Dow jones at record high, but many stocks are not?

[Burt]

The Dow is a stock market index of about 30 of the largest companies in the US. It is hardly representative if the overall market.
The S&P is bigger, but still weighted by the top companies.

One third of The S&P 500 index is made up of 10 tech companies. Much less diversified than most people realize. I prefer total market index funds.

 

[k1xv]

what has done well for me is JP Morgan/Chase, Visa, and Public Service enterprise Group. I just bought some Tesla. No so much for the cars, but for the electric grid batteries. I just installed 40 kWh of Tesla Powerwalls. Makes my house electrically into having an uninterruptible power supply. As a former electrical distribution engineer, a revolution is coming to the electric distribution industry. and batteries to manage loads will have a major role.

and Musk being so close to Trump will be good for Tesla stock.

 

[RhondaHonda]

what has done well for me is JP Morgan/Chase, Visa, and Public Service enterprise Group. I just bought some Tesla. No so much for the cars, but for the electric grid batteries. I just installed 40 kWh of Tesla Powerwalls. Makes my house electrically into having an uninterruptible power supply. As a former electrical distribution engineer, a revolution is coming to the electric distribution industry. and batteries to manage loads will have a major role.

and Musk being so close to Trump will be good for Tesla stock.

I know a guy working on battery grid backup systems instead of the natural gas systems they currently use. It’s pretty interesting and I only know about it at a very macro level.

 

[Astro14]

Well I'd be doing good if my AAP stock didn't drop 50 percent in one day last year and still hasn't come back up. My Boing stock isn't doing very good either.

I'm almost tempted to go all in on Walmart stock. I don't see why it won't go back up to $170 like it was before the split

How are you selecting the stocks in your portfolio?

What criteria are you using?

What’s your asset allocation?

Overall strategy?

 

[The motor guy]

How are you selecting the stocks in your portfolio?

What criteria are you using?

What’s your asset allocation?

Overall strategy?

Buy low, sell high. Kind of bites you in the ass when everything is high though. I have like 30 stocks I'm a little bit of everything. I think the excitement of the election is wearing off and I need to be more patient.

 

[Astro14]

Buy low, sell high. Kind of bites you in the ass when everything is high though. I have like 30 stocks I'm a little bit of everything. I think the excitement of the election is wearing off and I need to be more patient.

“Buy low, sell high” is an aphorism - not a strategy.

Not a plan.

How do you choose what to buy?

How do you know it’s low?

How do you know when it’s high enough to sell?

How much of your portfolio is in equities?

Why did you choose that percentage?

 

[ecotourist]

How do you choose what to buy?

How do you know it’s low?

How do you know when it’s high enough to sell?

How much of your portfolio is in equities?

Why did you choose that percentage?

Good questions. I'll give you my answers.

I've never been very good at stock picking. I'm okay at it but not great. Knowing and accepting that, I'm invested in low cost broad index ETFs.

I don't know when things are low. No-one else does either, at least not consistently.

Knowing when to sell (meaning when things are too high) is even harder, so I just stay invested all the time using my planned allocation. Doing that makes me sell high and buy low.

When I started investing I had no idea what would be a good allocation, so my original plan was based on the ancient "Keep 1/3 in real estate, 1/3 in business, and 1/3 in reserve." I took that to mean "own a nice home, and invest 50% in equities, 50% in bonds and cash."

Over the years that 50:50 drifted to 60:40 and in the last few years to 70:30. That's going the wrong way I know, but I'm mentally okay with equities falling hard (which they do quite often). When equities are down hard I don't sell. I start looking for bargains (which is why I always keep a lot of cash).

 

[The motor guy]

Good questions. I'll give you my answers.

I've never been very good at stock picking. I'm okay at it but not great. Knowing and accepting that, I'm invested in low cost broad index ETFs.

I don't know when things are low. No-one else does either, at least not consistently.

Knowing when to sell (meaning when things are too high) is even harder, so I just stay invested all the time using my planned allocation. Doing that makes me sell high and buy low.

When I started investing I had no idea what would be a good allocation, so my original plan was based on the ancient "Keep 1/3 in real estate, 1/3 in business, and 1/3 in reserve." I took that to mean "own a nice home, and invest 50% in equities, 50% in bonds and cash."

Over the years that 50:50 drifted to 60:40 and in the last few years to 70:30. That's going the wrong way I know, but I'm mentally okay with equities falling hard (which they do quite often). When equities are down hard I don't sell. I start looking for bargains (which is why I always keep a lot of cash).

That's what I did in 2020. Dumped a bunch of cash in and it went up a bunch, but then again you have to factor in all the money you dumped in. It kind of makes it hard to tell how much money you really have invested and how much it's actually went up over the years with their average cost basis etc. Ive been meaning to call and ask about this. Cause i screwed up earlier this year selling part of a stock that was down and it showed I lost a ton more than I sold it for. I don't think I technically lost anything because that batch that I sold was still higher than I bought it for. It was just the cost average cost basis was higher. Idk, I'll have to call again and ask about this because the firdt guy I asked didn't know. It was a simple question. Does the gains it shows factor in outside money you've put in over time? That's not really a gain

 

[Astro14]

That's what I did in 2020. Dumped a bunch of cash in and it went up a bunch, but then again you have to factor in all the money you dumped in. It kind of makes it hard to tell how much money you really have invested and how much it's actually went up over the years with their average cost basis etc. Ive been meaning to call and ask about this. Cause i screwed up earlier this year selling part of a stock that was down and it showed I lost a ton more than I sold it for. I don't think I technically lost anything because that batch that I sold was still higher than I bought it for. It was just the cost average cost basis was higher. Idk, I'll have to call again and ask about this because the firdt guy I asked didn't know. It was a simple question. Does the gains it shows factor in outside money you've put in over time? That's not really a gain

You haven’t answered a single one of my questions.

I’m not the one that needs the answer.

You are the one that needs those answers.

You need to have a plan. You need to have a structure in which investing takes place. You need to understand your time horizon, your goals, your risk tolerance, and then develop an asset allocation that makes sense for those criteria.

What you’re doing right now is basically gambling. You’re moving money around, buying and selling, but you don’t know why you’re buying something, and you don’t know why you’re selling it except, perhaps, feelings?

The fact that you started this thread, not understanding index, or how their performance is derived, the fact that you don’t understand things like cost basis, the fact that you “dumped a bunch of money in“, and that you cannot tell how much you’ve invested, or what your gains, or returns are, tells me this is all just entertainment.

It is not investing.

If you continue on this path, where “IDK“ is the common response to your portfolio and its performance or objectives, then only thing that is assured, is that your broker will continue to make commissions, and companies will continue to make money off of you.

You need to start getting smart about this. You need to start reading.

I used to listen to a radio talkshow host named Bob Brinker while I worked on cars. It was an education. He had a reading list. I recommend every single book on that reading list. You will find every single one of those books on a shelf in my library because I’ve read them.

The shows have been made into podcasts.

Start listening. Start reading. Stop throwing your money away.

 

[SC Maintenance]

I agree that the Dow is a worthless index. They added NVDA in a desperate attempt to remain relevant, but its only 2% of the index is my understanding. So I apologize for being slightly off topic.

However, the S&P 500 by weight is the first link below. It shows that as of Friday the top 7 companies make up 30% of the index and are all tech stocks. So if your like me and 100% of your 401K is in a broad market index like from Vanguard, your heavily invested in tech whether you like it or not.

The second link below is a "heat map" for the S&P 500. It shows all 500 stocks by sector by size and red / green based on the previous days performance.

I have a second portfolio which I manage myself, mostly as a hobby / self interest - I don't have enough money in it to get rich. It is also mostly in a S&P500 index - if you can't beet them join them. I used to hold most of it in individual stocks but I only have a few of those left. However a few weeks ago I rolled some of it into a equal waited S&P500 fund - "RSP". It holds all 500 stocks at an equal value amount - well its likely holding derivatives but who knows these days. I am not recommending it, just posting it as an option if interested - who knows how it will do.

The overall market is the most over-valued it has ever been by just about every measure, and has been for a while. I have learned not to sell winners but I remain vigilant.

https://www.slickcharts.com/sp500

https://finviz.com/map.ashx?t=sec

 

[ARCOgraphite]

Election gain blip evaporated.
Kennedy just tanked my wife's biomed tech stock. LOL.
This the only individual stock holding from her former workplace ESP. NO biggie, about 4% of portfolio as most is in a moderate return (for now) and "safe" money market

 

[The motor guy]

Election gain blip evaporated.
Kennedy just tanked my wife's biomed tech stock. LOL.
This the only individual stock holding from her former workplace ESP. NO biggie, about 4% of portfolio as most is in a moderate return (for now) and "safe" money market

Yeah it happens. I have a few ev stocks that are down 98 percent No sense in worrying about selling those when there isn't anything left to sell. Lol

 

[ecotourist]

The overall market is the most over-valued it has ever been by just about every measure, and has been for a while. I have learned not to sell winners but I remain vigilant.

The equity markets climb slowly and drop like a rock. In my experience it's not possible to sell fast enough to mitigate a market crash. Most of your gains will be gone in a few hours and the crash is often over in a couple of days. "Stop losses" don't work either when there are no buyers. Oh your equities will sell all right, just not at the price you intended, and that will confirm your losses.

If you want to sell, it would be better to sell while the market is hot. But I don't recommend doing that either because it's impossible to know when to sell. If I believed in buying and selling I would have sold about 5 years ago - and passed up all the recent gains.

As someone said, you have to get many things right to buy and sell profitably - when to sell, when to buy back.

What has worked for me is asset allocation and regular rebalancing. I've recently sold off some of my Canadian equities (% got too high), and I'm currently selling US equities (% has gotten too high) and buying bonds (% was too low).

So I am selling small bits of winners (equities) and buying slackers (bonds).

 

[SC Maintenance]

The equity markets climb slowly and drop like a rock. In my experience it's not possible to sell fast enough to mitigate a market crash. Most of your gains will be gone in a few hours and the crash is often over in a couple of days. "Stop losses" don't work either when there are no buyers. Oh your equities will sell all right, just not at the price you intended, and that will confirm your losses.

If you want to sell, it would be better to sell while the market is hot. But I don't recommend doing that either because it's impossible to know when to sell. If I believed in buying and selling I would have sold about 5 years ago - and passed up all the recent gains.

As someone said, you have to get many things right to buy and sell profitably - when to sell, when to buy back.

What has worked for me is asset allocation and regular rebalancing. I've recently sold off some of my Canadian equities (% got too high), and I'm currently selling US equities (% has gotten too high) and buying bonds (% was too low).

So I am selling small bits of winners (equities) and buying slackers (bonds).

I respectfully disagree with pretty much everything you said . Hopefully your not offended. Except the part about timing the market. That part is correct.

There are plenty of ways to hedge a portfolio, but there is a cost - a real cost and a loss of portfolio gain - ie put options, VIX, diverse assets. Its a difficult task and it isn't going to save you, but might soften the landing. I would say its not for the vast majority of amateurs.

I don't sell winners (school of hard knocks). l also don't like long bonds here. Shorter issues are OK. The 10 year is getting closer to looking good, but the spreads on corporates are still at historic lows. IMHO only.

My 401K is 100% in a Vanguard broad market fund - my best option. I have not looked at it since last Christmas and can't touch it for like 17 years, so I really don't care. I add to it every month, and someday maybe I spend it - if I live that long the Good Lord Willing. The portfolio I manage myself is a different beast for a different purpose. I make money and I loose money - at a rate that would be pretty alarming for most. Price of an education is expensive.

I will say that if your retired and need the money to live on someday, then having it all in equities at this point is a big risk, IMHO. I am not the only one, plenty of analysts point to retirees who are either all or almost all in equities as a looming potential disaster. So far they have been wrong, so maybe they stay wrong forever. Or maybe not.

Not to be construed as investment advice. I am just a simple engineer trying to understand the most complex system man has ever created.

 

[The motor guy]

“Buy low, sell high” is an aphorism - not a strategy.

Not a plan.

How do you choose what to buy?

How do you know it’s low?

How do you know when it’s high enough to sell?

How much of your portfolio is in equities?

Why did you choose that percentage?

It's worked for so far for a long time. I've doubled my portfolio in the last 5 years doing this. It worked until now when their aren't anymore good bargains. It's just the first time I've ever had it where the market went way up and my portfolio never really moved. It didn't go down, it just hasn't gone up much the last year or so. Nature of the beast

 

[Astro14]

It's worked for so far for a long time. I've doubled my portfolio in the last 5 years doing this. It worked until now when their aren't anymore good bargains. It's just the first time I've ever had it where the market went way up and my portfolio never really moved. It didn't go down, it just hasn't gone up much the last year or so. Nature of the beast

Then you have underperformed the S&P 500 index.

You have underperformed every single S&P 500 index fund, which is up 32% over the last year alone.

And you have done so while taking a great deal more risk.

So, much higher risk, with lower returns, than simply leaving it alone in an S&P 500 index, is precisely the kind of thing I’m talking about.

You are gambling, you are not investing.

The true “nature of the beast“ is that individual investors tend to underperform the market significantly. This makes you a typical individual investor.

It’s a bit of fantasy to think that somehow you, spending at most a few minutes a day, will be better able to pick stocks than the people who do it every single day as a full-time pursuit, and who have experience in the profession, along with sophisticated analysis tools to which you do not have access.

I am not opposed to individual investment, but the fact that you don’t have a framework in which this takes place, don’t understand risk, don’t understand how to calculate return, don’t know how much you’ve gained or lost, and don’t even understand the fundamentals of how market indices work, suggests that you would be much better served with an overall strategy with a market index fund at its core.

 

[Dave Hess]

Sure, especially the last few years and if they held tech.

Not bragging….

But I’ve been over $1M for quite some time with tech ETFs really driving things higher and higher.


At one time my entire Roth IRA was Amazon stock.

 

[The motor guy]

Not bragging….

But I’ve been over $1M for quite some time with tech ETFs really driving things higher and higher.

At one time my entire IRA was Amazon stock.

I wonder if you've held it since 1998? You might be the richest guy on here Personally I think with some patience and a good amount of anxiety medicine, putting all your eggs in one basket pays off eventually. Ever dog has its day, or should I say stock?

 

[ecotourist]

I respectfully disagree with pretty much everything you said . Hopefully your not offended. Except the part about timing the market. That part is correct.

There are plenty of ways to hedge a portfolio, but there is a cost - a real cost and a loss of portfolio gain - ie put options, VIX, diverse assets. Its a difficult task and it isn't going to save you, but might soften the landing. I would say its not for the vast majority of amateurs.

I don't sell winners (school of hard knocks). l also don't like long bonds here. Shorter issues are OK. The 10 year is getting closer to looking good, but the spreads on corporates are still at historic lows. IMHO only.

My 401K is 100% in a Vanguard broad market fund - my best option. I have not looked at it since last Christmas and can't touch it for like 17 years, so I really don't care. I add to it every month, and someday maybe I spend it - if I live that long the Good Lord Willing. The portfolio I manage myself is a different beast for a different purpose. I make money and I loose money - at a rate that would be pretty alarming for most. Price of an education is expensive.

I will say that if your retired and need the money to live on someday, then having it all in equities at this point is a big risk, IMHO. I am not the only one, plenty of analysts point to retirees who are either all or almost all in equities as a looming potential disaster. So far they have been wrong, so maybe they stay wrong forever. Or maybe not.

Not to be construed as investment advice. I am just a simple engineer trying to understand the most complex system man has ever created.

I don't think you actually disagreed with anything I said. As part of my investments I have a Vanguard broad market ETF (VTI) as well which I haven't touched (much) for something like 15 years.

There is nothing wrong with being 100% in equities as long as you're young and can stomach a 40 - 60% drop. Many people can't and immediately want out. That's where bonds come in. Bonds don't usually follow equities and often gain a bit when equities crater (because all the people who couldn't stomach the big drop now want to buy something safer - ie bonds).

I don't buy long bonds either. I do buy a broad market bond fund (which is up 11.5% in the past 12 months). Which is not too bad for the slacker in my portfolio.

I don't hedge either because of the cost. And I like to keep things simple.

When I sell equities I sell the "least best" ones, or sometimes the ones with the lowest tax cost. We have a capital gains tax in Canada.

I agree with your point about none of this being investment advice. I'm just saying what I do - and why. No one here is an investment expert.

 

[wpod]

Election gain blip evaporated.
Kennedy just tanked my wife's biomed tech stock. LOL.
This the only individual stock holding from her former workplace ESP. NO biggie, about 4% of portfolio as most is in a moderate return (for now) and "safe" money market

Companies have a certain value and potential for growth. The best thing is the money chasing the perceived value.