Dow 30,000

Discussion in 'Off-Topic' started by RonBurgundy, Jul 11, 2019.

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Poll: Dow 30,000

  1. By End of This Year

    15 vote(s)
    10.6%
  2. 1st Half 2020

    24 vote(s)
    16.9%
  3. 2nd Half 2020

    21 vote(s)
    14.8%
  4. 2021 - 2022

    18 vote(s)
    12.7%
  5. Won't Hit It In Next 3 Years, Recession Will Knock It Back

    64 vote(s)
    45.1%
  1. Sigmapolis

    Sigmapolis Well-Known Member
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    Not really. And noticed I said *fiscal* policy -- those concerned with taxation and government spending -- as opposed to economic policies or politics more generally.

    The biggest things you need politically are the basics and good institutions...

    -- political stability
    -- the rule of law
    -- property rights
    -- predominantly private ownership of the means of production
    -- a reasonable regulatory environment
    -- stable currency
    -- mostly open trade relationships
    -- dependable, functioning law enforcement and courts (civil and criminal)

    Once you have those, the most important things towards growth are ones completely unrelated (or at least only tenuously related) to politics. Those are basically the big, structural things that make up our world and human society beyond anybody's control...

    -- technology
    -- demographics and migration
    -- changing cultural trends and tastes
    -- resource endowments (water, minerals, land, etc.)

    After that, in this hierarchy, the next most influential factor towards economic growth would be monetary policy, especially in the short- and medium-terms.

    Fiscal policy is a distant fourth behind all of those. To use an analogy, you can sluice off some of the water from the stream and move it around with fiscal policy (thought not much), slow it down or speed it up with monetary policy, or evaporate the river entirely with bad institutions, but for the most part, the course it is going to take is what it wants to take.

    Even powerful political leaders and central bankers are mostly along for the ride.
     
  2. SEIOWA CLONE

    SEIOWA CLONE Well-Known Member

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    Sorry, man, I did not realize I was talking to a stock expert in planning for retirement and saving for it.
    So your suggestion would be to not worry about SS, or any other form of retirement and just plow everything into the market. Got ya.
     
  3. isuno1fan

    isuno1fan Well-Known Member

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    Our point is you are an EXTREME version of risk adverse, ultra conservative financial planning that is the result of your own misconceptions and fear of equity markets.

    To each their own, but you have left a TON of money off the table. Assuming you have children, you are financially compromising them if you had planned to have anything to leave behind for them after death.
     
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  4. SEIOWA CLONE

    SEIOWA CLONE Well-Known Member

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    To each his own, like I said before, I will take that monthly IPERS payment in 4 years, and not worry about money the rest of my life.

    Nothing wrong nor extreme version of risk taking being enrolled for 30 years in a defined benefits program like IPERS.
    If my wife and I both passed away today, our estate would be well into the 7 figures mark, they will be fine.
     
  5. Sigmapolis

    Sigmapolis Well-Known Member
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    Assuming IPERS stays in good shape forever. I have my doubts.

    At least it is in a better actuarial position than Social Security.

    Which only means you left even more money on the table.

    You sound like those stories of old grandmothers who grew up in the 1930s and 1940s who kept their money under a mattress because that was safer than a bank.
     
  6. farminclone

    farminclone Well-Known Member

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    No, my comments keep going back to the fact you stated it’s silly to expect a break even or better over a 14.5 year time period. It’s asinine to say that, given the historical performance of the market, and if you are teaching kids that, my gosh they are going to miss out on millions of dollars of investment gains over their lives because of your scare tactic teaching.
     
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  7. SEIOWA CLONE

    SEIOWA CLONE Well-Known Member

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    You want to play the odds and history, great, have at it. These kids are not missing out on millions of dollars of anything.

    If the market is doing well when you cash out, great. Or if you are young enough to wait it out, you will be fine. But for that 57 year old, looking to retire, that just lost half his retirement, it hard to convince him to stay in the market. He and most will figure half is better than none, and will pull out.
    I have nothing against the market, I have already said, everyone should have some invested in it. But to say its a sure thing, is not true. We have since 2008 rising markets, that cannot go on forever. The trump tax cut is pushing it upward, but that will not continue for the next 5 to 10 years. Too many signs out there the economy is slowing down, and a bubble has formed.
    Truthfully, at my age, if I had a large sum of money in the market right now, I would be planning on being totally out of it by the end of the year. But I am not a huge risk taker at my age. Younger people, go for it.
     
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  8. DurangoCy

    DurangoCy Well-Known Member

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    I'm not, but you're one of the worst chicken little's I've seen on this topic and frankly you're doing those kids a disservice.

    Congratulations on your 7 figure mark, it's a fine nest egg. If you have IPERs and SS to live on, then why are you so worried about the market? Given how conservative you are; I would worry that you or your wife get sick, run through the money, inflation takes over and the other dies with nothing. I've seen in happen several and it's not because they invested in stocks.
     
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  9. SEIOWA CLONE

    SEIOWA CLONE Well-Known Member

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    I really did not realize I was interacting with a stock expert. Sorry, on my part. So what firm do you work for, and roughly what amount of business do you do currently. The way you talk I would judge around 10 to 25 million a year. Nice job, congratulations.
     
  10. Sigmapolis

    Sigmapolis Well-Known Member
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    #170 Sigmapolis, Jul 13, 2019
    Last edited: Jul 13, 2019
    I went and pulled the historical Dow and S&P 500 data since the beginning of the indices. I was only able to analyze the data starting in 1900, however -- long story, but some of you know probably know how Excel does not like dates before 1900.

    Using the Dow, the longest you could possibly go without at least getting your money back...

    9/3/1929 ($380.75) to 11/23/1954 (which is 9,212 days or 25.2 years)

    September 1929 was the high point before the crash, with October 1929 featuring Black Thursday, Black Friday, Black Monday, and Black Tuesday. The market lost roughly 25% of its value in four days. Something like that has never happened again.

    I think planning around another event on the scale of the Great Depression is probably overly pessimistic, however. Unemployment peaked over 30% in the early 1930s; it barely went over 10% during the Great Recession. So what if we look at only the postwar world?

    I am going to use August 15, 1945 (which is VJ Day, for the historically-inclined) as my cutoff. Looks like the first day of trading after that was 8/17/1945, so I will use that for the actual cutoff.

    1/11/1973 ($1,048.90) to 11/4/1982 (which is 3,584 days or 10.6 years)

    I could do the same exercise with other increments for the Dow if anybody was curious.

    The S&P 500 goes back to 1957. I think it is a better index anyways.

    The worst you could have done...

    1/8/73 ($119.86) to 7/17/1980 (which is 2,747 days or 7.5 years)

    I know there is some inflation you need to worry about in there, so it is probably okay to round up or even add ~1-2 years to the above times to the point where you make yourself whole again. That would be unfortunate, but it is something you can wait out with planning.

    Conclusions...

    -- Unless there was a 1929 level event, which probably nukes pension funds anyways, then...

    -- Even using the bear market of the 1970s as your test case, the absolute worst somebody at 57 could do is have to wait until around 70 to be "whole" again where they started.

    -- Any person that close to retirement should be roughly halfway in stocks and halfway in bonds, so they have plenty of bonds to sell off while the market comes back.

    Again -- these are absolute worst cases.

    Here is the cumulative probability of how long it takes you, at worst, to have your money back to where you started in the history of the S&P 500 since the 1950s...

    upload_2019-7-13_20-7-39.png

    You hit 99% after 677 days -- not even two years out.
     
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  11. besserheimerphat

    besserheimerphat Well-Known Member

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    Getting back to the original point of the thread...

    30,000 is just an arbitrary number as the economy continues to grow. There are ups and downs over the short term, but as the economy grows we should expect to hit new highs regularly. It's not like something magical happens at 30k as opposed to 29k or 28k or 27k. It's just another multiple of 1000 so people get worked up about it for some reason.
     
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  12. DurangoCy

    DurangoCy Well-Known Member

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    I literally told you I wasn't in my last post. What about that was unclear?

    However, I do sell fixed annuities and whole life insurance policies. Given your risk tolerance, I think you would be a prime candidate for some of our finest products. When you have a chance PM me and I have you come down to the bank.
     
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  13. SEIOWA CLONE

    SEIOWA CLONE Well-Known Member

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    Pass, we work with an investment firm in Des Moines. We have plenty of insurance and my other investments are through IPERS. But thanks away.
    You should really branch out, maybe become an economic analysist or something in the field. May I ask, what your degree is in?
     
  14. DurangoCy

    DurangoCy Well-Known Member

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    Economics
     
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  15. SEIOWA CLONE

    SEIOWA CLONE Well-Known Member

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    Interesting, I would think you have quite a few more hours in it than my 18 hours. Did you specialize in micro or the macro level?

    Just guessing here, but I would think more micro level. Personal finance and that sort of thing.
     
  16. CTTB78

    CTTB78 Well-Known Member

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    There's one poster in this thread that has way too much time on his hands.
     
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  17. SpokaneCY

    SpokaneCY Well-Known Member
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    From lemons comes an opportunity for a sale!

    I think we've seen the 2 extremes on this board - the bitcoin guy and the money in the mattress guy.

    Reminds me of Dire Straits Industrial Disease line - 2 men say they're Jesus, one of them must be wrong...
     
  18. SEIOWA CLONE

    SEIOWA CLONE Well-Known Member

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    If you are talking about me, its Saturday night, the wife went to Ames to help the daughter wallpaper a room in their house. So I am sitting here, watching the Cardinals, having
    a cold one and just shooting the **** on CF.

    Great thing about teaching, we get the summers off.
     
  19. CTTB78

    CTTB78 Well-Known Member

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    I wasn't.
     
  20. Sigmapolis

    Sigmapolis Well-Known Member
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    [​IMG]

    It took 10 minutes in Excel and five minutes to write the post.

    I was genuinely curious the answer, too, of what the worst case looks like for the market to recover, historically, if you discount the meteor that was the Great Depression.
     
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