Dave, I'm Scared of a Market Crash!

DerekJohnson · February 2021

https://www.youtube.com/watch?v=mGQTe-sT2fY

creepycoug · February 2021

Interesting take. Been asking this question myself. Tend to agree with Dave, but his answer wasn't super clean. The "I don't like the socialist shit in DC but otherwise I have no facts ...."

Ok, sure. Nobody who makes a move ever really does have any facts other than conjecture that the market is over-valued.

The question is for a conservative investor do you pull it out and potentially miss out on more gains vs. the risk of getting 1/3 shaved off your retirement nut?

doogie · February 2021

and once again, here we are.

Is Dow really going to 100,000 during your time horizon? Even with extreme turbulence? Then there really is no other choice but to jump in, strap up and hang on.

Also, Long term time horizons have a funny way of turning on a dime.

greenblood · February 2021

The guy is sitting on 2.3 million, and only wants $120k a year. That's 6% annually. The long term market gain is around the same amount. Even if the market contracts 50%, he'll still have enough money to ride 10 years on that income. That should buy the market time to recover. Even if he needs longer. Say he only pulls $100k if the market contracts, that buys him an extra couple years. The dude should be fine, and he should be thankful that he's in a much better state than 99.9% of most people his age. If I was him I'd diversify into other investment vehicles. Buy some physical gold and silver. Dabble in a little crypto. Don't overdue it, but have multiple different vehicles. Not everything is going to tank. There were still some very profitable investment vehicles during the 08-09 crash. Just be smart about it, and don't ever make decisions based on fear. Be calculated, smart, and flexible.

If he has cash on hand, mutual funds, hard metals, crypto, individual stocks, he should be in a good place.

creepycoug · February 2021

greenblood said:
The guy is sitting on 2.3 million, and only wants $120k a year. That's 6% annually. The long term market gain is around the same amount. Even if the market contracts 50%, he'll still have enough money to ride 10 years on that income. That should buy the market time to recover. Even if he needs longer. Say he only pulls $100k if the market contracts, that buys him an extra couple years. The dude should be fine, and he should be thankful that he's in a much better state than 99.9% of most people his age. If I was him I'd diversify into other investment vehicles. Buy some physical gold and silver. Dabble in a little crypto. Don't overdue it, but have multiple different vehicles. Not everything is going to tank. There were still some very profitable investment vehicles during the 08-09 crash. Just be smart about it, and don't ever make decisions based on fear. Be calculated, smart, and flexible.

If he has cash on hand, mutual funds, hard metals, crypto, individual stocks, he should be in a good place.

Reasonable.

I'm wondering ... I have always thought about my "Number" as a principal, or trust corpus, that I would not eat into, but would instead live off the earnings of that amount. That is the goal to which I am driving. The idea being that I don't want to run to the end watching my nut get smaller, and thus the amount it earns get smaller. The idea I've always had, or the assumption rather, was that I'd have enough to live off the earnings and not touch the principal.

Also, when I calculate monthly income from that amount, I tend to use 4% as my assumed ROR, assuming I can find something relatively stable with that return profile, or a 0.00333333 monthly multiplier.

I have no idea if this is realistic or any sane way of thinking about it. I have just worked and saved (though the college years have been rough). Somebody told me about the Rule of 20 ... 20x your gross annual salary. I am close to that now, but plan on working longer because I like it and because I get paid well to do it. I was thinking late 50s I'd hang it up and maybe consult on a limited basis thereafter.

greenblood · February 2021

creepycoug said:

greenblood said:
The guy is sitting on 2.3 million, and only wants $120k a year. That's 6% annually. The long term market gain is around the same amount. Even if the market contracts 50%, he'll still have enough money to ride 10 years on that income. That should buy the market time to recover. Even if he needs longer. Say he only pulls $100k if the market contracts, that buys him an extra couple years. The dude should be fine, and he should be thankful that he's in a much better state than 99.9% of most people his age. If I was him I'd diversify into other investment vehicles. Buy some physical gold and silver. Dabble in a little crypto. Don't overdue it, but have multiple different vehicles. Not everything is going to tank. There were still some very profitable investment vehicles during the 08-09 crash. Just be smart about it, and don't ever make decisions based on fear. Be calculated, smart, and flexible.

If he has cash on hand, mutual funds, hard metals, crypto, individual stocks, he should be in a good place.
Reasonable.

I'm wondering ... I have always thought about my "Number" as a principal, or trust corpus, that I would not eat into, but would instead live off the earnings of that amount. That is the goal to which I am driving. The idea being that I don't want to run to the end watching my nut get smaller, and thus the amount it earns get smaller. The idea I've always had, or the assumption rather, was that I'd have enough to live off the earnings and not touch the principal.

Also, when I calculate monthly income from that amount, I tend to use 4% as my assumed ROR, assuming I can find something relatively stable with that return profile, or a 0.00333333 monthly multiplier.

I have no idea if this is realistic or any sane way of thinking about it. I have just worked and saved (though the college years have been rough). Somebody told me about the Rule of 20 ... 20x your gross annual salary. I am close to that now, but plan on working longer because I like it and because I get paid well to do it. I was thinking late 50s I'd hang it up and maybe consult on a limited basis thereafter.

It depends.

I firmly believe that people that fully retire tend to die sooner than people who at least work part time. There's always value in having something to wake up to each day. Fishing, Golf, Hunting, Relaxing, all have benefits, but most people need to have a purpose. The 20X gross is a great benchmark, but I personally will always have a side hustle. Added income as a what if security, but also something that keeps my attention and focus.

creepycoug · February 2021

greenblood said:

creepycoug said:

greenblood said:
The guy is sitting on 2.3 million, and only wants $120k a year. That's 6% annually. The long term market gain is around the same amount. Even if the market contracts 50%, he'll still have enough money to ride 10 years on that income. That should buy the market time to recover. Even if he needs longer. Say he only pulls $100k if the market contracts, that buys him an extra couple years. The dude should be fine, and he should be thankful that he's in a much better state than 99.9% of most people his age. If I was him I'd diversify into other investment vehicles. Buy some physical gold and silver. Dabble in a little crypto. Don't overdue it, but have multiple different vehicles. Not everything is going to tank. There were still some very profitable investment vehicles during the 08-09 crash. Just be smart about it, and don't ever make decisions based on fear. Be calculated, smart, and flexible.

If he has cash on hand, mutual funds, hard metals, crypto, individual stocks, he should be in a good place.
Reasonable.

I'm wondering ... I have always thought about my "Number" as a principal, or trust corpus, that I would not eat into, but would instead live off the earnings of that amount. That is the goal to which I am driving. The idea being that I don't want to run to the end watching my nut get smaller, and thus the amount it earns get smaller. The idea I've always had, or the assumption rather, was that I'd have enough to live off the earnings and not touch the principal.

Also, when I calculate monthly income from that amount, I tend to use 4% as my assumed ROR, assuming I can find something relatively stable with that return profile, or a 0.00333333 monthly multiplier.

I have no idea if this is realistic or any sane way of thinking about it. I have just worked and saved (though the college years have been rough). Somebody told me about the Rule of 20 ... 20x your gross annual salary. I am close to that now, but plan on working longer because I like it and because I get paid well to do it. I was thinking late 50s I'd hang it up and maybe consult on a limited basis thereafter.
It depends.

I firmly believe that people that fully retire tend to die sooner than people who at least work part time. There's always value in having something to wake up to each day. Fishing, Golf, Hunting, Relaxing, all have benefits, but most people need to have a purpose. The 20X gross is a great benchmark, but I personally will always have a side hustle. Added income as a what if security, but also something that keeps my attention and focus.

Agree. I have yet to meet the person who retired and truly was happy fucking around all the time. It sounds great, but everything gets old when you've done it enough times.

Blu82 · February 2021

This always assumes that you retire and that same day you 100% exit the market for 0.5% CDs or some other low yield instrument.
That isn't nor does it have to be your reality. I'm thinking you plan on living a few years and have time to pay closer attention to your nest egg.
These models aren't reality.

RoadTrip · February 2021

creepycoug said:
Interesting take. Been asking this question myself. Tend to agree with Dave, but his answer wasn't super clean. The "I don't like the socialist shit in DC but otherwise I have no facts ...."

Ok, sure. Nobody who makes a move ever really does have any facts other than conjecture that the market is over-valued.

The question is for a conservative investor do you pull it out and potentially miss out on more gains vs. the risk of getting 1/3 shaved off your retirement nut?

I am increasingly becoming a fan of trying to time this next pullback. If I can avoid that 30% haircut, and then put it all back at the low, I could potentially make a ton of money rather than waiting for it to recover and then grow. If I pull out now, I think I forego 6-7 months of increases tops. I really believe the market is going to tank once the stimulus is done. But I suppose that depends on how many years Biden decides to enslave the American public.

greenblood · February 2021

RoadTrip said:

creepycoug said:
Interesting take. Been asking this question myself. Tend to agree with Dave, but his answer wasn't super clean. The "I don't like the socialist shit in DC but otherwise I have no facts ...."

Ok, sure. Nobody who makes a move ever really does have any facts other than conjecture that the market is over-valued.

The question is for a conservative investor do you pull it out and potentially miss out on more gains vs. the risk of getting 1/3 shaved off your retirement nut?
I am increasingly becoming a fan of trying to time this next pullback. If I can avoid that 30% haircut, and then put it all back at the low, I could potentially make a ton of money rather than waiting for it to recover and then grow. If I pull out now, I think I forego 6-7 months of increases tops. I really believe the market is going to tank once the stimulus is done. But I suppose that depends on how many years Biden decides to enslave the American public.

You don’t time the market

creepycoug · February 2021

RoadTrip said:

creepycoug said:
Interesting take. Been asking this question myself. Tend to agree with Dave, but his answer wasn't super clean. The "I don't like the socialist shit in DC but otherwise I have no facts ...."

Ok, sure. Nobody who makes a move ever really does have any facts other than conjecture that the market is over-valued.

The question is for a conservative investor do you pull it out and potentially miss out on more gains vs. the risk of getting 1/3 shaved off your retirement nut?
I am increasingly becoming a fan of trying to time this next pullback. If I can avoid that 30% haircut, and then put it all back at the low, I could potentially make a ton of money rather than waiting for it to recover and then grow. If I pull out now, I think I forego 6-7 months of increases tops. I really believe the market is going to tank once the stimulus is done. But I suppose that depends on how many years Biden decides to enslave the American public.

I mean, it goes against all the supposed rules, but the smart money doesn't just sit and let things ride. They time.

So i can't say I blame you. I've been running around with my finger on the trigger for two months.

Can tell you one thing ... the vested RSUs are being sold for close to what the tax impact was and going to cash, and the cash bonus is staying in cash. I want some powder if this thing tanks.

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Dave, I'm Scared of a Market Crash!

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