anyone see light at the end of the tunnel

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tennesseerunner
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Re: anyone see light at the end of the tunnel

Post by tennesseerunner »

I am 56 1/2 and thought about getting out of the market altogether at the beginning of the year but then I chickened out. Now my accounts are showing huge paper loss and I'm conservative!! Now I have decided that I cannot be emotional and just have to let it ride. I am not going to do anything with any of my investments and I am re-investing. I plan to retire fully at age 62. But I just read that it's going to take 3 years to recover t je "paper losses" that we are showing now. That's basically earning nothing for 3 years! But wont all the shares I got a low prices make up the difference when the market comes back? And does anyone know or think the market is going to come back as high as it has been at any time ever?

What should we expect in the next 3 years?
z3r0c00l
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Re: anyone see light at the end of the tunnel

Post by z3r0c00l »

UNI4MER wrote: Mon May 09, 2022 11:53 am
z3r0c00l wrote: Sun May 08, 2022 8:15 pm
UNI4MER wrote: Sun May 08, 2022 2:13 pm Have an appointment to chat with my vanguard advisor in the morning and at 70 kinda freaking out watching my 60/40 free falling and are looking for any green shoots and not seeing any for the next 2-3 years. Cash is tempting.
This current decline in stocks and bonds has been since December of last year. Did you really think there would never be bad 6 month periods in the market?
I see this trend continuing for the next 2-3 years.
Then you have billion-dollar inside information and should never worry about money again.
70% Global Stocks / 30% Bonds
Stoic9
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Re: anyone see light at the end of the tunnel

Post by Stoic9 »

I assume by tunnel you are referring to the Pandemic whose affects are felt on numerous areas of life to include financial. Caveat; I am an over planner!


I'm not 70 yet but I agree with sticking with a plan on the financial area. A plan should be based on facts and assumptions, yes a plan can change if you find your assumptions were wrong. I retired 5 years ago with a plan that started with $X spending a year and increased by 10% per year in 5 year bands. My plan was created on facts: Retirement Year(RY) (1 Pension with COLA), RY+2 (spouse pension starts) RY+5 (copious senior welfare kicks in saving us 3-4% a year, spouse starts SS), RY+10 (SS and Spouse benefits) RY+12 (large RMD's). Assumptions: I live to 75 spouse to 90, Rents increase 5-8% a year (they are up avg 18% a year), INFLATION avg 4% (first 5 year avg is 3.8%), when I retired we were historically way overdue for a recession. I assumed it would happen at least twice for me and 4 times for spouse.
jebmke
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Re: anyone see light at the end of the tunnel

Post by jebmke »

tennesseerunner wrote: Mon May 09, 2022 12:43 pm I am 56 1/2 and thought about getting out of the market altogether at the beginning of the year but then I chickened out. Now my accounts are showing huge paper loss and I'm conservative!! Now I have decided that I cannot be emotional and just have to let it ride. I am not going to do anything with any of my investments and I am re-investing. I plan to retire fully at age 62. But I just read that it's going to take 3 years to recover t je "paper losses" that we are showing now. That's basically earning nothing for 3 years! But wont all the shares I got a low prices make up the difference when the market comes back? And does anyone know or think the market is going to come back as high as it has been at any time ever?

What should we expect in the next 3 years?
If someone tells you the answer to this question I would suggest walking away. Nobody knows.
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
tvubpwcisla
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Re: anyone see light at the end of the tunnel

Post by tvubpwcisla »

Yes, it feels difficult right now. For me there is no end, as I plan to buy low cost index funds and never sell them, other than a 3% withdrawal rate during retirement. It's a great question though.
Apathizer
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Re: anyone see light at the end of the tunnel

Post by Apathizer »

I think we're at the point of panic selling. While there are certainly valid concerns, a drop this precipitous seems like an overreaction. A convincing argument can be made that the US market was probably over-valued early in the year. Now it seems like everything is under-valued. The US market seems slightly under-valued while ex-US markets and bonds seem ridiculously under-valued now.

Of course I don't have any special insight, but even with the Russia-Ukraine situation and recent inflation the recent sell-off seems like an overreaction.
ROTH: 50% AVGE, 10% DFAX, 40% BNDW. Taxable: 50% BNDW, 40% AVGE, 10% DFAX.
GeoFX
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Re: anyone see light at the end of the tunnel

Post by GeoFX »

Apathizer wrote: Mon May 09, 2022 1:54 pm I think we're at the point of panic selling. While there are certainly valid concerns, a drop this precipitous seems like an overreaction. A convincing argument can be made that the US market was probably over-valued early in the year. Now it seems like everything is under-valued. The US market seems slightly under-valued while ex-US markets and bonds seem ridiculously under-valued now.

Of course I don't have any special insight, but even with the Russia-Ukraine situation and recent inflation the recent sell-off seems like an overreaction.
Right now the SP500 PE ratio is 20.33. The historical average PE ratio is around 15-16 so we have a ways to go before reaching those levels of valuation. Until MSFT and APPL finally crater and capitulation finally happens, we're just going to be on a slow bleed like 2000-2002. In addition, the high-inflationary environment is putting a double whammy on prices. The parabolic movement of the 10yr yields has annihilated bonds and that was supposed to be a safe haven from this madness.

If bond yields go up to about 5%, i may actually sell off stocks to get into long-term treasuries honestly as that may overperform the market for the next 18-24 months.
Last edited by GeoFX on Mon May 09, 2022 2:10 pm, edited 1 time in total.
WhiteMaxima
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Re: anyone see light at the end of the tunnel

Post by WhiteMaxima »

I just DCA. Down market is just so good.
GeoFX
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Re: anyone see light at the end of the tunnel

Post by GeoFX »

WhiteMaxima wrote: Mon May 09, 2022 2:10 pm I just DCA. Down market is just so good.
A lot of people, especially retirees, don't have the option of DCA'ing and may be trapped a little. I'm one of them and my 50/50 allocation is taking a huge hit from both the equity and bonds side. I can't imagine what's happening to normal 60/40 and 70/30 portfolios where no contributions are being made into them.
Apathizer
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Re: anyone see light at the end of the tunnel

Post by Apathizer »

GeoFX wrote: Mon May 09, 2022 2:08 pm
Apathizer wrote: Mon May 09, 2022 1:54 pm I think we're at the point of panic selling. While there are certainly valid concerns, a drop this precipitous seems like an overreaction. A convincing argument can be made that the US market was probably over-valued early in the year. Now it seems like everything is under-valued. The US market seems slightly under-valued while ex-US markets and bonds seem ridiculously under-valued now.

Of course I don't have any special insight, but even with the Russia-Ukraine situation and recent inflation the recent sell-off seems like an overreaction.
Right now the SP500 PE ratio is 20.33. The historical average PE ratio is around 15-16 so we have a ways to go before reaching those levels of valuation. Until MSFT and APPL finally crater and capitulation finally happens, we're just going to be on a slow bleed like 2000-2002. In addition, the high-inflationary environment is putting a double whammy on prices. The parabolic movement of the 10yr yields has annihilated bonds and that was supposed to be a safe haven from this madness.

If bond yields go up to about 5%, i may actually sell off stocks to get into long-term treasuries honestly as that may overperform the market for the next 18-24 months.
Fortunately I have a factor-tilted portfolio which has mitigated my recent losses. My overall P:E is about 12. I'm not confident in my ability to predict markets, but earlier this year I sold most of my taxable investments and paid off most of my mortgage. Had I known all this would happen I'd have sold off everything and paid off my mortgage entirely, but still the total interest I have left is pretty minimal.

Now I'm slowly rebuilding with a more conservative taxable portfolio. I'm glad I opted for 50% bonds. They've been whacked too, but yields are moving up which is a good sign. It's really hard not to panic now, but so far I'm resisting the urge. I have enough in bonds to ride the current volatility. I don't expect equity markets to fully recover until sometime next year.
ROTH: 50% AVGE, 10% DFAX, 40% BNDW. Taxable: 50% BNDW, 40% AVGE, 10% DFAX.
WhiteMaxima
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Re: anyone see light at the end of the tunnel

Post by WhiteMaxima »

GeoFX wrote: Mon May 09, 2022 2:13 pm
WhiteMaxima wrote: Mon May 09, 2022 2:10 pm I just DCA. Down market is just so good.
A lot of people, especially retirees, don't have the option of DCA'ing and may be trapped a little. I'm one of them and my 50/50 allocation is taking a huge hit from both the equity and bonds side. I can't imagine what's happening to normal 60/40 and 70/30 portfolios where no contributions are being made into them.
you missed the commodity and tip investment.
Marseille07
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Re: anyone see light at the end of the tunnel

Post by Marseille07 »

GeoFX wrote: Mon May 09, 2022 2:13 pm A lot of people, especially retirees, don't have the option of DCA'ing and may be trapped a little. I'm one of them and my 50/50 allocation is taking a huge hit from both the equity and bonds side. I can't imagine what's happening to normal 60/40 and 70/30 portfolios where no contributions are being made into them.
Not that differently. Pretty much all allocations are taking a hit, 0/100 to 100/0. Equities & bonds mix doesn't do well here no matter the ratio. This is just a limitation of only carrying 2 asset classes and they both go down at the same time.
GeoFX
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Re: anyone see light at the end of the tunnel

Post by GeoFX »

Marseille07 wrote: Mon May 09, 2022 2:34 pm
GeoFX wrote: Mon May 09, 2022 2:13 pm A lot of people, especially retirees, don't have the option of DCA'ing and may be trapped a little. I'm one of them and my 50/50 allocation is taking a huge hit from both the equity and bonds side. I can't imagine what's happening to normal 60/40 and 70/30 portfolios where no contributions are being made into them.
Not that differently. Pretty much all allocations are taking a hit, 0/100 to 100/0. Equities & bonds mix doesn't do well here no matter the ratio. This is just a limitation of only carrying 2 asset classes and they both go down at the same time.
That's the unfortunate part of most corporate 401Ks, you're limited to only cash, bonds, or stocks. At least they are institutional funds so you don't get slammed by expense fees but it's nothing like right now lol
Marseille07
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Re: anyone see light at the end of the tunnel

Post by Marseille07 »

GeoFX wrote: Mon May 09, 2022 2:36 pm That's the unfortunate part of most corporate 401Ks, you're limited to only cash, bonds, or stocks. At least they are institutional funds so you don't get slammed by expense fees but it's nothing like right now lol
Cash is fine here though. I'm sure lots of people would rather hold cash than operate a Boglehead portfolio in 2022 that's down 15% on top of the asset value losing vs inflation.
Last edited by Marseille07 on Mon May 09, 2022 3:01 pm, edited 1 time in total.
Apathizer
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Re: anyone see light at the end of the tunnel

Post by Apathizer »

tennesseerunner wrote: Mon May 09, 2022 12:43 pm I am 56 1/2 and thought about getting out of the market altogether at the beginning of the year but then I chickened out. Now my accounts are showing huge paper loss and I'm conservative!! Now I have decided that I cannot be emotional and just have to let it ride. I am not going to do anything with any of my investments and I am re-investing. I plan to retire fully at age 62. But I just read that it's going to take 3 years to recover t je "paper losses" that we are showing now. That's basically earning nothing for 3 years! But wont all the shares I got a low prices make up the difference when the market comes back? And does anyone know or think the market is going to come back as high as it has been at any time ever?

What should we expect in the next 3 years?
Be skeptical of anyone professing such clairvoyance. I think the markets will recover sometime next year, but what do I know? Complex future events are unpredictable, but yeah it's disconcerting that global stocks and bonds have all plummeted so much this year when historically bonds have usually served as a nice buffer for equity market volatility.
ROTH: 50% AVGE, 10% DFAX, 40% BNDW. Taxable: 50% BNDW, 40% AVGE, 10% DFAX.
vested1
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Re: anyone see light at the end of the tunnel

Post by vested1 »

Yes, I do see the light at the end of the tunnel, and the exact date when I will emerge from the darkness. It will be the 2nd Wednesday of August, the 10th. That is when my first age 70 max SS will arrive at the bank. Finally some justification for not claiming early and investing that relative pittance after taxes.

Fixed income meets all needs now, but after August I'll have to start keeping some of those promises I made to my spouse concerning a housekeeper and those trips to the caribbean and Alaska.

Not that I have a claim to any personal wisdom, but rather glean what I can from others here who are far wiser than I am. That wisdom was sometimes ignored however, particularly when I went to all cash on March 20, 2020, somehow believing that a drop of 33% in GDP meant anything. Not many here would admit doing such a non-BH thing, and I only bring it up as a cautionary tale to the OP and any others who may feel the panic rising. Then again, I told myself it wasn't panic but merely prudence. At least the use of word made me feel better, even if spelling was the only difference.

Withdrawals from savings were non-existent during the ensuing 9 months out of the market, during which time I kept telling myself that sooner or later my strategy would pay off. I eventually had to admit that I had fallen victim to recency bias. We had been retired 4 years at that point already, and other than that lapse of judgement we had stuck to the plan of buy and hold. When reason finally returned we got back in at 60/40, just like we were before.

The thing that helps me now, and during the entire journey, has been to compare what my long term expectations were at the beginning of retirement with various points in time. There's no way I could have predicted the raging bull we've enjoyed for so long which resulted in a much greater portfolio balance than I had imagined over 6 years into retirement. I am no longer in any danger of cashing in during a downturn. I allowed dividends to accumulate enough to build a 5% cushion of cash to draw on when needed, then began reinvesting them again. I haven't sold anything since March of 2020, and have no need to until RMD's kick in two years hence. Sometimes it's better to be lucky than smart.

My advice: When in doubt, do nothing.
Last edited by vested1 on Mon May 09, 2022 3:27 pm, edited 1 time in total.
chicagoan23
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Re: anyone see light at the end of the tunnel

Post by chicagoan23 »

UNI4MER wrote: Mon May 09, 2022 11:53 am
z3r0c00l wrote: Sun May 08, 2022 8:15 pm
UNI4MER wrote: Sun May 08, 2022 2:13 pm Have an appointment to chat with my vanguard advisor in the morning and at 70 kinda freaking out watching my 60/40 free falling and are looking for any green shoots and not seeing any for the next 2-3 years. Cash is tempting.
This current decline in stocks and bonds has been since December of last year. Did you really think there would never be bad 6 month periods in the market?
I see this trend continuing for the next 2-3 years.
I was 65/35 at the start of the year, but have steadily moved money into stocks as they've fallen. I'm now at 80/20. If we see full capitulation (which I'd define as 35% down) I'll be closer to 100/0.

I'd love to be able to guess as to how long this trend will last, but I can't do that with any degree of certainty. So I'm not trying to do that and instead I will think that I'm getting in at pretty good prices now, compared to last year.
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Fallible
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Re: anyone see light at the end of the tunnel

Post by Fallible »

UNI4MER wrote: Sun May 08, 2022 7:29 pm
marcopolo wrote: Sun May 08, 2022 4:45 pm
UNI4MER wrote: Sun May 08, 2022 2:13 pm Have an appointment to chat with my vanguard advisor in the morning and at 70 kinda freaking out watching my 60/40 free falling and are looking for any green shoots and not seeing any for the next 2-3 years. Cash is tempting.
How did you end up back at 60/40 allocation?

In March 2020, you panic sold even though you were working with PAS. You apparently opted out of PAS and sold near the bottom, and were wondering in May whether to get back in and whether to do so on you own or go back to PAS. Several posters suggested that perhaps 60/40 wss too aggressive for you. Seems they might have been right.

What did you do, and how did you end up back at 60/40?

If you sell now, will you end up back at 60/40 again later after selling low, then buying high again? That is usually nit a recipe for investing success.
That was what my VG FP put me.
OP, your response above implies that you didn't agree with what the advisor put you in. But you always have a choice whether to follow an advisor's advice. Always.

So...did you agree with the advisor?
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UNI4MER
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Re: anyone see light at the end of the tunnel

Post by UNI4MER »

as expected my advisor said stay the course and use these 2 documents to support that:

https://investor.vanguard.com/investor- ... ssessments
https://corporate.vanguard.com/content/ ... -2022.html
Last edited by UNI4MER on Mon May 09, 2022 3:33 pm, edited 1 time in total.
jebmke
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Re: anyone see light at the end of the tunnel

Post by jebmke »

UNI4MER wrote: Mon May 09, 2022 3:22 pm as expected my advisor said stay the course and use these 2 documents to support that:

https://investor.vanguard.com/investor- ... ssessments

chrome-extension://oemmndcbldboiebfnladdacbdfmadadm/https://personal.vanguard.com/us/ViewMe ... o,-150,498
So, what are you going to do?
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
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UNI4MER
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Re: anyone see light at the end of the tunnel

Post by UNI4MER »

stay the course for now and hope for the best
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calmaniac
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Re: anyone see light at the end of the tunnel

Post by calmaniac »

UNI4MER wrote: Sun May 08, 2022 4:32 pm Sounds like the verdict is stay the course no matter how long and how far this cycle continues.
Yes. All of the alternatives, which are basically attempting to time the market, have worse outcomes.
"Pretired", working 20 h/wk. AA 75/25: 30% TSM, 19% value (VFVA/AVUV), 18% Int'l LC, 8% emerging, 25% GFund/VBTLX. Military pension ≈60% of expenses. Pension+SS@age 70 ≈100% of expenses.
tvubpwcisla
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Re: anyone see light at the end of the tunnel

Post by tvubpwcisla »

calmaniac wrote: Mon May 09, 2022 3:54 pm
UNI4MER wrote: Sun May 08, 2022 4:32 pm Sounds like the verdict is stay the course no matter how long and how far this cycle continues.
Yes. All of the alternatives, which are basically attempting to time the market, have worse outcomes.
This is a great point ^^
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calmaniac
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Re: anyone see light at the end of the tunnel

Post by calmaniac »

tennesseerunner wrote: Mon May 09, 2022 12:43 pm I am 56 1/2 and thought about getting out of the market altogether at the beginning of the year but then I chickened out. Now my accounts are showing huge paper loss and I'm conservative!! Now I have decided that I cannot be emotional and just have to let it ride. I am not going to do anything with any of my investments and I am re-investing. I plan to retire fully at age 62. But I just read that it's going to take 3 years to recover t je "paper losses" that we are showing now. That's basically earning nothing for 3 years! But wont all the shares I got a low prices make up the difference when the market comes back? And does anyone know or think the market is going to come back as high as it has been at any time ever?

What should we expect in the next 3 years?
tennesseerunner,

Do you have an Investment Policy Statement (IPS)?

Do you have an asset allocation that matches your need, ability, and willingness to take risk?

If not, working on these in the coming months will help you plan for the future and may increase your comfort level.
"Pretired", working 20 h/wk. AA 75/25: 30% TSM, 19% value (VFVA/AVUV), 18% Int'l LC, 8% emerging, 25% GFund/VBTLX. Military pension ≈60% of expenses. Pension+SS@age 70 ≈100% of expenses.
Jimsad
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Re: anyone see light at the end of the tunnel

Post by Jimsad »

Marseille07 wrote: Mon May 09, 2022 2:49 pm
GeoFX wrote: Mon May 09, 2022 2:36 pm That's the unfortunate part of most corporate 401Ks, you're limited to only cash, bonds, or stocks. At least they are institutional funds so you don't get slammed by expense fees but it's nothing like right now lol
Cash is fine here though. I'm sure lots of people would rather hold cash than operate a Boglehead portfolio in 2022 that's down 15% on top of the asset value losing vs inflation.
The present drubbing of both stocks and bonds made me appreciate my real estate investments more .
I am working on acquiring more real estate .
Right now I am still working and earning but I do not want to be at the mercy of markets when I am no longer in accumulation phase
There was a poster who had a 8 figure portfolio all in stocks and bonds and did not even own a primary house
I do not want it be in his shoes now
Marseille07
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Re: anyone see light at the end of the tunnel

Post by Marseille07 »

Jimsad wrote: Mon May 09, 2022 4:07 pm The present drubbing of both stocks and bonds made me appreciate my real estate investments more .
I am working on acquiring more real estate .
Right now I am still working and earning but I do not want to be at the mercy of markets when I am no longer in accumulation phase
There was a poster who had a 8 figure portfolio all in stocks and bonds and did not even own a primary house
I do not want it be in his shoes now
RE is certainly fine for diversification purposes, although we might be approaching the top there as well.

If we're talking about the same poster, iirc that poster spends 70K/year; the current downturn (or any downturns) is unlikely to materially impact their bottom line.
chicagoan23
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Re: anyone see light at the end of the tunnel

Post by chicagoan23 »

Jimsad wrote: Mon May 09, 2022 4:07 pm
Marseille07 wrote: Mon May 09, 2022 2:49 pm
GeoFX wrote: Mon May 09, 2022 2:36 pm That's the unfortunate part of most corporate 401Ks, you're limited to only cash, bonds, or stocks. At least they are institutional funds so you don't get slammed by expense fees but it's nothing like right now lol
Cash is fine here though. I'm sure lots of people would rather hold cash than operate a Boglehead portfolio in 2022 that's down 15% on top of the asset value losing vs inflation.
The present drubbing of both stocks and bonds made me appreciate my real estate investments more .
I am working on acquiring more real estate .
Right now I am still working and earning but I do not want to be at the mercy of markets when I am no longer in accumulation phase
There was a poster who had a 8 figure portfolio all in stocks and bonds and did not even own a primary house
I do not want it be in his shoes now
Have you ever lived through a real estate crash while holding a large (or leveraged) real estate portfolio? It gets very ugly. A former neighbor of mine went from being up big in a New York apartment to losing 30% and being forced to sell in a matter of months.
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Re: anyone see light at the end of the tunnel

Post by LadyGeek »

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Jimsad
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Re: anyone see light at the end of the tunnel

Post by Jimsad »

chicagoan23 wrote: Mon May 09, 2022 4:36 pm
Jimsad wrote: Mon May 09, 2022 4:07 pm
Marseille07 wrote: Mon May 09, 2022 2:49 pm
GeoFX wrote: Mon May 09, 2022 2:36 pm That's the unfortunate part of most corporate 401Ks, you're limited to only cash, bonds, or stocks. At least they are institutional funds so you don't get slammed by expense fees but it's nothing like right now lol
Cash is fine here though. I'm sure lots of people would rather hold cash than operate a Boglehead portfolio in 2022 that's down 15% on top of the asset value losing vs inflation.
The present drubbing of both stocks and bonds made me appreciate my real estate investments more .
I am working on acquiring more real estate .
Right now I am still working and earning but I do not want to be at the mercy of markets when I am no longer in accumulation phase
There was a poster who had a 8 figure portfolio all in stocks and bonds and did not even own a primary house
I do not want it be in his shoes now
Have you ever lived through a real estate crash while holding a large (or leveraged) real estate portfolio? It gets very ugly. A former neighbor of mine went from being up big in a New York apartment to losing 30% and being forced to sell in a matter of months.
I am only taking about Increasing my income producing real estate . Presently it is about 8% of my overall portfolio/assets (investments and real estate combined )
I plan or increase it to 15 % of my overall assets
Jimsad
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Re: anyone see light at the end of the tunnel

Post by Jimsad »

Jimsad wrote: Mon May 09, 2022 4:46 pm
chicagoan23 wrote: Mon May 09, 2022 4:36 pm
Jimsad wrote: Mon May 09, 2022 4:07 pm
Marseille07 wrote: Mon May 09, 2022 2:49 pm
GeoFX wrote: Mon May 09, 2022 2:36 pm That's the unfortunate part of most corporate 401Ks, you're limited to only cash, bonds, or stocks. At least they are institutional funds so you don't get slammed by expense fees but it's nothing like right now lol
Cash is fine here though. I'm sure lots of people would rather hold cash than operate a Boglehead portfolio in 2022 that's down 15% on top of the asset value losing vs inflation.
The present drubbing of both stocks and bonds made me appreciate my real estate investments more .
I am working on acquiring more real estate .
Right now I am still working and earning but I do not want to be at the mercy of markets when I am no longer in accumulation phase
There was a poster who had a 8 figure portfolio all in stocks and bonds and did not even own a primary house
I do not want it be in his shoes now
Have you ever lived through a real estate crash while holding a large (or leveraged) real estate portfolio? It gets very ugly. A former neighbor of mine went from being up big in a New York apartment to losing 30% and being forced to sell in a matter of months.
I am only taking about Increasing my income producing real estate . Presently it is about 8% of my overall portfolio/assets (investments and real estate combined )
I plan or increase it to 15 % of my overall assets
I feel bogleheads as a whole do not appreciate the value of real estate as a good diversifier to have as part of the portfolio.
Times like these , should make everyone realize the value of it
jebmke
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Re: anyone see light at the end of the tunnel

Post by jebmke »

Jimsad wrote: Mon May 09, 2022 5:01 pm I feel bogleheads as a whole do not appreciate the value of real estate as a good diversifier to have as part of the portfolio.
Times like these , should make everyone realize the value of it
Probably a couple of factors at play. One, some prefer to keep all their investments in liquid assets and two, many do not want the hassle of being a landlord.
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
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Re: anyone see light at the end of the tunnel

Post by tibbitts »

Jimsad wrote: Mon May 09, 2022 5:01 pm I feel bogleheads as a whole do not appreciate the value of real estate as a good diversifier to have as part of the portfolio.
Times like these , should make everyone realize the value of it
It's only a diversifier if you enough such that your real estate is ... diversified. Otherwise you'll get into an argument over whether good or bad results are more luck or skill.
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Re: anyone see light at the end of the tunnel

Post by Jimsad »

jebmke wrote: Mon May 09, 2022 5:18 pm
Jimsad wrote: Mon May 09, 2022 5:01 pm I feel bogleheads as a whole do not appreciate the value of real estate as a good diversifier to have as part of the portfolio.
Times like these , should make everyone realize the value of it
Probably a couple of factors at play. One, some prefer to keep all their investments in liquid assets and two, many do not want the hassle of being a landlord.
There is no free lunch . It may worth having ‘some ‘hassle to avoid being completely at the mercy of the markets and as inflation hedge
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Re: anyone see light at the end of the tunnel

Post by Vanguard User »

I am all equity portfolio. Are 44. Natural DCA. I am in it for a good treat later right?
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Re: anyone see light at the end of the tunnel

Post by miket29 »

AerialWombat wrote: Sun May 08, 2022 2:34 pm I’m happy as a clam at 30/70, cash-heavy.
Me too. I read Ferri's article a few years back https://www.forbes.com/sites/rickferri/ ... r-retirees as I approached retirement and it recommends a 30/70 portfolio (although many are able and willing to take more risk). I'm not sure if it has been better than a 60/40 in hindsight since it missed the market runup over the past few years, but it definitely let me sleep better without worrying about what a big market drop would do
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Re: anyone see light at the end of the tunnel

Post by Chaconne »

I wonder if any other Bogleheads experienced the same pitfall I did:

In planning for worst-case scenarios prior to retirement (3 years ago), I assumed my bond allocation would remain relatively stable in the event of a sharp downturn in stocks. So I thought my expectations were reasonable and something I could live with in a period of sharply falling stocks. Guess what. Bonds can fall sharply when stocks fall sharply. Surprise (to me)! I'm still okay at age 71 with an allocation of 26/57/17 (stocks/bonds/cash) and about 40x annual expenses (as of yesterday). But boy-oh-boy was it nice when I was sitting pretty at 50x expenses!

While I'm inclined to do something, I'm reassured by all the reminders that nothing is the thing to do.
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dogagility
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Re: anyone see light at the end of the tunnel

Post by dogagility »

The only light is seen by staying the course.
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Re: anyone see light at the end of the tunnel

Post by Tundrama »

Jimsad wrote: Mon May 09, 2022 4:07 pm
Marseille07 wrote: Mon May 09, 2022 2:49 pm
GeoFX wrote: Mon May 09, 2022 2:36 pm That's the unfortunate part of most corporate 401Ks, you're limited to only cash, bonds, or stocks. At least they are institutional funds so you don't get slammed by expense fees but it's nothing like right now lol
Cash is fine here though. I'm sure lots of people would rather hold cash than operate a Boglehead portfolio in 2022 that's down 15% on top of the asset value losing vs inflation.
The present drubbing of both stocks and bonds made me appreciate my real estate investments more .
I am working on acquiring more real estate .
Right now I am still working and earning but I do not want to be at the mercy of markets when I am no longer in accumulation phase
There was a poster who had a 8 figure portfolio all in stocks and bonds and did not even own a primary house
I do not want it be in his shoes now
Heck, I’ll take that trade. An 8 figure dude at -50% if we saw that…but we won’t!

I’ll take that 8 figure math over property in this market any day!
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Re: anyone see light at the end of the tunnel

Post by Marseille07 »

tvubpwcisla wrote: Mon May 09, 2022 1:47 pm Yes, it feels difficult right now. For me there is no end, as I plan to buy low cost index funds and never sell them, other than a 3% withdrawal rate during retirement. It's a great question though.
Do you have enough at 3% WR? This is my plan too, but 3% could be tight on my end if we continue to see a downturn. I admit sometimes 4% WR looks really tempting.
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Re: anyone see light at the end of the tunnel

Post by Chip »

Jimsad wrote: Mon May 09, 2022 5:43 pm There is no free lunch . It may worth having ‘some ‘hassle to avoid being completely at the mercy of the markets and as inflation hedge
Since I've experienced that hassle I will say that for me it is definitely not worth it. YMMV.
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Re: anyone see light at the end of the tunnel

Post by jebmke »

Chip wrote: Tue May 10, 2022 4:46 am
Jimsad wrote: Mon May 09, 2022 5:43 pm There is no free lunch . It may worth having ‘some ‘hassle to avoid being completely at the mercy of the markets and as inflation hedge
Since I've experienced that hassle I will say that for me it is definitely not worth it. YMMV.
Two of the happiest days of my financial life were the closing on the sale of rental property.
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
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Re: anyone see light at the end of the tunnel

Post by Chip »

jebmke wrote: Tue May 10, 2022 5:03 am
Chip wrote: Tue May 10, 2022 4:46 am
Jimsad wrote: Mon May 09, 2022 5:43 pm There is no free lunch . It may worth having ‘some ‘hassle to avoid being completely at the mercy of the markets and as inflation hedge
Since I've experienced that hassle I will say that for me it is definitely not worth it. YMMV.
Two of the happiest days of my financial life were the closing on the sale of rental property.
I had two properties as well, and similar happy days. Plus the bonus of a much simpler tax return.
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Re: anyone see light at the end of the tunnel

Post by jharkin »

UNI4MER wrote: Mon May 09, 2022 3:34 pm stay the course for now and hope for the best
Correct.

This is why you hold 60/40 (for example... or 70/30 or 50/50) and not just 100% growth stocks... The "40" in bonds/fixed income/cash is there to limit your downside and help you float though market retreats like this so that you dont have to heavily draw down the "60" stock. If you are nervous it just means that you should be even more conservative , even in good markets,.... maybe 50/50.
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Re: anyone see light at the end of the tunnel

Post by boomer543 »

I am 70 also and with Vanguard PAS about a year. My advice: take a chill pill and “STAY the COURSE”. You are with PAS and your likely CFP advisor in part to talk you out of stepping off the “Go to cash” cliff. And behemoth Vanguard has your back with their 10,000 model scenarios. Stay the course.
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Re: anyone see light at the end of the tunnel

Post by panhead »

JoeRetire wrote: Sun May 08, 2022 4:36 pm
Silk McCue wrote: Sun May 08, 2022 3:34 pm Your history of posts here reflects repeated market timing. At some point you need to establish and stick with a plan you can live with, and then live with it.
Or not.

While it might be advisable, nobody needs to stick with a plan. Many don't.
There is a lot of dogma here about "stay the course" and I think it is essentially good advice because making extreme changes during times of volatility and stress usually leads to bad decisions. This is why we create an IPS, so we can understand our strategy during rough water.

That being said, learning from the current environment and making changes around the edges can be a good idea (assuming ones original plan is reasonable to begin with).

What has become apparent to me during this volatility is that it can be a good idea to have a shorter term duration fixed income allocation piece in your fixed income. If your bond funds are 5-6 year duration, some meaningful amount of cash and 1-4 year duration instruments might make sense. Maybe 1 year of expenses (essential or total, up to you) for each "rung" on that ladder. This could be done at your brokerage with money market funds, brokered CDs, shorter term funds, individual tips, etc, or with I bonds (difficult with purchase limits), CD ladders, or whatever you find comfortable to work with.

This is especially relevant if you are spending out of your portfolio. No epiphany, just what people here have been saying forever, which is to match duration with your spending needs.
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Re: anyone see light at the end of the tunnel

Post by heyyou »

"It will fluctuate" was the answer given a hundred years ago, when a similar question about prospective action/market direction was asked.

Now, I'm doing nothing since that is my level of knowledge about what might occur next. We are having some type of correction from the previous status, very likely not "the end of the world." My expectation is that I will muddle through with some level of portfolio losses, typical of the long term history of investing in the stock and bond markets.

It is comforting to have a withdrawal plan that adjusts my withdrawals to each recent annual portfolio value, because those spending adjustments do boost my portfolio longevity. My action is to continuously live with the expectation of adequate but imprecise annual retirement income. My RMD spending method uses my rising, age-based RMD % on each recent annual, entire portfolio value, plus spending dividends and interest.
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Re: anyone see light at the end of the tunnel

Post by AerialWombat »

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Last edited by AerialWombat on Mon May 23, 2022 2:39 am, edited 1 time in total.
This post is a work of fiction. Any similarity to real financial advice is purely coincidental.
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Re: anyone see light at the end of the tunnel

Post by mikejuss »

There are an astonishing number of market timers on this board. It really is confusing. I don't get why every gyration in the market is an occasion for either glee or gloom.
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burritoLover
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Re: anyone see light at the end of the tunnel

Post by burritoLover »

mikejuss wrote: Wed May 18, 2022 8:40 am There are an astonishing number of market timers on this board. It really is confusing. I don't get why every gyration in the market is an occasion for either glee or gloom.
Agree - it is incredible that despite all the evidence against market timing, a number of people here think they are improving the performance of their portfolio by making changes in response to market conditions when the opposite is the case in the vast majority of cases.
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Re: anyone see light at the end of the tunnel

Post by KlangFool »

burritoLover wrote: Wed May 18, 2022 10:07 am
mikejuss wrote: Wed May 18, 2022 8:40 am There are an astonishing number of market timers on this board. It really is confusing. I don't get why every gyration in the market is an occasion for either glee or gloom.
Agree - it is incredible that despite all the evidence against market timing, a number of people here think they are improving the performance of their portfolio by making changes in response to market conditions when the opposite is the case in the vast majority of cases.
burritoLover,

A) How dare you telling folks that they are not smarter than average folks?

B) And, they cannot manage their stock and bond, "market time" to beat the average return?

I know that I am not smart enough. But, many others do not accept that.

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