Gyroscopic Investing

moda0306 wrote: Oh, and to top it off my friends are getting duped into cash-value life insurance (as I did to some degree) for their "safe money" when their Roth limits are anything but being approached.  I literally want to run these insurance peddlers off the road.

But what if "something were to happen to you?" 

To me, the best way to reduce your life insurance needs is to reduce your debt levels and beef up your savings.

I think another thing the PP does is naturally make you debt-averse.  Often, people will use the logic that since the stock market will return at 10%+, it's safe to take on debt at anything less than that.

Well being in the PP you have 2 assets that (currently) are offering 1% and 4.5%, it's a lot more difficult to justify taking on 5%-9% debt, much less the toxic stuff.  It's almost more my adherance to the PP that makes me averse to an auto loan at 7% than the implications of taking on that debt in and of itself.  I know it should probably be the other way around, but that's how my brain ends up working a lot of the time.

An interesting thing I heard on NPR today - 4/20/2011, the stock market has gained 100% in value since crashing 3 years ago.  In other words, in the last 3 years, if you stuck to an all stock portfolio, you just broke even. 

In all seriousness, 2008 taught me that the market is broken.  Most people saw the housing bubble coming and still allowed politicians, financial executives, and the public at large, to take down the world economy with it.

It also taught me to ignore financial advice.  Well, I should say, it reinforced that I should ignore financial advice from so-called "experts".  2002 taught me that the stock market is not a guaranteed path to easy riches, but 2008 reinforced that financial experts are the last ones you want to trust for advice.

For example, the CPA that tells you "you're young, you should be in an all-stock portfolio", or the real estate broker that tells you "go ahead, buy that house you can't really afford with only 3.5% down, the market will only go up and it will be the best investment of your life."  2008 taught me that the system is broken, and government can't protect you from the fraud that others will try to perpetrate upon you.

Lone Wolf wrote: ...

gizmo_rat wrote: What I liked about HB's WTBLIPUGW is that it presents a distillation of the attitude and extension of the solutions that I recognise from my parents and grandparents.

I agree.  This is exactly what Browne's "17 Golden Rules of Investing" remind me of.  It's like that old saying, "The older I get, the smarter my parents become."

Wholeheartedly agree.  It was my father's upbringing (in the aftermath of the Depression) and his fear of stocks that made me look for alternatives after experiencing 2008.  Without his constant prodding, I doubt I would have ever found the PP, nor been interested in it had I found it.

I learned that I had reached an age, and an asset level that HB's rule 2, "don't assume that you can replace your wealth" became real to me. While I did not bail, as some of my friends did, missing the 2009 bounce, it lit a fire in me to better understand diversification and investing.

Lone Wolf wrote:
I learned that although I am capable of riding out a downturn and buying more at (perceived) bottoms, the process is filled with stress. 

"Perceived" is the key word...as in, "Some people are better at perceiving a market bottom than others."