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Old 08-09-2020, 06:07 AM   #161
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Old 08-12-2020, 05:21 PM   #162
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Old 08-12-2020, 05:37 PM   #163
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Big day today. Just a few points until the S&P hits a new high. But Soros is out. Not sure what the rise is all about. Vaccine perhaps.
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Old 08-12-2020, 07:01 PM   #164
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Big day today. Just a few points until the S&P hits a new high. But Soros is out. Not sure what the rise is all about. Vaccine perhaps.
Wonderful! Between this big day in the stock market (lifting my portfolio to yet another all time high), and getting my SS deposit (lifting my bank account back up too), I am pretty happy about financial things today.

There are many things in the news which people could say caused this, depending on one's point of view in this election season, and I honestly do not have a clue about the cause. But anyway it sure put a BIG smile on my face.

Time to go study the Blow That Dough thread.
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Old 08-12-2020, 07:25 PM   #165
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yep, up another another new high today from a negative 850K before March low. Can't imagine what will happen when we have a vaccine.
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Old 08-12-2020, 08:37 PM   #166
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Old 08-12-2020, 08:58 PM   #167
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Didn't sell anything. Due to Mr. Market and PMs plus a couple of high flying health stocks, port is up for the year. YMMV
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Old 08-13-2020, 05:13 AM   #168
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There are many things in the news which people could say caused this, depending on one's point of view in this election season, and I honestly do not have a clue about the cause. But anyway it sure put a BIG smile on my face.

Time to go study the Blow That Dough thread.
+1 I don't know the reason the stock market fluctuates and I don't think anyone else does either. Those that make the claim are using are using a Magic 8 Ball.


Cheers!
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Old 08-13-2020, 06:11 AM   #169
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I sold some and bought some, but might have been slightly better off doing nothing. Now I am worried about November
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Old 08-13-2020, 08:30 AM   #170
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Im thrilled that my growth investments, as a whole, have come back to near January values. But, if I thought they were overvalued in January, I surely think that they are overvalued even more now! Im too young to invest heavily in non-growth investments, but it would be nice to reduce my exposure somehow and realize some profits.
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Old 08-13-2020, 08:45 AM   #171
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...late to the thread.

In all seriousness I think the way out of it may be inflation The fed will keep st rates low even with inflation and the US debt will largely move to short term debt as long term gets expensive. The debt wont get paid down per se. It will just become less of an issue as a % of gdp.

Maybe tips, gold, and real estate are the best hedges against this
If inflation goes up so will interest rates. If interest rates go up new buyers will not be able to get a mortgage to buy real estate at current values. So, as interest rates go up, real estate values will go down. Real estate is like bonds, when rates go up, values go down. Bonds pay a fixed coupon, so the underlying value is what fluctuates with interest rates. Real estate pays a fixed value in terms of rental income (or forgone rental income, in the case of owner-occupied houses), so the underlying value is what will fluctuate with interest rates.

I mean, its still true that they arent making any more land, you know. So, in the very long term, real estate is always a good investment. But, if you think interest rates and inflation are going to start going UP, you might think about getting out of bonds and real estate.
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Old 08-13-2020, 08:55 AM   #172
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If inflation goes up so will interest rates. If interest rates go up new buyers will not be able to get a mortgage to buy real estate at current values. So, as interest rates go up, real estate values will go down. Real estate is like bonds, when rates go up, values go down. Bonds pay a fixed coupon, so the underlying value is what fluctuates with interest rates. Real estate “pays” a fixed value in terms of rental income (or forgone rental income, in the case of owner-occupied houses), so the underlying value is what will fluctuate with interest rates.

I mean, it’s still true that “they aren’t making any more land, you know”. So, in the very long term, real estate is always a good investment. But, if you think interest rates and inflation are going to start going UP, you might think about getting out of bonds and real estate.
Real estate is slightly different than bonds for 2 reasons: 1) housing is a combo of a must have consumable (in some shape or form) and financial instrument, 2) rent typically will reflect inflation (so it's an inflation adjusted bond in a way). That's why historically, rent and housing kept up with inflation in parts of the country that are growing.

Now the substitute for existing housing is new housing, which has a tendency to go up based on labor, material, land, and regulations. At min labor and materials will go up from inflation. Land is fixed. Regulations usually become more onerous for building.
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Old 08-13-2020, 09:09 AM   #173
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Last night the gal was trying to get me to listen to a podcast. Her synopsis was that bankruptcies were increasing at an alarming rate, so a big percentage of tenants wouldn't be paying their rent. Also, since the economy was tanking, people would be moving down in housing class, so lower priced housing would be filled to capacity, thus causing rent prices to go up.
I was trying to go to sleep, but the take away seemed to be that vacancies would be down, rents would be up, but nobody would be paying. Okee dokee. I think all financial moves are based on the good fortune of paparazzi catching starlet wardrobe malfunctions or exits from limousines.
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Old 08-13-2020, 10:01 AM   #174
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Originally Posted by music-and-ski View Post
Im thrilled that my growth investments, as a whole, have come back to near January values. But, if I thought they were overvalued in January, I surely think that they are overvalued even more now! Im too young to invest heavily in non-growth investments, but it would be nice to reduce my exposure somehow and realize some profits.
Your thesis is that growth stocks will grow relative to the total market. You also observe that they seem overpriced. Of course. That is almost the definition of a growth stock.

Just for grins, I ran Portfoliovisualizer with a 100% Vanguard Growth Fund (VWUSX) portfolio and a 100% VG Total US Market portfolio (VTSAX). Over 20 years the total market fund crisply outperformed the growth fund, also with less volatility. Different funds and different time periods will produce different results, of course, but it would seem that your heavy exposure to growth may be unnecessary, maybe even unwise.

Jeremy Siegel's "Stocks for the Long Run" is a pretty good read. In it he talks about "the growth trap." I have only the original edition and the book has been revised several times, but I assume the message is substantially the same.
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Old 08-13-2020, 10:53 AM   #175
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Real estate is slightly different than bonds for 2 reasons: 1) housing is a combo of a must have consumable (in some shape or form) and financial instrument, 2) rent typically will reflect inflation (so it's an inflation adjusted bond in a way). That's why historically, rent and housing kept up with inflation in parts of the country that are growing.

Now the substitute for existing housing is new housing, which has a tendency to go up based on labor, material, land, and regulations. At min labor and materials will go up from inflation. Land is fixed. Regulations usually become more onerous for building.
Since the pandemic has made white-collar people realize they can live anywhere, the best real-estate to buy, IMHO, will be houses in very nice places. That is, houses in cities with price driven by good access to labor markets (lots of jobs within a reasonable commute) might go down, while houses in vacation hot-spots (mountain communities, seaside communities, etc.) might retain their value or go up.

I agree that housing and bonds are different. But, the huge rise in home values in a lot of places is driven by affordability. As interest rates fell, people could afford more and more housing, driving the competitive market for housing, and encouraging more consumption. This also drove the construction industry as well, to provide more, and better, housing, because people could afford it, due to the low interest rates. If interest rates went back to 8%, no young buyer could afford my house, unless the price dropped!

That's what scares me about my city house. Its value is largely driven by walkability to downtown, and the professionals who work downtown have all escaped to their lake homes and really have no desire to return to their downtown offices. The thought is that some of these vacant offices will have to convert to residential, which will further flood the market for housing in my neighborood. Meanwhile, if inflation (to reduce the Covid debt) drives interest rates up, no-one will be able to afford my house anyway.

I should join the club and escape to a mountain home, even though I'm not retired yet. Maybe I could rent in the city. At least then I won't get double-whammied by both white-collar flight and rising interest rates. I can't talk my DW into it, though.
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Old 08-13-2020, 10:55 AM   #176
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Your thesis is that growth stocks will grow relative to the total market. You also observe that they seem overpriced. Of course. That is almost the definition of a growth stock.

Just for grins, I ran Portfoliovisualizer with a 100% Vanguard Growth Fund (VWUSX) portfolio and a 100% VG Total US Market portfolio (VTSAX). Over 20 years the total market fund crisply outperformed the growth fund, also with less volatility. Different funds and different time periods will produce different results, of course, but it would seem that your heavy exposure to growth may be unnecessary, maybe even unwise.

Jeremy Siegel's "Stocks for the Long Run" is a pretty good read. In it he talks about "the growth trap." I have only the original edition and the book has been revised several times, but I assume the message is substantially the same.
Thanks for the book suggestion. I've been running Firecalc, and there's basically no scenario where any portion fixed income investments shows a good idea, since I'm not 55 yet and I'm running scenarios for 40 years. But, there are many different types of stocks, many aren't "growth" oriented.
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Old 08-13-2020, 11:19 AM   #177
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Thanks for the book suggestion. I've been running Firecalc, and there's basically no scenario where any portion fixed income investments shows a good idea, since I'm not 55 yet and I'm running scenarios for 40 years. But, there are many different types of stocks, many aren't "growth" oriented.
You might also enjoy reading one of these:


The punch line on stocks over the long haul is to own what Eugene Fama refers to as "the market portfolio." Everything. This video is a bit long at 37 minutes but it's a great way to get Fama's thinking. I've viewed it repeatedly and get something new every time. https://www.top1000funds.com/2015/12...the-moon-fama/
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Old 08-13-2020, 11:19 AM   #178
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Stayed at 50/50 allocation, many folks underestimate their emotional reactions when the market takes a dive and I think 50/50 helps me avoid that (especially with 4 years left to go until retirement).



I know investment time periods can always be construed to fit an investment advisor's narrative but Blackrock makes an interesting point here:



https://www.blackrock.com/us/individ...less-va-us.pdf
Retired this June and 4 - 5 years ago I was 100% equities. If I were to do it all over again I'd be 150% equities if it were possible.
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Old 08-13-2020, 11:21 AM   #179
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... If I were to do it all over again I'd be 150% equities if it were possible.
There's always margin in a taxable account.
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Old 08-13-2020, 02:43 PM   #180
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Retired this June and 4 - 5 years ago I was 100% equities. If I were to do it all over again I'd be 150% equities if it were possible.

You could buy one of those 3X leverage funds from ProShares.
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