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To: Math Junkie who wrote (42165)	1/15/2009 12:21:18 AM
From: Kirk ©	Respond to of 42834

Remember, this discussion arose out of someone saying that riding out 50% losses was unacceptable. Well, if something is unacceptable, then that implies that there is an alternative. Of course there is an alternative. I thought everyone here was well aware of it. If a 50% loss is unacceptable, then you don't put more than 50% in the market. If the max you have in the market is 50%, then your max loss is 50%. Given the market went down about 50% from the peak and total bond fund made about 5% last year, a 50:50 portfolio with half going down 50% and the other half going up 5% would lose about 22.5% if my math without checking a calculator is correct. 22.5% is not fun, but it is far better than the 'unacceptable' loss of 50% from the peak. You can play really safe and not use total bond and use CDs, TIPS, etc and hold to maturity... but the difference is overall return will be small so total bond works well enough for the simple case.

To: Math Junkie who wrote (42165)	1/15/2009 2:21:46 AM
From: Skeeter Bug	1 Recommendation Read Replies (2) \| Respond to of 42834

Math Junkie, read here for an analysis that makes the following assertions back in 2005: P/E valuation is 161% higher than average P/S valuation 658% higher than average P/B valuation is 152% higher than average investmentu.com while the article makes it clear that "whatever someone is willing to pay for it" is the value of the stock market, that value will tend to regress to the mean over time. consider the regression to the mean started (and earnings are collapsing). why did the market reach suck lofty heights? the government created credit bubble combined with bush's tax cuts for the uber rich created "a big pool of money." how did so much of that money end up in toxic assets? too much money chasing too few investments became "dumb money." they didn't even do any serious research into what they were buying.