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Post by richm on Apr 23, 2024 13:18:52 GMT -5
What do they call the phenomena described as follows:
Say your $1 took a -40% dip it was now $0.60... followed by a 40% gain... it was now $0.84. The average return was 0%, but your $1 returned -16%.
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Post by nuevowavo on Apr 23, 2024 13:27:23 GMT -5
As far as I know, there's no such thing as an "average return", only a return over a certain period. Your return on the investment is a 16% loss. You can't break it down into increments.
On the other hand, why is it "a penny for your thoughts" but you "put your 2 cents in"? Who's making that penny?
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Post by richm on Apr 23, 2024 14:40:56 GMT -5
As far as I know, there's no such thing as an "average return", only a return over a certain period. Your return on the investment is a 16% loss. You can't break it down into increments. On the other hand, why is it "a penny for your thoughts" but you "put your 2 cents in"? Who's making that penny? That's good. I just thought it was crazy that we lose say 40% and then the market goes up 40% for ultimately 0 change other than going down and coming up - yet you still lose 16% and that money is like gone into the space and time continuum. Does the market somehow get that money or is it just "lost". |
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Post by richm on Apr 23, 2024 14:41:53 GMT -5
It is a good argument for systematic investment and cost averaging.
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Post by nuevowavo on Apr 23, 2024 15:27:36 GMT -5
As far as I know, there's no such thing as an "average return", only a return over a certain period. Your return on the investment is a 16% loss. You can't break it down into increments. On the other hand, why is it "a penny for your thoughts" but you "put your 2 cents in"? Who's making that penny? That's good. I just thought it was crazy that we lose say 40% and then the market goes up 40% for ultimately 0 change other than going down and coming up - yet you still lose 16% and that money is like gone into the space and time continuum. Does the market somehow get that money or is it just "lost". "The market" is just a clearinghouse. You lost the money. Whether or not the other sides of the trades makes money or loses it depends on their execution after you're gone. Remember, there's no "return", making or losing money until you sell, dependent on where you bought.
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Post by richm on Apr 23, 2024 21:35:10 GMT -5
Gotcha.
For whatever reason i saw/hoped it was a zero sum/balanced game we play.
Seeing how much damage just riding thru a decent drop causes is eye opening. Id want to at least put some money in when it drops to not just lose as much.
But what is the best thing to do when we start withdrawing as opposed to adding or even just trying to sit steady and gain interest?
Buddy just spoke w Fiddlity and they told him 85% stocks 15% bonds vs Fisher w 70/30. He said he’s more comfy w 30% bonds.
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Post by ferris1248 on Apr 24, 2024 5:35:31 GMT -5
Old school way of thinking but it works if you have the years to wait while the market goes through it's machinations.
Being more conservative, I'm about 55% in cash, bonds, CDs, annuities and 25% in dividend type stocks. I have the rest in dirt and a few houses.
Also re what Neuvo said. You haven't lost anything till you sell.
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Post by nuevowavo on Apr 24, 2024 13:00:45 GMT -5
Gotcha. For whatever reason i saw/hoped it was a zero sum/balanced game we play. Seeing how much damage just riding thru a decent drop causes is eye opening. Id want to at least put some money in when it drops to not just lose as much. But what is the best thing to do when we start withdrawing as opposed to adding or even just trying to sit steady and gain interest? Buddy just spoke w Fiddlity and they told him 85% stocks 15% bonds vs Fisher w 70/30. He said he’s more comfy w 30% bonds.
I'm in the withdrawing phase, although I haven't touched principal, just taken profits. Keep my dry powder in Schwab money market at 5.25%. Other than that, 100% equities, at Fisher.
No bonds, and I was in the bond business my entire career. You can tell Fisher how you want it invested. I told them they can have it as long as they beat the S & P. To my surprise, so far they have.
To mitigate risk I take all my profits when I'm up 10% and put it into the MM fund.
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Post by madm002 on Apr 24, 2024 14:10:18 GMT -5
What do they call the phenomena described as follows: Say your $1 took a -40% dip it was now $0.60... followed by a 40% gain... it was now $0.84. The average return was 0%, but your $1 returned -16%. You just pointed out what most people do not get. It is very hard to gain back big losses you have to gain more proportionately than you lost. |
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Post by madm002 on Apr 25, 2024 7:53:47 GMT -5
Gotcha. For whatever reason i saw/hoped it was a zero sum/balanced game we play. Seeing how much damage just riding thru a decent drop causes is eye opening. Id want to at least put some money in when it drops to not just lose as much. But what is the best thing to do when we start withdrawing as opposed to adding or even just trying to sit steady and gain interest? Buddy just spoke w Fiddlity and they told him 85% stocks 15% bonds vs Fisher w 70/30. He said he’s more comfy w 30% bonds.
I'm in the withdrawing phase, although I haven't touched principal, just taken profits. Keep my dry powder in Schwab money market at 5.25%. Other than that, 100% equities, at Fisher.
No bonds, and I was in the bond business my entire career. You can tell Fisher how you want it invested. I told them they can have it as long as they beat the S & P. To my surprise, so far they have.
To mitigate risk I take all my profits when I'm up 10% and put it into the MM fund.
What has been your average return with Fisher been if I may ask? I am consolidating my pittance into one account and trying to decide where to go. Also debating the 60/40 stocks / FI split that the world historically recommends. I find it fascinating that after a career in bonds you do not own any bonds? |
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Post by ferris1248 on Apr 25, 2024 8:02:57 GMT -5
I'd bet he understands the risks involved better than us mere mortals.
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Post by Deleted on Apr 25, 2024 8:39:43 GMT -5
It seems like the “unrealized gains” tax laws that they are now talking about will really mess up the investment environment. I personally think even considering such a tax law is insane
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Post by swampdog on Apr 25, 2024 8:44:13 GMT -5
So I’m now working on my third million. I gave up on the first two…
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Post by richm on Apr 25, 2024 9:00:31 GMT -5
I gave up my first one by being self employed w wrong attitude for the business. I'm a worker, not schmoozer and schmoozers get the work.
Wanting to see the best ways to estimate what will be necessary for retirement. Got no kids of my own and the step kids have a rich dad, so don't feel like leaving an inheritance. All the stuff i read basically say to take your income now and pull a number outta yer butt for what you need in retirement.
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Post by madm002 on Apr 25, 2024 13:40:42 GMT -5
I gave up my first one by being self employed w wrong attitude for the business. I'm a worker, not schmoozer and schmoozers get the work. Wanting to see the best ways to estimate what will be necessary for retirement. Got no kids of my own and the step kids have a rich dad, so don't feel like leaving an inheritance. All the stuff i read basically say to take your income now and pull a number outta yer butt for what you need in retirement. I just went through this exercise. First you need a detailed, very detailed budget of your expenses when you retire. Take into account inflation between then and now. Assuming you are good with excel you then build an excel sheet that takes your current assets and projects them out at your retirement age using a rate of return assumption. There is an @function for that. The you make an assumption of how much you can save or put away each year and perform the same analysis, it is a little trickier process but the same option. You take the total of the two and estimate a return on your investment percent, a conservative average would be 8%. What you earn on your investment needs to cover your projected living expenses. I did not build in inflation in the outer years as I should have, as I plan on taking much less than I could out of the yearly returns. But to have rigor you should. DO NOT USE AI to try this excercise, they will always give you the wrong answer. |
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Post by nuevowavo on Apr 25, 2024 14:11:05 GMT -5
I'm in the withdrawing phase, although I haven't touched principal, just taken profits. Keep my dry powder in Schwab money market at 5.25%. Other than that, 100% equities, at Fisher.
No bonds, and I was in the bond business my entire career. You can tell Fisher how you want it invested. I told them they can have it as long as they beat the S & P. To my surprise, so far they have.
To mitigate risk I take all my profits when I'm up 10% and put it into the MM fund.
What has been your average return with Fisher been if I may ask? I am consolidating my pittance into one account and trying to decide where to go. Also debating the 60/40 stocks / FI split that the world historically recommends. I find it fascinating that after a career in bonds you do not own any bonds?
I handed money to Fisher in the summer of '22. Held them off on putting it to work until the middle of September (I know, you're not supposed to time the market, but in this case I did), at which point they immediately invested all of it, with my directions to keep it in U.S. based companies (they typically take more of a worldview, using the MSCI as their benchmark).
Every time I'm up 10% I take out my profit. I've done that 5 times, in January, April and June '23 and January and March '24. The great thing is that when I sell, they execute with an eye toward portfolio balancing and tax consequences, as opposed to a cookie cutter, one-size-fits-all manager who sells equally across the board, as would also happen in a mutual fund.
My decision to keep it 100% in equities is based on the historic returns. Nothing against bonds, but stocks have beaten them significantly over time, and I guess I have more tolerance for risk than most at my age. I kept my Mom in 85% equities until she passed at the age of 89.
BTW, I don't expect similar returns this year, but as long as they beat the S & P they'll have my money.
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Post by madm002 on Apr 25, 2024 14:54:53 GMT -5
What has been your average return with Fisher been if I may ask? I am consolidating my pittance into one account and trying to decide where to go. Also debating the 60/40 stocks / FI split that the world historically recommends. I find it fascinating that after a career in bonds you do not own any bonds?
I handed money to Fisher in the summer of '22. Held them off on putting it to work until the middle of September (I know, you're not supposed to time the market, but in this case I did), at which point they immediately invested all of it, with my directions to keep it in U.S. based companies (they typically take more of a worldview, using the MSCI as their benchmark).
Every time I'm up 10% I take out my profit. I've done that 5 times, in January, April and June '23 and January and March '24. The great thing is that when I sell, they execute with an eye toward portfolio balancing and tax consequences, as opposed to a cookie cutter, one-size-fits-all manager who sells equally across the board, as would also happen in a mutual fund.
My decision to keep it 100% in equities is based on the historic returns. Nothing against bonds, but stocks have beaten them significantly over time, and I guess I have more tolerance for risk than most at my age. I kept my Mom in 85% equities until she passed at the age of 89.
BTW, I don't expect similar returns this year, but as long as they beat the S & P they'll have my money.
I am kinda thinking the same thing. I have my 85 year old Mom in 80% equity and she has done really well since Dad died. Problem is that I just liquidated my 401k and am debating what to do with it. I am thinking about starting to scale into the market over a number of weeks. |
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Post by richm on Apr 25, 2024 18:02:19 GMT -5
I gave up my first one by being self employed w wrong attitude for the business. I'm a worker, not schmoozer and schmoozers get the work. Wanting to see the best ways to estimate what will be necessary for retirement. Got no kids of my own and the step kids have a rich dad, so don't feel like leaving an inheritance. All the stuff i read basically say to take your income now and pull a number outta yer butt for what you need in retirement. I just went through this exercise. First you need a detailed, very detailed budget of your expenses when you retire. Take into account inflation between then and now. Assuming you are good with excel you then build an excel sheet that takes your current assets and projects them out at your retirement age using a rate of return assumption. There is an @function for that. The you make an assumption of how much you can save or put away each year and perform the same analysis, it is a little trickier process but the same option. You take the total of the two and estimate a return on your investment percent, a conservative average would be 8%. What you earn on your investment needs to cover your projected living expenses. I did not build in inflation in the outer years as I should have, as I plan on taking much less than I could out of the yearly returns. But to have rigor you should. DO NOT USE AI to try this exercise, they will always give you the wrong answer. Thanks. I do have projections. Big Xcel table spelled out for the next 10 years. Just been looking at it backwards. Planning to make our expenses work with the income. It doesn't bother me to put numbers out but some folks get uptight. So will arbitrarily use $1 million. Looking at our situation and such, where we are at, what my company shares and distributions could/should be, savings, etc. We will hit $700k out of $1 million if we just continue to save at the projected rate and get 0% return. Want hit $1 million with continued investing and getting that 8% on our investments. If we get more that's fine too. This is my main concern and what is keeping me awake at night. That's how I've been approaching it. Just getting to the arbitrary $1 million mark is the goal. After that hoping everything follows "like liquid mercury flowing down a sloping thing" to quote steve martin in the pink panther. |
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Post by madm002 on Apr 26, 2024 6:29:53 GMT -5
I just went through this exercise. First you need a detailed, very detailed budget of your expenses when you retire. Take into account inflation between then and now. Assuming you are good with excel you then build an excel sheet that takes your current assets and projects them out at your retirement age using a rate of return assumption. There is an @function for that. The you make an assumption of how much you can save or put away each year and perform the same analysis, it is a little trickier process but the same option. You take the total of the two and estimate a return on your investment percent, a conservative average would be 8%. What you earn on your investment needs to cover your projected living expenses. I did not build in inflation in the outer years as I should have, as I plan on taking much less than I could out of the yearly returns. But to have rigor you should. DO NOT USE AI to try this exercise, they will always give you the wrong answer. Thanks. I do have projections. Big Xcel table spelled out for the next 10 years. Just been looking at it backwards. Planning to make our expenses work with the income. It doesn't bother me to put numbers out but some folks get uptight. So will arbitrarily use $1 million. Looking at our situation and such, where we are at, what my company shares and distributions could/should be, savings, etc. We will hit $700k out of $1 million if we just continue to save at the projected rate and get 0% return. Want hit $1 million with continued investing and getting that 8% on our investments. If we get more that's fine too. This is my main concern and what is keeping me awake at night. That's how I've been approaching it. Just getting to the arbitrary $1 million mark is the goal. After that hoping everything follows "like liquid mercury flowing down a sloping thing" to quote steve martin in the pink panther. Compounding is your friend. What you have now should roughly double in 7 years assuming 10% return. |
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Post by richm on Apr 26, 2024 8:52:40 GMT -5
Thanks. I do have projections. Big Xcel table spelled out for the next 10 years. Just been looking at it backwards. Planning to make our expenses work with the income. It doesn't bother me to put numbers out but some folks get uptight. So will arbitrarily use $1 million. Looking at our situation and such, where we are at, what my company shares and distributions could/should be, savings, etc. We will hit $700k out of $1 million if we just continue to save at the projected rate and get 0% return. Want hit $1 million with continued investing and getting that 8% on our investments. If we get more that's fine too. This is my main concern and what is keeping me awake at night. That's how I've been approaching it. Just getting to the arbitrary $1 million mark is the goal. After that hoping everything follows "like liquid mercury flowing down a sloping thing" to quote steve martin in the pink panther. Compounding is your friend. What you have now should roughly double in 7 years assuming 10% return. The rule of 72! Every time your interest totals = 72 your money doubles... 9 yrs on 8% 12 yrs on 6% etc. That's actually what is hurting me. The whole invest while you are young thing is real. I still wonder if we'd still be in business if the recession hadn't happened. So, getting to do what they say not to do, which is building wealth in a short period of time by depositing more. But pooh. Am using an investment calculator to do the math, say 401k = $100k and adding $20k annually - running that for the 10 yrs at 4-6-8% and estimating end result as 3 diff projections on one spreadsheet and just tracking it as of January 1 each year on another. Part of the problem is the super slow speed at which this stuff happens. I'm ahead of the curve, worrying 10 years out. Have time - can only stuff so much away every paycheck and that is the rate of progress. LoL! |
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