Are you acting on the market turmoil?

[metroguy]

my opinion on this stuff--if you lose 50% and you get scare. well, maybe you should lower your risk allocation. i like the boglehead statement about investments are mostly to keep up with inflation--NOT capital appreciation. it brings to focus, your major savings will come from wage/less spending. there will be people who made it big but it's rare. i try and failed. should have just stuck with index funds. i would have been ahead by 1 million if i did that.
note, i still am not in index funds and still gambling. but dw now has a chain around my neck--so i gamble less--normally just 401k money.
btw, as for what do.. i think diversity is the key. for me, i'm very financially diversify--so finances doesn't affect me at all-- at least not the 10% drop. now if there was a 50% correction, chances are high, my job will be gone. that will be a big change and will add some stress.

[spotty_dog]

my opinion on this stuff--if you lose 50% and you get scare. well, maybe you should lower your risk allocation. i like the boglehead statement about investments are mostly to keep up with inflation--NOT capital appreciation. it brings to focus, your major savings will come from wage/less spending. there will be people who made it big but it's rare. i try and failed. should have just stuck with index funds. i would have been ahead by 1 million if i did that.

I agree totally that if you're clenching up or not sleeping well, you've got too much skin in the game. The flip side though is that if we don't make at least 5-6% to beat inflation and a bit more, that's pretty much just as scary. We *have* to have enough growth to be able to retire early and live off of the proceeds. DH *can't* be working like this when he's 60. So, we go for the risk of the equity markets and hope like hell we'll be compensated for it. If we lost 50% of our equity and our bonds stayed stable, that would be six months to a year's compensation down the tubes, or about two-three years' investments. In sheer numbers it's staggering to me but in the grand scheme of things we'd be okay. And as long as we didn't lock in the loss by selling we'd still have some hope.

note, i still am not in index funds and still gambling. but dw now has a chain around my neck--so i gamble less--normally just 401k money.
btw, as for what do.. i think diversity is the key. for me, i'm very financially diversify--so finances doesn't affect me at all-- at least not the 10% drop. now if there was a 50% correction, chances are high, my job will be gone. that will be a big change and will add some stress.

Oi, with your job tied to the financial industry, if you were fully invested in domestic equities, that would be a lot of eggs in that basket.

[spotty_dog]

Aaannnd...the "scare" looks to be over. LOL. Here's a guy I trust talking about what this kind of volatility and market pessimism really means and how and when we should act on bad news. http://www.etf.com/sections/index-in...ce-a-bear.html

[metroguy]

I agree totally that if you're clenching up or not sleeping well, you've got too much skin in the game. The flip side though is that if we don't make at least 5-6% to beat inflation and a bit more, that's pretty much just as scary. We *have* to have enough growth to be able to retire early and live off of the proceeds. DH *can't* be working like this when he's 60. So, we go for the risk of the equity markets and hope like hell we'll be compensated for it. If we lost 50% of our equity and our bonds stayed stable, that would be six months to a year's compensation down the tubes, or about two-three years' investments. In sheer numbers it's staggering to me but in the grand scheme of things we'd be okay. And as long as we didn't lock in the loss by selling we'd still have some hope.



Oi, with your job tied to the financial industry, if you were fully invested in domestic equities, that would be a lot of eggs in that basket.

5-6% return after inflation (somewhere around 8% before tax/inflation) is very hard to do consistently yr after yr. markets go up and down. one wrong turn like individual stock will results yrs of setback. the biggest problem i have with stock market return is it's a big unknown. you can hope for 8% return but there's no guarantee. sure my firecalc calculations i pass all known scenario but there's a lot of unknown (like what if japan style depression happen in the us). it's one of the reason why i like alternative investments(real estate). there's more guarantee income--not as nice as a bond fund but has bigger potential returns. sure, there's a LOT of pain in the beginning but you get used to. now it's less painful.