ghariton wrote:...In fairness, I knew that my stocks were overvalued, and I expected them to fall. I just didn't expect 95% declines....
George
95% declines? What were you invested in?
Well, my single biggest investment in 1999 was JDS Uniphase. I invested $15,000 in March 1997. It topped out at about $400,000 in spring of 2000. I finally sold for $25,000 in 2006, after an uptick.
Of course I had diversified into Juniper Networks, and Foundry, and Extreme Networks, and Ciena, and so on...
ghariton wrote:Well, my single biggest investment in 1999 was JDS Uniphase. I invested $15,000 in March 1997. It topped out at about $400,000 in spring of 2000. I finally sold for $25,000 in 2006, after an uptick.
Ouch , that's the kind of thing that would drive someone to an all RRB portfolio.
Well, my single biggest investment in 1999 was JDS Uniphase. I invested $15,000 in March 1997. It topped out at about $400,000 in spring of 2000. I finally sold for $25,000 in 2006, after an uptick.
Couldn't stand to pay the tax, huh?
I had, in about the same timeframe, a small investment in Trimark Discovery. Each time it went up significantly I would pull some out. I eventually got rid of it before it bottomed out, but was able to keep much of the (much more modest) gains I made along the way.
Sic transit gloria mundi. Tuesday is usually worse. - Robert A. Heinlein, Starman Jones
ghariton wrote:...In fairness, I knew that my stocks were overvalued, and I expected them to fall. I just didn't expect 95% declines....
George
95% declines? What were you invested in?
Well, my single biggest investment in 1999 was JDS Uniphase. I invested $15,000 in March 1997. It topped out at about $400,000 in spring of 2000. I finally sold for $25,000 in 2006, after an uptick.
Of course I had diversified into Juniper Networks, and Foundry, and Extreme Networks, and Ciena, and so on...
George
Wow, does that ever bring back memories nightmares. I lived vicariously that scenario as I followed JDS Uniphase for about 24 months but it never quite hit my buy number. My nemesis was my employer, BNRNorthern Telecom Nortel.
Normal people… believe that if it ain’t broke, don’t fix it. Engineers believe that if it ain’t broke, it doesn’t have enough features yet. – Scott Adams
newguy wrote:Ouch , that's the kind of thing that would drive someone to an all RRB portfolio.
I'm about 65% RRBs. The rest is in broad U.S. equities ETFs (SPY, MDY, IWF, QQQQ, VTI) and a bit in XIU.
I believe that I finally came to understand my risk tolerance.
George
Ah yes JDS. I missed that one. However, Jones Soda (JSD) went from 88 cents to $36 and my broker said it was going to $60. I said please sell half. I sold the rest at $9.
We unloaded half of AAPL at $75, watched it go to $100 then retrace to $50. Still holding on but I might sell half pretty soon.
northbeach wrote:That is one scary looking chart. Would be pretty grim for those retiring in 2000.
For even scarier, have Norbert redo it based on $40 real withdrawals instead of the 4%. The % helps to lessen the pain for the portfolio but hides the pain in retirement spending. (i.e. near the end with a $500 portfolio, 4% = $20).
But I'm not sure how he adjusted the 4% withdrawal rate; I'm assuming he used real returns and then applied a 4% withdrawal ...
northbeach wrote:That is one scary looking chart. Would be pretty grim for those retiring in 2000.
For even scarier, have Norbert redo it based on $40 real withdrawals instead of the 4%. The % helps to lessen the pain for the portfolio but hides the pain in retirement spending. (i.e. near the end with a $500 portfolio, 4% = $20).
But I'm not sure how he adjusted the 4% withdrawal rate; I'm assuming he used real returns and then applied a 4% withdrawal ...
I took his withdrawal rate at the initial $40.00 plus inflation added to it each year. Based on the 4% safe withdrawal plus inflation hypothesis.
northbeach wrote:That is one scary looking chart. Would be pretty grim for those retiring in 2000.
To me, the most amazing thing is that it hasn't gotten any worse in the last nine years for equity heavy portfolios, because the damage was already catastrophic by the end of 2002. Even the FPX Balanced portfolio looks a little shaky at 640 (real) after 11 1/3 years. In the real world, I expect people would reduce their draws to ameliorate the damage. (Except for the RRB investors who are either going to leave large legacies or double their spending from here on out.)
Bylo Selhi wrote:IIRC you've been trading in and out of RRBs and TIPS during this period. Care to update us on how that worked out compared to buying and holding RRBs?
I gave up on both RRBs and TIPS long ago, never expecting them to get so dear. Back of the envelope, the total portfolio has been hurt by 1.5-2% by avoiding RRBs the last two years.
NormR wrote:... a fixed real withdrawal based on a 4% start?
Aye.
ghariton wrote:
AltaRed wrote:Not if they had a Balanced portfolio. The chart demonstrates the importance of asset allocation.
I strongly agree.
Says the man with the unbalanced portfolio that happens to have worked out better than anything else.
Nothing can protect people who want to buy the Brooklyn Bridge.
Final 2012 CPI figures aren't available until next week. A preliminary look says all five portfolios fell by $10-20 in 2012, so no serious damage anywhere.
Nevertheless, it's still dangerous territory for the FPX Growth and TSX Composite portfolios, as they remain right around the $500 mark and thus must achieve 8% real returns just to cover the original 4% withdrawal rate without declining further. But we're more than 12 years into the 30 year model period and my calculator says - if one could arrange steady returns - that 3.3% real going forward is enough for even those severely depleted portfolios to survive. That requires optimism but isn't pie in the sky.
Nothing can protect people who want to buy the Brooklyn Bridge.
I never got back to this a year ago, so mea culpa. Allow me now to update the chart with two more years of data.
The all equity portfolios continue to hang in around the $500 mark after 13 1/3 years in, so 30 year survival remains plausible. Indeed, the required steady real rate of return that avoids disaster has fallen from 3.3% a year ago to 2.8% today.
All other portfolios - in fact, any portfolio worth more than about $575 today - will survive the remaining period without risk if they are converted ("defeased") into RRBs at current rates.
Nothing can protect people who want to buy the Brooklyn Bridge.