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Old 08-11-2011, 02:55 AM
 
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i do it once a year or when things get out of whack by 20% or more. this will be the first time since we fell .
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Old 08-11-2011, 05:48 AM
 
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Thankfully we moved out of volitile markets 5 years before we retired. Basically in balanced/stable funds and haven't lost a cent. My motto in retirement was "I would rather make 3-4% than lose a dime." So far have been successful.
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Old 08-11-2011, 07:36 AM
 
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huh? balanced funds are down around 4% this year
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Old 08-11-2011, 04:05 PM
 
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Originally Posted by mathjak107 View Post
huh? balanced funds are down around 4% this year
Depends on when you read your statement or how frequently you check online. Also it is all relevant as to which you prefer. A consistent 3-4% each year or to average 6% with ups and downs. You never lose til you sell nor profit til you sell.
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Old 08-11-2011, 04:21 PM
 
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well as of when i looked last night they wre down for the year so im not sure how they are saying they are not.

absoluetly doesnt matter if your not selling. i just want them to check to see if what they are saying or believing is true.
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Old 08-11-2011, 05:30 PM
 
Location: Ponte Vedra Beach FL
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Originally Posted by newenglandgirl View Post
Robyn, welcome back, with your timely advice about a plan! I was wondering what you're thinking about the market and all these days.

All I know is that I remember reading a book written in the 50s (at a used bookstore a few years ago) - I dug it out of a dusty pile and began reading it, I forget its title, but it was something like The Conditions Leading to the Great Depression, and I never forgot two of the big developments just before the crash--land bust in Florida, and a wildly swinging market (back and forth, day to day). What is your take on the signs today?

If you, as a veteran market investor, are getting headaches, what do you see happening now? And, in terms of a plan, what kinds of plans can anyone make in this apparent chaos? (Please note, others, that I'm asking Robyn!).
Hi New England Girl - I was out of town for a while. And then came back in the middle of this mess. On my part - portfolio management is like flying an airplane. It's on auto-pilot most of the time - but sometimes you have to put it on manual controls.

Florida real estate actually has a really interesting role in the Crash of '29 - and the subsequent economic malaise. I would say the analogy today isn't the collapse of the speculative land sale market (like it was in the 1920's) - but the collapse of the real estate market and the resulting unemployment in the construction industry (in all areas that had lots of construction workers). Also take a look at the history of Florida hurricanes in the 1920's. They played a part too. And those in the mid-2000's played a part in the real estate mess as well (although a lesser role than they did back then - in the 1920's - people didn't really understand for the most part what hurricanes were - and insurance costs are more important now than they were back then). If and when you get to Florida - let me know - and I'll give you the names of some museums that go into this interesting history (reading books is ok - but going through a good museum can make it sink in better).

I can tell you that my crystal ball isn't clearer than anyone else's. Right now - there are comparisons both to 1987 (when the market fell 20% or so about this time - and then crashed another 20% on a single day - before recovering fairly quickly) - and to 2008 (when we went through similar gyrations in 2008 - rallied some and then fell to the extreme final lows in 2009). I have charts going back to the 1920's - and one can draw all kinds of comparisons with other points in time.

Of course - this is only with equities. The biggest problem I have comparing relatively recent market swoons with the current one is that during most of the prior swoons - interest rates were relatively high - or at least normal - and had room to fall (or to be cut). It is no surprise that one of the best (the best?) bull markets ever in equities and bonds was in the 80's-90's - when rates were declining from record highs. Declining interest rates (from very high to relatively normal) are a wind at your back. Declining from normal to what we're seeing today isn't a very good sign (especially since the decline is pretty much artificial - induced by the FED and now possibly the ECB being the buyer(s) of last resort.

Anyway - since I don't have a crystal ball - I am making the following assumptions. All investment returns will most probably be in accordance with Bill Gross' "new normal" (hat sized yields over an extended period of time). For a variety of reasons - there will be more volatility both up and down than people who grew up or went through investing in the 80's and 90's are accustomed to. It is entirely possible that we will see negative or only mildly positive inflation/tax adjusted returns. Not only in fixed income - but in most asset classes. Of course - inflation for a senior may be different than inflation for a 30 year old - the cost of medical care may be going up a lot while the cost of buying a new starter house may be going down. OTOH - SS is indexed to inflation more or less. The salaries of younger people aren't.

On my part - I have been assuming the "new normal" even before Bill Gross put a name on it. I knew 9% tax-free muni yields in the 1980's wouldn't last forever. So - as investment returns declined - I saved - and saved more. Now that my husband and I are in our mid-60's - I reckon we are on the back side of the mountain - especially since he has MS and I smoke. About 1/3 of our investment assets are in IRAs. Have never drawn out a penny of that money - and don't intend to until we have to as a result of the tax laws.

Speaking about tax laws - I think most of us will (or should) be paying more taxes down the road. Or our country will go to he**. In this regard - I hate most Republicans (for opposing all tax cuts) and most Democrats too (for insisting that we can get to a point of fiscal sanity by only imposing more taxes on people who own corporate jets). If we want a European style safety net (I'm not saying that is or isn't desirable - but most people seem to want it) - well most of us will have to pay more for it.

As for individual investment portfolios - it is obviously impossible to generalize. About the most general advice I could give that makes sense (to me) is to maximize investments in tax-deferred or tax-exempt accounts (like IRAs and Roth IRAs) when possible. And buy low cost investments (none of this 1.5%+ a year management fee stuff). And then buy what you think will perhaps allow you to reach your financial goals while sleeping at night. These 2 goals may well be inconsistent these days . Also - in this regard - everyone's mileage may vary. I was actually cheered up watching that interview with the GS guy yesterday. Because - since he was uncertain - and seemed a little upset - I reckon I wasn't being a total "wuss" feeling the same way . And always keep in mind the old Joe Granville (ancient - maybe dead - market guru given to pithy phrases) quote. If you don't know who you are - the markets are an expensive place to find out. Sometimes - doing nothing is the best thing to do. Even if you have a lot of cash and cash is paying nothing (or - in the case of some very big corporations - they are paying banks to hold cash for them).

Finally - I am still not convinced that municipal bonds are facing oblivion (which is what people like Meredith Whitney are predicting). It is still possible to get about 4.5% tax exempt these days in long term high quality state general obligation bonds - like Texas. Even if you live in a state where you would have to pay state income taxes on these bonds - they might make sense for you. I don't think today is the best day to buy (January this year was a good time to buy) - but - in fixed income - it isn't a black and white choice between zero on good stuff and more on junk - at least IMO.

Sorry for the rambling. Hope at least some of this helps. Robyn
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Old 08-11-2011, 05:33 PM
 
Location: Ponte Vedra Beach FL
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Originally Posted by mathjak107 View Post
i do it once a year or when things get out of whack by 20% or more. this will be the first time since we fell .
So will you rebalance again tomorrow?

How do you define "things getting out of whack"? Robyn
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Old 08-11-2011, 05:39 PM
 
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i rebalance one a year or when there is a 20-25% spread between the highest and lowest asset classes .since i did it the end of last year TLT the long term treasuries are up about 16% ytd. GLD is up around 20% and VTI my total market fund is down 6.5% ,cash is up .8%.

i rebalance back to 25% in each.

Last edited by mathjak107; 08-11-2011 at 05:55 PM..
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Old 08-11-2011, 05:47 PM
 
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Originally Posted by mathjak107 View Post
well as of when i looked last night they wre down for the year so im not sure how they are saying they are not.

absoluetly doesnt matter if your not selling. i just want them to check to see if what they are saying or believing is true.
What were they as of June 30 which was the last quarterly statement they would have gotten? If that has worked for them over the years and they are happy, excellent.
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Old 08-11-2011, 05:48 PM
 
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it doesnt matter what they think based on their quarterly statement. all that counts is that they may be down now and they dont think they are. they may want to take another look at what they own if they are down. perhaps its to volatile for their mindset if they thought they were un-changed.
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