Is the stock market over heating?

A_Flock_Of_Sheep

mystic_trev wrote: »

Your sheepdogs got ticks

I know. He's in the doghouse.

cepheus

By attempting to predict the future from available data of successful stock-markets you may be introducing black swan and survivability biases. Any assumption that the stock market will continue to rise indefinitely, particularly any local one, is surely flawed along with all the methods used to profit from it. Such strategies are based on faith and hope. They may work long enough of course, but even this isn't guaranteed.

Glen_Clark

gadgetmind wrote: »

Or mathematics including Monte Carlo analysis.

http://www.firecalc.com/

Even if you'd invested the whole lot just before the Great Depression, or the Dot Com crash, then 4% is very safe and even up to 5% still in the 90%+ success bracket.

Well I had a look. Like all these things it seems to say 'past performance is no guide to the future' Then it goes on to quote past performance as a guide to the future.....
But, more importantly, it doesn't tell you how long you are going to live. As far as I can see, only an annuity can take that into account - (by subsidizing those who live a long time with the funds of those who don't)

gadgetmind

Glen_Clark wrote: »

Well I had a look. Like all these things it seems to say 'past performance is no guide to the future' Then it goes on to quote past performance as a guide to the future.....

The recent past may not be a good guide to the near future, but taking a wider view does show how asset classes work together over multi-decade periods.

But, more importantly, it doesn't tell you how long you are going to live.

Yes, unforgivable.

As far as I can see, only an annuity can take that into account - (by subsidizing those who live a long time with the funds of those who don't)

Fine, buy yourself an annuity. After all, history tells us that these are 100% reliable.

But make sure you don't go for a level annuity if you expect to live a long time, and you might also want to get joint life. What income per £100k does that get you at age 55?

Thrugelmir

Glen_Clark wrote: »

(by subsidizing those who live a long time with the funds of those who don't)

Like any form of insurance. Pooled risk provides a guaranteed return.

Once in retirement, the risk of capital loss by holding a large portfolio of equities would be my concern.

gadgetmind

Thrugelmir wrote: »

Once in retirement, the risk of capital loss by holding a large portfolio of equities would be my concern.

Only if you're a forced seller.

Of course, you might well want to reduce your chosen annual drawdown if/when such a capital loss occurs via belt-tightening, and firecalc allows you to introduce some of the more common approaches to this.

However, those with larger pots, and who understand asset allocation over the long-term, can afford to just ride out the volatility.

Sanchsoot49

A_Flock_Of_Sheep wrote: »

I know. He's in the doghouse.

Get him some Bob Martins Flock

Have you been watching the markets today ... whats your stategy now? Still hoping for the tank this week?

Glen_Clark

gadgetmind wrote: »

What income per £100k does that get you at age 55?

a low but guaranteed one for the rest of your life

gadgetmind

Glen_Clark wrote: »

a low but guaranteed one for the rest of your life

Not quite as many decimal places there as I was expecting!

Can you really not see a role for drawdown for experienced investors and/or those with larger pots and/or those who retire early?

I'm sure I'll buy an annuity at some time (well before gagatime!) and perhaps even to let me use flexible drawdown, but going 100% for one at an early age makes very little sense other than for the most timind and/or under-informed.

jabba42

http://www.investing.com/news/stock-market-news/asia-stocks-fall-after-china-pmi;-nikkei-plunges-3.7-to-hit-6-week-low-248542

uring late Asian trade, Hong Kong's Hang Seng Index was down 0.1%, Australia’s ASX/200 Index ended 0.8% lower, while Japan’s Nikkei 225 Index plunged 3.7%.