Author Topic: Investing in the age of Trump  (Read 4226 times)

acousticsamurai

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Investing in the age of Trump
« on: August 02, 2018, 06:58:06 AM »
I’ve recently become financially able to invest and AGREE with MMM’s pro-index fund suggestions.
HOWEVER, looking at any stockmarket growth chart I would venture that we’re currently (August 2018) at the top of a “mountain” of growth and may be due for a huge drop.
I’ve watched from the side lines during the devastating bubbles like the .coms, housing etc. and believe we’re in a stockmarket bubble whether it’s due to “Trump economics” or not.

"Just dive in" is the advice many of my Gen-x colleagues did and JUST THIS YEAR are catching up to where they were a decade or two ago.
I’m a big fan of buy low & sell high, that strategy got me out of credit card debt with the sale of our previous house. 
Where would you recommend parking my money while I wait for the big crash (would you even suggest that?).
What goes up must come down right?  Why buy when stocks are up?

Graph of Dow Jones Industrial from beginning to current date
https://www.google.com/imgres?imgurl=https://upload.wikimedia.org/wikipedia/commons/thumb/c/c8/DJIA_historical_graph_to_jul11_%2528log%2529.svg/1200px-DJIA_historical_graph_to_jul11_%2528log%2529.svg.png&imgrefurl=https://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average&h=600&w=1200&tbnid=PGRFk6VpIgX_mM:&q=dow+jones&tbnh=100&tbnw=200&usg=AFrqEzcY9Ky0biQoJe5e9CPW0tRkBaBJ_Q&vet=12ahUKEwiYl8X2tM7cAhURSa0KHXZYAZ4Q_B0wIXoECAUQCQ..i&docid=5AX59ukmiHd9oM&itg=1&sa=X&ved=2ahUKEwiYl8X2tM7cAhURSa0KHXZYAZ4Q_B0wIXoECAUQCQ#h=600&imgdii=PGRFk6VpIgX_mM:&spf=1533214550060&tbnh=100&tbnw=200&vet=12ahUKEwiYl8X2tM7cAhURSa0KHXZYAZ4Q_B0wIXoECAUQCQ..i&w=1200
« Last Edit: August 02, 2018, 07:21:44 AM by acousticsamurai »

DavidAnnArbor

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Re: Investing in the age of Trum
« Reply #1 on: August 02, 2018, 07:03:36 AM »
I know it looks scary to invest right now, but it's always scary. The long trend of the stock market is up.
I'm a Gen X and I was made whole back in 2012 from the drop in the market. I don't see how it could have taken so long for your colleagues to have caught up, unless they had some weird mutual funds. You have to stick with the stock market passive index funds.

Here's an inspiring article about stock investing

How Much of Your Nest Egg to Put Into Stocks? All of It
https://nyti.ms/1o6kyXC

LAGuy

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Re: Investing in the age of Trum
« Reply #2 on: August 02, 2018, 07:05:19 AM »
Just dive in. If you didn't listen to your Gen-X friends 10 years ago, you've already lost money. A lot.

pecunia

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Re: Investing in the age of Trum
« Reply #3 on: August 02, 2018, 07:17:09 AM »
Find a J. L. Collins podcast.  He has some good advise.

capitalninja

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Re: Investing in the age of Trump
« Reply #4 on: August 02, 2018, 07:26:35 AM »
Investing in the age of Trump is really no different from investing in the age of Obama, Bushes or Clinton.  In the end capitalism wins out.

All this recent noise about tariffs and how they're going to ruin everything is a way to generate ratings. There's too much money to be made between countries to allow tariffs to cause long-term damage. It's a negotiating tactic.

Invest like you did before Trump was president. There's no reason not to.

SeattleCPA

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Re: Investing in the age of Trum
« Reply #5 on: August 02, 2018, 08:13:46 AM »
I know it looks scary to invest right now, but it's always scary. The long trend of the stock market is up.
I'm a Gen X and I was made whole back in 2012 from the drop in the market. I don't see how it could have taken so long for your colleagues to have caught up, unless they had some weird mutual funds. You have to stick with the stock market passive index funds.

Here's an inspiring article about stock investing

How Much of Your Nest Egg to Put Into Stocks? All of It
https://nyti.ms/1o6kyXC

+1

Two comments I'd add to David's... First, I would be textbook in terms of "asset allocation" about spreading savings around. I.e., if you're nervous about US stocks, put some money outside US. If you're nervous about high equity valuations, put some money in bonds. If you're worried about inflation, put money in real assets.

Second, I am personally "budgeting" for a bad stock market patch... and what I need to do to make things "work" is pretty inconsequential. Would guess the same is true for many folks...


Retire-Canada

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Re: Investing in the age of Trump
« Reply #6 on: August 02, 2018, 08:15:02 AM »
Where would you recommend parking my money while I wait for the big crash (would you even suggest that?).
What goes up must come down right?  Why buy when stocks are up?

I would park your money in some index funds. Why buy when stocks are up? Because they are up almost all the time. If you wait for the next crash you could be waiting years and end up buying at even higher valuations. People have been saying the next crash was imminent since I started reading these forums in 2014. They were wrong.

Stop thinking you can correctly time the market. Get your money to work and don't worry about the next crash.

acousticsamurai

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Re: Investing in the age of Trump
« Reply #7 on: August 02, 2018, 08:56:37 AM »
Thank you all for your comments,
I feel like I already learned my EXPENSIVE lesson (of jumping on a bubble at its zenith point).

I’m the guy that got married right out of college, bought a house at the zenith of the housing bubble.  My wife & I were living it up, until our 100k combined income was cut in half & we couldn’t afford nor sell our house.  Fortunately after renting it out for a year & living with family, we ultimately sold it for exactly what we bought it for (the house was a repo so of course that meant we lost ALL the $$$ we put into the renovation…OUCH!)

Fast forward to buying our next house in 2014 and selling it last year at double the price!  We ALMOST pulled the trigger on bitcoin in early Dec 2018 but decided THAT bubble was about to pop (dodged a bullet there). 
So I TOTALLY get you guys holding on thus far making tons of money, of course EVERYONE’S AN INVESTMENT GENIOUS when things are good, I see the trend.  Just like no one has a gambling problem as long as they’re winning. :)
Does it make sense where I’m coming from?
Remember roller coasters have excitement on one side and DEATH FEAR on the other .

Where do you guys park your $$$ while you wait for the next "ski lift", because I’ll skip this one & catch the next.

Dabnasty

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Re: Investing in the age of Trump
« Reply #8 on: August 02, 2018, 09:38:07 AM »
Thank you all for your comments,
I feel like I already learned my EXPENSIVE lesson (of jumping on a bubble at its zenith point).

I’m the guy that got married right out of college, bought a house at the zenith of the housing bubble.  My wife & I were living it up, until our 100k combined income was cut in half & we couldn’t afford nor sell our house.  Fortunately after renting it out for a year & living with family, we ultimately sold it for exactly what we bought it for (the house was a repo so of course that meant we lost ALL the $$$ we put into the renovation…OUCH!)

Fast forward to buying our next house in 2014 and selling it last year at double the price!  We ALMOST pulled the trigger on bitcoin in early Dec 2018 but decided THAT bubble was about to pop (dodged a bullet there). 
So I TOTALLY get you guys holding on thus far making tons of money, of course EVERYONE’S AN INVESTMENT GENIOUS when things are good, I see the trend.  Just like no one has a gambling problem as long as they’re winning. :)
Does it make sense where I’m coming from?
Remember roller coasters have excitement on one side and DEATH FEAR on the other .

Where do you guys park your $$$ while you wait for the next "ski lift", because I’ll skip this one & catch the next.

No one is claiming to be an investment genius here. Some probably are, but that's hardly the point. Most of the people on this forum who have done well with their investing use patience, humility, and a basic understanding of economics.

You'll find lot's of people on here willing or even eager to give advice, but I'll also point out that the issue of market timing has been discussed in great detail since the beginning of these forums. Go back and read through some of the old threads. Even better you could start with "The Simple Path to Wealth" by J L Collins. You may not have much to invest now but over time where and how you invest your money will add up to hundreds of thousands of dollars. It's worth taking the time to read a few books and the past conversations had on these forums.

I'm not sure what lesson you refer to when you say you've already learned your lesson but it sounds like you may have taken the emotions away from that situation rather than the knowledge. Of course you shouldn't jump on a bubble at it's zenith, but how do you identify a bubble? And then how do you identify the top of it? Even those who had a deep understanding of why the housing market was unsustainable in the mid 2000's didn't know when the bubble would burst. Many people look back on that situation as if it was obvious, it wasn't.

Your references to bitcoin and gambling suggest you do not have a solid grasp on how and why people buy stock in businesses. MMM has several good posts on the topic, here's one to get you started:

https://www.mrmoneymustache.com/2011/05/18/how-to-make-money-in-the-stock-market/

JLee

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Re: Investing in the age of Trump
« Reply #9 on: August 02, 2018, 09:40:56 AM »
Thank you all for your comments,
I feel like I already learned my EXPENSIVE lesson (of jumping on a bubble at its zenith point).

I’m the guy that got married right out of college, bought a house at the zenith of the housing bubble.  My wife & I were living it up, until our 100k combined income was cut in half & we couldn’t afford nor sell our house.  Fortunately after renting it out for a year & living with family, we ultimately sold it for exactly what we bought it for (the house was a repo so of course that meant we lost ALL the $$$ we put into the renovation…OUCH!)

Fast forward to buying our next house in 2014 and selling it last year at double the price!  We ALMOST pulled the trigger on bitcoin in early Dec 2018 but decided THAT bubble was about to pop (dodged a bullet there). 
So I TOTALLY get you guys holding on thus far making tons of money, of course EVERYONE’S AN INVESTMENT GENIOUS when things are good, I see the trend.  Just like no one has a gambling problem as long as they’re winning. :)
Does it make sense where I’m coming from?
Remember roller coasters have excitement on one side and DEATH FEAR on the other .

Where do you guys park your $$$ while you wait for the next "ski lift", because I’ll skip this one & catch the next.

I don't wait for anything or park $$$ anywhere special. Money stays in investment accounts until I need to spend it.

Dabnasty

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Re: Investing in the age of Trump
« Reply #10 on: August 02, 2018, 09:50:30 AM »
I’ve recently become financially able to invest and AGREE with MMM’s pro-index fund suggestions.
HOWEVER, looking at any stockmarket growth chart I would venture that we’re currently (August 2018) at the top of a “mountain” of growth and may be due for a huge drop.
I’ve watched from the side lines during the devastating bubbles like the .coms, housing etc. and believe we’re in a stockmarket bubble whether it’s due to “Trump economics” or not.

"Just dive in" is the advice many of my Gen-x colleagues did and JUST THIS YEAR are catching up to where they were a decade or two ago.
I’m a big fan of buy low & sell high, that strategy got me out of credit card debt with the sale of our previous house. 
Where would you recommend parking my money while I wait for the big crash (would you even suggest that?).
What goes up must come down right?  Why buy when stocks are up?

Graph of Dow Jones Industrial from beginning to current date

Someone already mentioned this but if the bolded is true, they did not follow the advice people are going to give you here. If they were invested in a total stock market index fund and put all of their money in at the absolute worst time (12/1/07) they would be +88% as of today, not including fees and dividends. They would have caught up to where they were before the crash around 2013. And again, that's if they put all of their money in on the worst day. I guarantee, that was not the case.

e34bb098

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Re: Investing in the age of Trump
« Reply #11 on: August 02, 2018, 10:17:23 AM »
I agree that we are probably near a bubble, but there's nothing you can do about it.  It's probable that stocks will be down in five years compared to today.  But it's even more probable that stocks will be up in ten years compared to today.  So put your money in, choose an AA that you can live with, and keep adding to it.

Mother Fussbudget

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Re: Investing in the age of Trum
« Reply #12 on: August 02, 2018, 10:22:15 AM »

GuitarStv

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Re: Investing in the age of Trump
« Reply #13 on: August 02, 2018, 11:03:33 AM »
I’ve recently become financially able to invest and AGREE with MMM’s pro-index fund suggestions.
HOWEVER, looking at any stockmarket growth chart I would venture that we’re currently (August 2018) at the top of a “mountain” of growth and may be due for a huge drop.

I’ve watched from the side lines during the devastating bubbles like the .coms, housing etc. and believe we’re in a stockmarket bubble whether it’s due to “Trump economics” or not.

Just to be clear, what you said is:

"Hey guys, I know what the future is going to be.  Should I time the market?"

+ a graph



Re-read the information about index investing, then go read some information about market timing, and come back to us.

dougules

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Re: Investing in the age of Trump
« Reply #14 on: August 02, 2018, 11:06:02 AM »
Thank you all for your comments,
I feel like I already learned my EXPENSIVE lesson (of jumping on a bubble at its zenith point).

I’m the guy that got married right out of college, bought a house at the zenith of the housing bubble.  My wife & I were living it up, until our 100k combined income was cut in half & we couldn’t afford nor sell our house.  Fortunately after renting it out for a year & living with family, we ultimately sold it for exactly what we bought it for (the house was a repo so of course that meant we lost ALL the $$$ we put into the renovation…OUCH!)

Fast forward to buying our next house in 2014 and selling it last year at double the price!  We ALMOST pulled the trigger on bitcoin in early Dec 2018 but decided THAT bubble was about to pop (dodged a bullet there). 
So I TOTALLY get you guys holding on thus far making tons of money, of course EVERYONE’S AN INVESTMENT GENIOUS when things are good, I see the trend.  Just like no one has a gambling problem as long as they’re winning. :)
Does it make sense where I’m coming from?
Remember roller coasters have excitement on one side and DEATH FEAR on the other .

Where do you guys park your $$$ while you wait for the next "ski lift", because I’ll skip this one & catch the next.

A house you live in is an expense not an investment, so you can't really compare the two.  Also, if you couldn't weather the downturn, it meant you stretched too much to buy the house in the first place.  If you had had the means to have ridden it out, the change in value wouldn't have mattered since you'd be living there and not selling. I'm not trying to be mean, but I see so many people getting confused between a residence and an investment. 

I feel the pain of investing high, too, but it was already high 3-4 years ago.  It's just gone higher.  Even if we're in a bubble, you don't know how or when it's going to pop.  Even in 1996, we all know that was a bubble, but the best advice you could send back to somebody then from the future would be to jump in and ride it out.  It took another 4 years for the bubble to burst. 

Telecaster

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Re: Investing in the age of Trump
« Reply #15 on: August 02, 2018, 12:29:08 PM »
Where do you guys park your $$$ while you wait for the next "ski lift", because I’ll skip this one & catch the next.

I park mine in the market.  Gen X'er here.  I've been through the .dot com and the 2008 crashes.  Trying to avoid crashes and catching ski lifts is wrong way to look at it. 

As an aside, the population is at an all time high, GDP is at an all time high, and corporate profits are at an all time high.  Is it therefore a reasonable conclusion that stocks prices should also be near all time high?  If not, specifically what number should the price be?

Anyway, the proper way to view stock investing is that stock prices consistently rise over the long term, but are variable in the short term.  Since we all have long term investing horizons, there is no reason to worry, or even about think short term prices.    Another thing is that if you look at your chart, you can see that a crash does not necessarily follow high stock prices.  From 1960-1980-ish prices were fairly flat.  I agree, that stock prices are high, but  that does not predict a crash.  It does predict lower than average returns in the future.   I'm okay with that, you can't be above average all the time.   Point is however, that you might be waiting for the rest of your life for a market correction that never comes. 

RedmondStash

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Re: Investing in the age of Trump
« Reply #16 on: August 02, 2018, 12:34:36 PM »
OP, you're approaching investing with a different mindset than that of most MMM folks.

Generally speaking, we believe in buy and hold, for decades, and not selling until you actually need the $$ to spend on living. Buy low-cost index funds, for maximum diversification. So you set a comfortable asset allocation, jump in the market, and do your best to ignore its daily, monthly, and yearly ups and downs, trusting that over a span of decades, things will smooth out and you'll be fine. The less you mess with your investments, the longer you just forget about them, the better off you are. You maybe rebalance now and then to keep your AA, but that's it.

We lost 1/3 to 1/2 of our investments in 2008. We held fast. Now they've recovered and then some.

We lost probably 1/4 of our home value in 2009. We didn't sell. It has nearly doubled in value since then.

Yes, crashes will happen. Recessions will happen. So you plan for those too, set your AA accordingly. Maybe when you go through a recession, you'll realize you're not comfortable with your AA, so you tweak it a bit so you can sleep at night. But then you forget it again and go back to living your life. Because historically, invariably, recoveries happen too; they just don't get as much press. More days are new all-time highs than you might realize.

It's about the long game. If you approach the market like a mayfly, darting around, expecting to hang out for a single day, you're going to mess yourself up. If you approach it like a tree, where you barely notice the seasons, let alone the years, you'll realize that who's president doesn't matter, because presidents change every 4-8 years, and you're in it for many multiples of that.

It's hard to make that mental shift. But that's how you get to FIRE.

Laserjet3051

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Re: Investing in the age of Trump
« Reply #17 on: August 02, 2018, 12:43:52 PM »
I’ve recently become financially able to invest and AGREE with MMM’s pro-index fund suggestions.
HOWEVER, looking at any stockmarket growth chart I would venture that we’re currently (August 2018) at the top of a “mountain” of growth and may be due for a huge drop.
I’ve watched from the side lines during the devastating bubbles like the .coms, housing etc. and believe we’re in a stockmarket bubble whether it’s due to “Trump economics” or not.

"Just dive in" is the advice many of my Gen-x colleagues did and JUST THIS YEAR are catching up to where they were a decade or two ago.
I’m a big fan of buy low & sell high, that strategy got me out of credit card debt with the sale of our previous house. 
Where would you recommend parking my money while I wait for the big crash (would you even suggest that?).
What goes up must come down right?  Why buy when stocks are up?

Graph of Dow Jones Industrial from beginning to current date
https://www.google.com/imgres?imgurl=https://upload.wikimedia.org/wikipedia/commons/thumb/c/c8/DJIA_historical_graph_to_jul11_%2528log%2529.svg/1200px-DJIA_historical_graph_to_jul11_%2528log%2529.svg.png&imgrefurl=https://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average&h=600&w=1200&tbnid=PGRFk6VpIgX_mM:&q=dow+jones&tbnh=100&tbnw=200&usg=AFrqEzcY9Ky0biQoJe5e9CPW0tRkBaBJ_Q&vet=12ahUKEwiYl8X2tM7cAhURSa0KHXZYAZ4Q_B0wIXoECAUQCQ..i&docid=5AX59ukmiHd9oM&itg=1&sa=X&ved=2ahUKEwiYl8X2tM7cAhURSa0KHXZYAZ4Q_B0wIXoECAUQCQ#h=600&imgdii=PGRFk6VpIgX_mM:&spf=1533214550060&tbnh=100&tbnw=200&vet=12ahUKEwiYl8X2tM7cAhURSa0KHXZYAZ4Q_B0wIXoECAUQCQ..i&w=1200

I'm GenX and the bolded statement above does not describe at all my experience. I am not just "catching up" to where I was a decade ago. Actually quite the opposite. Several phrasings in your post suggests that you probably need to go back and re-evaluate your investment philosophies.

I have zero issues investing in "the age of Trump" as you put it.

Just my 2cents.

ChpBstrd

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Re: Investing in the age of Trump
« Reply #18 on: August 02, 2018, 01:21:51 PM »
1) Investing is not an all-or-nothing decision. There are many shades of gray between the extremes of letting it all ride on one tech stock and hiding boxes of cash in the attic. Well-informed investors can define the amount of risk they are willing to take.

2) Bubbles can last for many years. They can keep going up and up and up longer than anyone expects. The stock market looked like a mountain about to fall for each of the past several years. There are probably people waiting for the idiotic property prices to fall in Brooklyn, San Francisco, and Honolulu, and they'll probably keep waiting. Similarly, there are people saying "if only markets fall to where they were at time X, I'll get back in." Keep waiting.

3) I participate in the market and hedge my downside. E.g. SPY is currently $282. You can buy a put option expiring Dec. 18, 2020 granting you the right to sell your shares for $265. Thus your maximum loss would be about 6%. These contracts currently cost $18.86/share and provide 2.38 years  of protection. That's a cost of 3% of the amount protected per year. So worst case is a 9% loss in 2.38 years. Best case is market performance minus 3%. Good news: a 97% stock portfolio that lets you sleep at night, even in the age of Trump. This strikes me as a bargain at this stage of the market cycle, with rising interest rates and economic policy reminiscent of Herbert Hoover.

You could even sell a call, turning the position into a collar, and reduce the drag by another percent while still enjoying significant upside potential. Pick your risk/reward.

Eric

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Re: Investing in the age of Trump
« Reply #19 on: August 02, 2018, 01:24:14 PM »
Bond funds exist.  Use a mix of those plus stock funds to fit your risk tolerance.  It seems like you're pretty risk averse, so maybe something like 50/50 would work for you.  That's always going to beat sitting on the sidelines waiting for a crash.  The idea that you, the person who has basically no experience investing, would be able to tell when a crash is due is complete silliness.  Warren Buffett can't even predict that!

acousticsamurai

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Re: Investing in the age of Trump
« Reply #20 on: August 02, 2018, 02:15:15 PM »
That’s what I get for sharing a story from my ranting co-workers without interrogating them for details then verifying those details (being sarcastic ).  it’s possible they exaggerated about how much richer they COULD have been had they not invested in .com’s etc., it’s also possible they took money out for one reason or another and that’s why they’re “just now” recovering, I apologize for not getting all their financial story down.

A house I live in IS an expense, very correct.  I put a small down payment on a house lived in it for almost 4 years and CLEARED 98K which jumpstarted our financial future, I mentioned it because of timing, “investment” was the wrong word.

Thank you all for your insight, I’ve made a list of things to read as you suggested so I’m not as financially ignorant.  You’re right, I don’t know the future.  Maybe I thought I was like dogs who sense catastrophes before they happen, maybe I’m more like my great dane who barks for no reason at 2am. 

I’m waiting for a correction because stocks have BOOMED so very quickly, that raised my concern.
Thanks again for your comments whether dismissive or assistive, I appreciated them all.

GuitarStv

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Re: Investing in the age of Trump
« Reply #21 on: August 02, 2018, 02:28:39 PM »
Humans are biological pattern matching machines.  It serves us very well in some aspects of life, but tends to make us really bad at predicting things like the stock market.  A good index investing strategy is built around ignoring some of your deepest in-grained instincts.  It's not easy to do.  I started investing in 2007 . . . there were a lot of people screaming SELL SELL SELL those first few years.  I'm glad I didn't.

Hargrove

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Re: Investing in the age of Trump
« Reply #22 on: August 02, 2018, 02:29:00 PM »
That’s what I get for sharing a story from my ranting co-workers without interrogating them for details then verifying those details (being sarcastic ).  it’s possible they exaggerated about how much richer they COULD have been had they not invested in .com’s etc., it’s also possible they took money out for one reason or another and that’s why they’re “just now” recovering, I apologize for not getting all their financial story down.

A house I live in IS an expense, very correct.  I put a small down payment on a house lived in it for almost 4 years and CLEARED 98K which jumpstarted our financial future, I mentioned it because of timing, “investment” was the wrong word.

Thank you all for your insight, I’ve made a list of things to read as you suggested so I’m not as financially ignorant.  You’re right, I don’t know the future.  Maybe I thought I was like dogs who sense catastrophes before they happen, maybe I’m more like my great dane who barks for no reason at 2am. 

I’m waiting for a correction because stocks have BOOMED so very quickly, that raised my concern.
Thanks again for your comments whether dismissive or assistive, I appreciated them all.

Hopefully it helps to know the recovery horizon was roughly 6 years from one of the worst crashes in history. It's not easy to quiet emotional jitters from that. Basically - hey, good news, it's way better than you think.

NOT going into the market is making a bet every day that the market will go down instead of up. Odds of the market going up or down, however, favor up. If you shorted the market starting, say, 2017, you'd be out quite a bit, but people were saying the same stuff about waiting then. You would not only be betting it will go down, you would be betting it will go down soon, because if it goes up tomorrow, every time it does is a gain you missed.

thd7t

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Re: Investing in the age of Trump
« Reply #23 on: August 02, 2018, 02:39:39 PM »
I agree that we are probably near a bubble, but there's nothing you can do about it.  It's probable that stocks will be down in five years compared to today.  But it's even more probable that stocks will be up in ten years compared to today.  So put your money in, choose an AA that you can live with, and keep adding to it.
Even if we're on a bubble, it's really improbable that stocks will be down in five years compared to today.  It's possible, but very unlikely.

ILikeDividends

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Re: Investing in the age of Trump
« Reply #24 on: August 02, 2018, 02:45:02 PM »
I’m waiting for a correction because stocks have BOOMED so very quickly, that raised my concern.

The S&P 500 was down nearly 10%, which is correction territory, early in February of this year.

You missed it.  You should take very recent history as evidence that you're likely not very good at spotting corrections, nor are you very good at exploiting them, even when you're right in the midst of one.  That's nothing to be ashamed of.  But it is something you can learn from, if you care to.

February 2016 was the bottom of the last correction before this most recent one.  Even if you had bought at the worst possible time before that happened, you would be sitting on some pretty hefty gains right now.

How long are you prepared to wait for the next correction?  And what will you do differently when one presents itself again?  Inflation is slowly but steadily eroding the purchasing power of your cash while you wait.  Likewise, your productive working years are slowly slipping away. Time is not on your side.

You need a plan that puts time on your side.

Tick tock.
« Last Edit: August 02, 2018, 04:28:13 PM by ILikeDividends »

DreamFIRE

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Re: Investing in the age of Trump
« Reply #25 on: August 02, 2018, 03:47:48 PM »
I'm GenX and the bolded statement above does not describe at all my experience. I am not just "catching up" to where I was a decade ago. Actually quite the opposite. Several phrasings in your post suggests that you probably need to go back and re-evaluate your investment philosophies.

I have zero issues investing in "the age of Trump" as you put it.


Yes, agreed, same thing here.

Rob_bob

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Re: Investing in the age of Trump
« Reply #26 on: August 02, 2018, 07:41:43 PM »
Go back and look at those charts again and tell us the last time the broad market was at an all time low.

One

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Re: Investing in the age of Trump
« Reply #27 on: August 03, 2018, 01:40:57 AM »
Thank you all for your comments,
I feel like I already learned my EXPENSIVE lesson (of jumping on a bubble at its zenith point).

I’m the guy that got married right out of college, bought a house at the zenith of the housing bubble.  My wife & I were living it up, until our 100k combined income was cut in half & we couldn’t afford nor sell our house.  Fortunately after renting it out for a year & living with family, we ultimately sold it for exactly what we bought it for (the house was a repo so of course that meant we lost ALL the $$$ we put into the renovation…OUCH!)

Fast forward to buying our next house in 2014 and selling it last year at double the price!  We ALMOST pulled the trigger on bitcoin in early Dec 2018 but decided THAT bubble was about to pop (dodged a bullet there). 
So I TOTALLY get you guys holding on thus far making tons of money, of course EVERYONE’S AN INVESTMENT GENIOUS when things are good, I see the trend.  Just like no one has a gambling problem as long as they’re winning. :)
Does it make sense where I’m coming from?
Remember roller coasters have excitement on one side and DEATH FEAR on the other .

Where do you guys park your $$$ while you wait for the next "ski lift", because I’ll skip this one & catch the next.

Smart, a bird in the hand is worth two in the bush, put your money in short term treasuries.  If the market drops sell the treasuries and buy the sp500. Wouldn't be a bad idea to put some into the market now and build over time. No reason to jump in all at once, better to miss some gains than lose big.
« Last Edit: August 03, 2018, 01:54:45 AM by One »

MustacheAndaHalf

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Re: Investing in the age of Trump
« Reply #28 on: August 03, 2018, 02:50:44 AM »
What goes up must come down right?  Why buy when stocks are up?
If you wait for new cars to cost $20 again, you'll never buy one.  Prices aren't gravity - prices do not have to come down all the way back down.

If you're reasoning from principles like that, you should read a book about investing to gain some more relevant insight.  "A Random Walk Down Wall Street" is now in it's 11th edition, and it's conclusions are backed by decades of stock market data.  When picking a book on investing, make sure they show how their ideas performed over decades, not just a few years.

MoneyTree

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Re: Investing in the age of Trump
« Reply #29 on: August 17, 2018, 11:01:48 PM »
Interesting Read (not mine, found somewhere else on the forum) - What if you ONLY invested at Market peaks?

http://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/

tl;dr if you just keep holding, you'd probably do just fine.

The problem with saying that you won't invest when the market is at an all time high is that an all time high today may just look like one ordinary data point in an overall long term uptrend 10 years from now.

So even though the markets may feel overvalued right now, and sure, there could be a terrible crash next week. If your plan is to buy and hold, you'll probably do just fine.

I had friends who were saying the same thing as you back in 2013. That they were holding off until the next crash. Meanwhile I just kept investing whenever I could, and now my net worth is 4x what it was back then. By waiting, you might avoid the next crash, but you might also find yourself missing out on a lot of gains in the meantime.

You're right that it is costly to invest at the wrong time, but dont forget its also costly to sit on the sideline waiting for the right time.

englishteacheralex

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Re: Investing in the age of Trump
« Reply #30 on: August 17, 2018, 11:45:34 PM »

2) Bubbles can last for many years. They can keep going up and up and up longer than anyone expects. The stock market looked like a mountain about to fall for each of the past several years. There are probably people waiting for the idiotic property prices to fall in Brooklyn, San Francisco, and Honolulu, and they'll probably keep waiting. Similarly, there are people saying "if only markets fall to where they were at time X, I'll get back in." Keep waiting.



Yes! We bought a condo in Honolulu in 2015 for 364k; it seemed insane to pay so much for just a condo but for our income it represented a modest, sensible home. We have a friend who couldn't stomach the price of even a small condo like ours in Honolulu (median home price currently $700k+) and they decided to wait because they were sure the market would crash in the next few years. Three years later our home is worth ~$420...still waiting for that market to crash!

Lesson? Invest sensibly and don't try to predict the future. Also, OP, lessons learned from real estate are not particularly applicable to low fee index fund investing.

FWIW, we've been investing in Vanguard funds for 15 years and are way ahead as a result.

GuitarStv

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Re: Investing in the age of Trump
« Reply #31 on: August 18, 2018, 07:11:10 AM »
We bought our home at peak price after about a 15 year run up.  This was followed by 7 more years of steady and large price increases.  The market seems to have slowed over the past year, but still is increasing.  I'm glad we didn't wait for the coming crash that people have been predicting for more than 20 years now before buying.

One

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Re: Investing in the age of Trump
« Reply #32 on: August 18, 2018, 07:16:19 AM »
I agree that we are probably near a bubble, but there's nothing you can do about it.  It's probable that stocks will be down in five years compared to today.  But it's even more probable that stocks will be up in ten years compared to today.  So put your money in, choose an AA that you can live with, and keep adding to it.

This is a great time for dollar cost averaging.  If things keep going up you lose some gain but still make money.  If the market tumbles you buy on the way down and the way back up making big gains. It's a poor time to be greedy.

boarder42

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Re: Investing in the age of Trump
« Reply #33 on: August 18, 2018, 08:36:06 AM »
http://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/

Just dump money in. If you can't stomach this now then you won't make it during a crash and you'll sell causing even more damage. Stop trying to time the market and educate yourself so you're comfortable dumping in and more importantly holding and never selling.

People were posting about the top and Armageddon here and all over the financial world since 2013. I've made 100s of thousands over this period.

Laserjet3051

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Re: Investing in the age of Trump
« Reply #34 on: August 18, 2018, 09:50:20 AM »
http://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/

Just dump money in. If you can't stomach this now then you won't make it during a crash and you'll sell causing even more damage. Stop trying to time the market and educate yourself so you're comfortable dumping in and more importantly holding and never selling.

People were posting about the top and Armageddon here and all over the financial world since 2013. I've made 100s of thousands over this period.

That write-up by Ben Carlson is one of the most compelling arguments for investing in purportedly "expensive" stocks (as many people currently claim they are now). And as others point out, that article is lump sum investing at market peaks, whereas most of us DCA in over extended time periods, so such investment time frames virtually ensure that we would never be in "Bob's" predicament (which isnt all that bad really).

PDXTabs

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Re: Investing in the age of Trump
« Reply #35 on: August 18, 2018, 12:38:12 PM »
I am very afraid of what is to come for the US. As far as I can tell, owning an internationally diverse portfolio of stocks is my best long term hedge against the unknown (including what is going on in the the US). Because of this almost all of my wealth is in VTWSX and I keep very few US dollars. That also means that 47% of my stock holdings are outside of the US, and a lot of the other 53% are large global companies that would not go out of business even if the US caught on fire and sank into the oceans.
« Last Edit: August 18, 2018, 02:05:13 PM by PDXTabs »

mjr

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Re: Investing in the age of Trump
« Reply #36 on: August 18, 2018, 06:08:33 PM »
If the US caught fire and sank into the ocean, the effects on all the other stock markets in the world would be dramatic.  It's a global marketplace these days.

Invest internationally if you like, but keep a great deal of your funds in the currency in which you intend to live off.

boarder42

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Re: Investing in the age of Trump
« Reply #37 on: August 18, 2018, 08:08:11 PM »
If the US caught fire and sank into the ocean, the effects on all the other stock markets in the world would be dramatic.  It's a global marketplace these days.

Invest internationally if you like, but keep a great deal of your funds in the currency in which you intend to live off.

Correct the us economy is so large it's essentially too big to fail. We're not Japan. I hate when people bring this up. Owning a nikkei index is quite different than a us index and the times have changed from when the nikkei was flat. Much more global today all around.

theolympians

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Re: Investing in the age of Trump
« Reply #38 on: August 19, 2018, 12:04:17 AM »
I pulled up the related graph from the first post. I don't get the indecision based on that. It shows up, up, up even with the dips/crashes. If you only had the graph, put it in.

reeshau

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Re: Investing in the age of Trump
« Reply #39 on: August 19, 2018, 09:10:35 AM »
Where do you guys park your $$$ while you wait for the next "ski lift", because I’ll skip this one & catch the next.

Forget about what others do, or what the market does.  This is about what you will do.  The reason why market timing is a sucker's bet is that you have to be right two times in a row--and nobody ever has.  Were you eager to invest in early 2002?  In March 2009?  Just like nobody can call the top now, nobody will call the bottom, either--it will look like there is still more room to drop.  You are burdening your future self with a skillset and decision-making capability you don't have now.  How will you come to possess that?

The answer is, you won't.  Only you know you; you have been bitten before, so your risk tolerance is lower than others, particularly others here.  If you need your money in less than 5 years, then look elsewhere.  If not, then get your butt in the market.  As was stated here before, even the 2008 crash recovered in that sort of timeframe.  If the swim is a little adventurous, then don't go all in.  Keep 20% as a cash cushion, call it an emergency fund, and know you can use it If and when you see an opportunity.  Or, dollar cost average your way in--it's not optimal, but some people take time getting into a cold swimming pool; there is no shame in that.

But, you won't suddenly become an evil stock market genius at just the right time.  Why?  Because you haven't been before, and have no plan to develop that in the future.  And nobody else is, either.  So make your plans about what you can control:  savings rate, investment choices, long-term financial plan.  And have confidence in that plan to see you through the good and the bad.

PDXTabs

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Re: Investing in the age of Trump
« Reply #40 on: August 19, 2018, 10:36:23 AM »
If the US caught fire and sank into the ocean, the effects on all the other stock markets in the world would be dramatic.  It's a global marketplace these days.

Invest internationally if you like, but keep a great deal of your funds in the currency in which you intend to live off.

Absolutely, if the US went down in flames there would be pandemonium. The world markets would be a mess, but owning companies would still be better than holding US dollars. Even in good times that is how we think around here, right? Even in good times inflation is more of a threat than market fluctuations?

Correct the us economy is so large it's essentially too big to fail.

Oh really? Who's going to bail us out if we do something really dumb? I think a better argument might be that so many companies have so much capital in the US that they won't let us do something that dumb. But human capacity for doing dumb things seems almost limitless if you look through history.
« Last Edit: August 19, 2018, 10:38:21 AM by PDXTabs »

boarder42

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Re: Investing in the age of Trump
« Reply #41 on: August 19, 2018, 11:04:46 AM »
You're right better bet on pessimism and never retire. I stand corrected.

PDXTabs

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Re: Investing in the age of Trump
« Reply #42 on: August 19, 2018, 12:01:14 PM »
You're right better bet on pessimism and never retire. I stand corrected.

As clearly stated above, I'm betting on the world stock market, of which 53% are US equities. What are you betting on?
« Last Edit: August 19, 2018, 12:02:45 PM by PDXTabs »

boarder42

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Re: Investing in the age of Trump
« Reply #43 on: August 19, 2018, 12:08:44 PM »
You're right better bet on pessimism and never retire. I stand corrected.

As clearly stated above, I'm betting on the world stock market, of which 53% is US equities. What are you betting on?

The US and REITs it's a world economy. If I want currency diversification I'll so it with currency. I've considered doing some int after FIRE. I go back and forth. Currently I'm all us equity in accrual bc I don't have the correct vehicles for int or REITs till I get my 401k money into an IRA.

GuloGulo

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Re: Investing in the age of Trump
« Reply #44 on: August 19, 2018, 02:10:07 PM »
3) I participate in the market and hedge my downside. E.g. SPY is currently $282. You can buy a put option expiring Dec. 18, 2020 granting you the right to sell your shares for $265. Thus your maximum loss would be about 6%. These contracts currently cost $18.86/share and provide 2.38 years  of protection. That's a cost of 3% of the amount protected per year. So worst case is a 9% loss in 2.38 years. Best case is market performance minus 3%. Good news: a 97% stock portfolio that lets you sleep at night, even in the age of Trump. This strikes me as a bargain at this stage of the market cycle, with rising interest rates and economic policy reminiscent of Herbert Hoover.

3% is an absolutely massive price to pay! Every ~25 years you will end up with half as much money as if you had just bought SPY. Exponential compounding is working against you, just like it is for people buying high-fee funds. Would you invest in a fund that charged 3%? Plus, how do you decide if and when to exercise your option? Sounds like market timing to me...

OP, it sounds like you don't yet have a bunch of cash already saved and waiting to be invested.  If this is the case, you really really should not wait. Let's say your fears come true and the market loses 1/2 of its value a year from now. You only lost 6 months worth of savings. If you wait to invest you'll have a lump sum and the psychological stakes will be that much higher.

One

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Re: Investing in the age of Trump
« Reply #45 on: August 19, 2018, 02:18:27 PM »
http://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/

Just dump money in. If you can't stomach this now then you won't make it during a crash and you'll sell causing even more damage. Stop trying to time the market and educate yourself so you're comfortable dumping in and more importantly holding and never selling.

People were posting about the top and Armageddon here and all over the financial world since 2013. I've made 100s of thousands over this period.


Dumping it all in now seems more like timing the market, dollar cost averaging is a more disciplined approach. 

boarder42

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Re: Investing in the age of Trump
« Reply #46 on: August 19, 2018, 02:31:51 PM »
http://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/

Just dump money in. If you can't stomach this now then you won't make it during a crash and you'll sell causing even more damage. Stop trying to time the market and educate yourself so you're comfortable dumping in and more importantly holding and never selling.

People were posting about the top and Armageddon here and all over the financial world since 2013. I've made 100s of thousands over this period.


Dumping it all in now seems more like timing the market, dollar cost averaging is a more disciplined approach.

Mathematically dca is inferior to lump sum investing. People dca bc of the fear of collapse. Having a policy of dumping in every dollar as fast as you get it is statsically the best policy

One

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Re: Investing in the age of Trump
« Reply #47 on: August 19, 2018, 02:37:28 PM »
http://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/

Just dump money in. If you can't stomach this now then you won't make it during a crash and you'll sell causing even more damage. Stop trying to time the market and educate yourself so you're comfortable dumping in and more importantly holding and never selling.

People were posting about the top and Armageddon here and all over the financial world since 2013. I've made 100s of thousands over this period.


Dumping it all in now seems more like timing the market, dollar cost averaging is a more disciplined approach.

Mathematically dca is inferior to lump sum investing. People dca bc of the fear of collapse. Having a policy of dumping in every dollar as fast as you get it is statsically the best policy

Maybe

boarder42

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Re: Investing in the age of Trump
« Reply #48 on: August 19, 2018, 03:03:18 PM »
http://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/

Just dump money in. If you can't stomach this now then you won't make it during a crash and you'll sell causing even more damage. Stop trying to time the market and educate yourself so you're comfortable dumping in and more importantly holding and never selling.

People were posting about the top and Armageddon here and all over the financial world since 2013. I've made 100s of thousands over this period.


Dumping it all in now seems more like timing the market, dollar cost averaging is a more disciplined approach.

Mathematically dca is inferior to lump sum investing. People dca bc of the fear of collapse. Having a policy of dumping in every dollar as fast as you get it is statsically the best policy

Maybe

It's math historically it's inferior. Google it.

Hargrove

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Re: Investing in the age of Trump
« Reply #49 on: August 19, 2018, 03:45:22 PM »
Dumping it all in feels more like a bet because it's proactive.

But, the sleight of hand you're doing to yourself is not recognizing that you actually can't avoid the bet.

The market tends to rise. DCA in practice is shorting the market for a period of days or months. You're just betting the market won't go up tomorrow.
« Last Edit: August 19, 2018, 03:47:51 PM by Hargrove »