Sad time for investors

Reading is FUNdamental wrote:

Same Same wrote:

Flagpole. You have to be one of the dumbest poster one here. No small feat must say.

It is better to be invested in the market when you are losing money than when you you are making money?

That's not what he wrote. So I guess this is the pot calling the kettle black.

His post is still up. That is precisely what he said. It's kind of dumb to make a false claim when the evidence is still posted

Same Same wrote:

Reading is FUNdamental wrote:

That's not what he wrote. So I guess this is the pot calling the kettle black.

His post is still up. That is precisely what he said. It's kind of dumb to make a false claim when the evidence is still posted

__

I think FP's point, which is correct, is that when you are in the accumulation phase and still buying stocks, you do want prices to be low.

The point is that long term investors shouldn't care about the value on, say, march 10, 2009, but only when they they have to sell, in, say, march 2040.

As long as you are still buying stocks you want them to be low.

agip wrote:

I think FP's point, which is correct, is that when you are in the accumulation phase and still buying stocks, you do want prices to be low.

I changed the title of the thread to what FP really meant.

In FP's perfect world the market will crash right before he invests more and then rise 1,000% the day he decides to cash out. And screw everybody else.

IJ(&^%#gycI wrote:

Flagpole,

What percentage of your investments do you have in cash right now?

I don't consider "cash" to be an investment. I have an 8-month emergency fund in cash.

Might seem like it, but in practice, at least for me, it has been WAY better than that. All my dividends are reinvested, and I've seen a HUGE increase since 2000.The Dow is currently lower than it was in October 2007, and yet I have a fund that is almost all DOW that I no longer contribute to, and it is much higher today than it was then...all due to reinvested dividends.

Blowing.Rock Master wrote:

Actually, what is sad for Buy & Hold investors like Flagpole is that the S&P 500 is only 11 points higher than it was 13 years ago on 1/1/2000. Any index investments held since the beginning of the century have made about 2% -3% per year (the dividends that were paid out).

Here are some charts showing how simple trend following methods would have fared in comparison to Buy & Hold.

http://etf-strategies.com/Trade_Data.html

Same Same wrote:

Flagpole. You have to be one of the dumbest poster one here. No small feat must say.

It is better to be invested in the market when you are losing money than when you you are making money?

That isn't what I've said at all. I like the idea of POTENTIAL money, and so when the market is low, you buy and feel the best about it. I still buy now.

Bigfoot Investments wrote:

...but you folks are way off base. Generally he [Flagpole] is a sensible lad with solid, if obvious, advice.

CORRECT!

Nothing lucky about it.Before you retire you should have NO debt including a paid for house. In a big downturn you can drastically limit your withdrawal rate and/or rely on social security and cash savings. I will likely have 12-18 months of expenses in cash when I retire, and I'll be just 2 years from Social Security. Also, if I had to take 1% of my retirement portfolio for a couple years, I could STILL live on that in a down market. It's all about preparation, and I've done the preparation to handle any realistic market situation including another crash the magnitude of 2008 and even worse.

Um...there is no perfect world. Fact is that the stocks market goes UP 73% of calendar years, so in a bad year, you either draw down less, or continue to draw the amount you chose anyway. Typically they say draw down 4%, and that's so you can weather a bad few years in there, because over all your stuff should do better than that. I plan to retire at age 60 with at least enough in cash to take me to 61 if I needed it, and then by age 62, I can take SS if I want. When you retire with NO debts, you don't even need that much money. I will have a larger income in retirement than I ever had while working, because I've put in the money to make that happen.I always talk about dividends. 2012 was my biggest dividend year ever, and I made just over $15,000 in dividends that were then reinvested; $7,000 of that happened in December. That is crazy. If I were 62, I could live on that any the SS that my wife and I will get (projected to be ~$45,000 a year if I take it at age 62). This was all accomplished with a modest income and regular investing.

Blowing.Rock Master wrote:

agip wrote:

I think FP's point, which is correct, is that when you are in the accumulation phase and still buying stocks, you do want prices to be low.

I changed the title of the thread to what FP really meant.

In FP's perfect world the market will crash right before he invests more and then rise 1,000% the day he decides to cash out. And screw everybody else.

You could have made the same regular investments and used the simple trend following strategy I outlined above and you would have made 50% more money over the last 33 years than you did.

While all your talk about being debt free is good advice (my wife and I are also debt free) it's irrelevant to the discussion. Buy and Hold only works in Bull markets. It will kick your butt in a bear market, and only grows at the dividend rate in a flat market.

While you might not want to admit it, you were lucky that the bulk of your disciplined investment program occurred during the longest bull market in US history.

If somebody is ignorant about the stock market and isn't interested in learning then I'd suggest that they should do what you do. But they better cross their fingers and hope that the volatile going nowhere market of the last 13 years doesn't continue, because they might get hammered.

If they want to learn how to invest so that they catch the majority of the market's growth while avoiding most of its risk, they should check out some of the links OTG and I provided in earlier posts. They'll be better off in the long run if they do.

Blowing.Rock Master wrote:

If somebody is ignorant about the stock market and isn't interested in learning then I'd suggest that they should do what you do. But they better cross their fingers and hope that the volatile going nowhere market of the last 13 years doesn't continue, because they might get hammered.

the 'volatile going nowhere market of the last 13 years' is a myth.

One more thing to point out to anyone who wants to use Buy and Hold. DO NOT use a leveraged ETF like SSO or UPRO if you invest like FP. While the S&P 500 is almost back to where it was in 2007, SSO, which moves twice the daily amount of the S&P 500, is still over 30% below where it was in 2007.

However, leveraged ETFs work great with trend following systems. The S&P 500 is up roughly 100% from where it was in April 2009. SSO is up 250% over the same time period. It definitely pays to learn how to do invest correctly.

Flagpole wrote:

Might seem like it, but in practice, at least for me, it has been WAY better than that. All my dividends are reinvested, and I've seen a HUGE increase since 2000.

with div reinvested, the S&P500 is up 2.8%/yr since 2000. It is actuarially impossible for you to be up significantly from this and still be invested primarily in US large caps. fixed income 5-7%, Gold has been a good one, and emerging markets if you got the timing right. You claim none of these as investments in any meaningful size.

But there is no way a buy & hold strategy has done better than 3-4% since 2000. To claim otherwise is an obvious lie.

Off the Grid wrote:

with div reinvested, the S&P500 is up 2.8%/yr since 2000. It is actuarially impossible for you to be up significantly from this and still be invested primarily in US large caps. fixed income 5-7%, Gold has been a good one, and emerging markets if you got the timing right. You claim none of these as investments in any meaningful size.

But there is no way a buy & hold strategy has done better than 3-4% since 2000. To claim otherwise is an obvious lie.

GREAT post. It's too bad it will be deleted shortly...

agip wrote:

Same Same wrote:

His post is still up. That is precisely what he said. It's kind of dumb to make a false claim when the evidence is still posted

__

I think FP's point, which is correct, is that when you are in the accumulation phase and still buying stocks, you do want prices to be low.

The point is that long term investors shouldn't care about the value on, say, march 10, 2009, but only when they they have to sell, in, say, march 2040.

As long as you are still buying stocks you want them to be low.

A new challenger for dumbest poster. A market slide is good for those with investments? Mother of God help us

Off the Grid wrote:

Flagpole wrote:

Might seem like it, but in practice, at least for me, it has been WAY better than that. All my dividends are reinvested, and I've seen a HUGE increase since 2000.

with div reinvested, the S&P500 is up 2.8%/yr since 2000. It is actuarially impossible for you to be up significantly from this and still be invested primarily in US large caps. fixed income 5-7%, Gold has been a good one, and emerging markets if you got the timing right. You claim none of these as investments in any meaningful size.

But there is no way a buy & hold strategy has done better than 3-4% since 2000. To claim otherwise is an obvious lie.

__

To claim otherwise is NOT an obvious lie.

If you do some research you will see that the only types of stocks that have sucked since 2000 are large cap US and large cap Europe and large cap Japan.

Now, if that is all you own, you have made 4% per year.

But if you owned:

REITS

Small Cap

Mid Cap

Utilities

Energy

Precious Metals

Health Care

Emerging Markets

These are completely investable, easy to own, liquid and solid parts of any good portfolio.

Really, anything but large cap US, you would have done fine.

And if you had mixed in bonds as you should, you would have had a solid 13 years - I'm guessing 7 or 8 percent per year. Bought and held.

And if you had continued to buy through the bad times you would have done even better.

I'm not opposed to market timing systems - But saying buy and hold has been a failure is wrong. it is wrong to say that > 4% returns from buy and hold is a lie. It has only been a failure for large cap stocks.

Flagpole

There is no bad time to be in the market.

Blowing.Rock Master wrote:

While you might not want to admit it, you were lucky that the bulk of your disciplined investment program occurred during the longest bull market in US history.

Simply not true. Many people (yourself included) keep talking about how people have hardly made anything the last 10+ years. I've done VERY well since 2000. While the 90s were quite good, my investing has made it possible for me to retire now at age 60 and perhaps as early as 55. Prior to 2000, I was planning to retire by 65.

agip wrote:

the 'volatile going nowhere market of the last 13 years' is a myth.

CORRECT!