THREAD CLOSED!!! Ask Rande 5000+: USE NEW THREAD

Top 82. Mar 26, 2000 3:56 PM

» Rande - cfb,

cfb,

Thanks for making the effort to find your way here -- it's greatly appreciated. Thanks also for the kind words. Never considered anything with regard to views on a prudent approach to investig as a competition. Having a passion for investing and personal finance, I do take communicating what I believe is the most prudent approach seriously. BUT, I like to have fun too. For some, the notion that market timing doesn't work failed to be much "fun." Can't help that, but we sure can continue to share serious ideas right here AND have fun at the same time -- even when we disagree. Thanks again, cfb, and hope you stick around.

-- posted by Rande

Top 83. Mar 26, 2000 4:15 PM

» cfb - Getting back in

Rande,

Will be most pleased to stick around and will now ask for your thoughts on how to reenter the market. When BB went to 60/40 I was fully invested in the market. Since all in tax deferred accounts and with a money manager who I no longer felt comfortable with I withdrew everything. This took me about two weeks to accomplish. By that time the Dow and S&P had taken a dive so I did not go back in. Felt very smug and figured Dow and S&P would go much lower. Never for a moment did I believe Nasdag would continure to surge. Quite frankly now that Nasdaq so far up and S&P setting new record and Dow over 11,000 am really sitting on the fence. Was thinking of DCA over 12 months the entire amount and/or "buying on the Dip" but who knows when or if will be a "Dip".

Your thoughts would be appreciated

-- posted by cfb

Top 84. Mar 26, 2000 5:20 PM

» AL_W - Rande....additional tax consequnce of following a sell signal

Rande.....

I doing my taxes, I realized how close I was getting to the phase-out threshold for the Hope and LifeTime Scholarship Tax credits.

If I had gone to 60% cash in the taxable account, which has a cost basis of about 50% of its current value, I would have had so much capital gain, that I would have lost the entire $1000 dollar credit I am planning on taking in 2000.

Add one more tax consqunce item watch for when one choses the path of a MT'er.

I haven't seen any discussion of this, and I am glad I did not trap myself in Jan.

-- posted by AL_W

12 Rules for the New Economy

Top 85. Mar 26, 2000 5:33 PM

» Rande - Here's a great piece referred by our good friend Tara:

Here's a great piece referred by our good friend Tara:

-- posted by Rande

Top 86. Mar 26, 2000 6:12 PM

» Rande - cfb,

cfb,

We've talked about this, and it's a difficult decision at best. The choices are pretty clear:

1. Wait and hope the market goes down enough to warrant a "buying opportunity."
2. Begin to DCA back in now and if there is a downturn use the "opportunity" to lump the rest in. If there is no downturn, at least you're in.
3. Lump back in now. If the market goes up, you'll be better off vs. number 1 or number 2. If the market goes down, you would have been better off with number 1 or number 2.

Tough call. It doesn't help for me to say investors shouldn't be in this position to begin with -- it's understandable and inevitable that we all make emotional decisions we later regret. The good news is that it's all part of the learning process. We've all been there. So, what would I do? At this point, I'd DCA. Has to hurt with the S&P up so much recently and the Dow down around 9800 just a week and a half ago, but what else can you do? Timing depends a lot on luck. But, if you DCA you may yet get lucky with another downturn along the way. On the other hand, if no significant downturn occurs at least you'll be in up to whatever your appropriate allocation should have been all along. Who knows? The future is unpredictable, but given a long enough time horizon I continue to believe that business owners will continue to lead the pack in terms of capital accumualation. Best way to do that, outside of starting your own, is through diversified equity ownership. Good luck!

-- posted by Rande

Top 87. Mar 26, 2000 6:22 PM

» Rande - Al,

Al,

So true! There is a real "stealth tax" out there, the bulk of which has been implemented during the current Administration's watch (1993 tax act) that impacts much of the two-earner middle class. Phase out of the goodies -- deductible IRA deductions, eligibility for Roth IRA, certain credits and other benefits, phase out of itemized deductions, etc. -- raises the marginal tax hit to a higher rate than the published tables, depending on where you fall.

These days, knowing your marginal tax bracket is not enough for truly efficient personal financial planning. Of course, you should also know "how deep" you are into the bracket, but you must also be aware of the impact of AGI (adjusted gross income) on the numerous credits and deductions that would otherwise be available. Impossible to do without help. For those with truly complex situations or high income/net worth situations, a qualified CPA is in order (my bias showing -- one with a CFP and/or PFS credential is even better).

For most of us, a good tax software program such as TurboTax can be a great way to project various scenarios and do a number of "what if" analyses to see the impact various decisions might have on an after-tax basis. We always say, "Don't let the tax tail wag the investment dog." But, taxes are real and permanent. Provided the investment decision makes sense, why not implement it in the most tax efficient manner possible? Knowledge is power.

Thanks for the good observation.

-- posted by Rande

Top 88. Mar 26, 2000 8:06 PM

» cfb - getting back in

Rande,
Good advice. Basically feel the same way. No point in compounding my original mistake.
Have my own business with a worth of approx $400,000 and has an excellent cash flow to take care of mine and my family needs for the forseeable future.
Since live in SF Bay Area have a large equity in my home.
Also have large credit line for both business and personal but no debt
Based on that feel should take most of my other monies(all tax deferred) and put into market at 80% with balance of 20% in short term bonds.
What is your opinion of this thinking?

Many thanks!

Cfb

-- posted by cfb

Top 89. Mar 26, 2000 8:24 PM

» JenL_2 - Tara....

....Thanks for the link to the article in Wired. Even though the article was written in Sept. 1997, the author really seems to understand, and is able to foresee the future of the Net Economy.

BTW - Hope you got your Suite 101 login problem solved. Email me again if you still need help....Jen

-- posted by JenL_2

Top 90. Mar 27, 2000 5:49 AM

» Rande - cfb,

cfb,

If, aside from your investment portfolio, you have good, reliable cash flow and more than adequate liquidity for ongoing needs and expenses, that certainly makes it easier to focus on the longer term. If you have a long enough time horizon and the ability (risk tolerance and liquidity) to withstand periods of market adversity, an allocation of 80% equities could make sense for you. It's an individual facts and circumstances issue, and everyone's different. The important thing, it seems to me, is to develop a plan and stick to it. As a successfull business owner, you are in a good position to appreciate the importance of planning and discipline and the rewards that can come with time from taking prudent risks.

Discipline is key. We know, from history, discipline is difficult in a period of market adversity (people are inclined to bail out when things look their worst), but we've also seen how discipline can be difficult even in an ongoing bull market. It's the old greed/fear conundrum. Having an appropriate long-term, strategic allocation that makes sense -- and sticking with it -- is the answer. You can always keep a small portion on the side to "play" with, but the bulk of the portfolio should be considered "serious" money and should be viewed as inviolate no matter what the emotion of the day might be.

-- posted by Rande