# Moving pension fund to cash



## mikerd4 (6 Sep 2022)

I have my pension fund currently in a high risk fund thats done well over the last few years, given the current uncertainty and after reading articles like this one https://www.thestreet.com/technology/michael-big-short-burry-makes-another-dire-prediction

What are the pro's and cons of putting my current pension pot into a cash fund?  Given the ecb are now pushing up interest rates slightly, or am I simply losing money via inflation despite my pot not going down?

I'm lucky I can transfer between funds freely with no charges or penalties.


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## Gordon Gekko (6 Sep 2022)

How old are you?

How many years to retirement?

What other assets do you have?


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## mikerd4 (6 Sep 2022)

Sorry thought I put that in, Im 44.  No plans to retire before 65 as it stands.

Assets wise I have my house.

I know Im trying to guess the markets and world economics but I was thinking short term it might be a better bet to ease any potential craziness


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## moneymakeover (6 Sep 2022)

My theory is that as interest rates rise so do markets

That's my theory


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## fistophobia (6 Sep 2022)

Time in the markets.. not, timing the markets.
At your age, you keep contributing.
DCA - dollar cost averaging.
Keep doing pension contributions, while you still can.


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## Gordon Gekko (6 Sep 2022)

mikerd4 said:


> Sorry thought I put that in, Im 44.  No plans to retire before 65 as it stands.
> 
> Assets wise I have my house.
> 
> I know Im trying to guess the markets and world economics but I was thinking short term it might be a better bet to ease any potential craziness


Do nothing.

Leave it as is and keep contributing.

44 year olds with 21 years to go until retirement should be high risk/equities all the way.


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## ClubMan (7 Sep 2022)

Some clichés that have some relevance...

Timing the market is a mug's game.
It's time IN the market, not timing the market, that matters.
Also, remember that, in many cases, a retiree (not on a defined benefit pension) will probably (a) be looking at a long lifetime into retirement and (b) be rolling at least 75% of their pension fund into an ARF, so staying invested in high risk/reward assets may make sense heading towards and even in retirement.


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## Steven Barrett (7 Sep 2022)

mikerd4 said:


> I know Im trying to guess the markets and world economics but I was thinking short term it might be a better bet to ease any potential craziness


 Can you tell me when you are going to get back into the market? You know someone doesn't ring a bell when it hits the bottom? It is likely to go up and back down again. But the biggest bounce will be at the start but you won't be in the market because you want to be sure that it is a recovery. 

Downturns are a part of investing. You can't just have upside. If there was, there would be no investment risk and therefore no return. Trying to time the market is a near on impossible thing to do consistently. You may get lucky. You may not. But that is all it will be, luck. Not the greatest investment strategy to have. 

I would look to the advice of Warren Buffett rather than Michael Burry. 


Steven
www.bluewaterfp.ie


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## NoRegretsCoyote (7 Sep 2022)

mikerd4 said:


> What are the pro's and cons of putting my current pension pot into a cash fund?


Currently you own a tiny % of global equities. The value goes up and down but your % stays the same.

If you put it in cash you no longer own that same tiny % anymore.

The only thing certain about your proposed strategy is that you'll pay fees on the way back out and way back in again. You can't time the market at the microscopic retail level. Just stay in all equities and ignore news about the market. It's mainly noise generated by people who profit from trading.


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## LDFerguson (7 Sep 2022)

I agree with the last five posts.  Just adding mine to reinforce the point.  It's a fairly easy decision to switch to cash or low-risk funds when things are uncertain.  Who knows?  You might even avoid a bit of a drop in the markets.  Or you might not.  The much harder decision is when to switch back into an equity fund.  Often, a recovery can be very swift.  Miss the recovery and you've done your fund value a lot of long-term damage.  At 44, stay where you are think of any fund drops as opportunities to buy at a lower price.  

Google "timing the markets" for any number of articles on this subject with evidence.

Regards, 

Liam
www.FergA.com


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## mikerd4 (7 Sep 2022)

Cheers for the advice.  A few I know are doing it but wanted to do some of my own research.  The theory being moving the pot into cash for a few months to protect the lump sum already accrued from any major change. Whilst keeping future contributions going into the high risk fund.
My pension scheme has zero fees or charges for moving between funds and I can choose how much of the pot I want to put into each fund it doesn't need to be the whole amount.


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## Conan (7 Sep 2022)

Ok, so what will be the catalyst foe moving out of Cash in "few months".......the market haven risen (so you miss the bounce)? 
Trying to time the market is a fools strategy, particularly if you have a 20 year plus time horizon.


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## mikerd4 (7 Sep 2022)

I wouldn't be trying to time the market more looking to protect the lump sum that I have in the pot already so it doesn't take too big a hit over the next 6 to 12 months. 
Like I said a few have already done this but I would rather do some research than a knee jerk reaction


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## LDFerguson (7 Sep 2022)

mikerd4 said:


> I wouldn't be trying to time the market more looking to protect the lump sum that I have in the pot already so it doesn't take too big a hit over the next 6 to 12 months.



How would you decide when to switch back out of cash?


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## Itchy (7 Sep 2022)

mikerd4 said:


> too big a hit over the next 6 to 12 months


 
Seems like an arbitrary time frame in the context of the next 20 years?


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## Sarenco (7 Sep 2022)

mikerd4 said:


> Like I said a few have already done this but I would rather do some research than a knee jerk reaction


Folks try to time the market all the time - that doesn’t make it a good idea.

Far more money has been lost by investors trying to anticipate corrections than in all corrections combined.


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## jasdpace@gmail. (7 Sep 2022)

Sarenco said:


> Far more money has been lost by investors trying to anticipate corrections than in all corrections combined.



I'd be interested on seeing the data on this


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## jim (7 Sep 2022)

Is there nothing to be said for moving to cash in a time of impending recession, at least for a few months.

In terms of when to move back out of cash is it not just simply a case of watching the news and as soon as it starts to look like the recession might end then move back.

Even if the recession doesnt end you will have sheltered yourself from some drop for those few months.

And if it does then youve only gone and timed the market.

You would still be lobbing pension contribution each month into your fund for those months youre in cash.

Worst case scenario, a very sharp recovery suddenly happens and you dont have time to react. But if youre studying the economy, news, markets then youre mitigating this risk to an extent.

I know most of you will say this is a terrible strategy but im yet to be fully convinced that its without any merit at all, if done right. Surely, if done right you stand to save a fortune?

If you lay out each risk, associated with this strategy, one by one. And assign a mitigant to each one....not saying itll be foolproof. Am saying it might have merit.


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## Sarenco (7 Sep 2022)

jim said:


> IWorst case scenario, a very sharp recovery suddenly happens and you dont have time to react. But if youre studying the economy, news, markets then youre mitigating this risk to an extent.


What makes you think that professional money managers don’t watch the news?

Trust me, if it’s in the press, it’s already in the price.


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## Conan (7 Sep 2022)

Nobody rings a bell when markets are going down, neither does anyone ring a bell when markets start to go up. If you go back to the market crash in 2008, the biggest drawdown into Cash by investors was circa February/March 2009, and markets started to recover from March 2009. So many investors suffered all the losses on the way down, but missed the recovery. Had they stayed invested, they would have recovered their 2008 losses in the following 18 months.
So as I said earlier, what would be the catalyst for re-entering the market? How long would the recovery have to be to convince the investor to re-invest? If it’s 6 months of recovery, then it means that the investor has lost that recovery period whilst waiting to see that it’s not a “dead cat bounce”.


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## Gordon Gekko (7 Sep 2022)

Firstly, you can’t “ring fence” your lump sum! If I’ve 25% of my fund in cash and 75% of it invested in equities, a 20% fall in equities will reduce the lump sum available to me.

Secondly, you’re 21 years away from retirement! You shouldn’t be concerned about protecting anything. Just stay invested 100% in global equities and go and have a beer. If a friend of yours says they’re moving to cash, just say “oh, okay” and take another sip of your beer. If it’s a really close friend, refer them to this thread.

Thirdly, as Sarenco and others have said, things like impending recessions are already baked into the price. Someone going to cash with a recession on the horizon and deploying their cash once there are green shoots will see really poor results over time.


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## jim (7 Sep 2022)

Gordon Gekko said:


> Someone going to cash with a recession on the horizon and deploying their cash once there are green shoots will see really poor results over time


Why?


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## AAAContributor (7 Sep 2022)

jim said:


> Why?



With the exit and re-entry decisions you have to make, there is a higher likelihood on missing out on the market's best days and doing a number on the total return you could have earned by staying invested:









						Staying invested even when markets are volatile can serve investors well.
					

History shows that some of the market's best days occur shortly after bad days.



					www.putnam.com
				












						This chart shows why investors should never try to time the stock market
					

Bank of America has quantified the perils of trying to time the market.




					www.cnbc.com


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## Paddy1981 (7 Sep 2022)

I'm 41 and have my current pension invested in 100% equities. I think you'd be making a huge mistake to cash out, even temporarily. 
Yes, you might protect yourself in the short term, but as others  have pointed out you could potentially miss out on huge upsides, very quickly, by doing this.
With 20+ years to retirement, like myself, I think its best to leave it as is and enjoy buying units at a lower price, if the market does temporarily fall.


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## Gordon Gekko (8 Sep 2022)

jim said:


> Why?


Because when there’s a recession on the horizon, it’s already baked into the price, and when there are green shoots, it’s already baked into the price.

You become the person who buys high and sells low. This person:


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## jasdpace@gmail. (8 Sep 2022)

Hi AAAContributor,

Please just take this in the interest of debate.

Let's look at your two links.

1. In the first, the by-line......
History shows that some of the market's best days occur shortly after bad days.​The chart then remarkably simply ignores this obvious correlation. Disingenuous.......because, I believe, deliberately misleading.

2. In the second, in fairness, the obvious correlation is included and demonstrates over the chosen period (1930 to 2020), the market return is 17,715% versus 27,213% for someone who managed to avoid the extremes both positive and negative. In simple terms, missing both positive and negative extremes pays very handsome dividends. In other words, the invariable thrown out "proof" of the merits of staying in the market does anything but prove its case.


Similarly, last night, I asked Sarenco to support another oft thrown out dictum in relation to all of this. - the one about more money being lost anticipating corrections, etc.  I'd be surprised if reliable evidence-based support for this assertion exists. There is loads of evidence of poor investor behaviour in general, and after a crisis in particular, but that's a completely different saucepan of fish.

At a general level, I would argue that there are times when dialing down on one's equity exposure can provide enhanced returns over the probable excellent long-term pure market returns. I could give some examples, but no one likes after-timers........me included! Personally, it has served me well but I am unable to quantify how much of the excess return is due to good old-fashioned lady luck.


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## Itchy (8 Sep 2022)

jasdpace@gmail. said:


> At a general level, I would argue that there are times when dialing down on one's equity exposure can provide enhanced returns over the probable excellent long-term pure market returns. I could give some examples, *but no one likes after-timers*........



I'd be delighted to evaluate your calls ahead of time. You could set up your own thread?


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## jasdpace@gmail. (8 Sep 2022)

Thanks Itchy,

That's the type of evidence-based contribution that really undermines my factual observations. Can we deal with facts and not silly cheap shots please?


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## Itchy (8 Sep 2022)

jasdpace@gmail. said:


> Thanks Itchy,
> 
> That's the type of evidence-based contribution that really undermines my factual observations. Can we deal with facts and not silly cheap shots please?



It's neither silly nor a cheap shot, is it or is it not factual to say that you personally adjust your equity exposure in order to "provide enhanced returns over the probable excellent long-term pure market returns" and that "it has served [you] well"?

The only point that I can discern from your post is that you have reasoned that because it is _theoretically _possible to achieve outsized returns by adjusting equity exposure, you think it is _practically _possible. You cite your own skills as evidence, without knowing your performance attribution no less. It must be very good? 

Chasing return with your pension fund is dangerous and expensive. Have you got _practical _advice for the OP that's going to beat staying invested in the market for the next 20 years or not?


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## Steven Barrett (8 Sep 2022)

mikerd4 said:


> *I wouldn't be trying to time the market* more looking to protect the lump sum that I have in the pot already so it doesn't take too big a hit over the next 6 to 12 months.
> Like I said a few have already done this but I would rather do some research than a knee jerk reaction


That is exactly what you are doing. Moving into cash when markets are volatile, back into equities when things are better.



jim said:


> I know most of you will say this is a terrible strategy but im yet to be fully convinced that its without any merit at all, *if done right.* Surely, if done right you stand to save a fortune?


If it could be done right, you'd be running a multi billion hedge fund. The thing is, it is nigh on impossible to do it right.



Gordon Gekko said:


> Firstly, y*ou can’t “ring fence” your lump sum*! If I’ve 25% of my fund in cash and 75% of it invested in equities, a 20% fall in equities will reduce the lump sum available to me.


He's talking about the sum he's already accumulated. 

But one of Irish Life's investment strategies for one of their group pension funds does exactly that. It was marketed around the industry years ago and never made sense. Irish Life have decided to stick with it. Nothing more than a marketing ploy and a dangerous one at that. 


Steven
www.bluewaterfp.ie


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## Steven Barrett (8 Sep 2022)

Time The Market Game
					

Are stocks due for a crash? Is it a good time to buy low? Can you time and beat the market?!   Click the “Start” button below to start the clock on a random 10 year period of the U…




					www.personalfinanceclub.com


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## ClubMan (8 Sep 2022)

mikerd4 said:


> I wouldn't be trying to time the market more looking to protect the lump sum that I have in the pot already so it doesn't take too big a hit over the next 6 to 12 months.
> Like I said a few have already done this but I would rather do some research than a knee jerk reaction


But, that's *exactly* what you're contemplating - timing the market - and yet you still don't seem to realise that in spite of almost every previous post pointing this, and the inherent flaws, out to you!

Edit: post crossed with @Steven Barrett's posts.


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## ClubMan (8 Sep 2022)

jasdpace@gmail. said:


> Thanks Itchy,
> 
> That's the type of evidence-based contribution that really undermines my factual observations. Can we deal with facts and not silly cheap shots please?


"Evidence based" and "factual" are, effectively, the same thing.
You don't seem to understand the jargon that you're using.


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## mikerd4 (8 Sep 2022)

Err sorry I came here for help and advice. 

I'm not out to time or play markets. Given my pot has dropped nearly 20k in the last 12 months.  I wanted to ask if moving the pot into cash to stop any further drop.  Obviously the better knowledge of the people in here say it isn't. If I'd done the move 6 months ago I wouldnt be down that 20k  but the timing to return as some of pointed out would be critical.


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## ashambles (8 Sep 2022)

They've a good point, but are  ignoring the reality that people do this quite often. While most people will lose money doing it and are almost guaranteed to so if they make a habit of it - it will sometimes work out well.

(I've never done it and don't ever plan to)

IF you do it I think a key would be to try  to stick some rules for when to re-enter. Do not trust yourself to pick a time - it will always feel like the wrong time.

For example, if the fund you exit drops by some target percentage e.g. 10% you re-enter, and also have a set date which you leave cash regardless of whether it's worked out or not.

I've seen people stick around in cash for several years trying to find the ideal time to return, but in most cases they did have one short opportunity to buy back in at a cheaper price.


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## Steven Barrett (9 Sep 2022)

mikerd4 said:


> Err sorry I came here for help and advice.
> 
> I'm not out to time or play markets. Given my pot has dropped nearly 20k in the last 12 months.*  I wanted to ask if moving the pot into cash to stop any further drop.*  Obviously the better knowledge of the people in here say it isn't. If I'd done the move 6 months ago I wouldnt be down that 20k  but the timing to return as some of pointed out would be critical.


It may...if there is a further drop. But we don't know if there will be (probably), how much of a drop it will be or how long it will last. Then you have to get back into the market, a second timing event. It's very difficult to do. I wrote a quick article about it in April 2020. Covid should have been like shooting fish in a barrel for market timers. It wasn't that easy. 









						Diary of a market timer - Bluewater Financial Planning
					

4 March 2020 – 287.45 All this talk about coronavirus. How serious will it actually be? 10 March 2020 – 263.25 I’m down 8.4% since last week. Will it just be a blip like the end of 2018 or something more serious? We’ve had a few of these viruses out of China before and not […]




					www.bluewaterfp.ie
				





Steven
www.bluewaterfp.ie


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## mikerd4 (9 Sep 2022)

Thank you for that Steven.  For clarification, its what I have in the pot Id be moving, Id continue to put any contributions into the high risk fund.


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## joe sod (9 Sep 2022)

Steven Barrett said:


> It may...if there is a further drop. But we don't know if there will be (probably), how much of a drop it will be or how long it will last. Then you have to get back into the market, a second timing event. It's very difficult to do. I wrote a quick article about it in April 2020. Covid should have been like shooting fish in a barrel for market timers. It wasn't that easy.
> 
> 
> 
> ...


There were a lot of posts around that early covid period March 2020 when the market  had dropped 30% in a few months. People posted about cashing out and that this was just the start of an even bigger sell off. Lo and behold the sell off stopped  fast and some of the biggest recovery  days happened in the next month.

 Yet it must be remembered that covid was getting worse and  it was non stop covid on the media  for the next 2 years yet the market had put covid behind it. The biggest up day happened after Pfizer  announced they had a successful  vaccine, but nobody could anticipate or time that event you just had to be invested especially  in the most beaten down  stocks

Then people were interested  in investing again  but only in tech stocks or the the s&p500 again they were chasing the most loved sector and stock index.  However you have  to be invested in other things besides technology  as the inflation and energy crisis is showing now. Technology has made very little  inroads into energy and food as is now apparent


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## jasdpace@gmail. (9 Sep 2022)

More misinformation. I played Steven's market game.....for the craic. First time, I did it, I beat the market but the associated table gave the wrong info saying that the market had beaten me. So I did it again just to see whether the error is repeated and hey...........guess what, in this second try, the table says I still lost whilst the graph clearly shows I won.

My only point here is that this is more disinformation in the "hold at all costs" book of tools.

Of course, past posts on this thread are not necessarily a guide to future posts, etc. Still, I'm not expecting any acknowledgement that this is weird or what I've said is true/factual. To clarify for certain posters, I'm not saying that if I played this game again, I'd win. What I am saying is that it would be nice if this tool gave truthful results. No more. This should be a sentence which is hard to misrepresent but let's see!


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## jasdpace@gmail. (9 Sep 2022)

Just did it again....




yet......in spite of me being the blue line.......




Unbelievable!


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## Itchy (9 Sep 2022)

jasdpace@gmail. said:


> yet......in spite of me being the blue line.......



You're the red line


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## Scoobydoobydoo (9 Sep 2022)

jasdpace@gmail. said:


> yet......in spite of me being the blue line


The market is the blue line.....


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## Itchy (9 Sep 2022)




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## jasdpace@gmail. (9 Sep 2022)

Ah yeah - gotcha!

What a beautiful ruse!

When something I said could be directly discounted, you're back like a shot to address the specific issue. I'm taking this as proof that when no plausible discounting is available, you'll avoid the issue. QE + D!!


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## jasdpace@gmail. (9 Sep 2022)

Scoobydoobydoo said:


> The market is the blue line.....



I was just doing a social media interaction experiment as per above. Cheers!


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## Sarenco (9 Sep 2022)

Ah, it was just a ruse!


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## Dave Vanian (9 Sep 2022)

jasdpace@gmail. said:


> Ah yeah - gotcha!
> 
> What a beautiful ruse!
> 
> When something I said could be directly discounted, you're back like a shot to address the specific issue. I'm taking this as proof that when no plausible discounting is available, you'll avoid the issue. QE + D!!



If you post information to back up your arguments that is later shown to be simply wrong, there are two ways of dealing with it.  


 Tell everyone that it was just a test and that you deliberately posted the wrong information, knowing all along that it was wrong and that in fact you have somehow proved your point really.  
Admit that you were wrong and move on.  
The latter takes courage.  But it's not difficult.  Just four simple words.  "Sorry.  I was wrong."  Without also trying to qualify it.


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## jasdpace@gmail. (9 Sep 2022)

Dave Vanian said:


> If you post information to back up your arguments that is later shown to be simply wrong, there are two ways of dealing with it.
> 
> 
> Tell everyone that it was just a test and that you deliberately posted the wrong information, knowing all along that it was wrong and that in fact you have somehow proved your point really.
> ...



Nail on the head there, Dave........that's all I'm looking for!


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## Dave Vanian (9 Sep 2022)

jasdpace@gmail. said:


> Nail on the head there, Dave........that's all I'm looking for!



Your reply makes no sense.  I guess the simple apology for posting incorrect information wasn't something you could bring yourself to do.


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## jasdpace@gmail. (9 Sep 2022)

Nail off the head there, Dave. I'm somewhat, but admittedly not totally, surprised of your inability to comprehend but dems de breaks, right?

Anyway, that's my final contribution to this highly productive debate. It's a pity that it's descended as it has but that's life. Presumably, you'll want the final word* - that's invariably how these things go. Knock yourself out. If nothing else, it's sure to add to your like score.........it's got to be long money on that certain people will experience an irresistible temptation to applaud you! Jeepers - there's me making crazy predictions again. Must prepare my attribution analysis for that last wild comment or I'll get into more trouble with Scratchy.

On a serious note, I wish you a nice weekend.

*This is quite hard to do from my observations of interactions such as this. I am, however, determined - like the late Queen - to demonstrate stoicism. In this regard, I do, however, have one caveat in that, I absolutely reserve the right to come out of retirement if Sarenco comes up with the data that I, in my naivété, sought the other day. I think that this is only fair.


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## Dave Vanian (9 Sep 2022)

jasdpace@gmail. said:


> Nail off the head there, Dave. I'm somewhat, but admittedly not totally, surprised of your inability to comprehend but dems de breaks, right?
> 
> Anyway, that's my final contribution to this highly productive debate. It's a pity that it's descended as it has but that's life. Presumably, you'll want the final word* - that's invariably how these things go. Knock yourself out. If nothing else, it's sure to add to your like score.........it's got to be long money on that certain people will experience an irresistible temptation to applaud you! Jeepers - there's me making crazy predictions again. Must prepare my attribution analysis for that last wild comment or I'll get into more trouble with Scratchy.
> 
> ...



Tellingly defensive but a fairly weak attempt to defend.  You posted several graphs featuring information that was simply wrong in an attempt to make an argument.  You were called out on your blatantly wrong information by several here on this board.  Yet you seem unable to simply utter the four simple words "Sorry.  I was wrong."  Instead you go to such great effort to try to change the subject and even make out that it was all some sort of fabulous ruse all along.


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