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Flagpole wrote:
Ghost of Igloi wrote:
What happens if the market is negative for 13 years like 2000-13?
Well, that's not true for one thing.
Dow 2000 (average closing price) - 10,729
Dow 2013 (average closing price) - 15,009For another thing, IF I were really on the edge with withdrawals (I would STILL be completely debt free, living in a house I owned outright, and have Social Security), if there were one big down turn year, I could use my emergency fund plus Social Security to pay for that year's expenses.
BUT, since I have WAY more money than I will ever need, I'll just continue to take money from my retirement accounts. I won't even be taking 4% annually, because I will not need anywhere close to that much, even if I spend very freely.
For normal investors, you DO realize why the 4% withdrawal rule is there, right? To be able to handle down years.
Dow contained very few technology stocks in 2000. Dow is a dollar weighted index, and not representative of the market. It would be naive to benchmark against the Dow, especially in the current market. Domestic large company money managers are measured against the S&P 500. You current portfolio appears to be tracking the NASDAQ, which was down 83% 3/2000-10/2002, and did not reach a new durable high until 2015. The S&P 500 peaked at 1550 3/2000 rose to 1575 10/2007, collapsed to 666 3/20009, and did not reach a new durable high until the summer of 2013.
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Flagpole wrote:
Ghost of Igloi wrote:
What happens if the market is negative for 13 years like 2000-13?
Well, that's not true for one thing.
Dow 2000 (average closing price) - 10,729
Dow 2013 (average closing price) - 15,009For another thing, IF I were really on the edge with withdrawals (I would STILL be completely debt free, living in a house I owned outright, and have Social Security), if there were one big down turn year, I could use my emergency fund plus Social Security to pay for that year's expenses.
BUT, since I have WAY more money than I will ever need, I'll just continue to take money from my retirement accounts. I won't even be taking 4% annually, because I will not need anywhere close to that much, even if I spend very freely.
For normal investors, you DO realize why the 4% withdrawal rule is there, right? To be able to handle down years.
The 4% withdrawal rule does little if the sequence of return is not in your favor, which is clearly my point. The essence of the concept is the reverse of compounding, withdrawals as the portfolio is contracting. More on the subject for your education:
https://moshemilevsky.com/wp-content/uploads/2018/02/WHITEPAPER_2.pdf
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Ghost of Igloi wrote:
Flagpole wrote:
Well, that's not true for one thing.
Dow 2000 (average closing price) - 10,729
Dow 2013 (average closing price) - 15,009For another thing, IF I were really on the edge with withdrawals (I would STILL be completely debt free, living in a house I owned outright, and have Social Security), if there were one big down turn year, I could use my emergency fund plus Social Security to pay for that year's expenses.
BUT, since I have WAY more money than I will ever need, I'll just continue to take money from my retirement accounts. I won't even be taking 4% annually, because I will not need anywhere close to that much, even if I spend very freely.
For normal investors, you DO realize why the 4% withdrawal rule is there, right? To be able to handle down years.
The 4% withdrawal rule does little if the sequence of return is not in your favor, which is clearly my point. The essence of the concept is the reverse of compounding, withdrawals as the portfolio is contracting. More on the subject for your education:
If you want to be really safe a withdrawal rate closer to 3% is a better bet.
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S&P500 currently down about 14% from all time high... How low will it go? Quantitative tightening, increasing interest rates, high inflation, Russia out of the world economic picture... Doesn't look to great right now. Statistically, we're not "due" for a drop of 20% or more, but it's very possible with all the factors lined up. Wouldn't surprise me if we see a dip below 4000 in the coming weeks... I'm not really expecting much more than that, but of course you never know. Probably won't see another all time high until late 2022 if not 2023.
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What do you guys think of this local investment firm's strategy?
When markets decline, investors renew focus on risk management policies that are already in place. Typical asset class diversification risk management is simply reducing stock market allocation. Portfolios usually increase asset allocation to bonds. The allocation is based on Modern Portfolio Theory which applies long-term average market returns to each asset class.
Why? It simplifies sales and client reporting. It seems logical. It generates pretty charts.
Why not?
You aren’t buying long-term average returns with your investment dollars. You are buying unknown future returns.
Current market prices seldom match average long-term prices. You can’t invest in any prior decade with today’s dollars.
Market risk is dynamic and probably does not match the average used to construct your portfolio.
Economic conditions today are likely not average.
Cash is not important when using Modern Portfolio Theory.
Whether making an investment today or maintaining a portfolio, today’s market generated information has priority in building and adjusting our portfolios. Specifically, our models treat cash as a separate and important asset class. Using current market data, cash becomes a primary portfolio position when market risk rises.02 -
What do you guys think is good entry for SPY? 380? I kinda want to go all in VTI and be done. I waste too much time watching stocks and getting nowhere.
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Flagpole wrote:
Ghost of Igloi wrote:
Not much posting on the stock market today, for some reason. Your numbers are likely to get much worse. If you choose to use your brain, you may want to hedge you stock exposure. Just in case we see another 2000-2013 market.
I am beyond caring how the stock market does in any given year. I've won the stock market game. I have more money than I will ever need. It is insane even. No hedging needed.
Well...I suppose you consider this a hedge -- I DO have three YEARS of expenses liquid. I did that several years ago before I really needed it,, but since the market has done so well, I just kept it on the sidelines, so, after my wife retires in 5 more years and we no longer have any income, if the market tanks for 3 years or so, it's really not a problem...well, it's not a problem anyway. I have more than I need.
what exactly is it the take-away you want to impart here?
A lot of investors cannot afford your indifference. Nor could they withstand significant depreciation of their retirement funds from a prolonged bear market. For that matter, a lot of people don't even have retirement funds.
Do they not matter or do you just want to impress us with your good fortune?
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Apparently just had the worst week for NASDAQ since 2008
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seattle prattle wrote:
Flagpole wrote:
I am beyond caring how the stock market does in any given year. I've won the stock market game. I have more money than I will ever need. It is insane even. No hedging needed.
Well...I suppose you consider this a hedge -- I DO have three YEARS of expenses liquid. I did that several years ago before I really needed it,, but since the market has done so well, I just kept it on the sidelines, so, after my wife retires in 5 more years and we no longer have any income, if the market tanks for 3 years or so, it's really not a problem...well, it's not a problem anyway. I have more than I need.
what exactly is it the take-away you want to impart here?
A lot of investors cannot afford your indifference. Nor could they withstand significant depreciation of their retirement funds from a prolonged bear market. For that matter, a lot of people don't even have retirement funds.
Do they not matter or do you just want to impress us with your good fortune?
If you had a good investment strategy then you're prepared for the current situation, it's still not any fun but it's not the end of the world. If you had a bad investment strategy there's probably not a lot you can do at this point, hopefully you learn some lessons and have a long enough timeline to recover.
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this is it wrote:
seattle prattle wrote:
what exactly is it the take-away you want to impart here?
A lot of investors cannot afford your indifference. Nor could they withstand significant depreciation of their retirement funds from a prolonged bear market. For that matter, a lot of people don't even have retirement funds.
Do they not matter or do you just want to impress us with your good fortune?
If you had a good investment strategy then you're prepared for the current situation, it's still not any fun but it's not the end of the world. If you had a bad investment strategy there's probably not a lot you can do at this point, hopefully you learn some lessons and have a long enough timeline to recover.
What?
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carmine9 wrote:
Apparently just had the worst week for NASDAQ since 2008
This is the kind of insightful analysis that keeps me following this thread. Wow.
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“Statistically, we're not "due" for a drop of 20%”
What statistics gives you that impression?
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this is it wrote:
carmine9 wrote:
Apparently just had the worst week for NASDAQ since 2008
This is the kind of insightful analysis that keeps me following this thread. Wow.
Now why would a simple recitation of a fact trigger you?
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seattle prattle wrote:
Flagpole wrote:
I am beyond caring how the stock market does in any given year. I've won the stock market game. I have more money than I will ever need. It is insane even. No hedging needed.
Well...I suppose you consider this a hedge -- I DO have three YEARS of expenses liquid. I did that several years ago before I really needed it,, but since the market has done so well, I just kept it on the sidelines, so, after my wife retires in 5 more years and we no longer have any income, if the market tanks for 3 years or so, it's really not a problem...well, it's not a problem anyway. I have more than I need.
what exactly is it the take-away you want to impart here?
A lot of investors cannot afford your indifference. Nor could they withstand significant depreciation of their retirement funds from a prolonged bear market. For that matter, a lot of people don't even have retirement funds.
Do they not matter or do you just want to impress us with your good fortune?
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Ghost of Igloi wrote:
Statman Caruthers wrote:
Is this a joke? If not, then either Hussman is ignorant or purposely disingenuous. Given the performance of his funds, My guess is it’s the former.
Given you are the obsessed Troll: Blocked.
What an odd reply.
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”The lessons of financial history are that the worst-case scenario has a funny habit of not occurring.”
~Michael Antonelli
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Ghost of Igloi wrote:
Only in terms of average frequency of drops that large. Obviously it's more complicated than that, but given we had a 20% drop in late 2018 and a massive drop in 2020, it would be unlikely we'd see another 20% drop from all time highs this year. That being said, these events could be seen as mostly independent, meaning just because event X happened two years ago says nothing about whether event X will happen again this year. You can look at things in much higher resolution than that, but that is a bird's eye view.
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seattle prattle wrote:
Flagpole wrote:
I am beyond caring how the stock market does in any given year. I've won the stock market game. I have more money than I will ever need. It is insane even. No hedging needed.
Well...I suppose you consider this a hedge -- I DO have three YEARS of expenses liquid. I did that several years ago before I really needed it,, but since the market has done so well, I just kept it on the sidelines, so, after my wife retires in 5 more years and we no longer have any income, if the market tanks for 3 years or so, it's really not a problem...well, it's not a problem anyway. I have more than I need.
what exactly is it the take-away you want to impart here?
A lot of investors cannot afford your indifference. Nor could they withstand significant depreciation of their retirement funds from a prolonged bear market. For that matter, a lot of people don't even have retirement funds.
Do they not matter or do you just want to impress us with your good fortune?
1) Igy was commenting about MY investments, so I told him how concerned I was, which is not at all.
2) Investment discussion can't involve those who don't invest. I can't help them.
3) What is your definition of a prolonged bear market? 3 years? 5 years? 10 years? The latter is extremely unlikely. If a person with a normal-sized retirement account ($1-$3 million) wants to protect themselves against a lengthy bear market, they should do all these things: don't retire until you are debt free and own your house free and clear, have 3 YEARS of expenses saved in cash or other liquid way. That's pretty much it. If the market tanks a ton, you can use your 3 years of expenses to help pay for things while you wait for the market to recover. IF during that time you also have Social Security, then your 3 years of expenses will last even longer, maybe up to 5 years. If you get to the end of 5 years and the market hasn't recovered, well, at a minimum you have 5 fewer years you need to withdraw from your retirement pile. That's good enough for most people. If you have less than $1 million or even nothing or next to nothing, then you should plan to work until you are debt free and maybe until you are 70 and not start taking SS until then.
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seattle prattle wrote:
Flagpole wrote:
I am beyond caring how the stock market does in any given year. I've won the stock market game. I have more money than I will ever need. It is insane even. No hedging needed.
Well...I suppose you consider this a hedge -- I DO have three YEARS of expenses liquid. I did that several years ago before I really needed it,, but since the market has done so well, I just kept it on the sidelines, so, after my wife retires in 5 more years and we no longer have any income, if the market tanks for 3 years or so, it's really not a problem...well, it's not a problem anyway. I have more than I need.
what exactly is it the take-away you want to impart here?
A lot of investors cannot afford your indifference. Nor could they withstand significant depreciation of their retirement funds from a prolonged bear market. For that matter, a lot of people don't even have retirement funds.
Do they not matter or do you just want to impress us with your good fortune?
Also, any good fortune I have is because I made it happen. I invested early and often and unbroken since 1989.
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