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Post by uncleharley on Nov 12, 2022 16:51:42 GMT
"does anyone think they can nail the worst days of the market and also hit the best on a consistent basis?" I can't. But by applying the results of technical signals from the broader market indexes to specific securities that I am interested in, I can have considerably better returns than an index fund. For how long - years? I was actually thinking of the ability to earn 30% this year. It is remarkable and to be admired. If you matched last year market returns as well, amazing. Most of my net worth is in the market, so I can't imagine trading/shorting. May I ask what percent of your net worth is used for trading? Also, do you have an agreement with Fidelity? When I sell anything, other than Fidelity managed funds, it takes at least 2 days to access the funds. The only reason I ask, is I would encourage you to market your abilities and to even further increase your returns! Pun intended! My most valuable asset is my ongoing income from SS & a pension annuity. Since both of them end when I die and I have no idea when that will be, I find it impossible to estimate the current value of them. Consequently what percent of my net worth, if it can be calculated, seems to be irrelevant. Let me just say that if I lost it all, I would be very sad, but my lifestyle would see little change. No, I have no agreement with Fidelity. If I sell something and buy something else before the 3 day settlement period is over, the bought security should not be sold for 3 business days. If it is, there is a good faith violation and if I have 3 of those violation in a 90 day period of time they will close my accounts. I have no reason to market my abilities. I do not need additional income & my time is devoted to being the primary care provider for my wife. Since that is not always a busy activity I choose to work the markets and remain engaged in current events during slow periods.
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Post by Deleted on Nov 12, 2022 16:55:45 GMT
I can't access funds to buy anything unless I have that much cash in my account. So, if I make a large sale, I have no flexibility. Selfishly, I sure wish you would reconsider marketing your abilities though, but understand.
As far as how much at stake - I wondered if (as you are taking so much risk) you had a substantial savings cushion - if you did take a huge hit. I have a pretty substantial cushion using the USG G-fund (souped up money market) as well as I-bonds and some cash. Not taking social security yet, but have a very good pretty much guaranteed income.
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Post by Deleted on Nov 12, 2022 17:00:24 GMT
Over time is meaningless. What time, whose time? All the studies of time periods using different portfolio allocations, don't apply to the specifics of what we are actually doing with our investments. Time you are holding equities - your holding period. Do you know how long you will be holding yours without making changes based on market conditions, personal preferences, or needs.
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Post by Deleted on Nov 12, 2022 17:05:11 GMT
@haven ,
I know I have been holding 12 years so far. I think you are asking if I know I will die tomorrow or not. Of course not, but chances are very good I will have at least another 18 years in my investing career and towards my holding period. So, I am planning my allocation based on a 30+ years holding period, with no expectation to change my allocation based on anything other than when I need income and if I can sleep well at night. If I have a LTC situation, I guess my estimation on how much money I need and when would indeed change. No, I am not planning for outlier unknowns - my holding period for all intents and purposes is 30+ years.
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Post by steelpony10 on Nov 12, 2022 19:43:47 GMT
@slooow , @haven ,
Based on a 3% inflation rate 30 years out LTC for you will be about 310k a year minus your SS if it matters. Our’s will be about 200k per year at age 90 minus SS. Saw LTC dissolve a whole life savings in about 3 years with my parents and 1mil over 10 years with a close friend’ wife. We have our finger in equities (future value unknown) and HY currently stockpiling cash if ever needed. All other situations we believe are covered at this point.
You could add maybe another 75-150k total for assisted living leading up to that. Make sure you enter a facility that takes medicaid and can cover assisted living otherwise you will get transferred out before LTC. It helps to be an independent living resident of the facility also before all that at double current apartment rental costs in your area.
At those costs I’m sure there will be a government solution (a joke) by then when that massive crisis occurs and companies offering value plans like McDonalds (also a joke). My point has always been if you plan for a worse case scenario you may have a chance. Wait another 15 years if you’re not loaded now and you’re toast. We’re 13 years in starting before retirement and not active investors any longer. LTC is the last target.
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Post by Deleted on Nov 12, 2022 20:06:00 GMT
@slooow , @haven , Based on a 3% inflation rate 30 years out LTC for you will be about 310k a year minus your SS if it matters. Our’s will be about 200k per year at age 90 minus SS. Saw LTC dissolve a whole life savings in about 3 years with my parents and 1mil over 10 years with a close friend’ wife. We have our finger in equities (future value unknown) and HY currently stockpiling cash if ever needed. All other situations we believe are covered at this point. You could add maybe another 75-150k total for assisted living leading up to that. Make sure you enter a facility that takes medicaid and can cover assisted living otherwise you will get transferred out before LTC. It helps to be an independent living resident of the facility also before all that at double current apartment rental costs in your area. At those costs I’m sure there will be a government solution (a joke) by then when that massive crisis occurs and companies offering value plans like McDonalds (also a joke). My point has always been if you plan for a worse case scenario you may have a chance. Wait another 15 years if you’re not loaded now and you’re toast. We’re 13 years in starting before retirement and not active investors any longer. LTC is the last target. Taking a long walk off a short pier has to be preferable to LTC in any form.
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Post by steelpony10 on Nov 12, 2022 20:37:32 GMT
@haven ,
Ha. Ha. Well the good characteristic is you won’t know you’re there. I’m just concerned about an outside spouse. Once you’re single it may be easier. I know 2 guys in now at age 80 or so and two wives in apartments paying for it all. A third, a women, just passed at an early age about 70 or so. I prefer long term planning which makes everything else in between no big deal. Otherwise from my experience it becomes too little too late
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Post by Chahta on Nov 12, 2022 21:04:46 GMT
steelpony10 said "At those costs I’m sure there will be a government solution (a joke) by then when that massive crisis occur..." Of course there will be an answer. Those that get free college will be able to chip in more for us. Also a joke. ECE Prof said "I was losing cash because of what you have described in VOO, SPY, and VTI. It happened again and again in October. I lost big money in QQQ and VGT before September. That was ok because of the nature of those ETFs. But VOO, SPY, and VTI were not spared either because of the indices were highly influenced by the Tech stocks. Get some SCHD and HDV. Of course no equities are lighting a fire but those 2 at least pay dividends. Newsflash....growth ain't doing well.
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Post by Chahta on Nov 12, 2022 21:18:41 GMT
Beating the S&P 500 is irrelevant for us retired people. The only important thing is that we can provide for ourselves with what we have. Chances are if you live off a $1m portfoliio and the time comes for LTC, $1m will go a long way. After that make sure you keep your Glock handy.
OK, we have been thru a brutal year. Now everything is doom and gloom. Nothing to look forward to. But those that have been taking 4% or less and with a couple of years in cash reserves will most likely turn out fine. Why is this any different that 15 years ago? Too many are listening to the nonsense out there.
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Post by ECE Prof on Nov 12, 2022 21:41:22 GMT
steelpony10 said "At those costs I’m sure there will be a government solution (a joke) by then when that massive crisis occur..." Of course there will be an answer. Those that get free college will be able to chip in more for us. Also a joke. ECE Prof said "I was losing cash because of what you have described in VOO, SPY, and VTI. It happened again and again in October. I lost big money in QQQ and VGT before September. That was ok because of the nature of those ETFs. But VOO, SPY, and VTI were not spared either because of the indices were highly influenced by the Tech stocks. Get some SCHD and HDV. Of course no equities are lighting a fire but those 2 at least pay dividends. Newsflash....growth ain't doing well. I have HDV now, doing ok (better than ok) along with income from the CEFs. I could not buy last week due to the transfer of our portfolios from Vanguard to FIDO. Vanguard still has a small part in one of our accounts. But, most cash has been transferred now. I will dump all my cash in HDV incrementally now. I like HDV better than SCHD. SCHD was also one of my holdings before. Besides, my annually expected income has jumped by more than 25%. It makes sense because of the peanut dividends from QQQ, VGT, VTI, and VOO. There is one problem for me. I have almost 75% gain (average, starting with 260%..) in my VTI. I will leave it alone.
Thanks both.
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Post by steelpony10 on Nov 12, 2022 23:47:27 GMT
Chahta , It’s only been 10-11 months. Next year won’t be much better either so says grandmas crystal ball. We all waited out 2 years with Covid. Life goes on so we all adapt to an unknown. Tying a dividend to an equity means if you have to sell because of some surprise permanent increase in income needs and the equity is down in value your losing some of the TR maybe leaving you with 80% growth and maybe taking some income with you. That’s why I separated the 2. I ran into that with my parents and I know 2 couples who are doing this now. Depending on markets and timing an unknown, fails again. As far as the OP a gentleman stated no one can beat an index now but he disdains bonds. No one ever mentions my little darlings. Those must be for crazy people. We banked another good amount and I’m thinking of opening positions in our taxable account in January. Ordinary income like my paycheck was of course. wealthtrack.com/sixty-years-of-investment-wisdom-from-financial-legend-charles-ellis/#more-25286
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Post by Chahta on Nov 13, 2022 14:05:15 GMT
steelpony10, I fail to understand how investors hate bonds so much but love equities that also decline in value.
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Post by Deleted on Nov 13, 2022 15:12:36 GMT
steelpony10 , I fail to understand how investors hate bonds so much but love equities that also decline in value. Certainly not very knowledgeable on bonds, but I am decreasing the percentage I have allocated to bonds (G-fund) at the beginning of 2023. The reasons why are 1) I have enough income/available liquid assets for the next 7 years because I work; 2) I find it extremely unlikely that the very low inflation and very low interest rates of the last 15 years or so will be repeated anytime soon. Additionally, from what I understand, for holding periods of 15 and 20 years, stocks have less risk than bonds. I have read that as the holding period increases, the average return SD falls nearly double for equities as opposed to fixed income assets. Stocks exhibit mean reversion. Bonds on the other hand exhibit mean aversion in inflationary times and the cumulative effects leave little chance for bond holders to make up the loss to purchasing power. Mean reversion vs Mean aversion means that stocks have a better chance of making up losses. Having said all that - I did not study nor do the tests that lead to these conclusions. But it makes imminent sense to me that bondholders pay the inflation tax. Bonds often beat equity returns in the short term, but not in the long term. This is again why many who hold equities, find it difficult to stay the course if they have a short term perspective. If one needs bonds for liquidity or to sleep well at night, they are a great addition.
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Post by win1177 on Nov 13, 2022 15:16:52 GMT
win1177 , "I think it is VERY hard to consistent “beat” the market long term, and especially “time” the market." I agree, generally. First, how someone thinks about this may well depend on where they are in their investing journey. You and Sara are still working and are able to continue to invest new money on a regular basis. Continuing to invest in higher expected return vehicles may the most sense as you will be gaining shares at lower prices and eventually be far better off. However, it isn't so simple for retired folks with no investible income coming in. So while I don't generally like market timing, like 2008, this is a period when going to cash, T-bills and a small recent bond stake makes sense to me. I don't need to make a lot of money, but I don't want to watch my portfolio go down 30% either. We all gamble to an extent with investments and I'm betting on a recession and lower equity prices than today in the next year or so. At 77, I'll likely never go above 40% of equities and think bonds are where the easy money is to be made starting pre-recession. Horses for courses. Mozart, I retired at the beginning of 2022, so my ability to “invest new money” has dropped somewhat. However, we are still generating more income than our outflows, so I do have a (smaller) amount to reinvest. I had the misfortune to retire right into a bear market, so much for “timing” things! However, I am growing a little more cautious as time goes on. First, I have traditionally been VERY aggressive in our allocation- often 90+% in equity. It has paid off with a very large portfolio, more than my wife and I will probably ever need. We are saving the “excess” as both money that will eventually be left to our children, future grandchildren, as well as possible long term care if either one of us needs it (self insured). So we can afford to be “aggressive” with our investment portfolio. Now starting to look at adding some bonds/ CD’s, etc., since I retired 11 months ago. Looking at moving some of our cash (14%) into bonds/ fixed income. We currently have less than 1% in bonds, but planning on increasing that over the next year or so. Also, looking to move some cash into more diversified dividend growth funds, that align with my investment goals. I did do some “timing” this year, got OUT of bonds when rates started shooting up, saved us from worsening losses, and now planning on going back into bonds when rates appear “closer” to the top. Timing that might be “tricky”. Win
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Post by Deleted on Nov 13, 2022 15:22:37 GMT
win1177 , "I think it is VERY hard to consistent “beat” the market long term, and especially “time” the market." I agree, generally. First, how someone thinks about this may well depend on where they are in their investing journey. You and Sara are still working and are able to continue to invest new money on a regular basis. Continuing to invest in higher expected return vehicles may the most sense as you will be gaining shares at lower prices and eventually be far better off. However, it isn't so simple for retired folks with no investible income coming in. So while I don't generally like market timing, like 2008, this is a period when going to cash, T-bills and a small recent bond stake makes sense to me. I don't need to make a lot of money, but I don't want to watch my portfolio go down 30% either. We all gamble to an extent with investments and I'm betting on a recession and lower equity prices than today in the next year or so. At 77, I'll likely never go above 40% of equities and think bonds are where the easy money is to be made starting pre-recession. Horses for courses. Mozart, I retired at the beginning of 2022, so my ability to “invest new money” has dropped somewhat. However, we are still generating more income than our outflows, so I do have a (smaller) amount to reinvest. I had the misfortune to retire right into a bear market, so much for “timing” things! However, I am growing a little more cautious as time goes on. First, I have traditionally been VERY aggressive in our allocation- often 90+% in equity. It has paid off with a very large portfolio, more than my wife and I will probably ever need. We are saving the “excess” as both money that will eventually be left to our children, future grandchildren, as well as possible long term care if either one of us needs it (self insured). So we can afford to be “aggressive” with our investment portfolio. Now starting to look at adding some bonds/ CD’s, etc., since I retired 11 months ago. Looking at moving some of our cash (14%) into bonds/ fixed income. We currently have less than 1% in bonds, but planning on increasing that over the next year or so. Also, looking to move some cash into more diversified dividend growth funds, that align with my investment goals. I did do some “timing” this year, got OUT of bonds when rates started shooting up, saved us from worsening losses, and now planning on going back into bonds when rates appear “closer” to the top. Timing that might be “tricky”. Win Win - I would suggest watching the Charley Ellis interview on Wealthtrack. He makes a good point to make your investing decisions based on when you need the money. I am now going the opposite and increasing my risk (not based on the interview) after seeing how I psychologically handled this year. I am leaning towards a 90-10 for this year - but I am still working. I don't know if I would sleep well with even less, so am stepping down to see.
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Post by Chahta on Nov 13, 2022 17:08:01 GMT
Interesting listen to Charlie Ellis. He is an old school traditional investor. His advice is great for those that are still making a living or have enough income via SS and/or other reliable source. It would be interesting to have him address the other side of retirement. What does he suggest to provide an income stream for those relying on their portfolio. Thanks for the tip.
What are your thoughts on providing an income stream for yourself, @slooow? BTW I agree with high % equity portfolios prior to retirement. I was 100% until 2 years before to make sure I had something guaranteed to avoid as much sequence risk as possible.
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Post by FD1000 on Nov 13, 2022 19:09:43 GMT
Mozart, I retired at the beginning of 2022, so my ability to “invest new money” has dropped somewhat. However, we are still generating more income than our outflows, so I do have a (smaller) amount to reinvest. I had the misfortune to retire right into a bear market, so much for “timing” things! However, I am growing a little more cautious as time goes on. First, I have traditionally been VERY aggressive in our allocation- often 90+% in equity. It has paid off with a very large portfolio, more than my wife and I will probably ever need. We are saving the “excess” as both money that will eventually be left to our children, future grandchildren, as well as possible long term care if either one of us needs it (self insured). So we can afford to be “aggressive” with our investment portfolio. Now starting to look at adding some bonds/ CD’s, etc., since I retired 11 months ago. Looking at moving some of our cash (14%) into bonds/ fixed income. We currently have less than 1% in bonds, but planning on increasing that over the next year or so. Also, looking to move some cash into more diversified dividend growth funds, that align with my investment goals. I did do some “timing” this year, got OUT of bonds when rates started shooting up, saved us from worsening losses, and now planning on going back into bonds when rates appear “closer” to the top. Timing that might be “tricky”. Win Win - I would suggest watching the Charley Ellis interview on Wealthtrack. He makes a good point to make your investing decisions based on when you need the money. I am now going the opposite and increasing my risk (not based on the interview) after seeing how I psychologically handled this year. I am leaning towards a 90-10 for this year - but I am still working. I don't know if I would sleep well with even less, so am stepping down to see. Mostly reasonable interview. This is what I learned from the interview: 1) "According to Darwin’s Origin of Species, it is not the most intellectual of the species that survives; it is not the strongest that survives; but the species that survives is the one that is able best to adapt and adjust to the changing environment in which it finds itself." FD: does the above remind you of what I have said for years 2) Ellis was an adviser to the legendary, Swensen( link), who managed Yale endowment. Swensen was a practitioner of outside the box investing style. 3) Ellis: transaction fee + taxes matter. FD:No, they don't, smart investors make all/most of their trades in IRA and use fund OEFs that cost nothing to switch...or...many ETFs are now free to trades and have cheap ER too. Both VOO + SCHD have ER<=0.06%. Ellis thinks we are in 1980. 4) Ellis: Most fund managers can't beat the index, even if they put long hours. FD: Sara, with that in mind, these managers have several high degrees, a lot more time and access than you, so why are you still doing it?5) Ellis: if you need the money soon (1-2) years, treasuries are the best. Need it in 5-7 years, bonds. In 10+ years, ALL stocks. FD: I guess he forgot treasuries in 2022. If I follow Ellis advice, we need just 10% of our portfolio to live on, in the next 10 years and I need to invest 90% in stocks. I say he is LOCO. Retirees who have enough, should not take all the risk, only the risk they want. Ellis doesn't understand (or doesn't care to discuss) the concept of risk-adjusted returns, he only cares about performance. Remember, I retired debt free, including my kid's education, and we own our house and vehicles, do we need to be at 90% stocks when we can live another 30+ years? Noooooooooooo. But, when I get to be 70-75 years old, I will start changing and maybe very high % in stocks at age 85. Of course, if you have WTF money, nothing matters...wait, it would always matter to me. And as usual, he never discussed other bond categories, except treasuries.
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Post by steelpony10 on Nov 13, 2022 19:42:32 GMT
Chahta , I picked up years ago that bonds pay a steady income but long term equities show growth of principle in addition to income. Bonds are range bound, CEF’s are also range bound but have a wider range. So there’s a big difference between spending down and living on income. Professionally building a lifestyle around capital gains and spend down is work. Income investing takes less work but maybe a larger portfolio to implement depending on your needs. Marking timing is a disreputable “tool” no matter what “you think”. It isn’t professional just amateurish.
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Post by steelpony10 on Nov 13, 2022 20:06:39 GMT
mozart522 About 7-8 years before we retired we invested to replace our income from work supplemented by SS. We also created extra income to continue to invest for inflation and raises for future factual permanent increases in needs using a 3.5% inflation rate and LTC costs of 120k a year using the same rate. The basic outline of that plan is on a framed napkin. No market projections were used nor allocations or diversification guessed. It was strictly customized to our current needs with wiggle room to tweak as unknowns presented themselves.
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Post by FD1000 on Nov 13, 2022 20:07:12 GMT
Chahta , I picked up years ago that bonds pay a steady income but long term equities show growth of principle in addition to income. Bonds are range bound, CEF’s are also range bound but have a wider range. So there’s a big difference between spending down and living on income. Professionally building a lifestyle around capital gains and spend down is work. Income investing takes less work but maybe a larger portfolio to implement depending on your needs. Marking timing is a disreputable “tool” no matter what “you think”. It isn’t professional just amateurish. How many times are you going to make up the above? Suppose I have 1 million in FXAIX(SP500) and I need $3000 monthly. I set a monthly, a sell order of $3000, on a certain date, forever. In 2 minutes, my work is done for years. If I need to adjust this amount, I change this amount in 2 minutes for months (maybe years) to come. Remember, the SP500 is the easiest, best LT investment known in the world, with excellent record, not depending on any managers. But, you have thousands of other choices using other funds. It's pretty easy and recommended for most investors to use just several funds.
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Post by Mustang on Nov 13, 2022 22:10:27 GMT
5) Ellis: if you need the money soon (1-2) years, treasuries are the best. Need it in 5-7 years, bonds. In 10+ years, ALL stocks. FD: I guess he forgot treasuries in 2022. If I follow Ellis advice, we need just 10% of our portfolio to live on, in the next 10 years and I need to invest 90% in stocks. I say he is LOCO. Retirees who have enough, should not take all the risk, only the risk they want. Ellis doesn't understand (or doesn't care to discuss) the concept of risk-adjusted returns, he only cares about performance. Remember, I retired debt free, including my kid's education, and we own our house and vehicles, do we need to be at 90% stocks when we can live another 30+ years? Noooooooooooo. But, when I get to be 70-75 years old, I will start changing and maybe very high % in stocks at age 85. Of course, if you have WTF money, nothing matters...wait, it would always matter to me. And as usual, he never discussed other bond categories, except treasuries. On the surface it sounds as if Ellis is talking about the bucket strategy that Morningstar talks about: cash, bonds, and stocks. The idea is that the investor replenishes cash every year from the best performing of the other two buckets. Some call it pruning back. Some years bonds outperform stocks so cash is replenished from them. Other years stock outperform bonds.
I think Morningstar makes the strategy overly complicated by using multiple bond funds and multiple stock funds so I have never really been fond of it. Harold Evensky pioneered the strategy. He said in a 2010 interview that the sensible number of buckets for a do-it-yourself investor was two. He is said to have simply bolted on a cash account to his total return portfolios. Distributions are only from growth. Cash is spent first and replenished from growth. A failure is when cash runs out and it has to be replenished early..
I read a comment about the bucket strategy that made me smile. It said that spending cash first is like eating your canned goods while fresh vegetables are ripening in the garden.
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Post by Deleted on Nov 13, 2022 22:13:28 GMT
Interesting listen to Charlie Ellis. He is an old school traditional investor. His advice is great for those that are still making a living or have enough income via SS and/or other reliable source. It would be interesting to have him address the other side of retirement. What does he suggest to provide an income stream for those relying on their portfolio. Thanks for the tip. What are your thoughts on providing an income stream for yourself, @slooow ? BTW I agree with high % equity portfolios prior to retirement. I was 100% until 2 years before to make sure I had something guaranteed to avoid as much sequence risk as possible. I agree - it would be interesting to hear what he advises once you get to retirement and don't have work income. For myself, I've built a diversified portfolio of mainly large cap dividend stocks and growth. My style box on Fidelity has me inline with the market index weightings for large, mid, and small, but with much more in value than growth - except with value tilt am down much less this year. I have been fortunate with the growth I selected (mainly AAPL and FB which I sold once Zuckerberg changed the vision). I am well diversified so pretty much mirror market returns. Like Ellis points out, taxes are a huge consideration for me due to the amount in my taxable account versus deferred accounts. My income yield is nearly double the S&P and is already where I need it to be. I have actually played it safer than you and will increase risk this next year, but still with keeping in mind it could take a market 10 years to recover! That's when the dividend income stream hopefully carries the water. Mustang , It made me think of the bucket strategy concept too which I view as simple common sense. Have enough liquidity to cover expenses. steelpony10, I agree you need to build a large portfolio to implement a relatively safe/stable dividend income stream. Time and compounding are remarkable for this.
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Post by richardsok on Nov 13, 2022 22:37:56 GMT
A slightly off-topic remark:
I am now finishing and proof-reading my book on investing. A large part of it deals with market timing and trading technical indicators just as we've debated a hundred times.... plus a deep look at managing emotions and hunches involved in trading. The heart of my book covers methods and ideas we've never discussed here -- or anywhere else I've ever read.
I was wondering if one of the experienced BB regulars would fact-check my section that discusses closed end funds. (It's about six or seven pages long.) If curious, I could also show the opening and closing chapters -- but it's the trading closed-end fund section that needs a suspicious look-over. (I'm unable to give a pre-published look-see of the book's entirety.) I'm pretty confident in the CEF chapter -- and in the entire book -- but don't want to slip and accidentally write a stupid howler some place.
Anyone willing just message me. I'll get the manuscript section to you -- and you get my gratitude and a free book out of it.
(I have already OK'd this request with chang.)
Thanks.
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Post by Chahta on Nov 13, 2022 23:24:53 GMT
I too thought of buckets when I listened to that interview. To me buckets are nothing more than thoughts on how to organize a portfolio.
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Post by Chahta on Nov 13, 2022 23:31:36 GMT
FD1000 said: "3) Ellis: transaction fee + taxes matter. FD:No, they don't, smart investors make all/most of their trades in IRA and use fund OEFs that cost nothing to switch...or...many ETFs are now free to trades and have cheap ER too. Both VOO + SCHD have ER<=0.06%. Ellis thinks we are in 1980. When you start RMDS and grow your taxable account, how will you generate money to live on? Will you still trade paying taxes on short term CGs? I get it that now we can trade on IRAs tax free but not forever. Just curious.
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Post by Deleted on Nov 13, 2022 23:47:20 GMT
Chahta , I picked up years ago that bonds pay a steady income but long term equities show growth of principle in addition to income. Bonds are range bound, CEF’s are also range bound but have a wider range. So there’s a big difference between spending down and living on income. Professionally building a lifestyle around capital gains and spend down is work. Income investing takes less work but maybe a larger portfolio to implement depending on your needs. Marking timing is a disreputable “tool” no matter what “you think”. It isn’t professional just amateurish. How many times are you going to make up the above? Suppose I have 1 million in FXAIX(SP500) and I need $3000 monthly. I set a monthly, a sell order of $3000, on a certain date, forever. In 2 minutes, my work is done for years. If I need to adjust this amount, I change this amount in 2 minutes for months (maybe years) to come. Remember, the SP500 is the easiest, best LT investment known in the world, with excellent record, not depending on any managers. But, you have thousands of other choices using other funds. It's pretty easy and recommended for most investors to use just several funds. FD1000 , You are dismissive of tax impacts on a portfolio and now sequence of return risks. This might be because they don't apply to you (taxes) or you don't see a need for concern about sequence of return risks. Many of us do have tax considerations and many of us plan to avoid sequence of returns risk. Please see article form M* which well explains it. Steelpony had some very unfortunate experiences with long term care and relatives. He saw their entire savings decimated. Sequence of return risk is a reason I like dividend income. Some like CEFs. Some like selling of the S&P. You like doing whatever you do. All can fail and outcomes for the investor in terms of lifestyle impact are based on very individual circumstances. Sequences of returns risk - www.morningstar.com/articles/1048704/sequence-of-returns-what-it-means-and-how-to-dealsteelpony10 , Since we have some folks who trade and seem to do okay, might be best to give that strategy the benefit of the doubt. I sure don't subscribe to it, and do understand if someone were constantly picking at what has been successful for me for 4 decades, might make me more cynical towards unproven results. Edit - also thinking about the statement that investing in the S&P is so dang easy - study after study shows most investors cannot stay invested - they move in and out and sacrifice return. Interesting chart - look at REITS! Look at the gap of investor return vs the S&P. Chart is only to 2015. www.wauchulastatebank.com/blog/sp-500-vs-average-investorIt isn't easy to stay invested in the S&P. This year as a case in point. It has been down right scary. 2000 and 2008 would have been even more so. But when one says the S&P has the best return - it is based on staying in through all these times. Not easy.
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Post by ECE Prof on Nov 14, 2022 0:48:44 GMT
"Ellis thinks we are in 1980."
LOL. That is a perfect description of Vanguard. The world has left many behind. That is what my granddaughters are thinking of me too. They both taught me simple codings using steps and cartoons to me. I have never seen these before, and how teaching of even high level stuff can be brought to the cartoon world. The world keeps moving.
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Post by steelpony10 on Nov 14, 2022 1:19:21 GMT
@slooow ,
You’re correct markets are a big casino now. Gambling addiction. I guess one would have to define “doing ok”. I play poker a lot, a gambling addiction itself with much smaller amounts at risk, where if you answer you “did ok” that means mediocre at best.
I just press the easy button and let the pros handle the real money. All the benefits and none of the work, stress or boredom of long market lulls. Undervalued is not as exciting as overvalued but thats where money is made so the pros say which I believe. I just need a compound calculator, the rule of 72 and my experience as tools.
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Post by mozart522 on Nov 14, 2022 13:14:02 GMT
Interesting listen to Charlie Ellis. He is an old school traditional investor. His advice is great for those that are still making a living or have enough income via SS and/or other reliable source. It would be interesting to have him address the other side of retirement. What does he suggest to provide an income stream for those relying on their portfolio. Thanks for the tip. What are your thoughts on providing an income stream for yourself, @slooow ? BTW I agree with high % equity portfolios prior to retirement. I was 100% until 2 years before to make sure I had something guaranteed to avoid as much sequence risk as possible. My guess is Charlie would suggest holding an index based portfolio whose asset allocation you are comfortable with, and reating income by selling whatever asset is up the most as a means of rebalancing. Basic Boglehead stuff, from a guy who was on Vanguard's board for many years, and wrote "Winning the Losers Game"
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Post by mozart522 on Nov 14, 2022 14:12:52 GMT
steelpony10, For me, total return is all that matters. I'm less interested in risk adjusted returns, because they can only be known after the fact and I'd rather have a 10% return with a low alpha than a 3% return with a high alpha. There is no basis for believing that alpha persists in general. Since income investing involves the use of value stocks, it is a compromise between relatively steady and growing income and perhaps optimal total return using growth and blend stocks. Part of that compromise is income investors generally have lower SD. But TR investors, as FD points out, can create their own income very easily, and have the advantage of taking that income only when they need or want it without being forced to take more, particularly in taxable accounts. Either type of investing "works". Most types of conventional investing in stocks and bonds require little more than a strong belief in your strategy and sticking with it to be successful. I define successful as getting what you need, not the highest possible return. Few of us could handle 100% small-cap value. While market timing can work, it takes skill, work, and a willingness to be wrong at times; home runs and strikeouts. Real market timers live on their keyboards. So how we each invest is less about which strategy is best and more about how we are individually hardwired and influenced through our experiences. IMHO
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