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Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

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Jonathan Clements: Ignore The Signs?

FYI: IF THIS IS THE START of a bear market, share prices have a lot further to fall: The S&P 500 is down just 9.4% from its all-time high—and yet one of the most important lessons may have already been learned.


  • Nice find Ted !
  • edited October 2018
    Dunno how much it’s down. Don’t much care. But I’ll note here that percentages can be very misleading.

    Example A: If your portfolio fell by 25% in one year, you would actually need to gain more than 33% in the following year to “break-even” again.

    Example B: How many years in succession can your portfolio experience a 25% decline?
    Think 4? Actually, in hypothetical terms, it could fall by 25% per-year every year - forever.

    Are you feeling lucky?
  • I recognized this one. Previously posted. Makes sense. Still.
  • @Hank. At times like these I ponder measuring movement in dollars vs %. This morning I noted our portfolio is down 1.9% since the start of the quarter. Of course I can't spend % at the store. I need $$$$. The raw number of dollars seems much more serious than the %.
  • edited October 2018

    Yep - The dollar sum losses sting a bit more. I don’t know how old you are, but if not yet taking distributions you’re fine just dealing with the percentages. After one actually begins pulling money out, losses in dollars seem to assume a greater importance. Guess it has to do with a diminishing time horizon.

    I came to the conclusion early in investing that it’s the percentages that really matter - not dollar amounts. When it comes to putting together a sound allocation model and investment approach, it seemed to me that whether one was managing $50,000 or $1,000,000 it really didn’t make a lot of difference. The thought process is pretty much the same. (But it’s cheaper to manage a million because fees are generally lower.)
  • @Hank. 2019 will be my first RMD. Just retired end of quarter 3.. At this point in life it sure looks different than in the accumulation years. Oddly enough my October paper loses equal exactly the dollar amount I will need to withdraw in 2019. When withdrawal time is way over the horizon a bad year is just a %. When three weeks equal a years worth of living $$$$$ that is something else .
  • larryB-I find myself in EXACTLY the same situation. You are absolutely right when you say three weeks equal a year of living when I withdraw my RMD. A market rebound would be nice, wouldnt it? Then again, Ive always been a dreamer. You sure rang a bell with me when I read your comment. Good luck to all
  • @BennyB. It's a bummer to be sure but we knew we were approaching RMD time at peak market. And yet I feel so self centered muttering about paper loses in light of this mornings events. Funny how the guys rantings sound so much like that of the repuglican party. But hey,,, if my people had only brought their assault weapons to worship,,,,,,
  • edited October 2018
    Hmm ... I started taking distributions at perhaps 63 or 64 - long before RMD was required. And that’s when the realization sank in that this isn’t some “numbers game” we’re playing anymore. It’s very real spendable cash. Withdrew very small amounts the first few years. For several years the net amount invested continued to grow.

    My thinking behind the % comments I made earlier was along the lines that, while I have often chased markets down in the past - with some success - and including during the ‘07-‘09 rout, I won’t be chasing this one. My gut tells me there’s a ways to go yet. I’ve never before witnessed the kind of complacancy among investors as this time around. At 72 I don’t have a realistically long enough time horizon to tough it out and keep buying should prices continue falling.

    Not doing anything drastic. Just sitting back and watching. At the end of December it will be time to do a quarterly rebalance. Perhaps equities will be on sale at that time.:)
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