No ideas? Come on, folks. There’s a free MEMBERS Capital Advisors shirt/blouse for each of two lucky contributors. Send in your answer to one or both questions. We’ll put all your names (or email addresses) in a hat and draw one for each question:
How much do you need in liquid reserves in retirement?
How do you know when stock or bond prices are “depressed” (and you should wait for a recovery before selling)?
So, send me your thoughts on this. If you don’t want them posted or attributed to you, just say so.
Enjoy this special weekend!
Larry Halverson: I've Been Thinking
Larry Halverson, CFA, Managing Director of MEMBERS Capital Advisors, Inc., is a veteran of more than 35 years in the financial services industry. Links: SUBSCRIBE TO: I've Been Thinking | 
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4 comments:
Larry,
Those are tough questions. I know I have my crystal ball around here somewhere...
It says "depends on the situation".
Michael
ps. size XXL
First question response: I think a good rule for retirement is a 1 year reserve. In other words, whatever you spend in a month in retirement, times 12.
Second question response: If I knew when a stock or bond price was depressed, I'd own Aruba! If you have any clues, I'd love to hear them!
Liquid reserves: One unopened 5th in addition to the opened one. Company may stop by.
Depressed: When I get a headache and it's not due to consuming my retirement reserves. (see Liquid Reserves, above)
6 months of expenses.
It doesn't matter what the prices are. You should invest using an asset allocation strategy that meets your risk and returns goals. I went through the burst of the tech bubble in Austin with many clients heavily invested in tech stocks. First they wouldn't sell because the prices were going higher (TI stock was at $80). Then, then wouldn't sell because the prices had gone down 20% from their high of $100(TI stock still at $80). Today they are hoping to get 1/3 of the prior prices (TI now at $30). It turned out that TI stock at $80, $70, or even $60 was not near as "depressed" as is would be within the next few months (TI bottomed at $13 a share).
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