Are Pos. Or Neg. On The Stock Market for The Next Three Years?

those of us who never made huge salaries had to grow our money via investing .

but risk and volatility are not the same thing .


[FONT=&quot]risk and volatility are two very different things .
[/FONT]
[FONT=&quot]the natural market cycles for a long term investor are volatile and owning diversified funds is volatile but has little risk .[/FONT]

[FONT=&quot]risk comes when you try to pick individual stocks and are held captive to the whims of a particular company , or betting on the next google. risk comes from mis-matching investments and time frames .[/FONT]

[FONT=&quot]there is very little risk in diversified funds over the long term . it just is volatile . volatility means little to long term investors .[/FONT]

[FONT=&quot]like i said there is no data that shows that investors with lower pucker factors tend to stay any better in balanced funds . their bad investor behavior just seems to get triggered at lower levels .[/FONT]

[FONT=&quot]the important thing is just find an allocation that meets your goals and run with it turning off the noise .[/FONT]

[FONT=&quot]i never made a big salary so growing my assets via investing was a priority . volatility and not risk was just fine . now in retirement 40-60% equities meets my goals .[/FONT]
 

a different view

I don't agree that my receiving a dividend from one of the companies in my portfolio reduces my investment in that company. If I had 100 shares, I still have 100 shares. I'm heavily into dividend paying companies, and by reading the list, on a weekly basis, of companies increasing their dividends and of those reducing or eliminating their dividend, the former list is always much longer that the latter list. This tells me that the economy has been in pretty good shape, for an extended period.
 
well you can disagree , but you would be wrong . you are not even talking about the same thing i am .

if you have 100 shares , after a pay out you have the same number of shares . but each share's value is reduced . it is finra law that every share price must be automatically reduced at the open by the same amount.

money does not get created out of the air . why would a share holder ever want to pay the same thing before and after millions of dollars are taken out of a company ? the answer is they wouldn't so finra requires the price per share to have an equal set back before the stock can trade . all percentages up or down on your investment is on the dollars you have left invested at the open . .


if you have 1000 shares of a 100 dollar stock that is a 100k investment . if it goes up 10% you have 110k . if it pays out a 10% dividend you get 11k in pocket and 1000 shares at 99 dollars a share or a total of 99,000 left compounding .

market action now works on the 99k . if markets take it up 8% that it is 106,920.

had you reinvested the dividend instead you would have had 1010 shares at 99.00 or the same 100k you had the night before ex div. that 100k going up the 8% % would have you at 110k .

so you are looking at what is happening ,wrong .

yes you have your share count the same after the payout but no it is not the same price as it closed at the night before .it is lower and not by markets but by finra law.




FINRA MANUAL :

5330. Adjustment of Orders

(a) A member holding an open order from a customer or another broker-dealer shall, prior to executing or permitting the order to be executed, reduce, increase, or adjust the price and/or number of shares of such order by an amount equal to the dividend, payment, or distribution on the day that the security is quoted ex-dividend, ex-rights, ex-distribution, or ex-interest, except where a cash dividend or distribution is less than one cent ($0.01)
 

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mathjak107 said:
well you can disagree , but you would be wrong . you are not even talking about the same thing i am .

if you have 100 shares , after a pay out you have the same number of shares . but each share's value is reduced . it is finra law that every share price must be automatically reduced at the open by the same amount.

money does not get created out of the air . why would a share holder ever want to pay the same thing before and after millions of dollars are taken out of a company ? the answer is they wouldn't so finra requires the price per share to have an equal set back before the stock can trade . all percentages up or down on your investment is on the dollars you have left invested at the open . .


if you have 1000 shares of a 100 dollar stock that is a 100k investment . if it goes up 10% you have 110k . if it pays out a 10% dividend you get 11k in pocket and 1000 shares at 99 dollars a share or a total of 99,000 left compounding .

market action now works on the 99k . if markets take it up 8% that it is 106,920.

had you reinvested the dividend instead you would have had 1010 shares at 99.00 or the same 100k you had the night before ex div. that 100k going up the 8% % would have you at 110k .

so you are looking at what is happening ,wrong .

yes you have your share count the same after the payout but no it is not the same price as it closed at the night before .it is lower and not by markets but by finra law.




FINRA MANUAL :

5330. Adjustment of Orders

(a) A member holding an open order from a customer or another broker-dealer shall, prior to executing or permitting the order to be executed, reduce, increase, or adjust the price and/or number of shares of such order by an amount equal to the dividend, payment, or distribution on the day that the security is quoted ex-dividend, ex-rights, ex-distribution, or ex-interest, except where a cash dividend or distribution is less than one cent ($0.01)
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Why do you feel the need to go into this detail everytime someone makes a post about dividends? Just reference one of your previous multiple post on the subject.
 
obviously if they are arguing the point they did not follow what was written . i gave examples here numerous times.

i rather re-explain it so they learn than have them go on believing mis-information . as you see this topic is so mis-understood .
 
Worse than never investing is investing without some form of strategy. I see on this thread some folks are in the market but don't have a handle on some basic fundamentals. This market we are witnessing is being tied to Trump rightly or not but it is being said and that can sway some investors. I'm sure some are buying on dips and some are panic selling, both right now are not the best way to go in my opinion. I am standing pat but I am doing so solely for me and how I am invested which is conservative at my age and wealth. I was a aggressive investor at 30 yrs. of age and won and lost big back then. I am maybe a little too heavy in cash but one rule of investing is do what you are comfortable with.
 
i am 50/50 in retirement and that stays put no matter what i think or markets do .

117 30 year cycles so far since 1871 and 40-60% equities has worked very well . on the other hand inflation has been the bogey man and killed off more than half (64) of those 117 cycles with fixed income only .
 
mathjak107 said:
i am 50/50 in retirement and that stays put no matter what i think or markets do .

117 30 year cycles so far since 1871 and 40-60% equities has worked very well . on the other hand inflation has been the bogey man and killed off more than half (64) of those 117 cycles with fixed income only .
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mj,

I'm curious about how you look at your SS and any defined benefit pension plans when determining your investment allocation.

I've read that some people view the income from those guaranteed benefits as part of their conservative/bond holdings and increase the stock portion of their allocations. e.g. If 50% of income is in the form of SS/pensions they would keep 100% of investments in stocks to generate the other 50% of income.

I ignore those guaranteed sources of income when making my allocations.

Just curious what you think and how you look at it.

Thanks, B
 
i don't look at ss as anything but an income source . it plays no part in how i allocate because it plays no roll in portfolio safe withdrawal rate stress testing .

so if i need 100k as an example and 40k is social security ,pension ,etc then the portfolio has to provide 60k . so all we are interested in , is that our allocation has a high success rated spinning off that 60k.

1,500.000 at 4% could safely provide that as stress testing different allocations show .

50/50 would be an excellent choice . you want at least 90% success of already making it through all the times frames . you can see the more conservative you go the riskier it gets trying to spin off anything near a 4% draw.

fixed income alone would be the riskiest bet of all .

i-SSMXJ5L.jpg
 
I don't look at it either but the logic used is interesting.

In your example of needing 100K with 40K coming from guaranteed sources of income, these folks would assign that guaranteed income a portfolio value of $1,000,000.00 based on a 4% withdrawal rate. That would allow them to allocate the $1,500,000.00 portfolio to $1,250,000.00 for stocks and $250,000.00 to more conservative bond holding. An allocation of 80-85% stocks and 15-20% bonds. It would be as though you had no guaranteed income and a portflio of $2,500,000 allocated at 50/50 to generate the $100k in required income.
 
i would not do that ,in fact no calculator does that . it subtracts out any pension income ,ss income and annuity income since only the invest-able assets in the portfolio has to be stressed tested .

a safe withdrawal rate stress tests the portfolio "only" including the fact it can go to zero . there is NO SEQUENCE RISK IN SS AND IT WILL CLOUD THE STRESS TESTING .

you would have a portfolio that can end up extremely volatile trying to count ss as part of invest-able assets . you would end up with an 83/17 allocation . that portfolio would be extremely volatile .
not a great idea in my opinion . you also can't rebalance social security so to speak . what do you do as stocks keep growing and growing over time ? you can be 80 years old and 95% equities .

if you had a job and income would you count that as part your portfolio allocation ? i sure wouldn't it makes little sense . well the same applies to ss income and pension income. it is outside the scope and purpose of your portfolio . it is an income source but should play no part in a portfolio allocation or strange things can happen like 95% equities .

there are no retirement calculators that count future income like pension or ss as if it was a lump sum bond allocation ..
 

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