Stock Market Thread
- Thread starter AndyHeel
- Start date
I am not displeased right now. After the big dip earlier in the year, I’ve gotten it all back. Treading water isn’t so bad at my age. I am hopeful for and end of year rally.
I have like 5% of my retirement fund in the direct stock market If it was 90% I would be buying a Beach House.
I am cool with it-but it is intersting
Question....generally how old are you? I hope you are already in retirement if you are investing like that. Because if not, you are going to have a hard time ever retiring or meeting your financial goals by being that uninvested. I assume the other 95% is in either cash/MMK or in bonds.
Just realize that cash is always depreciating due to inflation (which is running notably higher these days than it has in decades, and likely will continue to run hot for the foreseeable future because of the significant debt/deficit issues our country faces...printing more money is the only true way out of this long term), and bonds are also awful investments in inflationary environments. Even if inflation stays stable, bonds are already as such low historical interest rates that you just aren't going to get a lot of bang for your buck long term. Stocks are priced on nominal earnings, meaning inflation in itself can push up the valuation of equities over the long term. So being virtually completely out of the market is just going to slowly erode your long term purchasing power.
Should you be all in equities? Unless you are very young, then no. I'm certainly not arguing that. But being only 5% invested in the stock market is a really bold (and usually losing) call to make. I'd never (even in retirement) go below 20-25% in equities if it were me. You really need that equity exposure to insulate your returns from inflationary environments, and just missing out on the incredible earnings potential that equity markets give you a chance to participate in. I'd also consider some small allocation to gold and bitcoin (for the same reason as far as hedging against a depreciating dollar when all of your other assets are dollar denominated). If you are worried about recession, then adjust your equity exposure to be in lower risk stocks like consumer staples and other dividend paying stocks like utilities instead of being in highly volatile, risky, and cyclical equities. That gives you some defense while still being exposed to those earnings streams.
Otherwise, good luck. Feels like you're trying to time the market, which is pretty much the greatest losing strategy in retirement investing. Predicting some massive calamity that the market has missed is about as probable as predicting where lighting will strike and when. Warren Buffett himself has said that the world only ends once, and that's a really hard trade to time. Remember that literally all of our global institutions are tied to the financial markets, and all of the political power in the world is there to do everything they can to protect those institutions, especially the financial ones for obvious reasons. Making an almost all in bet against all of that failing is a tough way to roll.
The way the pros run money is that they determine their risk tolerance and build a portfolio with target weighting to different assets classes (so for example, maybe 40% US equities, 20% International equities, 20% bonds, 5% gold, 5% bitcoin, 10% cash/mmk or something like that)....and then leave it alone until there are big moves in the market, and then rebalance back to your target weightings again....or just automatically rebalance every quarter (note that rebalancing in shorter periods like weekly or monthly usually ends up in worse performance). Rebalancing just naturally makes you sell high and buy low as you trim your winners and replenish the asset classes that have recently underperformed. That's going to give you a concrete long term plan that will capture returns....just going all in or all out willy nilly is not much of a plan and relies on luck more than anything else, and is an incredibly difficult way to build wealth.
Considering that there are trillions currently parked in money market accounts right now as people have been taking advantage of the risk free returns of over 4% in the last couple of years....if short term interest rates start getting aggressively cut, you're going to see a lot of that money parked on the sidelines find its way into risk assets for two reasons.....1) the yield on MMK funds will not be as attractive anymore and likely won't keep up with inflation, and 2) lower interest rates support higher equity valuations (it's just simple math that the present value of future cash flows goes up when interest rates drop).
It's impossible to know when the next correction will be (it will inevitably happen, but the timing is anyone's guess), but I think it's likely that the dip will be shallow because of the reason above (but it all depends on what caused the dip to begin will...if it's WW3 for example, then the dip will be deep and calamitous...but if it's over some geopolitical spat or some tweet, then it will probably be a blip, much like the liberation day tariff thing was). But see my prior post...going all in or out on that is not a great idea. Have a plan and stick to it. If you go by your gut and normal human emotions, you are going to probably end up buying high and selling low like most market timers end up doing. The answer on exactly what you should do right now is known by no one.
I'm liking it right now. Continued rise is going to mostly depend on size of rate cut, or not, by the Fed.
On another note, I have a very small etrade account I'm going to transfer over to my investment account and buy nothing with it but Chip makers. Nvidia and one other I'm thinking about. Account is only worth about 20k, so I think it would be fun to play with.
On another note, I have a very small etrade account I'm going to transfer over to my investment account and buy nothing with it but Chip makers. Nvidia and one other I'm thinking about. Account is only worth about 20k, so I think it would be fun to play with.
Great post.
He definitely needs 30-40% in equities, even if he's in his 60s-70s.
Was thinking AMD. Any ideas on what might be a better choice?
Also, kik, aren't you in Atlanta?
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No, I'm in New Jersey.
I own Avago and Nvidia, but not the other two, but that says nothing about future performance. I think AMD and Taiwan are great companies, and I don't think you'll lose money with them.
You may just want to buy the leading semiconductor ETF, whose ticker symbol is SMH, and get exposure to the whole sector. Those four companies are the ETF's biggest holdings, by the way.
You can check it out here:
SMH - VanEck Semiconductor ETF | Holdings & Performance | VanEck
The short answer is I am financially illiterate.
The longer answer is that around my early 60s I got a deevorce. I had zero savings after that, half of a moderate house, and the outlook of Soc Security and a Defined pension
I have never spent all my defined pension, always saved all my Soc Sec and than after a couple years I started buying CDS. I got a modest inheritance cashed in my Half a house and now suddenly I have 600,000 in CDS, Fed Bonds.
I save right at half my post tax income. My "investments" income and Soc Sec are roughly equivalent to my Defined Pension-which I still don't typically spend.
So now for the first time in my life I have my little version of accumulated wealth-and a defined pension and Soc sec . So I am rethinking my future.
Mother left me a 17,000 IRA, I saw it dip to 12,000-that soured me on such investments. Now it is 20,000 and I see the possibilities
Never too late to grow up
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Believe me when I say I'm not one to tell you what to do but have you considered letting a professional investment firm assist you? They will look at where you're at and ask you what your goals are and then advise you on what they think is your best course of action. It's up to you at that point on what to do with your money.
My wife and I met with our advisor yesterday morning for a couple of other reasons and during our talk he said I had a couple of other options that could help maximize my investments with just a couple of changes here and there. He has done really well for us through the years and I'd be stupid not to listen to him.
Just a thought..
FYI, CD rates will be going down, now that the Fed has cut (and will likely cut further) interest rates, making CDs less attractive as an investment.
Yea
My Fed Bonds are locked in for 5 years I did that on purpose after the election (whatever )
The Bank sponsored 12 month CDs that come up in a few months are going to get crappier.............
Anyone got thoughts on KVUE? On surface, feels like a buy the dip opportunity with the Tylenol kerfuffle. So today's drop caught me by surprise. I recognize they are still post spin-off and thus have risk as they establish themselves (and stock price) as a standalone entity. Current 4% div yield is nice, along with a stable of popular brand name products. I've dipped my toes in, but curious what others think of this as a long-term play.
Undervalued as it may be, I'd put it squarely in the speculative bucket, given the upheaval and uncertainty in the current US administrative environment. There is literally no logical way to determine what comes next.
Came here to note the same thing! I recall AMD was the semiconductor stock you were specifically looking at. Did you pull the trigger?
It isn't what anyone wants to hear when tech is booming like this, but putting 10% each in JNJ/PG/MMM/KO/WMT/CL/APD/IBM/KMB/EMR and rebalancing annually will almost never let you down. That generally holds up even when stocks and bonds are both taking a beating, and the fee is 0.00%.
Hell no. That small account I was going to move from etrade to my investment account at Truist ( which is what I was going to use for that )has taken longer than it should due to my advisor dragging his feet. Lol, he will get a piece of my mind I can tell you that!
CNBC has some attractive female hosts. Kelly Evans and Morgan Brennan making watching stocks fun.Check out Sara Eisen on CNBC this AM. She's interviewing Treasury Secretary Bessent.
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