Stock Market is the bottom in?

[yoderjac]

"One of the major problems for an investor hoping to regularly recreate that 10.67% average return is inflation. Adjusted for inflation, the historical average annual return is only around 7%."

S&P 500 Average Returns and Historical Performance

See the historical performance of the S&P 500 Index. Learn more about the factors that affect the S&P 500 average return.

www.investopedia.com

My target is a 3% withdraw from the nest egg to supplement the fixed income stream. I'm expecting to keep the nest egg stable or grow slightly in perpetuity.

 

[homerj1]

you may lose money one year maybe two years

"...whilst the United States didn't see the same level in real terms until August 1993, over twenty years after the 1973–74 crash began."

1973–1974 stock market crash - Wikipedia

en.wikipedia.org

Stock market losses can last a whole lot more than a couple years.

 

[Bszweda]

You guys are making me want to go back to work……NOT.

But I am dumping some real estate in two weeks. Cashing in while the market is still stupid. And I’m real estate heavy.

What’s the strategy after selling some real estate? Have cash for available for when the market tanks?

 

[yoderjac]

"...whilst the United States didn't see the same level in real terms until August 1993, over twenty years after the 1973–74 crash began."

1973–1974 stock market crash - Wikipedia

en.wikipedia.org

Stock market losses can last a whole lot more than a couple years.

Early losses right after retirement can have a bit impact in the long term. Having said that, I went back and looked at the S&P as far back as I could get data. When I look at the ups and down of the value of the S&P there were extremely few periods when the market value did not recover in 3 years.

My personal withdraw plan is to have 4 years in cash and the rest 100% invested in the broad market when I retire. I'm not sure whether I will withdraw from the nest egg on a monthly or quarterly bases, but that doesn't really matter. I plan to look a the total value of the nest egg the day I retire. When it is time for each withdraw, I will compare the current value of the nest egg to the value at retirement. If the value has dropped or is unchanged, I will withdraw from the cash portion. If the value has gone up, I will sell stock to both fund the withdraw and well as to bring any deficiency in the cash portion back up to 4 year. I ran some gaming over different historical periods. There were very few periods where a mix of stock/bonds/cash beat the stock/cash method with this kind of withdraw plan.

It will be interesting in the future to see how close reality is to my gaming results.

Thanks,

Jack

 

[Jerry-B-WI]

Early losses right after retirement can have a bit impact in the long term. Having said that, I went back and looked at the S&P as far back as I could get data. When I look at the ups and down of the value of the S&P there were extremely few periods when the market value did not recover in 3 years.

My personal withdraw plan is to have 4 years in cash and the rest 100% invested in the broad market when I retire. I'm not sure whether I will withdraw from the nest egg on a monthly or quarterly bases, but that doesn't really matter. I plan to look a the total value of the nest egg the day I retire. When it is time for each withdraw, I will compare the current value of the nest egg to the value at retirement. If the value has dropped or is unchanged, I will withdraw from the cash portion. If the value has gone up, I will sell stock to both fund the withdraw and well as to bring any deficiency in the cash portion back up to 4 year. I ran some gaming over different historical periods. There were very few periods where a mix of stock/bonds/cash beat the stock/cash method with this kind of withdraw plan.

It will be interesting in the future to see how close reality is to my gaming results.

Thanks,

Jack

Just retired last week and this plan is very similar to what I've worked out with the advisor.

 

[Bill]

What’s the strategy after selling some real estate? Have cash for available for when the market tanks?

That’s the plan. I took a nice chuck out of the market mid December. Some cash may be good for a bit.

But I’m already looking at other real estate with more possible upside. Unlikely to buy anything until I see what the next year brings. Paper “digital” stocks have been “OK” to me and I’d never get out completely. But I do like owning some things I can touch.

 

[homerj1]

When I look at the ups and down of the value of the S&P there were extremely few periods when the market value did not recover in 3 years.

Including inflation and lost average returns for those down years?

While the bear market/recession of '73-'74 lasted 630 days after a 48% drop, in order for the market to fully recover to pre-recession levels it took many years.

10 Things You Should Know About Bear Markets

Even elite athletes need rest days to stay healthy. Sometimes financial markets need to reset from record-setting performance, too. Here’s what you need to know about bear, or down, markets.

www.hartfordfunds.com

 

[yoderjac]

Just retired last week and this plan is very similar to what I've worked out with the advisor.

You must have an unusual advisor. Almost every advisor I've talked to recommends the stock/bond/cash mix. After I show them the math and rationale, none have been able to poke holes in my approach from a financial perspective. The only logical argument I've heard from them regarding the stock/bond/cash mix is that some people don't sleep well at night when they see their nest egg value diminish significantly even for a short time.

 

[b116757]

"...whilst the United States didn't see the same level in real terms until August 1993, over twenty years after the 1973–74 crash began."

1973–1974 stock market crash - Wikipedia

en.wikipedia.org

Stock market losses can last a whole lot more than a couple yearsagreed

"...whilst the United States didn't see the same level in real terms until August 1993, over twenty years after the 1973–74 crash began."

1973–1974 stock market crash - Wikipedia

en.wikipedia.org

Stock market losses can last a whole lot more than a couple years.

Agreed

 

[roymunson]

You must have an unusual advisor. Almost every advisor I've talked to recommends the stock/bond/cash mix. After I show them the math and rationale, none have been able to poke holes in my approach from a financial perspective. The only logical argument I've heard from them regarding the stock/bond/cash mix is that some people don't sleep well at night when they see their nest egg value diminish significantly even for a short time.

if you're so good, why the samhill are you hiring a financial advisor?

I'm young enough that I've got time to weather some of these storms, but it's comical to me that you claim to not be ready for retirement, yet you know more about it than anyone else here, or elsewhere.
Is it possible there is more than 1 way to skin a cat? Is it possible you're not right? Asking for a friend...

 

[Gator]

You guys are making me want to go back to work……NOT.

But I am dumping some real estate in two weeks. Cashing in while the market is still stupid. And I’m real estate heavy.

I’m dumping my rental tomorrow. Can’t beat this hot market and I hated being a landlord even though I had good renters


Sent from my iPhone using Tapatalk

 

[b116757]

No. I’m selling raw land. It’s been good to me. Logged $80k off it about 8 years ago and now it’s going for more then I paid. In 10 years I’ve hunted it once, it’s not costing me anything but it’s not making me enough to hold it.

I just have to much of $ in real estate to not cash in some.

I sold 40 acres last year that I haven’t hunted in 20 years.

 

[Mortenson]

My parents and I decided a few years ago that we will absolutely never be housing landlords ever again. We had trainwreck situations.

 

[Mortenson]

I sold 40 acres last year that I haven’t hunted in 20 years.

We sold a wooded, creek bottom 15 acre tract in a great area a few years ago. Tried getting my hunting buddies to buy it for years. Sold it for 60k. These guys make 100k+ a year and cry about their permission hunting on a regular basis. They eat out all the time, have fancy vehicles, polaris rangers and all the other toys, but just couldn't stomach locking down some ground to enjoy with their families for the rest of time. Spenders, not savers. One even badmouths me for saving, saying "you only live once."

 

[BuckSutherland]

Some of you guys on here make me chuckle........
"I'm gonna save $xxx,xxxx,xxx and then I'm gonna spend $xxx,xxx per year and after 20-30 years when its all gone die peacefully in my sleep......"

Not me. I plan to make a pile, save every last scrap of it, die early, and then pass it on to my wife and her new pool boy to spend it all.... . Some lucky bastard will be sitting on his beachfront property using the money I made corn detasseling in 1992, to finance the purchase.


I'd be more interested in having a functioning body that operates superbly from 60-80 years old, but I have zero chance at that. Doing a fine job smashing it to pieces the last 41 years. Never know when you times is gonna be up boys so keep that in mind instead of trying to get to some magical number. We are all gonna have the same amount in the end....

 

[jsasker007]

Yep, can't take it with you.

 

[yoderjac]

if you're so good, why the samhill are you hiring a financial advisor?

I'm young enough that I've got time to weather some of these storms, but it's comical to me that you claim to not be ready for retirement, yet you know more about it than anyone else here, or elsewhere.
Is it possible there is more than 1 way to skin a cat? Is it possible you're not right? Asking for a friend...

I did not say I was "good" at any of this. I haven't hired a financial advisor. There are 2 certified financial planners in the family and one of the benefits the company I work for offers is an independent financial planner.

There is a big difference between being ready for retirement and having the financial means to retire. I don't know more about it, than others, that is why I put out my plan as outside the conventional wisdom. So far, no financial planner has been able to refute my analysis of the the historical financial data. The only argument anyone has provided is not technical, it is that some folks sleep easier, which is a valid reason to use bonds. I like when folks challenge my approach. That is why I did run it by those financial planners and why I'm putting it out there. I'm looking for folks to punch holes in it. I'm always open to change when new information becomes available.

Keep in my being "right" does not mean you end up with a desirable outcome. "Outcome bias" is a common fallacy in analysis. So far, I'm confident that I'm "right" when it comes to my approach being the most productive on a long-term historical basis. The problem for all of us is that history is not a great predictor of the future, but it is the best we have for prediction. We are all in the same boat. You can make the best decision given the data available today and have a very bad outcome tomorrow. You can also make very poor decision based on the information available at the time you make the decision and end up with a great outcome.

There are also many other kinds of bias that creep into human decision making. It is an interesting study and worthwhile. Knowing it is there helps us guard against it and minimize it.

I have not desire to foist my approach on others. I do have the desire to provide things that make folks think about their approach. I'm also more than happy for others to critique mine. This goes for both financial and habitat approaches. There is no one person whom I've followed and I expect no one to follow me. However, I've learned all I know from a very wide variety of others.

Hope your "friend" has a nice day.

Thanks,

Jack

 

[b116757]

I totally agree with you both to me it’s a balancing act saving for a future that you may or may not ever even see and enjoying life in the here and now. Everyone has to make those decisions for themselves. I’m a long term planner by nature so saving comes easy to me not so for my wife she likes to spend money it’s a compromise between us.

 

[homerj1]

It's true you can't take it with you. It's also true that you don't plan to fail, you fail to plan.

 

[b116757]

I did not say I was "good" at any of this. I haven't hired a financial advisor. There are 2 certified financial planners in the family and one of the benefits the company I work for offers is an independent financial planner.

There is a big difference between being ready for retirement and having the financial means to retire. I don't know more about it, than others, that is why I put out my plan as outside the conventional wisdom. So far, no financial planner has been able to refute my analysis of the the historical financial data. The only argument anyone has provided is not technical, it is that some folks sleep easier, which is a valid reason to use bonds. I like when folks challenge my approach. That is why I did run it by those financial planners and why I'm putting it out there. I'm looking for folks to punch holes in it. I'm always open to change when new information becomes available.

Keep in my being "right" does not mean you end up with a desirable outcome. "Outcome bias" is a common fallacy in analysis. So far, I'm confident that I'm "right" when it comes to my approach being the most productive on a long-term historical basis. The problem for all of us is that history is not a great predictor of the future, but it is the best we have for prediction. We are all in the same boat. You can make the best decision given the data available today and have a very bad outcome tomorrow. You can also make very poor decision based on the information available at the time you make the decision and end up with a great outcome.

There are also many other kinds of bias that creep into human decision making. It is an interesting study and worthwhile. Knowing it is there helps us guard against it and minimize it.

I have not desire to foist my approach on others. I do have the desire to provide things that make folks think about their approach. I'm also more than happy for others to critique mine. This goes for both financial and habitat approaches. There is no one person whom I've followed and I expect no one to follow me. However, I've learned all I know from a very wide variety of others.

Hope your "friend" has a nice day.

Thanks,

Jack

Jack

My portfolio will likely never see a bond but in all honesty my wife and I do not even need my 401k to retire if I wait until age 60.