Does anyone believe 100 percent equities is not risky?

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Marseille07
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Re: Does anyone believe 100 percent equities is not risky?

Post by Marseille07 »

tvubpwcisla wrote: Tue Aug 02, 2022 6:15 pm No thank you on timing the market. Always stay invested unless withdrawing in retirement at a WR equal to the dividend payout of the fund so the money will last forever.
Dividend = WR is difficult to pull off. But if you can and that's what you want to do, by all means.
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tvubpwcisla
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Re: Does anyone believe 100 percent equities is not risky?

Post by tvubpwcisla »

Marseille07 wrote: Tue Aug 02, 2022 9:27 pm
tvubpwcisla wrote: Tue Aug 02, 2022 6:15 pm No thank you on timing the market. Always stay invested unless withdrawing in retirement at a WR equal to the dividend payout of the fund so the money will last forever.
Dividend = WR is difficult to pull off. But if you can and that's what you want to do, by all means.
Thank you. It's a great approach to ensure you funds last your lifetime and generations to come.
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Beensabu
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Re: Does anyone believe 100 percent equities is not risky?

Post by Beensabu »

tvubpwcisla wrote: Correct. When it does recover, being 100% equity Index Funds allow you participate in the full recovery. If the market goes up 5% in one day, you get the full 5%.
Being 100% equities is taking diversifiable risk. Risk that may show up in a non- or partial recovery for an unknown period of time that may be longer than previously imagined.
tvubpwcisla wrote: No thank you on timing the market. Always stay invested unless withdrawing in retirement at a WR equal to the dividend payout of the fund so the money will last forever.
What if the recovery takes so long that you need to withdraw more in retirement than the dividend payout? What if it takes so long that you need to withdraw quite a bit more?

Don't bank on a quick recovery. That's gambling.
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tvubpwcisla
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Re: Does anyone believe 100 percent equities is not risky?

Post by tvubpwcisla »

Beensabu wrote: Tue Aug 02, 2022 10:06 pm
tvubpwcisla wrote: Correct. When it does recover, being 100% equity Index Funds allow you participate in the full recovery. If the market goes up 5% in one day, you get the full 5%.
Being 100% equities is taking diversifiable risk. Risk that may show up in a non- or partial recovery for an unknown period of time that may be longer than previously imagined.
tvubpwcisla wrote: No thank you on timing the market. Always stay invested unless withdrawing in retirement at a WR equal to the dividend payout of the fund so the money will last forever.
What if the recovery takes so long that you need to withdraw more in retirement than the dividend payout? What if it takes so long that you need to withdraw quite a bit more?

Don't bank on a quick recovery. That's gambling.
Absolutely. That's a great call out!
Marseille07
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Re: Does anyone believe 100 percent equities is not risky?

Post by Marseille07 »

tvubpwcisla wrote: Tue Aug 02, 2022 9:30 pm Thank you. It's a great approach to ensure you funds last your lifetime and generations to come.
I don't think dividends matter much because they're part of your total return. If dividends = WR% works, it's because the percentage is very low, not because dividends carry special properties.
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tvubpwcisla
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Re: Does anyone believe 100 percent equities is not risky?

Post by tvubpwcisla »

Marseille07 wrote: Tue Aug 02, 2022 10:17 pm
tvubpwcisla wrote: Tue Aug 02, 2022 9:30 pm Thank you. It's a great approach to ensure you funds last your lifetime and generations to come.
I don't think dividends matter much because they're part of your total return. If dividends = WR% works, it's because the percentage is very low, not because dividends carry special properties.
Yes, absolutely! For example, if VTSAX pays a 1.55% dividend then monies invested in that fund would be withdrawn at a SWR of 1.55%.
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Re: Does anyone believe 100 percent equities is not risky?

Post by Da5id »

tvubpwcisla wrote: Tue Aug 02, 2022 10:32 pm
Marseille07 wrote: Tue Aug 02, 2022 10:17 pm
tvubpwcisla wrote: Tue Aug 02, 2022 9:30 pm Thank you. It's a great approach to ensure you funds last your lifetime and generations to come.
I don't think dividends matter much because they're part of your total return. If dividends = WR% works, it's because the percentage is very low, not because dividends carry special properties.
Yes, absolutely! For example, if VTSAX pays a 1.55% dividend then monies invested in that fund would be withdrawn at a SWR of 1.55%.
Dividends can go up and down, SWR usually is specified as a fixed percentage of original portfolio value adjusted for inflation. You seem to be specifying SWR as a variable amount that is current dividend yield. But obviously if you meet your goals at a SWR of 1.55% you will never run out of money under basically any assumptions.
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Re: Does anyone believe 100 percent equities is not risky?

Post by Marseille07 »

tvubpwcisla wrote: Tue Aug 02, 2022 10:32 pm Yes, absolutely! For example, if VTSAX pays a 1.55% dividend then monies invested in that fund would be withdrawn at a SWR of 1.55%.
It just doesn't make much sense to use dividends as your WR%. If they stopped paying dividends, do you not withdraw at all? What if they pay 10%, do you withdraw 10%?

Instead, what I do is to keep dividends in cash and I skip some months without selling equities, which lowers my effective WR%.
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Northern Flicker
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Re: Does anyone believe 100 percent equities is not risky?

Post by Northern Flicker »

tvubpwcisla wrote: Tue Aug 02, 2022 9:30 pm
Marseille07 wrote: Tue Aug 02, 2022 9:27 pm
tvubpwcisla wrote: Tue Aug 02, 2022 6:15 pm No thank you on timing the market. Always stay invested unless withdrawing in retirement at a WR equal to the dividend payout of the fund so the money will last forever.
Dividend = WR is difficult to pull off. But if you can and that's what you want to do, by all means.
Thank you. It's a great approach to ensure you funds last your lifetime and generations to come.
It does not ensure that.
My postings are my opinion, and never should be construed as a recommendation to buy, sell, or hold any particular investment.
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tvubpwcisla
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Re: Does anyone believe 100 percent equities is not risky?

Post by tvubpwcisla »

Marseille07 wrote: Tue Aug 02, 2022 11:39 pm
tvubpwcisla wrote: Tue Aug 02, 2022 10:32 pm Yes, absolutely! For example, if VTSAX pays a 1.55% dividend then monies invested in that fund would be withdrawn at a SWR of 1.55%.
It just doesn't make much sense to use dividends as your WR%. If they stopped paying dividends, do you not withdraw at all? What if they pay 10%, do you withdraw 10%?

Instead, what I do is to keep dividends in cash and I skip some months without selling equities, which lowers my effective WR%.
If an equity Index Fund like the Vanguard Total Stock Market Index Fund (VTSAX) stopped paying dividends, then I would not be able to use the withdrawal rate of the yield and would not be able to perform any withdrawals. Although I would love it, I don't foresee VTSAX increasing it's dividend to 10%. Do you know if that fund ever cancelled it's dividend? Thank you.
Last edited by tvubpwcisla on Wed Aug 03, 2022 5:01 am, edited 2 times in total.
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Re: Does anyone believe 100 percent equities is not risky?

Post by tvubpwcisla »

Northern Flicker wrote: Wed Aug 03, 2022 12:46 am
tvubpwcisla wrote: Tue Aug 02, 2022 9:30 pm
Marseille07 wrote: Tue Aug 02, 2022 9:27 pm
tvubpwcisla wrote: Tue Aug 02, 2022 6:15 pm No thank you on timing the market. Always stay invested unless withdrawing in retirement at a WR equal to the dividend payout of the fund so the money will last forever.
Dividend = WR is difficult to pull off. But if you can and that's what you want to do, by all means.
Thank you. It's a great approach to ensure you funds last your lifetime and generations to come.
It does not ensure that.
Thank you for pointing that out! Can you please elaborate how you would run out of money if your SWR is the dividend yield of VTSAX?
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Re: Does anyone believe 100 percent equities is not risky?

Post by dbr »

tvubpwcisla wrote: Wed Aug 03, 2022 4:55 am
Northern Flicker wrote: Wed Aug 03, 2022 12:46 am
tvubpwcisla wrote: Tue Aug 02, 2022 9:30 pm
Marseille07 wrote: Tue Aug 02, 2022 9:27 pm
tvubpwcisla wrote: Tue Aug 02, 2022 6:15 pm No thank you on timing the market. Always stay invested unless withdrawing in retirement at a WR equal to the dividend payout of the fund so the money will last forever.
Dividend = WR is difficult to pull off. But if you can and that's what you want to do, by all means.
Thank you. It's a great approach to ensure you funds last your lifetime and generations to come.
It does not ensure that.
Thank you for pointing that out! Can you please elaborate how you would run out of money if your SWR is the dividend yield of VTSAX?
The idea is that the historical experience in that is that 4% inflation indexed is a pretty safe 30 year withdrawal rate from portfolios of stocks and bonds. If the dividend yield on VTSAX is consistently higher than that the result would presumably be edging into a less safe situation. When the dividend yield is less than 2% your statement is true to a ridiculous degree of overkill, or perhaps over-survival. So the risk is then that the investor has worked too long, saved too much, and spent and is spending too little. But if you make the change to something that does yield a lot more you could arrange to withdraw too much and under some bad circumstances increase the chances of retirement ruin. The math for the whole thing is that the success of retirement withdrawals is a balance of returns and the sequence in which they appear against the magnitude of the withdrawals. By and large the yields on stocks don't indicate better or worse return, certainly not for large index funds. Stock dividend yield is a false data point for retirement planning.
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Re: Does anyone believe 100 percent equities is not risky?

Post by JackoC »

WR=div yield is a bit like 'you don't lose anything till you sell'. Taken literally it's arbitrary at best, though not nonsensical like 'you don't lose anything till you sell' taken literally, but you can 'convert' either into something more reasonable with some more explanation. Corporate managements over the whole index are reluctant to choose a dividend they don't believe they can steadily increase over time at least in nominal terms. So the div might be a very rough proxy of 'sustainable withdrawal'. Although the optimist might look to their guiding star, the rearview mirror, and point out that companies in US in a short period of history with US as the leading economy have been able to grow real stock value greatly (albeit a big chunk was increase in valuation of P relative to E) and also gradually* grow the real per share dividend. So, limiting yourself to withdrawing dividends would be 'shockingly pessimistic' in that view, even 'forever'. The less optimistic would point out that just because management is comfortable a nominally growing div is sustainable to their required level of certainty over the time horizon they care about (concentrated on their expected tenure, presumably) doesn't mean the real dividend stream can't seriously contract. Like many question it tends to come back in part to the comfortable view that future is a guaranteed rerun of a fairly short period of the past in one country, or at least a selection from a distribution wholly defined by that short period (same jar of different colored marbles as 1900 or 1871 etc to now, we'll just make a different draw), vs. the more unsettling prospect that the distribution itself might be less attractive (its midpoint the expected total return now certainly appears lower than the geometric average return over that 'long' past period).

I don't directly base anything on the dividend yield. Retired, we aim for expected >0% growth of inflation adjusted principle for heirs thus to spend < the total expected after tax real return. I estimate our expected after tax real return around 1.7% (portfolio roughly equivalent to 60/40 correcting for rental real estate in lieu of some stocks and some equity tail hedges) assuming no capital gains basis step up for heirs (~2% with 100% basis step up). It's coincidentally a little above US stock div yield and in range of global stock div yield (but others would get a different answer just based on tax situation). The realized return is around even money to be lower but I believe it very unlikely lower enough for us to entirely exhaust the principal from our age, though with no absolute guarantee. If we naturally spent even that much perhaps I'd look at it differently (I don't think I'd try to justify a higher return assumption, but who knows). That's the whole other, individual, side to it: how much spending do you need to justify?

*though only quite gradually: in 1900-1949 real div per share in the US grew 1% pa, 1950-2009 1.3% per Ilmanen in 'Expected Returns'.
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Re: Does anyone believe 100 percent equities is not risky?

Post by willthrill81 »

tvubpwcisla wrote: Tue Aug 02, 2022 9:30 pm
Marseille07 wrote: Tue Aug 02, 2022 9:27 pm
tvubpwcisla wrote: Tue Aug 02, 2022 6:15 pm No thank you on timing the market. Always stay invested unless withdrawing in retirement at a WR equal to the dividend payout of the fund so the money will last forever.
Dividend = WR is difficult to pull off. But if you can and that's what you want to do, by all means.
Thank you. It's a great approach to ensure you funds last your lifetime and generations to come.
It's 'an' approach, but it's certainly not a 'great' approach. You can ensure that your funds will last your lifetime by a number of means. And ensuring your funds will last for generations has proven to be exceedingly difficult. Ask the Vanderbilts, for instance, about this. And those very few who have exceeded didn't do so simply because they only spent dividends.
dbr wrote: Wed Aug 03, 2022 8:50 am
tvubpwcisla wrote: Wed Aug 03, 2022 4:55 am
Northern Flicker wrote: Wed Aug 03, 2022 12:46 am
tvubpwcisla wrote: Tue Aug 02, 2022 9:30 pm
Marseille07 wrote: Tue Aug 02, 2022 9:27 pm

Dividend = WR is difficult to pull off. But if you can and that's what you want to do, by all means.
Thank you. It's a great approach to ensure you funds last your lifetime and generations to come.
It does not ensure that.
Thank you for pointing that out! Can you please elaborate how you would run out of money if your SWR is the dividend yield of VTSAX?
The idea is that the historical experience in that is that 4% inflation indexed is a pretty safe 30 year withdrawal rate from portfolios of stocks and bonds. If the dividend yield on VTSAX is consistently higher than that the result would presumably be edging into a less safe situation. When the dividend yield is less than 2% your statement is true to a ridiculous degree of overkill, or perhaps over-survival. So the risk is then that the investor has worked too long, saved too much, and spent and is spending too little. But if you make the change to something that does yield a lot more you could arrange to withdraw too much and under some bad circumstances increase the chances of retirement ruin. The math for the whole thing is that the success of retirement withdrawals is a balance of returns and the sequence in which they appear against the magnitude of the withdrawals. By and large the yields on stocks don't indicate better or worse return, certainly not for large index funds. Stock dividend yield is a false data point for retirement planning.
Well said. I don't think that many who pursue a 'only spend the dividends' approach realize how much longer it will take them to achieve this versus the historic perpetual withdrawal rate of about 3% (i.e., portfolio of 33x one's annual spending), which would have already taken an 5-10 years historically to achieve if one was already 25x (i.e., 4% withdrawal rate) and sometimes longer to achieve. Going to a 1.5% withdrawal rate requires yet another doubling of one's portfolio size (67x) compared to a 3% withdrawal rate. Unless one's expenses are very low and/or one's income is exceedingly high, it is extremely difficult to achieve this.
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Re: Does anyone believe 100 percent equities is not risky?

Post by vineviz »

tvubpwcisla wrote: Wed Aug 03, 2022 4:55 am Thank you for pointing that out! Can you please elaborate how you would run out of money if your SWR is the dividend yield of VTSAX?

Remember your definitions.

Sustainable withdrawal rate (SWR) is almost always defined in two important ways: 1) it is the percentage withdrawn in the FIRST period of retirement; and 2) the AMOUNT is adjusted by inflation every year thereafter (preventing a drop in standard of living).

Spending ONLY the dividend yield doesn't necessarily obey either of those conditions.

Furthermore, it is a "worst case" number that can only be observed in hindsight: there's really no such thing as "your" SWR during retirement.

Additionally, even then there's no rule (economic or legal) that prevents the dividend yield from being 100%. Theoretically, a firm can decide to close up shop and pay out the remaining value in a dividend.
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Re: Does anyone believe 100 percent equities is not risky?

Post by random_walker_77 »

willthrill81 wrote: Wed Aug 03, 2022 9:03 am Well said. I don't think that many who pursue a 'only spend the dividends' approach realize how much longer it will take them to achieve this versus the historic perpetual withdrawal rate of about 3% (i.e., portfolio of 33x one's annual spending), which would have already taken an 5-10 years historically to achieve if one was already 25x (i.e., 4% withdrawal rate) and sometimes longer to achieve. Going to a 1.5% withdrawal rate requires yet another doubling of one's portfolio size (67x) compared to a 3% withdrawal rate. Unless one's expenses are very low and/or one's income is exceedingly high, it is extremely difficult to achieve this.
Agreed that this is very high bar to reach. At the same time, someone who strikes it rich and early retires at 33x, unless they hit a bad sequence of returns, will very likely see their portfolio double over the intervening decades. They've basically hit a financial "escape velocity" and, barring an economic disaster, their portfolio will grow a lot. Of course, the whole point of a large portfolio for a "safe withdrawal rate" is to be able to withstand an economic disaster, using the historical worst case as the comparison point, w/ the hope that a new historical record isn't set during your retirement.

From an "escape velocity" point of view, if you're young, I think that 33x is so much better than 25x because it increases the odds that you've reached escape velocity. Mostly because, if you've hit 25x really young (under age 40, say), you probably have a high income and it might only be a few years to get to 33x (or even 40x). In the context of a *very long* retirement, that might be more acceptable to trade off a few more working years in order to reduce risk and have more funds at your disposal.

At the other end, if you're in your mid-60s you have a much more limited number of good years left, changing how you'd value the marginal benefit of more savings.
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Re: Does anyone believe 100 percent equities is not risky?

Post by willthrill81 »

random_walker_77 wrote: Wed Aug 03, 2022 9:35 am
willthrill81 wrote: Wed Aug 03, 2022 9:03 am Well said. I don't think that many who pursue a 'only spend the dividends' approach realize how much longer it will take them to achieve this versus the historic perpetual withdrawal rate of about 3% (i.e., portfolio of 33x one's annual spending), which would have already taken an 5-10 years historically to achieve if one was already 25x (i.e., 4% withdrawal rate) and sometimes longer to achieve. Going to a 1.5% withdrawal rate requires yet another doubling of one's portfolio size (67x) compared to a 3% withdrawal rate. Unless one's expenses are very low and/or one's income is exceedingly high, it is extremely difficult to achieve this.
Agreed that this is very high bar to reach. At the same time, someone who strikes it rich and early retires at 33x, unless they hit a bad sequence of returns, will very likely see their portfolio double over the intervening decades. They've basically hit a financial "escape velocity" and, barring an economic disaster, their portfolio will grow a lot. Of course, the whole point of a large portfolio for a "safe withdrawal rate" is to be able to withstand an economic disaster, using the historical worst case as the comparison point, w/ the hope that a new historical record isn't set during your retirement.

From an "escape velocity" point of view, if you're young, I think that 33x is so much better than 25x because it increases the odds that you've reached escape velocity. Mostly because, if you've hit 25x really young (under age 40, say), you probably have a high income and it might only be a few years to get to 33x (or even 40x). In the context of a *very long* retirement, that might be more acceptable to trade off a few more working years in order to reduce risk and have more funds at your disposal.

At the other end, if you're in your mid-60s you have a much more limited number of good years left, changing how you'd value the marginal benefit of more savings.
Yes, it's certainly possible for someone to reach 33x at a relatively young age, though that doesn't seem to be the case here. And even if someone is at 33x, it would have historically taken about an average of about a decade for a 100% stock allocation to result in the portfolio doubling again in real dollars, and it could have taken much longer. And if someone is concerned about 33x not being enough due to a poor sequence of returns and/or very poor average returns going forward, such a person should then plan on it taking them well over a decade to get that last desired doubling. Note that it took a 100% U.S. TSM portfolio almost 18 years to double in real dollars beginning with the year 2000.

A key point underlying this is the potentially steep opportunity costs involved. Waiting a decade or longer for one's portfolio to hopefully reach an arbitrary number so that one can retire with double the assets that were historically needed in the worst long-term historic scenarios seems like a very poor trade-off to me, but it's called personal finance after all.
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Re: Does anyone believe 100 percent equities is not risky?

Post by wander »

I don't believe 100% percent equities is not risky. I was 100% equity before my 40th birthday because I could take the risk.
Marseille07
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Re: Does anyone believe 100 percent equities is not risky?

Post by Marseille07 »

tvubpwcisla wrote: Wed Aug 03, 2022 4:53 am If an equity Index Fund like the Vanguard Total Stock Market Index Fund (VTSAX) stopped paying dividends, then I would not be able to use the withdrawal rate of the yield and would not be able to perform any withdrawals. Although I would love it, I don't foresee VTSAX increasing it's dividend to 10%. Do you know if that fund ever cancelled it's dividend? Thank you.
I don't believe the fund cancels dividends because they're paying us dividends on behalf of the underlying. I was just speaking generically how it doesn't make much sense to use yield = WR%.

Basically the problem is that WR% already varies your withdrawal amount, and you're adding yet another variable by changing that variable.
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Da5id
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Re: Does anyone believe 100 percent equities is not risky?

Post by Da5id »

tvubpwcisla wrote: Wed Aug 03, 2022 4:55 am
Northern Flicker wrote: Wed Aug 03, 2022 12:46 am
tvubpwcisla wrote: Tue Aug 02, 2022 9:30 pm
Marseille07 wrote: Tue Aug 02, 2022 9:27 pm
tvubpwcisla wrote: Tue Aug 02, 2022 6:15 pm No thank you on timing the market. Always stay invested unless withdrawing in retirement at a WR equal to the dividend payout of the fund so the money will last forever.
Dividend = WR is difficult to pull off. But if you can and that's what you want to do, by all means.
Thank you. It's a great approach to ensure you funds last your lifetime and generations to come.
It does not ensure that.
Thank you for pointing that out! Can you please elaborate how you would run out of money if your SWR is the dividend yield of VTSAX?
As a spending plan, it could fail in year 1. Depending on your definition of SWR. If the initial dividend yield is "the amount you need to live on" and the dividend falls in real dollars (as has happened historically over some periods), you can't only spend the dividend and not fail. I think this graph is an illustration of how it can fail as a spending plan. There can be prolonged periods where the initial dividend, aka your "SWR", isn't restored in real dollars for quite some time.

Image

Now if "fail" is "run out of money", that is really hard to do with dividends at say 2% and most circumstances we'd like to contemplate. If US stocks gave out a higher percentage of their total return as dividends (who knows what the future could bring?) just spend the dividend could fail as a plan though. If you don't have growth to offset spending the dividends your purchasing power would presumably be declining.
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Re: Does anyone believe 100 percent equities is not risky?

Post by burritoLover »

tvubpwcisla wrote: Wed Aug 03, 2022 4:55 am
Northern Flicker wrote: Wed Aug 03, 2022 12:46 am
tvubpwcisla wrote: Tue Aug 02, 2022 9:30 pm
Marseille07 wrote: Tue Aug 02, 2022 9:27 pm
tvubpwcisla wrote: Tue Aug 02, 2022 6:15 pm No thank you on timing the market. Always stay invested unless withdrawing in retirement at a WR equal to the dividend payout of the fund so the money will last forever.
Dividend = WR is difficult to pull off. But if you can and that's what you want to do, by all means.
Thank you. It's a great approach to ensure you funds last your lifetime and generations to come.
It does not ensure that.
Thank you for pointing that out! Can you please elaborate how you would run out of money if your SWR is the dividend yield of VTSAX?
The price of the VTSAX drops by the amount of the dividend - spending only the dividend is not a perpetual withdrawal strategy anymore than selling the same amount of stock in that fund would be.
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Re: Does anyone believe 100 percent equities is not risky?

Post by JackoC »

dbr wrote: Wed Aug 03, 2022 8:50 am The idea is that the historical experience in that is that 4% inflation indexed is a pretty safe 30 year withdrawal rate from portfolios of stocks and bonds. If the dividend yield on VTSAX is consistently higher than that the result would presumably be edging into a less safe situation. When the dividend yield is less than 2% your statement is true to a ridiculous degree of overkill, or perhaps over-survival. So the risk is then that the investor has worked too long, saved too much, and spent and is spending too little. But if you make the change to something that does yield a lot more you could arrange to withdraw too much and under some bad circumstances increase the chances of retirement ruin. The math for the whole thing is that the success of retirement withdrawals is a balance of returns and the sequence in which they appear against the magnitude of the withdrawals. By and large the yields on stocks don't indicate better or worse return, certainly not for large index funds. Stock dividend yield is a false data point for retirement planning.
Dividend yield is only at most a rough proxy for a withdrawal rate under the assumption of perpetual constant real portfolio. Only rough in that case (what's the expected real index price return?, what non-stock assets are there?, how are returns taxed*?, etc), and definitely not the answer if the goal is just '>0 portfolio value at death with high certainty' (which depends a lot on age not just return). Agreement so far.

I don't agree however that dividend yield of the index and expected return of the index are unrelated if that's your meaning here. I reject dividend yield as a practical way to pick stocks cross sectionally within the index at a given time. But the yield of the whole index is more relevant to expected return* of the index. One reason the div yield is low now is that future earnings are valued more highly, higher price, lower yield, lower expected return. Indeed one fundamental estimate of stock expected return of the index is div yield+real div growth, latter inferred from real EPS growth in turn assumed to have some connection to real GDP growth trend**. A lower div yield doesn't mean expected real div growth has increased to result in expected return always being the geometric average return in some 'long' past period. The expected stock return is not directly related to the past average geometric return in my view, just like it's clearly not for bonds. Though this is a basic point of contention on many threads. Many on this forum seem to (effectively) believe the expected return is positively connected to the past average return (either equal to it or some slight discount to it). A few believe in expected mean reversion of valuation, IOW expected negative speculative return at a time like now of higher than past average valuation, subtracting from the fundamental estimate. I'm happy with fundamental estimate (like div+real div growth or 1/CAPE aka CAEY, etc) assuming no expected speculative return. I've never seen anyone here explicitly combine a fundamental return estimate and a *positive* expected speculative return (expected valuation increase), though assuming expected return=past average is saying that in effect as I see it.

*I never think of withdrawals other than as follows: my portfolio has a certain after tax return. Separately I wish to consume a certain amount aiming for a future portfolio real value ('expected value same as now' is mine but the default is usually '>0 at a high confidence level'). The consumption amount doesn't include income taxes on investments, those are already subtracted from return.
**probably best viewed as the global index, to avoid debate about whether a lower/higher yield (or GDP growth trend) in one country of another means its index expected return is higher/lower, sort of like picking stocks. The baseline assumption for theoretical purposes should IMO be the 'investable' global index, though it doesn't mean people can't concentrate in just one country as a trading call if they like.
***though real EPS grew substantially more slowly than real GDP in the US in 20th century, something like 1.5% v 3%. As noted earlier, div growth per share was even lower than real EPS growth, though other return of capital might explain that difference. Now global GDP trend is probably not far >3%, if global EPS grows 1.5% and the global div yield (Vanguard VT ETF) is 2.27%, real pre tax expected return of stocks might be high 3's (sunny optimist, I assume 4% :happy ). The rearview mirror estimate US only is much higher, but I don't see much validity to it. I put the expected perpetual withdraw rate well below 3.3% now, 1.7-2% is my estimate for our portfolio and tax rates depending on basis step up.
srt7
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Re: Does anyone believe 100 percent equities is not risky?

Post by srt7 »

KlangFool wrote: Mon Aug 01, 2022 8:42 am
tvubpwcisla wrote: Mon Aug 01, 2022 8:33 am I am in the camp that 100% equities is a great investment approach because you get to participate in 100% of the Index Fund rallies without drag down.

I believe the risky assets are not equity Index Funds but rather:

Options Trading
Individual Stocks
Speculative Assets like Cryptocurrencies

Do you agree?
tvubpwcisla,

When you are unemployed in the coming recession, how long can you last?

KlangFool
"When" and not "if". LOL! That's just brutal Klang.
Taking care of tomorrow while enjoying today.
KlangFool
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Re: Does anyone believe 100 percent equities is not risky?

Post by KlangFool »

srt7 wrote: Wed Aug 03, 2022 11:17 am
KlangFool wrote: Mon Aug 01, 2022 8:42 am
tvubpwcisla wrote: Mon Aug 01, 2022 8:33 am I am in the camp that 100% equities is a great investment approach because you get to participate in 100% of the Index Fund rallies without drag down.

I believe the risky assets are not equity Index Funds but rather:

Options Trading
Individual Stocks
Speculative Assets like Cryptocurrencies

Do you agree?
tvubpwcisla,

When you are unemployed in the coming recession, how long can you last?

KlangFool
"When" and not "if". LOL! That's just brutal Klang.
On 1/1/2009, my employer laid off 50% of its employee at my location.

My current employer just announced travel freeze and hiring freeze.

KlangFool
40% VWENX | 12.5% VFWAX/VTIAX | 11.5% VTSAX | 16% VBTLX | 10% VSIAX/VTMSX/VSMAX | 10% VSIGX| 40% Wellington 40% 3-funds 20% Mini-Larry
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Re: Does anyone believe 100 percent equities is not risky?

Post by srt7 »

KlangFool wrote: Wed Aug 03, 2022 11:23 am
srt7 wrote: Wed Aug 03, 2022 11:17 am
KlangFool wrote: Mon Aug 01, 2022 8:42 am
tvubpwcisla wrote: Mon Aug 01, 2022 8:33 am I am in the camp that 100% equities is a great investment approach because you get to participate in 100% of the Index Fund rallies without drag down.

I believe the risky assets are not equity Index Funds but rather:

Options Trading
Individual Stocks
Speculative Assets like Cryptocurrencies

Do you agree?
tvubpwcisla,

When you are unemployed in the coming recession, how long can you last?

KlangFool
"When" and not "if". LOL! That's just brutal Klang.
On 1/1/2009, my employer laid off 50% of its employee at my location.

My current employer just announced travel freeze and hiring freeze.

KlangFool
It does seem to head that way again. Hope for the best but prepare for the worst, I guess.
Taking care of tomorrow while enjoying today.
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Re: Does anyone believe 100 percent equities is not risky?

Post by willthrill81 »

KlangFool wrote: Wed Aug 03, 2022 11:23 am
srt7 wrote: Wed Aug 03, 2022 11:17 am
KlangFool wrote: Mon Aug 01, 2022 8:42 am When you are unemployed in the coming recession, how long can you last?

KlangFool
"When" and not "if". LOL! That's just brutal Klang.
On 1/1/2009, my employer laid off 50% of its employee at my location.

My current employer just announced travel freeze and hiring freeze.

KlangFool
I'm sure that you realize that your employer is not everyone's employer. As such, making statements such as "when you are unemployed in the next recession" is completely inappropriate as it directly implies that you know the future.
I have left the forum but occasionally check PMs.
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Beensabu
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Re: Does anyone believe 100 percent equities is not risky?

Post by Beensabu »

willthrill81 wrote: Wed Aug 03, 2022 11:52 am
KlangFool wrote: Wed Aug 03, 2022 11:23 am
srt7 wrote: Wed Aug 03, 2022 11:17 am
KlangFool wrote: Mon Aug 01, 2022 8:42 am When you are unemployed in the coming recession, how long can you last?

KlangFool
"When" and not "if". LOL! That's just brutal Klang.
On 1/1/2009, my employer laid off 50% of its employee at my location.

My current employer just announced travel freeze and hiring freeze.

KlangFool
I'm sure that you realize that your employer is not everyone's employer. As such, making statements such as "when you are unemployed in the next recession" is completely inappropriate as it directly implies that you know the future.
It's already happening. The good ones are reducing head count now instead of later so people have time to find another job while "the job market is good". It's going to be interesting when people in the types of higher paying jobs that held up during the pandemic realize that "all the jobs!" are service sector or toxic environment. It's better to be prepared than to bury your head in the sand on a coin flip.
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next." ~Ursula LeGuin
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willthrill81
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Re: Does anyone believe 100 percent equities is not risky?

Post by willthrill81 »

Beensabu wrote: Wed Aug 03, 2022 12:12 pm
willthrill81 wrote: Wed Aug 03, 2022 11:52 am
KlangFool wrote: Wed Aug 03, 2022 11:23 am
srt7 wrote: Wed Aug 03, 2022 11:17 am
KlangFool wrote: Mon Aug 01, 2022 8:42 am When you are unemployed in the coming recession, how long can you last?

KlangFool
"When" and not "if". LOL! That's just brutal Klang.
On 1/1/2009, my employer laid off 50% of its employee at my location.

My current employer just announced travel freeze and hiring freeze.

KlangFool
I'm sure that you realize that your employer is not everyone's employer. As such, making statements such as "when you are unemployed in the next recession" is completely inappropriate as it directly implies that you know the future.
It's already happening. The good ones are reducing head count now instead of later so people have time to find another job while "the job market is good". It's going to be interesting when people in the types of higher paying jobs that held up during the pandemic realize that "all the jobs!" are service sector or toxic environment. It's better to be prepared than to bury your head in the sand on a coin flip.
Certainly people should always be prepared for sudden unemployment. But that doesn't mean that a poster can say with any confidence whatsoever that another unknown poster will lose his/her job in the next recession. On the contrary, history has shown us that most people retain their jobs during a recession. For better or worse, KF has apparently been in a sector that has had much more employment volatility than most, and he has erroneously concluded that everyone else's employment is in an equally precarious position.
I have left the forum but occasionally check PMs.
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Re: Does anyone believe 100 percent equities is not risky?

Post by Northern Flicker »

tvubpwcisla wrote: Wed Aug 03, 2022 4:55 am
Northern Flicker wrote: Wed Aug 03, 2022 12:46 am
tvubpwcisla wrote: Tue Aug 02, 2022 9:30 pm
Marseille07 wrote: Tue Aug 02, 2022 9:27 pm
tvubpwcisla wrote: Tue Aug 02, 2022 6:15 pm No thank you on timing the market. Always stay invested unless withdrawing in retirement at a WR equal to the dividend payout of the fund so the money will last forever.
Dividend = WR is difficult to pull off. But if you can and that's what you want to do, by all means.
Thank you. It's a great approach to ensure you funds last your lifetime and generations to come.
It does not ensure that.
Thank you for pointing that out! Can you please elaborate how you would run out of money if your SWR is the dividend yield of VTSAX?
You are making an assumption that if the dividend covers your expenses on day 1 of retirement, that it will cover your expenses forever. That is far from guaranteed.

What if stocks fall by 50% or more, the dividend is cut by 50% or more so the distribution rate is the same, and stays that low for 20 years? Before you say it could never happen, that is what retiring in Japan in 1990 looked like if you assumed the dividend stream from the Nikkei 225 would cover expenses. Japanese retirees who held a healthy allocation to bonds fared much better.

For a retiree, stocks can be a generous asset or a toxic asset. The last two bear markets saw sharp recoveries, but that has not been the historical norm. What if we had an outlier in the other direction, with a much longer recovery period than the historical norm?
My postings are my opinion, and never should be construed as a recommendation to buy, sell, or hold any particular investment.
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Re: Does anyone believe 100 percent equities is not risky?

Post by Marseille07 »

tvubpwcisla wrote: Wed Aug 03, 2022 4:55 am Thank you for pointing that out! Can you please elaborate how you would run out of money if your SWR is the dividend yield of VTSAX?
I recommend you to read this post: viewtopic.php?p=6806611#p6806611

50K events can and do happen. Even for myself, I bought a car all cash and that was a lumpy expense.

If you have 2M let's say, investing 1.9M and keeping 100K safe go a long way, and that's still 95/5; not that different than 100/0. It's really pointless to push it to the limit.
Last edited by Marseille07 on Wed Aug 03, 2022 6:48 pm, edited 2 times in total.
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RAchip
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Re: Does anyone believe 100 percent equities is not risky?

Post by RAchip »

I did not read all the posts in this post yet, but I’m going to comment anyway. I think its fine to have 100% of INVESTABLE ASSETS in equities. But I do not include real estate you use for personal purposes and cash holdings you need to live for a year (or maybe 2) in case of an emergency in “investable assets”.
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Re: Does anyone believe 100 percent equities is not risky?

Post by seajay »

Activesloth wrote: Tue Aug 02, 2022 12:41 pm There is always risk in investing. I’m 65, retired. 100% US with 40% individual stocks. There are things I consider too risky: investing in cryptocurrency, investing in bonds when the Federal Reserve says rates are going up, VXUS, emerging markets and physical gold. I invest mainly for my kids. My youngest child is only 20, so my investing horizon is 45 years in the future. If I have advanced warning of my demise, I will probably shift to 100% VOO to simplify things for my beneficiaries.
If the average stock borrows half its book value (issues corporate bonds or otherwise), and investors bid up share prices to a average of twice book value, even 100% stock includes 25% (short) bonds. Long or short bonds broadly washes, so to get to pure stock only a investor has to 80/20, wastefully be long and short bonds in equal measure. For 50/50 stock/long bond 44.4/55.6 -> 44.4 long stock and 44.4 long bonds.

You can add in a gold like factor too, FX can be as good as gold during a domestic currency crisis. Iceland 2009 financial crisis saw gold in their local currency soar, but where gold priced in Euro's remained much the same, gold or Euro's provided comparable hedging. Foreign stocks will often hedge their foreign currency exposure/risk back into the currency in which they report/domicile
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tvubpwcisla
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Re: Does anyone believe 100 percent equities is not risky?

Post by tvubpwcisla »

Marseille07 wrote: Wed Aug 03, 2022 3:29 pm
tvubpwcisla wrote: Wed Aug 03, 2022 4:55 am Thank you for pointing that out! Can you please elaborate how you would run out of money if your SWR is the dividend yield of VTSAX?
I recommend you to read this post: viewtopic.php?p=6806611#p6806611

50K events can and do happen. Even for myself, I bought a car all cash and that was a lumpy expense.

If you have 2M let's say, investing 1.9M and keeping 100K safe go a long way, and that's still 95/5; not that different than 100/0. It's really pointless to push it to the limit.
I agree. Thank you for sharing that thread!
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Re: Does anyone believe 100 percent equities is not risky?

Post by Patzer »

vineviz wrote: Tue Aug 02, 2022 9:31 am
Patzer wrote: Tue Aug 02, 2022 9:26 am
I strongly believe that no one in retirement/drawdown should be 100% in anything.
People in the accumulation are a different story though.
Keep in mind that people in accumulation cannot, by definition, be 100% in stocks since most of their wealth is actually in their human capital.

The reason their financial portfolios can "safely" be 100% in stocks is that they have this other huge asset (human capital) which is essentially bond like. For them, an 80/20 IRA or 401k leaves them LESS diversified than a 100/00 account would.
Interesting perspective. I am not sure I agree on being less diversified though.
My gold is a different asset class than human capital.
Bonds might have some similarities to the revenue stream my human capital creates, but I could get badly injured and be unable to work for a year, whereas a fund holding thousands of different bonds is unlikely to be hurt by a single event and likely to still pay out.

80/20 is probably still more diversified than 100/0, but your point might become very valid at more conservative allocations for someone in accumulation.
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augryphon
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Re: Does anyone believe 100 percent equities is not risky?

Post by augryphon »

Taylor Larimore wrote: Mon Aug 01, 2022 9:03 am tvubpwcisla:

I remember the 1929-1932 bear market when the Dow stocks plunged 89%.

Enough said.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "Deep down, I remain absolutely confident that the vast majority of American families would be well served by owning their equity holdings in an all-U.S. stock-market index portfolio and holding their bonds in all-U.S. bond-market index fund."
The Post of the Century! We are so blessed to have an investor among us seasoned by the worst investing event that ever was (so far). Thanks for remembering and reminding us Taylor!
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Re: Does anyone believe 100 percent equities is not risky?

Post by SeasOfCheese »

burritoLover wrote: Wed Aug 03, 2022 10:54 am The price of the VTSAX drops by the amount of the dividend - spending only the dividend is not a perpetual withdrawal strategy anymore than selling the same amount of stock in that fund would be.
A dividend is not a stock sale, and a stock sale is not a dividend. They are not the same. And they never will be. They are fundamentally different methods of profiting from the purchase of equities.
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Re: Does anyone believe 100 percent equities is not risky?

Post by dh »

I have not read every message in this thread. Yet, I have read enough. I am unsure why the OP posted such a provocative question. If it was just to generate replies, then I am adding to the chorus. If not, OP please reply as I welcome your rationale.

I will share my thoughts. I cannot imagine any person not believing that 100% equities is not risky. If the intent of the question is to ask: Is it possible that a person could do amazing well with a 100% equity portfolio? Of course it is possible! Yet, not risky? There is the abyss of naive optimism, yet the believe that 100% in equities not being risky is far beyond naive.
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Re: Does anyone believe 100 percent equities is not risky?

Post by squirrel1963 »

dh wrote: Sun Aug 07, 2022 11:29 pm I have not read every message in this thread. Yet, I have read enough. I am unsure why the OP posted such a provocative question. If it was just to generate replies, then I am adding to the chorus. If not, OP please reply as I welcome your rationale.

I will share my thoughts. I cannot imagine any person not believing that 100% equities is not risky. If the intent of the question is to ask: Is it possible that a person could do amazing well with a 100% equity portfolio? Of course it is possible! Yet, not risky? There is the abyss of naive optimism, yet the believe that 100% in equities not being risky is far beyond naive.
100% of anything is risky I think. 100% of treasuries risks being unable to keep up with inflation, 100% TIPS risks underperforming treasuries for those who are concerned about total return.

I am pretty sure Warren Buffet's wife be wealthy enough that she could be comfortably 100% stocks, spend $1 million a year in perpetuity, and yet Warren Buffet directed to use 90% stocks / 10% bonds for her estate. So I guess even Warren Buffet thinks a wealthy individual should have a mix of stocks and bonds despite the risk being 100% stocks being very low in this case.
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Re: Does anyone believe 100 percent equities is not risky?

Post by er999 »

It’s risky year to year with the potential drawdowns compared to an all bond portfolio or portfolios with a large bond percentage but less risky over the standpoint of 20-30 years to get a larger total amount. Most people on bogleheads seem to be risk adverse and focus the potential drawdowns of 100% stock but for someone young the bigger risk is being too conservative and not getting enough assets when they get closer to retirement age. Of course this kind of logic could apply to leverage too, why not 120% or 150% stocks then?

Biggest risk is behavioral and selling low either because you can’t take the losses any more or (not behavioral) you lose your job and need the money sooner than you thought as it’s either sell stocks when down or not eat. You probably need a larger emergency fund so are really 90 or 95% stocks, not 100%.
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Re: Does anyone believe 100 percent equities is not risky?

Post by squirrel1963 »

er999 wrote: Mon Aug 08, 2022 12:40 am It’s risky year to year with the potential drawdowns compared to an all bond portfolio or portfolios with a large bond percentage but less risky over the standpoint of 20-30 years to get a larger total amount. Most people on bogleheads seem to be risk adverse and focus the potential drawdowns of 100% stock but for someone young the bigger risk is being too conservative and not getting enough assets when they get closer to retirement age. Of course this kind of logic could apply to leverage too, why not 120% or 150% stocks then?
Of course everything is a risk and risk is always relative and it depends on the context.
100% bonds at 25 is probably much riskier than 100% stocks - 80/20 is probably a good starting point for AA in this case
100% stocks at retirement is probably much riskier than 100% bonds - 50/50 is probably a good starting point for AA in this case, but if you retire early it is probably too risky and 72/25 might be less risky
er999 wrote: Mon Aug 08, 2022 12:40 am Biggest risk is behavioral and selling low either because you can’t take the losses any more or (not behavioral) you lose your job and need the money sooner than you thought as it’s either sell stocks when down or not eat. You probably need a larger emergency fund so are really 90 or 95% stocks, not 100%.
I agree 100% here, actually I'm going leverage and I agree 200% :-)
It doesn't matter how good your plan is, I think the biggest risk is behavioral. Maybe here in BH we do a better job than the average American, but it's a big risk regardless. Probably the best argument to be made for having your finances managed by someone else is if you are prone at behavioral risk.
| LMP | safe portfolio: TIPS ladder + I-bonds + Treasuries | risky portfolio: US stocks / US REIT / International stocks |
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Re: Does anyone believe 100 percent equities is not risky?

Post by burritoLover »

SeasOfCheese wrote: Sun Aug 07, 2022 10:44 pm
burritoLover wrote: Wed Aug 03, 2022 10:54 am The price of the VTSAX drops by the amount of the dividend - spending only the dividend is not a perpetual withdrawal strategy anymore than selling the same amount of stock in that fund would be.
A dividend is not a stock sale, and a stock sale is not a dividend. They are not the same. And they never will be. They are fundamentally different methods of profiting from the purchase of equities.
Stock dividends do not increase your net worth nor are they a perpetual withdrawal strategy. In that way, they are the same as selling the same amount of stock. If you disagree, you'll have to be more specific. I never stated they were exactly the same.
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Re: Does anyone believe 100 percent equities is not risky?

Post by SeasOfCheese »

burritoLover wrote: Mon Aug 08, 2022 7:14 am
SeasOfCheese wrote: Sun Aug 07, 2022 10:44 pm
burritoLover wrote: Wed Aug 03, 2022 10:54 am The price of the VTSAX drops by the amount of the dividend - spending only the dividend is not a perpetual withdrawal strategy anymore than selling the same amount of stock in that fund would be.
A dividend is not a stock sale, and a stock sale is not a dividend. They are not the same. And they never will be. They are fundamentally different methods of profiting from the purchase of equities.
Stock dividends do not increase your net worth nor are they a perpetual withdrawal strategy. In that way, they are the same as selling the same amount of stock. If you disagree, you'll have to be more specific. I never stated they were exactly the same.
Dividends are a direct return of capital from the company to the shareholder.
Stock sales are performed in the open market at whatever the current price of the security might be.

Which is not to say relying on one method or the other will be better. But, traditionally, dividend flows have been significantly less volatile than market prices.

And, except for 1917 Russia type events, dividends are pretty much, by definition, a perpetual withdrawal method. Especially with a diversified portfolio.
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Re: Does anyone believe 100 percent equities is not risky?

Post by burritoLover »

SeasOfCheese wrote: Mon Aug 08, 2022 8:51 am
burritoLover wrote: Mon Aug 08, 2022 7:14 am
SeasOfCheese wrote: Sun Aug 07, 2022 10:44 pm
burritoLover wrote: Wed Aug 03, 2022 10:54 am The price of the VTSAX drops by the amount of the dividend - spending only the dividend is not a perpetual withdrawal strategy anymore than selling the same amount of stock in that fund would be.
A dividend is not a stock sale, and a stock sale is not a dividend. They are not the same. And they never will be. They are fundamentally different methods of profiting from the purchase of equities.
Stock dividends do not increase your net worth nor are they a perpetual withdrawal strategy. In that way, they are the same as selling the same amount of stock. If you disagree, you'll have to be more specific. I never stated they were exactly the same.
Dividends are a direct return of capital from the company to the shareholder.
Stock sales are performed in the open market at whatever the current price of the security might be.

Which is not to say relying on one method or the other will be better. But, traditionally, dividend flows have been significantly less volatile that market prices.

And, except for 1917 Russia type events, dividends are pretty much, by definition, a perpetual withdrawal method. Especially with a diversified portfolio.
Like I stated, stock dividends are not a perpetual withdrawal strategy any more than selling the same amount of stock would be. To believe otherwise is to believe the market is horribly inefficient and that dividends are essentially a "free lunch".
SeasOfCheese
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Re: Does anyone believe 100 percent equities is not risky?

Post by SeasOfCheese »

burritoLover wrote: Mon Aug 08, 2022 8:55 am
SeasOfCheese wrote: Mon Aug 08, 2022 8:51 am
burritoLover wrote: Mon Aug 08, 2022 7:14 am
SeasOfCheese wrote: Sun Aug 07, 2022 10:44 pm
burritoLover wrote: Wed Aug 03, 2022 10:54 am The price of the VTSAX drops by the amount of the dividend - spending only the dividend is not a perpetual withdrawal strategy anymore than selling the same amount of stock in that fund would be.
A dividend is not a stock sale, and a stock sale is not a dividend. They are not the same. And they never will be. They are fundamentally different methods of profiting from the purchase of equities.
Stock dividends do not increase your net worth nor are they a perpetual withdrawal strategy. In that way, they are the same as selling the same amount of stock. If you disagree, you'll have to be more specific. I never stated they were exactly the same.
Dividends are a direct return of capital from the company to the shareholder.
Stock sales are performed in the open market at whatever the current price of the security might be.

Which is not to say relying on one method or the other will be better. But, traditionally, dividend flows have been significantly less volatile that market prices.

And, except for 1917 Russia type events, dividends are pretty much, by definition, a perpetual withdrawal method. Especially with a diversified portfolio.
Like I stated, stock dividends are not a perpetual withdrawal strategy any more than selling the same amount of stock would be. To believe otherwise is to believe the market is horribly inefficient and that dividends are essentially a "free lunch".
No. But we will agree to disagree. :beer
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Re: Does anyone believe 100 percent equities is not risky?

Post by willthrill81 »

er999 wrote: Mon Aug 08, 2022 12:40 am It’s risky year to year with the potential drawdowns compared to an all bond portfolio or portfolios with a large bond percentage but less risky over the standpoint of 20-30 years to get a larger total amount. Most people on bogleheads seem to be risk adverse and focus the potential drawdowns of 100% stock but for someone young the bigger risk is being too conservative and not getting enough assets when they get closer to retirement age. Of course this kind of logic could apply to leverage too, why not 120% or 150% stocks then?
Effective stock allocations over 100% are perfectly reasonable for young accumulators, if they have the risk tolerance for it.
I have left the forum but occasionally check PMs.
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Re: Does anyone believe 100 percent equities is not risky?

Post by audioengr »

Taylor Larimore wrote: Mon Aug 01, 2022 9:03 am tvubpwcisla:

I remember the 1929-1932 bear market when the Dow stocks plunged 89%.

Enough said.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "Deep down, I remain absolutely confident that the vast majority of American families would be well served by owning their equity holdings in an all-U.S. stock-market index portfolio and holding their bonds in all-U.S. bond-market index fund."
Taylor,

Do you really believe that the US Govt and more importantly the Fed would allow the Great Depression to occur again?
Look at 2008 for reference.
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firebirdparts
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Re: Does anyone believe 100 percent equities is not risky?

Post by firebirdparts »

It's good to know, at the end of the day, that dividends are what really matters.

I can't believe you guys are so fascinated by this.

To the original question, I guess "risky" is a relative term and I would have bet 5 replies rather than 5 pages. in the past, 100% equities would have been okay an awful lot if you hang on. Like now, for instance. If you have been 100% equities in the 21st century you would be pretty happy right now.
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Re: Does anyone believe 100 percent equities is not risky?

Post by alfaspider »

audioengr wrote: Mon Aug 08, 2022 10:24 am
Taylor Larimore wrote: Mon Aug 01, 2022 9:03 am tvubpwcisla:

I remember the 1929-1932 bear market when the Dow stocks plunged 89%.

Enough said.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "Deep down, I remain absolutely confident that the vast majority of American families would be well served by owning their equity holdings in an all-U.S. stock-market index portfolio and holding their bonds in all-U.S. bond-market index fund."
Taylor,

Do you really believe that the US Govt and more importantly the Fed would allow the Great Depression to occur again?
Look at 2008 for reference.
Of course I'm not speaking for Taylor, but I would argue that no event can truly ever happen "again." We can spend a lot of time pointing to similarities between various downturns, but each has unique features. That said, the "take your medicine" approach of the government during the early part of the Great Depression is unlikely to be repeated in the event of an analogous financial panic. That doesn't mean we couldn't have just as sharp a downturn, but it would have different causes and different impacts.
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Re: Does anyone believe 100 percent equities is not risky?

Post by burritoLover »

audioengr wrote: Mon Aug 08, 2022 10:24 am
Taylor Larimore wrote: Mon Aug 01, 2022 9:03 am tvubpwcisla:

I remember the 1929-1932 bear market when the Dow stocks plunged 89%.

Enough said.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "Deep down, I remain absolutely confident that the vast majority of American families would be well served by owning their equity holdings in an all-U.S. stock-market index portfolio and holding their bonds in all-U.S. bond-market index fund."
Taylor,

Do you really believe that the US Govt and more importantly the Fed would allow the Great Depression to occur again?
Look at 2008 for reference.
That’s kind of like saying do you think the US govt would allow inflation to get too high?
Marseille07
Posts: 10518
Joined: Fri Nov 06, 2020 1:41 pm

Re: Does anyone believe 100 percent equities is not risky?

Post by Marseille07 »

burritoLover wrote: Mon Aug 08, 2022 2:23 pm That’s kind of like saying do you think the US govt would allow inflation to get too high?
Why? 2008 could have been another 1929 but the Fed had learned lessons and prevented that. It's a valid question not having anything to do with inflation (though I'm sure the Fed has learned lessons from the 70s as well).
US & FM (5% seed) | 350K Cash
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