"zak" <zhendsch[at]yahoo.com> wrote in message
news:a7a1bede.0409170325.5a0ce118[at]posting.google.com...
- quote -

Yeah -- I've got to admit ya got me there. Didn't even think
about that one. My dad tells me stories of that time period
where he "supported the family, in style, on $100 a week"


- quote -

On Fri, 24 Sep 2004 09:37:46 CST, me6[at]privacy.net wrote:

- quote -

I told my niece about this thread. She's an attractive college
sophomore who said she could care less about the details... what she
wanted to know was could we get his phone number? <grin
-HW "Skip" Weldon
Columbia, SC

On Fri, 24 Sep 2004 09:37:46 CST, me6[at]privacy.net wrote:

- quote -

I told my niece about this thread. She's an attractive college
sophomore who said she could care less about the details... what she
wanted to know was could we get his phone number? <grin
-HW "Skip" Weldon
Columbia, SC

- quote -

Same here

I want to know

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Well tell me how you are different

Im serious.... Id like to know

You are obviously doing very well

Valueinv wrote:
- quote -

Hi Dan-
Well looks like a struck a nerve, you're way defensive about how rich
your area is! No really I'm not harshing on your hood...I'm very
familiar with it, have family ties there that go back a long time. And
unless you're talking about a very small sliver, there just isn't as
much wealth there as you think there is. Just like here in San Francisco
where there's a lot of apparent wealth and much less actual wealth. We
advisors get to see this when we prepare balance sheets where so many
"home owners" turn out to be mortgage owners. I think you'd be surprised
if you really got to peek under the hood of everyone.

You may be talking about a very small subset, the 20-acre mansion types,
and the older money. And the money based on more solid foundations -
sounds like your dad fits that category. Of course that's there, it was
there 20 years ago, it'll be there 20 years from now - you can find that
anywhere really. But that just isn't a baseline for "how much is needed
to retire." Unless you've decided that you want to retire in a 20 acre
mansion of course - maybe you have. Is that why you think you need $5M
before checking out? Then again 20 acres would take a lot more than
that. Again, I'm genuinely interested because I heard that recently from
someone else your age & wonder where it comes from. I see retirees with
a fraction of that who can't spend it fast enough - yes, in comparable
areas, in fact two are in the places that you see on the "20 most
expensive counties" lists.

are left with 1.1 million to produce
- quote -

OK now we're onto something - that's not the kind of return a $1.6M NW
investor expects. You're talking about 20-year Treasuries.


- quote -

I really don't expect you to put such personal info on MIFP but I'd like
to hear how you earned $200k before age 20, while still going to school.
It's a great achievement - I really mean that. I've never even heard of
someone who did that unless they started working immediately and really
lucked into a good situation. What did you do?

-Tad

Tad,
Well I guess I will just have to chuckle back. When I referred to 4-5
million I was very serious. I was also referring to retiring where I grew
up Greatfalls/Mclean, and that is quite accurate, and I know there are a
few other areas in the country just as wealthy. In regards to my parents
neighbors: I wouldn’t be surprised how much they are worth, because 1.6
million is not even in the question, I am not sure you understand the
type of net worth the majority of the people have that live in the area of
Greatfalls/Mclean and especially in my parents neighborhood. When you were
in nova you must have not really taken a look at the area in depth, as you
noted you were in Arlington which was somewhat considered the slums
compared to outlying areas and still is to an extent, and that $135,000
3/bd house you had an opportunity to buy which I know for a fact is not a
pretty sight- is now hovering around $500,000 in value- and it will never
come w/in $200,000 of that price again- bubble or not. The area was poised
for an explosion of wealth way before Dulles- believe me: my dad has lived
in nova his whole life…So let me enlighten you… sorry to say but jobs in
this area were not only from Dulles and AOL: that was a very ignorant
comment….does Columbia Maryland ring a bell? It is only the largest hotbed
for biotechnology or how about Bethesda? Potomac? Chevy Chase? Vienna?
Oakton? Rockville? Reston? Alexandria? Annandale? Ashburn? Georgetown?
Take a look at other large companies in the area and bite your tongue.
This area of DC/VA/MD… happens to have one of the largest clusters of
wealth ridden zip codes in the country whether you would like to
personally accept that fact or not. And the majority of the people in the
area couldn’t agree more that if they “paid for their house in cash” as
you said= about $500,000- (and note this will not buy a desireable house
at all in Greatfalls/Mclean) and are left with 1.1 million to produce
income (roughly about $60,000 a yr.) that they would not feel very
comfortable at all to retire in that area, which is why most people with
1.6 million that live in this area and want to retire would have to
relocate which is what I was inferring, AND which is what most people that
think logically would do….regardless if they are “value-investing.” The
goal of most people that want to retire COMFORTABLY and not relocate or
relocate to a desirable location is to maintain the same exact lifestyle
financially as when they were working: which would mean if they have a net
worth of 1.6 million and were earning an income of around 100,000-300,000
when they were in the workforce than their net worth would have to be much
more than 1.6 million…so there is how I obtained that calculation. So the
answer is yea sure you can go retire and live comfortable off 1.6
million…but you would have to pay $200,000 or less for your house and live
in a very low cost area.

As for me turning my own money into $250,000: my parents have not
contributed more than the yearly gift regulations- so more than %80 of
that money in my brokerage accts. is money I have contributed personally
and compounded…so no, my investing has not just begun…when I was young I
wouldn’t ask for mindless stuff for holiday’s…usually literature or acct.
contributions. And me blowing it? Very cute comment: I can see how you
could picture that, looking at the everyday 20 yr olds: but I am not your
avg. college student.

And for HW Skip: Multi- Is a prefix signifying much or many more than one.
The multimillionaire status would not be recognized in general at a 2
million dollar net worth. And this story you have presented is the life
story of a lot of high income professionals that have their own medical,
dental or law practice- they are highly educated but loan poor when viewed
in a balance sheet perspective or have just made bad financial decisions
throughout their life...which is why they have to make some large moves at
retirement to maintain a similar cashflow: in this case sell the house and
potentially relocate.

Dan

Douglas Johnson <johnson[at]classtech.NOTPARTOFADDRESS.com> writes:

- quote -

That's not the definition of EMH I've seen in places like finance texts,
JoF, Bernstein, Malkiel, etc. The EMH I'm used to seeing is more like:
Efficient market hypothesis (EMH) is an idea partly developed in
the 1960s by Eugene Fama. It states that it is impossible to beat
the market because prices already incorporate and reflect all
relevant information.

or still more formally:

The efficient market hypothesis (EMH) asserts that stock prices are
determined by a discounting process such that they equal the
discounted value (present value) of expected future cash flows. It
further states that stock prices already reflect all known
information and are therefore accurate, and that the future flow of
news (that will determine future stock prices) is random and
unknowable (in the present).

And again, the various forms of the EMH relate to what is meant
by "known information". Colloquially, the weak-form says that
technical analysis is useless, the semi-strong-form says that
fundamental analysis is useless, and the strong-form says
that even insider information is useless.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

Witness the Internet bubble, the new economy just wait for the dollars to
roll in. P/E ratios and valuations that would dwarf Exxon and GE.


<me6[at]privacy.net> wrote in message
news:b1m3l01n5r28n1tiqgeage9qt7lgou82gj[at]4ax.com...
- quote -

Rich Carreiro <rlcarr[at]animato.arlington.ma.us> wrote:

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"An 'efficient' market is defined as a market where there are large numbers of
rational, profit-maximizers actively competing, with each trying to predict
future market values of individual securities, and where important current
information is almost freely available to all participants. ...."

Note the word "rational" above. Bubbles are driven by "irrational exuberance".
I don't want to get pedantic. To some extent, it depends on which body of the
extensive EMH literature you'd like to believe.

The core point I'm trying to make is that markets are not driven by an army of
cool, calm, collected people carefully evaluating data flowing through EDGAR.
They are driven by hopes, fear, greed, cocktail party bragging, bad decision
making processes, and, sometimes, somewhere, evaluation of EDGAR data.

As a parting shot, how often do we see someone post "I'm holding on to <insert
investment> until I get even."? This is not rational. Other than tax effects,
you ignore what you have in an investment when making sell decisions.

-- Doug

Rich Carreiro wrote:
- quote -


I think both your points are well taken. A truly efficient market
shouldn't have VA Linux in it because any half-whit could figure out
that VA Linux wasn't worth as much as, you know, Scotland or whatever
its value peaked at, and should be able to figure out a way to profit
from that and drive the price down (or never let it get up).

And generally, bubble pricing is one of the things people point to as an
example of an inefficiency.

But try and profit from it, and the market looks more efficient. Bubbles
don't violate efficiency in the sense Rich said...the idea that you
can't profit from these things.

Also you can in a sense justify bubble prices because for a time they
are "justified" by facts that might not be known to you. Maybe a missing
piece of information about VA Linux was "the firms that took it public
are going to do whatever trading is necessary to prop up the stock
price." Or "a big fund manager hit his head on his car door and is now
convinced this is The Next Microsoft Plus IBM." I have no idea but
something kept the price up, and a bunch of sellers profited from that,
and no doubt some people were trying to take the other side of it.

Alternatively you can take the view that seeming inefficiencies happen
in the short term, but over the long term the market sorts them out. It
does seem hard to profit from bubble pricing...your put options expire,
your short position is flushed out before the stock turns. Even George
Soros's hedge fund lost its shirt betting against internet stocks, they
didn't have the capital to ride it out.

I am ambivalent about this though. I think a good argument against EMH
is your average toll booth. It takes no effort to shift a lane over so
the lines should even out. But how many times do you see one line with a
bunch of people stopped waiting in it, right next to an empty one?

-Tad

- quote -

Interesting

So you are saying that sometimes the market does not
make for efficiency cause people do things that don't
make any economic sense?

Douglas Johnson <johnson[at]classtech.NOTPARTOFADDRESS.com> writes:

- quote -

I've heard a number of people say that. But I haven't seem any of
them explain how that follows from the efficient market hypothesis.

The EMH basically says: "despite knowing [information set], you can't
beat the market", where what you plug in for [information set] depends
if you're talking about the strong-form, medium-form, or weak-form of
the EMH.

So how does something that says "you can't earn excess returns"
imply "markets can't have bubbles"? I don't see the link.

Tad?


--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

"Elizabeth Richardson" <erichktn[at]worldnet.att.net> wrote:

- quote -

Because few financial decisons are made with brains. The decisions tend to be
dominated by emotions. In this case, apparently wanting a big house, lots of
nice stuff, aiding children.

Generallizing, I've never been real comfortable with efficent market theory
because it didn't consistently describe how markets behave. Efficent markets
shouldn't have bubbles, for example.

The flaw is that efficent market assume rational investors. Recent study of
financial decision making shows that there are few, if any, consistently
rational investors. They chase performance, follow the herd, over-react to both
good and bad news, assume the current trend will continue forever, etc. I do
not exempt the pros from this.

A big part of financial success is understanding these deamons and making good
decisions in spite of yourself.

-- Doug

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Somehow I expect people who have the brains to earn a decent income to have
the brains to realize that $400,000 will not be enough to provide the same
decent income. How does this happen?

Elizabeth Richardson

On Tue, 21 Sep 2004 18:15:16 CST, Tad Borek <borekfm[at]pacbell.netwrote:


- quote -

I think this is the key. Many people have sizeable (seven figure) net
worths, but their residence is a healthy part of it. Whether they
would convert that house into something producing income is
questionable.

For example, I saw a couple whose net worth was $2 million. Of that,
their paid-for house was $1.2M and personal holdings (household
furnishing, jewelry, cars, etc.) was $.4M. That left $400,000 in
investments. No life insurance and no long-term care policy, but they
did have good health coverage.

He was a high-income professional, she a stay-at-home-volunteer wife.
Their income now goes to current lifestyle and keeping up their home.
He does contribute the max to a 401k. His health was showing the
affects of stress and he wanted to retire.

Assuming a 4% withdrawal rate, $400,000 pays them $1,333/month gross.
In three years Social Security will add another $1,500 to that. When
I told them that would not support their lifestyle and recommended
downsizing their home, they were shocked and horrified.

This couple has made bad decisions all along (too much house, not
saving enough, helping adult children, etc), and I have no idea what
they will do.

But they are a good example of multi-millionaires who are in trouble.

-HW "Skip" Weldon
Columbia, SC

Valueinv wrote:
- quote -

Dan,
I have to chuckle at that one. I'm writing from probably the highest
cost of living area in the country (and just got back from vacation in
its island counterpart) so believe me I'm aware of cost of living issues.

But really: you don't need $5M to 'glance at retirement' in NoVA, or
Boca, or anywhere. God forbid that was the case - nobody could ever
retire. Where did you ever get that kind of number? I'm interested
because I have a younger relative who said more or less the same thing.

I think you'd be surprised at the net worth of your parents' neighbors,
it's probably a lot lower than you think. So many people who appear
wealthy just aren't, from a balance sheet perspective. Don't think in
terms of home wealth because that's funny money at the moment, and a lot
of those folks have taken out the equity (or never had it to begin with).

You might be thinking in terms of retiring with multiple trophy homes in
the best areas in which case really, the sky's the limit and yes, you
really can never put a cap on the income needs. If that's the standard
then absolutely, $1.6M isn't a fortune and you have a ways to go. SgtS's
$10M kind of level is needed for that, and it might not be enough. And
very, very few people ever get to that level of wealth.

But I stand by my original point which is that once you have $1.6 you do
have a fortune of sorts, because you have a lot of options, one of which
is to stop working for good, pay for a nice house in cash, and live off
investment earnings. Yes you need to be smart about it but it's way
beyond the point. Especially if you're really a ValueInv and you know
what to do with the money! And I think that may be an issue...at 20
your $250k looks insecure because it is - you don't have 15 years of
growing it behind you, & I think you said that's UGMA money. Yes, you
shouldn't stop now because you haven't really even started. As you get
confidence investing and perhaps in your own businesses over the years
you'll see that "money gets money" and at a certain critical mass your
security level gets pretty high. It's more an issue of "not blowing it".

BTW you'd fall out of your chair if you saw how cheap things were in
NoVA when I was there (you were..uh...nine!) Pre-AOL I guess, when the
jobs were from "beltway bandits" and of course the gubmint. The whole
Dulles corridor wasn't established really. I remember our landlord in
Arlington offered the 3BR house to us for something like $135k and we
laughed at the idea of paying that much. Who would pay so much when you
still need to drive ten minutes to be in the District? Yeah.

Yes the area grew but the thing is, salaries aren't all that much higher
now than they were back then. That's my point about not using mid-bubble
home values as a baseline for gauging wealth or retirement-savings
needs. It paints a picture that requires way more savings than most
people will really need.

-Tad

<me6[at]privacy.net> wrote in message
news:sjh6k05ckkgl0pdqmbottgqqme2cp2nk19[at]4ax.com...
- quote -

Widows at that age with that kind of net worth are VERY common.

Brent D. Gardner, ChFC
Chartered Financial Consultant
http://members.cox.net/brentdgardner1378/

"Be ever questioning. Ignorance is not bliss. It is oblivion. You don't go
to heaven if you die dumb. Become better informed. Learn from other's
mistakes. You could not live long enough to make them all yourself." - Hyman
George Rickover (1900-86), Admiral, US Navy, advocated development of
nuclear subs & ships

The Chartered Life Underwriter (CLU) and Chartered Financial Consultant
(ChFC), designations owned and exclusively offered by The American College,
signify the highest standards of academic study and professional excellence
in the financial services industry.

"Sgt. Sausage" <nobody[at]nowhere.com> wrote in message news:<l%k1d.19888$w_6.27[at]fe37.usenetserver.com> ...
- quote -

The trick in this case is that the woman was 22 in 1949, when $300
would buy about what $2300 would buy today. For someone who has
stopped earning income and has been living off their nest egg for at
least 20 years, it's a pretty nice sum indeed.

- quote -

Well, I agree with that, and that the results aren't all that
atypical. The folks who grew up in the depression seem to have saving
down to an art form.

- quote -

Well, it depends on the age you plan on retiring and how much money you need
to live on

If you can live on an inflation-adjusted income of about $64,000 NPV, you
could survive for 40 years on $1,600,000. AND that's assuming you get no
social security benefits or any other pension. Since the current average
household income is $43,000, it can be done.

So, not only can someone retire on $1.6 million, but he could retire early.
--
Robert J. Romano, CPA
99 Massachusetts Avenue-Suite 4
Arlington, Massachusetts 02474-8600
www.romanocpa.com