Investments strategy with new administration?

[MossRoad]

S&P 500 is a winners list which is updated quarterly. Losers are dropped off the list.

Essentially they are listing stocks when they are considered high and un-listing them when they hit their lows. So are you buying high and selling low?

Remember ENRON? NORTEL?

A Closer Look at the S&P 500

https://ca.rbcwealthmanagement.com/delegate/services/file/592736/content

No, I am not buying low and selling high. We do dollar cost averaging, putting the same amount in every paycheck, regardless of if the market is up or down. When it's up, we get fewer shares for our buck. When it's down, we get more shares for out buck. It averages out to getting more shares per year by buying some of them 26 times per year VS buying all of them once per year.

Every paycheck for the past 30 years I've put 15% of my income into my 401K and/or IRA(now ROTH IRA). I've always put in at least as much as the company matched in the 401K and the rest in the IRA. My wife has done the same thing. Most of our funds are tied to the S&P500. It has served us well.

Our goal since before marriage was to double our net worth every 7-8 years. We've surpassed that greatly.

We make average wages, with me making a little less and her making a little more, but combined, almost exactly average for our area.

We never try and time the market. Our advisors discourage that and so we stay the course.

We've been debt free since 1995. It makes sleeping at night a lot easier.

 

[ultrarunner]

Around that time several retired with mutual funds saw values drop 50% and said I’m out and went to CDs…

The 401k losses were locked in but if your 70 or 80 and see 50% drops with a short horizon at least you got 50 cents on the dollar… this is what one told me…

 

[dmccarty]

....
Do you know what you own? Example: There are about 470'ish ETF's in the marketplace. Apple is one of the top 15 holdings in about 400 of them.

I don't touch our retirement investments very much. A few years ago, I was looking that the various funds, and some are not performing as well as others. I looked at transferring some of the the under performing funds to better ones. However, as I dug into the higher performing funds, I noticed they were invested in the same, small number of companies, i.e., they had all of their eggs in one basket. Now that might not be bad, IF one had other investments that did not include those same companies....

Looking at our other funds, guess what? Yep, they also were invested in these same companies, so I left the investments as is.

One thing that worked decades ago, but has not been working well for the last decade or so, has been owing non US stock funds. In the distant past, overseas stocks would rise when US stock would fall and vice versa. Having a mix of overseas and US funds balanced out over time. However, this has not been working in the last decade or so. As a result, I sold one overseas fund, and put the money in a US fund.

Overseas stocks are problematic long term due to demographic changes and government policies. Nothing really positive money wise has been happening in the Pacific area, and I think it will get worse. China has serious financial, demographic and cultural issues. It really is heading for a cliff which will be dangerous not only for the Pacific region but the world. Europe has it's own demographic issues and their environmental policies are finally showing up so the people can see what it is going to cost them. German politicians sold out to Putin's Gas and now we all pay the price. EU energy policy has driven up the cost of energy, made it scarce, and the political fractures are now apparent. This is hitting the economy and will continue to be a negative impact.

We don't invest in individual companies but if I did, I would get out of automotive stocks. I don't see things improving for the car companies for the next 5-10 years. They really got greedy and silly stupid during the pandemic and lately. Thinking people can afford $50,000 for a car or truck is just insane. And try to find a decent $50,000 car or truck. More like $60-80,000 and they will have quality issues. Prices are starting to fall as the inventory is building. Imagine that, the law of supply and demand. I know people who don't understand this simple concept. The fall in prices is going to increase the amount of money people are underwater on their loans and keep them out of the car market for 4-5 years at least. They simply won't be able to buy a new vehicle. Repo's are up and will increase, especially if there is a downturn, which will impact the banks. Some banks are already limiting loans to buyers as well as the inventory loans to the dealers.

 

[California]

My dad also said to never invest in the company you work for, with a few exceptions. The folks that worked for Enron learned that lesson the hard way. Lost their jobs and their savings all in one shot.

Delta airline, too. Well not the job, but the pension and personal investment in his employer.

A relative shifted from station agent to flight attendant, to make more money and get his savings back on track.

 

[two_bit_score]

Sometimes payments make sense. We were offered 1.9% over 36 months plus $1,000 cash back through GM Financial when we bought the wife's new Cadillac XT6. At that time our Cash Management account was drawing 5.02% so we took the financing instead of pulling out cash from savings. Now that interest rates have come down, I plan to pay it off early with no penalty.

I agree. I have always recommended paying cash to avoid payments when buying a vehicle because I see them as depreciating not appreciating assets. So the sooner you get it paid for and the longer you keep it the better. Every day you drive a paid off vehicle you are actually making money.

BUT, now it's different, IMHO, with the price of vehicles as they are and the way franchised dealers operate now it actually better for the customer to factor financing into the deal from the start, assuming you have good credit - ~800 or above, and you get the best rate. Keep your money invested.

 

[two_bit_score]

My dad also said to never invest in the company you work for, with a few exceptions. The folks that worked for Enron learned that lesson the hard way. Lost their jobs and their savings all in one shot.

I partially agree. You shouldn't invest in your employers stock and leave it all in the same stock as your retirement fund. But if you are working for a good company and they have an ESOP program it can be a good way to put money away for later.
It's been awhile since I was in one but we could set an amount each month that was deducted pre-tax into the fund (also no transaction charges on the purchase) and we could sell at the market anytime if we wanted. There may be new regulations today.

 

[DarkBlack]

My dad also said to never invest in the company you work for, with a few exceptions. The folks that worked for Enron learned that lesson the hard way. Lost their jobs and their savings all in one shot.

Sorry, but that makes no sense to me. His example is of a failed company. All investors who stayed invested in Enron till the bitter end , lost the same amount of money regardless of whether they bought shares as an employee or as a non-employee.

Maybe his message was actually meant to be related to shares in your own company ,that are tied to a retention date, or in lieu of other compensation.
Otherwise, a lot of companies give employees a discount on their stock, plus you’re likely to know if the company is healthy, so that’s an advantage to buying stock in someone else’s company.
You just don’t want to buy too much.
Diversity is all important

 

[two_bit_score]

I guess that depends on where you live. I don't think I've ever seen land values decline any appreciable amount around here, regardless of how the economy's doing.

Land market is often misunderstood. I knew someone who was talking up their recent purchase of "land" and come to find out it was 30 ac in Rocksprings which is on the Tx-Mx border. Undeveloped except for a dirt road and no utilities. No mineral rights. It will be two life times for them to get their money back if they ever do. I've had several people back when time shares were popular say that said they would 'make their money' on a time share in Ark. Well, those things never worked out. Now buying RE property that you can use or rent or develop in some way is good. I love it. I've never regreted anything I bought and held but I do wish I had kept some of the places I sold.

We don't invest in individual companies but if I did

I own some stock in individual companies. I try to buy in companies I trade with and like dealing with as a customer. Most here would recognize the names. Small Bank holding company (just recently it became a billion dollar bank) I bought stock long ago because I liked them when I had only a small checking account and it was available. Ive bought more since then. It was the first individual stock I had ever bought and I kinda forgot about it for a long time. Then bought some more when it became available, then they did an issue of preferred that I bought a little. They have offered several times to buy stock back for their ESOP plan. I've been so impressed with what they offered I figure if they would pay that much for it now I may as well keep it.

 

[DarkBlack]

I guess that depends on where you live. I don't think I've ever seen land values decline any appreciable amount around here, regardless of how the economy's doing.

They don’t really in New Hampshire, but as you know, we have a very high property tax. That twice a year tax can chew up all the gains on the land value.
The last acreage I sold, I priced at what I paid, plus the amount I paid through the years in taxes. It was still a difficult sell because banks don’t want to give loans on raw land, so I was pretty much restricted to cash buyers.
All those years just to break even on costs, means I actually lost money.
Should have just put the money into the market. I won’t make that mistake again

 

[kenmbz]

How I bought my first house.

I was working in a job where I had to work Overtime and I also got hazard pay when on certain bases.
I had that money got directly into a separate bank account.
It all adds up and after three years had a downpayment ready, still single at the time.
I bought a fixer upper. Worked with a guy who had a job in maintenance and we redid the back of the house, stairs and down stairs bathroom. I bought the materials, did all demo. The tow of us reassembled, he did the final finishing , which I am awful at.

When I got married, the wife and I redid the basement, then replaced carpets etc. and sold the house for more than double what I paid.

This is also how my Friends kids currently bought their houses, the money funneled into a 2nd account can really help.

As for ESOP , I did that with one company that set a discount price on stock. So it would have to really go down to have an affect. Had to leave it for 2 years.
2 years after I left I cashed all of it out and did ok, that front discount really made a difference.

I was offered set price stock in another company I worked for, did not take that one.
The company was doing some stupid contract bidding.
The stock was close to worthless before they got sold to another company, so dodged a bullet just by thinking through how they were doing business wise.


I did get stung once in another company where the vestment was three years for the 401K matching. I left after 3.5 years, only to find out the new owners had a 5 year vestment and I lost close to 20K (market had been way up on those 3 years).
That's when I found out that the terms could change.