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It seems like a lot of people like to come on, make predictions of doom/gloom, claim to be smarter than everyone else, then break for it when it looks like they were wrong...again. Pretty common for cranks and these threads serve as good examples why people shouldn't give any credence to them. It seems like people more often than not just want to wander about in conversations, and these kind of threads are so laughable that it's easy to ignore the OP.
The fun part is that market looks like it's going to be up from the week before.
I think the OP is a great predictor of things. Whatever they extol...do the exact opposite.
CNBC is barely watchable anymore. When the market it down, they bring in short sellers. When it is up, they bring in perma-bulls.
Additionally, what else burns me up is people like Jim Cramer. He says sell at the bottom and buy at the top and has quite a selective memory about this record. I have no clue how that guy is on air.
He was touting BAC at 18 and now telling people to get out of it at 14 and change? Horrible. Horrible advice.
Why can't these people just admit when they are wrong. It's okay. We understand the market can make a fool out of the best of us. Dishonesty is something all together though.
My point is that a person does not suddenly put their 1million or 500K dollar portfolio into equities.
In the example, if someone has that much in equities in year 2000...they must have had one h3ll of a run-up to get there...which means they almost "deserve" the crash. (I don't know of a better word to put it). Equities were averaging 15% annual growth prior to 2000.
If someone just plunked 500K or $1million in year 2000 and then retired...then they rightfully "deserved" the crash as well.
Kind of the point. The s&p 500 total return from 1985-2014 has been 2023.70% or 11% annualized with dividend reinvestment. Adjusted for inflation the return drops to 847% or 7.99% annually
I thought the standard rule was: buy low, sell high
If a drop is coming, why would I sell? I would just buy more when the prices plummet. You're not supposed to invest for a day, month, or a year, you're supposed to invest for the long term.
That's what I was taught. Will someone tell me if I was taught wrong?
interesting chart : for someone who retired in 2000 and tried to pull 4% inflation adjusted based on equity performance the spending down left our y2k retiree in a real pickle. even the 5 year bull market may not be able to salvage the damage done early on.
rthanks to raddr for the data.
I don't quite get the T Bill column. It is showing the interest rates for a TBill bought that year, not the return for TBill bought in previous years (which would be fixed at the time of purchase), and presumably all the TBills for that column were previously puchased. If the bond allocation is laddered, than only a small percentage (say 10%) of the allocation will be buying a TBill in the given year and all other TBills will be accruing at their purchased rate. Anyway, it is more complicated than that column is indicating.
The other thing I wanted to point out - any RIP calculation will provide a confidence figure for the retirement plan it is modeling. That confidence figure can be interpreted in different ways but certainly one way is that if you retire in year A, year, B, year C, .... and so on, of those years, only a certain percentage of them will succeed.
For instance, if you get a 90% confidence figure from the RIP tool, one out of 10 years that you retire in will not be successful in meeting your goals. That is consistent with the idea that people who retired in 2000 are likely failing in meeting their retirement goals but people who retired in other years are successful.
So we should not be surprised at all in the fact that you can find periods in history in which retirement plans will likely flounder.
Last edited by TwoByFour; 05-23-2014 at 10:59 AM..
Reason: clarification of a sentance.
I thought the standard rule was: buy low, sell high
If a drop is coming, why would I sell? I would just buy more when the prices plummet. You're not supposed to invest for a day, month, or a year, you're supposed to invest for the long term.
That's what I was taught. Will someone tell me if I was taught wrong?
People are saying that stocks now are at their high, so as your mantra tells you, sell them now. Then sit on the cash until the stocks are at their low and re-buy them all back. Just as your mantra says.
But the problem with that plan is that historically nobody has done a good job of catching the high or the low. It is easy in hindsight to see when a high or low occurred but it is very hard in real time.
My point is that a person does not suddenly put their 1million or 500K dollar portfolio into equities.
In the example, if someone has that much in equities in year 2000...they must have had one h3ll of a run-up to get there...which means they almost "deserve" the crash. (I don't know of a better word to put it). Equities were averaging 15% annual growth prior to 2000.
I don't think that is the point being made in the mathjak's chart.
For example - say you steadily invested money throughout the 90's. It grew and grew, just as you are saying. You are thinking to yourself, boy I am getting close to my "magic number" where I can retire. Finally, in the year 2000 you look at your portfolio and say that you have reached an asset level that will allow you to now retire. So you plan on living off roughly 4% of the net value of your portfolio as calculated in 2000. But, as mathjak's chart show, that does not work out very well.
The lesson here is a good one - you just don't know what will happen next year. You can use a RIP tool and have some confidence that it will all work out, but you really have no idea what will happen in the future. It can all fall apart so easily.
I don't quite get the T Bill column. It is showing the interest rates for a TBill bought that year, not the return for TBill bought in previous years (which would be fixed at the time of purchase), and presumably all the TBills for that column were previously puchased. If the bond allocation is laddered, than only a small percentage (say 10%) of the allocation will be buying a TBill in the given year and all other TBills will be accruing at their purchased rate. Anyway, it is more complicated than that column is indicating.
The other thing I wanted to point out - any RIP calculation will provide a confidence figure for the retirement plan it is modeling. That confidence figure can be interpreted in different ways but certainly one way is that if you retire in year A, year, B, year C, .... and so on, of those years, only a certain percentage of them will succeed.
For instance, if you get a 90% confidence figure from the RIP tool, one out of 10 years that you retire in will not be successful in meeting your goals. That is consistent with the idea that people who retired in 2000 are likely failing in meeting their retirement goals but people who retired in other years are successful.
So we should not be surprised at all in the fact that you can find periods in history in which retirement plans will likely flounder.
t-bills used are very short term to approximate cash. . there were no bonds used as the goal was to see what happened if you spent down a 50/50 mix using cash (t-bills) when markets were down and spending from equities when up.
I don't think that is the point being made in the mathjak's chart.
For example - say you steadily invested money throughout the 90's. It grew and grew, just as you are saying. You are thinking to yourself, boy I am getting close to my "magic number" where I can retire. Finally, in the year 2000 you look at your portfolio and say that you have reached an asset level that will allow you to now retire. So you plan on living off roughly 4% of the net value of your portfolio as calculated in 2000. But, as mathjak's chart show, that does not work out very well.
The lesson here is a good one - you just don't know what will happen next year. You can use a RIP tool and have some confidence that it will all work out, but you really have no idea what will happen in the future. It can all fall apart so easily.
correct!.. it is something that all us older investors feel very much as older money fell way behind goal.
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