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Americans have more money in stocks than ever before. Economists see red flag

9 points by rawgabbit 1y ago

rawgabbit 1y ago
Quote: Investors are benefiting, but as the S&P 500 becomes increasingly concentrated — the Mag Seven account for 34% of the S&P’s market value — they remain exposed to the fate of a few enormous companies.
andsoitis 1y ago
If you want to invest in US equities and are looking for something other than the S&P 500 index or individual stocks, you could also consider other major indexes like: - NASDAQ Composite (heavily tech & growth) - Russell 2000 (2,000 small cap companies) - Wilshire 5000 Total Market Index (exposure to nearly all publicly traded companies in the US) - S&P MidCap 400 (as the name implies; bridges gap between large and small cap) - S&P SmallCap 600 (600 small-cap US companies, emphasizing firms with strong financial health) You could also put your money into bonds, but they don't perform as well as equities, but are lower risk. Even though government (muni, state, federal) come with tax benefits, they typically still underperform something like the S&P 500 after tax. You can also invest your money into property with rental incomes, start your own business, etc., but these all come with the burden of additional effort. Other alternative assets you can push your money into are things like commodities, collectibles, or cryptocurrencies, with the first having a more predictable, though not guaranteed, demand. And if you want to get more esoteric, you can put your money into derivatives. All in all, S&P 500 index has stood out for its simplicity, low cost (expense ratios), low effort (you don't have to work or manage), and high returns.
- fragmede 1y ago
  You seem quite knowledgeable, so I've got a question I'd love your opinion on. Those, as well as the GLD ETF and Microstrategy are all denominated in dollars. If I wanted a hedge against the dollar, what would you do? Just in case there's a black swan event and the dollar collapses, where's somewhere safe you would park some assets?
neuralkoi 1y ago
The stock market is not the economy. While the economy seems to be entering a period of stagflation, the stock market keeps ticking up. The magnificent seven are living in their own kind of alternate reality. There's only so much they can squeeze from their current hyper aggressive approach. Maybe they are hoping on interest rate cuts or AI to save them? When the tide goes out, it's the people with the 401k's who are be going to be left swimming naked.

9 points by rawgabbit 1y ago

Quote: Investors are benefiting, but as the S&P 500 becomes increasingly concentrated — the Mag Seven account for 34% of the S&P’s market value — they remain exposed to the fate of a few enormous companies.

andsoitis 1y ago

If you want to invest in US equities and are looking for something other than the S&P 500 index or individual stocks, you could also consider other major indexes like: - NASDAQ Composite (heavily tech & growth) - Russell 2000 (2,000 small cap companies) - Wilshire 5000 Total Market Index (exposure to nearly all publicly traded companies in the US) - S&P MidCap 400 (as the name implies; bridges gap between large and small cap) - S&P SmallCap 600 (600 small-cap US companies, emphasizing firms with strong financial health) You could also put your money into bonds, but they don't perform as well as equities, but are lower risk. Even though government (muni, state, federal) come with tax benefits, they typically still underperform something like the S&P 500 after tax. You can also invest your money into property with rental incomes, start your own business, etc., but these all come with the burden of additional effort. Other alternative assets you can push your money into are things like commodities, collectibles, or cryptocurrencies, with the first having a more predictable, though not guaranteed, demand. And if you want to get more esoteric, you can put your money into derivatives. All in all, S&P 500 index has stood out for its simplicity, low cost (expense ratios), low effort (you don't have to work or manage), and high returns.

fragmede 1y ago
You seem quite knowledgeable, so I've got a question I'd love your opinion on. Those, as well as the GLD ETF and Microstrategy are all denominated in dollars. If I wanted a hedge against the dollar, what would you do? Just in case there's a black swan event and the dollar collapses, where's somewhere safe you would park some assets?

neuralkoi 1y ago

The stock market is not the economy. While the economy seems to be entering a period of stagflation, the stock market keeps ticking up. The magnificent seven are living in their own kind of alternate reality. There's only so much they can squeeze from their current hyper aggressive approach. Maybe they are hoping on interest rate cuts or AI to save them? When the tide goes out, it's the people with the 401k's who are be going to be left swimming naked.