There, I’ve admitted it - I’m guilty as charged. As a Baby Boomer I am highly risk averse. The truth is I was risk averse before I was classified as a Baby Boomer too. I’ve always been that way. But there seems to be some stigma attached to it. It is as if I am sub-human because I don’t want to take unnecessary risks with my retirement nest egg.

Making me feel guilty because I don’t want to put a large percentage of my nest egg into risk-based assets and hold on, is one of they ways the wealth management industry tries to get me to do just that.

My wife says I’m too quick to sell. But wasn’t it Rothschild who said when asked how he made his fortune, he always bought too late and sold too early. I’d say that is the trait of a risk averse person like me.

We’ve all read plenty of news copy, written mostly by the wealth management industry, that we need to have anywhere from 30% to 70% of our money in risky equities in retirement, or we won’t have enough money to live on for the next 30 years. How do they know? For 16 years until the 80’s the market went sideways at best and inflation was high but stocks did not compensate for it then. Read the rest of this entry »

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Here is my latest bates retirement income strategy model #2. You can check out retirement income strategy model #1 and compare them.

As I learn more from my research I find the picture of what I need to do becomes clearer. So I have decided to revise my model and it is shown below.

This is what I think will work for me. It may not suit all Baby Boomers but I find simple diagrams and pictures give me a better understanding of what I need to achieve.

(A large diagram is displayed later in the Post)

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This is a full copy of an email service I subscribe to from Al Thomas from Mutual Fund Magic. Al is a professional trader and has been a floor trader, a broker and almost everything you can be in the financial markets. His book “If It Doesn’t Go Up, Don’t Buy It!” is a must buy. The book is an education in itself. Also go to his web site and sign up for his newsletter today.

I just wanted you to see an expert professional trader has the same view as I do regarding these markets. I hope it gives my view more credibility. I wanted it included in this post complete so there can be no misunderstanding. Please read on ….. Read the rest of this entry »

The more I read about the need to have investments in the stock market in retirement regardless of the market volatility the more I realise this is fund managers trying to get your money just to gamble. You need to remember they get paid on the size of the funds under management NOT the returns they create for you or the losses they minimise for you.

Since the stock market eventually recovers they can keep wasting your hard earned money trying to time the market until it eventually turns bullish. That’s when they will be right and they’ll tell you how smart you were to buy and hold through the bad times. They forget that you might now need to recover 10, 20, 30% of your capital they lost trading it in a down market. Read the rest of this entry »

So much for safe, steady as she goes, buy and hold long term investment of your nest egg. Do you know your retirement funds may be contributing to the Oil Price bubble? Your trusted wealth managers may be telling you to have a conservative balance portfolio in retirement whilst they speculate in oil with your money.

“A pension fund is supposed to be investing money in secure, stable investments for the benefit of the people whose money they are investing,” said Dan Lippe, an energy analyst at Houston-based Petral Consulting Inc. Retirement Funds Plowing Cash into Oil

I’m really not sure of the ethics of this. It is supposedly well intentioned and aimed at protecting your nest egg to some degree against inflation and the loss in value of the US dollar. However I am more of the view they were chasing their bonuses on what looks like a sure thing riding the oil trend, just like the housing bubble. They get their bonuses every quarter in real cash. They cannot be trusted.

Read the rest of this entry »

Today I received an email from someone who maintains it is impossible to be in the market when it is rising and out of it when it is falling. I was investing this way for several years. I also entered the market in March 2003 using my indicators.

I requested more information and received a more detailed explanation of why the sender thought this was so.

This is the email I received to support the statement above. The email contents are in italics and I respond to each paragraph. I want to thank the writer for taking the time to give me their justification so I could respond. I’m happy to keep this discussion going so please all join in if you want to add (or subtract) from what has been said. Read the rest of this entry »

Baby Boomers here is more proof market timing works by protecting your nest egg from severe bear markets and thus avoiding large losses. Repetition is the way to learning so I will keep hammering this point - when in retirement we must find ways to minimize stock market losses.

I was half way through a post on Marketing Timing vs. Asset Allocation and Diversification when I came across a report written by Mebane T. Faber. I believe this report is so important that I need to bring it to every Baby Boomer’s attention. I found the 10 page report by going several pages deep in Google. Most people don’t do this. You cannot even get to this report from the site itself. That’s why I call it a secret report.

I’m hoping this report will convince Baby Boomers once and for all that Buy and Hold is flawed and should not be used in retirement.

How would you like a Portfolio of Publicly Trading indexes giving:

• Equity-like Returns
• Bond-like Volatility and Drawdown
• Over 30 years consecutive positive returns

If only that were possible I hear you say?

According to Mebane T. Faber it is certainly possible with a 10 month simple moving average market timing system. It can’t get any simpler than buy when the price for an index crosses above the 10 month SMA and sell when it crosses below it.

Read the rest of this entry »

I thought I might try and see how Buy and Hold Non-Strategy held up against a Stop Loss Strategy from the 2000 stock market crash to now.

I know when I watched the market recover from the March lows I was tempted to put some money in the market. But I use stops and my stops would almost certainly have been hit. So I stayed out and will stay out until I get a clear signal to go back in.

Even then I will trade with my “play money” not my nest egg money. If I start to see my play money is not getting whipped out I may start to put a percentage of my nest egg money in the market.

Since I don’t do much chart analysis these days I went looking for something that fits with my beliefs about market timing and could give me an indicator that a Bull market might be happening. But more importantly that the high volatility has reduced so I don’t get whipped out with my stop losses.

Then I thought what if I could do a hypothetical comparison on Buy and Hold vs. using a Stop Loss Strategy over the period 2000 to now. Recent stock market history has more relevance to us Baby Boomers. Read the rest of this entry »