UnThreaded | Threaded | Whole Thread (147) | Ignore Thread Prev | Next
Author: Dwdonhoff Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75830  
Subject: Re: Strategy comparison S&P500 vs. IUL [rev 1] Date: 4/4/2013 11:55 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 2
Hi AJ,

If the figures RayVT posted are correct,
They're not, yet.

Looks to me like the S&P wins hands down.
It doesn't... the comparison hasn't been leveled yet.

What we are seeing so far, with inaccurate figures, is that if you are willing to lose up to 50% of your money but wait 10, 15, 20 years for recovery (or as long as it takes,) *then* you may end up better off in a naked S&P position.

If a 50% drawdown is acceptable, its easy enough for me to build that into the hedged model as well... but we haven't got that far in ironing out a reliable model on the simpler basics yet.

NOW... you then addressed Cath, and while I won't speak for her, I do take exception to some accusations (yes, I know... 'if the shoe doesn't fit, don't try to keep wearing it, etc... but I think this is worth addressing.)

And, for someone who advocates risk-taking when taking on debt (ARM vs. FRM), it does seem odd that you are so averse to taking on risk when you are trying to grow assets.
Properly structured, with existing reserves and future interest savings linked to the same interest rate markets as the ARM mortgage, the ARM is actually safer than a FRM. This requires no active trading, and has zero risks of "drawdown."

In contrast, a naked S&P position has a real historical 50% drawdown potential (if the future continues to rhyme with the past.)

On the other hand, you do sell these IULs, along with mortgages, right? So, every time that someone refinances their ARM with you (to lengthen their term to try to get the payment back down after rates eventually increase), you get a commission, and every time someone buys an IUL through you, you get a commission. Maybe not so odd why you are such a strong advocate for your strategies, then.

This is simply a sleazy ad hominem attack.

Yes, it is important to consider 'incentive biases' when looking at any surface-level strategy... but throwing that out as a smear *AFTER* the hood has been peeled back and the underlying mechanics are being micro-inspected & reviewed is simply low class.

c'mon... stay classy, please.

Dave Donhoff
Leverage Planner
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (147) | Ignore Thread Prev | Next

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Managing Your Wealth
Our own TMFHockeypop from Rule Your Retirement fame on the TV show Managing Your Wealth.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Apple

The Saddest Place on iPhone Day
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement