DOW 20k!!! - the investing thread

With a 20-30 year horizon you really don't have to worry so much about dips. Bargain hunting is fun but you can be missing out on % parking cash. I know, I've done it. It's too easy to rationalize a dip not being enough of a dip and then you're never in.

 

I buy it whether it is on sale or not...just would be nice if it were.

 

Dollar cost averaging.

 

The best investing advice I got was to pay yourself first, automate your contributions to the maximum possible, and invest into what ever asset classes help you feel comfortable given your own due diligence and risk tolerance.

My father-in-law is into precious metals (since gold was under $50 an oz), currencies, real estate and cash. He has only about 10% of his investments in the stock market. He just never liked or trusted it.

My father is all in on stocks, always has been. Both have done very well.

My wife and I are targeting retirement in 5-7 years. With the dow flirting with 27,000 in August 2019 I switched from Vanguard 2025 target date fund, to a much more conservative 20/80 mix. The 80% is in short term bonds, and about 30% of that is in stable value.

I sense irrational exuberance out there, which to a contrarian is the potential harbinger of a blow off top and at this stage I would rather be early than late in taking profits from stocks. My returns since switching to 20/80 are actually a lot better than I expected, and in a violent downturn my positioning should be fairly protective. During the peak of the last financial crisis, stable value funds returned over 5%, while stocks dropped over 30%. I was all in stocks then and didn't really pay much attention at the time because I was a much longer way from potential retirement.

My wife's 401K is still all in stocks, but it has a smaller balance than mine. Outside the market we are stacking cash/CDs and precious metals, which are fairly hated right now by many. Our two properties continue to build equity, and are almost paid off so I don't worry about a real estate pull back. I am skeptical of crypto currencies, and the notion of it goes against my nature, so I will not be going there at my age.

Low interest rates seem to be here to stay for the foreseeable future, and have pushed a lot of capital into risk assets, which has distorted prices in my perspective. I don't know how this so-called Modern Monetary Theory (Keynes on steroids) will play out, but it is firmly in place now as evidenced by the latest Fed reversal on interest rates, and the recent overnight repo bailout operation. But trees don't grow to the sky, and financial markets cannot forever defy the laws of nature. Long term buy and hold will still likely be rewarded, but I think the next 5-10 years could be a little shaky.

 

I've been hearing some grumblings about this and it doesnt sound good. Unfortunately I know very little about financial policies. Care to explain what this is all about?

 

“There are thousands and thousands of people out there leading lives of quiet, screaming desperation, where they work long, hard hours at jobs they hate to enable them to buy things they don't need to impress people they don't like.”

Nigel Marsh

 

Here’s a quick explanation of what happened in September. I have heard that the new banking rules require banks to keep more cash on hand than was required prior to the last financial mess. So “they” are saying that the Fed stepping in now isn’t necessarily bad news.. take that for what it’s worth.. lots of other videos available if you search...

 

I think this one has a better explanation.

 

The videos posted are good. Initially this was only supposed to be a temporary operation, but it had continued until mid-December. I haven't followed it over the last week or so. The deeper meaning to me is that economies managed by central banks for ever increasing monetary expansion/inflation result in the misallocation of capital, more greed, over-consumption made possible by debt, and finally an inevitable blow-off top in asset prices. The longer economies are managed for inflation and increasingly rely on credit/debt expansion for growth, the more drastic the steps needed by central banks (operation twist, rate cuts, QE3, Repo operations, eventual QE4, negative interest rates, etc) to keep the music playing. All the while, wealth disparity grows bigger to benefit those with substantial financial assets; those fixed incomes see their standard of living continue to decrease; and, all the while, the conditions become evermore favorable for a potentially bigger conflagration to occur than the previous financial crisis.

The only thing we can do as investors is to play the game by investing in a mix of both traditional financial assets, and some tangible assets without counter-party risk...and if able to, stack some cash to buy repriced assets after big downturns. Always be ready to do some "selling when they are yelling, and buying when most are crying."

 

repo:
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crap, apparently you can't link to financial times
they have a good explain on repo and how it is linked to change of investment from offshore cash rules changes recently
Dec 31 is supposedly the hump to get past for both the banks and the Fed


you can google: " financial times repo-rate " and it should be the top hit dated Nov 25

 

Okay let me preface this comment with the admission that I know an embarrassingly little amount about our financial system and how it operates.

Now that is out of the way...
Thanks for the videos stuckinthemuck! I'm sure they were way oversimplified for explanation purposes. However, if that is how our money system works in this country then that is the stupidest thing I've ever heard. All it takes is the dumbest little thing to screw it up and everything falls apart.

Like I said I'm sure there's more to it than this and I've been meaning to learn more about the money system. I guess it's time to start doing some reading...

 

And putting a little cash away just for emergency.

 

I have some empty coffee cans if you want some....

 

You're supposed to leave the money in there......then bury 'em on the property somewhere and create a detailed map with location(s). Then, bury that.

 

I have one with $500 in quarters, it’s in the barn among a bunch that have screws in them.

 

Cans full of screws.........that's a unique investment strategy.

 

Have you bought good wood screws lately?

 

Looks like some good changes for our IRAs for 2020. If I can find a good write up I’ll post a link. After 50 you can now put in $7k each year. I think the age of mandatory withdrawal may have changed also.

 

401k max went up by 500 too.

 

Anyone notice the Dow bounced over 29,000 today?