Assessing the Carnage

[joesxm3]

This week has been such a head-spinning event that I decided to balance the books today so I can get a grip on where things are.

I had been trying to increase my equity exposure from 23% to 40% before the toilet was flushed. I had been buying what seemed to be beaten down tech growth stocks and soon discovered that they were just warming up for their price dump.

I have a couple that I think are good for long term holding and I have been adding to those and also adding SPY and VTI for a more sensible equity exposure.

That said, despite the crashing I have managed to increase my equity allocation to 32%.

Measuring the bleeding I came up with the following:

Year to date, down 15%.

From my all time high, down 20%.

From my total on the day I FIRED in August 2016, down 2%.

My original "back of the napkin" retirement spreadsheet had factored in a 15% drop in my portfolio in the first month of retirement. So I guess I have some wiggle room. Plus it has already been 5 3/4 years into retirement.

At this point, I am pretty satiated on catching the falling knives, so I probably will wind down my "buying the dip" and just slowly DCA into SPY and VTI.

However, while I know you should evaluate the percentage of loss, I still take a look at the total dollars lost and think of how many hours of w*rk that took to earn them.

 

[lawman]

This week has been such a head-spinning event that I decided to balance the books today so I can get a grip on where things are.

I had been trying to increase my equity exposure from 23% to 40% before the toilet was flushed. I had been buying what seemed to be beaten down tech growth stocks and soon discovered that they were just warming up for their price dump.

I have a couple that I think are good for long term holding and I have been adding to those and also adding SPY and VTI for a more sensible equity exposure.

That said, despite the crashing I have managed to increase my equity allocation to 32%.

Measuring the bleeding I came up with the following:

Year to date, down 15%.

From my all time high, down 20%.

From my total on the day I FIRED in August 2016, down 2%.

My original "back of the napkin" retirement spreadsheet had factored in a 15% drop in my portfolio in the first month of retirement. So I guess I have some wiggle room. Plus it has already been 5 3/4 years into retirement.

At this point, I am pretty satiated on catching the falling knives, so I probably will wind down my "buying the dip" and just slowly DCA into SPY and VTI.

However, while I know you should evaluate the percentage of loss, I still take a look at the total dollars lost and think of how many hours of w*rk that took to earn them.

I always knew equities could and would have times of volatility. What I wasn't ready for was the 10% loss I took when I finally sold my bond funds..

 

[joesxm3]

I sold my bond funds several months ago, but I have not calculated the drop from all time high. I had them for years, so there was a profit, but probably a lot less than if I sold at ATH.

 

[lawman]

I sold my bond funds several months ago, but I have not calculated the drop from all time high. I had them for years, so there was a profit, but probably a lot less than if I sold at ATH.

Me too..I held VFIDX for probably 20 years so I know I made money but when I sold it was down a lot from where is had been..

 

[NW-Bound]

That said, despite the crashing I have managed to increase my equity allocation to 32%.

Measuring the bleeding I came up with the following:

Year to date, down 15%.

From my all time high, down 20%...

I am trying to understand.

Is your entire portfolio down 15% with a current stock AA of 32%?

If so, your stocks go down a whole lot more than the S&P.

 

[joesxm3]

Yup, seems I am playing with fire in my choice of disruptive stocks.

I have been DCA'ing into (in descending position size) GOOG, TSLA, AMZN, SQ, ARKG, ARKK, PLTR, NVDA.

These new ones are about half of my equity allocation. But even the Fidelity total market and VTI are down about 20% from ATH. I also have long held positions in T Rowe Price funds.

Not to mention the temporary drop in the forbidden asset class

I started to compare the drop from ATH to my current loss position and it seems I was too quick to bottom fish, since my loss is about half of the drop from ATH on the new stock positions.

 

[Out of Steam]

Since I do my annual accounting on March 31st, the carnage in our retirement portfolios won't look quite so bad.

 

[NW-Bound]

Yup, seems I am playing with fire in my choice of disruptive stocks.

I have been DCA'ing into (in descending position size) GOOG, TSLA, AMZN, SQ, ARKG, ARKK, PLTR, NVDA...

Well, I never bought any of these disruptive stocks, and will not get interested until the dust settles.

I want to see them all fallen from their high horse and dragged around the tracks a few times. The ones that survive and can still crawl around on hands and knees, maybe I will get interested.

I learned this lesson from the 2000 tech fiasco.

 

[joesxm3]

Apparently I didnt.

My plan was to get started and build the position after the dip, but I guess I fell victim to fear of missing out.

 

[Montecfo]

The low equity allocation but high concentration is intriguing.

I have a much higher equity allocation, but I limit any one position to 5 pct or less. So I trimmed many of my highly successful positions (GOOG, AMZN, FB and small positions in 2nd tier growth names well before Nov.

And I have nibbled to add to others.

I do not like the downdraft but I'm hit less than most with this strategy and avoiding duration in bonds.

Good news is some stocks are getting pretty darn cheap. We can't bottom until that becomes concensus OR inflation falls enough that Fed's trajectory and economy direction become clear.

 

[npage]

Would QQQ be a way to tackle getting these stocks when the dust settles a bit more without having to pick one I have been thinking. I've always just been VTi but admit getting curious.

 

[joesxm3]

The way I figured my asset allocation is to have 30% of the total portfolio in "safe" stuff, either funds or big name stocks. 10% is to be in "risky" stuff.

Of the 30% safe

GOOG 14.66%
TSLA 13.46% (intended to be the largest single stock holding eventually)
AMZN 7.95%
T Rowe and Vanguard Funds and ETFs 24.63%
Total market and S&P funds and ETFs 16% (planning to increase)
Current cash 11.36%

After GOOG, TSLA and AMZN split I plan to sell covered calls and probably will sell off some of the shares. I plan to hold GOOG and TSLA for a long time and probably will trade out of AMZN if it runs up due to the publicity of the stock split.

In the 10% risky

SQ 12.72%
PLTR 10.44%
ARKK 9.36%
ARKG 9.03%
Gene Editing Stocks 5%
current cash 44.36%

My thesis for these risky stocks is that now that they are 80% off their ATH, they might be properly priced and I think that they will grow into nice companies over the next five or ten years.

If I were planning to actively trade the individual stocks I probably would limit my position size to 2% max and cut losses aggressively, sort of like the Investor's Business Daily trading style, but I guess I drank too much cool aid at Cathie's last party and do think that we are in the midst of some major changes in the world. Whether that means I can match companies to changes and make money is another story.

 

[joesxm3]

My reasoning for not including QQQ in my mix is that the Nasdaq is made up of the "old guard" technology companies and my thesis is that the changing situation will lead to new disruptive companies taking share from the older tech companies.

I think that SPY includes GOOG, TSLA and AMZN, so I guess I am overweight if I buy too much SPY.

 

[aja8888]

Joe ^^^^^ I don't understand how you can call Tesla a safe stock when it's P/E is around 100 and competition is staring it in the face.

 

[joesxm3]

Compared to my other ones TSLA is safe

One clarification regarding not learning from the dot com bubble. When the dot com burst I was 80% equity heavy tech stocks. So I guess my timid equity allocation up to now was a reaction.

 

[aja8888]

Compared to my other ones TSLA is safe

Yes, I guess you are right there.

 

[npage]

My reasoning for not including QQQ in my mix is that the Nasdaq is made up of the "old guard" technology companies and my thesis is that the changing situation will lead to new disruptive companies taking share from the older tech companies.

I think that SPY includes GOOG, TSLA and AMZN, so I guess I am overweight if I buy too much SPY.

I just threw QQQ and SPY into portfolio visualizer. Goes back to 2000.

$10,000 initial investment has QQQ at $39.6K and SPY at $42.2K. Basically S&P 500 wins but very high correlation.

 

[NW-Bound]

I just threw QQQ and SPY into portfolio visualizer. Goes back to 2000.

$10,000 initial investment has QQQ at $39.6K and SPY at $42.2K. Basically S&P 500 wins but very high correlation.

Well, QQQ crashed so hard, it took 20 years to catch up with SPY.

And in 2010, 10 years after the tech crash, SPY was still at $10,000, and QQQ was at about $6000. And these numbers are with dividends. Aye, aye, aye...


PS. And on the other hand, Dow Jones (DIA) has been higher than SPY all this time since 2000. It's now $46k, vs. SPY at $42K.

 

[npage]

Yeah, it's always easy to look back and wonder. Over a long enough time frame I subscribe reversion to the mean for everything. The challenge with timing is figuring out where you are in that reversion, ascension or decline or neither.

 

[npage]

If I could go back to talk to my 21 year old fresh out of school self, put every extra dollar in S&P 500 index and ignore it all, don't get creative, ignore your coworker's theories, talking heads and on. I'd be a lot better off today and not wasted a lot of time.

I might tell someone 5 years from retirement to ease off a bit and put some in CD's and treasuries, but I digress.

 

[steelyman]

All I’ve been trying to do lately is invest uninvested money from my 2022 Roth contribution (and leftovers from 2021). That’s done and I’ll be glad not to think about it until next year.

 

[NW-Bound]

Yeah, it's always easy to look back and wonder. Over a long enough time frame I subscribe reversion to the mean for everything. The challenge with timing is figuring out where you are in that reversion, ascension or decline or neither.

It pays to not push your luck.

The Reddit kids did not learn that stock prices do not grow like Jack's Beanstalk.

"To the moon" indeed.

 

[joesxm3]

I think in my case the story of the Pied Piper might be more appropriate.

 

[COcheesehead]

I think the bottom isn’t in yet and we won’t see a meaningful upturn until later in the year or until 2023 just based on some things going on in the market and the political cycle.
I am down YTD, but two years into retirement, I am actually up from the day I retired and that includes pulling out two years of expenses, new house, new car, light travel.
I sold some stuff earlier this Spring, wish I would have sold some stuff late last Fall, but that’s the market.

 

[W2R]

I'm invested pretty conservatively, so for me at this point in time it's not too bad at all even when I compare with my all time high back on 11/8/2021.

However if this keeps up for very long then I reserve the right to whine a bit.