HomerJ wrote: ↑Sat Dec 04, 2021 7:52 pm
nigel_ht wrote: ↑Sat Dec 04, 2021 6:14 pm
HomerJ wrote: ↑Sat Dec 04, 2021 3:31 pm
nigel_ht wrote: ↑Sat Dec 04, 2021 2:46 pm
Rationalize your AA change any way you like but if PE was low you wouldn’t be hoarding more cash even if you were retiring tomorrow.
You’d have stayed 50/50.
That is incorrect. I have never used PE/valuations to make any of my decisions.
Nice deflection by the way.
One can't just look for dark clouds on the horizon. There are always dark clouds on the horizon.
No deflection at all. Your original course was 50/50. You even said you were deviating from your original course. It’s not like you didn’t already know that sometime in the next few years you were going to want to retire.
What changed? The highest valuations since dot bomb.
What changed was I hit my number (sooner than I expected), and my tolerance for B.S. at work dropped. Plus my wife developed some health issues which means we will be paying a good chunk in health care deductibles if I retire for the next 4 years until she turns 65 and gets on Medicare.
I suddenly saw the light at the end of the tunnel 4 years earlier than expected.
Lots of things changed. The fact that I have more money faster is tangentially related to valuations increasing I suppose, but at no time did I think about market predictions or valuations when deciding to try to save some bridge money to get me through the next 4 years just in case I retire before my planned retirement date.
Do me the service of believing I understand my motivations better than you. I've been 50/50 for 10 years regardless of valuations. Expected returns have been low for most of that period. I've ignored all that because 50/50 is a good allocation for me. Each time we've had a correction, that could have turned into a crash, I never blinked. I wasn't bothered at all in Dec 2018, and I wasn't bothered during March 2020.
That's the trick to successful investing. Not scanning the horizon constantly for a hint of clouds. But sticking with an AA that you can hold even during a crash/hurricane...
And then you don't have to worry about crashes/hurricanes any more.
So your trick to successful investing is to claim 50/50 but actually be 40/60 or even more conservative by mentally bucketing extra cash as not part of your AA. Why not just set your AA to 40/60 or whatever?
By being 50/50 for the last 10 years meant you’ve lost more money preparing for the hurricane than what a “normal” hurricane/bear would have cost you. You’d have reached your number even earlier and been able to go into the protected harbor of a more conservative portfolio sooner than mid-2021.
If March 2020 ended up going down 50% and followed the 2008 timeline by dropping down through 2022 you wouldn’t have made your numbers 4 years early and would have been at risk of not making your number by 2025 since the market didn’t recover till 2013.
Like I said to the OP, you do you but don’t lecture me about “staying the course” when even you said you didn’t.
HomerJ wrote: ↑Thu Jul 29, 2021 11:25 am
So, I'm close to retirement, have made my number, and now I'm just locking in gains every few months lately, when the market hits new highs.
I'm not just rebalancing back to my original AA, I'm building up a cushion of cash, but this slowly changes my AA.
So look at me, I'm not staying the course!
It doesn’t matter whether the market will crash 50% because Trinity SWR calculations mean that historically you’ll be fine with around a slightly less than 4% SWR even if the market crashes 80%.
So why does SORR matter? 60/40 or 50/50 works in the historical worst case scenarios for a 30 year retirement.
Ironically you haven’t reduced risk but increased it because your conservative AA over the last decade means your portfolio smaller than it would have been because as you just said “my wife developed some health issues”.
The risk isn’t that the market will crash like in 1929. That’s accounted for in the SWR.
The risk is you’ve vastly underestimated your lifetime expenses.
My black swan isn’t 1929 or 1966. My 3% SWR has headroom for that.
My black swan is my wife or kid needing $10,000 a dose drug that insurance won’t cover or force us to go through months of less expensive treatments where they might die before getting approved?
https://www.goodrx.com/healthcare-acces ... ugs-period
If that’s too out there for you then just having enough money to be able to get on transplant waiting lists in places where the line is shorter.
That’s just the ability to fly around the country.
https://www.nytimes.com/2009/06/23/busi ... liver.html