That is not correct. WB buys investments that make sense. While he tends to hold his investments long term, he occasionally sells positions that don't make sense. BRK stays diversifies in the size of its cash positio the size of which is determined by the availability of investments that make sense.. I wouldn't advocate liquidating 100% of a 401k but backing out of a position to have some cash on hand is often a prudent course of action. If WB had been completely undiversified in 2008, he wouldn't have had the approx 25 billion in cash that he was able to put to work in numerous financial strapped companies to profit over 10 billion on the deal. Buffet also uses financial derivatives to hedge some of his bets, something the average investor can't or doesn't know how to do...
Rebalancing is a great idea, assuming that you are a bit heavy on equities or other assets. I don't suggest you sit at the sidelines waiting it out, as neither you or I (or Warren Buffett) knows which way the market is going to go.
I rode 7700 shares of a local bank stock from 21.00 a share down to 4.00 and lost about 2500.00-3000,00 a year in cash dividends plus a 5% stock dividend every year. Gary
I have ridden two companies into bankruptcy. On one of them I doubled down when it was at half the value of my purchase price, because I knew better than everyone else. I now stay diversified.
stuckinthemuck I was referring to the fact that he generally only holds less than 10 individual stocks at a time. yes in companies he understands and believes to be undervalued with where changes in the market are going.. once that changes you change allotment.. I was speaking in generalities but 6 to 8 individual stocks (not counting cash and bonds etc) is less diversified than most funds which is where most 401ks are... yeah I would never try to explain covered calls, collars or derivatives or recommend them to anyone without personally knowing their situation.. thanks for clarifying! edit maybe we should start a investing thread!
Good idea! Although it could almost get like a political thread, you know what they say about opinions! Gary
its a fair assessment that the markets can't keep rocking this Trump high. I think retail sales will continue to push them higher and we'll see the DOW coming back to earth 17-18.5k prior to tax time, but fully expect 20k+ by the end of next year Juts be wary of stocks overextended in capital markets that may not respond well to rising interest rates -even if they can sustain growth & yields in those headwinds the sharks will eat all the little folks like they always do. Buying opportunities So many useful tools out there at all the brokerage houses - compare the 5/10/15+yr yields on most funds but also look at the loads/%costs if anyone wants more than .5-.75% to manage your assets for stable 8 % returns - run
For the record I've ridden 4 companies into bankruptcy - but they were all purchased with the crème of stop sales on rising said stocks (principle investment liquidated and left over profit left to grow or in this case gobbled up by reverse splits OTC exchanges and whatnot) - lesson learned if you don't have the time to manage your money intensely then dump it in a mutual fund or other low load fund that matches when you want your money to mature. The later method has yielded me prolific results, but I still buy dividend stocks with long term track records because I still want to supplement my early retirement without actually touching my nest egg.
A lot of people don't understand how the tax breaks work. They think the interest comes directly off their tax bill. A co-worker and his wife took out a loan for an RV a few years ago and were excited that they could claim it as a second home and deduct the interest. They thought every dollar in interest was a dollar off their tax bill. I tried over and over to explain that the interest was deducted from his income but he didn't get it.
I think you need to decide how long until you'll be depending on this money for your income. If you're close to retirement age, it's a good idea to move the money into a fund that has a higher mix of bonds. But if you've got a decade or more until retirement, I say let it ride.
Not to be argumentative (okay, maybe just a little ), here's a thought, let her look at her 401k and see if she is comfortable with where she is at. Doesn't mean she can't ask advice (and not necessarily from you), just means she should take responsibility. After all, if "you" do something that costs her money, there will be hard feelings. And, she is more likely to live longer than you (going by national averages), so she needs to learn how to take care of her finances.
Since she has only been at her current place 38 years I figure she will have another 20 if I have any input! With the way her 401k is tiered they have slowly been moving it to retirement type bond funds. I cant remember what the split is exactly. I think only about 15-20 percent is in higher risk, which was what I was thinking about moving out some. to one of her bond funds. Still gotta do a lot of research. Gary
My wife and finances?? Actually she has done pretty good. Her work has a financial advisor that works with them on how everything should be structured for retirement. Gary
Bonds scare me more than stocks, especially right now. I would not try to "reduce risk" by increasing my bond exposure. I am 75% or more in stocks, and have been for most of the last 30 years. Though I am hoping to retire in about 10 years, I'm still intentionally very stock heavy. As I said, bonds are scary (always), and especially in todays's ridiculous interest rate environment. When rates reach something more normal, I will probably reconsider.
Got a notice that my "papers" are being processed could take a couple weeks for finalized documents to arrive. Since then I'm being barraged with emails from any lender I've ever leveraged credit to "refinance my home" I know there is no middle finger smiley here but I reply a resounding GFY!
