Two weeks ago our investment guy came over with a bottle of wine to go over our portfolio with us. He always brings a bottle of wine, even when the market is up. We just drank it a little faster this time.
After I told him that I am not panicking, he told me that a significant portion of his clients have had him sell everything; they have decided to stay out of the market for awhile. They concede that it may be the absolute wrong thing to do, but they just can't stomach it anymore.
Three days ago, I met a friend for lunch and she asked me if I'm selling everything. She told me that another friend of ours did, and put it all into cash. I told her no, I'm not selling anything.
Yesterday, brip blap posted that even his barber has decided it's time to get out of the market.
It may look to the outside world like I am one cool-headed investor. But the truth is, I simply have no choice.
If I sold everything right now and put it all into cash, I would have a ZERO percent chance of making enough on that money to get me through 50 years of retirement. It simply could not generate enough income to keep up with inflation and my living expenses for that length of time.
The worst-case scenario of the market never ever recovering would also mean that I could not meet my retirement needs either. But at this point, the only hope I have, is to hope that the market will indeed recover at some point. And since that possibility has odds of greater than ZERO percent, I have to go with that approach.
The other alternative, of course, is to sell everything and wait for the exact bottom and buy it all back up again at bargain-basement prices. But I also know with 100% certainty that I'm not smart enough to know what day that is, so I'm not even going to try.
Related Posts:
"But at this point, the only hope I have, is to hope that the market will indeed recover at some point."
You're placing your hope and faith in the corrupt Wall Street?
In 2001, my dad lost one million dollars in Wall Street. He was 85 years old. My sister had to take over his accounts and hired a manager from Fidelity to manage my dad's holdings. We thought he had gone insane.(to be so heavily invested in Wall Street BUT he wanted to make MORE money)
My dad still was holding 5 more million dollars in investments. When he died in 2004, it took us years to dump the junk he was holding and recoup any of the money. My dad didn't believe in setting up any trust fund or tax program. By the time the dust settled, the IRS got over 55% of dad's money in taxes. The accountants and lawyers got most of the rest.
Good luck.
Oh, and I'd stop drinking that wine your investment guy brings over. The wine clouds your decision making properties. Neat trick.
(I lost big money in 1987 and 2001 till I had had enough. This time, I haven't lost a dime. Live and learn.)
Posted by: boomie | September 25, 2008 at 07:01 AM
Hmmmm, I can think of a lot worse outcomes than dying with 5 million dollars! Sounds like he was still doing ok.
Posted by: Retired Syd | September 25, 2008 at 09:21 AM
Syd, I am not selling anything either. I thank my financial advisor for making sure our portfolio was diversified enough to weather this storm. This too shall pass.
Posted by: Leslie | September 25, 2008 at 10:00 AM
Syd,
That's exactly my point. My dad 'gambled' in the stock market BUT he had tons of millions to support him when things went bad. How many people can make that statement and suffer such losses? He did not take the $1 million loss lightly. He would talk about it ALL the time. He was obsessed with not having enough money till he died.
The govt. got over $2.2 million in taxes after he passed on. The lawyers, attorneys and executors got tens of thousands more. By the time it got down to the children, there was literally pennies left.
IT WAS A JOKE.
What was it all for?
Trust me, my dad did NOT enjoy his life. It was awful and pathetic. It becomes an obsession after a while. He was racked in fear. He was so terrified he would not have enough money in his old age. It was heart breaking.
Yet, he ignored his most valuable treasure: his own family. He had 2 daughters and a son who loved him and would have given anything to have taken care of him. Dad chose his money instead.(He also had a girlfriend for 19 years who loved him but he would not marry her because he did not want her to get any of his money)
Posted by: boomie | September 25, 2008 at 12:27 PM
Boomie:
That's so sad about your dad. I think too many people get sucked into the same kind of thinking, that money (or stuff) is more important than the things that truly bring us happiness-our friends and family.
Simple Dollar had a relevant post just a few days ago on this very topic:
http://www.thesimpledollar.com/2008/09/19/the-psychological-and-emotional-attachment-to-what-we-have-and-what-we-want/
Syd
Posted by: Retired Syd | September 25, 2008 at 12:41 PM
This is so interesting - I've just heard from several people that they are selling off most or all their stocks to wait it out. While it sounds awfully tempting at times, I am certain that I would miss the bottom of the market by a longshot. I know myself well enough to know how hard it would be to get back in. And then I would have not only lost a bunch on the way down, but effectively lost a bunch on the way back up too.
The only thing I'm doing now is re-evaluating my asset allocation to consider what percentages would have let me sleep better. Slowly, I may re-balance if the market ever stabilizes.
In the meantime, maybe we just need more wine?
Posted by: RetiredAt47 | September 25, 2008 at 05:19 PM
ok. You hit this one on the head! I'm going to do a post on asset allocation tomorrow. If I can remember. I've had a lot of wine tonight.
Posted by: Syd | September 25, 2008 at 09:00 PM
It's really terrifying, this aptly named "Armageddon" of the stock market. What I started doing was stashing money and selling items that I did not need, like my extra life insurance policy. I sold it in a life settlement.
Posted by: Harvey | October 02, 2008 at 04:12 AM
"But I also know with 100% certainty that I'm not smart enough to know what day that is, so I'm not even going to try."
Picking the exact bottom has nothing to do with smarts.
Lots of gloom here in the comments. Where are the stories about those who didn't sell in 1987 and didn't sell in 2000-2001? ;-\
Posted by: Steve Austin | October 03, 2008 at 09:10 AM
The only thing I'm doing now is re-evaluating my asset allocation to consider what percentages would have let me sleep better. Slowly, I may re-balance if the market ever stabilizes.
Posted by: Prada | September 08, 2010 at 05:58 PM