5-1/2 Years Later: A Different Perspective

In October 2007, the month I retired,  the stock market was at an all time high.  My company stock was at an all time high.  The estimated value of our  house was at an all time high.  The projections going forward were very positive: everything would be at least 20-30% higher in valuation in a few years.  For me, the financial decision to retire appeared very simple: just do it.   So I took early retirement.  I didn't think there was any way my retirement was at risk.

Then came the 08-09 recession, which was a humbling experience.  Our retirement and savings accounts lost over 40% of their value.   A successful retirement was no longer a sure thing.  We started to hunker down, paid off our mortgage and significantly reduced our living expenses.  I even took some part time jobs to reduce our withdrawal rate from savings.

Now, in April 2013, the stock market has achieved a new all time high.  My company stock has just passed its October 2007 high.   One difference is the value of our house is still below our 2003 purchase price.  The other major difference is that I have much less confidence in the economy and the stock market.  So instead of putting significant additional funds into the stock market, I continue to be cautious and net selling into the rally.

If my caution is misplaced, I will miss out on some gains.  However, if my negative perspective is correct, I will reduce my losses since I have reduced our exposure to equities.

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This is not financial advice. Please consult a professional advisor.

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