Another Franklin Fund Nosedive

Mine see saws...loses $10,000, then gains back $12,000 or $13,000. It's been doing that for months. The most I ever lost in one day was $25,000. I surprised myself when I did not panic. Of course, it bounced back to even more than was originally in the portfolio. That's the nature of the beast. The market may be down now in response to the looming government shut down.
 
The fund had a large allocation to energy stocks as of August 31, 2023, which may have contributed to its negative performance in September as oil prices declined. The fund also had a significant exposure to high-yield bonds, which tend to be more sensitive to changes in interest rates and credit quality than investment-grade bonds.
 
September was a bad month for American stocks. But a great month for Treasury obligations and CDs. Balance is needed.
 
I have pulled out of the market for the most part. Most of my money is now in CDs to make sure I have a gain and to avoid any major losses. I have one account that I have left in the market but in a very safe portfolio.
 
today there is no such thing as a very safe portfolio.
risk is off in all assets right now , even treasuries are getting beat up
but trying to play the timing game or bailing to cash is a poor idea as the biggest gains back are when timers are still on the side line and it looks like nothing changed .
the best plan is find a comfortable portfolio and ride it thru good and bad times
University of Michigan Professor H. Nejat Seyhun analyzed 7,802 trading days for the 31 years from 1963 to 1993 and concluded that just 90 days generated 95% of all the years’ market gains — an average of just three days per year. miss those few days and you hurt your return .

If you were able to miss the worst days , you would have had an incredible return .

But It is near impossible to not only reliably miss the worst days but it is just as hard to miss the worst time frame as a whole .

catching the best days is easy as pie ... just be invested . NO PREDICTING NEEDED .
 
mathjak107 said:
today there is no such thing as a very safe portfolio.
risk is off in all assets right now , even treasuries are getting beat up
but trying to play the timing game or bailing to cash is a poor idea as the biggest gains back are when timers are still on the side line and it looks like nothing changed .
the best plan is find a comfortable portfolio and ride it thru good and bad times
University of Michigan Professor H. Nejat Seyhun analyzed 7,802 trading days for the 31 years from 1963 to 1993 and concluded that just 90 days generated 95% of all the years’ market gains — an average of just three days per year. miss those few days and you hurt your return .

If you were able to miss the worst days , you would have had an incredible return .

But It is near impossible to not only reliably miss the worst days but it is just as hard to miss the worst time frame as a whole .

catching the best days is easy as pie ... just be invested . NO PREDICTING NEEDED .
Click to expand...
But, but, but…… some of us would rather worry and get worked up over trying to predict the short term future!!!!
 
historically cash instruments have had a negative real return after inflation and taxes almost 70% of the last 40 years

not exactly something i would sleep soundly with if i was drawing a 4% safe withdrawal rate
 
mathjak107 said:
historically cash instruments have had a negative real return after inflation and taxes almost 70% of the last 40 years

not exactly something i would sleep soundly with if i was drawing a 4% safe withdrawal rate
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Well we are not in historic times, are we?
Funny, you have to conjure up 40 years of data to 'try' to prove a point?

If I'm getting 5.50% and drawdown of 4%, I'm getting a 1.5% increase above my draw.
Principal protected, government backed.

History doesn't put money in my account, dollars do.

Talk with any money manager and if honest, they are seeing their clients running to CD, MM, and fixed annuities.
I talk with many all the time (actually, yesterday at a golf outing) and they are saying many of their clients are jumping out of equities.
Pick almost any day in the WSJ and there is an article on the flight to cash.

As far as taxes goes, I keep all my investments in a qualified account, until I draw on them and even then its at a lower tax rate based on income.
 
Sippican said:
If I'm getting 5.50% and drawdown of 4%, I'm getting a 1.5% increase above my draw.
Principal protected, government backed.

History doesn't put money in my account, dollars do.
Click to expand...
Inflation needs to be 1.5% or less. Otherwise purchasing power is being lost.

Current year long inflation rate is 3.7%. Leaving a net gain in real terms after inflation of 5.5-3.7=1.8%. 1.8% - 4% withdrawal = -2.2%. And that is before taxes are paid on the earnings. IOW, your dollar buys fewer loaves of bread today than it did a year ago.

However, you can learn to bake your own bread which is much cheaper and healthier, IMO. Not joking, I do this myself. If your personal inflation rate is low enough, then you need only worry about cash flow, and 5.5% may be good enough. But, I want to make certain others figure in inflation. Inflation is real, it hurts us, and it’s unlikely to go away.

Good luck whatever you do.
 
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Sippican said:
Well we are not in historic times, are we? Funny, you have to conjure up 40 years of data to 'try' to prove a point? If I'm getting 5.50% and drawdown of 4%, I'm getting a 1.5% increase above my draw. Principal protected, government backed. History doesn't put money in my account, dollars do. Talk with any money manager and if honest, they are seeing their clients running to CD, MM, and fixed annuities. I talk with many all the time (actually, yesterday at a golf outing) and they are saying many of their clients are jumping out of equities. Pick almost any day in the WSJ and there is an article on the flight to cash. As far as taxes goes, I keep all my investments in a qualified account, until I draw on them and even then its at a lower tax rate based on income.
Click to expand...
Sippican said:
Well we are not in historic times, are we?
Funny, you have to conjure up 40 years of data to 'try' to prove a point?

If I'm getting 5.50% and drawdown of 4%, I'm getting a 1.5% increase above my draw.
Principal protected, government backed.

History doesn't put money in my account, dollars do.

Talk with any money manager and if honest, they are seeing their clients running to CD, MM, and fixed annuities.
I talk with many all the time (actually, yesterday at a golf outing) and they are saying many of their clients are jumping out of equities.
Pick almost any day in the WSJ and there is an article on the flight to cash.

As far as taxes goes, I keep all my investments in a qualified account, until I draw on them and even then its at a lower tax rate based on income.
Click to expand...
this is incorrect

for a 4% INFLATION ADJUSTED draw it takes a minimum of a 2-1/2% real return over the first 15 years of a 30 year retirment

of the 123 rolling 30 year retirements to date , fixed income alone has has failed to do that 65% of them .

it takes at least. 90% to be considered safe
 
mathjak107 said:
this is incorrect

for a 4% INFLATION ADJUSTED draw it takes a minimum of a 2-1/2% real return over the first 15 years of a 30 year retirment

of the 123 rolling 30 year retirements to date , fixed income alone has has failed to do that 65% of them .

it takes at least. 90% to be considered safe
Click to expand...
Well of course if you span anything over 15/30 years situations change, even investments. (Really? you need to reference 123 years?)
I am talking about the 'here and now'.
There are triggers in place to move investments out of cash accounts once/if investments change in the future.
Never said this was a 30 year solution, just a solution 'right now'
If you haven't seen articles, finance professionals talking, that people are moving to cash in a high interest time, then you are living under a rock.
 
Sippican said:
Well of course if you span anything over 15/30 years situations change, even investments. (Really? you need to reference 123 years?)
I am talking about the 'here and now'.
There are triggers in place to move investments out of cash accounts once/if investments change in the future.
Never said this was a 30 year solution, just a solution 'right now'
If you haven't seen articles, finance professionals talking, that people are moving to cash in a high interest time, then you are living under a rock.
Click to expand...
the math has not changed

in order for 4% swr , inflation addusted to hold it takes at least a 2% real return over the first 15 years as an average or it will fail to last under worst came outcomes.

which is after all what a safe withdrawa rate is based on .

it has taken at least 35% equities to have 4% inflation adjusted hold at a 90% success rate or higher.

trying to inflation adjust a 4% draw off only fixed income has been the most dangerous bet .

40 to 60% equities has a 90% or higher success rate
 
You do not need a crystal ball to see what was going to happen to all bond funds. The Fed starting raising rates in March 2022, and said they were going to keep raising them until inflation was cooled.
Every time they raised rates, the value of a bond or bond fund dropped.
 
mathjak107 said:
the math has not changed

in order for 4% swr , inflation addusted to hold it takes at least a 2% real return over the first 15 years as an average or it will fail to last under worst came outcomes.

which is after all what a safe withdrawa rate is based on .

it has taken at least 35% equities to have 4% inflation adjusted hold at a 90% success rate or higher.

trying to inflation adjust a 4% draw off only fixed income has been the most dangerous bet .

40 to 60% equities has a 90% or higher success rate
Click to expand...
Of course the math changes.
I am talking about the next 1,3,5 years, not 15,30,120 years as you described.
In the next 1,3,5 years I can get guaranteed 5.50%.
As with all investments, when markets changes the investment strategy needs to change with it.

When you talk 15,30,120 years.....the math does gets fuzzy.
You are acting like there is only one strategy for 15,30,120 years....there isn't
 

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