I'm not a real "investor" (index funds only) but I am feeling more willing to forgo gains to be more risk averse just based on my own neuroses.
Maybe I cash out and buy T-bills? Gold? Bullets? What's the non-crazy person equivalent?
Edit: Notably, you don't have to fully stop investing in the SP500. If you were previously 60% weighted towards the SP500, you can still reduce your exposure by changing that to 20%, or something like that.
For this round I've bought (well, bought and sold, and now waiting to buy via an order) puts on a semiconductor ETF. Since I own some of the stocks, if it goes sky high still I win, if it crashes I win, and if nothing happens I'll have to sell it 30 days before it expires to avoid the theta decay, which starts to really bite in that last month.
No one knows anything - which is the environment I'm learning to operate it.
A very conservative investor, say a boglehead or a 'value investor' would tell you to buy in an index fund and not look, unless you know for sure what you are doing and have done insane research on a company and it's priced low. They would say, buy VTI or VOO if you don't need the money within 5 years, and stop looking at it. Oh, and DCA into it versus all at once.
Diversification is the bedrock of portfolio management, meaning owning a range of assets that collectively perform acceptably under a range of scenarios. But it’s generally not sexy, not something you catch individuals bragging about - avoiding permanent loss of capital.
Think about what risk you’re willing to take, in the context of your job/career prospects, current investments etc.
These are things for you to decide. Wouldn’t trust anyone who says buy x without knowing your individual circumstances.
What I can say is there are consistent patterns for many successful investors, and the media will tend to focus on the outliers / lottery winners, which by definition are difficult to emulate / replicate. Be wary of survivorship bias and the narrative fallacy.
Gold is only for very rich people if you want to have something in the case the whole economy goes to the bin.
Bullets if you are paranoid.
I'm not really an investor btw, this is just my intuition. I'm curious what others here are doing.
> I'm not really an investor btw, this is just my intuition
Don't give advice when you don't know the subject. For a start, there are more than 2 assets. For some, certain corporate bonds look nice right now. Although indices are overpriced and carry risk due to the bubble, much of the wider market is extremely cheap. Developed and undeveloped foreign markets have also been outperforming the US. And commodities...
And this isn't even about the total number of high-paying jobs. Even having too much income concentration (fewer, but higher paying jobs) will mean that there's less demand at the margin. To put it another way, if the job growth in say, silicon valley, starts to reverse because of AI, there will still be newcomers, but not enough to buy out the available housing at an ever increasing price.
If the price trend ever reverses and holds that way long enough to seem like a new normal, I suspect the price will suddenly correct downwards. Everyone holding on to real estate as an investment will have a great reason to sell once it becomes a depreciating asset. If it goes on long enough, people will be underwater on housing and start walking away.
The price trend is already somewhat flattened, which reduces FOMO. Why buy now when AI is uncertain and the price seems pretty flat?
Depends on equity and interest rate of course.
Particularly as it seems contagion is more AB’s more likely. That the implosion won’t be limited to the mag 7.
What are the implications of bond prices in this dubious interest rate environment? It seems no one knows what the Fed should or wants to do, including the Fed. And if the economy is on shaky ground, won't that be bad for bonds if companies can default?
You're not expecting it to earn much, but it should hold its value over the long term. This will reduce the expected return of the portfolio, but the goal is to get volatility to a level you can stomach, allowing you to ride out fluctuations on the equity side. Because even though we can all look at the current situation and say the stock market appears overvalued, we can't know how much higher it will go, when we've hit the top, or once it starts declining, when we've hit the bottom. Even experts do no better than luck would dictate at that game.
I'd say ex-US international value stocks, especially EU, are a better hedge.