I also recently read the idea that “once you’ve won the race, stop running”. If you have a secure retirement, pull your money out to safety.
I’m not entirely sure that means to sell all of your investments and put all of your money in cash.
I’d read it as simply reducing the risks you take. If you were an investor in cutting edge growth stocks, back it off to more blue chips. If you tended to manage a portfolio of longer term holds, consider switching to an index (or 3).
If you have all you need for a secure retirement, invest to keep up with inflation and stop there. You no longer need to beat the market by some margin. You just need to keep up with it.
On the other hand, if you have way more than you need for a secure retirement, in that you’re now effectively investing for your heirs, some risks may still be worth taking. Or perhaps give some of it away now so you can see how the money you don’t need is doing good somewhere.
If you have a secure retirement, pull your money out to safety.
How do you define ‘safety’? Because keeping cash exposes you to inflation risk. Holding bonds exposes you to default risk and interest rate risk. Holding stocks exposes you to market risk. Etc., etc. - every investment has some type of risk. Pay your money, take your choice. But there is no ‘risk-free’ investment.
As you point out, nothing is risk free in the investment world. The risk I wish to avoid is running out of money (and the disruptions that would precede running out of money)
It is almost certain when my wife and I are both gone, there will be significant funds left over.
There certainly will be changes in our actual holdings - but the core distribution will not change. 65% to 70% equities, 3% to 5% cash (and <90 day paper). The remainder bonds. We have a portion of our equities (~5% of portfolio) in a couple of Aperio activity managed funds.
The number I track is percentage of our portfolio we have spent in the preceding 12 months. I find budgets restrictive - we have never budgeting anything except saving for retirement during our working years.
“f you have a secure retirement, pull your money out to safety.”
Once upon a time, you could stash 5 years worth of living expenses ( not including annual SS take and any pensions) with interest rates more than inflation.
Those days are over. You can get a few percent interest on five year CDs…and a rolling ladder of five years worked decently. You didn’t lose purchasing power.
Now…CDs are a few percent and annual inflation 8-10%. You take a bath. In five years, your CD is worth almost down to half of what you paid for it in inflation adjusted dollars!
Even worse is putting it in a money market fund.
So…keep a few years maybe in short term funds…but if you expect to live off your portfolio for 30 years, you better consider ‘riskier investments’ to avoid taking a bath on inflation.
So far, my dividend paying stocks are chugging along. But dividends can be cut if companies don’t do as well
I feel a bit of sympathy for the ‘newish’ investors in the FAANG type stocks. Wow…UBER down 48%. Faceboook down 42%. Amazon down 36%. Tesla down 34%. Google down 22%. Bitcoin down to half of peak value SNAP down 50%. Disney down 32%. Ouch. 40% of ‘investors’ now underwater. Those that join the high flyer club…sometime crash back to Earth…
I don’t own any of them over than those in index funds…like Vanguard total market and SP500 funds…
"I feel a bit of sympathy for the ‘newish’ investors in the FAANG type stocks. Wow…UBER down 48%. Faceboook down 42%. Amazon down 36%. Tesla down 34%. Google down 22%. Bitcoin down to half of peak value SNAP down 50%. Disney down 32%. Ouch. 40% of ‘investors’ now underwater. Those that join the high flyer club…sometime crash back to Earth…
I don’t own any of them over than those in index funds…like Vanguard total market and SP500 funds…
t. "
I was just comparing charts of stocks looking at varying time periods. Looking at time periods
of 5 years and longer give a vast different view compared to looking at 2 years and less.
Investing in equities is something that requires time - folks used to use a “holding period”
of 5 years as a guideline.
Howie52
Price matters, time matters, needs and goals matter - judgement and knowledge matter.
Diversity matters.
Acronyms and momentum don’t seem to matter as much.
“I was just comparing charts of stocks looking at varying time periods. Looking at time periods
of 5 years and longer give a vast different view compared to looking at 2 years and less.”
FB (Meta) down to the same price it was five years ago
GOOG doubled in five years from 930 to 2100
APPL did nothing for 20 years - actually lost money inflation adjusted… then tripled in last 3 years.
But where will they wind up? I don’t think we are anywhere near the bottom.
Amazon has doubled in past five years…but it was up triple…then dropped to only double… but where will it wind up?
NVidia still a triple…but it was up 4 times to 5 years ago…
It did nothing for 15 years if you held it…
So…most of the ‘gains’ in these stocks happened in last 2 years - buying frenzy…and who knows? Most of the ‘drop’ might continue to back to historical P/E ratios…
Bitcoin mining helped a couple of them…but, how good is ‘crypto’ going to be? Half of them are worthless. Stable Coin? ho ho…anything but…
"FB (Meta) down to the same price it was five years ago
GOOG doubled in five years from 930 to 2100
APPL did nothing for 20 years - actually lost money inflation adjusted… then tripled in last 3 years.
But where will they wind up? I don’t think we are anywhere near the bottom.
Amazon has doubled in past five years…but it was up triple…then dropped to only double… but where will it wind up?
NVidia still a triple…but it was up 4 times to 5 years ago…
It did nothing for 15 years if you held it…
So…most of the ‘gains’ in these stocks happened in last 2 years - buying frenzy…and who knows? Most of the ‘drop’ might continue to back to historical P/E ratios…
Bitcoin mining helped a couple of them…but, how good is ‘crypto’ going to be? Half of them are worthless. Stable Coin? ho ho…anything but…
t. "
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But look at firms such as Pepsi, Chevron, Sysco, Proctor and Gamble.
Growth stocks of the days of yesteryear.
Still, a 2 year view is short-term.
Why would someone who is looking at a short-term need consider equities?
And the answer is “If someone is sold a bill of goods.”
Howie52
People frequently buy things that are presented as filling their needs - but the goods bought
are not at all suitable. The market is risky at the best of times.
And I suspect that Mr. Dickens was spot on.
The best of times and the worst of times are a matter of an individual’s circumstance.
I also recently read the idea that “once you’ve won the race, stop running”. If you have a secure retirement, pull your money out to safety.
Just make sure you have won the race. This is merely one of hundreds of similar videos. Think you have won, only to celebrate too early, and loose. In today’s environment, inflation is what will pass you at the finish line.
"Monitoring your holdings daily is not a problem - tends to be a necessity.
It’s far from necessary, unless you’re a day-trader.
Read the 10Qs and 10ks and annual report. What else is there, really?
Daily price quotes tell you nothing."
Monitoring holdings is more than checking the price - monitoring holdings would include
checking the business activities, the industry, economic activities which impact the company.
The you have management activity - business climate and activity in the regions companies
have manufacturing sites or major sales contracts.
Howie52
Basically, I try to keep up the same “due diligence” done before I buy a company. There may not be
information flowing every day - but you follow what is available in the literature.
I do find that as I have aged, I tend to scan information rather than immerse myself in the data.
That assumes things will rebound. They might but it might also take a long time to do so.
Good companies will rebound. But, yes, it could take a while. Potentially several years.
I’ve read people calling the “bottom”. In fact, someone posted on Saul last week words to the effect of “we know we’re at the bottom, and here’s how we know”. (Or something like that…he was clearly calling the bottom.) It did do a slight rebound, but everything was down again yesterday. I suspect we’re not at bottom yet. My crystal ball looks like this, so take that with a grain of salt:
Yeah…I could save the market by selling-out. If I do that, everything will go up. I have seen it before.
Yep, the biggest investing mistake I ever made by far was selling out a substantial portion, but not all thankfully, in a rush to safety in 2008. When you sell out, the devil becomes facing up to the demons of when to get back in.
