug 06, 2020 7:36 pm Consider limiting a "tactical trim" to 10-20%.

Also consider that USD may not be a great store of value either.
If the U.S. dollar drops in value relative to other currencies it will benefit international equities. Good argument for holding some international in your portfolio.
User avatar
FIREchief
Posts: 5835
Joined: Fri Aug 19, 2016 6:40 pm

Re: Carry on or Take your toys and go home ?

Post by FIREchief »

skor99 wrote: Thu Aug 06, 2020 7:33 pm how do you ignore the facts of rising dysfunction in Washington , rising Covid, ever rising debt and now even the aura of the almighty US dollar starting to dim as a reserve currency ( which is probably the main reason for US superpower status ) ?
There has been dysfunction in Washington and rising debt for as long as I can remember. New Covid cases/deaths/hospitalizations are falling in most areas of the Country. In other words, "same as it ever was." 8-)
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
Scooter57
Posts: 1612
Joined: Thu Jan 24, 2013 9:20 am

Re: Carry on or Take your toys and go home ?

Post by Scooter57 »

I reached a point where I had more than enough for my foreseeable needs and took most of my toys and went home. The misery I would feel at losing what I have right now, which is more than sufficient for my needs and my heirs would be far greater than the joy of making more.

I enjoy studying investing and still own some stocks, funds, and ETFs, but most of my savings are in high yield CDs that will stay high yield for another 2 and 3 years. If the market dropped by 50% and stayed down for 15 years I'd be fine. If we had sudden inflation, I would put my money into Money Market funds like I did in the early 1980s. If the market keeps going up, my modest investment in the market will keep my balance from dropping even while I spend.

Looking at the advice others have given you, I feel it important to remind people that it is impossible to give this kind of advice to a stranger without knowing how old they are, what ongoing earning power they have, their health and genetics, how much they have saved, and how much they need to spend to live the life they are likely to lead. People who tell strangers to leave a lot of money in the market without knowing that kind of information about them are being irresponsible. Many people here giving you advice may have 1/10 or less as much savings as you have, have long years of working ahead of them, and are recently converted to the Boglehead approach which they proselytize for,

Only you know how you would feel if the market dropped by a big amount and stayed dropped for 15 years. You really have to think that out and stop thinking that because the market has gone up for the past 10 years or so it will always do that. I am old enough to remember several long stretches when the market did squat and all gains came from dividends. Dividends back then were FAR higher than they are now. So how likely are you to be able to earn any more money if you stay with your current allocation and the market tanks? How likely are you to regret not getting out when the getting was good. How much would you regret missing out on more gains if you got out and the market continued to rise?

I have had my policy tested because I became a very conservative investor back some years ago and have "missed out" on big gains by having a very modest stock allocation. But I sleep very well, have enough money for all my needs and more, can take care of the kinds of disasters that can be fixed with money, and can help my kids if COVID takes away their jobs. As conservative as I have been, I have as much money right now now as I had seven years ago, and as it was enough back then, it is still enough now, as my personal rate of inflation is quite low.

If I had more money, it would just sit in my account, so why gamble it? The current no-yield environment is frustrating, but it would be a lot more frustrating to have a lot in stocks if the market stopped responding to the Fed's increasingly hysterical stimuli and <shock and horror> went down and stayed down.

Until you really think out your own needs other people's advice could be very damaging. Imagining losing half your money theoretically is very different from actually losing half your money. In 2008 I saw a lot of my friends nearing retirement lose half their money and panic. Yes, the market went up later, but it might not have, and several saw all their retirement plans go up in smoke at the point where it wasn't at all certain that the market would come back again.
Scooter57
Posts: 1612
Joined: Thu Jan 24, 2013 9:20 am

Re: Carry on or Take your toys and go home ?

Post by Scooter57 »

FIREchief wrote: Fri Aug 07, 2020 12:47 pm
There has been dysfunction in Washington and rising debt for as long as I can remember. New Covid cases/deaths/hospitalizations are falling in most areas of the Country. In other words, "same as it ever was." 8-)
Fact check: COVID deaths in the U.S. are now up to 2,000 a day according to Johns Hopkins, a nonpartisan world-renowned teaching and research hospital. This is almost double what we saw a month ago. There were 58,000 new cases diagnosed yeseterady. Deaths and hopitalizations are not declining.
https://komonews.com/news/coronavirus/n ... n-24-hours
ChiKid24
Posts: 341
Joined: Fri Aug 09, 2019 3:43 pm

Re: Carry on or Take your toys and go home ?

Post by ChiKid24 »

Scooter57 wrote: Fri Aug 07, 2020 5:27 pm
FIREchief wrote: Fri Aug 07, 2020 12:47 pm
There has been dysfunction in Washington and rising debt for as long as I can remember. New Covid cases/deaths/hospitalizations are falling in most areas of the Country. In other words, "same as it ever was." 8-)
Fact check: COVID deaths in the U.S. are now up to 2,000 a day according to Johns Hopkins, a nonpartisan world-renowned teaching and research hospital. This is almost double what we saw a month ago. There were 58,000 new cases diagnosed yeseterady. Deaths and hopitalizations are not declining.
https://komonews.com/news/coronavirus/n ... n-24-hours
Just because it's reported by the well respected news organization of Komo News :), does not make it so. Here's a link to the actual Johns Hopkins data where you will find there were actually 1,250 deaths reported in the last 24 hours, a far cry from 2,060. We actually haven't had a day with over 2,000 deaths in over 2 months and numbers are indeed declining on a daily, week-over-week, 7-day running average basis.

https://coronavirus.jhu.edu/data/cumulative-cases
User avatar
FIREchief
Posts: 5835
Joined: Fri Aug 19, 2016 6:40 pm

Re: Carry on or Take your toys and go home ?

Post by FIREchief »

Scooter57 wrote: Fri Aug 07, 2020 5:27 pm
FIREchief wrote: Fri Aug 07, 2020 12:47 pm
There has been dysfunction in Washington and rising debt for as long as I can remember. New Covid cases/deaths/hospitalizations are falling in most areas of the Country. In other words, "same as it ever was." 8-)
Fact check: COVID deaths in the U.S. are now up to 2,000 a day according to Johns Hopkins, a nonpartisan world-renowned teaching and research hospital. This is almost double what we saw a month ago. There were 58,000 new cases diagnosed yeseterady. Deaths and hopitalizations are not declining.
https://komonews.com/news/coronavirus/n ... n-24-hours
That article is whacky. It shows AZ as RED when the official state website has shown rapidly declining new cases, deaths and new hospitalizations for weeks. The amount of disinformation being spread about Covid is legion. :twisted:
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
User avatar
FIREchief
Posts: 5835
Joined: Fri Aug 19, 2016 6:40 pm

Re: Carry on or Take your toys and go home ?

Post by FIREchief »

ChiKid24 wrote: Fri Aug 07, 2020 5:50 pm
Scooter57 wrote: Fri Aug 07, 2020 5:27 pm
FIREchief wrote: Fri Aug 07, 2020 12:47 pm
There has been dysfunction in Washington and rising debt for as long as I can remember. New Covid cases/deaths/hospitalizations are falling in most areas of the Country. In other words, "same as it ever was." 8-)
Fact check: COVID deaths in the U.S. are now up to 2,000 a day according to Johns Hopkins, a nonpartisan world-renowned teaching and research hospital. This is almost double what we saw a month ago. There were 58,000 new cases diagnosed yeseterady. Deaths and hopitalizations are not declining.
https://komonews.com/news/coronavirus/n ... n-24-hours
Just because it's reported by the well respected news organization of Komo News :), does not make it so. Here's a link to the actual Johns Hopkins data where you will find there were actually 1,250 deaths reported in the last 24 hours, a far cry from 2,060. We actually haven't had a day with over 2,000 deaths in over 2 months and numbers are indeed declining on a daily, week-over-week, 7-day running average basis.

https://coronavirus.jhu.edu/data/cumulative-cases
Thank you. :beer
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
jarjarM
Posts: 399
Joined: Mon Jul 16, 2018 1:21 pm

Re: Carry on or Take your toys and go home ?

Post by jarjarM »

FIREchief wrote: Fri Aug 07, 2020 6:01 pm
Scooter57 wrote: Fri Aug 07, 2020 5:27 pm
FIREchief wrote: Fri Aug 07, 2020 12:47 pm
There has been dysfunction in Washington and rising debt for as long as I can remember. New Covid cases/deaths/hospitalizations are falling in most areas of the Country. In other words, "same as it ever was." 8-)
Fact check: COVID deaths in the U.S. are now up to 2,000 a day according to Johns Hopkins, a nonpartisan world-renowned teaching and research hospital. This is almost double what we saw a month ago. There were 58,000 new cases diagnosed yeseterady. Deaths and hopitalizations are not declining.
https://komonews.com/news/coronavirus/n ... n-24-hours
That article is whacky. It shows AZ as RED when the official state website has shown rapidly declining new cases, deaths and new hospitalizations for weeks. The amount of disinformation being spread about Covid is legion. :twisted:
I wish there's one trust source of truth... Maybe the CDC website :twisted:
User avatar
FIREchief
Posts: 5835
Joined: Fri Aug 19, 2016 6:40 pm

Re: Carry on or Take your toys and go home ?

Post by FIREchief »

jarjarM wrote: Fri Aug 07, 2020 6:03 pm
FIREchief wrote: Fri Aug 07, 2020 6:01 pm
Scooter57 wrote: Fri Aug 07, 2020 5:27 pm
FIREchief wrote: Fri Aug 07, 2020 12:47 pm
There has been dysfunction in Washington and rising debt for as long as I can remember. New Covid cases/deaths/hospitalizations are falling in most areas of the Country. In other words, "same as it ever was." 8-)
Fact check: COVID deaths in the U.S. are now up to 2,000 a day according to Johns Hopkins, a nonpartisan world-renowned teaching and research hospital. This is almost double what we saw a month ago. There were 58,000 new cases diagnosed yeseterady. Deaths and hopitalizations are not declining.
https://komonews.com/news/coronavirus/n ... n-24-hours
That article is whacky. It shows AZ as RED when the official state website has shown rapidly declining new cases, deaths and new hospitalizations for weeks. The amount of disinformation being spread about Covid is legion. :twisted:
I wish there's one trust source of truth... Maybe the CDC website :twisted:
I'm guessing that each state's department of health is the root source of any "official" data being accumulated. Even that has been highly questioned (e.g. the motorcycle death in FL that was included in their COVID death numbers). I sure wouldn't depend on the media to provide meaningful information. Too many agendas out there.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
Topic Author
skor99
Posts: 312
Joined: Mon Jun 26, 2017 5:51 pm

Re: Carry on or Take your toys and go home ?

Post by skor99 »

Scooter57 wrote: Fri Aug 07, 2020 5:23 pm I reached a point where I had more than enough for my foreseeable needs and took most of my toys and went home. The misery I would feel at losing what I have right now, which is more than sufficient for my needs and my heirs would be far greater than the joy of making more.

I enjoy studying investing and still own some stocks, funds, and ETFs, but most of my savings are in high yield CDs that will stay high yield for another 2 and 3 years. If the market dropped by 50% and stayed down for 15 years I'd be fine. If we had sudden inflation, I would put my money into Money Market funds like I did in the early 1980s. If the market keeps going up, my modest investment in the market will keep my balance from dropping even while I spend.

Looking at the advice others have given you, I feel it important to remind people that it is impossible to give this kind of advice to a stranger without knowing how old they are, what ongoing earning power they have, their health and genetics, how much they have saved, and how much they need to spend to live the life they are likely to lead. People who tell strangers to leave a lot of money in the market without knowing that kind of information about them are being irresponsible. Many people here giving you advice may have 1/10 or less as much savings as you have, have long years of working ahead of them, and are recently converted to the Boglehead approach which they proselytize for,

Only you know how you would feel if the market dropped by a big amount and stayed dropped for 15 years. You really have to think that out and stop thinking that because the market has gone up for the past 10 years or so it will always do that. I am old enough to remember several long stretches when the market did squat and all gains came from dividends. Dividends back then were FAR higher than they are now. So how likely are you to be able to earn any more money if you stay with your current allocation and the market tanks? How likely are you to regret not getting out when the getting was good. How much would you regret missing out on more gains if you got out and the market continued to rise?

I have had my policy tested because I became a very conservative investor back some years ago and have "missed out" on big gains by having a very modest stock allocation. But I sleep very well, have enough money for all my needs and more, can take care of the kinds of disasters that can be fixed with money, and can help my kids if COVID takes away their jobs. As conservative as I have been, I have as much money right now now as I had seven years ago, and as it was enough back then, it is still enough now, as my personal rate of inflation is quite low.

If I had more money, it would just sit in my account, so why gamble it? The current no-yield environment is frustrating, but it would be a lot more frustrating to have a lot in stocks if the market stopped responding to the Fed's increasingly hysterical stimuli and <shock and horror> went down and stayed down.

Until you really think out your own needs other people's advice could be very damaging. Imagining losing half your money theoretically is very different from actually losing half your money. In 2008 I saw a lot of my friends nearing retirement lose half their money and panic. Yes, the market went up later, but it might not have, and several saw all their retirement plans go up in smoke at the point where it wasn't at all certain that the market would come back again.
That does make a lot of sense
retire2022
Posts: 1814
Joined: Tue Oct 02, 2018 6:10 pm
Location: NYC

Re: Carry on or Take your toys and go home ?

Post by retire2022 »

skor99 wrote: Thu Aug 06, 2020 11:59 pm I admire your guts to be 93/7 at age 60. How did you handle the fall from 1.8 MM to 1.2 MM in March ?
sorry for the late response, just noticed it now on a revisit. I am single with no dependents that helps, also I have a safe secure job.

I lost 600K on March 23, 2020, however as of to date gained almost all of it back except for Russell 2500 CIT fund. I'm actually above where I was in Feb 21, 2020 of 1.833 million to 2.0million. As of today I joined the 2 M club.

I sold my VSEQX a few weeks ago and brought more shares of VGT which brings total to 1803 shares. It was the only fund which I preformed positive during Covid.

I have pension 66K, steady paying job, WFH, and SSA at 70 to be at 38K per year.
Last edited by retire2022 on Tue Sep 01, 2020 9:54 pm, edited 1 time in total.
User avatar
arcticpineapplecorp.
Posts: 7006
Joined: Tue Mar 06, 2012 9:22 pm

Re: Carry on or Take your toys and go home ?

Post by arcticpineapplecorp. »

ChiKid24 wrote: Thu Aug 06, 2020 7:12 pm The long-term annual growth rate of the S&P 500 is positive. That means it is not uncommon to be at or near "all time highs". Looking back at the last 7 years, here is the number of times the S&P hit an all time high in each of those years:

2013: 45 times
2014: 52
2015: 10
2016: 18
2017: 62
2018: 19
2019: 34

If you sold when we hit an all-time high in 2013, you would have missed out on 123% growth.
If you sold when we hit an all-time high in 2014, you would have missed out on 80% growth.
Even if you sold when it broke 3,000 in July 2019 or again this past May, you would have missed out on 12% growth.

Are you telling me "this time it's different"?
excellent post. I'm not questioning your numbers, but I like to see where people get their data from when they make claims. Can you provide info/links, etc. so that I may be able to corroborate and follow this over time? thanks!
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
marcopolo
Posts: 3854
Joined: Sat Dec 03, 2016 10:22 am

Re: Carry on or Take your toys and go home ?

Post by marcopolo »

nigel_ht wrote: Fri Aug 07, 2020 10:25 am
fatcoffeedrinker wrote: Thu Aug 06, 2020 7:32 pm
7eight9 wrote: Thu Aug 06, 2020 7:25 pm Imagine the Japanese investor in December 1989.

Those who took their toys home are still patting themselves on the back three decades later.

Markets don't always go up.

Sometimes they go down and stay down for decades.
[Yawn] When will people realize we aren't Japan? And certainly nowhere near where Japan was in 1989.
LOL, folks will parrot "nobody knows nothing" as nauseum until they want to claim we aren't Japan and the market will always rise.

Someday we will be Japan. Is it worth worrying about? Probably not since there will be significant indicators that we have become Japan first but there will be a large number of folks here that will arrogantly claim that "nobody knows nothing" and everything is fine even after we see those indicators happen.

The other amusing thing is these folks will confidently ignore Japan and forget that 2000 required 152 months (13 years) to reach 0 real returns when accounting for inflation.

If you are mid to late in your career and retirement savings getting 0 returns for a decade on what you already saved will suck. If you are 5-10 years from retirement it really really sucks.

Image

From the perspective of getting to 5% real returns the answer is not yet and probably never...

Image

https://earlyretirementnow.com/2019/10/ ... ar-market/

Jack Bogle took money off the table in 2000 and went 35/65. He didn't believe in taking your ball and going home but taking 10% off the table was reasonable. He went back up to 60/40 and then dropped to 50/50 (sometime around 2015) which I think was his final AA.
Well, a "glass half-full" type person might look at the second plot and conclude that based on "reversion to mean", we have had really poor returns for the last 20 years, so are due to have out-sized returns going forward to revert back to long term trends. Or do you thing "reversion to mean" only applies when it portends poor returns going forward?
Once in a while you get shown the light, in the strangest of places if you look at it right.
flaccidsteele
Posts: 1339
Joined: Sun Jul 28, 2019 9:42 pm
Location: Canada

Re: Carry on or Take your toys and go home ?

Post by flaccidsteele »

skor99 wrote: Thu Aug 06, 2020 6:52 pm Nasdaq at all time highs by far, S&P within 2% of all time highs, but COVID also at all time highs and growing... something has to give is the feeling that I get and I am sure a lot of people are feeling that.
If you have come close or crossed your previous portfolio high and/or reached or are close to your ‘number’, do you take your toys and go home ? Or atleast get super conservative 80-20 in cash/bonds vs stocks ?
I crossed my number years ago

What’s the benefit of “going home”?
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat
jsh
Posts: 12
Joined: Tue Mar 19, 2019 2:56 pm

Re: Carry on or Take your toys and go home ?

Post by jsh »

Stay with your IPS allocation, or maybe get a little more conservative.. You need to exceed inflation, or you're going backwards. I doubt the 80/20 allocation will do that. I just retired at in my early 60's, but need my portfolio to last 30 more years.
andypanda
Posts: 554
Joined: Sun Nov 12, 2017 9:11 pm
Location: Richmond, Virginia

Re: Carry on or Take your toys and go home ?

Post by andypanda »

"If you have won the game why not pick your ball and go home?"

And pay LTCG taxes on $800,000, plus some STCG, plus extra levels of IRMAA for both of us? I'm 70 and have been retired for 8 years and I think I'll stick with what's been working for 30 or 40 years. Fwiw, we're still at 75/25 with plenty of cash in CDs.
User avatar
HomerJ
Posts: 15668
Joined: Fri Jun 06, 2008 12:50 pm

Re: Carry on or Take your toys and go home ?

Post by HomerJ »

skor99 wrote: Thu Aug 06, 2020 6:52 pm Nasdaq at all time highs by far, S&P within 2% of all time highs, but COVID also at all time highs and growing... something has to give is the feeling that I get and I am sure a lot of people are feeling that.
If you have come close or crossed your previous portfolio high and/or reached or are close to your ‘number’, do you take your toys and go home ? Or atleast get super conservative 80-20 in cash/bonds vs stocks ?
You should have the same allocation regardless of what the market is doing...

If you have hit your financial goals, there's nothing wrong with going more conservative. But going conservative should be a long-term move.

Don't switch back and forth based on what the market is doing or what you think the market will do next.

And don't make big swings... You talk about going to 20/80 stocks/bonds.. What are you now?

Note that just normal rebalancing also locks in your gains.

If you are normally 50/50 and these market gains have made you 55/45, sell enough stock funds to get back to 50/50 and you've locked in those gains even if the market crashes tomorrow.

But if you've hit your number, and want to dial back even more to 40/60 or 35/65, nothing wrong with that (going all the way to 20/80 would be too much from 50/50 in my opinion)
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
User avatar
SmileyFace
Posts: 6241
Joined: Wed Feb 19, 2014 10:11 am

Re: Carry on or Take your toys and go home ?

Post by SmileyFace »

Its not clear to me what you are even asking. Seems people have interpreted a few different ways (someone up thread asked if you meant "Get back in at a Lower Price" - but I am thinking you mean "I have won the game; cash out equities and don't look back).

By "go home" Are you asking
"If I won the game and have enough money to put all my equities in cash and live out my life would I do so"
Or
"If I think the market is as high as it will be for a while; pull back and wait for a correction"

By "toys" I assume you mean the Stock part of my portfolio.

In my case - I carry on regardless - but I think some folks would "go home" for the first presumption but not for the second.
User avatar
David Jay
Posts: 9976
Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: Carry on or Take your toys and go home ?

Post by David Jay »

HomerJ wrote: Wed Sep 02, 2020 10:38 am...going all the way to 20/80 would be too much from 50/50 in my opinion.
Rick Ferri has described 30/70 as the “center of gravity” for retirees. Enough equities to stay ahead of inflation and enough stability to not get knocked off center. For example, the March drop (30% on the SP500) would be 9% with a 30/70, which most retirees could endure without “selling out” at the bottom.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
User avatar
abuss368
Posts: 23011
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: Carry on or Take your toys and go home ?

Post by abuss368 »

skor99 wrote: Thu Aug 06, 2020 6:52 pm Nasdaq at all time highs by far, S&P within 2% of all time highs, but COVID also at all time highs and growing... something has to give is the feeling that I get and I am sure a lot of people are feeling that.
If you have come close or crossed your previous portfolio high and/or reached or are close to your ‘number’, do you take your toys and go home ? Or atleast get super conservative 80-20 in cash/bonds vs stocks ?
Jack Bogle has always said "Don't do anything. Just stand there" and "stay the course".

Wise advice that investors should listen to.
John C. Bogle: “Simplicity is the master key to financial success."
User avatar
HomerJ
Posts: 15668
Joined: Fri Jun 06, 2008 12:50 pm

Re: Carry on or Take your toys and go home ?

Post by HomerJ »

daacrusher2001 wrote: Fri Aug 07, 2020 10:01 am I've hesitated to get involved in these discussions since I'll likely get criticized, but...wth...

For me, it came down to timing. I plan to retire in a year. I'd be lying if I said I know what my retirement expenses will be - while that sounds absurd, I'm sure, the reality is I know what it costs to live where I am now. I don't anticipate staying here. We have not settled on a retirement location yet.

So, I looked at what I've accumulated, and my minimum level of fixed income (meaning, taking SS at 62, 100% survivor on pensions) - I realized I can lock in a pretty reasonable retirement income and even stay in my current house if I really wanted to. If I kept a substantial stock allocation, and we have a prolonged downturn, many things change. So, I moved to a significantly more conservative AA in mid-2019 - aka, took my gains off the table.

I do not plan to stay as conservative as I am right now - but will do so until I get a good handle on what I really need.

Probably seems crazy to many, but I won't be in accumulation mode soon and don't want to get caught in a major down market right as I retire.

Longer term, once I'm confident I understand my expenses, I'll be re-entering the market and establishing a long term AA I'm comfortable with since I hope it'll have to last me 30 years!
No, this is the right reason to go more conservative. When you get close to retirement, it's smart to go more conservative. At least for the first few years to minimize the Sequence of Returns Risk. A big prolonged market crash the first couple years in retirement can really hurt or even destroy a retirement plan that is heavy in stocks.

Going more conservative because you think the market might crash soon is the WRONG reason to change your Asset Allocation. That's market-timing.
Going more conservative because you're close to retirement and want to protect yourself in case the market crashes soon is a GOOD reason.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
User avatar
HomerJ
Posts: 15668
Joined: Fri Jun 06, 2008 12:50 pm

Re: Carry on or Take your toys and go home ?

Post by HomerJ »

David Jay wrote: Wed Sep 02, 2020 10:47 am
HomerJ wrote: Wed Sep 02, 2020 10:38 am...going all the way to 20/80 would be too much from 50/50 in my opinion.
Rick Ferri has described 30/70 as the “center of gravity” for retirees. Enough equities to stay ahead of inflation and enough stability to not get knocked off center. For example, the March drop (30% on the SP500) would be 9% with a 30/70, which most retirees could endure without “selling out” at the bottom.
Seems reasonable to me... I'm thinking 40/60 for the first few years of retirement, then once we start taking Social Security, moving it up to 50/50
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
User avatar
David Jay
Posts: 9976
Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: Carry on or Take your toys and go home ?

Post by David Jay »

HomerJ wrote: Wed Sep 02, 2020 10:56 am
David Jay wrote: Wed Sep 02, 2020 10:47 am
HomerJ wrote: Wed Sep 02, 2020 10:38 am...going all the way to 20/80 would be too much from 50/50 in my opinion.
Rick Ferri has described 30/70 as the “center of gravity” for retirees. Enough equities to stay ahead of inflation and enough stability to not get knocked off center. For example, the March drop (30% on the SP500) would be 9% with a 30/70, which most retirees could endure without “selling out” at the bottom.
Seems reasonable to me... I'm thinking 40/60 for the first few years of retirement, then once we start taking Social Security, moving it up to 50/50
I wasn't thinking about this for you, I was thinking about the individual who wanted to go 20/80. It was a caution that Rick feels 20% is too low, they really should be at least 30%.

Personally, I have legacy interests so I will be ramping stocks up to 60/40 as Social Security kicks in.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
User avatar
AerialWombat
Posts: 1975
Joined: Tue May 29, 2018 1:07 pm
Location: Cash Canyon / Cashville

Re: Carry on or Take your toys and go home ?

Post by AerialWombat »

7eight9 wrote: Thu Aug 06, 2020 10:50 pm
GoldenFinch wrote: Thu Aug 06, 2020 8:42 pm
7eight9 wrote: Thu Aug 06, 2020 7:03 pm If you have won the game why not pick your ball and go home?

I remember one night years ago when Bobby was running the dice pit. It was a slow weekday and only one table was still open. Around 1:00am the table was ahead six figures. So what did Bobby do? He closed the game and sent the crew home. There was no way that he was going to risk giving back a six figure win.

It is good to quit a winner.
But Bobby was gambling. People here are investing. So it’s not the same. At least, that’s what I like to think.
Bobby wasn't gambling. Bobby was the casino. He had the edge. And he still opted to quit winners.
To me, the lesson here is simple: Own the casino.
User avatar
AerialWombat
Posts: 1975
Joined: Tue May 29, 2018 1:07 pm
Location: Cash Canyon / Cashville

Re: Carry on or Take your toys and go home ?

Post by AerialWombat »

David Jay wrote: Wed Sep 02, 2020 10:47 am
HomerJ wrote: Wed Sep 02, 2020 10:38 am...going all the way to 20/80 would be too much from 50/50 in my opinion.
Rick Ferri has described 30/70 as the “center of gravity” for retirees. Enough equities to stay ahead of inflation and enough stability to not get knocked off center. For example, the March drop (30% on the SP500) would be 9% with a 30/70, which most retirees could endure without “selling out” at the bottom.
Very happy member of the 30/70 club here. Saw Ferri’s advice on this a couple years ago, and drank the flavored sugar water. It’s enough gas to theoretically overcome inflation, yet safe enough to theoretically preserve most of the capital.
bmelikia
Posts: 638
Joined: Mon Jun 15, 2009 9:23 pm

Re: Carry on or Take your toys and go home ?

Post by bmelikia »

skor99 wrote: Thu Aug 06, 2020 6:52 pm Nasdaq at all time highs by far, S&P within 2% of all time highs, but COVID also at all time highs and growing...
At every point along this several month journey COVID has been at an "all time high and growing". . .so nothing is any more special about today than it was several months ago
"I would rather die with money, than live without it...." - Bogleheads member Ron | | "The greatest enemy of a good plan, is the dream of a perfect plan." | -Bogle
Cash is King
Posts: 255
Joined: Sun Dec 10, 2017 9:04 am

Re: Carry on or Take your toys and go home ?

Post by Cash is King »

skor99 wrote: Thu Aug 06, 2020 7:33 pm
Sandtrap wrote: Thu Aug 06, 2020 7:17 pm Ignore financial news, media frenzy, aura of chaos, and public anxiety.
Stick to your IPS.

j :happy
I try very hard and feel that I am pretty successful at ignoring all the talking heads on TV, but how do you ignore the facts of rising dysfunction in Washington , rising Covid, ever rising debt and now even the aura of the almighty US dollar starting to dim as a reserve currency ( which is probably the main reason for US superpower status ) ? Couldn’t all this be a reason of a long term decline like Japan after the 1980s ?
It seems you are allowing the "fear porn" on each topic you mention control you. If you continue down this path, you will lose the game in my opinion. Behavior=90% Investing skill=10% IMO.
onda
Posts: 15
Joined: Tue Jul 28, 2020 4:26 pm
Location: Gdansk, PL

Re: Carry on or Take your toys and go home ?

Post by onda »

nigel_ht wrote: Fri Aug 07, 2020 10:25 am LOL, folks will parrot "nobody knows nothing" as nauseum until they want to claim we aren't Japan and the market will always rise.

Someday we will be Japan. Is it worth worrying about? Probably not since there will be significant indicators that we have become Japan first but there will be a large number of folks here that will arrogantly claim that "nobody knows nothing" and everything is fine even after we see those indicators happen.

The other amusing thing is these folks will confidently ignore Japan and forget that 2000 required 152 months (13 years) to reach 0 real returns when accounting for inflation.

If you are mid to late in your career and retirement savings getting 0 returns for a decade on what you already saved will suck. If you are 5-10 years from retirement it really really sucks.

Image

From the perspective of getting to 5% real returns the answer is not yet and probably never...

Image

https://earlyretirementnow.com/2019/10/ ... ar-market/

Jack Bogle took money off the table in 2000 and went 35/65. He didn't believe in taking your ball and going home but taking 10% off the table was reasonable. He went back up to 60/40 and then dropped to 50/50 (sometime around 2015) which I think was his final AA.
From the perspective of getting to 5% real returns the answer is not yet and probably never...
Not really, you seem to ignore the fact that an average passive investor would keep buying consistently even during market decline.
ChiKid24
Posts: 341
Joined: Fri Aug 09, 2019 3:43 pm

Re: Carry on or Take your toys and go home ?

Post by ChiKid24 »

arcticpineapplecorp. wrote: Tue Sep 01, 2020 8:59 pm
ChiKid24 wrote: Thu Aug 06, 2020 7:12 pm The long-term annual growth rate of the S&P 500 is positive. That means it is not uncommon to be at or near "all time highs". Looking back at the last 7 years, here is the number of times the S&P hit an all time high in each of those years:

2013: 45 times
2014: 52
2015: 10
2016: 18
2017: 62
2018: 19
2019: 34

If you sold when we hit an all-time high in 2013, you would have missed out on 123% growth.
If you sold when we hit an all-time high in 2014, you would have missed out on 80% growth.
Even if you sold when it broke 3,000 in July 2019 or again this past May, you would have missed out on 12% growth.

Are you telling me "this time it's different"?
excellent post. I'm not questioning your numbers, but I like to see where people get their data from when they make claims. Can you provide info/links, etc. so that I may be able to corroborate and follow this over time? thanks!
I use Yahoo! finance to pull historical data. I started tracking it back in 2017 and went back to 2013. Manual pulls. I'm sure someone else can find a way to automate! This FT article seems to corroborate: https://www.ft.com/content/9cafd2e0-058 ... bacad9e7dd
nigel_ht
Posts: 1565
Joined: Tue Jan 01, 2019 10:14 am

Re: Carry on or Take your toys and go home ?

Post by nigel_ht »

David Jay wrote: Wed Sep 02, 2020 10:47 am
HomerJ wrote: Wed Sep 02, 2020 10:38 am...going all the way to 20/80 would be too much from 50/50 in my opinion.
Rick Ferri has described 30/70 as the “center of gravity” for retirees. Enough equities to stay ahead of inflation and enough stability to not get knocked off center. For example, the March drop (30% on the SP500) would be 9% with a 30/70, which most retirees could endure without “selling out” at the bottom.
I dunno that the long term risks at 30/70 are lower than 70/30 even for retirees.

I think that quite a few rules of thumb are asterisked at this point and I wouldn’t be overly comfortable below 50/50. I’d use international cap weight at 50/50 vs 30/70 to mitigate against a bad US stock cycle.

My belief is that most developed economies got hit less than ours due to covid.
nigel_ht
Posts: 1565
Joined: Tue Jan 01, 2019 10:14 am

Re: Carry on or Take your toys and go home ?

Post by nigel_ht »

onda wrote: Wed Sep 02, 2020 3:45 pm
nigel_ht wrote: Fri Aug 07, 2020 10:25 am LOL, folks will parrot "nobody knows nothing" as nauseum until they want to claim we aren't Japan and the market will always rise.

Someday we will be Japan. Is it worth worrying about? Probably not since there will be significant indicators that we have become Japan first but there will be a large number of folks here that will arrogantly claim that "nobody knows nothing" and everything is fine even after we see those indicators happen.

The other amusing thing is these folks will confidently ignore Japan and forget that 2000 required 152 months (13 years) to reach 0 real returns when accounting for inflation.

If you are mid to late in your career and retirement savings getting 0 returns for a decade on what you already saved will suck. If you are 5-10 years from retirement it really really sucks.

Image

From the perspective of getting to 5% real returns the answer is not yet and probably never...

Image

https://earlyretirementnow.com/2019/10/ ... ar-market/

Jack Bogle took money off the table in 2000 and went 35/65. He didn't believe in taking your ball and going home but taking 10% off the table was reasonable. He went back up to 60/40 and then dropped to 50/50 (sometime around 2015) which I think was his final AA.
From the perspective of getting to 5% real returns the answer is not yet and probably never...
Not really, you seem to ignore the fact that an average passive investor would keep buying consistently even during market decline.
Mid to Late career your new money is much smaller impact than saved money. I put in a decent chunk every year but it isn’t a large fraction of the total portfolio anymore.

Say you salt away $50K a year in your mid 50s with a $1M portfolio. If that last 10 years is 0 real you’re not screwed but it sure isn’t going to be the same as what we’ve seen the last decade.

If we have a real crash you may not recover before 65. If you need to start to draw down before you recover that’s a double whammy.
onda
Posts: 15
Joined: Tue Jul 28, 2020 4:26 pm
Location: Gdansk, PL

Re: Carry on or Take your toys and go home ?

Post by onda »

nigel_ht wrote: Thu Sep 03, 2020 8:02 pm
onda wrote: Wed Sep 02, 2020 3:45 pm
nigel_ht wrote: Fri Aug 07, 2020 10:25 am LOL, folks will parrot "nobody knows nothing" as nauseum until they want to claim we aren't Japan and the market will always rise.

Someday we will be Japan. Is it worth worrying about? Probably not since there will be significant indicators that we have become Japan first but there will be a large number of folks here that will arrogantly claim that "nobody knows nothing" and everything is fine even after we see those indicators happen.

The other amusing thing is these folks will confidently ignore Japan and forget that 2000 required 152 months (13 years) to reach 0 real returns when accounting for inflation.

If you are mid to late in your career and retirement savings getting 0 returns for a decade on what you already saved will suck. If you are 5-10 years from retirement it really really sucks.

Image

From the perspective of getting to 5% real returns the answer is not yet and probably never...

Image

https://earlyretirementnow.com/2019/10/ ... ar-market/

Jack Bogle took money off the table in 2000 and went 35/65. He didn't believe in taking your ball and going home but taking 10% off the table was reasonable. He went back up to 60/40 and then dropped to 50/50 (sometime around 2015) which I think was his final AA.
From the perspective of getting to 5% real returns the answer is not yet and probably never...
Not really, you seem to ignore the fact that an average passive investor would keep buying consistently even during market decline.
Mid to Late career your new money is much smaller impact than saved money. I put in a decent chunk every year but it isn’t a large fraction of the total portfolio anymore.

Say you salt away $50K a year in your mid 50s with a $1M portfolio. If that last 10 years is 0 real you’re not screwed but it sure isn’t going to be the same as what we’ve seen the last decade.

If we have a real crash you may not recover before 65. If you need to start to draw down before you recover that’s a double whammy.
But this is exactly why you rebalance regularly and adjust your asset allocation as you get older.
User avatar
Orbuculum Nongata
Posts: 537
Joined: Thu Nov 06, 2014 1:58 pm

Re: Carry on or Take your toys and go home ?

Post by Orbuculum Nongata »

skor99 wrote: Thu Aug 06, 2020 6:52 pm ...do you take your toys and go home?
Can you think of a single "game" where, at the end, the winner says "let's play overtime instead"?
Potential - distraction = performance.
Nowizard
Posts: 3130
Joined: Tue Oct 23, 2007 5:33 pm

Re: Carry on or Take your toys and go home ?

Post by Nowizard »

This question comes up with each of us at some time as we age and get to, or closer to, our number. For us, having reached our number and being well into retirement (A way of saying that our "Investment horizon" is considerably shorter than in the past), different situations represent the difficulty we have with moving from an accumulation to preservation stage of investing. This has gone on for about ten years where we have invested more aggressively than necessary, often with nagging questions related to why we do that. We had finally begun to become more conservative just before Covid19 hit and have made changes now to a more conservative portfolio. Personal opinion is that this is a good time to become more conservative if you are near your goals but not a time to pull out entirely. Different circumstances define what is "more conservative" differently, but for us it is in the neighborhood of 30/70 forever. Not a recommendation, just anecdotal comments. The key is your circumstances rather than dogma that automatically says stay the course or adopt a particular stock/bond ratio.

Tim
User avatar
David Jay
Posts: 9976
Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: Carry on or Take your toys and go home ?

Post by David Jay »

nigel_ht wrote: Thu Sep 03, 2020 7:55 pm
David Jay wrote: Wed Sep 02, 2020 10:47 am
HomerJ wrote: Wed Sep 02, 2020 10:38 am...going all the way to 20/80 would be too much from 50/50 in my opinion.
Rick Ferri has described 30/70 as the “center of gravity” for retirees. Enough equities to stay ahead of inflation and enough stability to not get knocked off center. For example, the March drop (30% on the SP500) would be 9% with a 30/70, which most retirees could endure without “selling out” at the bottom.
I dunno that the long term risks at 30/70 are lower than 70/30 even for retirees.

I think that quite a few rules of thumb are asterisked at this point and I wouldn’t be overly comfortable below 50/50. I’d use international cap weight at 50/50 vs 30/70 to mitigate against a bad US stock cycle.

My belief is that most developed economies got hit less than ours due to covid.
Note, my response was to someone who wanted to go 20/80 and I recommended raising it to at least 30%. I have no issue with going higher, I believe that in retirement and taking significant distributions, anything between 70/30 and 30/70 is "reasonable".
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
nigel_ht
Posts: 1565
Joined: Tue Jan 01, 2019 10:14 am

Re: Carry on or Take your toys and go home ?

Post by nigel_ht »

onda wrote: Fri Sep 04, 2020 7:13 am
nigel_ht wrote: Thu Sep 03, 2020 8:02 pm
onda wrote: Wed Sep 02, 2020 3:45 pm
nigel_ht wrote: Fri Aug 07, 2020 10:25 am LOL, folks will parrot "nobody knows nothing" as nauseum until they want to claim we aren't Japan and the market will always rise.

Someday we will be Japan. Is it worth worrying about? Probably not since there will be significant indicators that we have become Japan first but there will be a large number of folks here that will arrogantly claim that "nobody knows nothing" and everything is fine even after we see those indicators happen.

The other amusing thing is these folks will confidently ignore Japan and forget that 2000 required 152 months (13 years) to reach 0 real returns when accounting for inflation.

If you are mid to late in your career and retirement savings getting 0 returns for a decade on what you already saved will suck. If you are 5-10 years from retirement it really really sucks.

Image

From the perspective of getting to 5% real returns the answer is not yet and probably never...

Image

https://earlyretirementnow.com/2019/10/ ... ar-market/

Jack Bogle took money off the table in 2000 and went 35/65. He didn't believe in taking your ball and going home but taking 10% off the table was reasonable. He went back up to 60/40 and then dropped to 50/50 (sometime around 2015) which I think was his final AA.
From the perspective of getting to 5% real returns the answer is not yet and probably never...
Not really, you seem to ignore the fact that an average passive investor would keep buying consistently even during market decline.
Mid to Late career your new money is much smaller impact than saved money. I put in a decent chunk every year but it isn’t a large fraction of the total portfolio anymore.

Say you salt away $50K a year in your mid 50s with a $1M portfolio. If that last 10 years is 0 real you’re not screwed but it sure isn’t going to be the same as what we’ve seen the last decade.

If we have a real crash you may not recover before 65. If you need to start to draw down before you recover that’s a double whammy.
But this is exactly why you rebalance regularly and adjust your asset allocation as you get older.
If you believe in age - 10 in bonds...which Bogle didn't really when his non-retirement portfolio was 80/20. Even if you do age -10 in bonds you're still 60/40ish.
nigel_ht
Posts: 1565
Joined: Tue Jan 01, 2019 10:14 am

Re: Carry on or Take your toys and go home ?

Post by nigel_ht »

David Jay wrote: Fri Sep 04, 2020 10:01 am
nigel_ht wrote: Thu Sep 03, 2020 7:55 pm
David Jay wrote: Wed Sep 02, 2020 10:47 am
HomerJ wrote: Wed Sep 02, 2020 10:38 am...going all the way to 20/80 would be too much from 50/50 in my opinion.
Rick Ferri has described 30/70 as the “center of gravity” for retirees. Enough equities to stay ahead of inflation and enough stability to not get knocked off center. For example, the March drop (30% on the SP500) would be 9% with a 30/70, which most retirees could endure without “selling out” at the bottom.
I dunno that the long term risks at 30/70 are lower than 70/30 even for retirees.

I think that quite a few rules of thumb are asterisked at this point and I wouldn’t be overly comfortable below 50/50. I’d use international cap weight at 50/50 vs 30/70 to mitigate against a bad US stock cycle.

My belief is that most developed economies got hit less than ours due to covid.
Note, my response was to someone who wanted to go 20/80 and I recommended raising it to at least 30%. I have no issue with going higher, I believe that in retirement and taking significant distributions, anything between 70/30 and 30/70 is "reasonable".
All I'm saying is that 30/70 may not be "reasonable" anymore.
000
Posts: 4036
Joined: Thu Jul 23, 2020 12:04 am
Location: Ursa Minor

Re: Carry on or Take your toys and go home ?

Post by 000 »

nigel_ht wrote: Fri Sep 04, 2020 10:14 am All I'm saying is that 30/70 may not be "reasonable" anymore.
I agree
randomguy
Posts: 9208
Joined: Wed Sep 17, 2014 9:00 am

Re: Carry on or Take your toys and go home ?

Post by randomguy »

nigel_ht wrote: Thu Sep 03, 2020 8:02 pm

Mid to Late career your new money is much smaller impact than saved money. I put in a decent chunk every year but it isn’t a large fraction of the total portfolio anymore.

Say you salt away $50K a year in your mid 50s with a $1M portfolio. If that last 10 years is 0 real you’re not screwed but it sure isn’t going to be the same as what we’ve seen the last decade.

If we have a real crash you may not recover before 65. If you need to start to draw down before you recover that’s a double whammy.
And if you don't recover by 65 (or whenever you retire), who cares? Did the 1981 retire suffer because they hadn't recovered from 1973 yet? Did the 2010 retiree suffer because they hadn't recovered from 2000? Did the 1942 retire suffer from not recovering from 1929?

Yeah I would rather make 10% year than lose 2% but you can't worry about short term periods. We know there will be 10 years periods where stocks struggle. There will be 10 year periods where they do well. And you ability to pick them out is questionable at best. Go read the articles from 2010 and count how many were predicting great times ahead. And then go to 2000 and read about how many of them talked about a lost decade.
nigel_ht
Posts: 1565
Joined: Tue Jan 01, 2019 10:14 am

Re: Carry on or Take your toys and go home ?

Post by nigel_ht »

randomguy wrote: Fri Sep 04, 2020 10:17 am
nigel_ht wrote: Thu Sep 03, 2020 8:02 pm

Mid to Late career your new money is much smaller impact than saved money. I put in a decent chunk every year but it isn’t a large fraction of the total portfolio anymore.

Say you salt away $50K a year in your mid 50s with a $1M portfolio. If that last 10 years is 0 real you’re not screwed but it sure isn’t going to be the same as what we’ve seen the last decade.

If we have a real crash you may not recover before 65. If you need to start to draw down before you recover that’s a double whammy.
And if you don't recover by 65 (or whenever you retire), who cares? Did the 1981 retire suffer because they hadn't recovered from 1973 yet? Did the 2010 retiree suffer because they hadn't recovered from 2000? Did the 1942 retire suffer from not recovering from 1929?

Yeah I would rather make 10% year than lose 2% but you can't worry about short term periods. We know there will be 10 years periods where stocks struggle. There will be 10 year periods where they do well. And you ability to pick them out is questionable at best. Go read the articles from 2010 and count how many were predicting great times ahead. And then go to 2000 and read about how many of them talked about a lost decade.
It’s not losing 2% but 20%+ in a single year and taking 13 years to break even.

And yes, they did “suffer” vs retirees from different periods or who had pulled money out.

The issue today is bonds are not going to provide the yields those other periods saw.
User avatar
Doom&Gloom
Posts: 3679
Joined: Thu May 08, 2014 3:36 pm

Re: Carry on or Take your toys and go home ?

Post by Doom&Gloom »

Orbuculum Nongata wrote: Fri Sep 04, 2020 8:07 am
skor99 wrote: Thu Aug 06, 2020 6:52 pm ...do you take your toys and go home?
Can you think of a single "game" where, at the end, the winner says "let's play overtime instead"?
Sure. Almost all games involving betting where the winner knows he has the edge. Do casinos close after winning a big chunk from a sucker, er customer?
Post Reply