Investing General Discussion

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Sanrith Descartes

Sanrith Descartes

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tugofpeace said:
I just started doing that; earlier I had about 70% SPY, 20% VXUS, 10% bonds. Got rid of the bonds couple months ago and started going 80/20. Now I'm 100% SPY.

The thing I don't like is that I don't have VTI in my 401k. It's gain since inception is 413% while SPY is 1260%.. caveat is that SPY is very tech heavy. In a limit down or crash scenario I think those holding 100% SPY will lose a lot more than thsoe holding VTI due to the diversification.

It's why I'm trying to figure out how to add some of that diversification into my 401k.. but I don't think I have any real funds which can do that.
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You have to let go of the "in a limit down situation" thinking. Unless you are already retired and on fixed income, this mentality is limiting your returns.

Look at every limit down instance in the last 100 years of the SPY. Did it recover? The answer is yes. The idea is you don't sell in a limit down situation and realize a loss, you buy. Buy, buy, buy.

It's why we say you need to leave you emotions at the door as an investor. If SPY ever goes to zero, we have much bigger problems than our 401k balances. And that is why you diversify your investments with guns and ammo.

And I say all of this as one of the more risk averse people in the thread.
 
Gravel

Gravel

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Even as someone who's retired, I don't worry about those. Shit, our retirement started with a good 20%+ drop. It has since recovered all of that. I told my mom the same thing. Unless she planning on dying in the next 2-3 years, the bonds are only holding her back. If she wants her money to last until she's 90, just in case, well, you need to be invested just like someone who's 40 planning to retire in 25 years.

It's one of the fallacies sold to older people that I just don't understand. Yes, you want to preserve your money, but you if you expect to have a 20+ year retirement, I'm not sure bonds are even going to match inflation.

I think Blazin mentioned it a few weeks ago, but there was basically a 30 year bond bubble and outside of that they're shit.
 
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Blazin

Blazin

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A sustained crash isn't really possible, to believe that you have to believe that the govt will solve it's debt problems that the dollar is not going to be devalued. The market WILL go up, it's delineated in US dollars those dollars are debased, the economy doesn't need to get better, companies don't need to earn more, still goes up. It's a testament to the shittiness of the dollar not the strength of the market.

Real long term concerns are more along the lines of does the market go up enough to keep my purchasing power in place. Unless you are super bullish on DOGe and the govt is about to constrain spending, we are going to solve entitlement issues with medicare /ss and on and on, then I guess we can talk about fearing a deflationary bust (a crash).

Now imagine understanding that and thinking " you know ,I want to own govt debt as a material portion of my portfolio"
 
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Sanrith Descartes

Sanrith Descartes

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I don't knock anyone who is in the "stocks early and then go to bonds as I get older" mentality. Why? Because it has been IV fed into you by the media, Wall Street, and pretty much anyone else flagged as an "expert" for a century.

The trick is to get unplugged, look at the data (or if you can't then listen to those who can) and see the truth. To paraphrase a certain Joo who has a sister with giant tits
, "data doesn't care about your feelings." And I speak from experience.

When I first started posting in this thread many years ago, I was one of those who bought into everything they said on CNBC, did the Boglehead cult for a while, the 5 stock strat, owned some shitty bonds, the whole nine yards. And yeah, I owned IXUS too. And emerging market bonds. Chyna stocks. And my returns were shit. Year after year.

Do I own some bonds today? Yes. Farm bonds. 6.35% that I expect to be called in May. I see that as a 1-yr trade that nets me a guaranteed 6.35% return. It was paying more than the interest on my cash core position.
It's not a long term investment. Even at my advanced age. Why? I can make better in equities with an upside over a long time horizon.

It's not that quality bonds are "bad" fundamentally. It's all about opportunity cost and lost compounding. For a retired person 75 years ago who had zero debt, house paid off and a portfolio filled with 7.5% treasures, they didn't care about opportunity cost, they only cared about not touching their principal in retirement to pass the stash on to their kids. It made sense for them. Especially when rhe market was averaging 9% with risk.

Tldr: if you aren't dedicated to investing, own the US index, look at it twice a year, buy more when you can and leave the meme stocks to Roaring Kitty. You will thank us in 30 years.
 
Blazin

Blazin

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We as a nation are odd about personal finance, people don't understand that wall street banks are the sellers of govt debt. That's their trade. We then ask them what we should do with our money and the debt salesman tells you you should buy debt. It's like being surprised that a car salesman wants to sell you a car. Now I have to stop posting about this issue or I'm going to wake up a full crypto bro.
 
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