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Have you moved your retirement account money out of stocks and index funds into something safer? I've actually been thinking about it...
by criddell 8mo ago
Have you moved your retirement account money out of stocks and index funds into something safer? I've actually been thinking about it...
- marcyb5st 8mo agoI did. I moved to sovereign debt (not US), bonds and stocks of boring companies (staples, energy, medicine, ...) that have at least AA rating. Might miss out a few months of glamorous growth, but fuck that, it reached a point that just one company hiccuping will send the whole thing tumbling (IMHO).
- criddell 8mo agoEnergy and healthcare has big AI exposure too. If it pops, you're going to be better off but not totally spared. I suppose that's probably a smart move though...
- marcyb5st 8mo agoFair enough and thank you for the comment. I went with a bit of Roche, Novartis, ... So something that would at least cushion the fall with dividends and not being in the GenAI crossfire since they definitely use AI/ML (I got them through an ETF). Also almost all my assets are now either CHF or Euro denominated/hedged. I am also not comfortable with the dollar weakening and the next Fed head probably cutting rates again like Trump wishes
- kjkjadksj 8mo agoYou’d be surprised. A lot of biotech is using genai not just traditional ml. And hiring for genai and LLM. They want to build their own chatbots, only trained on their own data and primary literature not reddit comments from armchair biologists.
- marcyb5st 8mo agoYeah, I figure. The thing is that I have a mix of bonds and stocks. Bonds should remain stable or even rally a bit if a crash happens. I mean, usually governments cut interest rates in time of crisis, so existing bonds should go up. It is definitely a hard time to invest as everything feels expensive
- hypeatei 8mo agoValuations really aren't that crazy, but the incestuous deals between Nvidia, Oracle, and OpenAI might cause a decent correction. I'm not too worried about my portfolio personally. It'll be a small bump in the road and you're better off not trying to time the market.
- SecretDreams 8mo ago> Valuations really aren't that crazy Okay
- hypeatei 8mo agoWhat public company is massively overvalued in your opinion? Nvidia right now is trading at 44 P/E which is higher than the S&P average, sure, but not anything like the dotcom bubble with a median of 120x earnings.
- B56b 8mo agoThe problem with this hype cycle has always been that the hyperscalers are pouring unbelievable amounts of capital into a technology that hasn't proven it can generate the revenues needed to justify that. Nvidia might have an ok P/E right now, but the question is if the industry can sustain buying over $50B of GPUs every quarter(or that it even needs to).
- SecretDreams 8mo agoThis exactly. How sustainable are the current spends in the wake of needing ROI against these spends in the not too distant future? And who will be able to afford an upgrade cycle only 2-3 years from now given none of the capex spent will have hit positive ROI 2-3 years out. Will everyone just accept negative ROI in the name of hype? Will scalers be able to meaningfully increase service prices without eroding customer interest? These are all unanswered questions that a simple PE statement can't support.
- kjkjadksj 8mo ago
- baggachipz 8mo agoYes. Went from 100% S&P500 fund into a gold ETF and a high-dividend fund (SCHD). Still a good portion in S&P but gotta hedge some.
- sethops1 8mo agoSimilar. Went from near 100% VOO down to 25%, with about 50% in SCHD and the remaining 25% sitting on cash, for now.
- criddell 8mo agoIs high-dividend a signal that the equities are more value oriented than growth oriented?
- baggachipz 8mo agoYep, the fund picks the equities with the highest dividend payout, therfore the most value-oriented. Those tend to be old blue chips which have stood the test of time and pay out well to their shareholders. Lockheed Martin, Merck, Coca Cola, etc. When the growth economy tanks, it's an oasis of relative stability. People love their cheap sugar water.
- qwerpy 8mo agoHow do you handle the capital gains taxes? I’d love to be able to rebalance the massive S&P 500 portion of my portfolio into other things but it would trigger huge federal and state taxes. Was hoping to hold on to these until retirement at which point I’d slowly be selling it for living expenses and the income taxes would be much smaller.
- nilkn 8mo agoI'm very curious about this as well. This is the main thing that has held me back from a meaningful rebalancing. Eating a huge tax bill to avoid a theoretical future loss of unknown size and duration while also losing out on potential gains if that loss ends up not materializing is a hard pill to swallow. I suppose this is probably why most long-term investment advice suggests not trying to time the market unless you have a very short time horizon. (Note: for me, I'm referring to funds in taxable brokerage accounts.)
- 2OEH8eoCRo0 8mo agoNo for a few reasons. I'm not close to retiring, I already own a good deal of bonds, and moving money based on emotion defeats the purpose. I rebalanced the same as I always have.
- kronks 8mo agoTo anyone reading, don’t do this. This is the ONE thing you aren’t supposed to do as a passive investor. A play like this will cause you to lose upside almost always, and some people never get back in and miss out on almost a lifetime of growth. THE MARKETS ARE NOT RATIONAL.
- criddell 8mo agoMy concern is shifting from maximizing upside to minimizing downside because I'm only about 10-12 years from retirement.
- unethical_ban 8mo agoThe laziest safe thing to do is put money into a target fund that is managed. So you could look for "Target 2040" and in theory, they change the asset mix as it approaches that date.
- barbazoo 8mo agoBut that’s people, what do they know about 2040 that I don’t? If I was 10 years away, I’d maybe look at bonds or GICs or is that too conservative?
- toomuchtodo 8mo agoEnough VXUS to minimize the impact of Mag 7 exuberance on my portfolio.
- catsquirrel28 8mo agoI'm not so sure VXUS will protect from the AI bubble popping since ~10% of its holdings are TSMC, ASML, Samsung, Tencent, Alibaba, and SK Hynix which are all way overvalued due to the AI bubble and will most likely crater when it becomes clear the LLM companies have no business and the data center lenders start calling in their debts.
- toomuchtodo 8mo agoThose companies had baseline demand before the AI bubble. They will have demand after.
- catsquirrel28 8mo agoSure, they won't go to 0 but they will certainly go down once it becomes clear the LLM companies don't have money to pay for chips or RAM. That will cause VXUS to go down as well but much it goes down is anyone's guess.
- toomuchtodo 8mo agoDrawdown will be limited compared to the S&P500 or other indexes that weight the Mag 7 heavily. I'm unsure what your point is? It's impossible to predict the future, but it is trivial and straightforward to derisk against this current market environment ("AI bubble") with a basic level of capital market understanding.
- moduspol 8mo agoYep. And I've already moved it back. I think we can all see this is a bubble, but it has been for over a year now, and I cannot predict when it will pop. Also, there aren't a ton of great options that are safer.
- unethical_ban 8mo agoI thought about it. The bulk of my 401k money is in a growth fund that i found has something like 30% in the big tech companies. Then again, I'm 20+ years from accessing it, so I figure I'm about 5 years out from moving more to S&P tracking and bonds. I am not a financial advisor.
- throwfaraway4 8mo agoThe Market can stay irrational longer than you can stay solvent.
- deleted 8mo ago[deleted]
- astrange 8mo agoThat's a terrible idea. Never ever do that. Never even think about what's in your retirement account unless you are actually about to retire.
- deleted 8mo ago[deleted]