The Motley Fool Discussion Boards

Previous Page

Investing/Strategies / Retirement Investing

URL:  http://boards.fool.com/ok-lets-take-this-perspective-then-100000-30619658.aspx

Subject:  Re: Strategy comparison S&P500 vs. IUL Date:  4/3/2013  1:29 AM
Author:  Rayvt Number:  71678 of 80990

OK, let's take this perspective then;
$100,000 liquid net worth.
How much of it would *you* (RayVT) put into an unhedged-long buy & hold position on the S&P, with the backward-looking wisdom & awareness of typical S&P drawdowns, versus "life happens" potentiality of needing to raid it for junior's uninsured skateboarding incident?


None.
Zero.
$000,000

First of all, "incident" thing is why you have insurance (homeowner's and health). But still, a valid question if you substitute "unexpected expense" for that bit.

Oh, my! So many points to respond to. Here goes ... ;-)

1) "unhedged-long" -- Implies that there is such a thing as a hedged long position. There isn't. A "hedged long" position is effectively just a smaller position. Which by definition is unhedged, that is, an unhedged smaller position. (Which, BTW, is why covered calls are a stupid strategy -- they hedge away all but a teeny bit of the profit.) This phraseology is just fear-mongering.

2) "buy & hold" -- I don't do buy & hold. Of *anything*. Every investment strategy I use is subject to some form of a market-timing overlay/gate for shifting my equity allocation to short-term or intermediate term bonds/T-bills. It's not perfect, and it's not ultra-technical, or genius-level, or requires a massive or superhuman effort as CC likes to taunt. It just moves