Author Topic: Thoughts on "magic number" vs. market cycle  (Read 9778 times)

Eric

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Re: Thoughts on "magic number" vs. market cycle
« Reply #50 on: February 08, 2018, 01:24:30 PM »
I guess I wasn't clear.  I am allocated between INTL stocks, stocks and bonds.  In 2008, a portfolio like mine would have dropped about 30%.  I did not intend to imply that all equity investments was my plan, I was only addressing the question of how I alter my target number to account for market cycles.

Ahhh, I see.  Above it appeared that a 30% market drop = 30% portfolio drop.  You're really saying a 50% market drop = 30% portfolio drop, which makes more sense.

I do this too, but not to that extreme.  Personally, I am (was?) factoring in a 30% amount market drop, which is an 18% portfolio drop with a 60/40 portfolio.  And then I figure if it drops any further than that, I'll cut spending but wouldn't need to up to that point.

However, with the current market action, I am already rethinking that buffer, since we're (likely) seeing some of that 30% drop right now.

Lan Mandragoran

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Re: Thoughts on "magic number" vs. market cycle
« Reply #51 on: February 08, 2018, 02:42:38 PM »
Or you could just be willing to pick up 10 hours a week in the instance of something like a 2008 crash or something. That's all it takes, just a few dollars.  It's incredibly easy to make enough money to survive on as a mustachian. The hard part is making it to the 25x of what you need in a given year.

http://www.mrmoneymustache.com/2012/05/14/first-retire-then-get-rich/

I'm pretty skeptical of the available of jobs for people with no recent work experience in a time like 2008 when unemployment is high and getting higher.

Competition for those 10 hour / week jobs will be pretty fierce.

I think it would be better to try picking up jobs like that in good times during retirement (not bad times).

But, if I'm making enough during the accumulation phase to retire in a short amount of time I think that the best hedge is to just work an extra year or two to get from 25x to 30x expenses. But, I like my job so others may feel differently.

I mean hell... if its that bad I managed to pay through college while working at dominoes 25 hours a week :P. I could do it again if it meant I didn't have to go into my 50% depleted stache for a year.

Or better yet, just occasionally have my wife take shifts as a physical therapist, she's never had problems getting those.  Or take up some jobs flipping apartments, or painting for "fun"... the point is it doesn't have to be particularly skilled labor or high value labor.

You just need something so that you can reduce the burden on your stache in catastrophic situations, or to make a few K here and there, just keep the momentum =]. 4% seems to work in most scenarios... so any tiny amount of flexibility is worth gold, especially if your one of us elite few that managed to retire in just a decade or two.

I'm with you on the saving some extra though! We just plan on having a bit extra fluff for a slightly higher SWR thats easily cut down in emergency situations.
« Last Edit: February 08, 2018, 02:44:42 PM by Lan Mandragoran »