Quote:
Originally Posted by Stu from NYC
We all have different risk tolerances.
Also understand why you would have taken your 401 equities and put them in cash but you did lose a lot of appreciation by doing that.
I tend to have faith in our economy over the long run.
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The comment is not a reflection of the economy, this is a valuation issue. The economy will still run between 1-3% long term. My comment is that the valuation is very, very extended relative to the economy. kind of like a 350K house going for 700K 12 months later. . . when nothing changed other than very low interest rates and high equity prices to assume a great retirement forever. . its called recency bias, versus the historical view which i displayed in the graphs. . that is the point, the recent market is not historically normal, but truly abnormal.
When I sold, the SPX was 4520, today its 4431, not sure how you can state that I have lost a lot of appreciation.
I was out of the stock market, 100% in cash in June 2007 prior to the housing market crash . . . the key is to avoid big market drawdowns, which has a potential to happen right now
But also relate the current valuation to the historical market highs, and realize that the Federal Reserve has had a lot to do with the stock market returns because of the deflationary effects of technology. . . ie, they didn't have to worry about consumption inflation, which is starting to move up and then flatten, depending upon the price of energy, and minimum wage. . .
The ultra best scenario is to have the Dec year end equity prices as low as possible for minimum RMDs but that goes against performance marketing of investment management.
The worst scenario is to have the market at yearly highs in Dec and then be down when you decide to take the RMD. . just something else to think about when to take the RMDs