Personal Investments • 100% in stocks. 15 years to retirement. Too risky?

Here’s a quote From Taylor Larimore when someone asked can you really know your AA until you’ve hit a bear market.

“I think it is impossible to know our risk tolerance until we have experienced a bad (and lengthy) bear market. For this reason, I think nearly every new investor should have 20%-50% in bonds.

This is my earlier post on the subject:
Hi Bogleheads:

Our family owned "Larimore's Diner" in Foxboro, Mass. in 1929. When the depression hit, my parents lost the Diner and we moved to Miami into one of my grandfather's empty homes.

My Grandfather, Christopher F. Coombs, was one of the three principals of American Founders Group, the largest investment trust in the roaring 20s. He lost nearly everything (approximately $50M)--including the Miami home we lived in (next door to where I live today).

These figures show what REAL bear markets are like:

BEAR MARKET OF 1929-1937 (Dow plunged 89%)

-1929--1930--1931--1932
(-31%)(-25%)(-43%)(-08%) Large Cap Stocks
(-34%)(-35%)(-47%)(-06%) Mid/Small Cap Stocks
(-47%)(-38%)(-50%)(-05%) Micro Cap Stocks

(+04%)(+07%)(-02%)(+09%) 5-Year Treasury Bonds

BEAR MARKET OF 1973-1976 (S&P fell 43%)
-1973--1974
(-15%)(-26%) Large Caps
(-39%)(-29%) Micro Caps

(-70%) Coca-Cola
(-82%) Intel
(-73%) McDonald's
(-86%) Merrill Lynch
(-86%) Walt Disney
(-71%) Xerox

Figures cannot convey the horrifying and debilitating effects of a deep and long bear market. You watch in agony as month after month your life savings evaporate before your eyes. Gloom and doom articles are in the media, radio, (and now TV and internet). Nearly everyone else is selling. You have no idea when, or if, your portfolio will stop losing money.

Your friends and relatives urge you to sell. Nearly all financial experts recommend "sell". You are ridiculed for trying to hold on. You begin to have self-doubt. Dispair sets in. Buying stocks is unthinkable. Suicide's increase.

That's what a bad bear market is like.
Best wishes.
Taylor”

Here’s a link to the thread: viewtopic.php?t=162147

Here is a graphical illustration of your point. Thank you for reminding me of it.

Image may be NSFW.
Clik here to view.
http://ritholtz.com/2018/08/us-bear-bul ... since-1926

Statistics: Posted by Firemenot — Fri May 31, 2024 7:33 pm — Replies 181 — Views 14557