Author Topic: Trying not to feel too giddy about the stache's growth spurt  (Read 22172 times)

TomTX

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #100 on: March 25, 2017, 07:48:50 AM »
Knowing when to buy is easy. It's knowing when to sell that is the hard part.

When I retire, at a rate of 4% per year, adjusted up per CPI annually. Haven't decided on quarterly or monthly.

If the market is down >20%, look at alternatives to reduce draw.
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Retire-Canada

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #101 on: March 25, 2017, 07:59:54 AM »
When I retire, at a rate of 4% per year, adjusted up per CPI annually. Haven't decided on quarterly or monthly.

If the market is down >20%, look at alternatives to reduce draw.

Yup. Seems pretty simple on both ends of the buy and sell equation.

Eric222

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #102 on: March 25, 2017, 08:06:21 AM »
I'm early into putting money into the market.  Emotionally, it's fun to see the numbers go up more quickly.  Intellectually, it would be nice to have my accumulation phase be during a period when the market isn't going up so quickly. 

No matter my thoughts or emotional reactions:  60% US Equity/30% Foreign Equity/10% Bonds, all in low-cost index funds, across all of my accounts, rebalanced by contributions, with a 'real' rebalancing at the beginning of each quarter if required.

....I still check my balances weekly.
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Retire-Canada

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #103 on: March 25, 2017, 08:12:51 AM »
I'm early into putting money into the market.  Emotionally, it's fun to see the numbers go up more quickly.  Intellectually, it would be nice to have my accumulation phase be during a period when the market isn't going up so quickly.

I just focus on the upside of whatever is going on and ignore the downside. Markets up?....awesome I'm getting rich! Markets down?...awesome I'm getting a good price for my regular monthly additions. Markets flat?...awesome while I am accumulating the price is staying steady.

Unless your accumulation phase is super short you'll get to "enjoy" all the flavours the market has to offer at one point or another.

TomTX

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #104 on: March 25, 2017, 08:20:37 AM »
....I still check my balances weekly.

You'll get over it.

It doesn't actually help during accumulation, yaknow.
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MonkeyJenga

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #105 on: March 25, 2017, 08:28:13 AM »
Instead of being tempted to spend more money on myself, I've been contributing more to causes and political races I care about. I surpassed my FI amount for my current expenses, but I'm not quitting until later this year. Even then, I'm planning to switch into a new field and keep working, at least PT. Gonna have a lot of excess to get rid of, especially if health insurance isn't cratered.

Then again, I grew up uncomfortable with the conspicuous consumption of my parents, so the existence of money doesn't make me want to spend. It's being tempted by email alerts, and enticing blogs, and other crap. I turned off marketing emails, stopped reading certain blogs, and the desire disappeared.

Eric222

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #106 on: March 25, 2017, 09:03:19 AM »
....I still check my balances weekly.

You'll get over it.

It doesn't actually help during accumulation, yaknow.

I'm early into putting money into the market.  Emotionally, it's fun to see the numbers go up more quickly.  Intellectually, it would be nice to have my accumulation phase be during a period when the market isn't going up so quickly.

I just focus on the upside of whatever is going on and ignore the downside. Markets up?....awesome I'm getting rich! Markets down?...awesome I'm getting a good price for my regular monthly additions. Markets flat?...awesome while I am accumulating the price is staying steady.

Unless your accumulation phase is super short you'll get to "enjoy" all the flavours the market has to offer at one point or another.

Good points.  I'm working on getting to the zen point of investing, where it just happens and it is what it is, and I just follow the plan.  Developing that is going to take riding out the first major market downturn that happens.  And I'm more focused it on now as I'm trying to get to NW0 - which is just a feel good point with no more practical significance than any other point along the accumulation spectrum. 
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alleykat

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #107 on: March 25, 2017, 09:13:25 AM »
Instead of being tempted to spend more money on myself, I've been contributing more to causes and political races I care about. I surpassed my FI amount for my current expenses, but I'm not quitting until later this year. Even then, I'm planning to switch into a new field and keep working, at least PT. Gonna have a lot of excess to get rid of, especially if health insurance isn't cratered.

Then again, I grew up uncomfortable with the conspicuous consumption of my parents, so the existence of money doesn't make me want to spend. It's being tempted by email alerts, and enticing blogs, and other crap. I turned off marketing emails, stopped reading certain blogs, and the desire disappeared.


Interesting.  I have been doing so good with spending this year but have started to lose it some.  I think I need to detox from YouTube, bloggers,  etc in order to get it under control. I am usually okay until I see something then I think I want or need it.  It is stupid.  I end buying stuff I don't need and really don't want after the fact. Then it just becomes clutter.  time to turn this stuff off.  Although, I am having a hard time turning it all off.

MonkeyJenga

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #108 on: March 25, 2017, 11:39:34 AM »
Instead of being tempted to spend more money on myself, I've been contributing more to causes and political races I care about. I surpassed my FI amount for my current expenses, but I'm not quitting until later this year. Even then, I'm planning to switch into a new field and keep working, at least PT. Gonna have a lot of excess to get rid of, especially if health insurance isn't cratered.

Then again, I grew up uncomfortable with the conspicuous consumption of my parents, so the existence of money doesn't make me want to spend. It's being tempted by email alerts, and enticing blogs, and other crap. I turned off marketing emails, stopped reading certain blogs, and the desire disappeared.


Interesting.  I have been doing so good with spending this year but have started to lose it some.  I think I need to detox from YouTube, bloggers,  etc in order to get it under control. I am usually okay until I see something then I think I want or need it.  It is stupid.  I end buying stuff I don't need and really don't want after the fact. Then it just becomes clutter.  time to turn this stuff off.  Although, I am having a hard time turning it all off.

Why is it hard for you to turn it off?

Dicey

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #109 on: March 25, 2017, 11:52:45 AM »
BTW, the concept of buying low and selling high has been common knowledge since ancient times. It predates the stock market, in fact. Knowing it and doing it are two vastly different things. And the total percentage of humans who see those Vanguard warnings is miniscule. Plus, all of your points were probably just as true prior to 2008. Dunno about the Vanguard warnings, tho, mebbe those are new.

I don't think you can argue that those fundamental things didn't change since 2008:
1. A LOT more people are using index funds now Any stats to back this up?
2. People have greater access to financial information via the internet (in contrast to maintstream media that tends to play on fear) Significantly more than in 2008-2009? Stats, please.

The index funds boom was probably caused by better information, and since indexing and "holding" advices usually come together, I bet we'll see better holding in the future.
I think you're kinda missing my  original point. Hell yes, it could happen again in our lifetimes!

However, I completely agree with your last phrase [my bold], but not by everyone. Sheep are always gonna panic, given the right circumstances. Understanding that is a wealth-creating opportunity.
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TomTX

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #110 on: March 25, 2017, 12:07:04 PM »
Instead of being tempted to spend more money on myself, I've been contributing more to causes and political races I care about. I surpassed my FI amount for my current expenses, but I'm not quitting until later this year. Even then, I'm planning to switch into a new field and keep working, at least PT. Gonna have a lot of excess to get rid of, especially if health insurance isn't cratered.

Then again, I grew up uncomfortable with the conspicuous consumption of my parents, so the existence of money doesn't make me want to spend. It's being tempted by email alerts, and enticing blogs, and other crap. I turned off marketing emails, stopped reading certain blogs, and the desire disappeared.


Interesting.  I have been doing so good with spending this year but have started to lose it some.  I think I need to detox from YouTube, bloggers,  etc in order to get it under control. I am usually okay until I see something then I think I want or need it.  It is stupid.  I end buying stuff I don't need and really don't want after the fact. Then it just becomes clutter.  time to turn this stuff off.  Although, I am having a hard time turning it all off.

Why is it hard for you to turn it off?

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alleykat

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #111 on: March 26, 2017, 03:01:22 AM »
Instead of being tempted to spend more money on myself, I've been contributing more to causes and political races I care about. I surpassed my FI amount for my current expenses, but I'm not quitting until later this year. Even then, I'm planning to switch into a new field and keep working, at least PT. Gonna have a lot of excess to get rid of, especially if health insurance isn't cratered.

Then again, I grew up uncomfortable with the conspicuous consumption of my parents, so the existence of money doesn't make me want to spend. It's being tempted by email alerts, and enticing blogs, and other crap. I turned off marketing emails, stopped reading certain blogs, and the desire disappeared.


Interesting.  I have been doing so good with spending this year but have started to lose it some.  I think I need to detox from YouTube, bloggers,  etc in order to get it under control. I am usually okay until I see something then I think I want or need it.  It is stupid.  I end buying stuff I don't need and really don't want after the fact. Then it just becomes clutter.  time to turn this stuff off.  Although, I am having a hard time turning it all off.

Why is it hard for you to turn it off?


Because it has become my mindless entertainment when I can't sleep at night.  It is easy to grab the iPad and just dive in.  It starts to make me tired and I don't have to turn on lights or "get up" and read a book.  I need to start keeping the iPad in the kitchen so it is not within reach.


Mmm_Donuts

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #112 on: March 26, 2017, 06:25:15 AM »
^^ if I have trouble sleeping, I use my iPad to browse this forum :)

I have a meditation app with guided meditations designed to help ppl fall asleep. Listening to those usually helps, too.

spokey doke

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #113 on: January 12, 2018, 09:37:27 AM »
Hey - remember this thread???  Are we there yet???

Likely a form of hedonic adaptation, as last March was nothing compared to the run-up/melt-up since then, and I now just blithely watch the DOW pass 23K, 24K, 25K, closing in on 26K.

Similarly, our FI number, which we technically passed (following mustachian pricinples) some time ago, has been creeping up, in terms of hypothetical/potential annual spend, and/or building in more and more conservative numbers in cfiresim projections.

Of course it also feels increasingly like a house of cards, but fun to watch...
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farmecologist

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #114 on: January 12, 2018, 11:24:43 AM »

Of course it also feels increasingly like a house of cards, but fun to watch...

Yes it does feel that way..especially if you are one that has been thru big downturns ( we went thru the 80-09 crash ).  However, the tax plan certainly should give the equities market some legs for a bit more...which is what we are probably witnessing now.  It is not going to last forever though regardless of what folks say around here.  :-)



Retire-Canada

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #115 on: January 12, 2018, 11:26:05 AM »
It is not going to last forever though regardless of what folks say around here.  :-)

The nice thing is my FIRE plans don't need it to last forever, but a little bit longer would be helpful. ;)

farmecologist

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #116 on: January 12, 2018, 11:27:11 AM »
It is not going to last forever though regardless of what folks say around here.  :-)

The nice thing is my FIRE plans don't need it to last forever, but a little bit longer would be helpful. ;)

I hear ya..a 'little longer' would be great!  Is the 'top in' yet?  :-)


Retire-Canada

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #117 on: January 12, 2018, 11:29:24 AM »
I hear ya..a 'little longer' would be great!  Is the 'top in' yet?  :-)

Almost. Just a bit more melt up. ;)

sol

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #118 on: January 12, 2018, 11:29:38 AM »
The market is growing 5% per week. What could possibly go wrong?

Retire-Canada

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #119 on: January 12, 2018, 11:35:07 AM »
The market is growing 5% per week. What could possibly go wrong?

Aliens could attack and use us for food or The Orange one could nuke Wisconsin for criticizing him?

CCCA

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #120 on: January 12, 2018, 11:50:15 AM »
yes, the recent run-up has made our stache balloon.  As a result, our CFiresim success rate has risen to well past 95% and even 100% in some scenarios (I like to try different spending and income scenarios).  I am planning to FIRE at the beginning of 2018, so depending on what the market does in that time, we'll may have an even greater safety margin.  Plus during that time, we can also figure out what the heck will happen with healthcare before my wife also retires (still unknown but within 1-2 years).

I'm just old enough where I started investing in 1999 and was unlucky enough to start investing at just the wrong moment (a modest lump sum).  2007-2008 was also a big setback in our investments.

We don't need to follow the 4% rule (on current spending) because our housing and childcare costs are a high % of our overall spending (HCOL SF Bay Area).  So childcare costs will go way down soon, and in 24 years when our mortgage is paid off, our spending would drop about about 55% of our current spending.  We also have growing rental income (assuming normal inflation) and SS which should cover 100% of our spending in about 20-25 years.


Holy crap, I just checked and our NW has increased over 25% since I last posted this in March.  But yes, aliens or some crazy trump thing, or some combination (i.e. finding out that our president is an alien) seems likely at this point.   
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NorthernBlitz

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #121 on: January 12, 2018, 12:07:57 PM »
Instead of being tempted to spend more money on myself, I've been contributing more to causes and political races I care about. I surpassed my FI amount for my current expenses, but I'm not quitting until later this year. Even then, I'm planning to switch into a new field and keep working, at least PT. Gonna have a lot of excess to get rid of, especially if health insurance isn't cratered.

Then again, I grew up uncomfortable with the conspicuous consumption of my parents, so the existence of money doesn't make me want to spend. It's being tempted by email alerts, and enticing blogs, and other crap. I turned off marketing emails, stopped reading certain blogs, and the desire disappeared.


Interesting.  I have been doing so good with spending this year but have started to lose it some.  I think I need to detox from YouTube, bloggers,  etc in order to get it under control. I am usually okay until I see something then I think I want or need it.  It is stupid.  I end buying stuff I don't need and really don't want after the fact. Then it just becomes clutter.  time to turn this stuff off.  Although, I am having a hard time turning it all off.

Why is it hard for you to turn it off?


Because it has become my mindless entertainment when I can't sleep at night.  It is easy to grab the iPad and just dive in.  It starts to make me tired and I don't have to turn on lights or "get up" and read a book.  I need to start keeping the iPad in the kitchen so it is not within reach.

I try to listen to podcasts when I can't sleep. There are a couple that I have where the voice is soothing enough to put me to sleep if I'm close. This is especially true when I go from 2x (where I usually listen) to 1x (what I do when I can't sleep).

gerardc

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #122 on: January 12, 2018, 05:17:11 PM »
Similarly, our FI number, which we technically passed (following mustachian pricinples) some time ago, has been creeping up, in terms of hypothetical/potential annual spend, and/or building in more and more conservative numbers in cfiresim projections.

Imagined lifestyle inflation? Still better than actual lifestyle inflation :D

Brother Esau

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #123 on: January 12, 2018, 05:21:54 PM »
yep, this certainly feels similar to the dot-com bubble pop but hey, i'm going to keep surfing the wave!

spokey doke

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #124 on: January 12, 2018, 06:49:30 PM »
Similarly, our FI number, which we technically passed (following mustachian pricinples) some time ago, has been creeping up, in terms of hypothetical/potential annual spend, and/or building in more and more conservative numbers in cfiresim projections.

Imagined lifestyle inflation? Still better than actual lifestyle inflation :D

Yes...and I get plenty of satisfaction just imagining, then going back to business as usual, as if I had actually indulged
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Monkey Uncle

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #125 on: January 13, 2018, 04:41:46 AM »
Similarly, our FI number, which we technically passed (following mustachian pricinples) some time ago, has been creeping up, in terms of hypothetical/potential annual spend, and/or building in more and more conservative numbers in cfiresim projections.

Imagined lifestyle inflation? Still better than actual lifestyle inflation :D

Yes...and I get plenty of satisfaction just imagining, then going back to business as usual, as if I had actually indulged

Yup.  All of our gains since about the end of 2016 are going in the safety buffer bin.  At this point we've got about a 15% buffer above even our high-end spending amount. 

Although I know better than to make a "top is in" type comment, this latest leg up has a very late 90's feel to it.  Current CAPE is at 33.8; the only other time in history it has reached that level was the late '90s.  I don't think CAPE is a precise predictor, but when we're approaching unprecedented levels, it's hard to think that the party will go on forever.
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eaknet

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #126 on: January 13, 2018, 09:42:05 AM »
Tha party won’t go on forever.


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Retire-Canada

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #127 on: January 13, 2018, 09:44:40 AM »
Tha party won’t go on forever.

It never does, but getting out now could well be worse than riding out the melt up and meltdown. So I don't see much choice.  If I get close to my FIRE number I'll shift some of my gains to the bonds I want to hold when I stop working and start living from my investment income. Beyond that I'm just going to ride the wave.

eaknet

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #128 on: January 13, 2018, 09:47:27 AM »
Tha party won’t go on forever.

It never does, but getting out now could well be worse than riding out the melt up and meltdown. So I don't see much choice.  If I get close to my FIRE number I'll shift some of my gains to the bonds I want to hold when I stop working and start living from my investment income. Beyond that I'm just going to ride the wave.
Yeah, that comment certainly wasn’t meant to be doom and gloom, it was more tongue in cheek. I’m still socking everything I can into reasonable equity-heavy funds. And when the correction comes I pray to God I’ll have the balls to hold.


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Retire-Canada

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #129 on: January 13, 2018, 09:50:57 AM »
And when the correction comes I pray to God I’ll have the balls to hold.

If you are feeling weak and might do something crazy come here. There will be more than a few calm rationale voices telling people not to panic. A little support from people in the same boat could be all the difference in the world.

sol

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #130 on: January 13, 2018, 09:58:20 AM »
Tha party won’t go on forever.

It never does, but getting out now could well be worse than riding out the melt up and meltdown. So I don't see much choice.  If I get close to my FIRE number I'll shift some of my gains to the bonds I want to hold when I stop working and start living from my investment income. Beyond that I'm just going to ride the wave.
Yeah, that comment certainly wasn’t meant to be doom and gloom, it was more tongue in cheek. I’m still socking everything I can into reasonable equity-heavy funds. And when the correction comes I pray to God I’ll have the balls to hold.

We've already seen a number of posters declare that they are poised to exit when the correction finally comes, as if they will correctly identify the sell signal.  I'm skeptical.

The whole point of being an indexer is that the only way to guarantee you get the long term market average is to never be out of the market.  You can't get out.  Every time the market dips a little, some portion of people will cry that the sky is falling and will bail.  If the market continues down and they promptly get back in again this can be fine, but in most cases they identify the dip incorrectly and get out too early. 

And I think that's been happening a LOT to people on this forum.  How many people are willing to admit they got spooked at ANY point in the past nine years, and moved some of their money out of the stock market?  Every single one of those decisions was wrong, and those people now have less money in the market than they would have if they had just stayed the course.

So when the next dip does finally come, and those folks are all over this board crowing about how smart they are for sitting out the downturn, try to remember that they also missed a big part of the runup.  They will be losing less money, but from a lower starting point than I am.  My market assets graph looks like a rocket ship since 2009, so taking a bit of a haircut in the next recession will be an absolutely worthwhile price to pay for having been able to secure those incredible gains.  Not everyone was so willing to stay in the market every single day on the way up.

BlueMR2

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #131 on: January 13, 2018, 11:19:04 AM »
I've thought we were at the top and about to drop for at least the last year.  However, I stick to my plan and keep getting surprised as it goes higher and higher.  Safety margin for an expected "typical" correction is looking really solid now.  Some indicators make me think it's about to drop, but some now point towards a couple more years of continued growth at this rate being at least possible.  Will continue to stick to my plan and try not to get too emotional about it.

Bateaux

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #132 on: January 13, 2018, 12:07:44 PM »
I was 100% stocks for a very long time and it has paid nicely in this bull.  I've started movement into VBTLX, I'm over 15% now and with new funds will be near 20% eventually.   I'm not nearly smart enough to time this crazy market.  It will drop eventually and it's going to hurt like hell to see that money flow out of my portfolio.  It's a major reason why even though we're within 4% of our FIRE number, it's OMY for me.  I'd like to have that buying opportunity and then FIRE on the rebound.
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gerardc

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #133 on: January 13, 2018, 01:17:30 PM »
Quote
And I think that's been happening a LOT to people on this forum.  How many people are willing to admit they got spooked at ANY point in the past nine years, and moved some of their money out of the stock market?  Every single one of those decisions was wrong, and those people now have less money in the market than they would have if they had just stayed the course.

Ugh, you just described me.  About 6 months ago, I felt that stocks were overpriced and I saw that we were up 11% YTD in a year in which we were poised for a correction.  Surely any moment Trump would do something that would provoke the markets to drop.  I mean the guy is a mess, and that's the sort of thing markets do when important, consequential people make messes. Also, MMM wrote a post that said, Hey, don't do anything silly like rebalance, but looking at history, we're due for a correction. For all those reasons, I asked myself: what's more likely to happen first?  The market dropping 10%, or the market gaining 10%?  So, anyway, I changed my portfolio from 100% Equities (75% US equities/25% Foreign), to 66% Equities, 33% Cash.   Well in the last 6 months, the money I put in cash has missed out on thousands and thousands of dollars of gains.  And the really $hit part is -- now I don't know when to get back in. 

I know I should probably just admit my mistake and put all that money back in, but I am hoping now for a correction that will make me feel better about my decision.  I hate how I got here; my decision seemed pretty sensible at the time. I've been rationalizing my behavior a hundred different ways like, "Well, maybe this is just the asset allocation that is right for me.  I wasn't market timing; I was optimizing my asset allocation." But gottdamn, of course I was market timing.

Drop your ego and get back in now. If you were invested in 100% stocks now, would you sell part of it? If no, then you should buy back.

You can see each day as a different decision of whether you should be invested or not, and to what allocation. Everyday you stay out, you're basically repeating the same mistake you've been doing everyday for the past 6 months. You can stop the damage now.

It never does, but getting out now could well be worse than riding out the melt up and meltdown. So I don't see much choice.  If I get close to my FIRE number I'll shift some of my gains to the bonds I want to hold when I stop working and start living from my investment income. Beyond that I'm just going to ride the wave.

If there's a meltdown before you FIRE, will you still shift some of your gains to bonds? If not, it'd be market timing.
« Last Edit: January 13, 2018, 01:19:47 PM by gerardc »

Strick

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #134 on: January 13, 2018, 01:46:31 PM »
The recent market run-up has the stache rocketing past our FI number, which has me feeling a bit giddy, even though I know it can all change dramatically any time, and even though the run-up appears to be due to things I don't otherwise support...so lots of mixed emotions right now.

Contrast this with last summer, looking at sweating out the first years of ER fearing sequence of returns risks amidst all the low growth predictions and recommendations for padding one's stache and lowering one's assumed SWR (I left my career just a bit shy of our number).

Others?

And just for the record...I plan to stay the course, of course, continue to rebalance to my AA, and keep to the mustachian lifestyle.

Yeah, I feel that giddiness, but also on the flip side I feel "stupid" for 2 years ago moving from 100% Total Market to the 80/20 VASGX because I was about to hit FI and thats what I had always planned to do, but therefore I've lost percentage points on return.  I tell myself both feelings are ridiculous and in the moment and i maintain my plan....
« Last Edit: January 13, 2018, 01:50:06 PM by Strick »

sol

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #135 on: January 13, 2018, 01:48:37 PM »
Some indicators make me think it's about to drop, but some now point towards a couple more years of continued growth at this rate being at least possible.

My primary concern about the stock market is that it is vulnerable to downturns in the economy, and I think our economy is made significantly more fragile by the current Congress's plan of increased deficit spending (new debt-backed tax cuts) while interest rates are already at historic lows.   This situation severely limits our ability to respond to economic downturns with fiscal stimulus, which potentially means the next downturn could grow unchecked for much longer than normal.

Normally, we slowly raise interest rates and taxes when the economy is prosperous, then cut them and start deficit spending when the business cycle busts.  This is the heart of Keynesian economics, that the government moderates the ups and downs to keep us growing steadily overall.  That plan has seemingly gone right out the window these days, because we're instead trying to pump up the business cycle with depressed interest rates and deficit spending to fund tax cuts for people who don't contribute to the economy, but DO contribute to inflated stock prices.  This has the net impact of pushing up stock prices while not increasing wage growth, which is exactly the kind of situation that leads to massive bubbles which then burst catastrophically.

Not to be a doomsayer, but it certainly looks like a recipe for a prolonged recession and a more severe stock market downturn than average.
« Last Edit: January 14, 2018, 11:18:32 AM by sol »

Retire-Canada

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #136 on: January 13, 2018, 02:03:57 PM »
It's a major reason why even though we're within 4% of our FIRE number, it's OMY for me.  I'd like to have that buying opportunity and then FIRE on the rebound.

As long as you are okay with it being several more OMYs. There may not be a crash for a while still and instead of a crash there could be a long period of low/mild negative returns.

Bateaux

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #137 on: January 13, 2018, 04:57:26 PM »
It's a major reason why even though we're within 4% of our FIRE number, it's OMY for me.  I'd like to have that buying opportunity and then FIRE on the rebound.

As long as you are okay with it being several more OMYs. There may not be a crash for a while still and instead of a crash there could be a long period of low/mild negative returns.
I'm not saying that we may not slip into a period of slightly negative or sideways movement.   I think it would be following a crash however.  We're in a bubble, we've seen it before.   I'm still 80+  percent exposure to market flux because it is unknown when it will happen.  Building the stash and cash is what I'm doing for now.  I'd actually be relieved with a 10 to 20 percentage drop.  This market needs a speed bump.
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Tabaxus

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #138 on: January 13, 2018, 10:12:17 PM »
I've been kicking the heck out of myself for paying off my law school loans within 3 years of graduating (payoff ca. 2014, graduated in 2011, had about $160k of loans) rather than investing everything I had in the market.  Sofi and its progeny didn't exist yet when I graduated--they didn't really get going until I was pretty close to fully paid off--so I was looking at 6.8-8.1% loans, but man, the amount of money that decision has cost me.

I've been kicking the heck out of myself for putting a $120k downpayment on a house in 2016 (pre-election) (20% downpayment).  It was a bit more than I intended to spend on a house, but not by a ton and it has everything I want in a house for the medium-long term.  But man, the amount of money that decision has cost me.

What's the common thread between those two things?  Doing both (other than going about $20k higher on downpayment than I had planned on) was "in the plan."  So it hurts in hindsight, but so does the fact that I didn't put $20k into Bitcoin back in 2012.  I had my mouse pointer over "buy."  I couldn't go through with it... it wasn't anywhere in my plan and it felt totally speculative (because it would have been).  Talk about hurting in hindsight. 

But you know what decisions tick me off the most? 
-In 2016, post-election, although I fortunately did not sell what I had in the market, I was slow to invest in the market with new funds. I figured, Trump is a maniac, there's no way we don't have a near-immediate crash.  Thank goodness I didn't have the full courage of my convictions on that and didn't liquidate all of my holdings.  I had my mouse pointer over "sell."
-In 2017, I took a chunk of my 2016 bonus and made a $26k extra payment on my mortgage (I invested most of the rest, and held $25k in cash to buy a car for the first time in 10 years).  Again, I just couldn't swallow what the market had done post-election.  So, that lost me a fair amount of money.  (Of course the car is also a catastrophically expensive thing once I factor in foregone investment returns on that money, but I made the decision not to think in those terms and to allow myself that lifestyle creep.)

Common thread?  They were decisions outside of my plan.

But good thing about them?  Further reinforced the fact that my "gut" doesn't know jack-all.  So.  I'm highly confident the market is going to crash at some point in the next couple of years.  I believe that my party of choice will probably help a market correction along when they come back into power by increasing taxes, Trump is still nuts, and we're overdue.  And I still sent 100% of my 2017 bonus into the market (after taking out taxes, funding anticipated medical expenses for the year, etc).  I wasn't in the workforce or the market for the dot com bust or 2007-2009--wasn't in the workforce until 2011 and was minimally invested until 2014 because of my focus on student loans--but I'm hoping that these two frustrating occurrences of market timing gone wrong will stay in my mind and keep me from selling when the correction does come.

spokey doke

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #139 on: January 14, 2018, 09:34:19 AM »
Quote
And I think that's been happening a LOT to people on this forum.  How many people are willing to admit they got spooked at ANY point in the past nine years, and moved some of their money out of the stock market?  Every single one of those decisions was wrong, and those people now have less money in the market than they would have if they had just stayed the course.

Ugh, you just described me.  About 6 months ago, I felt that stocks were overpriced and I saw that we were up 11% YTD in a year in which we were poised for a correction.  Surely any moment Trump would do something that would provoke the markets to drop.  I mean the guy is a mess, and that's the sort of thing markets do when important, consequential people make messes. Also, MMM wrote a post that said, Hey, don't do anything silly like rebalance, but looking at history, we're due for a correction. For all those reasons, I asked myself: what's more likely to happen first?  The market dropping 10%, or the market gaining 10%?  So, anyway, I changed my portfolio from 100% Equities (75% US equities/25% Foreign), to 66% Equities, 33% Cash.   Well in the last 6 months, the money I put in cash has missed out on thousands and thousands of dollars of gains.  And the really $hit part is -- now I don't know when to get back in. 

I know I should probably just admit my mistake and put all that money back in, but I am hoping now for a correction that will make me feel better about my decision.  I hate how I got here; my decision seemed pretty sensible at the time. I've been rationalizing my behavior a hundred different ways like, "Well, maybe this is just the asset allocation that is right for me.  I wasn't market timing; I was optimizing my asset allocation." But gottdamn, of course I was market timing.

Sound like 66-33 might be closer to your proper target AA...so take the time you were 100% stocks as a bonus.

I have done some minor rebalancing out of stocks of the past year, and yes, I made less money because of it.  I don't think that makes those moves bad or stupid...I'm still raking it on on the (fairly aggressive for my age) 70% or so I have in the market, AND (it makes a difference what you focus on) I have some ballast in the portfolio that also provides more secure funds for a number of years whenever the shit hits the fan.

This is one of the benefits of having a plan you believe in...follow it, knowing it is sound over the long run, and will not predict and take advantage of all that is happening in the short term, and you shouldn't really have regrets.
“The best thing about graduating from the university was that I finally had time to sit on a log and read a good book.”
― Edward Abbey

BlueMR2

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #140 on: January 14, 2018, 10:31:54 AM »
Not to be a doomsayer, but it certainly looks like a receipt for a prolonged recession and a more severe stock market downturn than average.

I agree that the next downturn is likely to be for an extended period of time.  That's a very large part of the reason I'm OMYing it right now (also, I hit my numbers a couple years before I expected and that also makes me nervous)...  I don't want to get caught out in what (with the financial games being played) could be a record breaking poor sequence of returns when it does happen.  I've expected it to happen already, but right now I can see it potentially being a couple more years out.  I don't change my investment strategy, but if I'm feeling nervous I'll keep hanging onto work. :-)

Bateaux

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #141 on: January 14, 2018, 01:14:39 PM »
Not to be a doomsayer, but it certainly looks like a receipt for a prolonged recession and a more severe stock market downturn than average.

I agree that the next downturn is likely to be for an extended period of time.  That's a very large part of the reason I'm OMYing it right now (also, I hit my numbers a couple years before I expected and that also makes me nervous)...  I don't want to get caught out in what (with the financial games being played) could be a record breaking poor sequence of returns when it does happen.  I've expected it to happen already, but right now I can see it potentially being a couple more years out.  I don't change my investment strategy, but if I'm feeling nervous I'll keep hanging onto work. :-)

It's a shame we have to do this.  The tax cut will further increase the bubble and take away from the ability to recover from the crash.  Tax cuts and easy money are for when things are down.  We're pumping in more hot air to an overheated market. 
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montgomery212

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #142 on: January 14, 2018, 03:38:40 PM »
Feeling the same way. Taking one of my accounts as an example, my goal for last year was to get to 300k in my 401k. I hit it and now not even 4.5 months later, I'm at 350k. I'm thinking it's too much too soon -- even given my full 18k contribution for last year and a generous match. But I just keep telling myself that all I'm doing now is building up that "cushion" above 300k for the correction whether it happens now or 6 months from now. As of right now, I'm 50k or 16.66% above the 300k level. If we hit a 2008 style crash (god forbid), 16.6% obviously means nothing. But if we hit a more "routine" 10% correction, the run up still keeps me above 300k. If this melt up continues even for another few weeks, that cushion % just grows. Fingers crossed.

skip207

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #143 on: January 15, 2018, 03:38:16 AM »
Personally I think you need a 3-5 year buffer just in case market returns are not good or negative.  You can either do this by ring fencing some cash out of the markets or you can FIRE later.

I prefer the cash idea and I am going with 3 years basic living costs in a non market account when I FIRE.  I wont touch that money unless the markets do something bad.  Then when they do I can sit back reduce WR to 0 and wait for it to recover.  Its always a lot easier to make decisions when you can look at performance over 12 months or longer rather than trying to guess what will happen next.

Scortius

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #144 on: January 15, 2018, 09:58:49 AM »
Personally I think you need a 3-5 year buffer just in case market returns are not good or negative.  You can either do this by ring fencing some cash out of the markets or you can FIRE later.

I prefer the cash idea and I am going with 3 years basic living costs in a non market account when I FIRE.  I wont touch that money unless the markets do something bad.  Then when they do I can sit back reduce WR to 0 and wait for it to recover.  Its always a lot easier to make decisions when you can look at performance over 12 months or longer rather than trying to guess what will happen next.

This is pretty much what the rising equity glide path is and it seems to be a very solid way to go if you stick to your plan.

gerardc

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #145 on: January 15, 2018, 01:08:42 PM »
Personally I think you need a 3-5 year buffer just in case market returns are not good or negative.  You can either do this by ring fencing some cash out of the markets or you can FIRE later.

I prefer the cash idea and I am going with 3 years basic living costs in a non market account when I FIRE.  I wont touch that money unless the markets do something bad.  Then when they do I can sit back reduce WR to 0 and wait for it to recover.  Its always a lot easier to make decisions when you can look at performance over 12 months or longer rather than trying to guess what will happen next.

This is pretty much what the rising equity glide path is and it seems to be a very solid way to go if you stick to your plan.

Sounds good in theory but in practice the increased success rate with rising equity glide path is very small, maybe not even statistically significant. You lose out a lot by having a large amount sitting in cash.

Eric

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #146 on: January 15, 2018, 05:07:26 PM »
Personally I think you need a 3-5 year buffer just in case market returns are not good or negative.  You can either do this by ring fencing some cash out of the markets or you can FIRE later.

I prefer the cash idea and I am going with 3 years basic living costs in a non market account when I FIRE.  I wont touch that money unless the markets do something bad.  Then when they do I can sit back reduce WR to 0 and wait for it to recover.  Its always a lot easier to make decisions when you can look at performance over 12 months or longer rather than trying to guess what will happen next.

This is pretty much what the rising equity glide path is and it seems to be a very solid way to go if you stick to your plan.

Sounds good in theory but in practice the increased success rate with rising equity glide path is very small, maybe not even statistically significant. You lose out a lot by having a large amount sitting in cash.

There's nothing that says you need to hold cash.  Most all studies I've seen using the glide path only use stocks and bonds.  Increase the bonds, and then steadily decrease them during your first years of retirement.

I think even in practice this is a good thing.  It depends on your goals, of course.  If your goal is to not run out of money, then it's likely good.  If you goal is to have the largest balance in 30 years, then it's likely bad.
"Compound interest is the most powerful force in the universe."  -- Einstein

Eric

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #147 on: January 15, 2018, 05:08:52 PM »
Personally I think you need a 3-5 year buffer just in case market returns are not good or negative.  You can either do this by ring fencing some cash out of the markets or you can FIRE later.

I prefer the cash idea and I am going with 3 years basic living costs in a non market account when I FIRE.  I wont touch that money unless the markets do something bad.  Then when they do I can sit back reduce WR to 0 and wait for it to recover.  Its always a lot easier to make decisions when you can look at performance over 12 months or longer rather than trying to guess what will happen next.

I'd give this a read before deciding to hold so much cash:

https://www.kitces.com/blog/research-reveals-cash-reserve-strategies-dont-work-unless-youre-a-good-market-timer/

It could still be worth it for your peace of mind, but you're paying for that peace of mind.
"Compound interest is the most powerful force in the universe."  -- Einstein

gerardc

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #148 on: January 15, 2018, 05:21:20 PM »
Personally I think you need a 3-5 year buffer just in case market returns are not good or negative.  You can either do this by ring fencing some cash out of the markets or you can FIRE later.

I prefer the cash idea and I am going with 3 years basic living costs in a non market account when I FIRE.  I wont touch that money unless the markets do something bad.  Then when they do I can sit back reduce WR to 0 and wait for it to recover.  Its always a lot easier to make decisions when you can look at performance over 12 months or longer rather than trying to guess what will happen next.

This is pretty much what the rising equity glide path is and it seems to be a very solid way to go if you stick to your plan.

Sounds good in theory but in practice the increased success rate with rising equity glide path is very small, maybe not even statistically significant. You lose out a lot by having a large amount sitting in cash.

There's nothing that says you need to hold cash.  Most all studies I've seen using the glide path only use stocks and bonds.  Increase the bonds, and then steadily decrease them during your first years of retirement.

I think even in practice this is a good thing.  It depends on your goals, of course.  If your goal is to not run out of money, then it's likely good.  If you goal is to have the largest balance in 30 years, then it's likely bad.

Replace "cash" with "bonds" in what I wrote and it still applies. Even for success rate the advantage of a rising equity glide path is very small. I'd bet it also has a small effect on balance at death.

Eric

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Re: Trying not to feel too giddy about the stache's growth spurt
« Reply #149 on: January 15, 2018, 05:46:49 PM »
Personally I think you need a 3-5 year buffer just in case market returns are not good or negative.  You can either do this by ring fencing some cash out of the markets or you can FIRE later.

I prefer the cash idea and I am going with 3 years basic living costs in a non market account when I FIRE.  I wont touch that money unless the markets do something bad.  Then when they do I can sit back reduce WR to 0 and wait for it to recover.  Its always a lot easier to make decisions when you can look at performance over 12 months or longer rather than trying to guess what will happen next.

This is pretty much what the rising equity glide path is and it seems to be a very solid way to go if you stick to your plan.

Sounds good in theory but in practice the increased success rate with rising equity glide path is very small, maybe not even statistically significant. You lose out a lot by having a large amount sitting in cash.

There's nothing that says you need to hold cash.  Most all studies I've seen using the glide path only use stocks and bonds.  Increase the bonds, and then steadily decrease them during your first years of retirement.

I think even in practice this is a good thing.  It depends on your goals, of course.  If your goal is to not run out of money, then it's likely good.  If you goal is to have the largest balance in 30 years, then it's likely bad.

Replace "cash" with "bonds" in what I wrote and it still applies. Even for success rate the advantage of a rising equity glide path is very small. I'd bet it also has a small effect on balance at death.

Depends on the market movements, right?  The point is to mitigate against sequence of returns risk.  Michael Kitces has written at least 3 posts about it.  Here's the most recent one.  I'm not sure if he's concluded what the actual ending effect is though, other than stating that it is beneficial.

Over at Early Retirement Now, they've concluded that doing this when CAPE is greater than 20 increases your success rate by 10%-ish.  So while not a dramatic jump, it is definitely in the statistically significant range.  Conversely, you could use it to retire earlier with a higher withdrawal rate.

From this post:
Quote
Likewise, if I’m OK with a 5% failure probability conditional on a CAPE>20, then the static stock allocation of 80% would give me an SWR of 3.47%. The glidepaths would have allowed between 3.57% and 3.63%. Only an additional 0.16%, but that’s about 5% more consumption every year!

Is that significant enough?  I'm not sure.  But I'm also not sure that looking at every result is all that meaningful (because good years to retire are going to work no matter what).  It certainly seems to help stem the tide of poor returns when I have run simulations based on the 2000 retiree.  It increased portfolio balances by 8% after 5 years compared to static AA.  (Admittedly with some pretty perfect hindsight timing.)
"Compound interest is the most powerful force in the universe."  -- Einstein