Stocks Crashing! Thank God For The PP!!

[Cortopassi]

I am with Budd here.  At 27% equities right now, on the way to (gulp) 40% over the year.  1% chunks at a time.

If the market continues tanking, seems like a decent a time as any to begin increasing stock allocation.  My modified PP will be 40 stocks, 25 each gold/TLT and 10 cash, a slightly modified Golden Butterfly.

I hope not to be crying come Dec 31.

[barrett]

My modified PP will be 40 stocks, 25 each gold/TLT and 10 cash, a slightly modified Golden Butterfly.

It's not the Slightly Modified Golden Butterfly. It's The Cortopassi Prosperity Tilt Supreme!

That 10% cash allocation is probably OK if you are still young and your work prospects remain good even in a severe downturn. The 4X25 cash component can be a thing of beauty if an asset goes on sale big time, but that can sometimes take years to happen. I remember 2008 all too well when I was left on the sidelines with no cash to inject into stocks.

Cortopassi, I know you have written a bit about wanting to go more heavy on the equities. Do you see the above as a flat-out better portfolio or maybe just one that is more suited to your personality? Thanks.

[Cortopassi]

Honestly, what is best suited to my personality would be 100% in a 5% yielding money market, which we may not see again until long after I'm retired.

I have done enough with Tyler's charts to convince me I need to up my equity to try and capture some more CAGR in the 13-17 years I have until retirement.  I'm the first to say the future is unknowable and I should not be taking the historical chart returns as a sure thing.  However, I am at the point where if I don't do this, and stick to 25% allocations I am at point A (4.8 CAGR per Tyler's latest) and point B with the Cortopassi Prosperity Tilt (6.2% CAGR)

If I retire in 15 years, that's 2x my money with the PP and 2.5x with the modified.



Not as much difference as I'd like but at the levels I am talking about, extra $$ in retirement will help more than less $$ will hurt.  At least that's what I think, assuming there is still a social security safety net.

Lady in the office and her husband are 2 years from retirement.  Have 3 million in investments.  Obviously invested their money wisely.  Even with a 2.5x return and continuing the insane savings rate I do right now, it is nearly impossible for me to ever get to that level.  I will be lucky to retire with half that amount in investment accounts.  Not shabby, but I will beat myself up again here, it should have been a shitload more were it not for 25 years of stupidity on my part thinking I could beat the system.

[Reub]

Interesting chart:

http://allstarcharts.com/sp500-lost-13-3-weeks-now/

S&P going to 1576 possibly?

[buddtholomew]

Honestly, what is best suited to my personality would be 100% in a 5% yielding money market, which we may not see again until long after I'm retired.

I have done enough with Tyler's charts to convince me I need to up my equity to try and capture some more CAGR in the 13-17 years I have until retirement.  I'm the first to say the future is unknowable and I should not be taking the historical chart returns as a sure thing.  However, I am at the point where if I don't do this, and stick to 25% allocations I am at point A (4.8 CAGR per Tyler's latest) and point B with the Cortopassi Prosperity Tilt (6.2% CAGR)

If I retire in 15 years, that's 2x my money with the PP and 2.5x with the modified.



Not as much difference as I'd like but at the levels I am talking about, extra $$ in retirement will help more than less $$ will hurt.  At least that's what I think, assuming there is still a social security safety net.

Lady in the office and her husband are 2 years from retirement.  Have 3 million in investments.  Obviously invested their money wisely.  Even with a 2.5x return and continuing the insane savings rate I do right now, it is nearly impossible for me to ever get to that level.  I will be lucky to retire with half that amount in investment accounts.  Not shabby, but I will beat myself up again here, it should have been a shitload more were it not for 25 years of stupidity on my part thinking I could beat the system.

Cortopassi, $3 million in investments is a significant sum, but doesn't tell us much about their living expenses.
I too have 17-20 years until retirement and have reached a similar conclusion - equity risk is necessary to achieve retirement goals.
This works for me - 70/30 retirement assets (equity heavy) balanced with 4x25PP + Cash in taxable for a blended 52.5/40/7.5 allocation.
I can't touch the funds in retirement accounts for many years and therefore willing to increase risk for the likelihood of excess returns.
I know my risk tolerance so the PP + Cash in taxable let's me sleep well at night.
In other words, it doesn't have to be all or none. Blend Bogleheads with PP for a smoother ride.
For reference, 70/30 -9.3% YTD, PP+Cash -.5%, blended -4.5 and S&P500 -8.6%

[Cortopassi]

For reference, 70/30 -9.3% YTD, PP+Cash -.5%, blended -4.5 and S&P500 -8.6%

The shock at that -9.3% number, imagining it in my account right now, will certainly keep me to a blended/<40% stock allocation!

The living expenses of my colleague are minimal, which is one of the reasons they were able to save so much.

[buddtholomew]

For reference, 70/30 -9.3% YTD, PP+Cash -.5%, blended -4.5 and S&P500 -8.6%

The shock at that -9.3% number, imagining it in my account right now, will certainly keep me to a blended/<40% stock allocation!

The living expenses of my colleague are minimal, which is one of the reasons they were able to save so much.

Gotcha. In CA, couldn't retire comfortably on less than 4 million in my opinion. I'm sure others have retired with substantially less depending on expenses.

[Tyler]

If you want out of the rat race bad enough, you can get your expenses down pretty far.

+1. 

Expenses are something that too many people treat as non-negotiable for fairly arbitrary reasons.  After living in both California and Texas, I personally decided that measuring "standard of living" based purely on cost of living is a piss poor way to evaluate quality of life.  I happily retired on way less than $4mm.  Just not in California. 

But everyone's preferences are different, and mix in family and I understand it gets complicated.  Everything has a tradeoff.

[dragoncar]

For reference, 70/30 -9.3% YTD, PP+Cash -.5%, blended -4.5 and S&P500 -8.6%

The shock at that -9.3% number, imagining it in my account right now, will certainly keep me to a blended/<40% stock allocation!

The living expenses of my colleague are minimal, which is one of the reasons they were able to save so much.

Gotcha. In CA, couldn't retire comfortably on less than 4 million in my opinion. I'm sure others have retired with substantially less depending on expenses.

$4 million?  You gotta be kidding me... that's only $160k/year which wouldn't even cover my dog's therapist.

[Pointedstick]

But everyone's preferences are different, and mix in family and I understand it gets complicated.  Everything has a tradeoff.

The wife and I want to live like absolute Spartans and get out as early as humanly possible. Trailer, cheap land, thrift stores, food in bulk. First get out, then let luxuries come as the portfolio grows. If I'd known at 16 what I know now, I'd have been out for 10 years already.

I assume you have read http://www.amazon.com/Early-Retirement- ... 145360121X

…and follow Mr. Money Mustache?


Regardless, the PP (or a slightly modified version of it) makes a great ERE portfolio, both during accumulation and withdrawal.

[var]

depends on your wife spending habits...

but i think 4 million my number.... it really depends where you live... car you want to drive etc..

[goodasgold]

depends on your wife spending habits...

but i think 4 million my number.... it really depends where you live... car you want to drive etc..

Perspectives differ. I haven't driven a car (except short-term rentals when traveling outside of New York City) for 25 years.

"Some things are really necessaries of life in some circles, which in others are luxuries merely and in others still are entirely unknown." - Thoreau, Walden

[dualstow]

Perspectives differ. I haven't driven a car (except short-term rentals when traveling outside of New York City) for 25 years.

I think I stopped in 1989. Almost exactly the same time frame.

[dualstow]

Nope. I just hate driving. 
Seriously, I do. And I'm doing the country a favor by taking myself off the road until self-driving cars are available.

[Pointedstick]

I'm with you, mr drinky blood. I bought my current house in cash for as little as I could find in a place I wanted to live in--a bit under $100k, as it turned out. It's amazing how little you can spend and still live what appears to others to be a totally normal life, and enjoy it!

[MediumTex]

A couple of off-topic questions...

• Do you really? (drink blood)
• Do you really? (laugh out loud while partaking)

My impression is that he is a vampire with Tourette Syndrome, so everyone please be sensitive.

[MediumTex]

As long as we're off topic and off-color, I'll post this humorous little article here.  It's about a book called "The Life Changing Magic of Not Giving a F*&k." 

Warning, it contains the very scary "f" word. 

http://idealog.co.nz/workplace/2016/01/ ... iving-fuck

It's interesting how her work reminds me of what Harry Browne was doing in the early 1970s.

Here is how she described her worldview:

When did you realise that you gave too much of a fuck, or gave too many fucks?

There was a period of eight or nine years between the time I got married and the time I really started advancing in my career and then last summer, after eight years of consideration, I decided to leave my corporate career, which was 15 years in the making.

The fucks that I gave in regards to planning my wedding were very much family oriented and the fucks that I gave in regards to my career were very much work orientated. That's how I came up with my four categories of fuck giving. I realised that it's a lot easier to start with inanimate objects, then the workplace and then move your way to friends and then family, which is a lot harder.

Maybe she should have caller her book: How I Found Freedom by Not Giving a Fuck.

[MediumTex]

I moved the doctor talk to Other Discussions.

[Reub]

Blooddrinker, I hope that you will have the same passion for healing your future patients.