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Author: yttire Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 5068  
Subject: Financial update first quarter 2009 Date: 3/28/2009 10:58 AM
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The economy continues to unravel, but our financial picture if we keep our jobs is stable. This is primarily because most of the money was moved out of the market in the middle of the crash. A percentage was moved back in in parts while the DOW was below 7,000, although this may have been wise, it may have been foolish. Of our retirement assets, they straddle stocks with about a 50% position. The DOW is now trading around 8,000.

Our overall economic position is up 6% for the quarter (24% nnualized!) but this is in large part because of back pay owed to both of us that was realized this quarter rather than due to any investing acumen. The real threat to FIRE at this point is the lack of available investment vehicles which will get some real rate of return. Inflation seems probable, and corporate growth will undoutably be diminished for many more quarters. so we are looking at several (many?) years of no obvious growth vehicles. A good trader could undoubtably do well in this situation, but that is very luck driven.

We now have a 5% of total assets in gold as a possible inflation hedge. Of course, gold is at a high at this time, so may already have priced in a good amount of potential future inflation. This position may not really be a strong one because of this reason.

The future of the assets for the next few quarters looks good merely because there is much more back pay from years of work which will show up in the accounts in upcoming quarters. However, it is nice to see a graph which reflects a "bounce" after severe losses, especially against a backdrop of a stock market which still fell heavily this quarter despite its recent comeback.

Paying off the house in the upcoming quarter seems a certainty to reduce forced cash outflow with a guaranteed rate of return, which would be a good buffer against either of us losing our jobs in the cash flow department.

It is not clear if the market as a whole will crash heavily ala 29, or go into a rebound mode and make up for some of its losses to come out around 10,000 or so. For this reason straddling the stock market with retirement assets seems like a rational course of action in the hopes of getting better future price points and of partially avoiding the possible heavy crashes which may come if any of these economic plans on taxpayers coin do not pan out. Of course, this will miss out on the possible leveling gains. My suspicion is that first quarter numbers, combined with rising defaults on commercial properties, combined with Congress taking a lot of heat for bailing out banks will lead to a further round of bank failures and further economic downturn.

However extreme uncertainty dictates a "halfway" approach.

Our cash position as a portion of assets is at a record level (within records) compared to any time except mid 2005 when we were saving aggressively to buy a car with cash.
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Author: FIgirl Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4736 of 5068
Subject: Re: Financial update first quarter 2009 Date: 4/4/2009 6:25 PM
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I just did my monthly net worth calculation, and my net worth took a substantial jump last month thanks to the market rebound. May be temporary, though. I have ramped up my savings rate to try to stay on FIRE target despite the losses of the past year.

I am experiencing a fair amount of anxiety related to salary stability; less so job security anxiety, but some there too. This has led me to "hoard" more cash than usual. I'm justifying this by calling the extra cash "house fund money," but truthfully until my job/salary security is more sure, I am going to remain a renter. I am a fear-based budgeter, and I can't work up the courage to buy a house right now, despite the low mortgage rates. Sort of a shame, as I really thought I was ready this January to become a homeowner. But, things change.

Other than the cash hoarding, I am staying on track with my asset allocation. That sounds contradictory, but my AA doesn't count cash that isn't earmarked for investment.

FIgirl

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Author: mjs111 Big red star, 1000 posts Feste Award Nominee! Old School Fool Coverage Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4737 of 5068
Subject: Re: Financial update first quarter 2009 Date: 4/26/2009 3:51 PM
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Our overall economic position is up 6% for the quarter (24% nnualized!)

You're actually doing better than you thought. You forgot to take into effect the power of compounding! :)

6% in a quarter annualized taking into effect compounding:

1.06^4 = 26% CAGR

All in jest though. Who knows what will happen next quarter?

Mike

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