That would only mean that a stock is expensive. Looking at the Shiller PE that is currently indeed the case (link). Problem is, nobody knows when a correction will happen. I invest regularly, whether stocks are high or low. Maintaining my asset allocation automatically means that I buy more when prices are low than vice versa.
Statistically, an all-time high is also not a reliable indicator for an imminent crash (link; German).
I hear that often and that is also my impression! Sometimes I wonder how much revenue the entire economy is throwing away just because some companies and institutions are so inefficient.
overall stay the course: it will be my first full year with my IPS in place (recently put to paper too )…so I can hopefully contribute my first full year net worth progression (and “pants down” at the end of 2022).
specific action is to renegotiate our mortgage, merging all our “tranches” while freeing up our gage and stopping all amortisation by 01.2023.
ambitious action is to position myself for a raise/promotion latest 2023…I’m worth it and have had several good years in a row.
edit: put pen to paper and summarize key financial learnings learned here and elsewhere, in order to help me start to educate my kids in Financial Independance.
Over the last 12months, I’ve proudly killed all debt (was minimal no interest debt but still), invested a lot of time to act on several excessive expenses that I identified as savings for new cash flow (but never would have bothered before), learned more on optimising my mortgage and 3a contributions, knew how to better support my wife as she got her new business going (allowing us access to her 3a in 2021, which hasn’t been the case since our kids were born). And lastly, while I really felt at the start that the whole YNAB promotion was “too much”, I have to admit its really helped in 2021, structuring 2022 in a detail I would never have committed to before. IMO worth the money to have a software to help, whatever suits you best.
I’ve learned a tonne from you all in 2021 : thank you!
Going more towards cash (70-30). Warren B. Is doing the same, so who am I to disagree?
Should I consider my own property in that 60%?
Most probably I will open a new portfolio with a less risky strategy in FP
I think it would be a good idea, since during high interest rates times there is the problem of DCF
I’m not sure if I will be able to sell my TSLA shares
If you read some articles by Lyn Alden, you will discover a lot of good information about commodities. She is really good.
There are too many signals to follow then
I won’t drop google stocks…they are the biggest company in many fields, that will be important in the future (ie AI).
I’m considering to add shares of banks (or XLF ETF). Interest rates going up = banks should go up
It’s never too late. In this thread you can read comments against cryptos, but even the biggest portfolio manager Ray Dalio, is saying to allocate a (small) portion…
Kraken+Ledger nano
You’re not handling billions and other people’s money, are you?
Just copying what the “big guys” do could turn out lucky, but we operate on totally different scales.
Managing billions is different from investing your own few 100k. There are one one side limitations when managing other people’s money and on the other side with such large amounts you can’t invest in smaller companies anymore, because your orders would move the price too much.
Also the reason why Berkshire holds more cash is because they are value investors and wait for bargains, which are almost impossible to find in the high priced environment we are living in currently. But from your comments you don’t sound like a value investor at all.
So I guess you don’t keep some cash aside, in case eventually the big drop will happen.
In my opinion there is time to be more invested in growth stocks or in value stock and keeping always a good percentage in an index. Not the easiest thing to rebalance, but it can worth it.
I prefer to keep cash (CHF) instead of buying bonds.
Said that, Buffet never purchased/understood BTC (or maybe he cannot buy any) but the truth is that it’s the assets that performed better than anything else.
Now the crypto market is sinking…but it’s another story.
I do keep cash aside, I never said you shouldn’t keep cash aside, I only explained why Berkshire keeps a high amount in cash currently.
What is a value stock for you? What you describe is market timing, you try to guess when is time for “value stocks” and when for “growth stocks”, so you are trying to beat the market, while at the same time you “are the market” with the index fund.
Buffet and Charlie don’t buy assets they don’t understand. In addition they are value investors, they buy assets when the price is way lower than the intrinsic value and BTC doesn’t have any intrinsic value (that’s a discussion for another topic). Putting money in BTC is speculating (trying to predict the future) and not investing. I also have maybe 0.5% of my NW in crypto, but for me, that’s fun money and gambling nothing more.
I think it is partially true.
If you made 10X with a (growth) stock and there is a big catalyst like the raise of interest rates, it makes sense to rebalance IMO
As of June 2019, large money center banks represent value stocks. Bank of America Corporation (BAC), JPMorgan Chase & Co. (JPM), Wells Fargo & Company (WFC), and Citigroup Inc. (C) all trade at a significant discount to the market based on earnings. For example, Citigroup has a P/E ratio of 9.67 compared to 19.12 for the average S&P 500 company.*
Anyway I would like to point out that I’m trying to add a different point of view and collect different opinions/strategies
Just because a stock has a P/E way lower than the average, doesn’t imply it is a value stock. That may be the definition of investopedia, but there’s way more to it than just comparing P/E ratios. A company may have a P/E of 2, but still not be a value stock because it’s intrinsic value is higher than it’s price. If it would be as easy as that, Berkshire wouldn’t have such a high cash allocation.
What I want to say with all this, don’t just blindly follow what the big guys are doing, if it would be that easy, everyone would be the big guy already. Investing is simple, but not easy.
For sure, otherwise you and I would not talk about strategies in a forum
I think I never said that I’m copying 100% the big players.
I guess, unless you have a team of analysts, everyone is absorbing information from different sources and then adapt to his age, risk tolerance, family situation, goals, etc
This has been a good idea for a couple of years now. Whether it holds true in times of rising inflation and interest rates is another topic (that has been discussed in this forum recently).
This helpful post from @wolverine was shared in the context of SWR but perhaps a good reminder.
It shows that if you lower exposure to stocks by too much to reduce risk in the short term, it is likely to decrease wealth in the long term. In other words more years until FIRE
As always it is a trade off and the investment strategy should depend on each person’s individual circumstances. If you try to time the market and get it wrong you miss the returns from stocks
In 2022 I’ll stick to my strategy. This implies 3 things:
a) Maintain my 100% ETF portfolio in balance, i.e. 80% World (mostly VWRD + some VDEM) and 20% Switzerland (mostly CHSPI + some CSSMIM). 4 ETF’s, that’s it.
b) Invest any cash surplus at the beginning of each month, provided my tactical cash reserve is at the desired level. Tactical cash reserve will be deployed if market drops below defined levels (“investment staircase”)
Thinking about this topic, and thanks @user137 for creating it, I think that a good part of the preparation for a potential crash is psychological: trying to visualize the crash while making our asset allocation/strategy and then standing ready to apply it through thick and thin. Having envisioned it beforehand and recognizing it as it unfolds makes living through it easier.
I would recommand posting our plan here in order to be able to get back to it if/when a crash occurs. I would also suggest that we make as sure as we can that that allocation/plan is something we can follow during times of hardship, when markets go down, then up, then down and additional pressures build up in our lives (less financial stability, a potentially less attractive job market and potential stress building up).
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)…so I can hopefully contribute my first full year net worth progression (and “pants down” at the end of 2022).