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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: DaYooper who wrote (16096)	1/23/2000 8:14:00 PM
From: LindyBill	Read Replies (1) \| Respond to of 54805

I've never before sensed such capital preservation concerns as with todays posts. What you are reading has always been Merlin's position, I believe, he is much more conservative than I am. But, You are watching me change my mind in "real time," Three months ago, when I decided to retire; I thought I would pull out one year's income and do exactly the same investment strategy as before with the rest. Two things happened to change my mind. 1) I went through the 20% dip in Q the first week of this year. 2) I looked at the amount of money I had on hand, and realized that I had no need to make any more money. I could afford to take it all off the table, but it at interest, and still have more money available to spend each year than I would ever spend. Inflation could cut my income by 1/2 over the next 30 years, and I would still be OK. So I looked at my investment strategy, and said, "why take this much risk? If I have only 7 Million in my investment account on Jan 1, 2001, instead of 8 Million, what the hell difference will it make to me? None!" That is why I am taking 22% off the table next week. .

To: DaYooper who wrote (16096)	1/23/2000 10:40:00 PM
From: Mike Buckley	Read Replies (1) \| Respond to of 54805

Rory, Great questions! The reason I believe in having no less than five years' living expenses taken out of the market doesn't have to do with valuations. It has a lot to do with emotions. I worked very long, sometimes stressful hours for the past 25 years so I could get to the point that I could eliminate as much stress as posisble. Having my living expenses taken care of eliminates ALL financial stress. Doing so also helps eliminate emotions clouding my future investing decisions. With my living expenses taken care of for years to come, I'll be less likely to make unwise investment decisions insofar as they might have been caused by emotion related to ensuring my living expenses. When it comes to valuations, I think it's always fair to say that any traditional valuation junky such as myself will always be concerned about valuations and historical trends. Until a few years ago, the S&P 500 had never gone up 20% or more for more than two years in a row. It's now done it five years in a row. The Naz has never had a year like last year's 85% increase. Yet I'm a lot less concerned about specific stock market conditions than I am the global and national economic environment in which the companies we invest in operate. I won't take the time to go into any details supporting my thinking, but those conditions don't give me any reason to think the companies will suffer huge setbacks; I don't see a recession around the corner. Having said all that, just as there are many ways to make money in the stock market, there are many ways to manage personal finances when we choose to toss the day job. I think the process of determining in advance to take out X dollars every year based on a percentage of the portfolio value at the start of retirement is equally prudent. But it will only work if we choose a percentage that proves much later down the road to be practical, and it only works if it fits the emotional needs of everyone in the family. In the case of my family, that method doesn't fit the emotional needs. Make sense? --Mike Buckley