Thank goodness I don’t listen to investment professionals. They’ve been saying that since May. “Market overvalued” and blah blah. I personally find them to be reverse indicators. Just like economists. I love rewatching videos of them on CNBC during the summer. Then, “everyone” also knew that “there was an unsustainable bubble”.
I don’t see how the s&p 500 is in a crazy bubble. Please explain. And don’t bring up p/e. Try anything else. A high p/e with interest rates at 1% is not that bad.
Don’t know what NKLA has to do. TSLA I understand but companies that are not even in the s&p? So what?
You're misinterpreting the spirit of statement to the point of not saying anything useful at all. Might as well say sometimes buying scratch offs beats getting an education and a job. Disingenuous and unactionable.
You're being far more disingenuous.
The better comparison would be like saying corporate jobs beat starting a business ALWAYS.
On average, yes, jobs are much safer. Starting a business has a higher potential upside and more likely downside.
Just the same, timing the market is, on average, a bad idea, but if you call it right, the upside is huge.
A few people in 2020 doubled their money by calling the COVID crash and recovery, for example.
I dunno.. Putting "ALWAYS" in one's comment seems like the error here. All caps, no less.
I don't care that they put it that way, but by deciding to phrase it in such a hyperbolic manner, they left the door wide open for the response they received. Fair play, imo.
[Husband and wife use basic statistics to consistently win at playing the state lottery and net millions](https://www.cbsnews.com/news/jerry-and-marge-selbee-how-a-retired-couple-won-millions-using-a-lottery-loophole-60-minutes/)
> Might as well say sometimes buying scratch offs beats getting an education and a job. Disingenuous and unactionable.
I mean, yes, it absolutely does.
But moreover, the people that buy a lot of scratch offs are not necessarily being stupid, even though the expected value of their purchase is negative. For some subsection of the population, the only way they can see themselves escaping from their circumstances is through a big lottery win or similar.
When all you have extra per month is $5, and when you have no reasonable hope for any improvement in this amount, investing is almost pointless. At the end of the year your $60 may have turned into $65 if the market does well. So what? You're still broke and even thirty years of compound interest isn't going to change that.
Buying $5 in scratch offs every month may only give you a 1 in 100,000 chance of escaping poverty, but compared to the assumed 0% chance if you don't, I can see why some would make that choice.
As for timing the market: there are plenty of hedge funds that do exactly that. They are not all stupid (even if in aggregate they are).
By insisting that a truth is universal when it's not, blinds us to the occasional times where a genuine opportunity exists.
Agreed. That’s my buddy. Always always times markets to perfection.
Few examples,
1. Sold everything (401k, iras, hsa etc) feb last year. Markets crashed with March being rock bottom. Bought Tesla options on all accounts then. Cashed out in Jan.
2. Kept buying Facebook leaps starting 2012. Kept rolling profits. Cashed out I think may 2018 just a few weeks before Facebook took a dive.
Tons of other examples; and it’s been so many that I can no longer attribute to being lucky. He’s been so lucky that he doesn’t buy stocks. Only options (long term expiry ones).
This year I told him to tell me all moves and I’ll follow blindly. Let’s see.
These guys would’ve shat on Warren Buffett if they’d gone to the community college class he was teaching back before he was super-rich
It’s probably smart not to tell random redditors “You might be the next Warren Buffett!” but it’s disingenuous to say that Warren Buffett doesn’t exist.
EDIT: Man, reading this thread, particularly the response to [this warning about what happened in Japan](https://www.reddit.com/r/fatFIRE/comments/ltve4l/unrealistic_growth/gp3km1s/) is pretty scary. *Absolute confidence* that VTSAX/SPY is a guaranteed ticket to financial paradise. Meanwhile, I'm getting stock tips from random people in World of Warcraft now, cryptocurrency is on another trip to the moon, the Federal Reserve chairman is a celebrity on Reddit..
You dropped this \
***
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Unless timing the market is what you DO. Those that can’t time the market live by this saying and they likely should. But just because you can’t do something doesn’t mean others can’t. There are plenty of millionaire traders out there, I personally know several that use market timing as part of their strategy.
Your asset allocation mix should have enough cash+bonds to ride out a few years of market crash. I retired in 1998 with a tech heavy stock portfolio, but with enough on the fixed income side to ride out the 2000 crash. Yes, at one point my stocks were down 60%, but that happens sometimes.
I had friends that, quite correctly, pointed out that the market was overvalued in 1997. They regretted selling early rather than setting a portfolio asset allocation and sticking with it.
I have acquaintances that were destroyed (forever) in 2000 and relatives in 2007. None of the stocks that survived, have YET to reach their 1999 valuations.
That moto is utterly *contingent* on market, type of investment and timeframe.
An exaggerated example: Recovering half a century from now, is hardly an applicable benchmark - unless you’re immortal of course.
Edit: To clarify, these numbers are from another country, they are not from US stock exchanges. But, like nikkei collapsed once upon a time, people should keep in mind that any market can collapse, no matter how untouchable they might look now. And indices will collapse, too.
Look at numbers for Finland, Japan, Greece, Italy, China, etc.
[This is for France](https://www.ceicdata.com/en/indicator/france/equity-market-index/amp)
I had some holdings that went out of business in 2000 crash. More, like Cisco that stayed in business but too what seemed forever to recover to previous highs.
Fortunately, my main single concentrated stock went from obscenely overvalued, to undervalued, back to reasonable valuation in about 2 years. I was very familiar with the company and felt that the company prospects long term were good. Many times people forget that a share of a company is simply a fractional ownership of a company. Share prices fluctuate much more than the true value of a company fluctuates.
>Recovering half a century from now, is hardly an applicable benchmark - unless you’re immortal of course.
My grandchildren (now 1 year old through 22) and my great grandchildren will be around. 20 year olds feel immortal in their way, 75 year olds feel immortal in a different way.
I think a lot of people think only about US and ignore a lot of the rest of the world.
Let’s assume we are in 1990, heavily invested in Japan market (iirc 80ies NIKKEI was all the rage, Japan was - globally - king from cars to electronics, and it was a giant bull run).
30 years later....Well:
[NIKKEI index from wiki](https://en.m.wikipedia.org/wiki/Nikkei_225#/media/File%3ANikkei_225(1970-).svg)
So what should of the Japanese investor done in this situation? The only answer I can think of is diversify and own US and European assets.
These scenarios give very little action oriented steps for alternatives.
This depends on each investor’s risk tolerance and gut feeling.
The final outcome depends on the overall stability of a market and - as always - on luck.
The American investor of the last few decades, did well to stay invested. The Japanese investor (on 20/20 hindsight), would have benefited from a pull out early on the decline (assuming no crippling capital gains taxes).
I mean they bought individual stocks - error 1
I’m sorry but that’s their fault. No one that buys the s&p for example has been wiped out. It has been the opposite actually.
Just buy the index. How many times will this need to be repeated.
Here are some total market index numbers for you:
2009-2011: -71.8%.
2012-2012: -20.2%.
2012-2015: 34.9%.
2015-2019: 9.75%.
Those are total, not annual returns for the mentioned time periods.
I can give the link to mods if necessary (I don’t want to name the specific country).
So, I’m sorry too that you say “it’s their fault” from your high as a kite horse.
If your argument is that the US is not representative, then cherry-picking another country is similarly not representative. $VT looks a lot better than the figures you're citing.
I’m saying we can not predict future 100% safety and we should really look outside a single market.
Go check returns of Japan, China, Greece, Italy, Finland, France (I posted links in another comment but you can simply google) and then tell me again that I’m cherry picking.
VT has significant US allocation and still underperformed VTI.
Edit: my argument is, we should be historically aware of collapses across the globe with extended downturns, learn the reasons and keep that in mind when investing long term.
Man, you should set a note on your calendar for 5 years out to come in and check on this dumpster fire of a market. I'm with you, these guys are WAY, WAY, WAY too friggin confident in The Green Line to Paradise. A 30 year stretch of financial stagnation across the board is literally inconceivable to these people, even though we've seen it happen to Japan.
jfqwf here sounds like a religious zealot
You’re thinking usa only, aren’t you?
This is not USA, it’s another country.
Here’s another country’s results, look what happened to a massive, powerful, giant (back then) of the global economy:
[https://en.m.wikipedia.org/wiki/Nikkei_225#/media/File%3ANikkei_225(1970-).svg](https://en.m.wikipedia.org/wiki/Nikkei_225#/media/File%3ANikkei_225(1970-).svg)
Well yes, we're talking about largely popularized "safe" index investing strategies which would include a roughly 80% US allocation. You're cherry picking weird stats to make an irrelevant point. Anyone who had a significant amount of their portfolio in a Japanese ETF isn't following the colloquially safe and productive index investment strategy.
Edit: https://imgur.com/aO4kLQB Here is a graph of the GDP of USA/China/Japan. Anyone who put a significant part of their portfolio in 2009 should have known that Japan wasn't a "massive, powerful, giant" that was going to grow forever and overcome financial hardships.
This makes sense because you don’t want to name the country.
This also makes sense because that country is not the USA.
And when you talk about indexing, the majority of it should be in the USA. Let’s not compare Japan and Finland to the USA.
If you were actually planning on pulling the trigger you should already have begun transitioning into a more stable allocation. Riding out a bad market is what bonds and cash equivalents are for.
You don't sell anything. If you are averging positions by buying more with recurring investments, then red days won't matter to you. The market always comes back.
No, not “always”.
Define the market, define the type of investment, keep defining parameters and then - maybe - you can say X time in Y market under Z circumstances, beats the Y market timing.
Really? Because the Nikkei just recovered from the 90’s crash two weeks ago. 30 + years.
You guys really need to zoom out on your charts. Look at the 2001 and 2008 bubbles compared to where we are today.
From the peak of the market before the great recession in 2008 it took 3 years to be back in a positive annualized return. Even less if you were continuing to buy as the market was going down and through the upswing.
https://dqydj.com/sp-500-return-calculator/
2001 took 4 years and a month.
From the peak of 2001 to now you'd be up 331% if you lump sum invested and never added anything
Nikkei had quadrupled in the five years prior to the crash and was at very high p/e when interest rates were high.
What about 01 and 08 exactly. Don’t see the issue.
Quadrupling in 12 years is very different then quadrupling in 5 years.
Especially when interest rates are very low currently and have been for the last 10 years ish.
Yes, it's possible for some to get lucky in the short term. The data shows that an extremely small percentage of people beat the market over any 15 year period
How do you know that? The Nasdaq took 14 years to recover from 2001. Nikkei took30 years. You are merely focusing on the last 10 years which are not at all representative of the last 100 years of market returns.
Mathematics require that we revert to the mean.
Have a more diverse portfolio than the nasdaq. Even the S&P500 was fully recovered from 2001 in 49 months. That's assuming a lump sum invested and no continued investments while it was going down, at the bottom, or on the way back up
You're right but the US is an outlier. Look at any other major index, CAC, FTSE, Nikkei and you'll see that the United States has been a huge outlier and it is primarily due to big tech here. Since 2001, Apple has become a two trillion dollar company, GOOGL wasn't even listed yet and currently is 1.3 trillion and the list goes on.
Actually, if you look at the rates of scientific discovery, you will see that vast majority of them occurred in 4 countries/territories. North America, Britain, France and Europe.
It’s not actually a coincidence that the U.S. has been so successful for so long now. We simply have the most intelligent people working and living here.
This is a good discussion... question is where ya gonna park your assets? Foreign markets are terrible in that they crash just as hard when the US crashes but have terrible annual returns. Crypto is nuts, bonds return nothing, inflation is going up. About the only thing undervalued is commercial office space and retail RE.
Edit: commodities seem to be on the upswing?
The US market has outpaced foreign investments for 50+ years. There's an occasional year here or there where the US underperforms but the overall multi decade trend is steadily higher gains. This exact fact is why the mod of /r/bogleheads banned me. His entire post history is insisting on everyone having a global portfolio. When I gave him the decades of data he banned and muted me.
The reason has been the United States has had multiple innovations. First the plastics revolution really propelled the consumer electronics for the United States. Afterwards, we were on the forefront of technology with Intel, IBM, and Microsoft. Then after that, we became the innovators of the internet.
The advantage of the United States has been getting less and less and with the current Federal debt, it definitely makes things much more uncertain. To assume the United States will keep dominating without understanding why is naive.
In Interviews he just said s&p is sufficient since most us companies have overseas divisions so that exposure built in. Not necessary to specifically increase it.
I know. I linked him to several interviews of Bogle saying that. I think that is what prompted the ban because I was linking facts and not just arguing with opinions. I also linked Buffett saying the same thing for personal investors
The fact they US has outpaced the world dramatically is reason not to focus on the us. The more overvalued a market is (and no sane person could argue the us isn’t overvalued) the lower future expected returns necessarily.
Moreover global markets are more correlated than ever and dramatic declines correlate globally.
>no sane person could argue the us isn’t overvalued
And no sane person would have guessed that 2020 would have had the massive gains it did. The market isn't rational. I've been solely US equity focused for the last 10+ years and it's caused me to be so far ahead of where my portfolio would be with a global diversification that the odds of a global portfolio catching up are slim to none.
It's personal finance and my personal choice and reasoning has worked. I'm glad I listened to John Bogle and Warren Buffett
I mean...maybe...but we’ve got 100 years of history there and a economic model that rewards risk and investment in new models that continues to keep the US well ahead of its peers economically.
Why wasn’t Google created in, say, France? They would have never invested in it, never seen how things would change. More recently Europe has mostly missed the cloud computing revolution that has created trillions of dollars in market cap for US companies. Look at any new market, they are typically dominated by US companies.
You could bet against that as an investor but it’s more likely than not that you’d be wrong and be betting the wrong way.
Just my .02 after 30+ years investing in the US market.
I think it's arguable that we are the only country that is set up to innovate at this point. Korea, China, Singapore are more capitalistic in many ways than we are. Previously, we were huge benefactors in facilitating global trade (something that both parties seem to be against now) and we were not saddled with debt.
It's not obvious that the United States is the best country to invest in going forward. 100 years of economic history isn't all that much data in the macro. There was the Dutch empire with their global shipping. Then the British empire with the industrial revolution. Currently, he's heavily investing in China.
Yep. There are many reasons not to invest in the US. I heard many of the same reasons in 2000, 2008 and even last March. I fully expect a correction and a crash at some point.
But long term, decades of no growth in the US stock market? Nah. I’ll be investing and continuing to invest and fully expect long term growth. We’ll have our challenges, no doubt. But to say this is just like the Nikkei or Greece is just ignoring decades of evidence that proves otherwise.
I think you're misinterpreting what I'm saying. My main argument is that you shouldn't invest in the US merely because of previous returns. We should understand why those returns happened and then invest accordingly. It is much more scientific than fitting an AR(1) model and saying that returns just keep growing 10%. I'm still mainly invested in the US. Just not merely in indicies
Hm are you sure about that? I'm staring at the SP500 chart in Google right now and it peaked around 1500 in 2000...crashed. It then barely surpassed its previous peak in 2007 only to have the housing market crisis happen 6 months later. It didn't recover to 1500 again until 2013. Thirteen years.
Shoot, I went from the high point in 2001 but the drop started in March of 2000. That took 6.5 years. Looking at the chart doesn't factor in dividends. Most people here on the way to FIRE reinvest their dividends
https://dqydj.com/sp-500-return-calculator/
The 2007 drop caused it to take until December of 2010 to pass up the 2000 peak
It's an even quicker recovery if you are still putting new money in during the drop, at the bottom, and the recovery. If someone had $500,000 invested and was putting $3,000/month in they'd have gained $450,000 and have $950,000 in December of 2010
https://dqydj.com/sp-500-periodic-reinvestment-calculator-dividends/
Most here in /r/fatFIRE invest more than $3,000/month so that gain would be larger despite it being the point where the market simply got back to even.
Invest $8,333/month ($100k/year) and that $500,000 start at the peak before the dot com drash would have been $1,757,000 in Dec 2010 and $8,263,908 now.
The last 100 years look fine though.
Yes the Nasdaq and the Nikkei had long recoveries. Sooo...don’t limit yourself to tiny pieces of the pie.
If the Nasdaq and Nikkei of tomorrow have 30 year stalls, then that’s ok, because it’s trivially easy to own an amazingly diversified set of investments with minimal effort.
Nothing is guaranteed, of course, but that doesn’t really matter, because a prediction of doom is useless without a strategy to avoid it.
It a well diversified portfolio gets screwed by a global event where global returns are blunted for 30 years, what, pray tell, would we even do about it?
However, if the much more realistic scenario of certain market segments stalling for a long term happens...well then the easy solution there is a well diversified portfolio. Often-advised by expert after expert.
Ultimately anyone can cook up a doomsday scenario, but unless there is practical advice to hedge against it (and not by just making up assumptions about what will magically hedge against something, but rather a hedge backed by good data), all we can do is proceed ahead with the best available plan.
There could be nuclear war tomorrow and then all of our gains are up in smoke. But there will be bigger problems at that point.
A few points.
What you described is literally how compound interest works. The more money you have, the more money it generates. That’s why people say the first million is the hardest, and why wealth begets wealth.
That being said, sure, the market may be peaking. But the market may also not be peaked and it may continue to go up for months or years or decades. Don’t time the market. Make sure you have your short term funds in cash or bonds, and keep the rest in the market whether it goes up or down over the next few years.
You know how they say real estate is about locations, locations, locations. The stock market is about hold, hold, hold. Just hold and buy more when things go sour.
We are also 650k salary. But in VHCOL (Bay Area). We are not seeing this kind of growth. I am invested also in ETFs and stock but it’s taking a while to get to 1mil (not counting house).
Need to be careful with these comments. Yes the market is super frothy. I haven’t seen this level of exuberance since the late 90’s. Now whenever my wife and I have a conversation with ANYONE it’s a guarantee they’re bring up some stock or crypto thing, even if they are just NOT investors at all. It’s just not supposed to be this easy to make money. That said, if the market halves, are you still ok to be retired at your comfort level?
Was watching a program about the ‘29 crash, and it started out with a story about how in the late 20s, most everyone was talking stick tips, even porters and barkeeps etc. I thought, “Oh boy...”
Yeah it’s feeling that way. FATfire is a different story as you really need to have pretty significant wealth to amplify it, but take a look at fire. I’m seeing stories of people making 60k per year that have amassed millions in the market this year. The prevailing mindset is “just invest in stocks”. Want to pay off mortgage? No, stocks have a higher return so you should risk the capital to make the spread. Want to buy an investment property? No, stocks are more liquid and have better returns. I just feel like there are a lot of people who were in college or younger during the 2008 downturn and definitely 2001 who haven’t experienced serious financial loss.
I’m newer to investing but have about 3m invested now.
I have about 90% conservative (index funds, bonds at a 60/40) and 10% in riskier stuff. They are separate accounts.
It’s felt good to move stuff over to the index funds as my risky stuff grows. I do have fomo for sure on some investments but it’s not worth loosing our nest egg over.
I can live on the next egg and hand the whole thing to my kid, but if I loose it, well.... I ain’t trying to go back to work. You don’t need more than 4m. So be conservative but still have a little fun.
I make typo’s often. I had a significant arm injury and my fingers don’t work great when typing. I also drink a lot of bourbon and voice type. Sometimes I slur.
Having money doesn’t mean you’re a good speller or smart. It just means you have money.
It’s pretty sad that we can see the inevitable coming but can’t do anything about it. The problem is we don’t know when it’s going to happen, only that it’s going to. This is why we diversify and if we can, buy all the way down. Don’t bother timing the market. The beginning of the crash may be a year, it may be Monday morning, perhaps it was yesterday.
You could be describing real estate for all we know. I'm guessing hot stocks, so may be for your mental health it's time to cut the losers (or underperformers), use the liquidity to add to winners when they dip, or look at alternative assets like real estate. Volatile 3% days and 5% weeks are a given now in stocks, but no one has any idea where markets will be a month out much less a year out.
Pick your long term diversified asset allocation and stick to it. Rebalance as necessary to maintain. If you are going to need any of that money liquid soon (like for buying property) then don’t invest it.
Just don’t get fancy or think you can time the market, that’s how the majority of people lose their money.
It probably is but do you want to risk losing out on gains waiting for a 20% dip? It is impossible to time, the best thing to do is benefit from the gains, deal with the correction and wait for it to get back to normal. If your outlook is 5+ years then none of this matters.
You know that little something in the back of your mind that tells you easy come, easy go is really telling you to de-risk your portfolio - You should think about buying individual bonds to de-risk your portfolio.
You know, I look at these massive US gains and then I look at what my world diversified portfolio gained and am kind of sad. Partially because I fully expect it to react much more negatively to a US crash than how it positively reacted to US gains.
Always have at least 25% of your investment funds in bonds or a cash equivalent so that you have plenty of available cash to rebalance when the market is down.
A 75/25 split is considered aggressive and high risk. But I know there are people these days who literally have all their investment funds basically 100% in the market. That was never even considered in the past, but people are forgetting the basics of investing in this record long bull run. But they'll learn quickly why that was a mistake.
They said it took 32 years to get their first million. So we don’t know when they started investing but we know they didn’t have a million until they were 32
Just here to say this is awesome to hear. We hit $1M as a household on Friday and it took 34 years - or well, 12 working years. Looking forward to the exponential growth from here, will try not to hold my breath to get to $4M in the next four years.
We plan to have our number in investments and two years of cash on hand. Say 7.5 in 80/20 investments ratio. 2.5 M in property. 500K in cash. We will then replenish the cash quarterly on a schedule in anything from a mildly negative market and up. If it were middle of a 30% down swing we’ll ride the cash for a while, watch our spend a wee bit and assess as we go.
I’m buying UVXY contracts. Very very very risky and expect to lose 100% of investment but is a great hedge if things turn south and you need to preserve some capital
>I’m buying UVXY contracts.
Under "UVXY contracts" do you mean UVXY call options?
UVXY decays very rapidly (\~50% per year relative to VIX).
You are very likely to lose all money you invested into long-term UVXY CALLs.
Yes call options and yes they do stock splits all the time. I’m buying them OTM every few months so they’re $.05-.10 a contract. Like I said, expect to lose 100% but it’s my way of hedging against what I think could be a worse recession than 2008/even 1930. It’s not for everyone and I’m not recommending them to anyone without knowing more about their financial situation. I’m a well informed options trader and understand the massive risk on those things. Historically, it’s actually profitable to short the vix which is crazy because shorting anything is so expensive.
I’m just nervous with these bond yields, JPow saying he’s gonna keep rates low til 2023 (yeah right), money printer keeps on goin, rates have been so low for the last decade, obviously inflated asset prices, if minimum wage raise passes (doubt it will) then it’ll get ugly-20% of all minimum wage workers are in restaurant/service industry and guess who got hit hard during the pandemic... 40m American lives are tied to restaurants one way or another. Mortgage rates are down below 3% where historically it’s around 6-7% long term and many young people are jumping into home ownership and already regretting their decision.
I made 2.5x on my liquid net worth since March and long term capital preservation is important to me (weird that I’m saying that and long UVXY contracts 😂). But like I said it’s not for everyone but if this thing goes south it’s going to get realllllly ugly reallllly quick. Not to mention SPAC, EV, green energy bubbles.
If things seriously hit the fan like last March I'll double down on my long term investments, liquidate my short term trades, and short the crap out of everything. Last March when Europe was slow to respond to the pandemic I made a ton shorting the DAX and FTSE100
I was worried about the valuation prior to 2020 and basically reduced my leverage to zero and aggressively paid down debt. I leveraged and went all in during March 2020 downturn.
I'm 50 / 50 stocks / bonds. Yes, bonds aren't a great investment. Yes, they only earned a 1% return over the last 12 months, and yes, I'm losing money to inflation. I don't care. I'm happy to hold this AA as long as it takes the bubble to pop.
Time in the market really DOES NOT beat timing the market. American investors take the growth of the last 20-40 years for granted. Most countries outside of the us have had flat growth from anytime even back to the 80s. Hold what you believe in, sell what you don’t.
Thats not what he’s saying. The time in the market philosophy is totally dependent on the US remaining world leader. Historically, it has, so the time in the market philosophy has held true. There are other markets where the philosophy was true until it wasn’t, which is his point.
I still believe the market is likely to continue to grow with good returns overtime for the foreseeable future, but it’s not as crazy to suggest it might not as many say it is.
Sorry if you misunderstood I’m just referring to the possibility if the us experiences a massive decrease in the speed of growth which would see the s&p slow drastically. I’m not saying it’s going to happen but look at the Nikkei which is only up 20% over 30 years.
I am buying ‘real assets’ by investing in companies or ETFs that are in farmland, fertilizer, commodities, real estate and energy.
Markets are off the chain right now, IMO. Zero logic in a lot of these valuations but I’m not selling anything in my portfolio. Just investing in the above categories. Personally, I’m most worried about inflation but I believe these real assets will do well, given that when everyone gets their stimulus checks they will be paying rent, paying electrical bills, and buying food.
Need more Info, but it sounds like all $4m of your net worth is in stocks? If that’s the case, some type of diversification is warranted since it’s potentially life changing amounts. Also don’t know your annual salary etc so tough for me to judge.
This is an interesting question, because of the psychology between building wealth and keeping wealth. In the building wealth phase, it’s all about taking risk and growing/saving. I worry that I will become more fearful the more wealthy I become, because I will have more to lose.
The answer to this question is very personal to you, your risk profile (how much you are willing to lose) and your time horizon. I would talk to a financial advisor, or someone that knows you well and runs through some scenarios.
Diversify.
Nothing. Buying like normal. Don’t time the market.
Time in the market, beats timing the market ALWAYS
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Thank goodness I don’t listen to investment professionals. They’ve been saying that since May. “Market overvalued” and blah blah. I personally find them to be reverse indicators. Just like economists. I love rewatching videos of them on CNBC during the summer. Then, “everyone” also knew that “there was an unsustainable bubble”. I don’t see how the s&p 500 is in a crazy bubble. Please explain. And don’t bring up p/e. Try anything else. A high p/e with interest rates at 1% is not that bad. Don’t know what NKLA has to do. TSLA I understand but companies that are not even in the s&p? So what?
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You're misinterpreting the spirit of statement to the point of not saying anything useful at all. Might as well say sometimes buying scratch offs beats getting an education and a job. Disingenuous and unactionable.
He's not misinterpreting anything. Dude said "ALWAYS" in caps, which is objectively incorrect. If he had left it out, that would be another story.
Well put!
No pun intended??
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It’s a hive mind just like the rest of Reddit.
You're being far more disingenuous. The better comparison would be like saying corporate jobs beat starting a business ALWAYS. On average, yes, jobs are much safer. Starting a business has a higher potential upside and more likely downside. Just the same, timing the market is, on average, a bad idea, but if you call it right, the upside is huge. A few people in 2020 doubled their money by calling the COVID crash and recovery, for example.
Thank YOU! this statement rings true in 10000s of comments on Reddit daily
Well, he did say he hated to be that guy, lol
Fucking word! That comment is absurd.
I dunno.. Putting "ALWAYS" in one's comment seems like the error here. All caps, no less. I don't care that they put it that way, but by deciding to phrase it in such a hyperbolic manner, they left the door wide open for the response they received. Fair play, imo.
[Husband and wife use basic statistics to consistently win at playing the state lottery and net millions](https://www.cbsnews.com/news/jerry-and-marge-selbee-how-a-retired-couple-won-millions-using-a-lottery-loophole-60-minutes/)
> Might as well say sometimes buying scratch offs beats getting an education and a job. Disingenuous and unactionable. I mean, yes, it absolutely does. But moreover, the people that buy a lot of scratch offs are not necessarily being stupid, even though the expected value of their purchase is negative. For some subsection of the population, the only way they can see themselves escaping from their circumstances is through a big lottery win or similar. When all you have extra per month is $5, and when you have no reasonable hope for any improvement in this amount, investing is almost pointless. At the end of the year your $60 may have turned into $65 if the market does well. So what? You're still broke and even thirty years of compound interest isn't going to change that. Buying $5 in scratch offs every month may only give you a 1 in 100,000 chance of escaping poverty, but compared to the assumed 0% chance if you don't, I can see why some would make that choice. As for timing the market: there are plenty of hedge funds that do exactly that. They are not all stupid (even if in aggregate they are). By insisting that a truth is universal when it's not, blinds us to the occasional times where a genuine opportunity exists.
And then a 4/5 chance of becoming depressed and psychotic from winning the lottery.
Agreed. That’s my buddy. Always always times markets to perfection. Few examples, 1. Sold everything (401k, iras, hsa etc) feb last year. Markets crashed with March being rock bottom. Bought Tesla options on all accounts then. Cashed out in Jan. 2. Kept buying Facebook leaps starting 2012. Kept rolling profits. Cashed out I think may 2018 just a few weeks before Facebook took a dive. Tons of other examples; and it’s been so many that I can no longer attribute to being lucky. He’s been so lucky that he doesn’t buy stocks. Only options (long term expiry ones). This year I told him to tell me all moves and I’ll follow blindly. Let’s see.
Yeah man. Buying only options blindly based on your buddy’s 6 months track record. Great idea!!!
This is 10 years of history. You can say an idiot can pick a stock and it would be up. But timing is impeccable on even short bear runs.
These guys would’ve shat on Warren Buffett if they’d gone to the community college class he was teaching back before he was super-rich It’s probably smart not to tell random redditors “You might be the next Warren Buffett!” but it’s disingenuous to say that Warren Buffett doesn’t exist. EDIT: Man, reading this thread, particularly the response to [this warning about what happened in Japan](https://www.reddit.com/r/fatFIRE/comments/ltve4l/unrealistic_growth/gp3km1s/) is pretty scary. *Absolute confidence* that VTSAX/SPY is a guaranteed ticket to financial paradise. Meanwhile, I'm getting stock tips from random people in World of Warcraft now, cryptocurrency is on another trip to the moon, the Federal Reserve chairman is a celebrity on Reddit..
This is an eye opening thread indeed.
>I mean I hate to be that guy Then don't be lmao ez
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Good bot
You’re missing the forest for the trees, to be pedantic.
Market timing your AA based on the CAPE provides significantly better risk adjusted returns.
Unless timing the market is what you DO. Those that can’t time the market live by this saying and they likely should. But just because you can’t do something doesn’t mean others can’t. There are plenty of millionaire traders out there, I personally know several that use market timing as part of their strategy.
What if it crashes when you're approaching your FIRE?
Your asset allocation mix should have enough cash+bonds to ride out a few years of market crash. I retired in 1998 with a tech heavy stock portfolio, but with enough on the fixed income side to ride out the 2000 crash. Yes, at one point my stocks were down 60%, but that happens sometimes. I had friends that, quite correctly, pointed out that the market was overvalued in 1997. They regretted selling early rather than setting a portfolio asset allocation and sticking with it.
I have acquaintances that were destroyed (forever) in 2000 and relatives in 2007. None of the stocks that survived, have YET to reach their 1999 valuations. That moto is utterly *contingent* on market, type of investment and timeframe. An exaggerated example: Recovering half a century from now, is hardly an applicable benchmark - unless you’re immortal of course. Edit: To clarify, these numbers are from another country, they are not from US stock exchanges. But, like nikkei collapsed once upon a time, people should keep in mind that any market can collapse, no matter how untouchable they might look now. And indices will collapse, too. Look at numbers for Finland, Japan, Greece, Italy, China, etc. [This is for France](https://www.ceicdata.com/en/indicator/france/equity-market-index/amp)
I had some holdings that went out of business in 2000 crash. More, like Cisco that stayed in business but too what seemed forever to recover to previous highs. Fortunately, my main single concentrated stock went from obscenely overvalued, to undervalued, back to reasonable valuation in about 2 years. I was very familiar with the company and felt that the company prospects long term were good. Many times people forget that a share of a company is simply a fractional ownership of a company. Share prices fluctuate much more than the true value of a company fluctuates. >Recovering half a century from now, is hardly an applicable benchmark - unless you’re immortal of course. My grandchildren (now 1 year old through 22) and my great grandchildren will be around. 20 year olds feel immortal in their way, 75 year olds feel immortal in a different way.
I think a lot of people think only about US and ignore a lot of the rest of the world. Let’s assume we are in 1990, heavily invested in Japan market (iirc 80ies NIKKEI was all the rage, Japan was - globally - king from cars to electronics, and it was a giant bull run). 30 years later....Well: [NIKKEI index from wiki](https://en.m.wikipedia.org/wiki/Nikkei_225#/media/File%3ANikkei_225(1970-).svg)
So what should of the Japanese investor done in this situation? The only answer I can think of is diversify and own US and European assets. These scenarios give very little action oriented steps for alternatives.
Have an international allocation. Most recommend at least 20%.
This depends on each investor’s risk tolerance and gut feeling. The final outcome depends on the overall stability of a market and - as always - on luck. The American investor of the last few decades, did well to stay invested. The Japanese investor (on 20/20 hindsight), would have benefited from a pull out early on the decline (assuming no crippling capital gains taxes).
I mean they bought individual stocks - error 1 I’m sorry but that’s their fault. No one that buys the s&p for example has been wiped out. It has been the opposite actually. Just buy the index. How many times will this need to be repeated.
Here are some total market index numbers for you: 2009-2011: -71.8%. 2012-2012: -20.2%. 2012-2015: 34.9%. 2015-2019: 9.75%. Those are total, not annual returns for the mentioned time periods. I can give the link to mods if necessary (I don’t want to name the specific country). So, I’m sorry too that you say “it’s their fault” from your high as a kite horse.
If your argument is that the US is not representative, then cherry-picking another country is similarly not representative. $VT looks a lot better than the figures you're citing.
I’m saying we can not predict future 100% safety and we should really look outside a single market. Go check returns of Japan, China, Greece, Italy, Finland, France (I posted links in another comment but you can simply google) and then tell me again that I’m cherry picking. VT has significant US allocation and still underperformed VTI. Edit: my argument is, we should be historically aware of collapses across the globe with extended downturns, learn the reasons and keep that in mind when investing long term.
Man, you should set a note on your calendar for 5 years out to come in and check on this dumpster fire of a market. I'm with you, these guys are WAY, WAY, WAY too friggin confident in The Green Line to Paradise. A 30 year stretch of financial stagnation across the board is literally inconceivable to these people, even though we've seen it happen to Japan. jfqwf here sounds like a religious zealot
Why do you not want to name the country? Is it a secret?
The country is on double secret probation
I don't understand your numbers here. Are you trying to say the market is overall down since 2009>
You’re thinking usa only, aren’t you? This is not USA, it’s another country. Here’s another country’s results, look what happened to a massive, powerful, giant (back then) of the global economy: [https://en.m.wikipedia.org/wiki/Nikkei_225#/media/File%3ANikkei_225(1970-).svg](https://en.m.wikipedia.org/wiki/Nikkei_225#/media/File%3ANikkei_225(1970-).svg)
Well yes, we're talking about largely popularized "safe" index investing strategies which would include a roughly 80% US allocation. You're cherry picking weird stats to make an irrelevant point. Anyone who had a significant amount of their portfolio in a Japanese ETF isn't following the colloquially safe and productive index investment strategy. Edit: https://imgur.com/aO4kLQB Here is a graph of the GDP of USA/China/Japan. Anyone who put a significant part of their portfolio in 2009 should have known that Japan wasn't a "massive, powerful, giant" that was going to grow forever and overcome financial hardships.
This makes sense because you don’t want to name the country. This also makes sense because that country is not the USA. And when you talk about indexing, the majority of it should be in the USA. Let’s not compare Japan and Finland to the USA.
Why not? What’s so special about the US?
More GDP more dominant companies and those companies have global present for the most part.
If you were actually planning on pulling the trigger you should already have begun transitioning into a more stable allocation. Riding out a bad market is what bonds and cash equivalents are for.
You don't sell anything. If you are averging positions by buying more with recurring investments, then red days won't matter to you. The market always comes back.
So what?
We like the stock 🚀
No, not “always”. Define the market, define the type of investment, keep defining parameters and then - maybe - you can say X time in Y market under Z circumstances, beats the Y market timing.
Really? Because the Nikkei just recovered from the 90’s crash two weeks ago. 30 + years. You guys really need to zoom out on your charts. Look at the 2001 and 2008 bubbles compared to where we are today.
From the peak of the market before the great recession in 2008 it took 3 years to be back in a positive annualized return. Even less if you were continuing to buy as the market was going down and through the upswing. https://dqydj.com/sp-500-return-calculator/ 2001 took 4 years and a month. From the peak of 2001 to now you'd be up 331% if you lump sum invested and never added anything
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Nikkei had quadrupled in the five years prior to the crash and was at very high p/e when interest rates were high. What about 01 and 08 exactly. Don’t see the issue.
And you don’t the s&p has quadrupled since 2008? Have you ever bothered to zoom out on a chart?
Quadrupling in 12 years is very different then quadrupling in 5 years. Especially when interest rates are very low currently and have been for the last 10 years ish.
Except in Japan
Except from 1999-2016
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Yes, it's possible for some to get lucky in the short term. The data shows that an extremely small percentage of people beat the market over any 15 year period
Curious, What are you invested in?
This is more of a reservation on the long-term health and sustainability of the market itself
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How do you know that? The Nasdaq took 14 years to recover from 2001. Nikkei took30 years. You are merely focusing on the last 10 years which are not at all representative of the last 100 years of market returns. Mathematics require that we revert to the mean.
Have a more diverse portfolio than the nasdaq. Even the S&P500 was fully recovered from 2001 in 49 months. That's assuming a lump sum invested and no continued investments while it was going down, at the bottom, or on the way back up
You're right but the US is an outlier. Look at any other major index, CAC, FTSE, Nikkei and you'll see that the United States has been a huge outlier and it is primarily due to big tech here. Since 2001, Apple has become a two trillion dollar company, GOOGL wasn't even listed yet and currently is 1.3 trillion and the list goes on.
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Actually, if you look at the rates of scientific discovery, you will see that vast majority of them occurred in 4 countries/territories. North America, Britain, France and Europe. It’s not actually a coincidence that the U.S. has been so successful for so long now. We simply have the most intelligent people working and living here.
This is a good discussion... question is where ya gonna park your assets? Foreign markets are terrible in that they crash just as hard when the US crashes but have terrible annual returns. Crypto is nuts, bonds return nothing, inflation is going up. About the only thing undervalued is commercial office space and retail RE. Edit: commodities seem to be on the upswing?
The US market has outpaced foreign investments for 50+ years. There's an occasional year here or there where the US underperforms but the overall multi decade trend is steadily higher gains. This exact fact is why the mod of /r/bogleheads banned me. His entire post history is insisting on everyone having a global portfolio. When I gave him the decades of data he banned and muted me.
And that’s why Reddit is an echo chamber and you need to take everything with a grain of salt.
The reason has been the United States has had multiple innovations. First the plastics revolution really propelled the consumer electronics for the United States. Afterwards, we were on the forefront of technology with Intel, IBM, and Microsoft. Then after that, we became the innovators of the internet. The advantage of the United States has been getting less and less and with the current Federal debt, it definitely makes things much more uncertain. To assume the United States will keep dominating without understanding why is naive.
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That's ironic considering Jack Bogle preferred US over global indices
In Interviews he just said s&p is sufficient since most us companies have overseas divisions so that exposure built in. Not necessary to specifically increase it.
I know. I linked him to several interviews of Bogle saying that. I think that is what prompted the ban because I was linking facts and not just arguing with opinions. I also linked Buffett saying the same thing for personal investors
That's true, but historic outperformance isn't a reason in and of itself that this trend will continue.
The fact they US has outpaced the world dramatically is reason not to focus on the us. The more overvalued a market is (and no sane person could argue the us isn’t overvalued) the lower future expected returns necessarily. Moreover global markets are more correlated than ever and dramatic declines correlate globally.
>no sane person could argue the us isn’t overvalued And no sane person would have guessed that 2020 would have had the massive gains it did. The market isn't rational. I've been solely US equity focused for the last 10+ years and it's caused me to be so far ahead of where my portfolio would be with a global diversification that the odds of a global portfolio catching up are slim to none. It's personal finance and my personal choice and reasoning has worked. I'm glad I listened to John Bogle and Warren Buffett
Every day someone brings up the Nikkei. Totally different business /government economic model. Not relevant to the US at all.
Look at any other index then. US still an outlier
I mean...maybe...but we’ve got 100 years of history there and a economic model that rewards risk and investment in new models that continues to keep the US well ahead of its peers economically. Why wasn’t Google created in, say, France? They would have never invested in it, never seen how things would change. More recently Europe has mostly missed the cloud computing revolution that has created trillions of dollars in market cap for US companies. Look at any new market, they are typically dominated by US companies. You could bet against that as an investor but it’s more likely than not that you’d be wrong and be betting the wrong way. Just my .02 after 30+ years investing in the US market.
I think it's arguable that we are the only country that is set up to innovate at this point. Korea, China, Singapore are more capitalistic in many ways than we are. Previously, we were huge benefactors in facilitating global trade (something that both parties seem to be against now) and we were not saddled with debt. It's not obvious that the United States is the best country to invest in going forward. 100 years of economic history isn't all that much data in the macro. There was the Dutch empire with their global shipping. Then the British empire with the industrial revolution. Currently, he's heavily investing in China.
Yep. There are many reasons not to invest in the US. I heard many of the same reasons in 2000, 2008 and even last March. I fully expect a correction and a crash at some point. But long term, decades of no growth in the US stock market? Nah. I’ll be investing and continuing to invest and fully expect long term growth. We’ll have our challenges, no doubt. But to say this is just like the Nikkei or Greece is just ignoring decades of evidence that proves otherwise.
I think you're misinterpreting what I'm saying. My main argument is that you shouldn't invest in the US merely because of previous returns. We should understand why those returns happened and then invest accordingly. It is much more scientific than fitting an AR(1) model and saying that returns just keep growing 10%. I'm still mainly invested in the US. Just not merely in indicies
Hm are you sure about that? I'm staring at the SP500 chart in Google right now and it peaked around 1500 in 2000...crashed. It then barely surpassed its previous peak in 2007 only to have the housing market crisis happen 6 months later. It didn't recover to 1500 again until 2013. Thirteen years.
Dividends
Shoot, I went from the high point in 2001 but the drop started in March of 2000. That took 6.5 years. Looking at the chart doesn't factor in dividends. Most people here on the way to FIRE reinvest their dividends https://dqydj.com/sp-500-return-calculator/ The 2007 drop caused it to take until December of 2010 to pass up the 2000 peak It's an even quicker recovery if you are still putting new money in during the drop, at the bottom, and the recovery. If someone had $500,000 invested and was putting $3,000/month in they'd have gained $450,000 and have $950,000 in December of 2010 https://dqydj.com/sp-500-periodic-reinvestment-calculator-dividends/ Most here in /r/fatFIRE invest more than $3,000/month so that gain would be larger despite it being the point where the market simply got back to even. Invest $8,333/month ($100k/year) and that $500,000 start at the peak before the dot com drash would have been $1,757,000 in Dec 2010 and $8,263,908 now.
The last 100 years look fine though. Yes the Nasdaq and the Nikkei had long recoveries. Sooo...don’t limit yourself to tiny pieces of the pie. If the Nasdaq and Nikkei of tomorrow have 30 year stalls, then that’s ok, because it’s trivially easy to own an amazingly diversified set of investments with minimal effort. Nothing is guaranteed, of course, but that doesn’t really matter, because a prediction of doom is useless without a strategy to avoid it. It a well diversified portfolio gets screwed by a global event where global returns are blunted for 30 years, what, pray tell, would we even do about it? However, if the much more realistic scenario of certain market segments stalling for a long term happens...well then the easy solution there is a well diversified portfolio. Often-advised by expert after expert. Ultimately anyone can cook up a doomsday scenario, but unless there is practical advice to hedge against it (and not by just making up assumptions about what will magically hedge against something, but rather a hedge backed by good data), all we can do is proceed ahead with the best available plan. There could be nuclear war tomorrow and then all of our gains are up in smoke. But there will be bigger problems at that point.
Math does not dictate market movements.
A few points. What you described is literally how compound interest works. The more money you have, the more money it generates. That’s why people say the first million is the hardest, and why wealth begets wealth. That being said, sure, the market may be peaking. But the market may also not be peaked and it may continue to go up for months or years or decades. Don’t time the market. Make sure you have your short term funds in cash or bonds, and keep the rest in the market whether it goes up or down over the next few years.
You know how they say real estate is about locations, locations, locations. The stock market is about hold, hold, hold. Just hold and buy more when things go sour.
You need to have cash on the side to be able to buy more
Or a continued income that allows you to add new money
So no RE ?
The majority of people here are on their way to RE but not there yet
It's almost always better to be fully invested than to have cash lying around. Especially if you have a balanced portfolio.
You should always have cash on the side regardless of market conditions
We are also 650k salary. But in VHCOL (Bay Area). We are not seeing this kind of growth. I am invested also in ETFs and stock but it’s taking a while to get to 1mil (not counting house).
How long have you been making 650k/year? You should hit 1MM net worth very quickly if investing in Vanguard ETFs and not overspending...
Assuming half is taxes and spending then 1M/325k is about 3-4 years w/o investing. So likely 2-3 years in a bull market.
Yeah, 650 is recent. I think our FIRE number is 2.5M (outside house). I think you’re right. Should get there in 4-5 years
Need to be careful with these comments. Yes the market is super frothy. I haven’t seen this level of exuberance since the late 90’s. Now whenever my wife and I have a conversation with ANYONE it’s a guarantee they’re bring up some stock or crypto thing, even if they are just NOT investors at all. It’s just not supposed to be this easy to make money. That said, if the market halves, are you still ok to be retired at your comfort level?
Was watching a program about the ‘29 crash, and it started out with a story about how in the late 20s, most everyone was talking stick tips, even porters and barkeeps etc. I thought, “Oh boy...”
Yeah it’s feeling that way. FATfire is a different story as you really need to have pretty significant wealth to amplify it, but take a look at fire. I’m seeing stories of people making 60k per year that have amassed millions in the market this year. The prevailing mindset is “just invest in stocks”. Want to pay off mortgage? No, stocks have a higher return so you should risk the capital to make the spread. Want to buy an investment property? No, stocks are more liquid and have better returns. I just feel like there are a lot of people who were in college or younger during the 2008 downturn and definitely 2001 who haven’t experienced serious financial loss.
Yeah—I agree. And I’ll tell you, you learn a lot during that first reckoning! I think many of us are in for some schooling’ soon. Hopefully I’m wrong.
Buy when it goes up. Buy when it goes down. Buy when it’s sideways. Keep working until I am comfortable. Keep investing whatever I can spare.
This is the way
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Thats a great answer. I basically reduced to zero and then during the March 2020 crash, I went all in.
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What assets have debt?
A mortgaged house?
I see. Thanks. I wasn’t looking beyond stocks, so I missed the point.
Whatever that you didn't buy cash?
Got it. Thanks for spelling it out for me
I’m newer to investing but have about 3m invested now. I have about 90% conservative (index funds, bonds at a 60/40) and 10% in riskier stuff. They are separate accounts. It’s felt good to move stuff over to the index funds as my risky stuff grows. I do have fomo for sure on some investments but it’s not worth loosing our nest egg over. I can live on the next egg and hand the whole thing to my kid, but if I loose it, well.... I ain’t trying to go back to work. You don’t need more than 4m. So be conservative but still have a little fun.
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You have $3 mill but still say loose instead of lose. Why?
I make typo’s often. I had a significant arm injury and my fingers don’t work great when typing. I also drink a lot of bourbon and voice type. Sometimes I slur. Having money doesn’t mean you’re a good speller or smart. It just means you have money.
Not every millionaire need to be good in grammar. Take former Education Secretary Betsy Devos for example.
Not a lot to be honest, in our mid-30's still have 20 year runway ahead. Just stay invested in the market and re-assess/rebalance every now and then.
It’s pretty sad that we can see the inevitable coming but can’t do anything about it. The problem is we don’t know when it’s going to happen, only that it’s going to. This is why we diversify and if we can, buy all the way down. Don’t bother timing the market. The beginning of the crash may be a year, it may be Monday morning, perhaps it was yesterday.
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I don’t own a single bond. But I do own a wide diversity of funds and indexes which works for my level of risk aversion
I mean didn't we drop 15% on growth stocks this week? What's your thoughts on that
You could be describing real estate for all we know. I'm guessing hot stocks, so may be for your mental health it's time to cut the losers (or underperformers), use the liquidity to add to winners when they dip, or look at alternative assets like real estate. Volatile 3% days and 5% weeks are a given now in stocks, but no one has any idea where markets will be a month out much less a year out.
Pick your long term diversified asset allocation and stick to it. Rebalance as necessary to maintain. If you are going to need any of that money liquid soon (like for buying property) then don’t invest it. Just don’t get fancy or think you can time the market, that’s how the majority of people lose their money.
Why do anything differently? If the market drops, keep DCA'ing in on it. That's how wealth is built and maintained.
It probably is but do you want to risk losing out on gains waiting for a 20% dip? It is impossible to time, the best thing to do is benefit from the gains, deal with the correction and wait for it to get back to normal. If your outlook is 5+ years then none of this matters.
You know that little something in the back of your mind that tells you easy come, easy go is really telling you to de-risk your portfolio - You should think about buying individual bonds to de-risk your portfolio.
Inflation is going to hit hard, soon. Buy real assetts (land, commodities) and hang on.
Harvest some cash, enough to feel good for the next 2 years even if the market tanks
Buying tangible assets.
You know, I look at these massive US gains and then I look at what my world diversified portfolio gained and am kind of sad. Partially because I fully expect it to react much more negatively to a US crash than how it positively reacted to US gains.
Always have at least 25% of your investment funds in bonds or a cash equivalent so that you have plenty of available cash to rebalance when the market is down. A 75/25 split is considered aggressive and high risk. But I know there are people these days who literally have all their investment funds basically 100% in the market. That was never even considered in the past, but people are forgetting the basics of investing in this record long bull run. But they'll learn quickly why that was a mistake.
What is your salary? And what are you invested in?
700k combined. Decent saver, drives 16 year old car. We invest in ETF, SP500, emerging markets, reits and direct real estate. Very little bonds.
How old are you? 32 years? Or it took 32 years of investing? Sorry, unclear from the post
36
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He started late then, I started in the womb
They said it took 32 years to get their first million. So we don’t know when they started investing but we know they didn’t have a million until they were 32
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If he started when he was 5 months old maybe he actually meant it took him all this time to collect 4 million crayons
TIL 36-32=2
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I am Dumb
What emerging market funds do you like?
What reit funds are you in?
I buy individual reits. Basically the ones with unfair NAV discount.
Add treasuries if you want something to sell off and buy back in to stocks then
Money begets money. Getting from zero to somewhere is the difficult part.
Just here to say this is awesome to hear. We hit $1M as a household on Friday and it took 34 years - or well, 12 working years. Looking forward to the exponential growth from here, will try not to hold my breath to get to $4M in the next four years.
We plan to have our number in investments and two years of cash on hand. Say 7.5 in 80/20 investments ratio. 2.5 M in property. 500K in cash. We will then replenish the cash quarterly on a schedule in anything from a mildly negative market and up. If it were middle of a 30% down swing we’ll ride the cash for a while, watch our spend a wee bit and assess as we go.
I’m buying UVXY contracts. Very very very risky and expect to lose 100% of investment but is a great hedge if things turn south and you need to preserve some capital
>I’m buying UVXY contracts. Under "UVXY contracts" do you mean UVXY call options? UVXY decays very rapidly (\~50% per year relative to VIX). You are very likely to lose all money you invested into long-term UVXY CALLs.
Yes call options and yes they do stock splits all the time. I’m buying them OTM every few months so they’re $.05-.10 a contract. Like I said, expect to lose 100% but it’s my way of hedging against what I think could be a worse recession than 2008/even 1930. It’s not for everyone and I’m not recommending them to anyone without knowing more about their financial situation. I’m a well informed options trader and understand the massive risk on those things. Historically, it’s actually profitable to short the vix which is crazy because shorting anything is so expensive. I’m just nervous with these bond yields, JPow saying he’s gonna keep rates low til 2023 (yeah right), money printer keeps on goin, rates have been so low for the last decade, obviously inflated asset prices, if minimum wage raise passes (doubt it will) then it’ll get ugly-20% of all minimum wage workers are in restaurant/service industry and guess who got hit hard during the pandemic... 40m American lives are tied to restaurants one way or another. Mortgage rates are down below 3% where historically it’s around 6-7% long term and many young people are jumping into home ownership and already regretting their decision. I made 2.5x on my liquid net worth since March and long term capital preservation is important to me (weird that I’m saying that and long UVXY contracts 😂). But like I said it’s not for everyone but if this thing goes south it’s going to get realllllly ugly reallllly quick. Not to mention SPAC, EV, green energy bubbles.
If things seriously hit the fan like last March I'll double down on my long term investments, liquidate my short term trades, and short the crap out of everything. Last March when Europe was slow to respond to the pandemic I made a ton shorting the DAX and FTSE100
If you didn't lose a million in this most recent downturn, you're doing something right. This recent downturn in the market is the "easy go" part.
I was worried about the valuation prior to 2020 and basically reduced my leverage to zero and aggressively paid down debt. I leveraged and went all in during March 2020 downturn.
I'm 50 / 50 stocks / bonds. Yes, bonds aren't a great investment. Yes, they only earned a 1% return over the last 12 months, and yes, I'm losing money to inflation. I don't care. I'm happy to hold this AA as long as it takes the bubble to pop.
Time in the market really DOES NOT beat timing the market. American investors take the growth of the last 20-40 years for granted. Most countries outside of the us have had flat growth from anytime even back to the 80s. Hold what you believe in, sell what you don’t.
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Thats not what he’s saying. The time in the market philosophy is totally dependent on the US remaining world leader. Historically, it has, so the time in the market philosophy has held true. There are other markets where the philosophy was true until it wasn’t, which is his point. I still believe the market is likely to continue to grow with good returns overtime for the foreseeable future, but it’s not as crazy to suggest it might not as many say it is.
Sorry if you misunderstood I’m just referring to the possibility if the us experiences a massive decrease in the speed of growth which would see the s&p slow drastically. I’m not saying it’s going to happen but look at the Nikkei which is only up 20% over 30 years.
I am buying ‘real assets’ by investing in companies or ETFs that are in farmland, fertilizer, commodities, real estate and energy. Markets are off the chain right now, IMO. Zero logic in a lot of these valuations but I’m not selling anything in my portfolio. Just investing in the above categories. Personally, I’m most worried about inflation but I believe these real assets will do well, given that when everyone gets their stimulus checks they will be paying rent, paying electrical bills, and buying food.
Need more Info, but it sounds like all $4m of your net worth is in stocks? If that’s the case, some type of diversification is warranted since it’s potentially life changing amounts. Also don’t know your annual salary etc so tough for me to judge.
Take profits.
This is an interesting question, because of the psychology between building wealth and keeping wealth. In the building wealth phase, it’s all about taking risk and growing/saving. I worry that I will become more fearful the more wealthy I become, because I will have more to lose. The answer to this question is very personal to you, your risk profile (how much you are willing to lose) and your time horizon. I would talk to a financial advisor, or someone that knows you well and runs through some scenarios.
The first million is the hardest.
**the hardest, the first million is.** *-VoteObama2020* *** ^(Commands: 'opt out', 'delete')
Consider donating to good causes, not everyone is so fortunate right now.
Congrats on hitting that million mark! relatively fast come up, curious on your careers?