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Where to put $100K in the coming months
Old 03-24-2020, 10:04 AM   #1
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Where to put $100K in the coming months

I've got a couple CDs maturing in the next two months and will probably be dipping the toes back in to equities in my Vanguard account. I don't do individual stocks, but wish to find some good index funds. I already have a large chunk in Total Stock Market Index Fund and Total International Stock Index Fund. I'm looking for recommendations for what you savvy investors think might do better, maybe targeting sectors that will bounce back quicker than the whole market. I am a medium risk investor and will not need these funds for 5+ years.
Thanks, and stay safe everybody!
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Old 03-24-2020, 11:05 AM   #2
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... I'm looking for recommendations for what you savvy investors think might do better, maybe targeting sectors that will bounce back quicker than the whole market. ...
My guess is that most "savvy" investors don't try to pick stocks or sectors.

Think about it this way: Unless you have inside knowledge that "the market" as a whole does not have, the prices in the market always reflect a consensus on the economic value of a sector or stock (the "Efficient Market Hypothesis") plus/minus a psychological factor. So picking a sector is basically making a bet against the consensus and predicting that a future consensus will give the stock or sector a higher valuation. IOW, a gamble. Nothing wrong with gambling as long as you understand it for what it is.

Your two funds are the best long term strategy. Buffett: “The stock market is a device for transferring money from the impatient to the patient.

Entertainment for shut-ins: https://review.chicagobooth.edu/econ...kets-efficient Fama and Thaler talking about market pricing. Beware: The transcript is edited and not complete. You'll have to watch the video to get the full benefit of these two Nobel Prize winners' wisdom.
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Old 03-24-2020, 11:08 AM   #3
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I was actually thinking about buying a bunch of Exxon stock since oil is so low. When the virus is gone and the economy starts roaring again, oil prices should rise along with it. With regards to your question, an energy mutual fund would be one of my first choices for mutual funds (they also pay dividends).
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Old 03-24-2020, 11:10 AM   #4
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I would just add to your broad index funds when you think the time is right. Beware the bear market rally and do your buys gradually.
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Old 03-24-2020, 11:39 AM   #5
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If you are talking literally the next couple months, I'd vote money market fund while this all shakes out. I get if we have money in market already leave it but does anybody honestly think this looks better in a few months when earngins investments come out down and the death toll is still rising?
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Old 03-24-2020, 11:49 AM   #6
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I was actually thinking about buying a bunch of Exxon stock since oil is so low. When the virus is gone and the economy starts roaring again, oil prices should rise along with it. ...
But everybody knows this. Don't you think the stock price already reflects the consensus expectation? If no, why not?
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Old 03-24-2020, 12:32 PM   #7
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I just put some $ into Ally Bank's 11 month CD that's without withdrawal penalties. You give up a little on the interest rate, but it pays far better than my credit union's .30% APR. And you can get to the $ whenever you might need it.

It's my bridge to having to take RMD's in 2 years.
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Old 03-24-2020, 04:18 PM   #8
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I'd make a plan to dollar cost average into an S&P 500 index fund over the summer, say 20k per month with 30 day limit orders.
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Old 03-25-2020, 03:30 AM   #9
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When aiming for low sectors or stocks just remember they have to stay in business without a bankruptcy for you to profit off the equities.

When bond holders own most of the assets I believe it is typical that they take a haircut and a new company with same or similar name is formed with a bit of fresh capital if losses insurmountable.
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Old 03-31-2020, 11:23 PM   #10
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A few picks of last few weeks,
MRK, PGH, NVS, CYH, GE, SLF, JPM, USO, DOW
These are all for minimum of 24 months. Good luck.
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Old 03-31-2020, 11:31 PM   #11
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No need to get fancy, Total US+ Total International are perfect but don't invest in equities if you need $$$ in 5 years.
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Old 04-01-2020, 04:40 AM   #12
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Average in to your long term AA over 6 months.
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Old 04-01-2020, 08:19 AM   #13
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My guess is that most "savvy" investors don't try to pick stocks or sectors.
I'm not sure what you mean by "savvy investors" but I can tell you this: Had I not paid attention to what stocks I was buying, I never would have retired 20 years ago (and stayed retired). I wouldn't own 4 nice (non-income producing) residential properties and have 2 newer Teslas in the driveway. And I wouldn't have any medical insurance that wasn't through active employment. In short, retirement would not have been possible until at least 60 years old.

Quote:
Think about it this way: Unless you have inside knowledge that "the market" as a whole does not have, the prices in the market always reflect a consensus on the economic value of a sector or stock (the "Efficient Market Hypothesis") plus/minus a psychological factor. So picking a sector is basically making a bet against the consensus and predicting that a future consensus will give the stock or sector a higher valuation. IOW, a gamble. Nothing wrong with gambling as long as you understand it for what it is.
That's true. I love a good gamble and take every one I can get when the odds are in my favor. My most profitable stock purchases are those that have the largest disparity between the perception of the average investor and reality.

Quote:
Buffett: “The stock market is a device for transferring money from the impatient to the patient.
I love that quote because I'm a very patient person. I harness that patience by using patience to find the largest disparity between people's perception and the actual reality on the ground. Always use patience to cause money to flow into your account. Never get impatient because that tends to cause you to see opportunities where there are none.
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Old 04-01-2020, 08:38 AM   #14
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I'm also going long on VTI and VXUS. But it may not be a bad idea to think about something like oil? I would stay away from any individual stock, but maybe something like XOP or AMJ. With your time horizon, they may be attractive?
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Old 04-01-2020, 08:40 AM   #15
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I would just add to your broad index funds when you think the time is right. Beware the bear market rally and do your buys gradually.
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Average in to your long term AA over 6 months.

+1 for these two, together.
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Old 04-01-2020, 08:51 AM   #16
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I'm not sure what you mean by "savvy investors" but I can tell you this: Had I not paid attention to what stocks I was buying, I never would have retired 20 years ago (and stayed retired). I wouldn't own 4 nice (non-income producing) residential properties and have 2 newer Teslas in the driveway. And I wouldn't have any medical insurance that wasn't through active employment. In short, retirement would not have been possible until at least 60 years old.



That's true. I love a good gamble and take every one I can get when the odds are in my favor. My most profitable stock purchases are those that have the largest disparity between the perception of the average investor and reality.



I love that quote because I'm a very patient person. I harness that patience by using patience to find the largest disparity between people's perception and the actual reality on the ground. Always use patience to cause money to flow into your account. Never get impatient because that tends to cause you to see opportunities where there are none.
@retiredatthirty-eight would love to hear your story on how you did it back in the day.
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Old 04-01-2020, 09:01 AM   #17
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No need to get fancy, Total US+ Total International are perfect but don't invest in equities if you need $$$ in 5 years.
This. Exactly this.

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I'm not sure what you mean by "savvy investors" ...
Well I was just using the OP's term, but I would say that savvy investors understand two things:

First, that the most important thing is to not lose money. Lots of gurus, including Buffett, have given this advice. That's not to say that following the advice is always easy, but it does and should color investing decisions.

Second, as William Bernstein has observed, the objective of investing for retirement is not to get rich. It is to not get poor.

Speculators/traders beliefs are in sharp contrast to these. Where an investor will hold a diversified portfolio, a speculator abhors such an approach. He wants to identify and hold a few winners, each in large enough proportion to significantly affect his portfolio. That is the essence of stock-picking. Bernstein again:

“Do you think that by choosing a portfolio of only a few stocks that you hope will score big, you are maximizing your chances of becoming wealthy? Indeed you are, but you are also maximizing the chances of a retirement of cat food cuisine”

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I can tell you this: Had I not paid attention to what stocks I was buying, I never would have retired 20 years ago (and stayed retired). I wouldn't own 4 nice (non-income producing) residential properties and have 2 newer Teslas in the driveway. And I wouldn't have any medical insurance that wasn't through active employment. In short, retirement would not have been possible until at least 60 years old. ...
Nice anecdote. I'll even assume that it is true. But I think you'd agree that it is irrelevant to the average investor. There will always be spectacular winners, but they are statistically rare and IMO the OP would be extremely unwise to assume that he will be one of them.
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Old 04-01-2020, 09:22 AM   #18
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Entertainment for shut-ins: https://review.chicagobooth.edu/econ...kets-efficient Fama and Thaler talking about market pricing. Beware: The transcript is edited and not complete. You'll have to watch the video to get the full benefit of these two Nobel Prize winners' wisdom.
That was interesting, if not a little slow. My observations:

Fama (came up with Efficient Market Theory) seems less comfortable in his skin and somewhat defensive while Thaler (believes more in human fallibility) seemed very much in command of the subject and supremely relaxed discussing the subject.

Thaler recognizes the Efficient Market Theory is useful and mostly correct but that it's quite imperfect and it's just an approximation. Fama seems more ideological and theoretical and wants to cling to his theory as if it represents reality itself.

I find myself more in Thaler's camp.
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Old 04-01-2020, 09:31 AM   #19
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.. I find myself more in Thaler's camp.
Me, too. I think of it as a two-step process, Fama's cupcake with Thaler's frosting, made with non-nutritive sweetener. The trick for a speculator is to figure out how much frosting there is and how it will change in the future. Or, for guys like me, to just ignore it/to not buy individual stocks any more. It's fun, I've done it, and maybe in total I've made a little money. But no more.

More for shut-ins: The first few chapters of "Extraordinary Popular Delusions and The Madness of Crowds" by Charles Mackay, published in 1841.
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Old 04-01-2020, 09:45 AM   #20
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@retiredatthirty-eight would love to hear your story on how you did it back in the day.
To make a long story short: Living like a college student and not spending any money I didn't need to. Furniture? Yes, it's a crate. TV? What's that? Car? I rebuilt it myself and it gets 40 mpg. Letting the winners ride (and adding more on dips) until I saw something better or I saw the party was over. I also avoided any high-fliers that I didn't understand or that I felt had less than excellent management or that didn't have a competitive moat. And never use margin or invest money that was allocated to future needs.

I would never dump a company because the share price went down if the reason for investing was still intact (I would buy more) and I would always dump a company, even at a loss, when my original reason for investing no longer seemed valid. I would never take profits just because profits were available, I would hold until the reasons I invested were no longer valid. I avoided shady companies no matter how promising they sounded. It's all about quality management and effective execution. I was not very diversified at any one time but I felt the quality of the companies I was investing in offered some protection against complete disaster. Additionally, my relatively young age, good health and lack of debt and monthly expenses further reduced the impact of any risk.

My biggest winners were MSFT, SBUX, QCOM, TSLA and 7 or 8 less spectacular winners. I completely missed APPL, AMZN, GOOG, and a whole bunch of others. My good results stem as much from avoiding companies that would go to zero as much as getting in on some great ones.
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