The Point Behind Point & Figure

After receiving the e-mail Iodine sent out last week, a client called and asked “what is the point of all of these charts that you mention to?”

I told her that “point and figure charts, and the strategy that Iodine utilize with those charts, is designed to forestall you from being involved in a disaster.”

I asked her to wit me for a minute and allow me state her about a gentleman Iodine recently met.

In 1998, helium decided that he’d retire in mid-2000, when he turned 65.

Back then, his 401k program was deserving $1,214,000.

He expected to retreat $80,000 per twelvemonth from the program (or about 6 to 7% of the balance), when he figured this out in 1998.

He went on to state me that he expected this would be a sensible amount, because the market had returned an average of 15% per twelvemonth for the former 15 years.

Even if the market didn’t do 15%, he said, he read somewhere that “over the long haul, the market returned a small over 10% per year, going back to the 1920’s.”

So, since he planned to only take out 6 Oregon 7% per year, and it’s growing at least by 10% or more, he estimated he would never run out of money.

So he made large plans!

He planned to restitute his house, set in a pool. Also make a small traveling, something he never had clip to make while he was raising a household and working. His married woman also made programs to halt working as well.

His retirement day of the month was Friday, April 14, 2000; his 401K had a value of $1,277,000.00.

One twelvemonth later, in April, 2001, his 401K program had a value of $979,000.

By December 2002, his 401k account was deserving $764,000.

He had not even made a backdown yet, but his solar-powered calculator told him bad news: he’d be scrounging for money by the clip he was 76. The $80,000.00 per twelvemonth he planned to take out would now run out this account entirely in about nine years.

The statistical distribution was scaled back, from $80,000 to $24,000.00 a year.

Going from $80,000 to $24,000 a twelvemonth was a lifestyle change for him. He felt burned. Dreams of traveling went out the window. Buy a new car? No chance.

His married woman have taken a occupation in the library. He’s now back at work, as a consultant, hustling for jobs. And now he’s just learned that his former company is changing their healthcare program for their retirees.

What if this were you inch this situation?

Right now, he desires to forget about plus allocation, pie charts and “pie in the sky” narratives of long-term returns and growing rates. He told me that pretty soon, he won’t be distressing about “pie inch the sky,” he’ll be wondering... how to get pie on the table!

Moral of the story: when the point and figure charts travel on defense, we should mind the warning!

Please don’t get “sucked in” to the conception that the market tax returns an “average of ___% per year” and “over the long haul” things will work out OK.

Just cognize that going on defense doesn’t mean value the market will travel immediately consecutive down.

What we bash cognize is that the hazard of losing money in our accounts is much higher when the indexes are flashing defense. This have been the lawsuit since the bullish percent charts were created over 50 old age ago.

If you desire me to demo you how these charts can steer you, just name me and I will GLADLY show you in less than 10 minutes.

This is where stock choice is key.

There have never been a more than important clip for you to be working with person who watches the market on a day-to-day basis. If you have got any inquiries whatsoever regarding our game plan, you need to name me immediately at the office. The number is 732-223-9000.

Since the summertime of 1998, there have got been four modern times where the S&P Five Hundred have returned 20% Oregon more. And there have got been four modern times where the S&P Five Hundred have doomed 20% Oregon more. In just seven years!

But if you just sat there and “held on,” no existent advancement was made. You can look it up; you’re right where you stood in 1998. Pretty soon it will be a decennary where the “buy and hold” investor will have got made no money.