Feeling like Sally Brown

DRHolden
By DRHolden on Fri, Jul 25, 2014 - 10:17am

I haven't posted in quite a while... I've been feeling like Sally Brown from the Peanuts over the last couple years. Sally puts her trust in Linus that there's such a thing as the Great Pumpkin and she forfeits her Halloween night to stay with him in the pumpkin patch to see the Great Pumpkin.  Anyway, all signs (to Linus) are that the Great Pumpin will appear, but never does...  

I've had my money mostly in cash for the last X years after the last crash for fear of another crash.  All signs point that way for me (Maybe I'm feeling more like Linus than Sally).  From what I see and what I read, it all looks bad.  I missed out on some tremendous gains in stocks, and have lost all the equity I had in physical gold. Part of me just wants the crash to come, so I can feel better...  I guess this is how it happens (is happening) people have been really getting back into the market over the last year because they're tired of missing the gains, which could be setting them up for even bigger losses.  I know others (with their heads in the sand) who have done much better than me, just by doing nothing.  Does anyone have a crystal ball out there?  I like Chris's motto, better a year too early than a day too late (or something like that), but this is getting ridiculous.  How much longer can it keep going up?

Confused in New England...

11 Comments

Brady's picture
Brady
Status: Member (Offline)
Joined: Apr 24 2013
Posts: 3
My Thoughts Exactly!

You couldn't have described my feelings any better! I, too, recite Chris' "year early vs day late" mantra, then try to find a happy place in my mind to forget about all the gains I missed out on by staying in cash. Trying to lift my own spirits, I tell myself that there is a reason I chose that course of action many moons ago, and those reasons are still valid today (if not even more valid). 

If you can't get rid of the itch to jump back into the market, perhaps you could do so with an insignificant portion of your portfolio (5%? 10%?) just so you feel you're not completely missing out. At least it would give you a chance to cheer a rise in the market instead of bemoaning it.

Thanks for posting. It validates my own feelings in a way.

jhochwalt's picture
jhochwalt
Status: Member (Offline)
Joined: May 16 2013
Posts: 2
A place for Sally Brown to feel comfortable

Having read these last two comments, I felt compelled to chime in if I may?   For more than a decade, I own and work with a National brand known as Bank On Yourself.   (www.findoutmorenow.com passcode JH78)  I was introduced to the NY Times Best Selling Author Pamela Yellen and honestly have not turned back.  

Rather than try and time the markets which by the way, I am personally very bearish on also, it utilizes a program that has grown money safely and predictably for over 160 years, Dividend-Paying Whole Life with the addition of special riders called paid-up addition riders that grow money much more quickly. Designed properly, it can serve to enable you to actually Bank On Yourself where you borrow capital for any purpose, meanwhile earn the same annual dividends as if you never borrowed a dime.   It can also create a lifetime stream of income that is tax-free through a series of withdrawals to cost basis and loans thereafter.    No more Bull and Bear markets!  

It is not a magic pill nor a get rich quick scheme but for me it makes sense and seems like a perfect fit for those that see the realities of a government out of control powered by Wall Street and Lord knows who else?   Just my 2 cents.  Hope it is ok to speak on this in the forums as I am new to posting here.  

Best, 

Jeff in Denver   

DRHolden's picture
DRHolden
Status: Silver Member (Offline)
Joined: Oct 18 2009
Posts: 131
RE: A place for Sally Brown to feel comfortable

Thanks for the info Jeff.  This works for some, but I don't think it's the right fit for me.  I really have no need for the insurance aspect of it, which expense for are front loaded on Whole Life programs like this.   My understand is that it's not good for everyone. 

  • It’s not for people who don’t need or want a permanent death benefit.
  • It’s not for people who can’t afford a term premium to protect their families.
  • Expenses are front-loaded. The agent and insurance company can eat up half of the first year’s premium
  • It’s not for people with an unstable source of income.

Dean

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
Discount Rate.

Patience friend; you are victim of your all-too-human discount rate.

Let Nate Hagens explain.

I miss the old Oil Drum.

 

jhochwalt's picture
jhochwalt
Status: Member (Offline)
Joined: May 16 2013
Posts: 2
Thanks Dean

Thanks for your reply Dean.  I would have to agree by and large.  The 4 points that you state are accurate with a few caveats.   The majority of our case designs feature capital transfers over just a few years or all at once and therefore do not require ongoing funding from outside sources such as income.   If a person is over age 59 1/2, they may go as far as over fund to point of being a Modified Endowment Contract,  where they could see recovery of all of their investment as early as the second policy year.  Every year thereafter, they would enjoy guaranteed annual cash value increases that are tax deferred (kind of like a super-flexible deferred annuity without its typical surrender charge) and non-guaranteed dividends as well. 

Modified Endowments require far less death benefit and allow more return on investment than you are used to due to special riders that effectively turbocharge performance while still allowing tax deferral) and therefore far higher cash value even from day one thus avoiding that pesky high (50%) front end load you mention.  ;)   Hope that helps?     Thank you, Jeff

 

aggrivated's picture
aggrivated
Status: Platinum Member (Offline)
Joined: Sep 22 2010
Posts: 572
counterparty risk avoidance

All of the above angst about 'in the market',' out of the market' issues can be deeply alleviated by putting your wealth into areas that don't have third party risks.  For instance, if you own some precious metals, don't look at the markets all the time worrying about their value.  If the dollar collapses, then the trade value of those rare metals will be useful for things like food and medical care, etc.  Also, don't put all of your eggs in that one basket.  

Sitting on your cash is like sleeping on an air mattress with a hole in it. Spend some of it on those things that will make your future better or cheaper.  Chris and Adam and many others have discussed all of this from garden soils to insulation to skill set development.   As time goes on you will start to realize a return on these expenditures investments.

And to make three points out of this comment, also build relationships with your neighbors that includes using your developing skill sets.  Share and receive the wealth of information and skills that build a community. 

I noticed that some of you are new to the online community.  Much of what is available on this site is related to practical issues that can channel 'traditional market worries' into different but very profitable areas. 

If the future is going to be with less energy as is predicted, then complex systems of specialized labor division will sometimes crash and sometimes shrink, but planning ahead for unreliable third parties and then doing things in  practical and hands on ways is good for now and good for the future whatever it holds.

Cheers

 

davefairtex's picture
davefairtex
Status: Diamond Member (Online)
Joined: Sep 3 2008
Posts: 5683
no sales pitch here

Quick look from friendly google runs into one review that suggests this post is most likely by an agent trying to sell you something.  (No, really!  But you knew this already I suspect.)

http://www.cbsnews.com/news/bestselling-books-financial-promises-dont-add-up/

And of course, any investment which at its core relies upon an insurance company to continue surviving has counterparty risk involved, which at its core is the insurance company's successful management of its portfolio of stocks and bonds.

Insurance companies fail.  When they make bad investments, they get shut down - or bail-outs happen.

http://www.actuaries.asn.au/Library/Events/SUM/2013/Sum2013PaperAndrew%20Brown%20Bimal%20Balasingham.pdf

If your insurance company has investments that do poorly (lets say it writes a bunch of credit default swaps on something that goes bad) - oops, no policy.  Beyond AIG, four insurance companies required bailouts during the GFC in 2009: Prudential, Principal Life, Hartford, and Lincoln.

There is no secret sauce.  Insurance is just a promise, like a bank deposit, a brokerage account, or a mutual fund at Vanguard.

But of course you knew that.

thebrewer's picture
thebrewer
Status: Silver Member (Offline)
Joined: Nov 7 2012
Posts: 110
Many mixed emotions...
aggrivated wrote:

Sitting on your cash is like sleeping on an air mattress with a hole in it. Spend some of it on those things that will make your future better or cheaper. 

I can relate to that line!

Although I have done things to secure my family's future like buying PM's, diverting extra cash towards my mortgage, started raising chickens and goats as well as expanding my garden, I too have felt some angst about missing the boat.

Although I believe a significant market collapse is eminent, I felt compelled to put a little back in the market about 3 months ago. All my market investments are tied up in a 401k, and since I can't get it out to invest in tangible assets, I've had it sitting in a cash account for over 3 years. We have not contributed to it since  my wife's company stopped matching so it has grown very little over 3 years at 1.25%. Three months ago I rolled the dice and put a third of it back in and have seen that investment choice grow by 10%! It shocks how almost everyday, without fail it goes up.

I plan to move it all back to cash right before the mid terms elections, and because the downside to this is that I have a pit in my stomach everyday waiting for the hammer to fall. I hate living like this!

My wife and I talk everyday about her leaving her job just so we can move her 401k to tangible assets. Someday's it seems like a good idea and others it seems foolish, but going back to the original quote from above, how much sense does it make to watch your cash wither away like that air mattress with a hole in it?

Stabu's picture
Stabu
Status: Silver Member (Offline)
Joined: Nov 7 2011
Posts: 110
Moving 401k Assets
thebrewer wrote:

My wife and I talk everyday about her leaving her job just so we can move her 401k to tangible assets. Someday's it seems like a good idea and others it seems foolish, but going back to the original quote from above, how much sense does it make to watch your cash wither away like that air mattress with a hole in it?

I just wanted to let you know really quickly, that there are ways to legally withdrawn 401k assets (at least some of them), without quitting your job. Some employees (such as mine) have are willing to "let you go and hire you back" if you explain to them that you need to do this because of your 401k assets. Better not make any drastic choices without considering all the available options.

 

Wendy S. Delmater's picture
Wendy S. Delmater
Status: Diamond Member (Offline)
Joined: Dec 13 2009
Posts: 1988
ROI for non-traditional" investments.
aggrivated wrote:

Sitting on your cash is like sleeping on an air mattress with a hole in it. Spend some of it on those things that will make your future better or cheaper.

Exactly, sir, exactly. I've said this before, but for the benefit of the new people on the site, I give you our list of our "non-traditional" investments, now with return-on-investment (ROI) numbers, thus far. We've "invested "in personal Energy, Food, Fresh water rights, and other tangibles.

  • Energy: savings. A $200 investment installing Eco-Foil reflective insulation to our roof joists lowered our air conditioning bill by $30 a month. In three years this has returned us $1,080 gross, or $880 net. And it made our attic useable storage space. (Those in cold climates  should attach it to the ceiling joists, to keep heat in.) We continue to save $30 a month. Think of it as an annuity paying out.
  • Utility and Energy savings: Four years ago we replaced a leaking solar hot water tank, investing $180. It saves us $10 a month on our water bill: Gross ROI $480; net $300. Add the ongoing $10 a month savings to that "annuity."
  • Energy: creation. Four years ago we made $5,000 investment in an airtight wood-burning stove: this included the stove and flue, chimney brushes, trailer for hauling (free) wood, and a light and heavy-duty chain saw. We save about $1,000 a year on heating, so we will make our break-even point this winter. After that, we will have an ROI of at least $1,000 a year. Awesome.
  • Energy: savings. Three years ago we traded HVAC repair expertise for a newish used refrigerator, one with substantially more insulation. We've saved $30 a month on our electric bill: $1080 so far and that part of the "annuity" keeps on saving us $30/mo.
  • Food: kitchen garden and edible landscaping. Where do I start? I think the initial investment in building raised beds, soil additives and compost, trellises, canning supplies and canner, food drying rack, seeds, and perennials was $1,000, five years ago. We grow more and more of our own food, as the price of store-bought food continues to rocket higher. And we can or dehydrate our own fruits and vegetables. This year the asparagus bed matured to where we could harvest it. We've mastered how to grow numerous fruit trees, bushes and vines - plus  seed-saving and annual vegetables and herbs. I am especially thrilled that we are getting good at growing legumes and increasing the starches we can provide. Our grocery bill is now, on average $50 less a week despite inflation, and it keeps on shrinking as more of our "investment" flora reach maturity. That's at least $2,600 a year gross in our pockets from here on in, and expansions/maintenance only run us about $100 a year. So we covered our initial costs after four years and now it;'s a rapid "growth" (pun intended) investment. The net ROI numbers look like this: Year one, -$1K; year two -$800; year three -$400, year four +$200; year five projected to be +$2,600.
  • Water. For a one-time cost of $3,000 a well was not an inexpensive investment, but we could not grow food in this climate without it. We also plan to invest in hooking up the house to the well, which will save us a net $400 a year.

All of these are low-risk, tax-free investments.

There are many smaller "investments" we have made - things like insulating shades with heat-trapping box valances and side curtains, window screens and screen doors  for ventilation, learning new skills (besides gardening and canning, we've learned how to get/cut/store firewood), and investments in getting to know and building relationships with our neighbors.

The biggest dividend is peace of mind.

treebeard's picture
treebeard
Status: Platinum Member (Offline)
Joined: Apr 18 2010
Posts: 627
Traditional Investments

Ultimately we are after impact. If we spend 99% of our efforts on educating people on the facts of energy depletion, yet nothing happens, perhaps it would be better to spend 50% of our efforts on education but 50% by example. For instance, researchers attempted to persuade young students not to litter either by teaching them about ecology and pollution or by telling them they were neat and tidy compared to other students -only the latter had a positive effect.(4) E.O Wilson suggests "A stiffer dose of biological realism is in order..The only way to make a conservation ethic work is to ground it in ultimately selfish reasoning. An essential component of this formula is the principle that people will conserve land and species fiercely if they forsee a material gain for themselves their kin or their tribe."All of our past environmental successes (DDT, Ozone depletion, unleaded gasoline, etc.) had some sort of smoking gun - an emotional trigger. The problem with climate change/peak oil, is when we do get the emotional trigger, it may be a gatling gun on full bore and all the benign mitigation possibilities will be superceded by immediate needs.

I look at this differently.  While the charade continues, we have a little more time to do all the hard work that needs to be done, each day is a gift (although it is a bit of a double edged sword, the longer this goes on the more damaged the planet and our psyches become).  Transforming our economy from a destructive and unsustainable one that we all know that it is, to something that is rational and sustainable will take a lot of the kind of "non-traditional" investments that Wendy mentioned.

Lets turn the tables around and make Wendy's non-traditional investments the standard, I think in a deeper sense they are the real traditional investments as she implies.  Lets call the "something for nothing" thugs and bandits on wall street the non-traditional investors. I personally have no desire to get in on the "action", let the markets (if you can call them that anymore) do what they will.  I would rather be able to sleep at night with no blood on my hands then have a few more coins in the bank.

And if we can't expand our definition of "tribe" from the conclusion of Arthur's link to include all of humanity and this magical planet that ultimately sustains us, then all is for naught.  The universe will restart this microscopic part of the experiment in consciousness on planet earth over again without us.

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