New investor looking for strategy feedback

[d2reid]

66 and a "new investor"? Odd I know. My FIRE stratagem had nothing to do with me personally investing in the stock market. I trusted investment services more than I trusted myself. So my new stock market EFT accounts do not risk my retirement income, makes it easier to lose.

My father did very well with stock market investments, well enough to finance my mothers 11 years in a very good memory care facility, she passed last year and there was money left over. So I have taken that inheritance and invested in the stock market. Last November and December I was feeling pretty good about what I was doing. But I was trading, not investing.

Around June 6th I as thinking I should sell everything and hold on to the cash. There was just so much financial negativity in the air, what little I had learned in the short time I was "in the market" told me things were going to go down hill. I got distracted and didn't make the big sell off. So today I am happy the market has come up a little. I have inadvertently become an investor, hanging on to my stocks simply because they have potential value that may ultimately increase to match the amount of money I paid for them. I don't really want to lock in a loss.

So I am sitting here today doing nothing with my stock portfolio. Debating whether to continue to do nothing or to go back to "working it" to see if I can't accelerate the recovery. I am down 7% from June 1, I have 20% in cash.

I have been "in the market" for less than a year and I am trying to find my strategy. I will only be alive maybe another 20 years so really long term strategy isn't something I want to look at.

For those that know what they are doing I hope my situation will elicit an eyeroll, a groan, or a chuckle. I have a long history of listening to good advice and then doing something stupid anyway. I am just hoping for some discussion that will help me make better decisions.

 

[aja8888]

For those that know what they are doing I hope my situation will elicit an eyeroll, a groan, or a chuckle.

You must be new here!

 

[Dash man]

The important thing is to be in the market. Those who get in and out trying to time the market will lose. I forget the exact numbers, but something like over a 20 year period you can count the big gains on your fingers and toes. Big gains often happen fast and after a down market.
I'm your age and I've just moved about a third of my funds out of individual stocks (my Roth IRA) and into index ETFs. Specifically SCHB, SCHD, SCHA and SCHY. This pretty much covers the market so I don't have to think too much about it as I age. The stocks in my taxable accounts have too much in capital gains to mess with much. so I mostly just take the dividends. I have been dabbling some with bonds as rates have gone up.
If you're just looking to play with fun money, it's a bit dangerous right now with the unpredictability we have. You can try selling some out of the money covered calls with the stocks you have for extra money.

 

[pb4uski]

I think you really need to ask yourself why you are investing in stocks? what do you hope to accomplish?

It sounds like your spending is well secured since you state that "my new stock market EFT accounts do not risk my retirement income, makes it easier to lose."

Let me suggest that you are probably in the zone where you have "won the game"... you have plenty for retirement without your stock money. If so, there are a number of schools of thought. One extreme is that you don't need to play the game anymore so you can invest that money conservatively in bonds and CDs and whetever it does it does but you don't need to worr about it and can sleep well at night... but the spending power of that money may erode over time due to inflation. The other extreme is that you can afford to risk it so just invest it in stocks, cross your fingers and hope for the best.

And there are all sorts of in-betweens, such as investing some of the money in a CD or UST ladder that provides cash flows to supplement your existing retirement income sources (or even perhaps a single premium immediate life annuity) and invest the rest in stocks. So for example, if an additonal $1,000/month of income would make your retirement even more comfortable then buy a SPIA or build a ladder that provides a secure $1,000/month and invest the rest in stocks.

There is no right or wrong answer. The world is your oyster.

Or you might consider this instead of equities using equity LEAP calls: https://www.optionseducation.org/strategies/all-strategies/synthetic-long-stock

Or I also like Dashman's covered call suggestion.

 

[d2reid]

I think you really need to ask yourself why you are investing in stocks? what do you hope to accomplish?

Nov-Jan the answer was easy, I liked watching my money grow. Lately I am still in the market because I want to learn more about how the world works, what makes it tick. I find it very interesting to watch how the market reacts to the slightest financial news and world events, but still not understanding the correlation.

So far it appears to me like the market reacts like a school of fish, swims one way when there is a perceived predator (doesn't even have to be real), and another way just because. It has feeding times when it is very active, and quiet times when it is resting. It has cycles that are similar to a school of fish following the lunar cycles. Obviously I know more about fish than I do about the financial market.

What do I hope to accomplish? Well to get rich of course... no that's not it, I know I am too late and too little in the game to get rich. I think it's more about self satisfaction, learning something new, understanding it. Probably a fools errand. But it won't be the first mistake I have made in my life.

 

[target2019]

66 and a "new investor"? Odd I know. My FIRE stratagem had nothing to do with me personally investing in the stock market. I trusted investment services more than I trusted myself. So my new stock market EFT accounts do not risk my retirement income, makes it easier to lose.

My father did very well with stock market investments, well enough to finance my mothers 11 years in a very good memory care facility, she passed last year and there was money left over. So I have taken that inheritance and invested in the stock market. Last November and December I was feeling pretty good about what I was doing. But I was trading, not investing.

Around June 6th I as thinking I should sell everything and hold on to the cash. There was just so much financial negativity in the air, what little I had learned in the short time I was "in the market" told me things were going to go down hill. I got distracted and didn't make the big sell off. So today I am happy the market has come up a little. I have inadvertently become an investor, hanging on to my stocks simply because they have potential value that may ultimately increase to match the amount of money I paid for them. I don't really want to lock in a loss.

So I am sitting here today doing nothing with my stock portfolio. Debating whether to continue to do nothing or to go back to "working it" to see if I can't accelerate the recovery. I am down 7% from June 1, I have 20% in cash.

I have been "in the market" for less than a year and I am trying to find my strategy. I will only be alive maybe another 20 years so really long term strategy isn't something I want to look at.

For those that know what they are doing I hope my situation will elicit an eyeroll, a groan, or a chuckle. I have a long history of listening to good advice and then doing something stupid anyway. I am just hoping for some discussion that will help me make better decisions.

Nov-Jan the answer was easy, I liked watching my money grow. Lately I am still in the market because I want to learn more about how the world works, what makes it tick. I find it very interesting to watch how the market reacts to the slightest financial news and world events, but still not understanding the correlation.

So far it appears to me like the market reacts like a school of fish, swims one way when there is a perceived predator (doesn't even have to be real), and another way just because. It has feeding times when it is very active, and quiet times when it is resting. It has cycles that are similar to a school of fish following the lunar cycles. Obviously I know more about fish than I do about the financial market.

What do I hope to accomplish? Well to get rich of course... no that's not it, I know I am too late and too little in the game to get rich. I think it's more about self satisfaction, learning something new, understanding it. Probably a fools errand. But it won't be the first mistake I have made in my life.

Since you have an income stream that's relatively secure, I hope, then what you do now could be preservation or growth-oriented, and the results do not affect your long-term outcome. Yes, 20 years is considered long-term.

I follow the principles and ideas put forth by John Bogle and William Bernstein. I consider all of our investments to be one portfolio. Then it is up to you and I to find what risk to take in each account, how to set asset allocations, and so forth.

Initially it makes sense to measure everything and define how each investment fits together. For example, you may find you actually have significantly more risk (equities) than you thought. Then you have a possible option for this other money, to play more conservatively and reduce your risk level.

Or you could continue reading headlines and go with the fish, or swim against them, I imagine. Maybe it will work? I prefer setting targets and allocations and monitoring things at a higher level.

 

[d2reid]

I prefer setting targets and allocations and monitoring things at a higher level.

This is a much sounder approach than my initial one. I was initially buying and selling like Barracuda chasing bait. But the downturn and my desire to not lock in the loss has forced me to re-analyze my strategy. All of the stocks I own now I picked out personally. The ones that are doing poorest are ones that were "recommended" by an online advisor or fund manager. I have even wasted money on some online advisors that claim they were the first to pick the big winners and for only a few dollars they will tell you what the next greatest stock is. That hasn't gone too well for me. The first thing I learned was they after you pay the fee you get to hear about the better suggestion for just a few more dollars.

My main retirement plan is pretty much set up on targets and allocations. I don't manage that, good thing. This new trading thing is an experiment with financial life. Doing at 66 what I should have done at 44.

 

[target2019]

This is a much sounder approach than my initial one. I was initially buying and selling like Barracuda chasing bait. But the downturn and my desire to not lock in the loss has forced me to re-analyze my strategy. All of the stocks I own now I picked out personally. The ones that are doing poorest are ones that were "recommended" by an online advisor or fund manager. I have even wasted money on some online advisors that claim they were the first to pick the big winners and for only a few dollars they will tell you what the next greatest stock is. That hasn't gone too well for me. The first thing I learned was they after you pay the fee you get to hear about the better suggestion for just a few more dollars.

My main retirement plan is pretty much set up on targets and allocations. I don't manage that, good thing. This new trading thing is an experiment with financial life. Doing at 66 what I should have done at 44.

I'm somewhat familiar with wealth managers and what they do for you. I kept an eye on those big boys for the in-laws.

We are not on the USS Wealth Management, and use mostly index funds only. In a taxable brokerage I tinker, but have grown tried of that and now just use SCHD (value) for a quarterly payout. In some accounts I use SCHG (growth) for new money. YMMV of course. It's all good.