anoop wrote:
- quote -

So? Are you jumping back in? This week the market hit levels more than
10% lower than that the day you made this remark.

-Will

william dot trice at ngc dot com

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kastnna wrote:

- quote -

Indeed, but even if the trades don't cause a shift to short term cap
gains, paying *any* taxes can hurt. Elle eloquently pointed out the
"triple compounding effect" that is missed when money is not invested.
However, taxes leave you with less money to reinvest when you are ready
to get back in further /compounding/ the problem . An ancient
article in SmartMoney, "Perfect Timing Is Still Bad Timing" (sorry,
don't know the year - it was an October issue, probably late 90s),
estimates that 40% of gains are consumed by trading in and out with
*perfect* timing due to federal and state income tax and transaction
costs. They estimate that you need to near-perfectly time a market drop
of at least 20% to profit from a timing strategy. If the drop is less,
you lose (vs. riding out the drop). If you mess up the timing, you lose.

Of course, given low transaction costs, this effect is much less
pronounced in tax-advantaged accounts.

-Will

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- quote -

Peter Lynch came to the same conclusions when he wrote (and I don't
remember where or when) that most investors in Fidelity Magellen did not
share the long term term results of Magellen because they tended not to
buy until Magellen had had a long upside period and then they sold well
after the fund hit a peak ( they bought high and sold low)

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kastnna wrote:
- quote -

No mention of taxes or method used to derive the numbers. Given the flow
of funds graphs I've seen, their conclusion seems legit.
Joe

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On Aug 12, 4:22*pm, joetaxpayer <joetaxpa...[at]nospam.com> wrote:

- quote -

Joe, having not personally read the study, did that 4.1% retun take
taxes into account?

Although not a certainty, market timing is more likely to result in
short term cap gains than buy-and-hold investing. It's possible that
not only did stock fund investors underperform the benchmark, but they
incurred greater taxes to boot.

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"John A. Weeks III" <john[at]johnweeks.com> wrote:
- quote -

The CPS, used to estimate the unemployment rate, is a *survey*. It is
unrelated to any states unemployment insurance system.

- quote -

This is simply not true.

Xho

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kastnna <kastnna[at]auburnalum.org> wrote:

- quote -

Sorry. I over-simplified. But that is the essence of the headline unemployment
number, not whether someone is registered with a state employment agency.

-- Doug

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Tad Borek wrote:

- quote -

A Boston-based financial services research firm, Dalbar, inc, concluded
that

"For the 20 years ended Dec. 31, 2006, the average stock fund investor
earned a paltry 4.3 average annual compounded return compared to 11.8
percent for the Standard & Poor’s 500 index."

This would appear to confirm your thoughts. It also points towards the
Jack Bogle approach of low cost indexing. Hindsight 20/20, I'd guess
that most people would be happy to have gotten 11.7% (or 11.62 depending
which fund had what fee) over that same time.

Joe

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On Aug 12, 2:22*pm, Douglas Johnson <p...[at]classtech.com> wrote:

- quote -

Eh, still no. Your correct that the BLS does a current population
survey (CPS) monthly to determine the unemployment rate. But the BLS
is adamant that they never directly ask whether someone is employed
nor are interviewees allowed to decide their own employment status.

for more info see:
http://www.bls.gov/cps/cps_htgm.htm

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"John A. Weeks III" <john[at]johnweeks.com> wrote:

- quote -

Eh, no. At least not as it relates to the normal headline unemployment number.
The headline number is from the household survey taken by the Feds. They
contact a random number of households and ask "Are you employed?" and "If not,
are you looking for work?" A person is counted as unemployed if the answers
are "No" and "Yes" respectively.

There are statistical adjustments to that base number than tend to overestimate
employment in times of contraction and underestimate it in times of expansion.
Remember the 2002/2003 "jobless recovery"? That was, at least partially, a
statistical anomaly.

But you're also right that people get discouraged and stop looking for work.
That drops them off the unemployment statistics ("No" to the second question).
When things turn up, they start answering "yes" and start getting counted again.

-- Doug

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In article <20080812124519.774$eW[at]newsreader.com> , xhoster[at]gmail.com
wrote:

- quote -

Here in Minnesota, you typically only get 6 months of unemployment
checks Once you are done, you drop off the system. After a year,
you no longer get updates from them, unless you go back and
register again. Most people who haven't found a job within a
year simply drop of the system after a year, and they are no
longer counted as unemployed.

A funny thing happens when the economy does perk up. A lot of
these long-term unemployed people come back into the system
because there is a chance of getting a job. So, when the
economy gets a bit better, unemployment numbers don't reflect
the better economy right away. There is a lag period as the
chronic and long-term unemployed come back into the system.

-john-

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anoop wrote:
- quote -

What was the timing of each of those switches? Something every investor
needs to be conscious of is the human tendency to chase performance,
with the possible outcome being returns much worse than the long-term
average returns on the underlying asset classes (or stocks, or houses,
or whatever). It could even be net losses after many years of investing.
It sounds like you've had a few cycles of this...has your timing been
excellent, good, so-so, or terrible?

Some reference points: the S&P 500's recent above-average years were
1995-2000 (peaked in March 2000). International stocks, as measured by
the MSCI-EAFE index, had a couple good years in there, but it's the
period 2003-2007 where international stocks caught a lot of people's
attention, driven largely by the fall in the dollar. And as for cash -
summer-to-fall 2007, in hindsight, was one of the better times to "go to
cash" in many years, as many equity asset classes fell 20% or more after
that. Where in this time line did your switches from S&P to EAFE to cash
fall?

- quote -

Please take this as a friendly nudge from cyberspace...fantasy football
is for playing, but the point of investing real cash is to make money!
If you've been claiming the max capital loss since 1999 you have $3k per
year, $24k, in realized losses, actual money out the door (plus whatever
carry-forward is left). And it sounds like it's from stock-picking.
Perhaps I'm mistaken but I'm hearing alarm bells about poor timing. If
that's the case, it suggests you consider a long-term strategy that in
no way relies on your ability to time purchases...?

-Tad

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"John A. Weeks III" <john[at]johnweeks.com> wrote:
- quote -

rolled off the end of what system?

Xho

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anoop <ghanw...[at]gmail.com> wrote:
- quote -

I trust you know you might also miss some gains. If history is a
guide, you are also missing the triple compounding effect of investing
in stocks for the long run: Reinvested dividends purchase shares at a
relative bargain; dividends rise; share prices rise.

You originally queried: "Does it make sense to stay invested in the
market when we [are in a recession etc.]?' It does when one is
investing for the long run. As importantly, one must remember that
stock market increases should not be counted on as the main path to
reach one's retirement goal. Rather, saving lots per a specific plan
and doing so regularly should.

Trying to time the market (= going for short term gains) never makes
sense, AFAIC. I know you know many of us here feel this way. You have
also said you are prepared to pay the piper should you fail at timing.
I am posting to clarify a little that, to me, "financial planning"
generally means a strategy for the long term, whereas right now you
are attempting a short term, make money fast, strategy. The long term
strategy should mean, for most investors, a broadly diversified stock/
mutual fund portfolio indicating a bet on the economy for the long
run. A short term strategy like timing is a bet on being able to guess
numbers with more specificity than is appropriate, IMO.

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On Aug 11, 8:16*pm, honda.lion...[at]gmail.com wrote:

- quote -

For the record, I don't know the answer to that rhetorical
question! :-)

I think I could make an argument for why they shouldn't and I don't
know why Boskin suggested they should. It has been a long while since
I read the Boskin Commissions findings.

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On Aug 11, 6:07*pm, honda.lion...[at]gmail.com wrote:

- quote -

I tried to skirt it because it's not a yes/no answer.

In retirement accounts I used to be 100% S&P, then
switched to 80% S&P/20% EAFE, then to
60% S&P/20% EAFE/20% cash, each time thinking
that was a good long-term allocation. Most recently,
a few months ago I switched to 100% cash because
I think I can afford the risk of trying to time the market.
If I fail, I will chalk it up to experience, otherwise, I
will have saved myself some losses. I don't know when
I will jump back in, but I probably will if the market
drops another 10% or so.

Outside of retirement accounts things are worse.
I started buying stocks in 1999 (because that's only
when I started having money to do so) and then the market
tanked. So ever since then, I've been claiming the
max capital loss. I do occasionally buy stocks now, but I
sell almost immediately as soon I have a small gain
(5-10%). But that's just for playing; it's not an investment
strategy.

Anoop

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kastnna <kast...[at]auburnalum.org> wrote:
- quote -

It is I, thanks. I am posting via google.com whilst I troubleshoot
problems posting the old way.

snip for brevity
- quote -

Should they account for outlet/wholesale? Rhetorical question, though
you are welcome to respond.

As I think I have noted before, I think the CPI is useful as one gage
of the economy as a whole. I do not think it is very useful for
individuals. Inflation in specific areas, though, is very useful to
individuals for planning. Gasoline, for example.

Elle

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"anoop" <ghanwani[at]gmail.com> wrote
Re a comparison of unemployment using the current method and the
aforementioned "historical method":
- quote -

This is a nice citation. Varying from what you claim, though, the
footnote states that the given years are not "strictly comparable with
data for prior years." Footnoted are nine of the years in the range
1942 to 1994; and every year from 1997-2000 and then 2003-2007. The
footnote sends the reader to http://www.bls.gov/cps/eetech_methods.pdf
, which on page 189 sends the reader to several sites giving how the
numbers changed using the different methods. For the most recent years
and rounding to the nearest 0.1%, the differences in unemployment
rates are usually 0. The biggest difference is shown in one table as
being 0.5% (as in 6.0% vs. 6.5% unemployed for Asians around 2002). I
do not find anything to suggest that a former method of measuring
unemployment yields a "much higher" figure for unemployment.

- quote -

The articles says, "Partly as a result of the large rise in the number
of involuntary part-time workers, the Bureau of Labor Statistics U-6
measure of labor underutilization, which includes discouraged workers
and involuntary part-time workers in addition to those counted as
unemployed, rose to 10.3 percent in July. This is only slightly below
the 10.4 percent peak in the last downturn, which was reached in
September of 2003."

"Labor underutilization" is not the same as "unemployment."

- quote -

Are you saying you do buy stocks with the intention of holding them
for the long term? Or do you never buy stocks?

Elle

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On Aug 11, 1:23*pm, joetaxpayer <joetaxpa...[at]nospam.com> wrote:

- quote -

I think his point is that if you're unable to put away that "huge"
percentage that will get you to retirement with zero-risk investments,
then you're basically taking a gamble and you may or may not
actually make it. Investing in the stock market doesn't
require a lower rate of contribution unless one assumes that
past performance is a predictor of future earnings.

Anoop

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anoop wrote:

- quote -

Bodie wrote that book when TIPS yielded 3%. That's inflation, plus a 3%
'real' return. The math of relying on TIPS is quite different as that
return drops to 1%. The tax on the inflation portion is enough to wipe
out the real return altogether.
The irony here is that when the book was published, 5/15/2003, the TIPS
return had already dropped to 1.1%, and the strategy proposed in the
book was already of little use. One using his TIPs would need to save a
huge percent of their income so their withdrawal rate will match the
TIPS return.

Joe

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