Watched Wealthtrack On 04/17/20

fmdog44

fmdog44

Well-known Member
Location
Houston, Texas
Consuelo Mack's guest was Robert Kessler founder and CEO of Kessler Investments. First, he is not the all knowing guru of money but he had some vey stern warnings about the very near future. He said among other things this is the scariest economy since the late 1920s. The coming recession he said will be "terrible" and "much worse than 2008-9." Rarely have I seen any person discussing our economy says "sell" stocks and move in to cash. Now, he did not say move out of all stocks but what he did say when asked when, he replied "we are discussing this on Friday move in to cash Monday." He pointed out to older people the fall in 2008-9 was twelve years ago so our timeframe for recouping losses is that much shorter. I have recouped a lot of money since the first of March but not all for certain. With that fact being obvious I know I am in too deep in stocks and mutual funds to feel comfortable and that has always been my trigger to reduce my positions and will do so very soon like this week Like Kessler said today, "when you have cash to buy a loaf of bread cash is a good investment."
 

The stock markets will continue to be a real "roller coaster" for the foreseeable future. The "analysts" opinions are all over the place....from the worst is over, to a major recession is coming. The "key" is going to be what happens to this virus, and how soon a cure is found. Relaxing the "social distancing" rules could easily cause a 2nd wave of this virus, which would drive the economy and stock prices even further down.

The index I am watching is the CBOE VIX. For the past couple of years, it was holding in the 10 to 15 point range. Suddenly, it jumped to over 80 when this virus hit, and has struggled to drop below 40 in recent days. Until investor sentiment returns to near normal, the stock markets are going to remain quite volatile....IMO.
 
This was the interview from 3/20/20 when the market was already plunging and set to hit a low in the 18,000's on 3/23. While I have great respect for Kessler's opinions, there are a couple of things worth considering. First, I remember him giving a very similar opinion while on Wealthtrack over a year ago. Since then we've hit new highs as well as a new recent low. Second, he is a bond manager and I've heard it said that bond guys are sometimes considered a little more pessimistic (or realistic) than stock guys.

If things played out more naturally -- meaning, without the Fed heavily injecting money into the economy including buying corporate bonds -- then I would say Kessler is spot on. However, this Fed will do everything to keep the stock market from crashing. Let's hope that doesn't extend to the Fed actually buying stocks to keep things pumped.

At this point, it's anyone's guess where the market is heading. With the market up over 50% since it's low on 3/23/20 even though unemployment is at a sky high 22 million, everything is topsy-turvy. I wonder if we'll ever have to pay the piper for the indecent amount of debt we have accumulated, including anticipated debt from more injections/bail outs.
 

It doesn't have to be an all or nothing proposition.

A mix of cash, stocks, and bonds coupled with social security and a pension/annuity gives you enough diversification to ride out most any situation.

I do think that we are in for a long bumpy ride but history is on our side.

Good luck!
 
Frankly, unless somebody pulled their cash out of the market on or before February 19, 2020, I can't take them seriously. The market crashed February 20th.

To tell people to turn paper losses into real ones by selling stocks now, goes against every basic investing principle. You sell when stocks are high, you buy when stocks are low.

Our CFP sent an email to clients saying they would be adjusting portfolios to harvest tax losses. This way it helps at tax time while retaining the same overall risk performance (similar funds are bought so the sale is a wash).

On 3/31/2020 (quarter end) our portfolio was down over $200K. Yesterday the total amount lost from before the 2/20 total portfolio had shrunk to.....$10K.

If you have the proper Asset Allocation for your risk profile, unless you know for sure you're going to die next week, it's fine to be more conservative with your expenditures going forward, but panicking over the stock market is never a good idea.

We're currently 50/50 in our equity/bond ratio, as we have some expenditures coming up over the next 2 yrs. We're fine with that ratio going forward. If we did not have a pension to rely on, I might be more inclined to a 40/60 split, but that is the absolute lowest I would probably go on equities. I'm a moderate-risk investor.
 
If one saw losses in the 2008-9 fall and got out early taking losses then sat out the rest of 2008 & 9 further losses were avoided. So sticking strictly to rules can bite one in the butt. My example was my Dodge & Cox Stock Fund. It was a super fund in good times and a real clunker in bad. As it plummeted I said finally "enough is enough" and got out with bread money. It continued its dive until the market settled out. So as I got back in the market avoiding D & C I had more money to invest than I would have had if I decided to ride the downward ship to the bottom. You can't always win 100% and lose 100%. Having a life expectancy of another 10 years I think it is foolish and naĂŻve to be more than 50-50 in cash & stocks. There is no way in the world I will spend all of my money before I die. Thankfully, a large portion of my 2020 losses have found its way back in the few weeks in April. Nice rebound.
 
mathjak107 said:
robert is a perma bear ... in all the years i have been watching him , and i do enjoy hearing him speak the sky was always falling ....
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That is true in fact it was said of him as Consuelo set up the interview. The difference this time is the overall consensus we are going to go in to a recession but how bad it will be is anyone's guess.
 
Well if you're in the market for the long haul and you'd be selling at a loss, I'd think it over carefully. In other words...no emotional selling. As has been mentioned by so many "experts", people tend to buy high then panic on the dips and sell. I'm staying the course. It doesn't hurt that 31% of my portfolio is cash, so far, I'm still "in the black" as they say and I don't need money from my portfolio to live on. Everything is probably going to my heirs anyway.
 
OneEyedDiva said:
Well if you're in the market for the long haul and you'd be selling at a loss, I'd think it over carefully. In other words...no emotional selling. As has been mentioned by so many "experts", people tend to buy high then panic on the dips and sell. I'm staying the course. It doesn't hurt that 31% of my portfolio is cash, so far, I'm still "in the black" as they say and I don't need money from my portfolio to live on. Everything is probably going to my heirs anyway.
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The term "long haul" has to be defined in part with age. First, what is my net worth? Second, how old am I? It is plain stupid to ignore those two. There is no "long haul" for me investment wise because I have invested making enough to live without a single additional dollar. The "long haul" started in the early 80's for me. The only reason to continue to invest at the closing years of ones life is for purposes of leaving money to others when death comes. Now I enjoy the money I have earned and risk is a thing of the past.
mathjak107 said:
the time to sell was when markets were breaking new highs ....
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mathjak107 said:
the time to sell was when markets were breaking new highs ....

once things fall that ship sailed
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First you contradict your rule that says buy at highs. Second that ship is different for everyone. Granted if I was invested in index funds I would be down but my stock portfolio has to say the least weathered this storm admirably. The mutual funds I own have not done as well but being conservative funds I am running a flat line right now and have taken a large chunk out opting for cash.
 
fmdog44 said:
First you contradict your rule that says buy at highs. Second that ship is different for everyone. Granted if I was invested in index funds I would be down but my stock portfolio has to say the least weathered this storm admirably. The mutual funds I own have not done as well but being conservative funds I am running a flat line right now and have taken a large chunk out opting for cash.
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No contradiction at all ..but if someone is looking to either jump ship and protect their profits from a long bull or make changes ,the time to have done so is when we are up , not sell out after we fall.

I am not advocating trying to time in or out in these declines at all .....just find a comfortable portfolio and let it run ,that is the best way.....

My entire life up until retirement was spent in 100% equities and I just rode it through....

Today I am retired and run a leaner meaner all weather portfolio
 
mathjak107 said:
No contradiction at all ..but if someone is looking to either jump ship and protect their profits from a long bull or make changes ,the time to have done so is when we are up , not sell out after we fall.

I am not advocating trying to time in or out in these declines at all .....just find a comfortable portfolio and let it run ,that is the best way.....

My entire life up until retirement was spent in 100% equities and I just rode it through....

Today I am retired and run a leaner meaner all weather portfolio
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How can it not be a contradiction?! May be your portfolio fell mine did not I own only five stocks and four have done exceedingly well and one is down about .09%. "Jumping ship" applies to doing just that. I made a calculated move with all solutions being "take years of profits."
 
So your are advocating trying to time markets in and out ? I have no idea what you are trying to say... I am up ..... my gold and long term treasuries have been soaring enough to turn my portfolio positive ...

If you are advocating timing your ins and outs let us know when you get back in ....also let us know the stocks so we can see how the stocks did vs you trying to time them.

We also have those who buy a few stocks and trade them and the amount invested is a tiny percentage of what they have so they do well with 5% of their portfolio while 95% sits in cash long term .....taken as a whole their return sucks.

I enjoy trading but then I have my core portfolio.....last year just the part I sold brought in over 160k in profit .... But my core portfolio is separate and that does not get timed in and out.

I think gold brought in about 35k of it last year . I can post my trading statement if you want to see my sales
 
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fmdog44 said:
The term "long haul" has to be defined in part with age. First, what is my net worth? Second, how old am I? It is plain stupid to ignore those two. There is no "long haul" for me investment wise because I have invested making enough to live without a single additional dollar. The "long haul" started in the early 80's for me. The only reason to continue to invest at the closing years of ones life is for purposes of leaving money to others when death comes. Now I enjoy the money I have earned and risk is a thing of the past.
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Interesting...I was just starting to invest in the early 80's. Didn't have money to do so until then, after I changed from municipal to state payroll (same office, new position). For me, the long haul is as you say, until I die. If I live to be as old as my mother....I'll still have another 24 years to go. I don't need my investments because I get a more than adequate pension as well as social security, but saving and investing are still ingrained in me. Only now, I've reversed course by adding more to my savings than my investments. You are among the blessed to be able to say this:
"Now I enjoy the money I have earned and risk is a thing of the past." And I ain't mad at ya! 🤑
mathjak107 said:
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the problem is money wise we don't know we are out of the woods until the game ends ... an extended case of double digit inflation can erode a pile of money in fixed income in short order ..... so while we think the "investing game " isn't needed anymore that has not been the case and not growing your money enough has been the biggest risk ....

we have had 120 30 year retirement cycles to date ,.... lets see how someone would have done if they tried to draw 4% inflation adjusted from fixed income and no equities . .... keep in mind any success rate under 90% is considered very risky and has to high a risk of not lasting .


you can see results for a retiree with no equities and just fixed income has been very very very poor ....the money ran out before 30 years under actual conditions 66% of the time ...

FIRECalc looked at the 120 possible 30 year periods in the available data, starting with a portfolio of $1,000,000 and spending your specified amounts each year thereafter.

Here is how your portfolio would have fared in each of the 120 cycles. The lowest and highest portfolio balance at the end of your retirement was $-526,987 to $2,317,282, with an average at the end of $177,238. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)

For our purposes, failure means the portfolio was depleted before the end of the 30 years. FIRECalc found that 67 cycles failed, for a success rate of 44.2%.


so no equities ran out of money and left you 526,987 dollars in the hole as a worst case or left you with over 2 million as a best case , just based on inflation and interest rates each year . where will your lifetime fall out ??? we just don't know in advance .

on the other hand 40% equities did very very well


FIRECalc looked at the 120 possible 30 year periods in the available data, starting with a portfolio of $1,000,000 and spending your specified amounts each year thereafter.

Here is how your portfolio would have fared in each of the 120 cycles. The lowest and highest portfolio balance at the end of your retirement was $-187,735 to $3,751,122, with an average at the end of $904,672. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)

For our purposes, failure means the portfolio was depleted before the end of the 30 years. FIRECalc found that 8 cycles failed, for a success rate of 93.3%.
 

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