Why not go to cash?

[Rich Toscano]

Agree on all that… but that’s kind of my point, the more expensive it gets, the less likely that prices will keep going up at a rate that would price you out forever.

[sdrealtor]

[quote=Rich Toscano]Agree on all that… but that’s kind of my point, the more expensive it gets, the less likely that prices will keep going up at a rate that would price you out forever.[/quote]

Rates will do that once prices stabilize

[svelte]

OK. I didn’t go all cash, but I just made the biggest shift I’ve ever made in my 401K.

I went from 15% stable to 40% stable.

My reasoning is this:
– That is about where the Vanguard retirement planning mutual funds say I should be at my age
– I’m over 40% up from where I had projected I would be right now. I made those projections 3, 4 and 5 years ago.
– Most major market corrections happen in the July-October time frame
– I’ve always waited just a few weeks too long to move money out in the past and I don’t want to miss the boat again.
– I may miss out on some of the future up movements, but at least I’ve locked in the 40% upside I already have.

Those of you younger probably shouldn’t make such a drastic move yourself. But at my age, it is the right thing to do. Now maybe my 401K account will stop sending me nastygrams saying I’m investing too aggressive for my age!

[svelte]

[quote=Coronita]
I figure if we have more inflation, companies like P&G can get away with charging more for things like diapers and toilet paper…
[/quote]

I’ve been listening to the inflation vs deflation discussions a lot lately. Personally, I think we have more risk of deflation than inflation going forward.

The savings rate is way up:
https://time.com/nextadvisor/banking/savings/us-saving-rate-soaring/

Boomers are retiring and slowing their spending down.

And then there is this writeup about how overvalued the market is right now:

A major bubble in growth stocks

That data on Tesla is just jaw-dropping. That can’t last.

[scaredyclassic]

I have a question.
With trading fees zero, why buy a mutual fund?

[svelte]

[quote=scaredyclassic]I have a question.
With trading fees zero, why buy a mutual fund?[/quote]

I guess that depends on whether you want to actively manage your mix of stocks. People who like to hold just a few companies will probably manage the trades on their own. That seems risky to me.

It seems safer to have my $$ spread over a wide range of stocks and have someone who has the time to watch that mix daily for patterns emerging in the market. I don’t have that kind of time. I check in on my accounts every couple of months. That leaves me exposed to major turns in the market.

Besides, most of my money is in my 401K. I can’t buy individual stocks there that I know of.

[Coronita]

[quote=svelte][quote=scaredyclassic]I have a question.
With trading fees zero, why buy a mutual fund?[/quote]

I guess that depends on whether you want to actively manage your mix of stocks. People who like to hold just a few companies will probably manage the trades on their own. That seems risky to me.

It seems safer to have my $$ spread over a wide range of stocks and have someone who has the time to watch that mix daily for patterns emerging in the market. I don’t have that kind of time. I check in on my accounts every couple of months. That leaves me exposed to major turns in the market.

Besides, most of my money is in my 401K. I can’t buy individual stocks there that I know of.[/quote]

Some 401k plans dont give you a self directed option. There’s a couple of actively managed funds i just like to keep around just in case, things like Fidelity Contrafund that comes in many 401ks.

Regarding index funds versus etf…I do bi+monthly contributions to index funds or sorts…while there are etf equivalents, one thing I found useful is not being able to sell right away and having some sort of penalty for frequently trading (ie being restricted to buy new shares X days from selling) has been good discipline for me on passive side of my portfolio. Having similar ETFs elsewhere, Im finding its much more tempting for me to try to time the markets in those accounts, and do more trading in and out off positions, which probably is a fruitless effort in the long term, at least for me.

Ive moved out of individual tech stocks, except 3. One, IBM, i simply bought for the dividend a few months ago. I dont expect a lot of hoopla on it, which is the point. About 2 months ago, i moved into visa and mastercard and some banks that were beaten down..because i figure given how much stimulus money is being thrown at people, people are going to end up spending $4 on credit for every $1 of stimulus they got, being good American consumers as they are, paying 19% APR, which probably will go higher on the not so far future…That, and costco will always be costco.

[gzz]

svelte: Agree on all points.

scaredy: Mutual funds are more convenient, but if you just buy a whole bunch of small investments in large caps, you can harvest tax losses in a way that an identical mutual fund can’t.

flu: Visa and MC and amex make their money on interchange fees, which are higher in the USA than other developed nations. Will they stay that way forever?

If Biden wants to make three large companies angry but a zillion companies that take credit cards happy, he can crack down on the fees. This is not a wild scenario: it already happened in many other nations all over the world.

[scaredyclassic]

a mutual fund is always going to charge a fee. if you just bought the same stocks, you’d already be ahead of a murual fund.

as to the mutual fund being smarter or beating the market, through trading or a sense of what’s coming, in general, they’re wrong. seems like ti would be better to just buy the same stocks as a fund you like and hold them. save the .3 or .5 % a year they charge to do the buying for you.

[svelte]

[quote=scaredyclassic]
as to the mutual fund being smarter or beating the market, through trading or a sense of what’s coming, in general, they’re wrong. seems like ti would be better to just buy the same stocks as a fund you like and hold them. save the .3 or .5 % a year they charge to do the buying for you.[/quote]

Oh, I don’t know. In some ways you are right.

I’ll never forget the series of stories WSJ did in the 90s showing that throwing darts at a dartboard picked stocks as well as if not better than the pros.

However, I do have my money in a few mutual funds that do outrageously well over the long term, even after taking into account fees.

Here are a few of my favorites, alphabetically:

Alger Weatherbie Specialized Growth A Fees: 0.81%
3yr: 27% 5yr: 26% 10yr: 15%

ClearBridge Large Cap Growth Fund IS Fees: 1%
3yr: 18% 5yr: 18% 10yr:15%

Fidelity Contrafund Fees: 0.86%
3yr: 18% 5yr: 19% Life: 15%

JPMorgan Large Cap Growth Fees: 1.04%
3yr: 27% 5yr: 25% 10yr: 17%

Now let’s look at what a low fee SP500 index fund returned:

Schwab S&P 500 Index Fund (SWPPX) Fees: 0.02%
3yr: 16% 5yr: 16% 10yr: 13%

So – if I’m getting a better return with managed funds AFTER they deduct their fees than I could get with the SP500 Index fund with almost no fees, why wouldn’t I buy the better managed funds?

[gzz]

80%+ of active funds under-perform the S&P. If you’re good enough to pick and buy the best 20% of funds in advance, you might be even better at picking stocks.

That JPM fund was ranked 11 out of 600+ funds in its category.

Also, “Front load 5.25%”

Wow!

[scaredyclassic]

Even at 1 percent, you’ll be up 10 percent creating your own mutual fund after a decade. And you’ll more likely at least track the market

[svelte]

[quote=gzz]80%+ of active funds under-perform the S&P. If you’re good enough to pick and buy the best 20% of funds in advance, you might be even better at picking stocks.

That JPM fund was ranked 11 out of 600+ funds in its category.

Also, “Front load 5.25%”

Wow![/quote]

I’m not claiming I’m super skilled at mutual fund picking. There are only so many funds offered in my 401K, I look at their history over the long term and select my investments based on that. Pretty simplistic.

I don’t have the time nor desire to put a lot of energy into studying individual stocks.

Front loads usually range from 3.75 to 5.75, so yeah 5.25 is on the high end of that. Need to leave $$ in there long term to make it worth it, not doing buy/sells all of the time.

Finally, I just found out that Warren Buffett has positioned Berkshire Hathaway at 37% cash, 63% stock so I came to about the same conclusion as Buffett independently!

[Coronita]

[quote=gzz]
flu: Visa and MC and amex make their money on interchange fees, which are higher in the USA than other developed nations. Will they stay that way forever?

[/quote]

https://finance.yahoo.com/m/86e32efe-ad5c-3dfd-8c6c-f203336aa737/visa-earnings-beat-as-key.html

[Coronita]

And one of the few tech stocks i still have…looks like as predicted, starting to do serious damage to Intels data center business. Ha ha.

https://finance.yahoo.com/m/224fd3a1-3956-3a0b-ae41-d3e0a2f9c92a/intel%E2%80%99s-data-center-customers.html

Intel.is sort of in a pickle…For our servers, weve all switched over to AMD epyc.

For home desktop, those of us running PCs are all using either AMD Threadrippers or the 12 or 16 core consumer ryzen, 3900 3950, and some are upgrading to the latest 5900 5950 when available.

and for apple specific development, the M1 is pretty quick.

intel not being used.

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