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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (3441)	5/4/2001 7:37:17 PM
From: Stock Farmer	Read Replies (2) \| Respond to of 74559

Hi Jay - excellent posts, as usual. I am back. Weary from tussling with the zombies over on the CSCO thread. The stake of logic to the brain does not kill them. They keep walking. Zombies, intent on recapturing the paper American Dream they rode into the ground. We are now in the phase where, IMHO, everyone in North America desperately wants to get back to the point where they can pull their chips back off the table and go home. Indeed, the devil will take the hindmost when that day comes! But meanwhile, for those who would risk their NUTS (Nextyears Un Taxed Savings) in the market, well it looks like we are going to zoom up a bit here. The collective desire of the nation is focused in that direction. Like the collective muscle tissue of a basketball player: driving him up towards the basket. Of course, the force of gravity hauls him inexorably back to the court. But that is later. John.

To: TobagoJack who wrote (3441)	5/5/2001 7:20:28 AM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 74559

Jay, If, however, on the same income, expense and savings numbers, I have a net worth of US$ 10 mm, I then would not want to position the assets in any way that will likely expose the mix of assets to a 10-20% downside, as it would take me many years of active income to make good the passive loss I think the problem with this example is the assumption that a 150K active salary could be some kind of significant contributor to a 10MM portfolio. Especially when disposable savings is only 50K of the 150K, or 0.5% of 10MM. It is close to a rounding error. More especially when you are talking of six months disposable savings, or 25K or 0.25%. Your example of the person with a 250K portfolio assumes a given volatility level (e.g., 10-20% decline) may be acceptable if active income can replenish same in short order. While this position may have intuitive appeal for one thusly situated, the active salary thread gets stretched thinner as assets build relative to income. At the eight-figure threshold, the idea becomes absurd IMHO. Such is to say that the hypothetical person with a 10MM portfolio and 150K salary needs to find justification other than salary "backup" for portfolio volatility, or else default to abject nonvolatility, IMHO. (Likewise, such person probably needs justification other than "making ends meet" in order to work for a salary of 150K.) Of course, such a person may find other reasons for choosing nonvolatility (e.g., nonvolatile [read "low"] returns may more than suffice for lifestyle requirements at this asset level), but association with the active salary seems rather arbitrary.

To: TobagoJack who wrote (3441)	5/7/2001 12:48:17 PM
From: pezz	Read Replies (6) \| Respond to of 74559

Jay, I certainly would not attempt to argue with your numbers.You are speaking of prudent money management. And most would agree that this is a good thing. In the last five years or so I have made and lost close to $500,000 starting from less than $50,000 ......three times.[Well currently I am at the sweet spot so the lost part is only two but give me a little more time ] I know that this is chump change to many here But to a working stiff such as myself it has been fairly stimulating ......OK,OK.... It's given me reason to live. Thus as you can guess I have little use for nor do I understand "prudent" money management. <<I need to win, just as gloriously, but, differing from you, I want to do so with as little dramatic fireworks as possible. I prefer to do without the clash of risk vs. reward>> Sad to say upon introspection I don't seem to feel that way. It appears that the risk is as great a part of the fascination as the reward for me......Perhaps if I believed in voodoo I would see a shrink. So you see I must stand by my assertion that a 12.5% supposedly safe bet is boring.....Perhaps prudent.perhaps wise. But boring nonetheless I'm sure you recognize the reference to "match sticks" is from "The Money Game".......Money,said Adam Smith "is just the way we keep score." I love to play the game for the playing of it.Win or lose my lifestyle doesn't change.No matter if I'm on top or bottom after the market close at 1:00 and on weekends I go out and do construction. <<Diversification is for folks that want to be on a par with the market.>> "is not reasonable and not prudent." Himmmmmm...that word again.Perhaps I should have said that diversification is for folks who want to be closer to market performance than to just what their own market sense would bring.........more or less depending upon amount of diversification.....This doesn't sound like much fun to me. As to ORCL, CSCO,etc. never owned'em never will. Dunno what the hell they will do.....Don't care. New Bull, new leaders. Gold?,Platinum?... Why is it different now than a year ago, two or three years ago?......Still don't see it........Maybe someday