US high valuations impact on your stock porfolio mix?

Investing / Portfolios
136

100%.

The one angle I would add:

  • once you start withdrawing from your portfolio, you start thinking about incoming cash flow a lot more than you worry about total return (at least I do).
  • a customized income-oriented portfolio helps immensly with this.
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137

Yea that’s true. At the time of withdrawals the game become a bit more complicated because what matters is the income which pays the bills :slight_smile:

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138

What you are saying is absolutely true. Individual stocks come with their own risks. It’s not for the faint hearted.

139

I think this is the key point. There are no brainers. MSFT was a no brainer to my uncle in Greece in the stone age of the 80s where you had to have a broker who was a person you’d call on the phone and ask them to buy or sell something. He was an early programmer (retired now) but he had the foresight that PCs will make it in every home and replace typewriters. Him and my aunt fit the millionaire next door profile to a t. Same home for 40 years, no extravagance, steady saving and investing. I don’t know that they’re millionaires but I’d expect they are. He definitely had a huge advantage of being an insider in a very new, very niche profession, but that’s not taking away from the success I imagine he had. By the mid 90s Bill Gates’s face, the feud with Apple and the US govt’s antitrust proceedings were in mainstream news all the time, even in Greece. Someone could have gotten in MSFT THEN, and become very rich from it. Someone could have gotten in 10 years later in 2005 say and again become very rich. Hell someone could have gotten in in 2015 and be riding great right now!!!

Anyway, as I said above the kicker is the bolded part. I count 4 failures to make it big to date: crypto (4 times, 2010, 2017, 2021 and definitely now), COVID, AI and the fat loss drugs, but I sleep ok with it because I know myself, I just don’t have the guts to go big in single stocks/assets. I bought nVidia at $200 and sold at $400, similarly pulled a 2x in Lilly and Novo, and got rid of both because they were stressing me out. I buy VWRL every month with zero stress.

@Your_Full_Name big love for saying what I’m often saying too, that economics and finance have no place among the real sciences :slight_smile:

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141

I owned DPZ, GOOG, not HD as I did find that too expensive, but instead I bought LOW.

My biggest mistake was selling them when I thought the valuations were stretched
 they kept going up and up and up.

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142

I see it as a game of poker: we make educated guesses based on game principles and our read of the situation with a risk assessment as to how much to bet on each hand (depending on our own situation (our hand) and the read we have on the situation and the other players).

Playing all games equally with passive index investing is one way to handle it, and not the worst as it relies purely on game principles without being dependent on our ability to read the situation (with strong principles behind the reasoning that stocks, as a whole and on a long term trend should outpace inflation).

Of course, players with strong conviction in their ability to read the situation (and/or the other players) may play it differently.

Edit: thinking about it, I may frame passive investing as “the house”, taking their cut on each transaction while active players take a more “win or loose” approach.

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143

Haven’t heard/thought about this analogy before, but I absolutely love it. :smiley:

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