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Old 05-26-2015, 05:46 AM
 
6,305 posts, read 4,752,208 times
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Mathjak, as pessimistic as you are, I expect you to follow the advice of Pfau and pull most of your portfolio out of the stock market so you have minimal risk.

Personally I am not worried about valuations, P/E, the Shiller CAPE, or the sky-is-falling scenarios. With the previous GAAP changes valuations are near what will be the new norm. So what? Valuations in the mid region have not been useful for predicting future stock market trends or corrections. We are not in some sort of overbuying frenzy. In fact the opposite is true and investors are very cautious. The economy is in mid cycle with slow healing, slow growth and a long way to go.

I understand your concern. When I approached retirement, I was also worried about the future and the prospects of additional market corrections and widespread recession.
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Old 05-26-2015, 05:50 AM
 
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you would be quite wrong . I am at 50/50 and staying at 50/50 although my choice in types of bond funds will likely change. never ever been a time I wasn't invested.
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Old 05-26-2015, 06:15 AM
 
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What happened to the "glide path." I thought you were going to follow Pfau and go to about 35% stocks?
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Old 05-26-2015, 06:44 AM
 
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the consensus after blanchett's study is rates on bonds are to low at this stage for a rising glide path at this point in the cycle..

not that there was a big difference between the conventional way and the rising glide path but ruling out a really nasty fall there wasn't enough advantage where rates are now.

so I raised it to 50/50 where I have been for a while.

both kitces and pfau were in agreement with blanchetts more extensive look in to the bond side and have since changed their views for now.

interesting study by blanchett if you google it.

blanchett found the conventional reducing equities as you age worked better in low interest rate scenario's.
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Old 05-26-2015, 06:48 AM
 
Location: Idaho
1,455 posts, read 1,157,703 times
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Quote:
Originally Posted by mathjak107 View Post
if you had money of any great amount invested 15 years ago OR EARLIER - it hit a wall and died pretty much on the vine regardless of when you put it in prior.

only new money saw decent growth.
mathjak107,

I was curious about these statements so I looked up our financial records over the years. It just happened that my husband stopped contributing to one of his 401K accounts in 2000 (15 years ago) when he was laid off. He just left it there and never contributed a dime to it.

I have managed his account by loosely adhering to asset allocation and reducing exposure to stocks over the years. The current balance is 10x the value in 2000 so this 'old' pot of money did not die on the vine.
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Old 05-26-2015, 06:54 AM
 
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the s&p 500 after adjusting for inflation is up less than 2% including dividends. that is called real returns.

if he had other investments like bonds then that is a different asset class than just the s&p 500 and equities and results will be different , but just looking at the s&p 500 real return was way below average..

the nominal returns for equities were 6.07% cagr but were less than 2% once adjusted for inflation.

1.00 in jan 2000 grew to 1.85 in nominal terms by dec 2014 , 14 years later.

http://www.moneychimp.com/features/market_cagr.htm
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Old 05-26-2015, 07:01 AM
 
6,305 posts, read 4,752,208 times
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Quote:
Originally Posted by mathjak107 View Post
the consensus after blanchett's study is rates on bonds are to low at this stage for a rising glide path at this point in the cycle..

not that there was a big difference between the conventional way and the rising glide path but ruling out a really nasty fall there wasn't enough advantage where rates are now.

so I raised it to 50/50 where I have been for a while.

both kitces and pfau were in agreement with blanchetts more extensive look in to the bond side and have since changed their views for now.

interesting study by blanchett if you google it.

blanchett found the conventional reducing equities as you age worked better in low interest rate scenario's.
Thanks, but I don't see a reason to chase after the most recent opinions from people who seem to be consistently wrong.
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Old 05-26-2015, 07:02 AM
 
12,708 posts, read 9,987,127 times
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Originally Posted by jrkliny View Post
Which also means that except for 4 time frames investing the amount of a low cost mortgage will also work. At a minimum the income will pay off the mortgage and generate a couple of percent annual returns that can be spent. Personally I like to be more conservative and not spend the 2% for at least a few years to be absolutely sure that returns early on will carry through. I also understand that the 4% or even the 6.5% withdrawals are conservative. Changes are very good that I will earn substantially more money from the investment of my mortgage amount.
Thank you for finally admitting that you are not absolutely 100% certain that your mortgage strategy is the winning one.

*lets out big sigh of relief*
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Old 05-26-2015, 07:04 AM
 
71,737 posts, read 71,853,273 times
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they are not wrong that often. nothing is ever right or wrong . there are different outcomes for different situations and market conditions.

what works when rates are higher may not work the best when they are lower. when stock valuations are higher things do not work as well as when they are lower.

refining things for conditions that never happened before is a work in progress not science.

never before have low rates and high valuations appeared together at the same time for any retiree group in 146 years of history,.
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Old 05-26-2015, 07:07 AM
 
12,708 posts, read 9,987,127 times
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Quote:
Originally Posted by mathjak107 View Post
they are not wrong that often. nothing is ever right or wrong .
Then the statement that "nothing is ever right or wrong" is also not right or wrong.
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