OT: Stock and Investment Talk

[mdk01]

Sure, looking backwards. But we appear to be on the cusp of a "seachange".... US equity valuations are historically crazy high. And this note is in context of capital preservation for "mature" portfolios. Diversification is warranted. Just an opinion,

There's also the arguement for diversification. It doesn't have to be more than 5% of a portfolio. One thing I'd look at is the rate of foreign taxes on those dividends. Is might be higher than the tax rate on US holdings.

 

[RU in IM]

I’ll buy some. I also brought more short term CDs just in case market drop and opportunities arise. Moved from 60% cash to 50% cash with more safer dividend stocks. The market needs to drop 10-15% to have good stock opportunities. I’m close to 70 and I hear I should be at 40% stock.

I have been at 32% equities for a while (waiting for the T2K response 🤣, but I’m retired, the market is overvalued, and I’m somewhat in preservation mode) and have purchased several CDs that will be maturing between 3 and 24 months. NVDA and AAPL have essentially been flat for more than 6 months, while TSLA is showing weakness after a crazy run and Meta could be next. MSFT has done nothing and GOOG is where it was in July. So Mag 7 stocks, which carried the market for 18-24 months, are showing some cracks.

 

[T2Kplus20]

Sure, looking backwards. But we appear to be on the cusp of a "seachange".... US equity valuations are historically crazy high. And this note is in context of capital preservation for "mature" portfolios. Diversification is warranted. Just an opinion, of course.

1. Finally got some skin in the game with WOLF. Jan 2026 calls.

2. Be careful with ex-US. This isn’t a cycle or regression to the mean. There are political, social, and economic reasons why most international markets are sucking. Europe is a museum. Japan is an old age home. China is a prison. Not much left to play with. India is probably best, but after a big run, it’s taking a breather.

 

[T2Kplus20]

There's also the arguement for diversification. It doesn't have to be more than 5% of a portfolio. One thing I'd look at is the rate of foreign taxes on those dividends. Is might be higher than the tax rate on US holdings.

I own very limited ex-US stocks and only one ETF. Wisdom Tree India. EPI.

 

[T2Kplus20]

I have been at 32% equities for a while (waiting for the T2K response 🤣, but I’m retired, the market is overvalued, and I’m somewhat in preservation mode) and have purchased several CDs that will be maturing between 3 and 24 months. NVDA and AAPL have essentially been flat for more than 6 months, while TSLA is showing weakness after a crazy run and Meta could be next. MSFT has done nothing and GOOG is where it was in July. So Mag 7 stocks, which carried the market for 18-24 months, are showing some cracks.

32% = Bear
Even in retirement! You should at least have 50% or so sitting in a low vol ETF like VTI or VIG. Try the 3 bucket retirement strategy. Only need cash/fixed to cover the next 3-5 years of expenses.
😁

 

[rutgersdave]

I have been at 32% equities for a while (waiting for the T2K response 🤣, but I’m retired, the market is overvalued, and I’m somewhat in preservation mode) and have purchased several CDs that will be maturing between 3 and 24 months. NVDA and AAPL have essentially been flat for more than 6 months, while TSLA is showing weakness after a crazy run and Meta could be next. MSFT has done nothing and GOOG is where it was in July. So Mag 7 stocks, which carried the market for 18-24 months, are showing some cracks.

If the Mag don’t move upward, the market will fall. Meta I was hoping will fall after earning but I had to buy a few shares recently. I expect the market to fall between Feb-Mar and when earning season gets near, the market goes up and I’ll sell again when they get close to highs. Then I will listen to Tom Lee and expect the big fall after earnings.

 

[rutgersdave]

32% = Bear
Even in retirement! You should at least have 50% or so sitting in a low vol ETF like VTI or VIG. Try the 3 bucket retirement strategy. Only need cash/fixed to cover the next 3-5 years of expenses.
😁

With this environment, maybe slightly conservative but give him money to buy at market drops. I go up to 80% and down to 40% equities depending on if the market is up or down. I like to take profits when the stocks are at their high normally when earnings are to be announced and buy in between earning season when the stock falls. I tend to have the same strategy as RU IN IM which is take advantage of the situation.

Oh, I’m been giving away some of my assets to relatives already. I figure they will remember me as the generous relative.

 

[T2Kplus20]

With this environment, maybe slightly conservative but give him money to buy at market drops. I go up to 80% and down to 40% equities depending on if the market is up or down. I like to take profits when the stocks are at their high normally when earnings are to be announced and buy in between earning season when the stock falls. I tend to have the same strategy as RU IN IM which is take advantage of the situation.

Oh, I’m been giving away some of my assets to relatives already. I figure they will remember me as the generous relative.

FYI - based on the math (and numerous analyses), even if you perfectly time the market and buy at every bottom, the person DCA'ing still gets better returns and makes more money. Why? Because 98% of the time a new ATH is followed but another ATH.

Jittery investors miss out on so much. Which is fine if it helps them sleep better at night. The market is about personal preference and psychology.

 

[RUAldo]

There's also the arguement for diversification. It doesn't have to be more than 5% of a portfolio. One thing I'd look at is the rate of foreign taxes on those dividends. Is might be higher than the tax rate on US holdings.

Another thing I never understood = 5% diversification in international is a total nothing-burger. Even if the portfolio is $1M what is $50K of international exposure going to do for you? It’s like when people talk about making BTC 1%-2% of their portfolio I don’t see the point. IMO, if someone truly wants to diversify with international exposure it should start at 10%-20%.

 

[rutgersdave]

FYI - based on the math (and numerous analyses), even if you perfectly time the market and buy at every bottom, the person DCA'ing still gets better returns and makes more money. Why? Because 98% of the time a new ATH is followed but another ATH.

Jittery investors miss out on so much. Which is fine if it helps them sleep better at night. The market is about personal preference and psychology.

Way back when, I got ahead of everybody by trading my company stock WX for several years. I was watching my company Westinghouse stocks go up and down about 1 dollar up and 1 dollar down. I just sold when the stock went up 1 dollar and brought it when it back when it went down 1 dollar. I noticed the 401k balance had grown significantly and then realized $1/$20 equals a 5% return. I just had to do it 8 times to get a 40% return annually. I did this for several years but the company tried to stop it by changing the time they brought the stocks. I had 200% return in 4 years that normally takes maybe 18 years to achieve. I was noticed by my brother since his company stock increased 5 times over 10 years and I was seeing no gain just holding my company stock. That’s how I got ahead of the game. I didn’t have such a high paying job like you.

No more DCA since I have been retired for 16 years and no more income coming in other than social security and a small pension. I have to sell to reallocate to a better situation or stock. Your advise is good for the average to below average investor.

 

[T2Kplus20]

Another thing I never understood = 5% diversification in international is a total nothing-burger. Even if the portfolio is $1M what is $50K of international exposure going to do for you? It’s like when people talk about making BTC 1%-2% of their portfolio I don’t see the point. IMO, if someone truly wants to diversify with international exposure it should start at 10%-20%.

I have 3-4% international just by random holdings in my biggest funds/etfs. Agreed, going to 5% is almost nothing. As for BTC, 1-2% is a general guideline for those new to crypto. BTC's vol is beyond what traditional investors are used to, so I think it is a good starting point. I'm around the 4-5% with crypto with the large majority being BTC (via the coin directly and FBTC in two of our rollover IRAs).

 

[T2Kplus20]

Way back when, I got ahead of everybody by trading my company stock WX for several years. I was watching my company Westinghouse stocks go up and down about 1 dollar up and 1 dollar down. I just sold when the stock went up 1 dollar and brought it when it back when it went down 1 dollar. I noticed the 401k balance had grown significantly and then realized $1/$20 equals a 5% return. I just had to do it 8 times to get a 40% return annually. I did this for several years but the company tried to stop it by changing the time they brought the stocks. I had 200% return in 4 years that normally takes maybe 18 years to achieve. I was noticed by my brother since his company stock increased 5 times over 10 years and I was seeing no gain just holding my company stock. That’s how I got ahead of the game. I didn’t have such a high paying job like you.

No more DCA since I have been retired for 16 years and no more income coming in other than social security and a small pension. I have to sell to reallocate to a better situation or stock. Your advise is good for the average to below average investor.

Interesting. I don't think you can do stuff like that in 401k's anymore. They are highly restricted on trading and investment options. In biotech, we get a ton of equity, but via options and RSUs. Even ESPPs (stock purchase plans) are pretty restricted.

We've gotten ahead by brute force savings (living below our means and investing excess money) and buying in bear markets. We did this in 2008/2009 without really understanding what we were doing in real time, but fingering out how powerful it was afterwards. Plowed in as much excess money as possible in 2018, 2020, and 2022. 2022 was the first time I moved some investments over to leveraged ETFs (broad market indexes) to maximize the post-bear rally. Worked amazingly well.

Never thought we would be where we are today with our portfolio.

 

[rutgersdave]

Interesting. I don't think you can do stuff like that in 401k's anymore. They are highly restricted on trading and investment options. In biotech, we get a ton of equity, but via options and RSUs. Even ESPPs (stock purchase plans) are pretty restricted.

We've gotten ahead by brute force savings (living below our means and investing excess money) and buying in bear markets. We did this in 2008/2009 without really understanding what we were doing in real time, but fingering out how powerful it was afterwards. Plowed in as much excess money as possible in 2018, 2020, and 2022. 2022 was the first time I moved some investments over to leveraged ETFs (broad market indexes) to maximize the post-bear rally. Worked amazingly well.

Never thought we would be where we are today with our portfolio.

No I see the government or companies decided that employees can only buy a % in company stocks since they are afraid of Enron situation. I broke all the basis rules in investing, don’t buy your company stocks, don’t put all your assets into one stock, and buy and hold don’t trade. My brother and many in his company BDX made millions by putting their 401k all in their company stock, he also had his bonuses and stock options. I’m sure plenty of Merck, Exxon, JNJ, And Pfizer employees did the same.

 

[T2Kplus20]

No I see the government or companies decided that employees can only buy a % in company stocks since they are afraid of Enron situation. I broke all the basis rules in investing, don’t buy your company stocks, don’t put all your assets into one stock, and buy and hold don’t trade. My brother and many in his company BDX made millions by putting their 401k all in their company stock, he also had his bonuses and stock options. I’m sure plenty of Merck, Exxon, JNJ, And Pfizer employees did the same.

I have never had company stock available in a 401k. All of my stock programs (including my current) just dumped into a separate Fidelity account. Finished up my MBA and started my career post-Enron. Also, my first company (worked for over 10 years) was a Japanese pharma whose stock was only on the Nikkei. That stock program was awesome. It was essentially just a cash/2nd bonus tied to the value of the shares. Very simple.