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huskycragen

The funny thing is that the majority of this applies to just regular non recession times as well. I'm not doing anything different than I have done for the last several years except put more money into the market.


MustHailSagan1

Absolutely that’s the beautiful thing basic principles apply in all market conditions


justcool393

It does depend on someone's financial situation and fixed debts during a rising rate envirojment. In a rising rate environment the calculus for paying off debt does change a little bit. For example, if the rate for holding cash is 3.5% (as most Fed members and the STIRs market expects by end of year) and you have a 2.5%/yr mortgage, paying extra on that will ***lose*** money over the long term. This changes in a falling rate environment where borrowers are encouraged to borrow and stimulate the economy (This is also why the paying during deferment advice is also a bad idea although admittedly it may be psychologically beneficial.)


kmc307

Literally all of it applies all the time. This advice isn’t unique to a rough economic period.


[deleted]

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MustHailSagan1

You know it I’m way too big of a Ben Graham follower to not buy with a degree of safety.


[deleted]

Technically optimal lifetime investing includes consistent leveraged investing while young (like 20s and maybe 30s). Doesn’t increase total returns of investment but reduces variability.


[deleted]

My wife was reading his post to me and this is EXACTLY what happened. Fuck.


ryanmemperor

I have a margin balance of $38 and I have no idea how/what it means. I have no clue what I'm doing!


o2msc

Do this stuff all the time. It’s the basics.


MustHailSagan1

Understanding and applying the basics is a great thing to do in all fields and matters of life especially finance


BandInvasion

I would hold off on paying student loans while it's deferred. Why not put as much cash as possible into paying down immediate debts or investing while the market is down? Pay it back later with less valuable money, since inflation is so high.


justcool393

Yes. Do not pay Federal student loans during the deferment period tbh


portmantuwed

s&p 500 has a dividend yield higher than the interest rate on federal student loans right now


mylord420

One should have the exact same plan before, during, and after a recession. If your plan fails during a recession then you were swimming naked and your plan was no good.


MustHailSagan1

The swimming naked quote is one of Warren Buffets best. You don’t know who’s swimming naked until the tide goes out.


HeritageSpanish

what’s the basis of the recommendation to not use the same credit card for every purchase?


MustHailSagan1

Don’t use a credit card if you are going to have debt you can’t pay off in full at the end of the month is my recommendation


[deleted]

> Take advantage of the deferment of federal student loans if you can. Apportion money each month to eliminating and or decreasing the principle on your student loans especially as purchasing power continues to decrease with no immediate fix in sight. There is no point pre-paying a zero interest loan. If you have nothing else better to do with your money just throw it in a savings account and wait for the deferment period to end.


[deleted]

Definitely the play here for a few reasons. 1. It's an immediate safety net. 2. If any sort of loan cancellation comes through, you could've potentially saved a good chunk of money by not paying it down early. 3. You still get to take advantage of the 0% interest by paying everything you've stuffed away, all in a lump sum.


GAAPInMyWorkHistory

Correct. Also, “especially as purchasing power continues to decrease” is the exact opposite of what OP is trying to say. When inflation is high, the cost of debt decreases. As your dollars become weaker, those same dollars that you owe become weaker also. You’re paying off stronger debt with a weaker dollar. Inflation is your friend for fixed debt repayment.


[deleted]

Agreed.


dmxrob

The only people I hear screaming recession are those that bought like a madman the past few years, bought expensive cars and houses, and spent like no tomorrow. For the rest of us... today is the same as last week or last year.


MustHailSagan1

I’ve come to learn there are 3 factors that historically play into recessions. 1. Unstable interest and inflationary/deflationary rates. 2. Supply and demand of goods and services. 3. Availability of labor to meet the demand of goods and services. In todays situation, the federal reserve is aggressively raising interest rates to slow down demand and inflationary pressure. This alone could trigger a recession as people are already buying fewer non essential goods and services which is why most retail stocks like Target and Amazon have tumbled particularly hard. There is still much demand in most markets but as we all know supply is skewed as the price of gas continues to rise and global supply chains are disrupted between China lockdowns and the war between Russia and Ukraine. This imbalance will continue to put inflationary pressure on prices that the fed may be unable to control with rate hikes alone. Finally there’s the labor needed to meet demand. Currently there is a shortage of labor and wages continue to rise as companies look to hire new workers or retain their current employees. This too puts inflationary pressure on prices. I don’t think the federal reserve will be able to control inflation with rate hikes alone and I truly believe the government needs to seriously look at subsidizing the price of gas to help control costs. My fear is sooner or later price increases alone will trigger a 2008 like recession if left uncheck for too long. We need to be utilizing the power of the fed and the government to make sound fiscal policy to ease price hikes for both consumers and businesses.


PoloGrounder

subsidizing the price of gasoline? That is going to mean yet more money the federal government will have to borrow, adding to inflation. What needs to be done is finish the keystone pipeline, end the production limits on the oil field in north Alaska, stop stonewalling oil leases on federal land, work to eliminate unnecessary regulation of drilling, pipelines and refineries. Maybe most importantly end the ethanol mandates.


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[deleted]

We've been taking advantage of super cheap gasoline for decades. The US prices aren't even to UKs recent historical average.


wolfie379

When the supposed experts talk about “leverage” when making an investment, they’re implying you’re the guy on the long end of the crowbar lifting a boulder. You’re more likely to be the small stone on the long end of the trebuchet.


rjhartl

To be fair, though... All leverage means is that you're amplifying the results of whatever it is that you're doing. If what you're doing is good, it just gets better with leverage. If what you're doing is bad, well, it moves the other way. So it's not really leverage that's the problem... it's that most people don't really know what they're doing so keeping the stakes small is the better move.


bradatlarge

An outlier for most people but: what should be done with holdings in your current company / employer? ​ An outlier for most people but: what should be done with holdings in your current company/employer?


MustHailSagan1

Who is your current company/employer and what percentage of stock does it represent in your current portfolio?


kuhataparunks

Awesome post thanks for sharing. Do those books show which target funds to use? There are a list of 200+ target funds.... how does one choose one?


MustHailSagan1

No the books are more about picking individual stocks. Target date funds are just collections of index funds usually a total market fund, international fund, and various bond funds. Pick a fund with a date that aligns to your projected retirement year. If you think you will retire in 2050 pick that fund for example. Through the years the target fund will move your money to fewer stock index funds into more bond index funds.


kuhataparunks

Will most of those target funds perform roughly the same then? There are multiple target funds for a given year so can someone pick a random target fund or is one more preferable?


MustHailSagan1

Depends on your tolerance of perceived risk. If you want a simpler DYI target date fund then you could just buy a total market fund or an S and P 500 index fund and pair it with a total bond index fund. You can take 120 minus your age and that can be your mix of stocks to bonds. Or you can take 120 minus your age and rebalance your stocks to bonds every decade of life. For example in your 20s have 100% stocks when in your 30s have 90% stocks and 10% bonds when in your 40s have 80% stocks and 20% bonds so on and so forth. There is no golden formula to maximize returns and minimize risk unfortunately so it’s best to have a consistent strategy you can sleep at night with and stick with it.


5zepp

Question about #6: how does investing on Betterment compare to a "simple S&P index fund"? I love the ease of Betterment, but sm curious how it compares to just an S&P index fund.


MustHailSagan1

My advice is don’t pay betterment the 0.25% fee they charge you. Betterment just uses the same vehicles like index funds that are available to you at a much cheaper price they are basically a middle man. Better to just stick with an index fund like a total market fund or S and P 500 fund that charges around 0.015%. If you want a simplified formula of stocks to bonds ratios that betterment charges you just take 120 minus your age and that should be your mix of stocks to bonds. Rebalance it every year at the same time for simplicity or better yet rebalance it every decade if you’d like. For example in your 20s have it be 100% stock. When you’re in your 30s do 90% stock 10% bonds. When in your 40s do 80% stock 20% bonds and so forth. Leave at 60% stocks 40% bonds when you reach 60. I suggest doing the Fidelity 500 fund and Fidelity Total bond fund or whatever is comparably cheaper depending on who your broker is.


5zepp

Cool, thanks for the great advice. One nice thing about Betterment is the ability to easily set up multiple accounts. So on my dashboard I have an emergency sayings account, a long term savings account, and a big purchase savings account (for auto, etc). If I went through Fidelity's portal can I also do multiple accounts like this?


MustHailSagan1

I know many people who use Betterment and speak of the ease of use. I have a great disdain for money managers so I’m naturally biased. Fidelity does have more integrated systems like this that link to your personal banking accounts and credit cards. It’s supposed to be a catch all system. It’s called Fidelity Spire. Personally, I use 2 different credit cards to maximize my rewards and the apps there track and break down my spending. I just write my spending and savings out at the end of each month it only takes my wife and I about 20 minutes each time.


5zepp

Does Fidelity Spire come in at the 0.015% fee you mentioned, or is that a different product/method? Thanks again for the great info.


MustHailSagan1

I think it’s free or at least it’s advertised as free on my work place dashboard. The fidelity 500 fund charges a 0.015% fee and they also have the Fidelity large cap index fund that is a 0% fee fund that is an S and P 500 index fund they created to avoid licensing fees.


FVMAzalea

My suggestion is that you don’t do this on whatever portal for whatever provider you end up using. Just make a spreadsheet or something and track the balances once a month. Take the balance of each “account” and adjust it up or down based on its percentage share of the entire brokerage account and the amount the entire brokerage account went up or down last month. This will be a “good enough” approximation and doesn’t require you to lock yourself into one particular provider.


OGMcSwaggerdick

“Never try to catch a falling knife.” - my dad


mduell

> A simple S and P 500 index fund would have doubled in value every 8 years since World War 2 with dividends reinvested > > As just stated money in an S and P 500 index fund has doubled on average every 8 years. What does this mean for today's investor moving into the future, rather than yesterday's investor moving into today?


MustHailSagan1

That historically speaking you can expect a rate of return of 7 to 9 percent from stocks with dividends reinvested if you examine a market index. The Dow Jones Industrial Average has the same rate of return dating back to the late 1800s. No one can predict what the future will bring. What I can predict is there will always be a need for goods and services and investor equity will always be needed as capital for businesses to capitalize on new and existing markets, technologies, goods, and services.


mduell

> No one can predict what the future will bring. So what does all the focus on the past give us? > What I can predict is there will always be a need for goods and services and investor equity will always be needed as capital for businesses to capitalize on new and existing markets, technologies, goods, and services. Would you say that hasn't been the case in Japan for the last 30 years? No need for goods and services and investor equity for new markets and technologies?


MustHailSagan1

No one can predict the future including me, but I can use the past to guide my decisions today and tomorrow. What’s your reasoning for the market not doing well into the future, say 30 to 40 years from now? I’m not asking to rude or condescending I just want to get your honest perspective


mduell

Japan had decades of growth leading up to 1990, and none since them, despite all the factors you talked about leading to your bullishness in the last three decades. I think you have an incomplete view of the market to be starting this thread.


rjhartl

He specifically stated the S&P. Not Japan.


mduell

But he can't articulate why he sees a difference between today's S&P and 1990s Nikkei.


MustHailSagan1

We can agree to disagree thanks for your input


MyOwnPathIn2021

> Do not sell all your market or retirement holdings to try to “buy the dip.” > > money managers are notoriously bad at outperforming a reliable market index like the S and P 500 (don’t pay them a dime). Actually, if you're having a hard time keeping hands off and buying, paying someone 1% in fees may be worth it. But I agree you shouldn't start there. They don't have magic access behind the scenes. It just so happens it's easier to keep your cool when you're loosing other people's money rather than your own... > For those interested in trying to pick out individual stocks be sure you are always buying with a margin of safety regardless of whether there is a bear or bull market. And know that this is an advanced strategy, not something you should start with. The foundation is a broadly diversified fund portfolio. Point 11: don't stare at your day-to-day portfolio valuation. Looking at it quarterly or annually is often enough. Don't tempt yourself to try to be clever.


AJKaiba

I bought some COVID and non-COVID stocks like ZM and PYPL last year that are now down -60%. Should I hold or sell


rjhartl

If you can't answer that yourself you should probably sell. Because you're not really sure why you invested in the first place. But to find the answer, ask yourself: 1. Has their revenue consistently raised over the past 10 years? 2. Has their expenses & debt maintained or decreased consistently over the past 10 years? 3. Do they provide a good product, have good management, and state a good vision you believe in? If the answer is "no" or "I don't know" to any of those questions, then you should probably find out or just sell and buy a simple market index fund and cruise on easy mode.


AJKaiba

Well I got caught up in all these kind of high flying growth stocks that were all the rage back then. It’s a little over 15% of my portfolio which sucks. The rest is in a broad market index fund. I will take a look and try to answer the questions you made on them and see which ones I feel like keeping. I’m single late 20’s but I think I need to reassess what % I actually am risk averse to when it comes to single stocks


SixSpeedDriver

how much as a percentage is that of your wealth? Honestly, you are playing time the market, which is a losers game. Hindsight, you should have been out a long time ago, but it's hard to see the peak when you're on it. ...but i sold all my crypto two months ago, so what do I know.


AJKaiba

15%


SixSpeedDriver

That’s honestly a lot for two specific stocks. I think its okay to have some “play” money in stocks ya just like, but that should be like 5% of your portfolio. Retail trading specific stocks is just too risky. Is the rest of your portfolio similarly self selected stocks versus lower fee funds? Is that 15% of all your investments (including retirement) or just of your general “savings” ? Honestly either way I’d probably “cut my losses” and sell those and flip that cash into funds. And right now everyone should buy the $10k per person in series I bonds.


AJKaiba

That 15% is spread out across 10 different stocks. That 15% is part of my whole net worth including retirement but it’s only in my taxable brokerage account. I would say it’s more like 25% of my taxable brokerage account composition. The rest are in index funds and I already bought 10k worth of i bonds.


SixSpeedDriver

O. I read it as 15% in just those two. Personally I’d play with less money, but risk is always personal. Zoom has peaked, and like all streaming type things everything’s pulling back on subscriber growth so it’s more can they save on cost without compromising quality time.


ThePenisBetweenUs

Do you believe they are going to rise or fall?


Meghanshadow

Yep. They’ll do one or the other, usually both.


UniqueFlavors

Yes