Stock gurus - buy AIG?

[Carnut]

Originally Posted by iceman

I didn't get beat up that much but I did take about a 40-50K hit which for me is a big one. I have a mix of the funds and stock....but my stock is my higher risk higher rewards (or higher loss as it may be) gambling if you will. I bought into Denny's a while back which seems like a joke but they were liquidating owned property and had a cash infusion coming. I was right - the stock jumped...but I was wrong and din't get out. Now I am sitting on a chunk of it hoping to see $4 again so I can get out up a little....3.63 I think is even and looking good now. I got Parker drilling (PKD) too and it's a pig that is killing me. I've said 2 times if it hits 10 I'll dump it and I have not - now breaking even at mid 7's seems like a pipe dream.

I did dump a lot of them when I said I would and as long as I do that I tend to be OK - when the run and I say I'll just hold on for X is when I get bent over....it NEVER works out.....and I am a slow learner. My 98 yr old grandma has pushed me hard for CD's so I keep a bit in there too but I am only 36 so I don't really want to put it all in there.....but 4-5% looks pretty good these days. I wish I had enough $ to live off that rate and then I'd be all set.

But at least its a positive 4 to 5 percent.

[iceman]

Originally Posted by Carnut

But at least its a positive 4 to 5 percent.

correct - that's her point. SHe has been slow and consistent all her life and it paid off nice for her. Her older sister (turning 100 in a few months) lives out in Vegas (recently moved off the strip when they took away the apts across from the stardust on that end of the strip) invested well in more risky things and made a killing then put it into the CD's which was what I was/am hoping to do....I just can't get the first part right yet.

[Alloy Dave]

Originally Posted by twobjshelbys

What funds? Are there any that weren't heavily invested in the mortgage crap?

They talked about "bundling up mortgages and selling them" it reminded me of what I see a recycling centers: Shredded newspapers bundled up into bales waiting to go get ground up. Those ground up newspapers are worth more than mortgages.

Vanguard sells over 400 different mutual funds. Fidelity sells hundreds. Take your pic. Try Vanguards VINIX, or VTRIX, or VFINX Vanguard 500 Index Report (VFINX) | Snapshot

None of those were invested in the mortgage crap. However, they are down considerably from last year...as they are equities. I just buy more....they are on sale now.

Dave

[Alloy Dave]

Originally Posted by SLB8SNK

True and smart. I do the same. If I was to single out a stock or two to buy, it would be short term risk with hopes of short term gains... such as, buying Ford or GM at rock bottom, a few bucks, watch it with a sell or strike point. Meaning if you buy Ford at $2 and want to sell at $4, could happen, set the sell and move on. However for long term, mutual funds are the only way to go. For example, market doing what is has, I lost over $40k in the last 2 months, over $60k for the last 6 months... ON PAPER... so unless I sell today, it means crap. To many people are dumping and running and that creates a problem. I invest long term, and plan accordingly. If you are a long term person (more than 5 years out) your investments will rebound just fine. If you are a short term investor, I would highly suggest staying away from risk or moderate risk investments and move your cash into bonds or certificates of deposit. You are guaranteed a lower return, but one no matter (unless your bank goes under) and then only move cash in $95k accounts or less, to make the FDIC insurance work for you..... the key to investing is play it smart from the start and reduce risk as you get closer to retirement or needing the cash. My .02

You got it right. Personal finance is a hobby of mine...I'm considering becoming a CFP when I retire. I've lost a bunch of money on paper too, but then I gained a bunch the previous 3 years. As you say, as retirement approaches, time to dial back slowly.

DCA is the way to go (Dollar Cost Averaging).

Dave

[Alloy Dave]

Originally Posted by Carnut

Well I am in those safe bond funds. I just lost 100k over that last several weeks. So much for friggin safe.

What is the average duration of your bond fund?

If you are in long bonds, you are suffering. The shorter the maturities the less volatile they will be. Long bonds are nearly as volatile as blue chips. I'd search for a maturity of no longer than 5-6 years if I was in or near retirement.

Dave

[Johnny Lupara]

..just ran into this thread; compared to if me and wife had gotten out of the market a year ago at its high, and safely invested that plus the last year's contribution, we are about 80k down. Of course that is just a magic number, and we are not planning to really cash out for about 10 years. Luckily I am an optimist on the country's economy.

[Alloy Dave]

Originally Posted by twobjshelbys

Don't tell me paper losses will be recovered. I bought a boatload of that garbage. If you're in your 20's or 30's paper losses don't matter much. If you're in your 50's it matters a bunch. My losses from the dot com bubble burst have NEVER been and never will be recovered. My 401K that I put over 150K in contributions in is and has been at 40K for almost 7 years. Forget gains, this was a straight cash loss. (The funds available were severely limited and there was no bailout strategy. Fund manager for this company sucked.)

Can't say never yet....it's only been 7 years since the dot com bust. Stocks have outperformed other investment classes over all 30 year periods in history. If you are in your '50s, then you'll live another 30 years probably.

When you begin investing, you should take a risk tolerance quiz. If you are risk averse (as it seems you are), then you should have a modest portion of your investments in equities...perhaps 30%. You'd still have lost money, but significantly less.

You say it was a cash loss? that means you needed the money in the next few years. It's best to only have money in the market that you don't need for at least 10 years.

The past 12 months have been unprecedented...the worst market since the depression of the '30s. Barack Obama will fix it all.

[Carnut]

Originally Posted by Alloy Dave

What is the average duration of your bond fund?

If you are in long bonds, you are suffering. The shorter the maturities the less volatile they will be. Long bonds are nearly as volatile as blue chips. I'd search for a maturity of no longer than 5-6 years if I was in or near retirement.

Dave

Since I am suffering, it must be long bonds.

Actually I really don't know, the financial planner was targeting my retirement age to start cashing in the dividends.

I am just bitter right now. Maybe it will get better

I should have stayed in acorns

[twobjshelbys]

Originally Posted by SLB8SNK

Tony, you described what I said to a t! Meaning LONG term versus SHORT term... I am not in my 50's yet (soon, very soon) but when you are indeed in your 50's-60's, the market is the last place you should be... conservative is the name of the game at that point. As well, yes you are partially correct... paper losses will only recover "IF" what you had originally invested in was indeed not the market that drove prices downward (like the dot.com era) and the housing market now. Diversification is the biggest rule of wise investments... do not put any large sum in a single market, here or over seas! I am still hopeful that my paper losses will fully recover, as I am a moderate risk taker... I liked my 8-12% gains well enough and no need to get greedy! hope your luck turns and you make back you lose and much more!

Not strictly true. I'm converting all of these old 401ks to IRAs and I'm going to turn over they keys to a pro. They charge 2-3%, but if they're good they'll turn 10-12. They are currently hosted at Fidelity. The thing I'm trying to decide is should I roll them to Charles Schwab or leave them at Fidelity. Both have mangers that can do it. They can also do it where I keep the keys and they tell me how to drive. I dunno. I just don't have time to do it myself right now. This market is so volatile that day traders (day to weeks) can turn some good money, and I definitely don't have time to watch stuff, so I think I'll just let them drive.

Whaddya think? Anyone got a manager that's done well for you?

Believe it or not, I'm thinking of changing jobs so I can get my 401k out of my current employer. Sorry, company, this isn't about loyalty any more. Your funds suck and I need to protect my capital.

[twobjshelbys]

Originally Posted by Carnut

Since I am suffering, it must be long bonds.

Actually I really don't know, the financial planner was targeting my retirement age to start cashing in the dividends.

I am just bitter right now. Maybe it will get better

I should have stayed in acorns

About three months ago I decided to be bold. I moved mine from the money markets to bonds. I've lost again, but not nearly as much as stocks, and I expect that bonds will recover before stocks (that is, if I don't bag it all and get someone to drive).

[iceman]

I have accounts with Schwab, Vanguard, and T-Row Price. I like The results I've gotten with T-Rowe price the best but I like the format of the web page at Schwab....I find that if you want help you won't get it there though. I has $ with Fidelity too but rolled it over to Vanguard. It's too early to tell on them but they don't strike me as being as helful as T-Rowe Price. If you want an easy to use web page though that can handle multiple accounts and types of accounts Schwab is good - as long as you don't ask them for much advice....it's no wonder their commercials are all cartoons, no real people would be on them!

[Alloy Dave]

Originally Posted by iceman

but 4-5% looks pretty good these days. I wish I had enough $ to live off that rate and then I'd be all set.

Expert research shows that an SWR (sustainable withdrawal rate) of about 4.2% of a portfolio will almost assure your money will outlast you. In other words, if you have $1M, and you invest in a well-diversified portfolio, and withdraw $45k/year, you will be able to increase your withdrawals each year to account for inflation and never run out of money.

Of course this assumes some things...such as that inflation won't hit 25% etc. The expert research was done most eloquently by Bill Bergen.
http://spwfe.fpanet.org:10005/public...ng%20Histo.pdf

There is also a Trinity study that discusses the research that was done before Bill. Here's some brief discussion on all 3 relevant studies. What's the "safe" withdrawal rate in retirement ?

I read this stuff as a hobby...quite dry actually.

Here is a calculator that is quite respected to determine your withdrawal rate.
FIRECalc: A different kind of retirement calculator

I should point out that retirement planning is not an exact science. There is no one right answer for what a person needs to save. The answers are probabilistic, and typically it's best to think in ranges. I like Monte Carlo analysis and layered spending analysis, but even these have their critics.

Dave

[iceman]

Originally Posted by Alloy Dave

Expert research shows that an SWR (sustainable withdrawal rate) of about 4.2% of a portfolio will almost assure your money will outlast you. In other words, if you have $1M, and you invest in a well-diversified portfolio, and withdraw $45k/year, you will be able to increase your withdrawals each year to account for inflation and never run out of money.

Of course this assumes some things...such as that inflation won't hit 25% etc. The expert research was done most eloquently by Bill Bergen.
http://spwfe.fpanet.org:10005/public...ng%20Histo.pdf

There is also a Trinity study that discusses the research that was done before Bill. Here's some brief discussion on all 3 relevant studies. What's the "safe" withdrawal rate in retirement ?

I read this stuff as a hobby...quite dry actually.

Here is a calculator that is quite respected to determine your withdrawal rate.
FIRECalc: A different kind of retirement calculator

I should point out that retirement planning is not an exact science. There is no one right answer for what a person needs to save. The answers are probabilistic, and typically it's best to think in ranges. I like Monte Carlo analysis and layered spending analysis, but even these have their critics.

Dave

great - I need at least $3MM to retire

[Alloy Dave]

Originally Posted by twobjshelbys

Not strictly true. I'm converting all of these old 401ks to IRAs and I'm going to turn over they keys to a pro. They charge 2-3%, but if they're good they'll turn 10-12. They are currently hosted at Fidelity. The thing I'm trying to decide is should I roll them to Charles Schwab or leave them at Fidelity. Both have mangers that can do it. They can also do it where I keep the keys and they tell me how to drive. I dunno. I just don't have time to do it myself right now. This market is so volatile that day traders (day to weeks) can turn some good money, and I definitely don't have time to watch stuff, so I think I'll just let them drive.

Whaddya think? Anyone got a manager that's done well for you?

Believe it or not, I'm thinking of changing jobs so I can get my 401k out of my current employer. Sorry, company, this isn't about loyalty any more. Your funds suck and I need to protect my capital.

Tony, obviously this is just my opinion, but I think you're expectations of a manager are no in line with reality.

When you say "if they are good, they'll get 10-12", do you mean on average over how long of a period? The stock market as a buy and hold investment has returned 12% over history...so you don't need to be any type of manager to do that.

Any manager that is returning more than the stock market average in good times is likely LOSING more than the average in bad times. In other words, they make more in good times by taking on more risk.

The efficient frontier concept comes into play here. All investments have a risk/reward trade off. To get more return, you must take more risk.

The best financial advisors IMO are not the ones who make high returns, but they are the ones who simply keep you from making big mistakes. You find me a manager who has outperformed the market over a long period, and I'll snap his picture and label it Warren Buffet....there aren't more than 3 in existence.

As for day traders, 92% of all day traders lose SIGNIFICANT amounts of money. I read the horror stories every week about these people.

Dave

[Johnny Lupara]

Originally Posted by iceman

great - I need at least $3MM to retire

..the numbers can seem scary, but don't forget all other forms of retirement income.

My wife and I are fortunate that we both have defined benefit retirements based on income and number of years of service. Makes planning a whole lot easier.

What worries me is that so many get frustrated when they think about retirement savings and end up doing nothing or next to nothing. They are the ones who will really be left out in the cold.

[Johnny Lupara]

Originally Posted by Alloy Dave

Tony, obviously this is just my opinion, but I think you're expectations of a manager are no in line with reality.

When you say "if they are good, they'll get 10-12", do you mean on average over how long of a period? The stock market as a buy and hold investment has returned 12% over history...so you don't need to be any type of manager to do that.

Any manager that is returning more than the stock market average in good times is likely LOSING more than the average in bad times. In other words, they make more in good times by taking on more risk.

The efficient frontier concept comes into play here. All investments have a risk/reward trade off. To get more return, you must take more risk.

The best financial advisors IMO are not the ones who make high returns, but they are the ones who simply keep you from making big mistakes. You find me a manager who has outperformed the market over a long period, and I'll snap his picture and label it Warren Buffet....there aren't more than 3 in existence.

As for day traders, 92% of all day traders lose SIGNIFICANT amounts of money. I read the horror stories every week about these people.

Dave

Dave

You might want to open your own "place" for this type of information, like you did on another site. I see a lot of interest in this type of discussion, and you sure have a lot of knowledge.

[Joe G]

Originally Posted by Johnny Lupara

Dave

You might want to open your own "place" for this type of information, like you did on another site. I see a lot of interest in this type of discussion, and you sure have a lot of knowledge.

Time for a new thread in Alloy Dave's Goat Barn or whatever it's called.












-

[Alloy Dave]

Originally Posted by iceman

great - I need at least $3MM to retire

yes, but you are forgetting a few things.

Let's say you need $120k/year as your number above indicates.
1) Did you base that on current earnings? Because if you did, you really don't need that much. Why not? Because if you're making $120k today, you're in a 25% tax bracket. That means earning $120k at your job you're really living on about $97k (taxes on $120k married filing jointly =
10% x 16,500
+ 15% x (65,100 - 16,500)
+ 25% x (120,000 - 65,100)
= 22,665
So $120,000 gross - $22,665 fed tax = ~$97k

If you've been smart in saving for retirement, then you have practiced "tax diversification", and you have some savings in either Roth IRAs, after-tax investment accounts, and so on. You will not pay taxes on these amounts in retirement. Therefore, you won't really need $120 to get the $97k to live on...you'll need something less depending on how smartly your accounts are set up from a tax withdrawal standpoint....let's say you only need $110k gross as an example.

Then let's say you get social security of $18,000/year and your wife gets $12,000/year (just guesses, and depends heavily on when you take SS).

Now you need $110k gross - $18k - $12k = $80k

Now you only need $2M to retire instead of $3M.

this is way oversimplified, but you get the point.

[Alloy Dave]

Originally Posted by Joe G

Time for a new thread in Alloy Dave's Goat Barn or whatever it's called.












-

Let me find that one emote that fits here....


there it is...

[Johnny Lupara]

..doesn't fit here or anywhere else, but has anyone heard from rob/grabber lately? from the photo, he seems a bit irked.....