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Subject:  Re: need help with asset allocation Date:  1/27/2005  6:19 PM
Author:  rrosenkoetter Number:  44247 of 88542

>> The greatest risk you face is not stock market losses, but loss of purchasing power through inflation <<

Um.. no... at retirement, the greatest risk you face is stock market losses.

We are in an on-going bear market. P/E ratios are still well above history's trend. Dividends are at all-time lows.

This is not a time to move all of one's assets into the market. Look at history. Look at every other time P/E ratios were this high. Look at the returns over the next 10-20 years. They were terrible. And those were years when dividends at least were decent, and provdied some boost. Not now.

Timing the market is impossible, but bull/bear swings do occur. We're currently in a bear. When will another bull start? I can't tell you, but it won't start with an average P/E ratio of 20. Wait for P/E ratios to drop to low teens or even single digits. That's when to start investing in broad-based index funds. Trouble is, it may take a while (last bear market went from 1966-1982)

It's hard to keep money in low-paying money market accounts... I would at least suggest this... If you're living well on the $80k, start moving some money to the market... slowly... If you have $600k, then move $5k to $10k a month into bonds/stocks (Percentages up to you). That will mean a very slow move into the market over the next 5-10 years (I'd probably always keep 100k in money markets though)

That way, you're not worrying about timing the market, and you're also not worrying about investing it all at once. I mean this is it. This is all the money you're going to have for the rest of your life. There's NO gambling with this money.

Another good book is Bull's Eye Investing. I highly recommend you read it.
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