Any portfolio that is 100% equities or even greater than 80% is not considered conservative.
Bears and DM
- Thread starter Aclone
- Start date
Yes. It all depends on your source for the definition. But, again, you sound like a broker.
The source is me. Anyone that has studied modern portfolio theory would never say a portfolio of 100% equities is conservative. Can there be a portfolio of "conservative equities?" Yes, but that does not mean it is a conservative portfolio
chiming in briefly. I am an investment professional. With the market performance we have experienced over the past 10 years (S&P up 16% on average per year), we are very likely to be entering a much lower average return stream in the near future. The last 10 years were a huge anomaly, as US equity markets have averaged approximately 9% per year since the Great Depression. If you remove the last 10 extraordinary years, it is 8%'ish. Our expectations for just the US equity portion of a portfolio is 5-6% per year on average over the next 5-10 years. If you then diversify some of these holdings into bonds, the portfolio return drops further on average.
You also need to factor in inflation, taxes, fees, etc to get your net return rate on the portfolio. Remember, any income is taxed from a portfolio (dividends, coupons), and any gains realized are also taxed. I'm not saying anyone's assumptions made here are wrong, as anything can happen, but there are many factors that go into a 'set for life' analysis. In DM's case, age would certainly also play into it. To be conservative, expect someone to live to 100. In DM's case that is 76 more years. I would argue that $2M would hardly be sufficient for any family over a 76 year timeframe - especially once kids, etc are factored in.
You also need to factor in inflation, taxes, fees, etc to get your net return rate on the portfolio. Remember, any income is taxed from a portfolio (dividends, coupons), and any gains realized are also taxed. I'm not saying anyone's assumptions made here are wrong, as anything can happen, but there are many factors that go into a 'set for life' analysis. In DM's case, age would certainly also play into it. To be conservative, expect someone to live to 100. In DM's case that is 76 more years. I would argue that $2M would hardly be sufficient for any family over a 76 year timeframe - especially once kids, etc are factored in.
I don't need to do much math on any example that shows $2 million in wages and a $2 million lump sum to be invested. For a $2 million lump sum to be invested you would need approximately $4 million plus to be paid after deducting taxes and living expenses.
Wow. Let's just say I won't have you managing my money. And let's just leave it at that. Ok?
So you expect him to put every penny of the $2 million in the bank? Yeah that's realistic.
Your previous post which was ...
Mr.G.Spot said:
Yes, I saw that post. He/she is correct.
Also, cherry picking the 70's is downright foolish which I'm guessing is the point you were making.
May I ask an honest question: are you invested in what you are preaching? And if DM's contract allowed for a distribution of $10k (arbitrary, but very comfortable living allowance) / mth for 15 years, how would go about investing it?
Different topic. As a generalized statement, u are correct. However, you couldn't be more wrong on this topic.
Everything you've said is true. And yet shorts are still not a sure bet. Also, as I pointed out 'gains to be realized' are made on a need be basis leaving principle to compound and portfolio to be flexible by offsetting losses. Also, the premise of 'family', I admit that was a lack of foresight in probability. And, finally, another lack of foresight is the Jones theory. Quite simply what we 'need' to be set for life is substantially lower than what we're convinced to spend.
Since I don't do that for a living that is ok with me. Anytime, u want to compare returns and portfolio amounts, let me know thru direct messages.
Ok. We'll just agree to disagree. But if someone gave me $2 mil when I was 25, I'd be set for life times 1000. No kidding. And though TheHelgo provided some great historical and probability information, I still feel the same if it were given to me.
Also, despite our disagreement, I have garnered some respect for your perspective. Where do you think venture capital is going?
What is your definition of a "distribution" in his contract?
Why is the 70's example foolish? Using bad years is foolish? Why do u think this is foolish?
My investments: stocks, munis, corporates, preferreds, ETFs, private equity and hedge funds.
A lot of good points here. I think while the $2mm is the discussion point it is not actually what DM has currently or will receive in the next few years and if he plays enough years in the NFL he will receive a pension as well - correct? DM will be fine as long as he has a competent advisor. On these kind of discussions it seems everyone focuses on income generation but the other side is spending which is completely controllable.
VC - angel, proven revenue with no profit or barely profitable?
I generally stay away from all of these. I have done these before, but in my mind, I write off when I make them.
I'm confused by the bolded part. Any link from gold was shattered back in the very early 70s, but you say you have been investing since the 80s, so that would have happened quite a bit before you hand had time to work through by then.
Nagy was enamoured with having a WR run the ball - and having him run a sweep in head scratching situations like when their RB could get them the yard they needed to move the chains on 3rd down. No gain, punt.
