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if you own a balanced mutual fund or a market index fund, you shouldn't worry about your losses because it will go back up given enough time. If you own good quality stocks, you are likely to makeup your losses given enough time (not always though). Regardless of what you own whether it be a risky option or a stock market ETF, you still lost that money if your account balance is less. However, if it's quality, you are likely to make that money back if you hold it long enough.
the wild card is time ... we never know how long it takes . we need equities in retirement or else we will make very inefficient use of our savings . but time is the equal to the house limit at the casino ..
if you have enough money you can always do a double or nothing until you win , of course that is until you bump the house limit .
in retirement we have a house limit too , it is time .... we hope we recover in a timely fashion so we can make use of the money or even not have to take a pay cut . so the danger is we bump the house limit , unlike our days of working with decades to go.
recovery in inflation adjusted terms can be much much longer than just nominal so that is always a concern . even a modest drop that is extended can hurt a retirement . a good portion of the 30 year retirement is based on the first 5 years and the entire outcome is based on the first 15 years .
Last edited by mathjak107; 11-30-2018 at 12:56 PM..
I sell cash covered puts and pocket the premium. Most of these options expire worthless. That’s how I grow my HSA and my kid’s Roth IRA account. 25% for the less than two years, 30% for my HSA.
That's not advice you should give general people. When you're selling cash covered puts you only need to be wrong once to get completely wiped out.
exactly . but that does not mean you are happy about rolling backward or planned around a higher balance . it just goes with the territory but pretending it did not happen is not accurate either.
if you hypothetically started off with 100k 30 years ago and had 3 million dollars today and we slid 80% you better believe you would count that fact and it would be quite meaningful to any future plans you had in the nearer term .
since our draw each year is based on our balance on 12/31 it has a definite effect on us . even if you don't use a variable draw system like us , your ability to take raises from the standard 4% safe withdrawal rate are based on your balance , so if you were anticipating being able to take one , well now you can't and may have to hold off ..
so the only reason that these dips may not count to someone is they just have no reason to care yet .
stocks are moved by greed , fear and future perception of earnings so i disagree on valuations alone reflecting just the sum of the future earnings of the firm discounted back to its present value. greed and fear can throw that out of whack way to easily , along with leverage and machine selling unwinding leverage at times market volatility is high and falling .
But that's literally the entire point of volatility in equity markets. You knew you had the potential for your account value to go down when you got into the "game". To get upset when it happens is completely irrational.
no , i never said i get upset . i have been doing this for over 30 years . it just is a fact of life that goes with investing , it is what it is and the effect is exactly what it is , you are down . trying to disguise that fact with it is only a loss on paper or i still have my shares or any other smoke and mirror's people use to feel better or help themselves ignore it are just covering up what transpired .
whether someone has reason to care is another story. some of us do have reason to care , but again , it is what it is and unless we want to take a lower draw forever it is all part of the deal .
no , i never said i get upset . i have been doing this for over 30 years . it just is a fact of life , it is what it is and the effect is exactly what it is
I was more referencing OP when talking about getting upset. But quoting your post about it being a real loss to your account value. I see everything I have invested in equities as a temporary representation of the underlying value of the assets I own, nothing more nothing less. I don't equate it to cash until it's pulled out of the market. It's funny to see with just half a million in investments how far you can drop in a couple of months even while pouring $10k+ in per month, but again it doesn't bother me. I could see how it would bother someone relying on the money in the next few years, but if it started to bother me then I'd know it's time to pull it off the table.
the problem is unless you want about a 25% pay cut in retirement you need at least 40-50% equities .
so it really is just a way of life and as you accumulate more and more the dollars up or down become larger and larger . i run 40-50% equities and at the low was down close to 200k .
the problem is unless you want about a 25% pay cut in retirement you need at least 40-50% equities .
so it really is just a way of life and as you accumulate more and more the dollars up or down become larger and larger . i run 40-50% equities and at the low was down close to 200k .
I'm 100% equities and dropped about $60k at the low so I get it, it didn't bother me at all. I was looking for more spots to buy. Just put $10k to work in the tech industry today. If it bothers you then you are probably too exposed to equities. You can't have your cake and eat it too.
I'm 100% equities and dropped about $60k at the low so I get it, it didn't bother me at all. I was looking for more spots to buy. Just put $10k to work in the tech industry today. If it bothers you then you are probably too exposed to equities. You can't have your cake and eat it too.
big drops spanning 6 figures will always bother most of us . that does not mean you act , it is part of the territory . you are confusing two different issues .
human behavior is amounts that represent a few years pay will always "bother you " . whether it forces you to act or loose sleep is something very different
i doubt anyone here is not thrilled looking at a substantial reduction in value vs a nice juicy new balance breaking new highs .
but when that reaction becomes extreme that is another story .
Last edited by mathjak107; 11-30-2018 at 03:40 PM..
That's not advice you should give general people. When you're selling cash covered puts you only need to be wrong once to get completely wiped out.
I’m not advice anyone. No more than your advice the other day, I could barely understand it. I’m telling people what I do. This is not a thread about advice, this is a thread about PAPER LOSS. So chill.
I'm 100% equities and dropped about $60k at the low so I get it, it didn't bother me at all. I was looking for more spots to buy. Just put $10k to work in the tech industry today. If it bothers you then you are probably too exposed to equities. You can't have your cake and eat it too.
It depends on the size of your account isn’t it.
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