Anything else just isn't Enterprise enough.

Summary of US stock market low/high

September 1929 to June 1932

The stock market crash of Oct. 29, 1929, marked the beginning of the Great Depression and sparked America's most famous bear market. The S&P 500 fell 86% in less than three years and did not regain its previous peak until 1954.

S&P 500 high: 31.86
Low: 4.4
Loss: 86.1 percent
Duration: 34 months
May 1946 to June 1949

S&P 500 high: 19.25
Low: 13.55
Loss: 29.6 percent
Duration: 37 months
December 1961 to June 1962

S&P 500 high: 72.64
Low: 52.32
Loss: 28.0 percent
Duration: 6 months
November 1968 to May 1970

S&P 500 high: 108.37
Low: 69.29
S&P 500 loss: 36.1 percent
Duration: 18 months
January 1973 to October 1974

S&P 500 high: 119.87
Low: 62.28
Loss: 48.0 percent
Duration: 21 months
November 1980 to August 1982

Duration: 21 months
High: 140.52
Low: 101.44
S&P 500 loss: 27.8 percent
August 1987 to December 1987

S&P 500 high: 337.89
Low: 221.24
Loss: 33.5 percent
Duration: 3 months
March 2000 to October 2002

S&P 500 high: 1527.46
Low: 776.76
Loss: 49.1 percent
Duration: 30 months
October 2007 to March 2009

S&P 500 high: 1565.15, Oct. 9, 2007
Low: 682.55, March 5, 2009
S&P 500 loss: 56.4 percent
Duration: 17 months
Permalink WorldRoverski 
July 14th, 2017 12:57pm
Better format:

September 1929 to June 1932
S&P 500 high: 31.86
Low: 4.4
Loss: 86.1 percent
Duration: 34 months

May 1946 to June 1949
S&P 500 high: 19.25
Low: 13.55
Loss: 29.6 percent
Duration: 37 months

December 1961 to June 1962
S&P 500 high: 72.64
Low: 52.32
Loss: 28.0 percent
Duration: 6 months

November 1968 to May 1970
S&P 500 high: 108.37
Low: 69.29
S&P 500 loss: 36.1 percent
Duration: 18 months

January 1973 to October 1974
S&P 500 high: 119.87
Low: 62.28
Loss: 48.0 percent
Duration: 21 months

November 1980 to August 1982
Duration: 21 months
High: 140.52
Low: 101.44
S&P 500 loss: 27.8 percent

August 1987 to December 1987
S&P 500 high: 337.89
Low: 221.24
Loss: 33.5 percent
Duration: 3 months

March 2000 to October 2002
S&P 500 high: 1527.46
Low: 776.76
Loss: 49.1 percent
Duration: 30 months

October 2007 to March 2009
S&P 500 high: 1565.15, Oct. 9, 2007
Low: 682.55, March 5, 2009
S&P 500 loss: 56.4 percent
Duration: 17 months
Permalink WorldRoverski 
July 14th, 2017 12:59pm
Sources Of Income

Firstly, I view the Social Security benefit for the retired investor as akin to a fixed income source - fixed in the sense that it is a guaranteed government benefit that will be paid month after month. Though it hasn’t increased much in value lately because it is tied to inflation indexes that the government says have not risen much, it is a dependable income source, nevertheless.

A moderate retirement budget, for a couple that has paid off the house and car, can be achieved in many parts of our great country for $50,000.00.

The average retired couple has a combined Social Security benefit today of about $28,800 per year. To live through a bear market correction, this average couple would need an additional $21,200 in annual income to pay the bills.

To close the gap of this $50,000.00 retirement, a couple could prepare by saving up, and putting in a cash reserve, three to five years worth of cash that could be drawn upon to fill the income gap.

$21,200 gap X 3 years = $63,600

$21,200 gap X 5 years = $106,000

Because the longest stock market drawdown has been just 2.8 years from previous peak to trough, this means that having 3 years of cash reserves put aside to draw on for expenses should be sufficient. Five years might seem like overkill to many readers, but it sure could provide that extra peace of mind to help stay the course and hold onto quality investments for the duration of the bear market.

Of course, this cash reserve could be invested in a short-term bond ladder or a CD ladder that matures each of the three or five years. This would generate additional interest income. A money market fund would serve the same purpose but generate less interest.

This is one method to say solvent longer than the market stays irrational. If the investor has additional sources of dependable income flows, that would simply make the funding of expenses during a bear market that much easier. These might include pension benefits or guaranteed annuities, to name just two.
Permalink WorldRoverski 
July 14th, 2017 1:02pm
Tip: If you're going to make a 20+ year stock market chart, be sure to use log-scale y-axis.  Otherwise, recent gains are exaggerated and older gains seem less important.  (due to the fact that the stock market goes up exponentially on average over time)
Permalink FSK 
July 14th, 2017 8:05pm
Rule of thumb I heard:

3% withdrawal rate is usually safe

4% is risky

More savings is generally better.

So for $50k/year annual inflation-adjusted living budget, $1.7M is safe, $1.2M is risky.
Permalink FSK 
July 14th, 2017 8:07pm
Don't bother with CD ladders or bonds.  Keep 6 months expenses in cash and the rest 100% in stocks.  Buy some dividend stable stocks for an extra cash cushion.  (Example: Con Edison ED, Coca-Cola KO)
Permalink FSK 
July 14th, 2017 8:08pm
I agree keeping 3-5 years of cash in CD's is a drag on returns and unnecessary.

$50,000/year in retirement will not buy a great lifestyle.
Permalink NPR 
July 14th, 2017 8:36pm
$50k/year will cover food, rent, medical.

Remember that you're in a lower tax bracket, don't have job/commuting expenses.

The 3% "safe withdrawal" rule means that you can withdraw 3% of your CURRENT BALANCE every year.  If you can get by on less for a few years, you can get a bigger cushion.
Permalink FSK 
July 15th, 2017 12:06am

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