The Long View, Ignoring the noise, and staying the course

[Dont_know_mind]

I don’t see why this makes a difference.
A few months ago, at all time market highs, we should all have been worried that the CAPE ratio was very high, predicting lower market returns going forward.

So at the top of a bull market, IMO you need to have a bit of a savings cushion before retirement to mitigate lower expected future returns.

When the market is lower you need to save a bit more to make up for your losses.

Either way, in a bull market or a bear market, you’ve got something to worry about.

Yes, there's always worries.
When I look back at my mistakes, I would have done better if I had worried less. And taken more risk. I think I was too risk averse age 35-40. But it may have turned out better if there had been a great depression during that period. I read the Morgan Housel book "Psychology of Money" last year and the chapter on compounding I wish I had read earlier in my life. That's the nut of it.

[Random1]

I dont get it, a few months ago, people were borrowing from their equity in their houses to buy more stocks at already inflated prices fearing that they were going to miss out. Stocks are down now, some would consider in a bargin range ( maybe a permanent bargin) . But companies dont just go out of business when the news goes bad, visa , exxon , microsoft , walmart , they all still make money , maybe less but they are all still making money. Exxon has 82 billion in sales with a profit margin of 10% . Visa has a net income of 4 billion with a 56% profit margin. These are multinational companies who will find the dollar(or foreign equivalent) anywhere in the world they can. If you are feeling the jitters , unplug for a while and sit tight and reread a basic book on finance and investing.

[Hatton]

Good thread. As some of you now I am retired. I find I worry much less about money now. I have what I have. What am I doing? Ignoring the news mostly. I check my portfolio to look for tax loss harvesting opportunities. I have Roth converted. I bought a QLAC. I bought Ibonds. I recently bought some Tesla shares. This may be a mistake but so far it is up. I am keeping cash.

[Tangler]

Good thread. As some of you now I am retired. I find I worry much less about money now. I have what I have. What am I doing? Ignoring the news mostly. I check my portfolio to look for tax loss harvesting opportunities. I have Roth converted. I bought a QLAC. I bought Ibonds. I recently bought some Tesla shares. This may be a mistake but so far it is up. I am keeping cash.

Thanks!

I think I have watched too much news. (War, state of union, etc.)

I have also been slowly buying, but find myself sad (rather than excited) about buying lately.

My general overall mood is less optimistic than it was before all of this which is totally irrational since now prices are lower.

I am an irrational pattern seeking primate who is overconfident about my ability to predict the future.

Recency bias.

[Tangler]

I dont get it, a few months ago, people were borrowing from their equity in their houses to buy more stocks at already inflated prices fearing that they were going to miss out. Stocks are down now, some would consider in a bargin range ( maybe a permanent bargin) . But companies dont just go out of business when the news goes bad, visa , exxon , microsoft , walmart , they all still make money , maybe less but they are all still making money. Exxon has 82 billion in sales with a profit margin of 10% . Visa has a net income of 4 billion with a 56% profit margin. These are multinational companies who will find the dollar(or foreign equivalent) anywhere in the world they can. If you are feeling the jitters , unplug for a while and sit tight and reread a basic book on finance and investing.

Everything you say is true, but "this time it is different"!

Just kidding. For the record, I paid off my mortgage (not a fan of debt). No debt. Age = 48.

However for people who are in their 30s with 20+ years of work left ahead and a mortgage rate of <3% I would still say it is intelligent to be 100% stocks and keep the mortgage.

I just need to turn off the news.

[Tangler]

Yes, there's always worries.
When I look back at my mistakes, I would have done better if I had worried less. And taken more risk. I think I was too risk averse age 35-40. But it may have turned out better if there had been a great depression during that period. I read the Morgan Housel book "Psychology of Money" last year and the chapter on compounding I wish I had read earlier in my life. That's the nut of it.

You are right! That is a great book! Worrying helps nothing. Thank you!

[mkintx]

This is a great thread. I am now reading about SORR, QLAC, etc. Hadn't even realized the market had taken a downturn as I don't really check it at all, which is my general strategy since I am years away from retirement.

[BruinBones]

Timely post, of course. I had this conversation with my wife last night, because most of the credit card hack websites she peruses are talking about not just an economy correction or recession but a full blown depression.
She is concerned about SORR since we are still in the first few years of retirement. I had to reassure her that I would not have FIREd if I wasn’t confident that our portfolio and its asset allocation was configured such that we would still be fine through good and bad economic times without the need for significant change or drastic measures.
If you have a sound, well-thought out plan, then there is no reason not to “stay the course.”

[Lordosis]

I was much more worried 2 years ago. Maybe it was the nature of the crisis but I remember having a much more pessimistic view of the economy compared to now.

I horsed around with a play account trying to catch some of that volatility but ended up doing worse so I learned my lesson. I am just going to ride this one down and back up the other side. It might be today or it might be 5-10 years from now. But I am just going to keep shoveling.

Maybe I have just been to busy to pay enough attention. Ignorance is bliss.

[artemis]

I'm still putting money in the market, and still taking advantage of opportunities to slowly tax-loss harvest my way out of Vanguard Total International into Vanguard Developed Markets. (Sold $3,000 shares of Total International today for a $40 loss; it's not much, but every little bit helps!) Now is not the time to make big moves based solely on market swings. A well-thought-out plan should weather this!

[Tim]

its a little different for the recently retired. I sold my practice a few months ago and these are fairly scary times. in addition to VTI and VXUS being down 12% long treasuries are also down 7%. the only part of my portfolio in the green is my intermediate TIPS fund (and just barely positive ytd). I only have 5 years of expenses in TIPS so I might be headed back to the salt mines if things don't turn around within a few years...

“Stories like his bug me, because they create the illusion that I ought to be doing something, and that if I did I might be protected, or at least better off. There may be some people who can be successful at this. The crucial piece is knowing whether or not you are one of them.”

Plan through the end! Regardless of the market.

You may be wrong, you may be right.

[JBME]

Good thread. As some of you now I am retired. I find I worry much less about money now. I have what I have. What am I doing? Ignoring the news mostly. I check my portfolio to look for tax loss harvesting opportunities. I have Roth converted. I bought a QLAC. I bought Ibonds. I recently bought some Tesla shares. This may be a mistake but so far it is up. I am keeping cash.

This is a great take. For the majority of us, we are still investing. And if someone is retired and worries less about money now even during the downturn, that should tell you a lot about how you should feel if you're still investing. Don't worry!

What I would do is count your blessings. Stocks are on sale! I decided back in Dec 2021 that we'd tilt more of our future contributions to Roth 401k rather than traditional so we have better tax diversification. So my take is I'm happy that we have a bunch of roth money we're buying on sale, for when it comes back (whether it takes 1, 5, 10, or 20 years) all those gains will be tax free.

To scratch the "timing" itch I've done one Roth conversion within my 401k so far this year. I'll consider doing another one soon but I want to make sure the conversions don't put us into the 32% bracket.

[Kamban]

My mother-in-law is 82, she is Japanese and lived in Japan for years. In Tokyo she rented and said: “almost every one rents as the homes go down in value with time….” I don’t know if this is true or if it is just her thoughts or if this is for the last 20-50 years or………

Nice article about the planned obsolescence of Japanese homes. The designs might be new and sometimes outlandish but the construction is shoddy and the upkeep is poor, since it will be demolished in 20-30 year time frame

https://robbreport.com/shelter/home-...hy-1234608438/

The vast majority of these new builds replace existing new-ish dwellings. The Japanese government dictates the “useful life” of a wooden house (by far the most common building material) to be 22 years, so it officially depreciates over that period according to a schedule set by the National Tax Agency. Even if buyers wanted to (which they don’t), they would struggle to purchase an older property, as banks will not lend against a worthless asset. “The banks and real-estate agents cannot value the building beyond book value,” says Toshiko Kinoshita, a Tokyo architectural historian.

[Antares]

What's your friend's personal investing track record, it might be a lot worse than you think.
I guess in hedge fund land, you get a fee for selling a narrative or perceived value add.

Its quite possible. I have no access to that info. The hard part is he talks such a good, confident game, and his reasoning is way beyond anything I can match on anything like an equal footing. But you’re right. He may well do no better or even worse than just sitting tight. But I react to his certainty that “measures must be taken!”
Fortunately I almost never take them….But he scares the ************************ out of me sometimes!

(Imagine that - you’re not permitted to evoke the imaginary place evildoers go after life - never realized that before!)

[VagabondMD]

If you are really intent on ignoring the noise, stop listening to The Long View. (Really.)