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

To: Apollo who wrote (40355)	3/13/2001 12:12:24 PM
From: LindyBill	Read Replies (2) \| Respond to of 54805

The magic number for retirement.... Apollo, my problem was that my prior 4 years in the market had returned double, double, double, and 750% in 1999. When I retired a year ago my attitude was that I could do no wrong, and that I was going to double again, at least, in 2000. I started spending money like there was no end to it, and speculating in tech stocks. I lost my ass, of course, and I am now paying for it. I try not to dwell on my stupidity, and get on with my life. The most difficult thing to do is to get over making it and losing it. When you are really making a bundle each year, it is difficult to reverse your thinking and be conservative!

To: Apollo who wrote (40355)	3/19/2001 3:35:25 PM
From: StockHawk	Read Replies (2) \| Respond to of 54805

The magic number for retirement The magic number question is one I've always been interested in. At what point is a portfolio so valuable, that you don't need any other sources of funding. It's probably a bit perverse to talk about magic numbers at this stage in the market, and I realize you did not ask my opinion, but here are some thoughts to consider, as we dream of bull markets to come: A number of years ago I worked with a guy who put an interesting label on that magic number. To clean up his phrase somewhat, he talked about "screw you money". Meaning having enough so that if you got upset enough with your job or your boss you could utter the phrase and quit without any concern. So, what's the number? I read an article about a week ago, I believe in the Journal, in which they described a survey asking people how much money was needed to be rich. The answer, when all responses were averaged, was $2.86 million dollars. A few years prior to that, before the dot com explosion, I read another article that said the magic number in Silicon Valley was $5 million. Once the dot com billionaires started appearing I imagine five mil was considered walking around money, but perhaps it has more meaning now. Naturally, everyone has different spending patterns and lifestyle expectations. Your age plays a factor, and so does the decision as to whether you wish to let your asset base decline each year as you live off it, as many retirees do. About four years ago I came up with a personal magic number. Most people like to keep their number close to the vest, but here goes: My number was $4 million. And that ment $4 million in liquid assets, not counting houses, cars, etc. My feeling then was that a 12% return, which was about the historic long term return on stocks, would yield almost half a million a year in income. Most people, I believe, could live on a bit less than that, so each year the portfolio could grow as one took out less than was earned. Of course, as we have seen recently, a stock portfolio can get killed and change the picture sharply, so that portfolio should likely be split in some way, perhaps with 50% in bonds/money markets and 50% in stock. You could then reballance annually, so that after a year like 1999 - if you could stick to your plan - you would be forced to sell some high priced stock to buy bonds, and in down years - if you had the guts - you would sell off bonds to buy more stocks. Now, of course, $6 million would be better than $4 million (and in early 2000 I thought $6 mil was a better goal) and $10 million would be safer still, but I still think $4 million is a reasonable magic number for most people. StockHawk