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mcbockalds

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  • Birthday 09/15/1944

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  1. Wouldn't this article better fit in the thread "Will My Retirement Funds Last?" Cheers John
  2. Vanguards version of asking "Are You Still In?" It is pretty telling when Vanguard starts sending out emails to its customers about re-balancing (certainly not called market timing! - or is it?) with comments like: "Buying stocks now may actually run counter to what many prudent investors should be doing," Cheers John
  3. "Are You Still In?" Bonds? No! Vanguard Long Term Treasuries are down 12.6% YTD - with most of that fall coming since May. And yet with all the bond selling going on, the money is not being recycled into stocks. Hmmm. Cheers John
  4. No one has responded to your post, me neither, but this article by Bill Gross made me think of your post. Mostly what Gross' article reminds me of is that how well any of us do with our investments is a lifetime question, not a question of how well we are doing this year or even over the the past x years, but over a lifetime - just as one's character is not determined by a most recent immoral or moral choice, but over a lifetime of choices. Cheers John Cheers John
  5. david3639, Congratulations on moving to I Savings Bonds at a pretty good time. And congratulations on kicking your addiction. Treasury Direct is a good place to research the various US Bonds available. Today, the available interest rates are not very compelling. Actually the fixed rate on the 30 year I Savings Bond is 0%!! The current inflation rate which is added to the fixed rate is only 1.76%! So you bought in at a pretty good time compared to now (so did I and a friend I give financial advice to.) What grinds me about some US bonds that are directly affected by the inflation rate is the less than honest/accurate method used to estimate inflation. As I have said before, the inflation rate when estimated by the "1990 methods" gives a current rate of about 5%. So what is the actual, real world inflation rate? I sure don't know, but neither does the FED. However, their extra low estimate sure makes it easy for them to keep inflating the money supply with QE and thus forcing down market interest rates and thus discouraging bond investors and "forcing" some of them to move out of bonds and into the stock market which is nicely and temporally inflating the stock market. Cheers John
  6. So you know what the other 98% of our retirement portfolio has been doing?? I don't think so! Sometimes it is good to think before speaking. Cheers John
  7. The last time I bought any stocks (always in mutual funds) was Oct. 2008 and that took our retirement portfolio up to a grand total of about 2% in stocks! I sold about half of those same stocks in April 2010 - at a decent profit - and that took our stock portion down to close to 1%. Now it is time once again to take some decent profit and I did - stock portion now down to about 0.5%. Our mutual funds have a serious penalty for "frequent" trading so I can only buy or sell anything once every 3 months without paying the penalty. So if my stocks are higher 3 months from now I will likely sell some more (getting closer and closer to 0% in stocks). It is fun to sell HIGH and buy LOW (or sell on the way UP and buy on the way DOWN) even if it only happens every few years. And it will be fun to start buying stocks again in the future at falling prices - as surely as morning follows night. Cheers John
  8. Hi Kirk, On your web site I was trying to look at your 5 years of expenses but can only see the first four years. The right hand column is cut off. Do you think it might be my browser? Anyone else mention this problem?

    Cheers John

  9. True. But I refer to myself as a recovering economist. I got my degree studying under the rather well known, nontraditional, ecological economist, Herman Daly, who has only one arm. He used to say, "What this world needs is a good one-handed economist Cheers John
  10. My point is simple, risk management in stocks is neither as easy nor as safe as Jeremy Siegel implies in his book. Lies, Damn Lies and Statistics (1976) is a very good book. It helps you know how to present proper statistical presentations. On the other hand it helps you to recognize deception, and errors in analysis, reasoning and conclusions. Stocks for the Long Run is a decent book, but due to some statistical "errors" (?) it is not a very good book and yet it is the bible from which we get the idea of "buy and hold" for the long run. Cheers John
  11. Here is another famous Farrell, Chris Farrell editor of Marketplace Money who is Rethinking Stocks for the Long Haul. Jeremy Siegel's famous book "Stocks for the Long Run" is the bible on the subject, but as with the other Bible, people have different interpretations and critical analysis of its content. Here is one criticism of his book (4th ed. if you have it), take a look at Figure 2-2 "Average Total Real Returns after Major 20thC. Market Peaks." For those without the book it shows that even investing in stocks at their peak (his examples are years, 1901, 1906, 1915, 1929, 1937, 1946, 1968, 1973) 30 years later you are better off compared to investing in bonds. He shows that $100 invested for 30 years at each of the eight peak years listed above would have an average total real return of $585. (Bonds much less.) A serious problem with the average return of $585 over those eight 30 year time periods is that 85% of that average return was made in only the last two time periods (1973 to 2003 and 1968 to 1998) and only 15% was made in the previous two time periods (1946 to 1976 and 1937 to 1967) and ZERO percent (zero dollars) was made in the first four time periods. How would you like to have been a stock investor in those first four periods or even the next two? That example is only one of a number of problems with Siegel's conclusions. There are others that are fairly will known among a few critical economists, but hardly known at all among the general public. Here is another example, made simple, to show you the problem with other parts of his data analysis. He argues that average annual returns on stocks have never been negative when measured over any period of 17 years or more. Technically true, but a portfolio does not earn or grow by "average annual returns." A portfolio earns or grows by annual compound returns. Here is what I mean. If stocks over a 3 year period earned annual returns of 10%, -20%, and 10% the average annual return is 0%. But 0% is not the compound return that stocks would have actually earned. Here is the math. Start with $100 growing the first year by 10% ($100 x 1.1) to $110 then falling the second year by 20% ( $110 x 0.8) to $88 then growing in the 3rd year by 10% ($88 x 1.1) to $96.80. Stocks lost $3.20, they did not earn or grow by 0%. (BTW this is no trick, change the numbers to occur in any order you want, the result is the same) That loss of $3.20 is a negative compound return. The average annual compound return is approximately -1.1%. Here is the math, $100 x 0.989 x 0.989 x 0.989 = $96.74 Finally, here is a web site that will give you more than you will ever want to read on the problem with Siegel's Stocks for the Long Run. This is partly why I said Paul Farrell might be right. Or not. It ain't an easy question, and the data may well be skewed by the huge stock prices run up from about 1982 to 2000 (easy money years). Lop those numbers off the tail end of the data from 1900 or even 1800 and the Siegel's conclusion about the safety of stocks for the long run does not look good. Cheers John
  12. I do not often post stuff by Schiff, because I think he often goes "over the top," but here he is scaring me without going over the top, IMO. Cheers John
  13. To try to offset the excited exuberance, here is a rather frightful prophetic set of emotions posted way back in April 2000 (by John Hussman). I clearly remember back then a couple of scenes where grown husbands and wives, crying in public, were telling friends or family members what happened to their stock portfolios...it still wrenches my guts just to remember them. "This is my retirement money. I can't afford to be out of the market anymore!" "I don't care about the price, just Get Me In!!" "It's a healthy correction" "See, it's already coming back, better buy more before the new highs" "Alright, a retest. Add to the position - buy the dip" "What a great move! Am I a genius or what?" "Uh oh, another sell-off. Well, we're probably close to a bottom" "New low? What's going on?!!" "Alright, it's too late to sell here, I'll get out on the next rally" "Hey!! It's coming back. Glad that's over!" "Another new low. But how much lower can it go?" "No, really, how much lower can it go?" "Good Grief! How much lower can it go?!?" "There's no way I'll ever make this back!" "This is my retirement money. I can't afford to be in the market anymore!" "I don't care about the price, just Get Me Out!!" Cheers John
  14. Do I see a double standard (short vs long) in your post if I highlight the above portion? I imagine some of the "experts" I quoted would like to point out that investing is a long term, many years, even lifetime process. Some years are good and some bad with most probably in between. It is the long term result that finally determines how well our investments do and I really do hope that we all do well in the long run. In the mean time we are all likely to disagree about which strategies are best. Of course that is mostly because best is going to be defined differently by each one of us and rightly so. Not everyone defines best as the highest return. Different attitudes toward risk, volatility, liquidity, are some factors that affect one's definition of best return. Other more personal factors are: age, taxes, family member relationships, money vs other goals......I suppose the list ends somewhere. I don't picture investing like a football game which ends when the clock runs out (Dec. 31, 2012) and the team with the most points wins and the other team loses. Perhaps it is more like a life long dance party where each person/couple decides when to dance and how to dance and how often to dance while realizing that others are making their own decisions on how to best enjoy the dance. Each person/couple may try to explain why they dance the way they do and even recommend it to others without suggesting that their way of dancing is the best way for everyone to dance. This thread has been fun for me to follow and participate in because I have seen it as a chance to explain why I currently dance a particular way or only dance at particular times or for only so long. I also enjoy reading about others way of dancing especially when it is explained. I don't think my way of dancing (or those of my dance teachers, "experts") is the only or even best way to dance for everyone. I have, however, reacted negatively when accused of doing so and when others seem to be doing so. If someone thinks I or someone else doesn't know much about dancing because we weren't dancing to the music in 2012, well lets hope we all like the music better in the future. Cheers John
  15. He might be right. Or not. Even in 2001 and 2002 and 2008? Cheers John
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