Author Topic: 45% Decline over Next 3 Years?  (Read 13185 times)

OkieStache

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45% Decline over Next 3 Years?
« on: October 22, 2015, 11:39:53 AM »
I don't know if any of my brethren mustachians follow Jesse Felder; our investments are far too boring to benefit from much of his philosophy.  ;)
He has some pretty compelling graphs and analysis calling for a 45% downturn over the next three years. http://tinyurl.com/nalmqpa I've done some back-of-the-napkin calculations that look like (no matter what happens) it may make sense to stay all cash for the next 12 months and jump in on the (huge) potential dip.  If there is no dip, there is not likely to be any appreciable increase in gain.   
Anybody else thinking this way?

ShoulderThingThatGoesUp

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Re: 45% Decline over Next 3 Years?
« Reply #1 on: October 22, 2015, 11:41:27 AM »
No.

...


WTF?

Jeremy E.

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Re: 45% Decline over Next 3 Years?
« Reply #2 on: October 22, 2015, 11:48:59 AM »
You are VERY likely to lose at least 2% of the value of your cash from inflation if it's all cash, whereas most years the stock market increases in value. I think all cash is a very bad idea.

Frankies Girl

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Hank Sinatra

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Re: 45% Decline over Next 3 Years?
« Reply #4 on: October 22, 2015, 12:04:19 PM »
I don't know if any of my brethren mustachians follow Jesse Felder; our investments are far too boring to benefit from much of his philosophy.  ;)
He has some pretty compelling graphs and analysis calling for a 45% downturn over the next three years. http://tinyurl.com/nalmqpa I've done some back-of-the-napkin calculations that look like (no matter what happens) it may make sense to stay all cash for the next 12 months and jump in on the (huge) potential dip.  If there is no dip, there is not likely to be any appreciable increase in gain.   
Anybody else thinking this way?

Here's what I got when I went to the site: 

Phishing attack ahead
Webroot had blocked access to the website you tried to open.
It has been evaluated to contain phishing content.


Just an advisory

OkieStache

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Re: 45% Decline over Next 3 Years?
« Reply #5 on: October 22, 2015, 12:22:29 PM »
http://thefelderreport.com/blog/ 
Posting of October 19, 2015.
"most years the stock market increases in value" is true, and it is true that inflation is probably going to be 2 - 2.5%.  It is also true that the Dow lost 54% from 10/7 - 3/09.  As many on here have said, the recession made their retirement possible by creating a tremendous buying opportunity.  It would be nice to make the most of that should it present itself again.
If I can explain my post to fill in *TF let me know.

Jeremy E.

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Re: 45% Decline over Next 3 Years?
« Reply #6 on: October 22, 2015, 12:25:31 PM »
It's also true that market timing rarely works.

ShoulderThingThatGoesUp

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Re: 45% Decline over Next 3 Years?
« Reply #7 on: October 22, 2015, 12:37:03 PM »
http://thefelderreport.com/blog/ 
Posting of October 19, 2015.
"most years the stock market increases in value" is true, and it is true that inflation is probably going to be 2 - 2.5%.  It is also true that the Dow lost 54% from 10/7 - 3/09.  As many on here have said, the recession made their retirement possible by creating a tremendous buying opportunity.  It would be nice to make the most of that should it present itself again.
If I can explain my post to fill in *TF let me know.

If you can find somebody who made a giant pile of money because they held their savings in cash from 2006 until 2008 and then put it all in near the bottom, all based on the advance knowledge of some Internet shyster with a website that tries to infect your computer with malware, please link to them.

Louisville

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Re: 45% Decline over Next 3 Years?
« Reply #8 on: October 22, 2015, 01:01:22 PM »
If you go exactly contrary to Jim Kramer, during a high sunspot cycle, and always hold your nose when placing your orders, you will be a stock picking millionaire in two weeks.

CmFtns

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Re: 45% Decline over Next 3 Years?
« Reply #9 on: October 22, 2015, 01:06:40 PM »
http://thefelderreport.com/blog/ 
Posting of October 19, 2015.
"most years the stock market increases in value" is true, and it is true that inflation is probably going to be 2 - 2.5%.  It is also true that the Dow lost 54% from 10/7 - 3/09.  As many on here have said, the recession made their retirement possible by creating a tremendous buying opportunity.  It would be nice to make the most of that should it present itself again.
If I can explain my post to fill in *TF let me know.

If you can find somebody who made a giant pile of money because they held their savings in cash from 2006 until 2008 and then put it all in near the bottom, all based on the advance knowledge of some Internet shyster with a website that tries to infect your computer with malware, please link to them.

haha... but yea i'm waiting for this link too

2Birds1Stone

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Re: 45% Decline over Next 3 Years?
« Reply #10 on: October 22, 2015, 01:19:31 PM »
I don't know if any of my brethren mustachians follow Jesse Felder; our investments are far too boring to benefit from much of his philosophy.  ;)
He has some pretty compelling graphs and analysis calling for a 45% downturn over the next three years. http://tinyurl.com/nalmqpa I've done some back-of-the-napkin calculations that look like (no matter what happens) it may make sense to stay all cash for the next 12 months and jump in on the (huge) potential dip.  If there is no dip, there is not likely to be any appreciable increase in gain.   
Anybody else thinking this way?

You should pull all of your money out of the markets and invest in tulip bulbs.

trailrated

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Re: 45% Decline over Next 3 Years?
« Reply #11 on: October 22, 2015, 01:31:18 PM »
I don't know if any of my brethren mustachians follow Jesse Felder; our investments are far too boring to benefit from much of his philosophy.  ;)
He has some pretty compelling graphs and analysis calling for a 45% downturn over the next three years. http://tinyurl.com/nalmqpa I've done some back-of-the-napkin calculations that look like (no matter what happens) it may make sense to stay all cash for the next 12 months and jump in on the (huge) potential dip.  If there is no dip, there is not likely to be any appreciable increase in gain.   
Anybody else thinking this way?

You should pull all of your money out of the markets and invest in tulip bulbs.

Where does one buy these tulip bulbs...

OkieStache

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Re: 45% Decline over Next 3 Years?
« Reply #12 on: October 22, 2015, 01:37:27 PM »
I think there are lots of people on this board that benefited from making big buys around the '09 bottom.  There also seem to be a lot of folks on this board that believe a recession is likely in the immediate future (6-24 months).  I don't think it's crazy to sit out a short period, when stocks are at historically high valuations by any measure, to see what happens.   Just wanted to see if anybody else was thinking that way.
If you think Felder is an "internet shyster" you didn't read the information.  He is legit and has the track record to prove it.  Sorry about the malware issues, I've never had a problem on his site.
Credit card fraud department called to verify that I wanted my $10k purchase from Burpee approved; I loaded up on Synaeda Amor...

povertystrickenbastard

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Re: 45% Decline over Next 3 Years?
« Reply #13 on: October 22, 2015, 01:39:16 PM »
The decline has already began.  The decline in intelligence as we are all stupider for having read this thread.

2Birds1Stone

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Re: 45% Decline over Next 3 Years?
« Reply #14 on: October 22, 2015, 01:43:52 PM »
Stocks are constantly at historical valuations.

Hank Sinatra

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Re: 45% Decline over Next 3 Years?
« Reply #15 on: October 22, 2015, 01:48:49 PM »
Quote
I don't think it's crazy to sit out a short period, when stocks are at historically high valuations by any measure, to see what happens.   Just wanted to see if anybody else was thinking that way.

For the record I concur with the gist of your statement. Sitting out short spells for historically relevant reasons is not crazy. Anybody or school  that thinks it matters worth a damn if someone  makes or loses a little here and there because they timed or held or didn't,  simply does not understand investing, and likely knows less about Life itself. 


wenchsenior

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Re: 45% Decline over Next 3 Years?
« Reply #16 on: October 22, 2015, 01:50:30 PM »
I literally guffawed out loud reading the subject line. That's how seriously I take it.


UnleashHell

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Re: 45% Decline over Next 3 Years?
« Reply #17 on: October 22, 2015, 01:56:25 PM »
If you go exactly contrary to Jim Kramer, during a high sunspot cycle, and always hold your nose when placing your orders, you will be a stock picking millionaire in two weeks.


Doing the opposite of Cramer should never be dismissed. shyster.

iamlindoro

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Re: 45% Decline over Next 3 Years?
« Reply #18 on: October 22, 2015, 01:58:55 PM »
Anybody or school  that thinks it matters worth a damn if someone  makes or loses a little here and there because they timed or held or didn't,  simply does not understand investing, and likely knows less about Life itself.

I'm giving you the benefit of the doubt in assuming that you are trying to express that what matters is consistently investing over time, but to deny that "making or losing a little here and there" can't have massive repercussions is a little disingenuous.  Market timers, single-stock gamblers, and "pull it out and hold it in cash until prices are better" investors don't tend to behave sub-optimally once, it's a pattern that in aggregate causes them huge damage over time.  To say otherwise would be a real misunderstanding of how investing, and compounding, work.

partgypsy

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Re: 45% Decline over Next 3 Years?
« Reply #19 on: October 22, 2015, 02:15:41 PM »
I went through the recession like most people here; at one point checking my retirement account it said I had 1% return over the past 10 years! What I did do during the downturn was reduce my stock holdings about 5% cash, just to reduce jitters, and just checked semi-annually.  The most important thing during a downturn is not to go into cash, but to consistently invest during that time. My question, is if there is going to be a downturn in next 12 months to 3 years, how do you know when to get out? And how do you know when to get back in? I don't trust myself to make both those kind of decisions correctly.

nereo

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Re: 45% Decline over Next 3 Years?
« Reply #20 on: October 22, 2015, 02:16:11 PM »
everyone likes scary stories this time of year.

Seriously though - I have no intention of pulling money out and having it sit on the sidelines. 
Someday a crash will happen, and then there will be a recovery.  The track-record for people predicting crashes is horrible.  THe long term average of the stock market is excellent.

EDIT:  let's not forget this thread :-) http://forum.mrmoneymustache.com/mustachianism-around-the-web/financial-doom-is-coming-in-september-anyone-believe-this/
« Last Edit: October 22, 2015, 02:24:53 PM by nereo »

BarkyardBQ

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Re: 45% Decline over Next 3 Years?
« Reply #21 on: October 22, 2015, 02:19:03 PM »
I don't know if any of my brethren mustachians follow Jesse Felder; our investments are far too boring to benefit from much of his philosophy.  ;)
He has some pretty compelling graphs and analysis calling for a 45% downturn over the next three years. http://tinyurl.com/nalmqpa I've done some back-of-the-napkin calculations that look like (no matter what happens) it may make sense to stay all cash for the next 12 months and jump in on the (huge) potential dip.  If there is no dip, there is not likely to be any appreciable increase in gain.   
Anybody else thinking this way?

You should pull all of your money out of the markets and invest in tulip bulbs.

Where does one buy these tulip bulbs...

You missed it. https://en.wikipedia.org/wiki/Tulip_mania

OkieStache

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Re: 45% Decline over Next 3 Years?
« Reply #22 on: October 22, 2015, 02:25:51 PM »
Anybody or school  that thinks it matters worth a damn if someone  makes or loses a little here and there because they timed or held or didn't,  simply does not understand investing, and likely knows less about Life itself.

I'm giving you the benefit of the doubt in assuming that you are trying to express that what matters is consistently investing over time, but to deny that "making or losing a little here and there" can't have massive repercussions is a little disingenuous.  Market timers, single-stock gamblers, and "pull it out and hold it in cash until prices are better" investors don't tend to behave sub-optimally once, it's a pattern that in aggregate causes them huge damage over time.  To say otherwise would be a real misunderstanding of how investing, and compounding, work.
Or worse, that long-term negative behavior is positively reinforced by an aberration and they apply the one-off financially positive experience to all future scenarios, disregarding historic trends, with negative results. 
Example:  I do very little individual stock investing.  When I do, it's stuff like KO that I plan to hold, for practical purposes, forever.  Recently I bought a little VLKAY (Volkswagen) when it was getting pummeled.  Sold 1/2 at 29 and I'll let the rest ride.  I understand that those circumstances are likely to never come around again.  And therein is the lesson that I think mustachians in particular can relate to.  Sometimes it's okay to deviate as long as we have objective, fact based, unemotional reasons for doing so and we realize that those parameters cannot be extrapolated to other situations.  Basically, we reign in our sub-optimal behavior.

CmFtns

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Re: 45% Decline over Next 3 Years?
« Reply #23 on: October 22, 2015, 02:45:25 PM »
I think what it comes down to is this, proven time and time again... You can't time the market.

In case you missed it above (well said partgypsy):
if there is going to be a downturn in next 12 months to 3 years, how do you know when to get out? And how do you know when to get back in? I don't trust myself to make both those kind of decisions correctly.

The safe bet is to ride it down... and then back up

For Example:
People predicted a large downturn a few months ago

so what if you had pulled your cash right at the beginning of downturn in august?... Then it plummets and you think:
"OHHH YEAA I win I'm the best... staying in cash for the big downturn"

...but oops it only dropped 11% and then came back up and you tell yourself:
"It's just a small upturn there's still a downward trend for coming months"...

Then it came back up to where you bought it and you tell yourself :
"I cant buy back in now... It's higher than when i sold =("

Then it goes up even higher and you now realise:
"I screwed up I should buy back in to ride this obvious upturn"

Therefore you easily ended up buying above where you sold because you "thought" that it will keep dropping and had some set mental number in your head like "I'll buy back in once it drops 15%"... Well guess what... it didn't drop 15% and you never bought back in and now it's higher than when you sold it and you lost money.

Listen to people instead of just blindly defending whatever your original argument was.
« Last Edit: October 22, 2015, 02:56:24 PM by comfyfutons »

sunday

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Re: 45% Decline over Next 3 Years?
« Reply #24 on: October 22, 2015, 02:46:12 PM »
Stocks are constantly at historical valuations.

I get this feeling also. Either they're "overvalued" or the market is in a "deep slump".

Telecaster

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Re: 45% Decline over Next 3 Years?
« Reply #25 on: October 22, 2015, 03:02:39 PM »
I think there are lots of people on this board that benefited from making big buys around the '09 bottom.  There also seem to be a lot of folks on this board that believe a recession is likely in the immediate future (6-24 months).  I don't think it's crazy to sit out a short period, when stocks are at historically high valuations by any measure, to see what happens.   Just wanted to see if anybody else was thinking that way.

There are times when the market can get really far out of whack in either direction.   We're out of whack on the high side right now.  It is not crazy to say so.  The crazy part is claiming you know how long it is going to take to get back to "normalcy."  The market could easily stack out of whack on the high side for three more years.   Or five more years for that matter.   

Jeremy E.

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Re: 45% Decline over Next 3 Years?
« Reply #26 on: October 22, 2015, 03:16:12 PM »
I have a prediction, in 15 years the U.S. market will have doubled or better in value and anyone holding lots of cash or bonds during those 15 years will be sad.

Tyson

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Re: 45% Decline over Next 3 Years?
« Reply #27 on: October 22, 2015, 03:23:55 PM »
I hope it does tank because I"m very recently debt free and I'm looking to acquire stocks as my primary investment.  Tanking means stocks are on sale for me, yay.  The stock market is inherently volatile.  Trying to time the market is like trying to get on and off a roller coaster after it's gotten started.  You might be able to do it, but it'll probably hurt you.

mrpercentage

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Re: 45% Decline over Next 3 Years?
« Reply #28 on: October 22, 2015, 05:14:03 PM »
45% not likely. It's just not that bad. I know many have the horrors of 2008-2009 are fresh on their mind but 50% dumps of the entire stock market are not a common enough thing to happen without very good reasons.

There have been some pointing to 2016 because of left over housing issues and baby boomer receptions. Possible. Makes sense.

I'm not too worried. People have to buy cars to get to work. Not everyone can buy used because we have a really old used car market. We will eventually have to rebuild roads and bridges. It's not an option we have to. We have to eat. Our nations people have reduced their debts a lot. The banks hold huge reserves of cash (the reason we don't have inflation from ZIRP). It's not that bad. Gas is low. Hillary is on the warpath to keep money out of medical insurance and into the economy.

Now if we continue to get gouged with medical that young people don't even use and energy prices go extreme with baby boomers making big redemptions-- that could be really bad. All money going to necessities rather than some for wants is really bad for the market. That's when people say screw the market I'm going to use that money for something I need.

concealed stache

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Re: 45% Decline over Next 3 Years?
« Reply #29 on: October 22, 2015, 05:48:41 PM »
All that the original link is really saying is "sometimes feedback loops establish themselves". As his charts show, sometimes they don't. It has a place in an overall analysis, but it is hardly a conclusion in itself. Back to sleep.

povertystrickenbastard

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Re: 45% Decline over Next 3 Years?
« Reply #30 on: October 22, 2015, 07:31:57 PM »
If you dollar cost average in regularly enough it wouldn't even matter, you'd be buying on the way down, buying near the bottom and then buying on the way back up.  Sitting out because something might happen is just stupid, what also might happen is we have a further 10% rally.  Just look at Thursday!

iamlindoro

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Re: 45% Decline over Next 3 Years?
« Reply #31 on: October 22, 2015, 07:35:49 PM »
If you dollar cost average in regularly enough it wouldn't even matter, you'd be buying on the way down, buying near the bottom and then buying on the way back up.  Sitting out because something might happen is just stupid, what also might happen is we have a further 10% rally.  Just look at Thursday!

<Obligatory "Dollar cost averaging underperforms lump sum investing 66% of the time" response>

https://pressroom.vanguard.com/content/nonindexed/7.23.2012_Dollar-cost_Averaging.pdf

And to clarify, investing smaller amounts as you earn them isn't DCA, it's lump-sum.

Murdoch

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Re: 45% Decline over Next 3 Years?
« Reply #32 on: October 22, 2015, 08:36:49 PM »
Iamlindoro, can you please explain how adding a percentage of your pay check to investments on a recurring basis as they become available is not Dollar Cost Averaging (DCA)?
I thought that was essentially the practical definition?

Cheers
Murdoch

iamlindoro

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Re: 45% Decline over Next 3 Years?
« Reply #33 on: October 22, 2015, 08:42:18 PM »
Iamlindoro, can you please explain how adding a percentage of your pay check to investments on a recurring basis as they become available is not Dollar Cost Averaging (DCA)?
I thought that was essentially the practical definition?

Cheers
Murdoch

https://en.wikipedia.org/wiki/Dollar_cost_averaging

"By dividing the total sum to be invested in the market (e.g. $100,000) into equal amounts put into the market at regular intervals (e.g. $1000 over 100 weeks), DCA reduces the risk of incurring a substantial loss resulting from investing the entire "lump sum" just before a fall in the market."

DCA is the division of a given sum over time to reduce (perceived) risk of buying at the "wrong" time.  Investing the maximum possible amount as soon as it is available, no matter how often you do it, is lump sum.   

povertystrickenbastard

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Re: 45% Decline over Next 3 Years?
« Reply #34 on: October 22, 2015, 08:44:41 PM »
If you dollar cost average in regularly enough it wouldn't even matter, you'd be buying on the way down, buying near the bottom and then buying on the way back up.  Sitting out because something might happen is just stupid, what also might happen is we have a further 10% rally.  Just look at Thursday!

<Obligatory "Dollar cost averaging underperforms lump sum investing 66% of the time" response>

https://pressroom.vanguard.com/content/nonindexed/7.23.2012_Dollar-cost_Averaging.pdf

And to clarify, investing smaller amounts as you earn them isn't DCA, it's lump-sum.

OK, just to avoid the semantics let's forget I mentioned DCA and we'll just call it 'making regular investments'.

iamlindoro

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Re: 45% Decline over Next 3 Years?
« Reply #35 on: October 22, 2015, 08:47:03 PM »
OK, just to avoid the semantics let's forget I mentioned DCA and we'll just call it 'making regular investments'.


SwordGuy

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Re: 45% Decline over Next 3 Years?
« Reply #36 on: October 22, 2015, 09:24:44 PM »
You should pull all of your money out of the markets and invest in tulip bulbs.

Snort!

For those who don't understand the joke...

http://www.investopedia.com/terms/d/dutch_tulip_bulb_market_bubble.asp

Hank Sinatra

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Re: 45% Decline over Next 3 Years?
« Reply #37 on: October 22, 2015, 10:24:48 PM »
Quote
I'm giving you the benefit of the doubt in assuming that you are trying to express that what matters is consistently investing over time
,

This is correct.

Quote
  Market timers, single-stock gamblers, and "pull it out and hold it in cash until prices are better" investors don't tend to behave sub-optimally once, it's a pattern that in aggregate causes them huge damage over time.


Mostly a shibboleth. It applies to those to whom it applies but does not apply to others.

Jeremy E.

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Re: 45% Decline over Next 3 Years?
« Reply #38 on: October 23, 2015, 12:50:37 AM »
Iamlindoro, can you please explain how adding a percentage of your pay check to investments on a recurring basis as they become available is not Dollar Cost Averaging (DCA)?
I thought that was essentially the practical definition?

Cheers
Murdoch

https://en.wikipedia.org/wiki/Dollar_cost_averaging

"By dividing the total sum to be invested in the market (e.g. $100,000) into equal amounts put into the market at regular intervals (e.g. $1000 over 100 weeks), DCA reduces the risk of incurring a substantial loss resulting from investing the entire "lump sum" just before a fall in the market."

DCA is the division of a given sum over time to reduce (perceived) risk of buying at the "wrong" time.  Investing the maximum possible amount as soon as it is available, no matter how often you do it, is lump sum.   
In Benjamin Grahams book, the intelligent investor, he refers to someone putting $15/month into investments as dollar cost averaging. If someone as well respected as Benjamin Graham considers this dollar cost averaging, I see no reason others should be scalded for using it this way. Especially based on a definition from wikipedia. For all intensive purposes putting $1,000 per week from your paycheck into a taxable account is the same as putting in $1,000 per week from you savings.

Mighty-Dollar

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Re: 45% Decline over Next 3 Years?
« Reply #39 on: October 23, 2015, 12:52:05 AM »
FACT: Since 1928, on average the S&P 500 index has hit a new high every 18 days.
FACT: Since 1928, the stock market has fallen 50% or more only 3 times.

If I hear one more doom & gloom prediction about a massive stock market crash (after we just had a 56% crash and a 49% crash in the 2000's) I'm going to vomit. These predictions NEVER END.

"Avoid weekend thinking and ignore the latest dire predictions of newscasters" -- Peter Lynch

mrpercentage

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Re: 45% Decline over Next 3 Years?
« Reply #40 on: October 23, 2015, 01:25:50 AM »
FACT: Since 1928, on average the S&P 500 index has hit a new high every 18 days.
FACT: Since 1928, the stock market has fallen 50% or more only 3 times.

If I hear one more doom & gloom prediction about a massive stock market crash (after we just had a 56% crash and a 49% crash in the 2000's) I'm going to vomit. These predictions NEVER END.

"Avoid weekend thinking and ignore the latest dire predictions of newscasters" -- Peter Lynch

Yep. Its right up there with Hail Bob, Y2K, 2012, and every blood-moon.

iamlindoro

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Re: 45% Decline over Next 3 Years?
« Reply #41 on: October 23, 2015, 07:51:16 AM »
In Benjamin Grahams book, the intelligent investor, he refers to someone putting $15/month into investments as dollar cost averaging. If someone as well respected as Benjamin Graham considers this dollar cost averaging, I see no reason others should be scalded for using it this way. Especially based on a definition from wikipedia. For all intensive purposes putting $1,000 per week from your paycheck into a taxable account is the same as putting in $1,000 per week from you savings.

Not having the book, I can't refute or confirm however it is defined by Graham.  I certainly haven't scolded anyone.  It is a fact that it is commonly misused, but the fact remains that DCA refers only to instances where a lump sum is available, and the investor opts to ease it into the market because he or she believes it reduces risk.  If you receive a $100,000 inheritance, and you put it all into the market at once, you have lump sum invested, yes?  Now, if you receive a second inheritance six months later, and invest it immediately, are you still lump sum investing, or are you now Dollar Cost Averaging?  The answer is that you have lump sum invested, twice.  If you had put some portion of the same money into the market every month, that would have been DCA.  Likewise, lump-sum investing doesn't only refer to those who save up their entire investing lifetime and invest in one orgasmic lump sum.

Mntngoat

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Re: 45% Decline over Next 3 Years?
« Reply #42 on: October 23, 2015, 08:24:45 AM »
so jesse has a crystal ball?

Telecaster

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Re: 45% Decline over Next 3 Years?
« Reply #43 on: October 23, 2015, 10:44:59 AM »
so jesse has a crystal ball?

Even better, page clicks.   

Eric

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Re: 45% Decline over Next 3 Years?
« Reply #44 on: October 23, 2015, 12:54:02 PM »
In Benjamin Grahams book, the intelligent investor, he refers to someone putting $15/month into investments as dollar cost averaging. If someone as well respected as Benjamin Graham considers this dollar cost averaging, I see no reason others should be scalded for using it this way. Especially based on a definition from wikipedia. For all intensive purposes putting $1,000 per week from your paycheck into a taxable account is the same as putting in $1,000 per week from you savings.

Not having the book, I can't refute or confirm however it is defined by Graham.  I certainly haven't scolded anyone.  It is a fact that it is commonly misused, but the fact remains that DCA refers only to instances where a lump sum is available, and the investor opts to ease it into the market because he or she believes it reduces risk.  If you receive a $100,000 inheritance, and you put it all into the market at once, you have lump sum invested, yes?  Now, if you receive a second inheritance six months later, and invest it immediately, are you still lump sum investing, or are you now Dollar Cost Averaging?  The answer is that you have lump sum invested, twice.  If you had put some portion of the same money into the market every month, that would have been DCA.  Likewise, lump-sum investing doesn't only refer to those who save up their entire investing lifetime and invest in one orgasmic lump sum.

LOL!  Also, agree with everything said.

Tjat

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Re: 45% Decline over Next 3 Years?
« Reply #45 on: October 23, 2015, 07:06:03 PM »
I think I saw this on yahoo finance...


k290

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Re: 45% Decline over Next 3 Years?
« Reply #46 on: October 24, 2015, 12:44:12 PM »
FACT: Since 1928, on average the S&P 500 index has hit a new high every 18 days.
FACT: Since 1928, the stock market has fallen 50% or more only 3 times.

If I hear one more doom & gloom prediction about a massive stock market crash (after we just had a 56% crash and a 49% crash in the 2000's) I'm going to vomit. These predictions NEVER END.

"Avoid weekend thinking and ignore the latest dire predictions of newscasters" -- Peter Lynch

Copied into signature. :p. Pearls of fact like this are always worth constantly keeping in consciousness.

One Noisy Cat

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Re: 45% Decline over Next 3 Years?
« Reply #47 on: October 24, 2015, 08:07:16 PM »
    45% decline in 3 years? It could happen. Paris Hilton could also decide to give away all her possessions and become a nun. Lot's of things could happen. There have been 3 year periods with a 45% decline before, not many, but there have been.
      Perhaps if you really, really want to try the market timing game, set aside some money that you wouldn't mind losing and use that. Keep the rest in a low expense index fund. Who knows, you might be the rare exception.

SwordGuy

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Re: 45% Decline over Next 3 Years?
« Reply #48 on: October 24, 2015, 09:47:33 PM »
45% market decline in the next few years?  For me, personally, that would be awesome. 

My wife and I are likely able to stay employed if we choose to do so.

We diversified our income streams into SS, farm income, rental income (which we're in the process of ramping up by a factor of 3 over the next 2 years as time and cash flow allow), and have no plans to tap into our stock portfolio at all for routine expenses.  The first 3 will cover our intended income level, which has a goodly bit of padding in it.

We're just buying and holding stocks.

So, if the market dived we would slow down the rental property purchases a bit to make sure we kept a bit more in cash.  (After we buy our new personal home we'll be lower in cash than I like to be until either mom's house or our old one sells).   After that we would start buying more stock than we already are.   We might even work a year longer than intended just to buy even more stock while the market was at the bottom.

Then, we would start harvesting foreclosures because there are bound to be a bunch of them.   They might come from regular consumers who got over-extended and then lost income as the job market and salary levels tightened up.  Or they might come from other real estate investors who were too highly leveraged.     At the moment we only have 3 rentals, only one of which is leveraged.  If the market doesn't tank we'll get another 5 to 6 over the next two years.  If it tanks we'll get another 10-15 over the next 3 years.  About the time that stock market rebounds the foreclosures would be flooding the market, so I would have lots of opportunity to buy more homes cheaply.

So, either way, we should be fine.   Other ways to make more income would be to  continue to work full time, write technical books, consult part time, flip houses, be my own property manager for an increase in rent money, or just do part time work doing anything.   


SpiritualGangsta

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Re: 45% Decline over Next 3 Years?
« Reply #49 on: October 25, 2015, 12:54:12 PM »
This method would take more work and involve more risk, however in times of "uncertainty," being fully invested in a market neutral portfolio can hedge out the downside risk you fear...

http://www.investopedia.com/terms/m/marketneutral.asp?optm=sa_v2

This form of portfolio management would most likely go against the grain preached on this thread, as it is more active and requires you to you have your finger on the pulse of the "market."

So for example if you had $100,000.00 to invest.
To maintain a market neutral portfolio you could:
Buy $50,000 of VOO (giving you exposure to the overall market)
You then find a rather weak sector/sectors.. ones that have been and most likely will underperform the broad market.
You then short $50,000 of said weak sector.

So in practice:
Say you buy $50,000 worth of the Vanguard S&P (VOO) and sell short $50,000 worth of Energy Select Sector SPDR ETF (XLE).
If Vanguard S&P (VOO) climbs 10% and Energy Select Sector SPDR ETF (XLE) falls 10%, you make $10,000. (Thatís 10%, or $5,000, on each $50,000 position.)

If Vanguard S&P (VOO) climbs 10% and Energy Select Sector SPDR ETF (XLE) also climbs 5%, you make $2,500. (Thatís a $5,000 gain on Vanguard S&P (VOO) and a $2,500 loss on the Energy Select Sector SPDR ETF (XLE) short position.)

And, if Vanguard S&P (VOO) drops 10%, but Energy Select Sector SPDR ETF (XLE) also drops 15%, you also make $2,500. (Thatís a $5,000 loss on Vanguard S&P (VOO) and a $7,500 gain on Energy Select Sector SPDR ETF (XLE).

The only way you lose on this market neutral position trade (often called a ďpairs tradeĒ) is if Energy Select Sector SPDR ETF (XLE) outperforms Vanguard S&P (VOO).

This is just surface level stuff... obviously dividends etc will alter the alpha generated by this strategy.