A time to EVALUATE your jitters
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Re: A time to EVALUATE your jitters
"I think it would be wrong to expect markets to fall, given that FED will not tolerate a crash, they will do everything in their power to prevent a crash and keep this bubble going.
I watched this interview by Ray Dalio and it makes a lot of sense.
https://www.youtube.com/watch?v=7WxfQ2zKXeA
You will need to start with what is money and what is a store of value. The FED has not even started using most of its tools. Capital markets are very very important for the US and if markets start falling, FED will start buying equities. There are no limits to what they can do, so it makes sense to be on their side rather than against them."
I'm not so optimistic about their ability to prevent the inevitable. Every since the tail end of the Bush administration, the Fed has embraced bailouts, Quantitative Easing, keeping rates low and buying back bonds/securities to keep the economy moving along. If Biden had not continued stimulus initiatives in 2021 (unemployment benefits, mortgage/rent forgiveness and handing out more "free" money, etc.), we may have been able to move back closer to normal. Instead, I think continuing down the same path and doubling down with trillions of new spending bills will be a case of too much help and definitely way too much spending. Covid's impact to international shipping/supply will continue its impact and the US can't control the world. Inflation will be the likely straw that will break the camel's back. I believe that we would have been better off falling on our face in 2008/2009 and going through the normal crash and recovery process. It would have been painful but, I think we would have been better prepared for the 2020 Covid crisis. We still would have needed to do some crisis management, but we may have been working with a stronger economic foundation.
It has been a wild ride and I have certainly made a lot of money over this crazy long bull run. As I stated earlier, I plan to stay the course, because I honestly don't see any better alternative. Being debt free, possessing adequate cash reserves and having low cost of living will hopefully help us ride out what comes ahead.
P.S. Please don't take my comments as an invitation to start a Dem's vs. Republicans ........I don't want this thread to go political. As far as I'm concerned, both have contributed to where we are now (good and bad).
I watched this interview by Ray Dalio and it makes a lot of sense.
https://www.youtube.com/watch?v=7WxfQ2zKXeA
You will need to start with what is money and what is a store of value. The FED has not even started using most of its tools. Capital markets are very very important for the US and if markets start falling, FED will start buying equities. There are no limits to what they can do, so it makes sense to be on their side rather than against them."
I'm not so optimistic about their ability to prevent the inevitable. Every since the tail end of the Bush administration, the Fed has embraced bailouts, Quantitative Easing, keeping rates low and buying back bonds/securities to keep the economy moving along. If Biden had not continued stimulus initiatives in 2021 (unemployment benefits, mortgage/rent forgiveness and handing out more "free" money, etc.), we may have been able to move back closer to normal. Instead, I think continuing down the same path and doubling down with trillions of new spending bills will be a case of too much help and definitely way too much spending. Covid's impact to international shipping/supply will continue its impact and the US can't control the world. Inflation will be the likely straw that will break the camel's back. I believe that we would have been better off falling on our face in 2008/2009 and going through the normal crash and recovery process. It would have been painful but, I think we would have been better prepared for the 2020 Covid crisis. We still would have needed to do some crisis management, but we may have been working with a stronger economic foundation.
It has been a wild ride and I have certainly made a lot of money over this crazy long bull run. As I stated earlier, I plan to stay the course, because I honestly don't see any better alternative. Being debt free, possessing adequate cash reserves and having low cost of living will hopefully help us ride out what comes ahead.
P.S. Please don't take my comments as an invitation to start a Dem's vs. Republicans ........I don't want this thread to go political. As far as I'm concerned, both have contributed to where we are now (good and bad).
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Re: A time to EVALUATE your jitters
This is EXACTLY what I needed this morning.. thank you for thisnisiprius wrote: ↑Sun Aug 07, 2011 7:00 am I want to say this carefully. This is not an optimistic "stay the course" post and it's not a pessimistic "OMG do something" post. It's directed at people who are feeling very uncomfortable. I want to point out some things to think about, things that are hopefully truisms that everyone can see are correct once they're pointed out.
Your investment plan needs to be in tune with your own personal willingness to take financial risk. Your tolerance for financial risk is what it is. Only you know what it is. Nobody else can tell you what it should be. Different people are really and truly different. And your tolerance for financial risk is not necessarily the same as your tolerance for other kinds of risk.
You may not know what stock market risk is really like, and you may not know what your own risk tolerance really is. This is, if nothing else, a good opportunity to assess both.
What we have today is about a 10-15% decline in the S&P over the last month or so, coupled with a feeling of seismic shifts in the financial world. A sense that the earth is moving under our feet. A sense that events are happening that are going to make it into the history books. The general mood is summarized in this headline:
El-Erian: downgrade heralds new era
Heralds new era! Strong stuff. Let's not argue about whether it's true or not, let's agree that it feels that way right now. Like there's been a turning point, a division between an old era and a new era, and therefore past history is no longer a guide to the future.
And here's my point: it always feels that way. That's always what a big downturn feels like. It's not a number, 10% or 15%. It's a sense that there's been a break, the ground has shifted, the rules have changed.
We love drama and after the fact the reality often turns out to be boring. Imagine thinking that, see, it wasn't so bad! But that's later. And sometimes it is a turning point and sometimes it is that bad.
When you're deciding what your risk tolerance is, it's not a tolerance for the number 10 or the number 15 or the number 25. It's not a tolerance for an "A" turning into a "+". It's a tolerance for accepting genuinely-scary, nothing-like-this-has-ever-happened-before, heralds-a-new-era news events.
Now, the next set of truisms. Nobody knows what's going to happen. No, really. I don't care what the best experts are saying or what the futures do or what happens tonight in Asia. On Monday, stocks might shoot right back up. Or they might plunge some more. Or they might diddle around for weeks leaving us all on tenterhooks and then plunge some more, Or not.
We see this:
Well, we really don't know what will happen. It might be almost nothing... it might be like the start of this period in 1998 and it could bounce back in a few months.
It might be the start of another 50% plunge like 2008-2009. Awful, but over in a couple of years.
It might be like the start of this period in 1937 when stocks plunged about 50% as in 2008-9, but didn't come back for about a decade. (I'm using a long-lived stock market mutual fund as a proxy for "the market," but it's close enough).
It might be like Japan in 1990, down for two decades and still down.
But not to overweight the pessimism, let me add one more chart. Where's last week's plunge? When I expand the scale, it's actually there. The data being plotted includes it. But apparently it's so tiny it just gets rounded off or vanishes at screen pixel resolution!
The point is, the last few weeks were a time when some risk showed up, and your job is to process it. The temptation is to deal with the discomfort by choosing a prediction. Don't. Your job is to confront the reality of that uncertainty, that you do not know what will happen, and can only make the roughest guesses as to the likelihood of all these scenarios.
Hopefully, you can say "well, yeah, I knew all that. I'd much rather see the market go up and I feel anxious, but I'm able to stay the course."
Unfortunately, if you look at all this and conclude that your exposure to the stock market is higher than your risk tolerance, there aren't any good options. It is absolutely a personal decision. The only sure way to reduce stock market risk substantially is to cut back on your stock allocation. Diversification, fiddling around with different flavors of stock, it's all bandaids. When stocks plunge, they plunge. So the S&P drops 50% and your portfolio drops 46%, big deal.
And when the stock market is falling, you can't cut back on your stock market risk without locking in a loss. It's a tough one and a personal decision. You absolutely have to measure one against the other. It's crazy to even suggest a course of action to anyone else and I'm not going to try.
What I'm saying is that this is a good time for evaluation. The risk is here. Don't exaggerate it--we all love drama, but reality is usually more boring than we expect. Don't brush it aside, look it in the eye as carefully as you can. And then look at how you really feel about it--not how you'd like to feel or how you think you're supposed to feel.
And one final thought. If we're lucky, and the stock market comes back at least part way and seems to stabilize for a while... or if it comes roaring back and soars (yes, that' could happen, too)... don't forget how you feel right now. If you feel that you are close to the edge of your risk tolerance right now, then you have too much in stocks. If you manage to tough it out and we get a calm spell, don't forget how you feel now and at least consider making an adjustment then.
Re: A time to EVALUATE your jitters
There's really not much risk to the market. The fed put is very much still alive.
Re: A time to EVALUATE your jitters
At some point the fed withdraws their support and raises interest rates. That will be the reason for some (not me) to sell.
"I started with nothing and I still have most of it left."
Re: A time to EVALUATE your jitters
But they've been saying that for over ten years. It's not going to happen. The pandemic gave them the justification to go boldly where no man has going before. What I mean by that is all the special programs that were enacted, including purchasing JNK, who would have thunk.
The ZIRP and fed purchases are strongly intertwined into the economy now. They tried to let up several years ago, but had no success. Normalized rates are a thing of the past.
Imo, they're next venue of ammunition is direct deposits into personal bank accounts...think Treasury deposits on steroids to fight downturns.
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Re: A time to EVALUATE your jitters
I’m evaluating, I’m evaluating...
I’m just going to use this period to hone my *nerves of steel* that I developed in March 2020. I haven’t shifted from my 10 percent into my new 25 percent equity allocation yet (still deciding how to do that since I want to be gradual), so the training wheels are on. We’ll see what happens to my bonds. Fingers crossed! Good luck out there everyone!
I’m just going to use this period to hone my *nerves of steel* that I developed in March 2020. I haven’t shifted from my 10 percent into my new 25 percent equity allocation yet (still deciding how to do that since I want to be gradual), so the training wheels are on. We’ll see what happens to my bonds. Fingers crossed! Good luck out there everyone!
Re: A time to EVALUATE your jitters
Having lived through several decades of stock market crashes, I don't get too concern with them. Each time, the portfolio recovers with time. I ran closed to 100% stock for a long time. When you are first starting out and the portfolio is small, I look at every big dip as an opportunity to buy low via the 401K or IRA. For a tiny portfolio, every contribution makes a huge impact. I ran like 100% stock for quite a long time.
As I get older though, my portfolio has reach a size where my contribution no longer make a big impact. I have adjust my portfolio to factor in the possibility that I won't be able to recovery quickly enough for retirement. I have since shifted my portfolio to currently around 25-30% bond, I plan to settle on a 60/40 by retirement.
My fear is always long term, I worry not about stock market dips but that the long term fundamental is changed. Let's say my home country USA becomes stagnate and end up like Japan where a buy and hold portfolio won't work out too well (at least if in domestic stocks).
As I get older though, my portfolio has reach a size where my contribution no longer make a big impact. I have adjust my portfolio to factor in the possibility that I won't be able to recovery quickly enough for retirement. I have since shifted my portfolio to currently around 25-30% bond, I plan to settle on a 60/40 by retirement.
My fear is always long term, I worry not about stock market dips but that the long term fundamental is changed. Let's say my home country USA becomes stagnate and end up like Japan where a buy and hold portfolio won't work out too well (at least if in domestic stocks).
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Re: A time to EVALUATE your jitters
Well said and my opinion on your last paragraph is that it is indeed the greatest risk--but it's also the one most difficult to plan for. As such, I don't lose much sleep over it. I'm youngish (I like to believe) and still damn near 100% stocks.gavinsiu wrote: ↑Sat Nov 20, 2021 11:28 am Having lived through several decades of stock market crashes, I don't get too concern with them. Each time, the portfolio recovers with time. I ran closed to 100% stock for a long time. When you are first starting out and the portfolio is small, I look at every big dip as an opportunity to buy low via the 401K or IRA. For a tiny portfolio, every contribution makes a huge impact. I ran like 100% stock for quite a long time.
As I get older though, my portfolio has reach a size where my contribution no longer make a big impact. I have adjust my portfolio to factor in the possibility that I won't be able to recovery quickly enough for retirement. I have since shifted my portfolio to currently around 25-30% bond, I plan to settle on a 60/40 by retirement.
My fear is always long term, I worry not about stock market dips but that the long term fundamental is changed. Let's say my home country USA becomes stagnate and end up like Japan where a buy and hold portfolio won't work out too well (at least if in domestic stocks).
Friday closed out the worst day of the year. I'm surprised nobody has been bumping this thread since! I have lost no sleep over this 900+ point dump, and am worried about omicron from a broad perspective, but not from a financial one; I will of course be doing absolutely nothing in my portfolio in an attempt to outperform the market.
Username is not serious :)
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Re: A time to EVALUATE your jitters
I agree with you partly about doing nothing. I will certainly not be dumping my equities in an attempt to be defensive. I will now look for an opportunity to use part of my cash reserves to buy additional equities. I have not decided whether I will go all in at once or invest over the next 4 weeks.
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Re: A time to EVALUATE your jitters
My greatest fear has always been a prolonged bear market as I enter retirement. In that event I would likely have to defer retirement for a number of years or work part time. I hate the idea of exhausting my capital early in retirement.gavinsiu wrote: ↑Sat Nov 20, 2021 11:28 am Having lived through several decades of stock market crashes, I don't get too concern with them. Each time, the portfolio recovers with time. I ran closed to 100% stock for a long time. When you are first starting out and the portfolio is small, I look at every big dip as an opportunity to buy low via the 401K or IRA. For a tiny portfolio, every contribution makes a huge impact. I ran like 100% stock for quite a long time.
As I get older though, my portfolio has reach a size where my contribution no longer make a big impact. I have adjust my portfolio to factor in the possibility that I won't be able to recovery quickly enough for retirement. I have since shifted my portfolio to currently around 25-30% bond, I plan to settle on a 60/40 by retirement.
My fear is always long term, I worry not about stock market dips but that the long term fundamental is changed. Let's say my home country USA becomes stagnate and end up like Japan where a buy and hold portfolio won't work out too well (at least if in domestic stocks).
Re: A time to EVALUATE your jitters
I’ll stay the course. But deep in the back of my head, my “jitter” is that the last 40 years has been a printed and borrowed bubble that will someday quickly revert and won’t recover during my remaining lifetime (I’m approaching 62). How have other economies resolved years of borrowing and currency printing?Collectingnuts wrote: ↑Tue Nov 30, 2021 8:12 pm I agree with you partly about doing nothing. I will certainly not be dumping my equities in an attempt to be defensive. I will now look for an opportunity to use part of my cash reserves to buy additional equities. I have not decided whether I will go all in at once or invest over the next 4 weeks.
- peskypesky
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Re: A time to EVALUATE your jitters
We have been warned about this for MANY years. Here's a slew of articles on the topic:Leesbro63 wrote: ↑Wed Dec 01, 2021 11:31 amI’ll stay the course. But deep in the back of my head, my “jitter” is that the last 40 years has been a printed and borrowed bubble that will someday quickly revert and won’t recover during my remaining lifetime (I’m approaching 62). How have other economies resolved years of borrowing and currency printing?Collectingnuts wrote: ↑Tue Nov 30, 2021 8:12 pm I agree with you partly about doing nothing. I will certainly not be dumping my equities in an attempt to be defensive. I will now look for an opportunity to use part of my cash reserves to buy additional equities. I have not decided whether I will go all in at once or invest over the next 4 weeks.
https://munknee.com/what-will-happen-if ... le-bursts/
Re: A time to EVALUATE your jitters
I dunno. I've learned to tune out the hysterical opinions like that. And yet I guess it could happen. Have there been other examples where big debt did not end like that?peskypesky wrote: ↑Fri Dec 03, 2021 8:05 amWe have been warned about this for MANY years. Here's a slew of articles on the topic:Leesbro63 wrote: ↑Wed Dec 01, 2021 11:31 amI’ll stay the course. But deep in the back of my head, my “jitter” is that the last 40 years has been a printed and borrowed bubble that will someday quickly revert and won’t recover during my remaining lifetime (I’m approaching 62). How have other economies resolved years of borrowing and currency printing?Collectingnuts wrote: ↑Tue Nov 30, 2021 8:12 pm I agree with you partly about doing nothing. I will certainly not be dumping my equities in an attempt to be defensive. I will now look for an opportunity to use part of my cash reserves to buy additional equities. I have not decided whether I will go all in at once or invest over the next 4 weeks.
https://munknee.com/what-will-happen-if ... le-bursts/
- peskypesky
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Re: A time to EVALUATE your jitters
You think all 29 articles were hysterical? Ok then.Leesbro63 wrote: ↑Fri Dec 03, 2021 9:39 amI dunno. I've learned to tune out the hysterical opinions like that. And yet I guess it could happen. Have there been other examples where big debt did not end like that?peskypesky wrote: ↑Fri Dec 03, 2021 8:05 amWe have been warned about this for MANY years. Here's a slew of articles on the topic:Leesbro63 wrote: ↑Wed Dec 01, 2021 11:31 amI’ll stay the course. But deep in the back of my head, my “jitter” is that the last 40 years has been a printed and borrowed bubble that will someday quickly revert and won’t recover during my remaining lifetime (I’m approaching 62). How have other economies resolved years of borrowing and currency printing?Collectingnuts wrote: ↑Tue Nov 30, 2021 8:12 pm I agree with you partly about doing nothing. I will certainly not be dumping my equities in an attempt to be defensive. I will now look for an opportunity to use part of my cash reserves to buy additional equities. I have not decided whether I will go all in at once or invest over the next 4 weeks.
https://munknee.com/what-will-happen-if ... le-bursts/
Re: A time to EVALUATE your jitters
So what's your plan, then?peskypesky wrote: ↑Fri Dec 03, 2021 2:59 pmYou think all 29 articles were hysterical? Ok then.Leesbro63 wrote: ↑Fri Dec 03, 2021 9:39 amI dunno. I've learned to tune out the hysterical opinions like that. And yet I guess it could happen. Have there been other examples where big debt did not end like that?peskypesky wrote: ↑Fri Dec 03, 2021 8:05 amWe have been warned about this for MANY years. Here's a slew of articles on the topic:Leesbro63 wrote: ↑Wed Dec 01, 2021 11:31 amI’ll stay the course. But deep in the back of my head, my “jitter” is that the last 40 years has been a printed and borrowed bubble that will someday quickly revert and won’t recover during my remaining lifetime (I’m approaching 62). How have other economies resolved years of borrowing and currency printing?Collectingnuts wrote: ↑Tue Nov 30, 2021 8:12 pm I agree with you partly about doing nothing. I will certainly not be dumping my equities in an attempt to be defensive. I will now look for an opportunity to use part of my cash reserves to buy additional equities. I have not decided whether I will go all in at once or invest over the next 4 weeks.
https://munknee.com/what-will-happen-if ... le-bursts/
"The day you die is just like any other, only shorter." |
― Samuel Beckett
- peskypesky
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Re: A time to EVALUATE your jitters
Not sure. The system is so [expletive removed by admin LadyGeek] right now that it's difficult to figure out a strategy. Stocks way overvalued and very possibly due for a major crash. Bond yields far below the rate of inflation. Cash not an attractive option with high inflation. Even real estate could very well be a bubble.
It seems there is no place to run.
I'm thinking of maybe buying a lot of gold as a hedge against economic collapse.
Last edited by peskypesky on Fri Dec 03, 2021 4:04 pm, edited 2 times in total.
Re: A time to EVALUATE your jitters
Keep looking. I use the local high school track, sometimes the neighborhood park (trails are well maintained).peskypesky wrote: ↑Fri Dec 03, 2021 3:59 pmNot sure. The system is so [expletive removed by admin LadyGeek] right now that it's difficult to figure out a strategy. Stocks way overvalued and very possibly due for a major crash. Bond yields far below the rate of inflation. Cash not an attractive option with high inflation. Even real estate could very well be a bubble.
It seems there is no place to run.
"The day you die is just like any other, only shorter." |
― Samuel Beckett
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Re: A time to EVALUATE your jitters
you may be living at the high school track if the system collapses.Godot wrote: ↑Fri Dec 03, 2021 4:03 pmKeep looking. I use the local high school track, sometimes the neighborhood park (trails are well maintained).peskypesky wrote: ↑Fri Dec 03, 2021 3:59 pmNot sure. The system is so [expletive removed by admin LadyGeek] right now that it's difficult to figure out a strategy. Stocks way overvalued and very possibly due for a major crash. Bond yields far below the rate of inflation. Cash not an attractive option with high inflation. Even real estate could very well be a bubble.
It seems there is no place to run.
Re: A time to EVALUATE your jitters
peskypesky wrote: ↑Fri Dec 03, 2021 4:04 pmyou may be living at the high school track if the system collapses.Godot wrote: ↑Fri Dec 03, 2021 4:03 pmKeep looking. I use the local high school track, sometimes the neighborhood park (trails are well maintained).peskypesky wrote: ↑Fri Dec 03, 2021 3:59 pmNot sure. The system is so [expletive removed by admin LadyGeek] right now that it's difficult to figure out a strategy. Stocks way overvalued and very possibly due for a major crash. Bond yields far below the rate of inflation. Cash not an attractive option with high inflation. Even real estate could very well be a bubble.
It seems there is no place to run.
It's really quite interesting to skim through this decade old thread and see that throughout, people were concerned about gloom and doom if not outright panic being sold in the media. You might be even be tempted to think that fear makes money for media selling it.
The negativity dance has been going on much longer than a decade of course, but the media now has much better tools now to tune the message to get us really worked up.
Re: A time to EVALUATE your jitters
And yet the debt-to-GDP ratio kept climbing while interest rates kept falling. At some point, when all that debt requires higher interest payments...Exchme wrote: ↑Fri Dec 03, 2021 9:51 pmpeskypesky wrote: ↑Fri Dec 03, 2021 4:04 pmyou may be living at the high school track if the system collapses.Godot wrote: ↑Fri Dec 03, 2021 4:03 pmKeep looking. I use the local high school track, sometimes the neighborhood park (trails are well maintained).peskypesky wrote: ↑Fri Dec 03, 2021 3:59 pmNot sure. The system is so [expletive removed by admin LadyGeek] right now that it's difficult to figure out a strategy. Stocks way overvalued and very possibly due for a major crash. Bond yields far below the rate of inflation. Cash not an attractive option with high inflation. Even real estate could very well be a bubble.
It seems there is no place to run.
It's really quite interesting to skim through this decade old thread and see that throughout, people were concerned about gloom and doom if not outright panic being sold in the media. You might be even be tempted to think that fear makes money for media selling it.
The negativity dance has been going on much longer than a decade of course, but the media now has much better tools now to tune the message to get us really worked up.
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Re: A time to EVALUATE your jitters
Stocks are very possibly due for a major crash. Not one person here will disagree (I'm guessing). They're always due for a major crash. For the last century or two. And they always do crash. And they always come back up to new highs.peskypesky wrote: ↑Fri Dec 03, 2021 3:59 pmNot sure. The system is so [expletive removed by admin LadyGeek] right now that it's difficult to figure out a strategy. Stocks way overvalued and very possibly due for a major crash. Bond yields far below the rate of inflation. Cash not an attractive option with high inflation. Even real estate could very well be a bubble.
It seems there is no place to run.
I'm thinking of maybe buying a lot of gold as a hedge against economic collapse.
It's not difficult to figure out a strategy, though: keep investing. Make sure you don't have so many that if the stock market drops 50% in a week your world doesn't come crashing down because of it...and if it would, decrease your allocation.
There's no shortage of doom to read about and some of it is right but you'd have no real way right now to figure out which is right, keeping in mind that throughout history almost all of it is wrong. I do in fact believe a head in the sand approach has a lot of merit. Plug your nose and keep on buying. Also always ignore people who do not have a significantly better-than-average predictive history (and heck maybe even ignore those who do).
Username is not serious :)
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Re: A time to EVALUATE your jitters
Apparently that's never going to happen.Leesbro63 wrote: ↑Sat Dec 04, 2021 11:35 amAnd yet the debt-to-GDP ratio kept climbing while interest rates kept falling. At some point, when all that debt requires higher interest payments...Exchme wrote: ↑Fri Dec 03, 2021 9:51 pmpeskypesky wrote: ↑Fri Dec 03, 2021 4:04 pmyou may be living at the high school track if the system collapses.Godot wrote: ↑Fri Dec 03, 2021 4:03 pmKeep looking. I use the local high school track, sometimes the neighborhood park (trails are well maintained).peskypesky wrote: ↑Fri Dec 03, 2021 3:59 pm
Not sure. The system is so [expletive removed by admin LadyGeek] right now that it's difficult to figure out a strategy. Stocks way overvalued and very possibly due for a major crash. Bond yields far below the rate of inflation. Cash not an attractive option with high inflation. Even real estate could very well be a bubble.
It seems there is no place to run.
It's really quite interesting to skim through this decade old thread and see that throughout, people were concerned about gloom and doom if not outright panic being sold in the media. You might be even be tempted to think that fear makes money for media selling it.
The negativity dance has been going on much longer than a decade of course, but the media now has much better tools now to tune the message to get us really worked up.
Re: A time to EVALUATE your jitters
I think that's the basis for modern monetary theory. Though I assume the jury is still out on its validity.
- peskypesky
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Re: A time to EVALUATE your jitters
It definitely is the basis for modern monetary theory. I find it hard to believe it will be proven true...that the can can be kicked down the road forever...jarjarM wrote: ↑Tue Dec 07, 2021 12:57 amI think that's the basis for modern monetary theory. Though I assume the jury is still out on its validity.
Seems like magical thinking to me, but maybe my gut instincts (and math) are wrong.
Re: A time to EVALUATE your jitters
My strategy has always been hold and shift allocation as I age. I now actually hold bonds. The idea is that as i get hold, the bond portion will increase to reduce my risk. When there is a bear market, I should be less exposed.
However, no portfolio is bear proof. If I hit a bear market when I retire, I could opt to continue working or live more frugally for a few years until my portfolio recovers. By then, the house should be paid off and the kids have become adults. My expenses should be lower.
My current concern is less about saving and investing, which is automatic but more about maintaining my skills to be employable for the time before retirement.
However, no portfolio is bear proof. If I hit a bear market when I retire, I could opt to continue working or live more frugally for a few years until my portfolio recovers. By then, the house should be paid off and the kids have become adults. My expenses should be lower.
My current concern is less about saving and investing, which is automatic but more about maintaining my skills to be employable for the time before retirement.
Re: A time to EVALUATE your jitters
The OP is a great one to keep as a sticky.
Turned 50 last year. A little late to adjust my AA around the birthday, but did so this past Dec during my annual rebalance. Crazy how out of whack eq-fixed became.
That reminds me ... I still have 6 figures sitting in $. May get around to putting it back to "at risk" later this week or next. No biggie.
Going to the gym, gotta stay healthy my peeps.
to a good year!
Turned 50 last year. A little late to adjust my AA around the birthday, but did so this past Dec during my annual rebalance. Crazy how out of whack eq-fixed became.
That reminds me ... I still have 6 figures sitting in $. May get around to putting it back to "at risk" later this week or next. No biggie.
Going to the gym, gotta stay healthy my peeps.
to a good year!
Re: A time to EVALUATE your jitters
I semi retired at age 51 and fully retired at age 65 with the first covid lockdowns. My retirement and SS are sufficient for all my modest expenses so I can draw from my even more modest portfolio as desired or I can keep adding to it which I am doing at present.
For jitters I think St. Jacks work on regression to the mean for mutual funds can be applied to the stock market as a whole. So if the last two or three years 20+% growth regresses to the historic 9.5% we could be in for a very sharp correction or a couple of years essentially flat.
But if that happens the underlying stock value and investment returns will be there and you will be able to buy shares at bargain prices compared to any you have bought recently. So I think a regression is likely but I don't plan on selling anything trying to avoid it.
On the other hand as a person in the withdrawal stage of life I see nothing wrong with taking my balance each month and dividing by 120 and taking that amount for current expenses. Like the frog jumping half the distance to the finish line with each jump I will never get to zero and if I have picked good funds and or stocks the balance may grow, increasing the result of dividing by 120. I look at the 1/120th being akin to what a money manager would skim off me in fees and hidden costs.
For jitters I think St. Jacks work on regression to the mean for mutual funds can be applied to the stock market as a whole. So if the last two or three years 20+% growth regresses to the historic 9.5% we could be in for a very sharp correction or a couple of years essentially flat.
But if that happens the underlying stock value and investment returns will be there and you will be able to buy shares at bargain prices compared to any you have bought recently. So I think a regression is likely but I don't plan on selling anything trying to avoid it.
On the other hand as a person in the withdrawal stage of life I see nothing wrong with taking my balance each month and dividing by 120 and taking that amount for current expenses. Like the frog jumping half the distance to the finish line with each jump I will never get to zero and if I have picked good funds and or stocks the balance may grow, increasing the result of dividing by 120. I look at the 1/120th being akin to what a money manager would skim off me in fees and hidden costs.
Re: A time to EVALUATE your jitters
An important distinction is that between volatility and risk. The former is to be expected in the market and varies but causes much more concern during periods of higher volatility that ultimately turns out to be "noise." Risk is more personally related to the individual circumstances. What is volatility for some may be risk for others. For example, a volatile market leading to what is a temporary downturn for a given year is more significant to new and recent retirees than to someone with a long investment horizon who may actually welcome downturns as buying opportunities. The interaction among factors of market analysis, individual circumstances and behavioral psychology as it relates to individual perceptions is important to integrate. As a retiree, this concept has become more important during preservation and contemplated disbursal as we age.
Tim
Tim
Re: A time to EVALUATE your jitters
I quite agree and would add that the risks are mostly in the tendency of an investor to panic and sell near the bottom of a downturn and hence lock in their losses and then wait too long before buying back in and missing out on the recovery. You can't do anything about or predict the volatility but if you apply a little courage and calm you can wait out the dips but that is much harder then it sounds on a keyboard.Nowizard wrote: ↑Fri Jan 07, 2022 10:53 am An important distinction is that between volatility and risk. The former is to be expected in the market and varies but causes much more concern during periods of higher volatility that ultimately turns out to be "noise." Risk is more personally related to the individual circumstances. What is volatility for some may be risk for others. For example, a volatile market leading to what is a temporary downturn for a given year is more significant to new and recent retirees than to someone with a long investment horizon who may actually welcome downturns as buying opportunities. The interaction among factors of market analysis, individual circumstances and behavioral psychology as it relates to individual perceptions is important to integrate. As a retiree, this concept has become more important during preservation and contemplated disbursal as we age.
Tim
Re: A time to EVALUATE your jitters
I am sorry to report that over this last month I have exceeded the market indexes. They are down and I am down more by a factor of 2X. My index funds are of course tracking the market but my taxable account looks as sad as a puppy sitting in a puddle of pee.
Oh well, I will just have to consider this as a "Buying opportunity". I do find it hard to get enthusiastic about that, human nature being what it is, and my being a complete human.
Anybody else got the jitters?
Oh well, I will just have to consider this as a "Buying opportunity". I do find it hard to get enthusiastic about that, human nature being what it is, and my being a complete human.
Anybody else got the jitters?
- AerialWombat
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Re: A time to EVALUATE your jitters
deleted
Last edited by AerialWombat on Fri Feb 04, 2022 1:06 pm, edited 1 time in total.
This post is a work of fiction. Any similarity to real financial advice is purely coincidental.
- AnnetteLouisan
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Re: A time to EVALUATE your jitters
Another 30/70 -er! Amigo!AerialWombat wrote: ↑Wed Jan 19, 2022 8:07 pm If this thread is popping up, I have to assume the market is down? I don’t actually know, because I don’t pay attention.
With my 30/70 AA, I don’t have to pay attention. At 70/30, in contrast, I’d have to pay attention, and I’d be freaking out at every minute daily drop in the S&P500.
A proper AA for you should resolve all jitters.
Re: A time to EVALUATE your jitters
The SP 500 has dropped to the level it was back in late November 2021. An SP 500 index fund is down less than 5% so far this year, and that's after a huge increase last year. So this is hardly a big drop.vtsnowdin wrote: ↑Wed Jan 19, 2022 8:01 pm I am sorry to report that over this last month I have exceeded the market indexes. They are down and I am down more by a factor of 2X. My index funds are of course tracking the market but my taxable account looks as sad as a puppy sitting in a puddle of pee.
Oh well, I will just have to consider this as a "Buying opportunity". I do find it hard to get enthusiastic about that, human nature being what it is, and my being a complete human.
Anybody else got the jitters?
If this market movement is making you jittery, consider adjusting your asset allocation to reduce risk for the long term. I don't know what's in your taxable account, but consider index funds for future investments there as well. It may also be helpful to take a break from watching the market.
best wishes,
cj
Re: A time to EVALUATE your jitters
I'm only playing with my beer money here so no need to have any jitters.AerialWombat wrote: ↑Wed Jan 19, 2022 8:07 pm If this thread is popping up, I have to assume the market is down? I don’t actually know, because I don’t pay attention.
With my 30/70 AA, I don’t have to pay attention. At 70/30, in contrast, I’d have to pay attention, and I’d be freaking out at every minute daily drop in the S&P500.
A proper AA for you should resolve all jitters.
Just commenting on the current trend.
Re: A time to EVALUATE your jitters
I dont agree with this. Asset allocation should be based on our needs and based on the size of our corpus. Inflation is the bigger risk, so just because you are risk averse if you put everything into bonds, you will lose out to inflation.AerialWombat wrote: ↑Wed Jan 19, 2022 8:07 pm If this thread is popping up, I have to assume the market is down? I don’t actually know, because I don’t pay attention.
With my 30/70 AA, I don’t have to pay attention. At 70/30, in contrast, I’d have to pay attention, and I’d be freaking out at every minute daily drop in the S&P500.
A proper AA for you should resolve all jitters.
To solve the jitters, it is all about education and learning history of markets and not making any stupid moves. As long as you are doing the tried and tested formula backtested with years of data, you should not have jitters with an aggressive asset allocation. If you still have jitters, then you must not watch your portfolio or just give it to some expert to manage.
Re: A time to EVALUATE your jitters
Agreed. The comments from those of us who are not concerned reflect our own perceptions and circumstances, not those of others universally. There are those who have reasons to be concerned, and those who do not. Evaluation is always appropriate during both up and down markets.
Tim
Tim
Re: A time to EVALUATE your jitters
Yup. This and the position of the “Freefall” and “Soaring” threads pretty much can tell me, in summary, what’s happening on any given day.AerialWombat wrote: ↑Wed Jan 19, 2022 8:07 pm If this thread is popping up, I have to assume the market is down
Re: A time to EVALUATE your jitters
Ayup down 500 points in the frist hour.Leesbro63 wrote: ↑Sun Jan 23, 2022 9:42 amYup. This and the position of the “Freefall” and “Soaring” threads pretty much can tell me, in summary, what’s happening on any given day.AerialWombat wrote: ↑Wed Jan 19, 2022 8:07 pm If this thread is popping up, I have to assume the market is down
Re: A time to EVALUATE your jitters
Please stay on-topic. Comments related to the stock market can be posted in:
- U.S. stocks continue to soar!
- U.S. stocks in free fall
- U.S. stocks continue to soar!
- U.S. stocks in free fall
Re: A time to EVALUATE your jitters
My feelings - if your fixed contains multiple years of living expenses then the AA % doesn't really matter - I have argued this with multiple financial advisors over the years - so your fixed % could be 90% or it could be 10% as long as you have 5 to 7 years expenses liquid in fixed. (my 35% fixed has about 10 years living expenses so i dont sweat runs like this- i will use it as a roth conversion and other buying opportunites)revhappy wrote: ↑Sun Jan 23, 2022 6:18 amI dont agree with this. Asset allocation should be based on our needs and based on the size of our corpus. Inflation is the bigger risk, so just because you are risk averse if you put everything into bonds, you will lose out to inflation.AerialWombat wrote: ↑Wed Jan 19, 2022 8:07 pm If this thread is popping up, I have to assume the market is down? I don’t actually know, because I don’t pay attention.
With my 30/70 AA, I don’t have to pay attention. At 70/30, in contrast, I’d have to pay attention, and I’d be freaking out at every minute daily drop in the S&P500.
A proper AA for you should resolve all jitters.
To solve the jitters, it is all about education and learning history of markets and not making any stupid moves. As long as you are doing the tried and tested formula backtested with years of data, you should not have jitters with an aggressive asset allocation. If you still have jitters, then you must not watch your portfolio or just give it to some expert to manage.
Re: A time to EVALUATE your jitters
I wonder why 5,7 or even 10 years is "enough" fixed "years spending in reserve". What if it's 1929? 1966? Japan 1990?john0608 wrote: ↑Mon Jan 24, 2022 10:47 amMy feelings - if your fixed contains multiple years of living expenses then the AA % doesn't really matter - I have argued this with multiple financial advisors over the years - so your fixed % could be 90% or it could be 10% as long as you have 5 to 7 years expenses liquid in fixed. (my 35% fixed has about 10 years living expenses so i dont sweat runs like this- i will use it as a roth conversion and other buying opportunites)revhappy wrote: ↑Sun Jan 23, 2022 6:18 amI dont agree with this. Asset allocation should be based on our needs and based on the size of our corpus. Inflation is the bigger risk, so just because you are risk averse if you put everything into bonds, you will lose out to inflation.AerialWombat wrote: ↑Wed Jan 19, 2022 8:07 pm If this thread is popping up, I have to assume the market is down? I don’t actually know, because I don’t pay attention.
With my 30/70 AA, I don’t have to pay attention. At 70/30, in contrast, I’d have to pay attention, and I’d be freaking out at every minute daily drop in the S&P500.
A proper AA for you should resolve all jitters.
To solve the jitters, it is all about education and learning history of markets and not making any stupid moves. As long as you are doing the tried and tested formula backtested with years of data, you should not have jitters with an aggressive asset allocation. If you still have jitters, then you must not watch your portfolio or just give it to some expert to manage.
Re: A time to EVALUATE your jitters
Leesbro63 wrote: ↑Tue Jan 25, 2022 6:44 am]john0608 wrote: ↑Mon Jan 24, 2022 10:47 amMy feelings - if your fixed contains multiple years of living expenses then the AA % doesn't really matter - I have argued this with multiple financial advisors over the years - so your fixed % could be 90% or it could be 10% as long as you have 5 to 7 years expenses liquid in fixed. (my 35% fixed has about 10 years living expenses so i dont sweat runs like this- i will use it as a roth conversion and other buying opportunites)revhappy wrote: ↑Sun Jan 23, 2022 6:18 amI dont agree with this. Asset allocation should be based on our needs and based on the size of our corpus. Inflation is the bigger risk, so just because you are risk averse if you put everything into bonds, you will lose out to inflation.AerialWombat wrote: ↑Wed Jan 19, 2022 8:07 pm If this thread is popping up, I have to assume the market is down? I don’t actually know, because I don’t pay attention.
With my 30/70 AA, I don’t have to pay attention. At 70/30, in contrast, I’d have to pay attention, and I’d be freaking out at every minute daily drop in the S&P500.
A proper AA for you should resolve all jitters.
To solve the jitters, it is all about education and learning history of markets and not making any stupid moves. As long as you are doing the tried and tested formula backtested with years of data, you should not have jitters with an aggressive asset allocation. If you still have jitters, then you must not watch your portfolio or just give it to some expert to manage.
[/quote
I wonder why 5,7 or even 10 years is "enough" fixed "years spending in reserve". What if it's 1929? 1966? Japan 1990?
There are too many safety nets, too much new technology and innovation, too many govt measures in place for your scenario to play out beyond a year or 2 or 3 ....hence 5 to 7 years is plenty.
The argument i have with financial advisors is that my strategy is 80% of my fixed is in FDIC insured locations, their counter is that i am overly conservative and am leaving money on the table and recommend 6 mths expenses in banks and the rest in bond funds.
Re: A time to EVALUATE your jitters
I hope you're right about the safety nets. Truthfully I think you are rationalizing to convince yourself you have enough safe fixed income. But to be fair, I'm not even sure that safe fixed income is safe (can't keep up with inflation).
- princetontiger
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Re: A time to EVALUATE your jitters
There's been three monetary regimes since 1914.
1914 - 1971
1971 - 2008
2008 - present
We're in a quasi-MMT phase. Markets will only head higher. In both real and nominals terms.
1914 - 1971
1971 - 2008
2008 - present
We're in a quasi-MMT phase. Markets will only head higher. In both real and nominals terms.
Re: A time to EVALUATE your jitters
Hope you are right. What isMMT?princetontiger wrote: ↑Fri Jan 28, 2022 1:45 pm There's been three monetary regimes since 1914.
1914 - 1971
1971 - 2008
2008 - present
We're in a quasi-MMT phase. Markets will only head higher. In both real and nominals terms.
Re: A time to EVALUATE your jitters
What is the difference between the three. I understand at some time dollar was backed by Gold and then it was not, but what are the three flavors?
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Re: A time to EVALUATE your jitters
[ quoted post removed by admin LadyGeek]
Has it really? This is barely a blip, maybe an almost imperceptible dip in the road, in the bigger scheme of things. If anyone is already thinking about selling or making major changes, then they need to take a long hard look in the mirror and figure out a better AA and overall plan. I haven’t even looked at my accounts in 2022, though I know what’s happened in the markets. We have seen a whole lot heckuva worse in the markets over the past 14 years. In fact, I’d be more concerned if this crazy bull market didn’t let off some stream.
Perhaps this thread is aptly named. Evaluate your jitters, because if you’re really feeling it, it’s a good learning opportunity. I learned a lot about myself back in 2008, and it was priceless.
Has it really? This is barely a blip, maybe an almost imperceptible dip in the road, in the bigger scheme of things. If anyone is already thinking about selling or making major changes, then they need to take a long hard look in the mirror and figure out a better AA and overall plan. I haven’t even looked at my accounts in 2022, though I know what’s happened in the markets. We have seen a whole lot heckuva worse in the markets over the past 14 years. In fact, I’d be more concerned if this crazy bull market didn’t let off some stream.
Perhaps this thread is aptly named. Evaluate your jitters, because if you’re really feeling it, it’s a good learning opportunity. I learned a lot about myself back in 2008, and it was priceless.
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Re: A time to EVALUATE your jitters
Modern Money or Monetary Theory, which doesn't tell us much about how the stock market performs at all, since the market always goes up over time regardless of what monetary "regime" is in place. But it's got some curious twists on conventional macro theory. For instance:Dottie57 wrote: ↑Fri Jan 28, 2022 3:04 pmHope you are right. What isMMT?princetontiger wrote: ↑Fri Jan 28, 2022 1:45 pm There's been three monetary regimes since 1914.
1914 - 1971
1971 - 2008
2008 - present
We're in a quasi-MMT phase. Markets will only head higher. In both real and nominals terms.
1 government bonds are useless because the government can simply print money to meet its debt or spending obligations
2) interest rates should be at zero, as you want people to consume in order to maintain economic growth
3) inflation is not caused by excessive money in the circulation, or excessive demand caused from said zero-point interest rates, but rather monopolistic producers who jack up prices by controlling markets
4) the broadest goal should always be full employment, with the government bearing the responsibility of giving everyone a job with satisfactory wages if private employers cannot keep up
5) if too much inflation hits, then don't raise interest rates -- just raise taxes.
It's interesting also because its own adherents can't seem to figure out when it works and when it doesn't. Jerome Powell blasted MMT during his 2018 confirmation at the Fed, then put into place a lot of policies that seemed to come from it, but now is backtracking and arguing that the Fed needs to adopt a more traditional anti-inflationary stance by hiking interest rates, as he prefers that to raising taxes.
It's of interest to academicians and economists but frankly, not very useful to retail investors like most of us who believe that the secular trend in stock markets always points up. They pointed up in the "pre"-MMT era and they will point up in the "post"-MMT era.
Re: A time to EVALUATE your jitters
Agreed. This is a normal correction so far.angelescrest wrote: ↑Fri Jan 28, 2022 8:42 pmHas it really? This is barely a blip, maybe an almost imperceptible dip in the road, in the bigger scheme of things. If anyone is already thinking about selling or making major changes, then they need to take a long hard look in the mirror and figure out a better AA and overall plan. I haven’t even looked at my accounts in 2022, though I know what’s happened in the markets. We have seen a whole lot heckuva worse in the markets over the past 14 years. In fact, I’d be more concerned if this crazy bull market didn’t let off some stream.vtsnowdin wrote: ↑Thu Jan 27, 2022 5:34 am So far this year has been a pretty good test of ones ability to "stay the course" through chaotic market swings. It does test ones nerve and patience. So far so good for me as I have not sold anything but I do have an ominous feeling that the news lately is a rerun of the news that was put out the week of December first 1941.
Perhaps this thread is aptly named. Evaluate your jitters, because if you’re really feeling it, it’s a good learning opportunity. I learned a lot about myself back in 2008, and it was priceless.
Historically, according to this recent Ben Carlson post, the S&P 500 has experienced a 10% or worse correction in 2/3 of all years. In those years, despite the drawdowns, 3 out of every 5 years have ended with a positive return and 2 out of every 5 have ended with gains of 10% or more.
Of course, it could get worse this year. But so far, this is normal.