Annuities?

[Xan]

Sorry, 1871 isn't far enough back for me to go all in on that strategy. For one thing, note that we so happened to win (or at least not lose?) all those wars. That kind of streak just doesn't go on forever.

[mathjak107]

once you start to fear everything and are a doom and gloomer you will never have your money working efficiently for you . counting on disaster or doom and gloom to see assets rise is an awful way to invest in my opinion . at this point i can lose 1/2 my assets and still be way a head of the pp had i gone that route . there is no guarantee with rising rates that the pp won't end up a dog as we go back towards historical averages . i think that is a far more likelier outcome than doomsday for stocks

[Cortopassi]

once you start to fear everything and are a doom and gloomer you will never have your money working efficiently for you . counting on disaster or doom and gloom to see assets rise is an awful way to invest in my opinion . at this point i can lose 1/2 my assets and still be way a head of the pp had i gone that route . there is no guarantee with rising rates that the pp won't end up a dog as we go back towards historical averages . i think that is a far more likelier outcome than doomsday for stocks

mathjak, I think we all understand your position, but just like your last stint on this forum, talking about how poor the PP is vs. the way you invest doesn't really fly too well on a site geared to the PP.

I think you understand that many of the people here came onto the PP because of very poor experiences trading their own money (me), trying to follow newsletters, getting screwed by an emotional response (me), etc. and the majority of us are more than happy to give up some gains to at least get the perception of less volatility in the PP (or similar) mix of assets.

I can quickly think of a dozen examples where I took an educated, calculated risk and got badly burned, being too early, too late, or too emotional with an investment. You obviously have better timing and emotional stability than most and have been rewarded.

[mathjak107]

i am not saying don't do the pp , but this bull shit about stocks facing doomsaday one day is really just a silly thing to say . nothing is forever . our treasuries may go bust , gold may be worthless and the dollar may crumble one day too . but yet all of you here invest in those items .

it is almost like many here try to justify giving up all that dough that they did as a pp investor by pointing out how stocks can meet their waterloo yet the same fate can happen to the very assets those here buy as some sort of insurance . that is my only objection , it is always equities that is in danger of crumbling away but nothing else seems to ever be spoken of as meeting the same fate .

i mean if we are playing what if , what if should apply to all the asset classes .

[stuper1]

To me the beauty of the PP is that it goes a couple steps beyond your typical 60/40ish stock/bond portfolio. One step is that it adds gold, which is uncorrelated to stocks/bonds and also if held physically acts as insurance against low-probability, serious events (my go-to being the solar flare that supposedly could knock out electricity for months on end, which would make trading stocks/bonds problematic, but wars could have a similar impact). The second step is that it uses only the safest bonds (U.S. Treasuries) rather than including corporate bonds, which turn out to be very correlated to stocks.

[Cortopassi]

i am not saying don't do the pp , but this bull shit about stocks facing doomsaday one day is really just a silly thing to say . nothing is forever . our treasuries may go bust , gold may be worthless and the dollar may crumble one day too . but yet all of you here invest in those items .

it is almost like many here try to justify giving up all that dough that they did as a pp investor by pointing out how stocks can meet their waterloo yet the same fate can happen to the very assets those here buy as some sort of insurance . that is my only objection , it is always equities that is in danger of crumbling away but nothing else seems to ever be spoken of as meeting the same fate .

i mean if we are playing what if , what if should apply to all the asset classes .

Agreed. It took too long but I have grown sick of doom and gloomers and conspiracy theory websites and people. There's only so long you can say Amazon is worthless and gold is going to the moon.

[mathjak107]

To me the beauty of the PP is that it goes a couple steps beyond your typical 60/40ish stock/bond portfolio. One step is that it adds gold, which is uncorrelated to stocks/bonds and also if held physically acts as insurance against low-probability, serious events (my go-to being the solar flare that supposedly could knock out electricity for months on end, which would make trading stocks/bonds problematic, but wars could have a similar impact). The second step is that it uses only the safest bonds (U.S. Treasuries) rather than including corporate bonds, which turn out to be very correlated to stocks.

the important thing to ask yourself is , if you are a long term investor , why do i care about mitigating short term temporary dips and hurting my long term balance permanently for what so far has been no reason ?

do i really need to pay for all of this insurance and did i really buy insurance or is the insurer just as likely of failure in these visions of doom that drive people to do this ?

and the biggest question i raised here 2 years ago that got me locked out of the other forums is what effect will rising rates have over the next few years on the pp. so far the last few years i called correctly as i said the pp was almost a one trick pony that counted on the 40 years of falling rates we had for the majority of it's gains
.

[stuper1]

Those are good questions. I think a lot of us who do the PP, or something similar, have already asked ourselves those questions and have come to a different conclusion than you.

[mathjak107]

which is fine if that is what you want .

there is no disputing that over the last 117 rolling typical accumulation periods and retirement periods that span as much as 30 years each , equities have always been the lead horse at the end of the day . hanging heavy weights on them with gold and long term treasuries in rising rates can really hurt things . the problem is these conservative portfolio's have a hard time really developing a cushion so when things weigh on them they hurt more .

it is like my income model which is 25% equities is really having a hard time getting traction . the growth and income model and growth model are having a good year already . the growth model is up over 6% after today . the conservative income model is struggling to stay positive .

yeah there is more volatilty in the more equity heavy portfolio's but you fall from balances eventually that even at the lows beat where you would be as a very conservative investor .

i don't know how many really think about this . all they know is they sidestepped some temporary dip but they fail to realize at the low that dip is still hundreds of thousands of dollars higher over the long haul

[Xan]

i am not saying don't do the pp , but this bull shit about stocks facing doomsaday one day is really just a silly thing to say . nothing is forever . our treasuries may go bust , gold may be worthless and the dollar may crumble one day too . but yet all of you here invest in those items .

it is almost like many here try to justify giving up all that dough that they did as a pp investor by pointing out how stocks can meet their waterloo yet the same fate can happen to the very assets those here buy as some sort of insurance . that is my only objection , it is always equities that is in danger of crumbling away but nothing else seems to ever be spoken of as meeting the same fate .

i mean if we are playing what if , what if should apply to all the asset classes .

We do. We only hold 25% in each of those asset classes. They all could face their Waterloo, that's why we hold ALL of them.

You hear a lot about the potential downside of stocks in particular because, well, we hear a lot about stocks from you. So that's the topic.

[mathjak107]

as i said in an earlier post , i always plan around what was , what is , and what stands a reasonable chance of continuing .


until i have reason to believe anything is severely different there is no reason not to and betting heavy on the unlikely exceptions is not something i would do . 50% equities is quite normal for retirement ,it certainly is not betting the ranch on one outcome . but the model has to make sense for the conditions we are in .

as i said the bond side is quite un-interest rate sensitive . if stocks are sluggish they will not be stalled out by the heavy drag of anything to interest rate sensitive .

i don't track it but i would think the pp is not gaining much traction the last few years and i bet the returns are not even close .

my insight growth and income model 60/40 was up:

2013-20.3
2014 9.3
2015 .80
2016 8.2
2017 16.5

what was the pp up those years ?

[mathjak107]

2008 was a non event for a long term investor unless it was the investors own bad behavior that hurt them . . in fact if you retired in 2008 , 10 years in you are no different than any other average retiree group in history . for a long term investor it was much ado about nuttin .

but here is 2007-2017

2007 up 6.1%
2008 down 33.
2009 up 28.1
2010 up 12.2
2011 flat
2012 up 13.40 .
2013 20.3
2014 9.3
2015 .80
2016 8.2
2017 16.5

so what did the pp do ? how much could that model loose and still not be at the pp balance ? a lot i would bet .

when you decide what is the right investment path for you that is what you have to consider. i know there is a lot of high fiving that goes on here every time the stock market takes a dip but you have to consider that even after that equity dip you may be still , soooooooo far lower in balance .

[flyingpylon]

2008 was a non event for a long term investor unless it was the investors own bad behavior that hurt them . .

But that’s kind of the point, at least for me.

My Dad retired in the very early ‘00s and got smacked by the tech bubble. Made decisions that turned out to be bad ones.

Got smacked again in 2008. Made decisions that turned out to be bad ones, again.

It gets worse from there, but suffice to say I’m not interested in having that happen to me. I am certainly more money and investing savvy to begin with, but it’s hard to know how you’ll react when your working years are over and your life savings take a massive hit like that.

When I was young I would throw caution to the wind but now with 10 or so years to go (hopefully) I am fairly well positioned and much more focused on simply not screwing it all up.

[mathjak107]

If he bailed from the pp because of losses it would still be another bad investor decision. All he had to own was an index fund and he would have been fine. You can't protect people from themselves. A better choice would have been to have someone handle his money which today can be done for a fraction of a point , invest it normally and he would have had a great balance.

Studies show that investors with no stomach for volatility will not likely stay with even a conservative model. They just have lower trigger points when losses happen

[mathjak107]

But most do not stay with it because while it may not fall as much in those rare downturns it is hard to stay with because most of the time it lags . It begins to be like waiting so long for the down turn ship to come in the pier rots away . It reaches a point you are just left to far behind waiting for it's day in the sun.

I tried it 2x and gave up on it.

[Cortopassi]

If he bailed from the pp because of losses it would still be another bad investor decision. All he had to own was an index fund and he would have been fine. You can't protect people from themselves. A better choice would have been to have someone handle his money which today can be done for a fraction of a point , invest it normally and he would have had a great balance.

Studies show that investors with no stomach for volatility will not likely stay with even a conservative model. They just have lower trigger points when losses happen

But that's the whole point. One is a lot less likely to bail from the PP during a meltdown of any of the components because the portfolio as a whole will be doing fine.

Pug's Dad's experience is my Dad's. And partly mine. And I can say from experience it is 99% easier to stomach downturns under to PP than if I was really heavy into stocks (or gold) instead. At least for the last 4+ years.

[mathjak107]

You can't take the volatility of a 60/40 mix with out the weight of gold or long term treasuries? That is the most popular mix in history for retirees and you can ' t handle that? i bet the pp is losing money ytd , at least the 60/40 model is up 3.40% not to mention a tremendous difference the last few years . you can't tell us being down or barely up is not worse on your stomach than being up ytd especially with a nice cushion in balance from the last few years if things are not so rosy . so i still fail to see the logic in weighing a portfolio down like the pp is sand bagged .

could someone enter the pp returns along side the 2007-2017 returns i posted . lets see what the difference in balance would be and keep in mind the insight 60/40 portfolio is a popular retirement model as far as volatility goes .

[Cortopassi]

You can't take the volatility of a 60/40 mix with out the weight of gold or long term treasuries? That is the most popular mix in history for retirees and you can ' t handle that? i bet the pp is losing money ytd , at least the 60/40 model is up 3.40% not to mention a tremendous difference the last few years . you can't tell us being down or barely up is not worse on your stomach than being up ytd especially with a nice cushion in balance from the last few years if things are not so rosy . so i still fail to see the logic in weighing a portfolio down like the pp is sand bagged .

could someone enter the pp returns along side the 2007-2017 returns i posted . lets see what the difference in balance would be and keep in mind the insight 60/40 portfolio is a popular retirement model as far as volatility goes .

Here you go. Your returns vs. the straight PP. PP from peak to trough.

***mj, I want to stress, for me, what the PP does is somewhat make drawdowns less. the -33 would have killed me. I likely would have sold. Stupid, I know, but that's how I was.



Here's with PP dividends reinvested, a little higher.

[mathjak107]

the pp did okay until rates kicked up and that is it's Achilles heel . the biggest determination in how we do is the amount of money you have invested being acted on .

so as time goes on generally our balances and acquisition of wealth becomes greater and greater . many of us had a lot less money invested in 2007 than 2017 so the markets effect is far greater today . we sold out our real estate the last decade so that money missed 2008 . so being it was multiple 7 figures from those sales what happened from 2008 on is what really mattered in our case which means post drop , not pre drop .

many are maxing out there 401k's today and have nice healthy balances where as a decade ago they were raising a family making far smaller contributions .

so charts and back testing really mean little , what counts is your balance personally and what your money does .

what is a crazy feeling is that a mere 7% drop when i was first starting out was nothing in dollars , it may have been at best a few months of 401k contributions . today a 7% drop is 9 years of maxing out my 401k at catch up .

so what happens as fuel tanks get fuller and fuller is a huge factor in your outcome . the greater your balance the greater the effect and for those not spending down yet that means the most current returns are what are going to effect you the most . today i would not want anything interest rate sensitive sand bagging me .

i mean you guys talk about the remote chance that stocks crumble in a doomsday scenario . yet a far more likely scenario and very real scenario is rates inching their way back to the historical average of 5-6% . a more than 40 year bull in bonds and low rates had a very different effect . we basically just had a few speed bumps up along the way in what was a solid trend down..

i think if you put vegas odds on what is more likely to happen first , a doomsday scenario to stocks or rates normalizing , i think you will find you have a pretty risky bet going on at a time your accounts are likely pretty full with fuel so to speak .

[Cortopassi]

mathjak, you have hard numbers here from the past 11 years, but you are completely disregarding them and giving reason why your current predictions and asset holdings is correct vs. the PP.

Many here are just starting out. And many here, like me, would have a stroke if -33% is in the cards again, and you can't say it is not, depending on allocation. You obviously have enough that you could weather that, many/most of us don't.

The whole bond bear is starting and the bull run is over I think is a full boat right now and just as likely to be proven wrong vs. right for the next 10 years.

[mathjak107]

if they are long term investors , just starting out and have no stomach for risk then i sooner see them give their money over to be managed for less than a fraction of a percent and maximize their growth . . for a fraction of a percent the brain power at rebalance ira is amazing and they use index funds .

i think it is silly to leave hundreds of thousands of dollars on the table over decades as a long term investor trying to do something i don't have the temperament to do . there are so many things in life we pay others to do for us because we can't or won't do it properly ourselves .

had i not been in 100% equities in my accumulation stage the difference would have been drastic . i used a newsletter for 30 years to keep me from myself . i am a tinkerer at heart. so i just follow their fund choices and i am not second guessing my last move or thinking about my next one .
in 2008 having them call the shots made it much easier on my wife and i to just stay put , eventually going on higher than ever . .

well you all can do as you like but i think the youngins are going to sandbag their growth over decades if they choose to mitigate temporary short term dips and hurt their long term gains permanently .

and yes , when it comes to investing in this country thinking this time is different has been the most expensive words and likely will be for some time to come .

wars , recessions , crashes , financial collapses and high inflation have all seen the long term markets returns fall out pretty much within 2% of each other every accumulation or retirement time frame spanning decades ..

the words long term investor are supposed to mean just that , and not worrying about short term temporary dips .

[Cortopassi]

I don't dispute that the PP will result in a lower return over time. Here's 3 cases, during my investing lifetime (from 1989 to now)

100% S&P, 100k into 1.484M, max DD -55.3%
60/40, 100k into 1.572M, max DD -26.24%
PP, 100k into 843k, max DD -14%

All those max DDs were in 2008. All I can say is I can sleep better giving up gains to prevent those scenarios where the market is down day after day and there is no end in sight, and I want to get out. It will happen again, multiple times, and unless this time is different, won't be far off.

[mathjak107]

Or one could have simply put all their money in Wellesley for that period and ended up with $210,000. Or in GB, and ended with $210,000 also. Both choices had much smaller drawdowns as well. There really is no need for newsletters and managed portfolios these days (if there ever was).

nonsense , cherry picking a decade means nothing . in fact if we use the lost decade you needed no stocks . bonds beat stocks .

wellesly is fine but not for growing money over the long haul . the insight growth model took 100k when i started in 1987 and turned it into 2.850 million today .

the insight sector model took 100k when it started in 1988 and today it is 4.12 million .

wellesley is not even close

[Xan]

You're cherry-picking the particular newsletter that luckily worked out for you over your investing timeperiod.

[mathjak107]

no , the fidelity investor did the same , fidelity monitor had done even better than my fidelity insight and vanguard has newsletters that did as well and a total market fund was 450k behind the growth model over the same period which still was not to shabby .

wellesley was not even close at 40% equities . wellesly did well in the lost decade which was a rare time frame where bonds beat stocks .

but their is no way wellesly will beat equities at growing money over an accumulation perid .

.