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mcbockalds

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Everything posted by mcbockalds

  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
  16. Right you are. Ha. Just two similar opinions! Cheers John
  17. I think you are correct. ***Warning*** The following is theory. I think Mauldin is better understood as a "secular bear," not a "perma bear." That is, he believes we have been in a secular (long term) bear market since 2000. Prior to 2000 I think he would argue we were in a secular bull market from roughly 1982 to 2000. (But I am putting words into his mouth because I don't think he tends to use these exact terms.) He may be even less inclined to use the terms "cyclical bear" and "cyclical bull" markets, which are short term markets.. But others do use these terms. A pretty thorough explanation of these terms can be found in this recent article by Adam Hamilton. So in Hamilton's words, we are in a secular bear market which started in 2000. And within that long run secular bear we are currently also in a short run, cyclical bull market that started in 2009. Not surprisingly he argues that prior to this cyclical bull we were in a cyclical bear market from late 2007 to 2009. All of this theory is not just about defining terms, but it is trying to make sense of past short term and long term bull and bear markets. You don't have to completely buy into this theory to actually get something out of it. The theory helps you to think. That is the fun of theory, at least I think so. Cheers John
  18. The story about the shepherd who cried wolf when he knew there was no wolf, is a story about liars. I may be wrong about what I think is going on in our economy, but I hope no one actually believes I am lying - I don't really think any one does think that. So, here is another negative view of our economy that may be wrong, but I don't think they are crying wolf either, John Mauldin's "Outside the Box." The section of the article toward the end titled "Can the Fed Create Demand" is going to be "over the top" for some who have not had an econ course or for whom it has been a long time since having one, so don't fret about it. My advice is to just skip it and read the last section titled "Treasury Bonds." Cheers John edit: I forgot, you have to freely subscribe to Mauldin's site. Then you are looking for the article in the section: Outside the Box Hoisington Quarterly Review and Outlook
  19. I do find your anger curious. It causes me to wonder, why would someone who has made such a killing on his investments that he, "paid cash for another new home, car, vacations, etc" be so angry at someone who is making next to nothing? Can anyone make a guess? And as a hint, I never put any stock (pun intended) in anyone's online claims about their personal investment returns. So I usually try not to discuss my own, because I don't expect anyone to put any stock in my claims either. Cheers John
  20. I must admit a fault of mine, I like to read stuff like this because it makes me look even nicer than I really am. Cheers John - your sideline coach.
  21. " Will you commit yourself? In your opinion, when will the calamity you predict come to pass? What month & year? " I have no clue when this re-inflated market will pop. The Fed is a powerful balloon blower as we have already seen over the past 20 or more years. These are amazing times we are living in. Never has the Fed been this active in manipulating financial markets for so long and the final results are far from in. Yes, I said, "Wouldn't it be educational to be able to look back at the posts on this forum in "Finances and Investing" say back in 2007 to 2009? I may be a pessimist, but I think being reminded of what life is like on the left side of the charts might be beneficial. " And then you refer to a post of mine from Aug. 2011: "Here is one of your posts from 2011. You seem to be just the type of retail investor CNN Money was talking about. Just standing on the sidelines watching the game. What sort of return did you get from the MM fund? Let me guess. 0.25%" But I really did mean posts from 2007 to 09. However, to answer your question: Nope, even less than 0.25%!! But I try not to brag. Ok, just a little bragging. Our 5-10% in bond funds did great until we got out in Dec 2011 which proved to be very good/lucky timing. "Still waiting on the "significant correction" ?? Or are you back in the game?" Still waiting, but let me tell you why it is easy for me to be "Just standing on the sidelines watching the game." In 2000 I estimated that my wife and I had sufficient funds in our retirement portfolio (including Social Security of course) to last us through the age of 100 if our portfolio just kept up with inflation. Needless to say, that was a wonderful discovery, and it still is true. I'm 68 and for the rest of my life our investments only have to match inflation. Why? Because we are rich? Nope. For two main reasons: my wife and I have always lived frugally and it is natural for us to do that because we have never had a need for lots of stuff. This is who we are - most likely because of the families and the faith we were raised in. But enough of that faith talk! Sorry. Cheers John
  22. Well the article did not say that the 1% got it all, others got 7%. Congratulations, sounds like you got a very nice slice of the remaining 7%. I don't think the average person has recovered quite enough yet to pay "cash for another new home...." Cheers John
  23. Looking at those charts and the CNN article makes me wonder if an increasing number of people are deciding that it is time to sell - you know, "buy low sell high?" They also make me wonder how the markets keep going higher if more and more people are selling like the CNN article seems to say? Oh, I forgot, the Fed's stated policy is to inject money into financial markets to give them a boost (others call it re-inflating markets) so we once-again-wealthy folk will go back to our spending-ways and help the recovery. Problem with that is about half the population doesn't own any stocks and most of the growth in income generated during the "recovery" is going to the top 1%. So instead of that extra income going to buy more goods and thus helping the economy, it goes into investments (stocks, bonds, gold, land, luxury goods) the places the 1% put their increased incomes. The 1% (and other very wealthy folks) don't increase the amounts of milk, bread, clothes, shoes, gasoline, etc. etc. when they get more income because they have not had to cut back on these purchases during the downturn like many of the rest of us have had to do. Oh well, be happy, it is always fun to be on the right hand side of the charts, but there is always another left side and it is the next left side that takes the cake - literally. Wouldn't it be educational to be able to look back at the posts on this forum in "Finances and Investing" say back in 2007 to 2009? I may be a pessimist, but I think being reminded of what life is like on the left side of the charts might be beneficial. Cheers John
  24. Given the Long Term view of the S&P 500, tight stops might be a good idea. The enthusiasm must have been pretty high in the Fall of 1999 when the S&P was hitting new highs in the 1400s. But then not so much after that. Then enthusiasm was growing again in the Fall of 2007 as the S&P approached its 1999 highs. But once again not so much after that. Now the enthusiasm is growing yet again as the S&P edges yet again to the highs of 1999. Oh my. Stocks For The Long Run (by Jeremy Siegel)? Well, maybe not. But I suppose they are better than a poke in the eye with a sharp stick. Cheers John
  25. Well Alan Greenspan is finally starting to see a little bit of the light that a few other economists (Bill Gross, John Hussman, John Mauldin, and others) have been seeing for a few years. Greenspan says in the early part of the video, "...Macroeconometric models"...at the IMF, Fed,{and others}...are wholly inadequate in understanding how the complex financial system works both in the U.S. and globally. The consequence is that you can not forecast crises of any sort because they all are fundamentally financial crises." Now doesn't that give you a lot of confidence? The Federal Reserve, our central bank, which is responsible for understanding the financial system and how it is affected by monetary and fiscal policies, the money supply, interest rates, the levels of loans, debt, and credit and on and on, does not have a model that understands the financial system! Also, after Greenspan made that statement, I can't imagine why the interviewer didn't stop the interview right there and say something like, "Alan, did you really mean what you just said? Would you like to take back or re-phrase that just a little? Do you realize that you basically just said the the Fed, IMF, and central banks world wide have no clothes on? Are we really in that bad of shape?" Greenspan just dropped a bombshell that I have yet to see any response to in the financial press that I read. We will see if anyone picks up on this. Cheers John (I can't believe he said that.)
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