Down goes the Dow

Ghost of Igloi wrote:

this is it wrote:

The main reason we are moving is that my mother is currently in memory care and we have become increasingly unhappy with the care she is receiving so we are buying a bigger place where we can care for her ourselves. We're staying in Virginia but moving from Fairfax county out to Winchester. An added benefit is that we're both (my wife in particular) tired of Northern Virginia and looking forward to a slower pace of life and being closer to the mountains and the great outdoors.

Good on you for doing that. We did something similar for my father-in-law, and my mother. Father-in-law was sharp as a tack up to his death a day before 94. We moved him into his own place, but we ate dinner at his house for the seven years he was near us. My mother had dementia, brother and I tried to keep her independent as long as possible, then took her car away. At first moved we moved her to an apartment by my brother. Eventually he retired early bought a house and she lived with him. In the later stages she was bed ridden, we hired a lady to come in daily to clean her up, etc. The photo below is one of my favorites, about six months before my mother passed away days before age 96. By this time she had ben bed ridden a year and a half, she had no concept of time. Once she broke her hip, the stability was gone, but she was happy.

Link:imgur.com/a/959ZPgt

comfortably retired from the other ipad wrote:

Ghost of Igloi wrote:

Good on you for doing that. We did something similar for my father-in-law, and my mother. Father-in-law was sharp as a tack up to his death a day before 94. We moved him into his own place, but we ate dinner at his house for the seven years he was near us. My mother had dementia, brother and I tried to keep her independent as long as possible, then took her car away. At first moved we moved her to an apartment by my brother. Eventually he retired early bought a house and she lived with him. In the later stages she was bed ridden, we hired a lady to come in daily to clean her up, etc. The photo below is one of my favorites, about six months before my mother passed away days before age 96. By this time she had ben bed ridden a year and a half, she had no concept of time. Once she broke her hip, the stability was gone, but she was happy.

Link:imgur.com/a/959ZPgt

Wonderful photo!

Several aunts and uncles on one side of the family died with various forms of dementia in their early to mid 80s and I am terrified of going that way. Our neighbour just had to put her sister into care against her wishes but in the best interests of her safety. Dementia is a tough punishment for all involved.

Ghost of Igloi wrote:

this is it wrote:

The main reason we are moving is that my mother is currently in memory care and we have become increasingly unhappy with the care she is receiving so we are buying a bigger place where we can care for her ourselves. We're staying in Virginia but moving from Fairfax county out to Winchester. An added benefit is that we're both (my wife in particular) tired of Northern Virginia and looking forward to a slower pace of life and being closer to the mountains and the great outdoors.

Good on you for doing that. We did something similar for my father-in-law, and my mother. Father-in-law was sharp as a tack up to his death a day before 94. We moved him into his own place, but we ate dinner at his house for the seven years he was near us. My mother had dementia, brother and I tried to keep her independent as long as possible, then took her car away. At first moved we moved her to an apartment by my brother. Eventually he retired early bought a house and she lived with him. In the later stages she was bed ridden, we hired a lady to come in daily to clean her up, etc. The photo below is one of my favorites, about six months before my mother passed away days before age 96. By this time she had ben bed ridden a year and a half, she had no concept of time. Once she broke her hip, the stability was gone, but she was happy.

Link:imgur.com/a/959ZPgt

this is it wrote:

Ghost of Igloi wrote:

Good on you for doing that. We did something similar for my father-in-law, and my mother. Father-in-law was sharp as a tack up to his death a day before 94. We moved him into his own place, but we ate dinner at his house for the seven years he was near us. My mother had dementia, brother and I tried to keep her independent as long as possible, then took her car away. At first moved we moved her to an apartment by my brother. Eventually he retired early bought a house and she lived with him. In the later stages she was bed ridden, we hired a lady to come in daily to clean her up, etc. The photo below is one of my favorites, about six months before my mother passed away days before age 96. By this time she had ben bed ridden a year and a half, she had no concept of time. Once she broke her hip, the stability was gone, but she was happy.

Link:imgur.com/a/959ZPgt

That's a very nice picture. We've gone through a very similar progression over the past several years, selling her old house and moving her into an independent living apartment, taking the car away, etc. It's a little daunting knowing that we'll be taking on the role of full time caregivers but we'll be able to hire a home health aide to help out for a lot less than what we're currently paying for memory care. And she will be much happier staying with family.

this is it wrote:

Ghost of Igloi wrote:

Good on you for doing that. We did something similar for my father-in-law, and my mother. Father-in-law was sharp as a tack up to his death a day before 94. We moved him into his own place, but we ate dinner at his house for the seven years he was near us. My mother had dementia, brother and I tried to keep her independent as long as possible, then took her car away. At first moved we moved her to an apartment by my brother. Eventually he retired early bought a house and she lived with him. In the later stages she was bed ridden, we hired a lady to come in daily to clean her up, etc. The photo below is one of my favorites, about six months before my mother passed away days before age 96. By this time she had ben bed ridden a year and a half, she had no concept of time. Once she broke her hip, the stability was gone, but she was happy.

Link:imgur.com/a/959ZPgt

That's a very nice picture. We've gone through a very similar progression over the past several years, selling her old house and moving her into an independent living apartment, taking the car away, etc. It's a little daunting knowing that we'll be taking on the role of full time caregivers but we'll be able to hire a home health aide to help out for a lot less than what we're currently paying for memory care. And she will be much happier staying with family.

la gente esta muy loca wrote:

comfortably retired from home wrote:

Also, given the current valuation of S&P 500, my best estimates of 5-year, 10-year and 20-year annualized change are (with 80% confidence limits in brackets):

5-year: +3.0% (-4.3 to +9.3%)

10-year: +2.8% (-1.5 to +6.4%)

20-year: +4.1% (+2.5 to +6.1%)

Personally, I don't like the idea of sitting on investments most likely to earn less than 6.1% over the next 20 years, given our plans and expectations. But, as always, to each their own. And don't take my estimates at face value, come up with your own best guesses to guide your own path forward.

I saw your 5 year est. and reran a straddle option I did on the $SPX* last week. Buying a 6000 call and a 6000 put for 21 DEC 2029 (1868 days); you get breakevens at expiry of 7995.65 and 4006.35. The probability of a profit is 18.5% and the Implied Volatility is 16.47. Option buyers therefore believe from now until expiration there's a 81.5% chance that the S&P 500 Index return will be from +5.92% CAGR to -7.75% CAGR! If you have all your savings in the SP500 and are withdrawing 4% a year, at -7.75% you will have a little over 54%^ left after 5 years. Don't say it can't happen, 3/2009 5YR Return was -7.90%!

If you buy a 5YR T-Note, currently at 4.19%, you'll receive $41,900 a year and still have all your principal after 5 years.

* The $SPX Index option is an European option and is cash settled at expiration.

Link:www.optionsprofitcalculator.com/calcul...

^At 5.92% CAGR and a 4% withdrawal rate you would have almost 109% of your principal left. My estimates are based on losses and gains of exactly -7.75% and +5.92%. Volatility and sequence of return will determine the actual results after 5 years.

agip wrote:

la gente esta muy loca wrote:

A better example, what is the market willing to pay for a lotto ticket that has an 80% chance of doubling your money and a 20% chance of losing almost 20% (can't ignore those fat tails though). I also believe there's recency bias at work here. If I get ambitious I might try to "torture" the data.

yeah but isn't the difference between stocks and a lotto ticket that stocks can be sold at any time (that is, before they lose all of that 20%) whereas a lotto ticket is a binary win/lose?

I think to keep your comparison you have to agree that 'buy and hold forever' is a given, which is not necessarily true for many investors.

Although of course the problem goes in reverse too...stocks could also be sold before they double your money even if the SP500 does accomplish that double.

la gente esta muy loca wrote:

agip wrote:

yeah but isn't the difference between stocks and a lotto ticket that stocks can be sold at any time (that is, before they lose all of that 20%) whereas a lotto ticket is a binary win/lose?

I think to keep your comparison you have to agree that 'buy and hold forever' is a given, which is not necessarily true for many investors.

Although of course the problem goes in reverse too...stocks could also be sold before they double your money even if the SP500 does accomplish that double.

I was speaking metaphorically, you are reading it literally. I should have stated this is some thing I was trying to flesh out; e.g. "torture the data".

Let's say these "lotto tickets" are auctioned every week day except holidays; the payout is exactly 10 years from that date; can be traded and the historical data suggests, but doesn't guarantee (fat tails) the odds I gave. Recently, lotto players like NASDAQ Sal have noticed recent payouts of 259% (CAGR of 10%)! Would they perhaps bid up the price they would pay for these tickets believing the payout now has a chance of being $15,562 instead of $12,000? But the price of a ticket that pays out $12,000 in 10 yrs that has a payout of 259% is $4633 and they paid $6000. (It could be bid up to $7781). Let's go with $4633, but it turns out it reverts back to it's historical odds and doubles to $9266. Those who paid 6000 have a payout of just 54.4% (4.44% CAGR). Also remember there's a 20% it could be 3706!

I'm keeping it simple. Actual expectation for an 80% that doubles and a 20% losses 20% odds on $6000 is (12,000*.8) + (4,800*.2) $10,560 (5.82% 10YR CAGR).

Image:i.imgflip.com/99ucli.jpg