Bear Market Coming?

It obviously depends on your time frame.  When you look at the short term chart, I would agree, it doesn't look great, probably trading in a range from 12,000 to 13,500.  It brings the old saying "Sell and go away in May" to life as we hit the summer doldrums.  Long term charts show the markets just starting to break out, new all time highs (except for the sh*tty Nasdaq right now)...could still continue to run another few thousand points (18,000?) before any significant pullback.  Lately I've been bullish on gold and copper and other metals and mining plays, could see a run before too long.  I'm really hoping techs and biotechs will take off though, I feel I've made some great bets there...but don't see it in the short term. 

As far as feeling that you should be more conservative and balanced, it's probably wise for the majority of clients out there.  That being said, the recent trading action has allowed for some discounted deals to be found.

Overall, right now I believe this market is piss poor and leaving many a little queezy.

Just my own personal thoughts. 

Worth talking about.

I'm taking the view that a lot of analysts think stocks could do 8% this year. How much (more) risk do you want to take to get 8%?

We're coming off a nice run in the market, and bonds will be okay in the long run. Retirees should trim back to 40% stocks (maybe that's all they ever have, but it can be increased at times). A lot of clients have 50-50 right now, more growth oriented still has 60-40 in favor of stocks.

Asset allocation is cool, but you need to add a factor for nearer term market expectations. Large cap looks better now than small cap, international is important, well managed tax exempt muni bond funds are always a good idea.

Great stuff to continually touch clients with, if just to let them know you are thinking about them.

We have had a nice run, economic cycles still exist, and you can't get burned too badly if you never give up on stocks, or don't have too many.

The risk reward relationship between balanced portfolio and all stocks is exponential for risk and less or linear for reward. Allreit can probably explain that better than me.

Hey I appreciate the response. 

Something I've been battling with, Can a chart on an index be as valid or as good as a tool as a chart on an individual security? 

At any rate, this market is ridiculous & tough to trade in my opinion.  I mean, if this thing sells off these financials are going to be a steal.

Its like this.

Real Estate stocks are DRAGGING

Bonds have been CLOBBERED  (good bargain?)

Oil Stocks LOOk extremely extended - but have P/Es of 10?

Banks & Financials - P/Es of 10 too, but nobody likes them!

Consumer Staples - Most have PEG ratios of 2

Technology - About to take off?

Consumer Discretionary - Credit Card spending keeping it going.

Where are we at?  wheres the next Bull Market?

We’re probably in a secular bear market still and will be for a while. Bullsht, Bobby, you may say!!! Here’s some information for you…if you take the average up year in a bear market and compare it to the average up year in a bull market, the bear market is higher. That’s why I love VA’s so much. They address all 3 possibilities of market direction. Most of you dumbshts position your clients for the market going in one direction - higher.

Bobby,

Can you expand on that?  How the average up year in a bear market is high than the average up year is in a bull market?

And also, if the market is inevitably going higher and it's going to be too tough to catch the quick shifts, doesn't it make sense and simplicity to put together a well balanced growth portfolio and stick to it?

[quote=FreeLunch]

Bobby,

Can you expand on that?  How the average up year in a bear market is high than the average up year is in a bull market?

And also, if the market is inevitably going higher and it's going to be too tough to catch the quick shifts, doesn't it make sense and simplicity to put together a well balanced growth portfolio and stick to it?

[/quote]

How can I expand on a fact? The data is out there. Go look it up. The UIT's that I've been using employ strategies that screen out weak companies. In 2002, when the S&P was down 22% and the average investor was down 40%, the strategy was down about 12%. Clearly, I don't believe in a "well balanced growth portfolio." This is also why EIA are so attractive.

[quote=FreeLunch]

I was just wondering what some of you thought.

Now I know that we're not in the business of timing the market, but we're sure as hell more likely to make a good call than 99% of people.

[quote=GolFA]

Worth talking about.

I'm taking the view that a lot of analysts think stocks could do 8% this year. How much (more) risk do you want to take to get 8%? [/quote]

If the analysts knew that stocks would do 8%, why are they not trading SPX futures instead of writing predictions about the SPX?

[quote]Asset allocation is cool, but you need to add a factor for nearer term market expectations. Large cap looks better now than small cap, international is important, well managed tax exempt muni bond funds are always a good idea.

Great stuff to continually touch clients with, if just to let them know you are thinking about them.[/quote]

Do you mail clients their horoscopes?

[quote]The risk reward relationship between balanced portfolio and all stocks is exponential for risk and less or linear for reward. Allreit can probably explain that better than me.[/quote]

I am a big fan of sentiment (Hulbert/Newsletters & Burke/Individual Investors) and am trying to gauge bullishness. Right now we have a divergence between Hulbert and Burke as Hulbert is more bullish and Burke is defensive.

A correction sometime this summer would probably be healthy longer term. I would prefer to see a long sideways correction as opposed to the straight drop and flush... unless I was holding puts or inverse ETF's, then I wouldn't mind the quick money. 

Hey guys,
I don’t post much here, but was a broker myself and now full-time futures trader. It’s enlightening to see a post about the bullish vs. bearish feelings on a broker’s board. I spend some time at elitetrader.com (traders message board) and every other week there’s a new guy calling a top… as the market continues up.

I have a question though - what are you guys hearing from clients? Are they pouring money into funds, VA’s, stocks, etc? Or are they hesitant b/c of the nice bullish push we’ve had? Having been out of the field for about 2 years now, it’s hard to gauge what the ‘dumb money’ out there is doing and who better to ask then the guys talking to these people everyday, right?

I got a good feel from some posts in this thread about what some brokers are feeling, but what are your clients and prospects saying now?

Thanks!

[quote=futurestrader]Hey guys,
I don't post much here, but was a broker myself and now full-time futures trader. It's enlightening to see a post about the bullish vs. bearish feelings on a broker's board. I spend some time at elitetrader.com (traders message board) and every other week there's a new guy calling a top... as the market continues up.

I have a question though - what are you guys hearing from clients? Are they pouring money into funds, VA's, stocks, etc? Or are they hesitant b/c of the nice bullish push we've had? Having been out of the field for about 2 years now, it's hard to gauge what the 'dumb money' out there is doing and who better to ask then the guys talking to these people everyday, right?

I got a good feel from some posts in this thread about what some brokers are feeling, but what are your clients and prospects saying now?

Thanks!
[/quote]

VA's, EIA's, DPP's, anything outside of the stock/bond markets.

[quote=AllREIT] [quote=GolFA]

Worth talking about.

I'm taking the view that a lot of analysts think stocks could do 8% this year. How much (more) risk do you want to take to get 8%? [/quote]

If the analysts knew that stocks would do 8%, why are they not trading SPX futures instead of writing predictions about the SPX?

[quote]Asset allocation is cool, but you need to add a factor for nearer term market expectations. Large cap looks better now than small cap, international is important, well managed tax exempt muni bond funds are always a good idea.

Great stuff to continually touch clients with, if just to let them know you are thinking about them.[/quote]

Do you mail clients their horoscopes?

[quote]The risk reward relationship between balanced portfolio and all stocks is exponential for risk and less or linear for reward. Allreit can probably explain that better than me.[/quote]

I'll explain something much simpler, you are mouthing off platitudes and cliche's from your firm's daily/weekly/monthly market and strategy letter.

[/quote]

When did you start getting so uppity, anyway? I think for myself, not that I said anything amazing. How many down markets have you been through with your clients money. It is one thing to bring up some new points, and another to attack someone you don't know. I've been around the block, Allreit, as in decades,  and I notice you got snitty over the past six months.

[quote=Bobby Hull]

[quote=futurestrader]Hey guys,
I don’t post much here, but was a broker myself and now full-time futures trader. It’s enlightening to see a post about the bullish vs. bearish feelings on a broker’s board. I spend some time at elitetrader.com (traders message board) and every other week there’s a new guy calling a top… as the market continues up.

I have a question though - what are you guys hearing from clients? Are they pouring money into funds, VA’s, stocks, etc? Or are they hesitant b/c of the nice bullish push we’ve had? Having been out of the field for about 2 years now, it’s hard to gauge what the ‘dumb money’ out there is doing and who better to ask then the guys talking to these people everyday, right?

I got a good feel from some posts in this thread about what some brokers are feeling, but what are your clients and prospects saying now?

Thanks!
[/quote]

VA's, EIA's, DPP's, anything outside of the stock/bond markets.

There's a bad moon a' rising.

[quote=futurestrader] [quote=Bobby Hull]

[quote=futurestrader]Hey guys,
I don't post much here, but was a broker myself and now full-time futures trader. It's enlightening to see a post about the bullish vs. bearish feelings on a broker's board. I spend some time at elitetrader.com (traders message board) and every other week there's a new guy calling a top... as the market continues up.

I have a question though - what are you guys hearing from clients? Are they pouring money into funds, VA's, stocks, etc? Or are they hesitant b/c of the nice bullish push we've had? Having been out of the field for about 2 years now, it's hard to gauge what the 'dumb money' out there is doing and who better to ask then the guys talking to these people everyday, right?

I got a good feel from some posts in this thread about what some brokers are feeling, but what are your clients and prospects saying now?

Thanks!
[/quote]

VA's, EIA's, DPP's, anything outside of the stock/bond markets.

[/quote]

And why do you think that is?
[/quote]

Don't know, don't care. I just sell them what they want to buy.

[quote=Bobby Hull][quote=futurestrader] [quote=Bobby Hull]

[quote=futurestrader]Hey guys,
I don't post much here, but was a broker myself and now full-time futures trader. It's enlightening to see a post about the bullish vs. bearish feelings on a broker's board. I spend some time at elitetrader.com (traders message board) and every other week there's a new guy calling a top... as the market continues up.

I have a question though - what are you guys hearing from clients? Are they pouring money into funds, VA's, stocks, etc? Or are they hesitant b/c of the nice bullish push we've had? Having been out of the field for about 2 years now, it's hard to gauge what the 'dumb money' out there is doing and who better to ask then the guys talking to these people everyday, right?

I got a good feel from some posts in this thread about what some brokers are feeling, but what are your clients and prospects saying now?

Thanks!
[/quote]

VA's, EIA's, DPP's, anything outside of the stock/bond markets.

[/quote]

And why do you think that is?
[/quote]

Don't know, don't care. I just sell them what they want to buy.

[quote=futurestrader]

And why do you think that is?
[/quote]



The high sales comissions. (rimshot!)



Bobby is our resident annuity shark/troll.

[quote=GolFA]

[quote]The risk reward relationship between balanced portfolio and all stocks is exponential for risk and less or linear for reward. Allreit can probably explain that better than me.[/quote]

I'll explain something much simpler, you are mouthing off platitudes and cliche's from your firm's daily/weekly/monthly market and strategy letter.

[/quote]

When did you start getting so uppity, anyway? I think for myself, not that I said anything amazing. How many down markets have you been through with your clients money. It is one thing to bring up some new points, and another to attack someone you don't know. I've been around the block, Allreit, as in decades,  and I notice you got snitty over the past six months.

IMHO the best policy is to be agnostic, and stick your Asset Allocation/Investment Disicipline regardless of what you think about future market conditions.

We can agree on that, but a little tactical asset allocation may be prudent now, just common sense given the market cycle. You've gotten more didactic and it feels patronizing, just my feedback to you personally, because I have admired your thinking here. Don't assume you are cutting any particularly new ground here, if you know what I mean.

ALLREIT

those are the some BLAND and Negative posts.

You honestly think it is impossible for us to understand market strategy and market conditions?  Why would I come on here and post what is on my market letter? 

If I relied on the market strategies of my firm, I would SUCK b/c my firm can't make a profitable trade to save their ass.

It sounds like you've given up on the game.  I'm sorry.

However, you're criticism has no value, as your responses weren't anywhere close to adding to the educational conversation we were having.  If you want to provide a good answer, go ahead.  But we weren't looking for someone who HAS NO idea who we are or what we know to tell us we don't know anything.  

Now I know that we're not in the business of timing the market, but we're sure as hell more likely to make a good call than 99% of people.

I see absolutely no reason why this would be true.   We have no special training that will allow us to time the market any better than a mechanic.

[quote=FreeLunch]

But when I like at a weekly/monthly chart on the S&P - It looks scary.

I'm not trying to call a top, I'm just curious what some of you guys think about the next 6months to a year...

[/quote]

Anonymous

YOU see absolutely no reason why it would be true for you.  Because YOU have no special training to time the market like a mechanic.

Let me make this clear - I AM NOT trying to time the market.  I am trying to determine a risk/reward ratio for UPSIDE/DOWNSIDE in the next 6 months to a year.

If you have no opinion on this topic, other than an opinion on MY OPINION - Don't Post. 

This topic is not for people who have NO FAITH in their abilities to at LEAST try and make adequate guesses about whats coming in the future.  It's all a frieking guess anyway, as there are too many variables in the future that we don't even know about yet.

If what you are saying is true, then there is no one out there that can adequately make forecasts on the economy & the market.  For every bull theres a bear.  If it wasn't worth talking about - YOU WOULDN'T LISTEN

I have no special training to time the market.  What is your special training.  If I could time the market, I would not be earning money by being a financial advisor.  I would be on my yacht.

Call it what you want, but you are trying to time the market. 

I'll post when I want.

I'm not quite sure how you can have faith in your "adequate guesses".  Please explain how if it is a guess, you can let this have any influence on the advice that you give.  That doesn't sound too smart. 

For every bull theres a bear

That's not remotely close to being true.

I happen to be very good at predicting the market.  Every year, I predict that it will go up and down. 

[quote=FreeLunch]

For every bull theres a bear. 

[quote=FreeLunch]

Anonymous

YOU see absolutely no reason why it would be true for you. Because YOU have no special training to time the market like a mechanic.

Let me make this clear - I AM NOT trying to time the market. I am trying to determine a risk/reward ratio for UPSIDE/DOWNSIDE in the next 6 months to a year.

If you have no opinion on this topic, other than an opinion on MY OPINION - Don’t Post.

This topic is not for people who have NO FAITH in their abilities to at LEAST try and make adequate guesses about whats coming in the future. It’s all a frieking guess anyway, as there are too many variables in the future that we don’t even know about yet.

If what you are saying is true, then there is no one out there that can adequately make forecasts on the economy & the market. For every bull theres a bear. If it wasn’t worth talking about - YOU WOULDN’T LISTEN

[quote=FreeLunch]You honestly think it is impossible for us to
understand market strategy and market conditions?  Why would I
come on here and post what is on my market letter? 

If I relied on the market strategies of my firm, I would SUCK b/c my firm can't make a profitable trade to save their ass. [/quote]

And you can? If understoond your original question, you're working from the assuption that a profitable market strategy is possible.

[quote]

It sounds like you've given up on the game.  I'm sorry.

However, you're criticism has no value, as your responses weren't anywhere close to adding to the educational conversation we were having.  If you want to provide a good answer, go ahead.  But we weren't looking for someone who HAS NO idea who we are or what we know to tell us we don't know anything.  

You guys obviously have no insight.

Go back to my original question.   What do you guys look for in the next 6 months to a Year.

I apologize if you do not think it is a fun issue to talk about.

And yes I have seen a bear market.  I began my investing for my personal portfolio in 2001.  You do the math.  I have seen a bear market and I know the reasons why they occur.

Call me what you want, but you obviously have nothing valueable to add.  If you did, you wouldn't be so scared about making a post where other people might disagree with you.

That's the problem.  You guys are too Scared to even make an educated guess, b/c you don't want to be judged by the others on this post.  I am not trying to time the market, I'm trying to see what some of you think about where our market is right now.

It doesn't require specialized knowledge to have an opinion - I mean really.

Get a Grip - You have made more assumptions about me, but refuse to make assumptions about the markets.  Hypocritcal.

Managed Money

Thanks for your Investing 101. 

- My response that for every "Bull there's a bear"  is obviously wrong if you take it out of content.  My point is, Markets wouldn't be efficient if you didn't have people taking both sides of the fence.

[quote=AllREIT]

And you can? If understoond your original question, you’re working
from the assuption that a profitable market strategy is possible.

Telling you that you don’t know anything about the future could be the most valuable insight in this thread.

[quote]

[quote=FreeLunch]

Managed Money

Thanks for your Investing 101. 

- My response that for every "Bull there's a bear"  is obviously wrong if you take it out of content.  My point is, Markets wouldn't be efficient if you didn't have people taking both sides of the fence.

EXACTLY

Market's aren't efficient.  That is why every day, there is opportunity.  And that is why IT IS possible to take advantage of an inefficient marketplace.

It is possible to discover the next bull-market and it doesn't take a damn rocket-scientist.

None of you have said what you think yet.  Managed Money - Do you really think that none of the managers of your SMA account aren't looking AHEAD?  What do you think they are doing?  After all, equities do trade on FUTURE EARNINGS potential & if they didn't, Forward P/Es would not be a valuable tool at all?

Don't you think that The Consumer Staple stocks trading at 2X Forward earnings gives ANY INSIGHT at all? 

Do you really think there is nothing to take from that?

Go back to my original question.   What do you guys look for in the next 6 months to a Year

Using my cloudy crystal ball:  I think the market is going to go nowhere for a while, bouncing up and down in a moderate range. I don't believe that interest rates are going to be hiked by the Fed unless we see a lot more inflation or unless there is some dramatic change in the Mid East that affects oil.

As we get closer to the election and IF it appears that Hillary and the Dems are going to take control of the economy (God help us all) the market will drop precipitiously as people take their profits and captial gains before we get reamed by tax hikes and soclialized medical care.

That's a good point Dust Bunny.

Don't Vote for Hillary!

[quote=ManagedMoney]
Profitable trading strategies are not only
possible, they’re easy to construct, and you don’t have to know
anything about the future to trade profitably.

[/quote]

If this is so damn easy to do, why are slaving away as an FA?

Here's why I don't think we'll go much lower.

P/Es for Financials and Energy are AROUND 10

- How much Lower can THOSE sectors go?

P/Es for Consumer Staples are trading at around 2X growth rate

- They may not be able to go too much higher

Healthcare stocks haven't done much.  Baby Boomers, Baby Boomers, Baby Boomers..

Technology - I'm just not sure about this sector - I think it goes higher.

Industrial Sector - Still Low P/Es and global industrialization

Consumer Discretionary - The Consumer is not Dead.

I PERSONALLY THINK THE MARKET TIMES OUT - THEN GOES HIGHER.

However, I guess I'm going to have to throw out all the Charts

[quote=FreeLunch]

Here’s why I don’t think we’ll go much lower.

P/Es for Financials and Energy are AROUND 10

- How much Lower can THOSE sectors go?

That's a good point Joe.

I guess if the E and the FP/E shrink @ the same time that would be brutal.

But maybe 'ol Ben will start lowering rates and that'll balance things out?

[quote=joedabrkr]

[quote=FreeLunch]

Here’s why I don’t think we’ll go much lower.

P/Es for Financials and Energy are AROUND 10

- How much Lower can THOSE sectors go?

[quote=FreeLunch]

None of you have said what you think yet.  Managed Money - Do you really think that none of the managers of your SMA account aren’t looking AHEAD?  What do you think they are doing?  After all, equities do trade on FUTURE EARNINGS potential & if they didn’t, Forward P/Es would not be a valuable tool at all?

Don't you think that The Consumer Staple stocks trading at 2X Forward earnings gives ANY INSIGHT at all? 

Do you really think there is nothing to take from that?

[quote=AllREIT]

[quote=ManagedMoney]
Profitable trading strategies are not only
possible, they’re easy to construct, and you don’t have to know
anything about the future to trade profitably.

[/quote]

If this is so damn easy to do, why are slaving away as an FA?

Managed Money,

90% of my book is professionally managed too - if it wasn't, we'd both be pulling our hair out.

It's a tough market, and I can't find many "Value-looking technical charts" (if you know what I mean)

I've never been one Love buying into strength from a trader's perspective.  My thing is, that now, it looks like the "trendlines" of my favorite stocks are rolling over.

I surely don't want to overanalyze things, but I enjoy it & love it.  I just think the market needs to churn and consolidate for awhile...I guess.  It's a tough one

There are definitely some lessons to be taken from the late 90's and turn of the century, and it has to do with managing real money for real clients for the long run.

Just saying, " the only thing you can say for sure is that you can't predict the market " is what a lot of advisors were telling their clients in 2000, 2001, 2002 and so on.

I can assure you that if the market really gets hammered, even for a short period, and maybe due to geopolitical reasons, you will lose some points just sounding like a buy and hold parrot. Worse, you are in the business to try to help you clients not lose money, and there is an active allocation responsibility here -at least, experience suggests that a lot of the above comments may feel like intellectual  hooey if things really fall apart. Look, we all learned the basics in our CFP or finance classes, there is a behavioural aspect here.

Allreit, I question if you really manage money for clients, or have for long, because this question is as much about handling clients as it is about running money.

From a financial planning point of view, if you have a client who has enjoyed gains for the past six years or so, they have more money, are closer to being able to finance their goals, are closer to retirement, whatever. This fact alone can affect portfolio construction, versus the esoteric academic questions about market timing. I know from experience that a lot of advisors have not gone back and looked at portfolio construction from this point of view, along with a great economic recovery and the fact of life that economic cycles still exist, apparently.

The biggest thing I learned around 2000 is that in moving from 50% stocks and 50% bonds, or so, up to a higher percentage of stocks, there is an exponential increase in risk but not reward.

Has anyone here at all been trimming back to fixed positions a little, or am I crazy? My clients are plenty happy to capture two thirds of the S&P with half the risk (right now). We still have plenty of stocks to catch a rising market, but we can buy more if stocks take a plunge.

Some of this " tactical " allocation also happens inside some managed funds.

In handling client relationships, getting some input from clients helps to continuously define a clients risk profile - these are smaller adjustments, but the communication itself is educational and helps prepare us for all market conditions.

At least, it works for me.

Here's  a question: your client's money has nearly doubled since 9/11.

Your client is six years closer to retirement, closer to " being there " from a financial planning point of view.

In terms of the investment portfolio, is geopolitical risk more important, less important, or the same  in terms of portfolio construction ( after six years of a great economy ) - net of the portfolio withdrawal time frame consideration?

They said we were living in a new paradigm at the end of the 90s, but good old fundamentals along with things like style drift and portfolio concentration and terrorists who hate capitalism blew things up for a while. Is the world more or less complex now, and how important is thinking for yourself and your clients individual needs versus historical wisdom. 

Historical wisdom (Modern Portfolio Theory) is the core, and the " tactical" allocation is really alignment with client's finanical planning considerations, but there is definitely a market performance expectation. There is a danger of imparting too much of our own view, but with the client, the right amount is really another form of diversification.

Of course, each to his own, I'm not suggesting I have a monopoly on helping clients get there.

[quote=FreeLunch]

Managed Money,

90% of my book is professionally managed too - if it wasn't, we'd both be pulling our hair out.

It's a tough market, and I can't find many "Value-looking technical charts" (if you know what I mean)

I've never been one Love buying into strength from a trader's perspective.  My thing is, that now, it looks like the "trendlines" of my favorite stocks are rolling over.

I surely don't want to overanalyze things, but I enjoy it & love it.  I just think the market needs to churn and consolidate for awhile...I guess.  It's a tough one

[quote=AllREIT]

[quote=joedabrkr]

[quote=FreeLunch]

Here’s why I don’t think we’ll go much lower.

P/Es for Financials and Energy are AROUND 10

- How much Lower can THOSE sectors go?

[quote=FreeLunch]

Managed Money,

90% of my book is professionally managed too - if it wasn't, we'd both be pulling our hair out.

It's a tough market, and I can't find many "Value-looking technical charts" (if you know what I mean)

I've never been one Love buying into strength from a trader's perspective.  My thing is, that now, it looks like the "trendlines" of my favorite stocks are rolling over.

I surely don't want to overanalyze things, but I enjoy it & love it.  I just think the market needs to churn and consolidate for awhile...I guess.  It's a tough one

[/quote]

Wait a minute!!! You told me that YOU were a money manager. What's up with that?

FreeLunch - It sounds like you have this whole market thing figured out, so I’m not sure why you are even asking anything about it. With your experience and knowledge, we should be asking you what to do next. Thanks for all of YOUR insight.



OldP



PS - In all of your experience with market downturns, how many coworkers have you seen commit suicide? It isn’t a pretty thing to experience, but having seen it, you truly have seen bear markets. Good luck sharing your knowledge.

In all of your experience with market downturns, how many coworkers have you seen commit suicide? It isn't a pretty thing to experience, but having seen it, you truly have seen bear markets. Good luck sharing your knowledge.

Old, that's horrible. And there is plenty of mental suicide. How many of us could deal with waking up next week to having half a book to manage? Maybe it just becomes partly selfish self preservation at some point. We have had a great run.

[quote=GolFA]

Just saying, " the only thing you can say for sure is
that you can’t predict the market " is what a lot of advisors were
telling their clients in 2000, 2001, 2002 and so on.

I can assure you that if the market really gets hammered, even for a short period, and maybe due to geopolitical reasons, you will lose some points just sounding like a buy and hold parrot. Worse, you are in the business to try to help you clients not lose money, and there is an active allocation responsibility here -at least, experience suggests that a lot of the above comments may feel like intellectual  hooey if things really fall apart. Look, we all learned the basics in our CFP or finance classes, there is a behavioural aspect here.

Allreit, I question if you really manage money for clients, or have for long, because this question is as much about handling clients as it is about running money.

The only way to control the behavioral aspect is to educate and clients
yourself about it, and then like Jason chain yourself to the mast of
the ship.



But that is how passive investing works, and thats the right approach
for most clients. You focus on getting your fair share of the market’s
return, but do not worry about what that return is, because you have no
influence over it.

[quote=GolFA]

In all of your experience with market
downturns, how many coworkers have you seen commit suicide? It isn’t a
pretty thing to experience, but having seen it, you truly have seen
bear markets. Good luck sharing your knowledge.

Old, that's horrible. And there is plenty of mental suicide. How many of us could deal with waking up next week to having half a book to manage? Maybe it just becomes partly selfish self preservation at some point. We have had a great run.

Different strokes, my clients and I are in a different place now. No way are we risking a 50% portfolio reduction. The upside potential sounds nice, no way are we completely going for it.

I think you and I understand and agree on the basic concepts.

Some guys take all the money off the table and go to the beach for the summer, so they can enjoy their tuna boat. Others just fish off the back porch every day.  Instead of prospecting, I'll take the referrals from a smoother ride, serving mellow clients.

GOLFA

Those are some GREAT posts - VERY insightful and I think you made some fantastic points.

OldProducer - You remind me of "DEBBIE DOWNER" on Saturday Night Live.  Those chumps that shot themselves during the blowup shoulda known better.  They were doomed from the getgo.

To go along with what GOLFA said - experience has shown me that the best way to beat the S&P over the long term is Tactical Asset Allocation just like you say. 

I am not claiming to know it all - I'm here to learn more.  The second I close the door looking for new strategies and ideas is the second I quit enjoying what I do...

Ditto, constantly learning and being challenged in a meaningful way.

I would even say, it is not about beating the indexes, but capturing most of the upside of the S&P with a lot less risk - at all times - since no one can know the market timing.

And the minor tactical allocation, which is tailored to financial goals and tempered by market expectations a little, maybe half of the importance of it is to refresh the client relationship through a constant dialog about goals, risk tolerance, expectations.

Being very tight with your clients through lots of phone contact and personal interaction generates all the referrals you will need, and the idea of going out and prospecting when your own client portfolios are down 50% - come on, better to give them a little smoother ride with plenty of upside and take the referrals that come running from their friend during the next down market. Plenty come now, it is a function of contact and not performance. I realize their are different client target markets, but if you teach them not to chase performance, and then you can deliver a good return with less risk, you are underpromising and overdelivering.

Now, and I would say the past six months, would be a great time to tune in to how clients feel about what the market may do, and it may go up a couple of thousand points. Do you think it will ever be lower than it is right now? Since when do we just educate folks that equities get 10 or twelve percent over the long haul and that we need to just stay invested in them so we can beat inflation. For a lot of folks, reality lies somewhere in the middle.

I would even say, it is not about beating the indexes, but capturing most of the upside of the S&P with a lot less risk - at all times - since no one can know the market timing.

We must have a very different clientelle.  I've never had a client tell me, "I'd like to capture most of the upside of the S&P with a lot less risk."

My clients say things like, "I would love to retire in 7 years" or "How am I going to send my child to college and take care of my parents at the same time." 

I guess if I was a money manager the concern would be about rates of return.  Instead, as a financial advisor, we keep the focus on helping clients maximize their chance to reach their goals instead of focusing on maximizing the amount of money that they have.

[quote=FreeLunch]

GOLFA

Those are some GREAT posts - VERY insightful and I think you made some fantastic points.

OldProducer - You remind me of “DEBBIE DOWNER” on Saturday Night Live. Those chumps that shot themselves during the blowup shoulda known better. They were doomed from the getgo.

To go along with what GOLFA said - experience has shown me that the best way to beat the S&P over the long term is Tactical Asset Allocation just like you say.

I am not claiming to know it all - I’m here to learn more. The second I close the door looking for new strategies and ideas is the second I quit enjoying what I do…

[quote=anonymous]

I would even say, it is not about beating the indexes, but capturing most of the upside of the S&P with a lot less risk - at all times - since no one can know the market timing.

We must have a very different clientelle.  I've never had a client tell me, "I'd like to capture most of the upside of the S&P with a lot less risk."

My clients say things like, "I would love to retire in 7 years" or "How am I going to send my child to college and take care of my parents at the same time." 

I guess if I was a money manager the concern would be about rates of return.  Instead, as a financial advisor, we keep the focus on helping clients maximize their chance to reach their goals instead of focusing on maximizing the amount of money that they have.

[/quote]

I think we agree, the clients come up with the goals, but most everyone wants to make money and not lose it.

Maximizing your net worth and and maximizing the chance you have to reach your goals are pretty much the same thing, unless you are talking about risk transfer or spending less.

Intangibles, like not being able to sleep at night because you worry about the market, require a little education for clients, or at least a core philosophy. Not saying mine is the highway, but it seems to work okay.

[quote=GolFA]

There are definitely some lessons to be taken from the late 90’s and
turn of the century, and it has to do with managing real money for real
clients for the long run.

Has anyone here at all been trimming back to fixed positions a little, or am I crazy? My clients are plenty happy to capture two thirds of the S&P with half the risk (right now). We still have plenty of stocks to catch a rising market, but we can buy more if stocks take a plunge.

[/quote]

Right on, Joe. And you rest easier.

Proactively contacting everyone in this manner right now is critical for me, although I am more like at the beach because portfolios are mostly ready. So it is just the personal contact that matters.

Free Lunch, you probably already know how much you elevate yourself as a professional when you call clients and say, " We're sitting in 40% fixed right now, and we've had a good run, and I'm reviewing what you said about your goals, and I'd like to move another 10% over to fixed for right now."

When you talk about the portfolio in terms of the mix, instead of relatively distaste individual vehicles, it is better for all.

With good reporting tools, you can pull up their allocation at close last night, look at 12 month trailing, year to date performance, drop in the S&P and broad bond indexes, and talk about that, then make your adjustment or not. Combine that with some fun time spent with clients and their friends, and we get and keep all the biz we need here.

I love managed money because people a lot smarter than myself can handle the tactical moves in the portfolio.



In general I’m reducing equity & high yield stakes in portfolios right now by 10 - 15%. Most of my clients don’t need or want to beat the market. Their bogey is that inflation number in their retirment plan. For me that means we avoid big losses even if we forego some gain.



My client’s like that & I have seen my assets grow dramatically in the past several weeks.

Now we are on to something, you can't handle losses/volatility. Having not experienced any, you feel sense of anticipation for punishment. Don't project that onto other people.

I generally like your posts, but this is a prime example of how your assumptions and logic over torque my lugnuts sometimes. You don't really know anything about how much my clients had lost at the aftermath of the last market mania, and what motivates me and my clients now.

One idea for the more technical brokers here - monitor the S&P futures (ES) for some additional help or guidance. As I’m sure all the smart brokers here know, the futures markets are very quick and responsive to movements. They can sometimes provide that little glimpse you might want or need.

For those just selling away, this won’t make much sense at all. I understand, I was there too!

[quote=joedabrkr]

Most people do it.  I make a couple of
extra bucks and they rest easier at night knowing that they’ve put some
of their realized profits in a safer pocket.
[/quote]



What your basicly doing it telling people to rebalance back to target
weighting. Thats part of straight up good portfolio management, w/o any
tactical elements.

[quote=GolFA]

Now we are on to something, you can’t handle
losses/volatility. Having not experienced any, you feel sense of
anticipation for punishment. Don’t project that onto other people.

I generally like your posts, but this is a prime example of how your assumptions and logic over torque my lugnuts sometimes. You don't really know anything about how much my clients had lost at the aftermath of the last market mania, and what motivates me and my clients now.

If I lost half my book, I'd do very little different except start prospecting harder. But I survived with 1/2 my book back then and can do the same now.

Infact the smartest thing of all, would be if my personal investments were wholly non-correlated with the market, since my professional fortunes are. So like a good pit trader, you own nothing but T-bills for your personal account

Now I know you are not a real advisor with actual clients.  If you are a fee advisor you would need to disclose to your clients that the investment tactics you are using for their portfolios are not the same as that you are using for your own.  This is a severe breach of fiduciary duty if you don't tell them you were recommending something that you are avoiding for yourself......and is illegal.

The fact you can shrug off losing half of your book without considering that your clients have lost half of their money and lifesavings is frightening.  I doubt that the example of OldProducer's colleague who committed suicide was because his "book" was down.  I imagine it was because he couldn't live with the guilt or idea that it might have been his mistakes and advice that has ruined other people's lives.

While what we do here is academic and analytical in many respects we always have to remember that we are dealing with real people's lives, hopes and dreams.  If we don't use our best efforts we can end up ruining somebody for years if not forever.

[quote=Dust Bunny]

If I lost half my book, I’d do very little
different except start prospecting harder. But I survived with 1/2 my
book back then and can do the same now.

Infact the smartest
thing of all, would be if my personal investments were wholly
non-correlated with the market, since my professional fortunes are. So like a good pit trader, you own nothing but T-bills for your personal account

Now I know you are not a real advisor with actual clients.  If you are a fee advisor you would need to disclose to your clients that the investment tactics you are using for their portfolios are not the same as that you are using for your own.  This is a severe breach of fiduciary duty if you don't tell them you were recommending something that you are avoiding for yourself......and is illegal.

The fact you can shrug off losing half of your book without considering that your clients have lost half of their money and lifesavings is frightening.  I doubt that the example of OldProducer's colleague who committed suicide was because his "book" was down.  I imagine it was because he couldn't live with the guilt or idea that it might have been his mistakes and advice that has ruined other people's lives.

While what we do here is academic and analytical in many respects we always have to remember that we are dealing with real people's lives, hopes and dreams.  If we don't use our best efforts we can end up ruining somebody for years if not forever.

Using your best efforts on behalf of clients includes not getting emotional about money.

[quote=AllREIT] [quote=Dust Bunny]

Using your best efforts on behalf of clients includes not getting emotional about money.

[/quote]

Or you can sell them a VA with principal protection, keep your clients happy and get new people in the door to help. 

[quote=AllREIT]

[quote=joedabrkr]

Most people do it.  I make a couple of
extra bucks and they rest easier at night knowing that they’ve put some
of their realized profits in a safer pocket.
[/quote]



What your basicly doing it telling people to rebalance back to target
weighting. Thats part of straight up good portfolio management, w/o any
tactical elements.

[/quote]

Not exactly, because I rebalance the fee-based (IAR) accounts back to a model weighting on an ongoing basis.  What I’m actually doing is telling them to take some of the profits out of the “variable” fee based portfolio and put it into a guaranteed “pocket”…to take it out of the MPT-oriented portfolio.

deekay - you say a VA will help with principal protection.

That's generally only for Income Purposes & Death Benefit.

I have recently met a guy whose VA he bought in 1999 For $110,000 is only worth $60,000, as his "Financial Advisor" (insurance salesman) didn't portray what he was really buying.  Putnam Growth Funds and Janus, etc.etc.etc.

For every great annuity salesman there might be 2 ignorant ones.  I doubt that any advisor coming here is an ignorant one, and in fact the vast majority of people here probably REALLY know what they are doing.

The more appropriate way to approach it is "A Well Balanced Investment portfolio within a Variable Annuity with good features"

Claiming that a VA is a great way to do it is simply TOO VAGUE

AS FAR AS THE ARGUE THAT TACTICAL ASSET ALLOCATION IS POINTLESS.

Take a look at the Goldman Sachs Asset Allocation Funds.

They are GREAT for smaller tickets.  And These guys manage the funds in the portfolio TACTICALLY and the FUND is rather expensive.  Even with high fees it still OUTPERFORMS.

Is it worth it?  I think so.  If tactical asset allocation was not OF VALUE, then thousands of people would be out of a job, including CFAs, Hedge Funds, Professors, and the list goes on and on.

People that have no faith in this are more than likely the people who do not value investment expertise and simply invest in Index Funds.

[quote=futurestrader]One idea for the more technical brokers here - monitor the S&P futures (ES) for some additional help or guidance. As I’m sure all the smart brokers here know, the futures markets are very quick and responsive to movements. They can sometimes provide that little glimpse you might want or need.

For those just selling away, this won’t make much sense at all. I understand, I was there too!

[/quote]


There is absolutely no difference between the futures chart and the cash chart (think arbitrage,) except that the futures move about 15 seconds (on average) in front of the cash. (the tail that wags the dog)

[quote=AllREIT]

From what I saw of the aftermath, losses of 70% were not uncommon.  But that’s the cost of speculation on a sure thing.

[/quote]

Wrong.   It is not the cost of speculation, rather it’s the cost of not having a strategy in place to protect oneself in the event that the market does the opposite of what you hope it will do.

For example, losses of 70% are impossible with the use of a 20% trailing stop. (even if you allow for ridiculous slippage and gap openings.)

ALLREIT,

If your clients lost 70%, I truly understand why you are currently in All Reits.

Those type of losses are ridiculous.

[quote=ManagedMoney]

[quote=AllREIT]

From what I saw of the aftermath, losses of 70% were not uncommon.  But that’s the cost of speculation on a sure thing.

[/quote]

Wrong.
  It is not the cost of speculation, rather it’s the cost of not
having a strategy in place to protect oneself in the event that the
market does the opposite of what you hope it will do.

For
example, losses of 70% are impossible with the use of a 20% trailing
stop. (even if you allow for ridiculous slippage and gap openings.)
[/quote]



I was talking about what I saw from clients who came to me in the aftermath of the tech bubble.

[quote=AllREIT] [quote=GolFA]

Now we are on to something, you can't handle losses/volatility. Having not experienced any, you feel sense of anticipation for punishment. Don't project that onto other people.

I generally like your posts, but this is a prime example of how your assumptions and logic over torque my lugnuts sometimes. You don't really know anything about how much my clients had lost at the aftermath of the last market mania, and what motivates me and my clients now.

[/quote]

From what I saw of the aftermath, losses of 70% were not uncommon.  But that's the cost of speculation on a sure thing.

Don't take things so personally, have some confidence in yourself and what you are doing.
[/quote]

I thought about it, and it's good advice. Kind of like listening to Miles Davis at the first refrain, waiting for Coltrane to kick in. Allreit f****ng Soprano.

deekay - you say a VA will help with principal protection.

That's generally only for Income Purposes & Death Benefit.

Incorrect.  GMABs are all about principal protection.  I like them more than GMIB benefits because they are a more honest benefit (ie. none of the bullsh*t 5% that GMIB's give)

Personally, I tend to use a 10 year 0% GMAB.  This can be reset every year.  For younger people a 20 year guaranteed double is a good one to use.  I think that this works out to about 3.2%.

[quote=anonymous]

deekay - you say a VA will help with principal protection.

That's generally only for Income Purposes & Death Benefit.

Incorrect.  GMABs are all about principal protection.  I like them more than GMIB benefits because they are a more honest benefit (ie. none of the bullsh*t 5% that GMIB's give)

Personally, I tend to use a 10 year 0% GMAB.  This can be reset every year.  For younger people a 20 year guaranteed double is a good one to use.  I think that this works out to about 3.2%.

[/quote]

Are you serious?  A 20 year Guaranteed double for younger people?

They'd be better off buying a bunch of matchbox cars and California Raisins..

They'd be better off buying a bunch of matchbox cars and California Raisins..

Please explain.  I have no clue as to what you are trying to say.

[quote=anonymous]

They'd be better off buying a bunch of matchbox cars and California Raisins..

Please explain.  I have no clue as to what you are trying to say.

[/quote]

What I am saying is that a Guarantted Double in 20 years is not that good, if that is what you were implying.

Assuming an 11% return or so...You should have grown your money EIGHT-fold in 20 years.

$50,000 should be $400,000

Guaranteeting a 20 year double...you'd be better off buying a bunch of antiques and collectibles for your portfolio.

[quote=FreeLunch][quote=anonymous]

They'd be better off buying a bunch of matchbox cars and California Raisins..

Please explain.  I have no clue as to what you are trying to say.

[/quote]

What I am saying is that a Guarantted Double in 20 years is not that good, if that is what you were implying.

Assuming an 11% return or so...You should have grown your money EIGHT-fold in 20 years.

$50,000 should be $400,000

Guaranteeting a 20 year double...you'd be better off buying a bunch of antiques and collectibles for your portfolio.

[/quote]

Or a big slug of 20y Treasury bonds, which have guarantee'd return of  4.9% pa *and* 100% return of premium at the end of the contract.

I just love these government fixed annuities.

I am implying that that a guaranteed double AS A WORST CASE SCENARIO  is good.  This is especially true because of how it impacts investor performance.

[quote=anonymous]

I am implying that that a guaranteed double AS A WORST CASE SCENARIO  is good.  This is especially true because of how it impacts investor performance.

[/quote]

Please don't think I am not knocking what you are saying - I am just saying that for Younger People, maybe we shouldn't be talking about a Worst Case Scenario?

I would think that a worst case scenario of a well-balanced investment portfolio outside of an annuity would be 6-7% annual return over a 20 year period......Which is a Triple

YOUNG people, for the most part, should be told and informed about what is really the best thing to do.  That's what we're here for.

Or a big slug of 20y Treasury bonds, which have guarantee'd return of  4.9% pa *and* 100% return of premium at the end of the contract.

How does this have any bearing on whether it makes sense to put a guarantee on equity investments?

[quote=AllREIT] [quote=FreeLunch][quote=anonymous]

They'd be better off buying a bunch of matchbox cars and California Raisins..

Please explain.  I have no clue as to what you are trying to say.

[/quote]

What I am saying is that a Guarantted Double in 20 years is not that good, if that is what you were implying.

Assuming an 11% return or so...You should have grown your money EIGHT-fold in 20 years.

$50,000 should be $400,000

Guaranteeting a 20 year double...you'd be better off buying a bunch of antiques and collectibles for your portfolio.

[/quote]

Or a big slug of 20y Treasury bonds, which have guarantee'd return of  4.9% pa *and* 100% return of premium at the end of the contract.

I just love these government fixed annuities.

[/quote]

You just got done saying that you're worst case scenario was a loss of 50% (its not me, just the markets).  Some clients may be OK taking off 1% of the "potential" gain in order to lock in a positive minimum rate of return.  Do we expose ourselves to any liability by not informing clients of this option?

[quote=FreeLunch][quote=anonymous]

I am implying that that a guaranteed double AS A WORST CASE SCENARIO  is good.  This is especially true because of how it impacts investor performance.

[/quote]

Please don't think I am not knocking what you are saying - I am just saying that for Younger People, maybe we shouldn't be talking about a Worst Case Scenario?

I would think that a worst case scenario of a well-balanced investment portfolio outside of an annuity would be 6-7% annual return over a 20 year period......Which is a Triple

YOUNG people, for the most part, should be told and informed about what is really the best thing to do.  That's what we're here for.

 [/quote]

FL-

No offense-just a thought for your consideration-the fact that you think you do not need to consider the implications of a "worst case" correction on a young client tells me that you have not yet personally  experienced a bear market of 'worst case' magnitude.

Yes you can and should generally be more aggressive for younger clients.  But, if the market really takes a hit and they reach their pain threshold, they're going to become irrational and pull the 'eject' handle.  This usually happens near the market bottom, so now they're selling out at low prices.  They often take that money and invest it somewhere else at peak-ish prices.  Think Florida real estate or US Government bonds in 2002.

Free Lunch,

For me, deferred annuities are primarily used to help control investor behavior.   The client may know that they are making a long term investment and that it should be in equities.  They also know that when the market goes down, it is a bad time to get out of equities.  That doesn't stop them from bailing when the market goes down.   The guarantee of the annuity keeps the client invested which, in turn, increases returns.

I seldom use an annuity for younger people, thus I seldom use the 20 year.  I usually use a 10 year 0% GMAB.   The vast majority of my VA sales are qualified money where the guarantee influences investor behavior. 

That's a good point, Joe.

And you are right about not experiencing a Bear Market for my clients, as I have only been in business during a great market.

I have adopted one thing when I talk to my younger clients, I always say something like this,

"Over the next ten years, we are probably going to have a VERY painful market at some point.  Maybe lost 15-20% in a year.  Are you going to be able to handle that and stick to the plan?"

Of course they say yes, but I guess when it comes to money their opinions about a so called "plan" can drastically change.  But I guess, if the relationship is THERE, then they trust you as long as you keep calling them and keep them informed about what's going on.

I tell people buying low is kind of like When you had to eat vegetables as a kid - you hate doing it, and it tastes bad, but you know its good for you and its what your being told to do by someone who is looking out for your best interests.

[quote=FreeLunch][quote=anonymous]

I am implying that that a guaranteed double AS A WORST CASE SCENARIO  is good.  This is especially true because of how it impacts investor performance.

[/quote]

Please don't think I am not knocking what you are saying - I am just saying that for Younger People, maybe we shouldn't be talking about a Worst Case Scenario?

I would think that a worst case scenario of a well-balanced investment portfolio outside of an annuity would be 6-7% annual return over a 20 year period......Which is a Triple

YOUNG people, for the most part, should be told and informed about what is really the best thing to do.  That's what we're here for.

[/quote]

So a well balanced portfolio lowered your return by 4 -5%, and this is still what you "think" is the worst case.  Can you guarantee that? Why not invest 100% equities with an insurance company guarantee for an additional 1%.   If the markets are even reasonably good, the bonds are dragging your balanced portfolio down more than that. 

On the Record? I can't guarantee that, no.

I'm not sure what your arguement is, and I am confident that The Bonds along with dividend stocks are going to be very beneficial in a down or flat market.........which is inevitable over a 20 year time frame.

Insurance Companies guarantee.  THEY guarantee.  The government doesn't guarantee that. 

Define guarantee.  I'm not trying to open up a whole new can of worms, I'm just playing the devils advocate.

Convince me that an insurance company HAS a ONE HUNDRED percent without a doubt guarantee.

deekay - you say a VA will help with principal protection.

That's generally only for Income Purposes & Death Benefit

Isn't that generally the reason people buy annuities?

I'm going to throw in the towel on the annuities.

You guys that use them MORE than me - and the partial reason is that I am not SOLD on them.  I guess that's what It boils down to.

I am knowledgeable, but probably not as knowledgeable, so I apologize if I have made some ridiculous claims....

Just sell 'em right.

[quote=FreeLunch]

I'm going to throw in the towel on the annuities.

You guys that use them MORE than me - and the partial reason is that I am not SOLD on them.  I guess that's what It boils down to.

I am knowledgeable, but probably not as knowledgeable, so I apologize if I have made some ridiculous claims....

Just sell 'em right.

[/quote]

 Congratulations on thinking for yourself, and reaching the " liberation point."

You thought it through for yourself but do not condemn that in which you do not believe, or specialize, or do not have any particular knowledge that creates a comparative advantage.

Myself, I mainly focus on cash stocks and bonds, and a little insurance,  and leave all the other bs. I challenge anyone here to be a better planner.

Having said that, who am I to say that Bobby's clients are not receiving an excellent total planning proposition? What do I really know about their situation - I still have my own preferences for my own clients.

For me, the liberation point is embracing all as colleagues - especially those who have not structurally eliminated choices for their clients.

And the "dumb" annuities - especially immediate annuities - are becoming more important as a generation of low savers retires. We will need the expertise and experience of our annuity expert colleagues to continue to offer realistic choices, continuing to be fully licensed might not be a bad idea, either. As for that, we'll see how the industry continues to shake out over the next couple of years.

[quote=FreeLunch]

On the Record? I can't guarantee that, no.

I'm not sure what your arguement is, and I am confident that The Bonds along with dividend stocks are going to be very beneficial in a down or flat market.........which is inevitable over a 20 year time frame.  I'm addressing the argument that VAs are expensive.  If equities have potential to make 10% and bonds have potential to make 5%, then any more than 20% bonds will cause a balanced portfolio to underperform a VA portfolio of 100% equities (assuming an extra 1% in fees).

Insurance Companies guarantee.  THEY guarantee.  The government doesn't guarantee that. 

Define guarantee.  I'm not trying to open up a whole new can of worms, I'm just playing the devils advocate.

Convince me that an insurance company HAS a ONE HUNDRED percent without a doubt guarantee.

Yes it is the insurance companies guarantee, and they can go bankrupt.  However, that doesn't stop me from getting homeowners, auto, and life insurance.  It may not be absolutely certain, but its the best we can get.  I may even take that over a government guarantee, since the government knows they don't have enough money and keeps making promises.

[/quote]

Glad to see you are open minded enough to not condemn other approaches, even if you are not fully convinced.  There's more than one way to achieve clients goals, and yet no approach is completely guaranteed.

The Government can Tax.

Honestly,

I think the only guarantee is that there IS NO guarantee.

There is no freelunch.  lol

[quote=anonymous]

deekay - you say a VA will help with principal protection.

That's generally only for Income Purposes & Death Benefit.

Incorrect.  GMABs are all about principal protection.  I like them more than GMIB benefits because they are a more honest benefit (ie. none of the bullsh*t 5% that GMIB's give)

Personally, I tend to use a 10 year 0% GMAB.  This can be reset every year.  For younger people a 20 year guaranteed double is a good one to use.  I think that this works out to about 3.2%.

[/quote]

anon, I know there's a few VA's with a shorter GMAB benefit (return of principal minus fees in 5, 7, or 10 years).  Any reason why you choose the 10-year model?

And FTR, alot of the GMIBs are pretty poor.  For some reason though, I've heard of one company (can't remember off the top of my head) that offers a true 5% income step up (compounded, that is).  Am I imagining things?

The one that I use is 10 years.  There is no subtracting of fees.   If the time period is shorter, the fee will have to be substantially higher.

Yes, you are imaging things with the GMIB.  The GMIB isn't true simply because they either use lower annuitization rates, an age setback or a combination of both.  This doesn't make the GMIB bad.  It  just makes it not honest to describe it as 5%.