Real world reaction if/when markets crash? Will this time be different?
- Thread starter Dave Taylor
- Start date
Fire Lord Jim
Well-Known Member
While this is good math, it's a bad plan. Because the price of what we buy is compounding at the same time. Looking at the investment side without the spending side is false comfort. I bought a house for $47k. I bought a new mountain bike for under $200. What's the point of being a millionaire when your new 74 speed cassette costs $300 thousand?
100%. The goalposts keep moving, yet stay in the same spot at the same time.
Dave Taylor
Rex kwan Do
I have a feeling the way DXY is going that a million will go much further than it has the last 20 years. Did you see Credit Suisse is on the brink of collapse? Thanks to their CDRs.
Dave Taylor
Rex kwan Do
You’re also assuming we can resume the upward inflationary spiral. Today’s news show deflation coming soon and not much mr powell can do about it.
The only thing thesr numbers prove is to stay the course. Nobody can predict which investment will win over a lifetime. Gold? Stocks? Real estate?
Play the portfolio and take the average over the long term. I don't think the goal is to be cash flow negative in retirement? Maybe some discipline, but mostly life unchanged.
Dave Taylor
Rex kwan Do
Imagine how well off everyone would be if financial advisors used the 8% stop loss rule on any investments they manage? We wouldn't need our accounts to draw down 25% as they are now. They could actually earn us a real return. Financial advisors are pretty much over paid college debt recipients.
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I suspect you mean a trailing stop?
consider that you like the stock - when do you get back in? when it returns to down 5% and seems on its way up?
3% was lost because it looked bad on paper...nobody can call the bottom.
what was the money doing while it was out?
Some people need a financial advisor just to tell them to keep saving - retirement, college savings, etc....
Others aren't good at the paperwork - and for good reason. It sucks.
Like paying a coach to tell you to do intervals - you know you need to do intervals.
Saying you are going to do them to someone ups the commitment ???
i really vacillate on the subject.
Dave Taylor
Rex kwan Do
No, an 8% stop. You can do a trailing stop too but more likely to get stopped out on that stock/etf you love. A good rule of thumb is never lose 8% on one position and you will do great. Let's say it's Feb of 2021 and you really want to own ARKK because Cathie Woods is the best and she's going to the moon with Bitcoin so you buy in on a slight pullback week later at $150. Got it, set you stop at 8% and you are good. Now boom, you get stopped out a couple days later at $138. Now the stop continues it's down fall all the way to $35.10. Do you really want to hold that bag until it's worth break even at $150? It will be years and that money can do so much more elsewhere. Same can be said for any small or. madcap over the last 1.5 years. I still don't think that stuff is done going down...not until AAPL and TSLA fail. Just remember, a good stock is only a good stock when it's going up.
The Kalmyk
Well-Known Member
I like this because it highlights behavior... behavior we share. My one buddy said i “should” be feeding into the local market more... silly. Thats what we have the other 80% for
Dave Taylor
Rex kwan Do
He may not be wrong on the grand scheme but you are right on the individual level. If you boost you local economy your homes, quality of life, schools, parks etc will all be more valuable and at the end of the day your net worth. Unfortunately you individually will not be able to do it.
that isn't what happens - Blue Horseshoe loves ARKK at $52 in May 2020 - it hits $152 8 months later and starts to slide.
at some point must have moved the stop? otherwise it is going down to $48 (8%stop) a year later and your portfolio takes a bigger beating from a perceptional POV.
Maybe the % can be adjusted so it doesn't trigger on a bad day? Only a bad trend.
a 15% trail would have triggered around $135. or buy puts to hedge?
it was a single sector EFT and that sector took a beating.
i'm just not a fan of trying for big wins, and small losses.
Playing the s&p, just keep putting it in and continue to dollar cost average. autopilot.
rick81721
Lothar
I read that article last night and not sure if it's a piece aimed at getting rational people angry, or aimed at people bad with money justifying their beliefs.
The whole gist of the theory is that you want to keep a consistent standard of living throughout your life which I believe is absolute bullshit. If anything you should aim for a standard of living that is slowly going up as you age.
For instance unlike what that article says I should have done, I enjoyed my 20s/30s while driving shitbox cars, not blowing crazy money on expensive vacations, housing, clothes etc. So as I've gotten older and added in more "luxury" like a generic hotel instead of campsites, or a brand new but under 20k car, my standard of living slowly improves yet I have a good financial outlook.
Fire Lord Jim
Well-Known Member
I'm going with the rationalization of their bad money habits.
If things lasted forever, then sure, go ahead and buy them now instead of saving to buy them later. But entropy is real, those things won't age well, and somethings you will buy in the future don't exist yet. We need to ability to pay for things in the future when we don't have a paycheck.
it doesn't make a lot of sense to save if amassing interest debt ???
my SIL looks at money as a stream - she is retired - she has money, but won't pay her cc bill in full
if it is over her monthly allotment, so it starts accumulating interest debt.
Even if she reels in the spending on new things, the interest now dominates the equation -
but that is fine, cause she can afford the minimum payment(s) - so paying 15% while earning 5% ... :throw hands up:
my SIL looks at money as a stream - she is retired - she has money, but won't pay her cc bill in full
if it is over her monthly allotment, so it starts accumulating interest debt.
Even if she reels in the spending on new things, the interest now dominates the equation -
but that is fine, cause she can afford the minimum payment(s) - so paying 15% while earning 5% ... :throw hands up:
Fucking guy is nuts, the only reason my retirement savings looks the way it does, is because I started early.
My first boss told me, put the 15% in, its money you just spend across a bar or somewhere else. Keep doing it, and it adds up. He was right, it was money that I never missed. I even borrowed 5k from it to go in a business venture. I would have never had that cash avail, if i hadn't been doing my 401k.
Let all hope the market comes BACK!!!
I'm pretty sure all my nephew and nieces live in CC debt. They are always traveling, ubers left and right. And they travel in style, I can't figure it out. they are all in their late 20's and early 30's. I have one niece who spends $15 every day on the way into to work at starbucks? Vegas, St Barts, Cancun, for bachelor or bachelorette party. Crazy stuff.
I wouldn't be able to sleep if i couldn't pay off my CC.
Well according to Google anyway, the average American has over $6000 in CC debt. Your SIL is not alone.
Dave Taylor
Rex kwan Do
Interesting. I have had a simple concept since starting my first employment. You're probably not going to love working anywhere so just make sure your salary goes up at every job you take. When I was 17-27 or so I loved paycheck to paycheck. I didn't mess with my retirement though and have been building it steadily. I am married with 3 kids now, own two houses(one outright and one about 1/3 paid for). I would not give up all of the life experience as a young adult for anything. I had 4 successful hobbies/lifestyles that have introduced me to loads of people, given me skills, interests and experiences I could never get anywhere else. I traveled to Germany,Belgium, Netherlands and Austria for about 6 years(3-4x/yr), learned to weld, build lowrider trucks, car audio systems and tons of other stuff. I motocross every weekend for about 16 years straight. Were any of these costly? Every one of them! I'm only 45 and have all I need in life. I drive beater cars and $12k bikes. It's what I like. We do combined(with the inlaws) family vacations each year. Eat out often. It's about living within your means. You can make $250k/yr and not save a penny. I have zero auto loans or CC debt. Life is pretty simple if you look at it that way....nowif only Credit Suisse can keep from F'ing the entire world financial system up this week(how did a Lehman brother end up being an executive for them?.
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