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

To: chmang who wrote (40515)	3/17/2001 9:58:54 AM
From: Mike Buckley	Read Replies (1) \| Respond to of 54805

Charles, On the basis of your personal assumptions, what is your own magic number, if it's not indiscreet? The specific number is irrelevant. No matter how large or small, stating it has potential to offend in a public forum followed by as many people as this one. The factors that helped me arrive at it are also irrelevant to anyone other than my wife and me, though a discussion of them can't hurt and might be helpful. I had four primary retirement goals: 1) Enjoy the same lifestyle as when I was working; 2) Significantly increase our net worth over the years (hopefully decades if we're so lucky to live that long); 3) With that increased net worth, contribute to my community in a quiet but meaningful way that leverages the assets I donate (I call this mini-philanthropy as opposed to the micro-philanthropy I currently enjoy); 4) Provide for my wife's option to quit working in ten years if that's her choice. 5) If we can move into a dream house while accomplishing all of the above, that would be fine though not as important as the above goals. My magic number to accomplish all that was arrived at by determining the value at which I could pull living expenses out every seven or eight years and increase the invested portfolio at a rate of 20% annually. If it increases only 10% annually the first two goals shown above will be met. As you know, high tech stocks were moving up very rapidly in 1999 and early 2000. I waited until the portfolio had surpassed the magic number significantly, knowing that the higher my stocks got in the shortest period of time, the likelihood increased that they would fall back; merely attaining my magic number in that environment wasn't prudent. I made the decision to quit working when my portfolio had outperformed the magic number by about 50%. The value of my liquid assets (invested portfolio and cash to live on) less than one year later is 35% below the magic number. Had I quit working when I achieved my magic number or had I pulled only one year's living expenses out of the stock market, my long-term plan would be at serious risk today. Even so, it is at minimal to moderate risk depending upon how my portfolio performs in the next five years. Hope this helps. --Mike Buckley