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Post by Norbert on Jul 28, 2021 7:17:37 GMT
I know traders use PUP sometimes if it is not a high conviction buy, though they are firm believers that there is a lot of fish in the ocean. So, I want to keep an open mind about PUP for speculative investing if it comes with a reliable exit strategy. Traders sell into strength as well. But traders always have tight stops and they do not mind whipsaws. I must say I do not enjoy averaging down speculative buys. I am more inclined to average down indices and average up speculative buys. If the price of a speculative buy goes below my initial entry price, the next buy has to be at least 10% lower if I have to average down but even then I am not a happy camper buying the second tranche. During March 2020, I made some speculative buys where the second tranche was 25-30% lower. Then I also end up selling too soon or too late. That is not the case with buying indices - once I start buying, a lower price has never bothered me. For me, buying has always been easier than timing sells. That works for investing in indices but not for speculative buys. Good post. I agree that short term trading is different. There I can see using momentum / PyrUp, paying close attention to the market action. But, it's moments like March 2020 that offer fantastic opportunity for longer-term investors: a sudden 25% discount appeared. Ditto for late 2008-2009. N.
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Post by FD1000 on Jul 28, 2021 13:28:33 GMT
retiredat48 , I am not the one objecting to your use of ‘buckets’, though I use ‘tranche’. I'm not objecting to his use of PyrUp either. There are many ways to get to Rome. Whatever works best for him! However, I think the benefit of PyrUp is psychological: it's reassuring to get market price confirmation before increasing a position with another bucket / tranche. The obvious problem is that it's not logical to wait for higher prices when establishing a position. It makes more sense to buy as cheaply as possible. Simple math! Knowledgeable investors buy the dips and corrections. As Buffett said, buy when others are fearful! That's how you make real money. PyrUp doesn't prevent future losses; all it does is guarantee a higher average cost. Prices may decline below the purchase price at any time in the future. For example, consider the case of an investor creating a position in oil & gas (XLE or VGENX) starting in 2011. He finally builds a full position (buys the last "bucket") by July 2014, following a strong uptrend. The problem is that July 2014 was the long-term top. It's been downhill from there. PyrUp only provides the illusion of safety, while increasing your cost base. N. Every sentence is a nugget and why I make (almost) a complete switch from position X to Y on the same day (Schwab lets you sell fund X and buy fund Y pretty close to the proceeds) Only after a meltdown, I use 3 buckets for the whole portfolio, not in one fund. I wait for upward prices confirmation when markets are in chaos, as we had in March 2020, especially when I'm in cash. I don't mind missing the first 5-10% after 30+% decline.
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Post by ignatz on Jul 28, 2021 15:35:56 GMT
PyrUp only provides the illusion of safety, while increasing your cost base. N.
That alone undoubtedly makes it useful for SOME personality types. Not mine, but some.
It enables them to spend time in the market that would otherwise be spent on the sidelines out of fear. Ultimate results (portfolio CAGR) compared to some other method be damned.
The rest of it is "why you should be more like me", which is the subtext of a lot of forum posts.
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Post by retiredat48 on Jul 28, 2021 16:07:07 GMT
retiredat48 , I am not the one objecting to your use of ‘buckets’, though I use ‘tranche’. Sorry...was not you...senior moment...edited. Actually, when I describe what Pyramid Up is, I fully explain what "buckets" are. I found that people understand this better than simply saying: Divide your purchase amount into five buys. R48
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Post by retiredat48 on Jul 28, 2021 16:19:12 GMT
R48 ... Let me conclude with this. I see value in your Pyr Up during my working wealth accumulation stage when I just had a bag of investments and more money coming in to deploy. In retirement, I am quite different. I am fully invested and have a very structured portfolio asset allocation with tight % targets. In good times I simply rebalance. In bad times I simply do nothing and wait for natural market recovery. I am not going to change. I have no interest or need for Pyr Up. This did bring back memories and gave me chuckle: elder...Bought second bucket of USCI. Pyramid up. Bill/
I owned this commodity fund for awhile and it was a loser. Nothing would have helped this, not even Pyr Up. You are simply saying you do very little buying or selling. You rebalance and do same day switches. But what about the retiree you just inherited $100,000? Now what. If you did today, would you inject it immediately into the market. Studies show this is actually best, compared to waiting. But few can do it. In fact, most have extreme difficulty investing this $100,000 into the stock market/funds. It is because their real goal is not max return; rather, "If I lose one penny of this, my father will be rolling over in his grave." So they do nothing...for years. Pyr Up allows one to ACT...and at the same time protect one from themselves. R48
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Post by FD1000 on Jul 28, 2021 16:28:33 GMT
PyrUp only provides the illusion of safety, while increasing your cost base. N.
That alone undoubtedly makes it useful for SOME personality types. Not mine, but some.
It enables them to spend time in the market that would otherwise be spent on the sidelines out of fear. Ultimate results (portfolio CAGR) compared to some other method be damned.
The rest of it is "why you should be more like me", which is the subtext of a lot of forum posts.
Why a typical investor should not be ALL invested? not including retirees who have enough and look for preservation. There are other categories than stocks. PyrUp (* or owning 20+) should not be an excuse for a bad style of investing. Remember: investing can be pretty simple, most should hardly trade, you can easily increase your stock % by switching one fund (example: sell VWINX and buy VWELX...or...sell some of your bond and increase stocks). Why most need to use any PyrUp? * owning 20+ funds = Over the years I helped hundreds privately. Many had 20+ funds (example: 5 SC, 5 LC, 5 international, 5 allocation, 5 bond) because they can't make up their mind. After discussing the matter, you find out it's mostly collecting these funds over the years and they were pretty knowledgeable what funds to cut.
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Post by retiredat48 on Jul 28, 2021 16:33:19 GMT
R48 ... This did bring back memories and gave me chuckle: elder...Bought second bucket of USCI. Pyramid up. Bill/
I owned this commodity fund for awhile and it was a loser. Nothing would have helped this, not even Pyr Up. Actually, this is the essence of Pyramid Up. It is a buy-in technique that, by the math, one has to be in a net positive position, when done. You can think straight if the fund starts to drop. Question yourself. Start reverse selling buckets...and so on. Consider this post above by Rosemary yr 2011... "Rosemarie...Bought 100 shares of GE at $20.86 on 2/7/11. Why? I already had 200 shares of GE at $16.98. Thought I was pyramiding up."Great. We all know GE went to $5/share eventually. So while would be interesting to see if Rosemary held all the way down, fact is she is in a net gain/positive position. She bought into an out-of-favor stock, thinking she caught a bottom. She did...for awhile. But as GE begins to decline, she can now assess much better from a gain position, an whether to sell or not. The forum in those days was filled by posters (many threads) buying GE in the forties, then the thirties, then especially in the twenties...averaging down. They averaged down to disaster. We had posters in MLPs averaging down, one poster stating KMI was surely a better buy at lower prices. He stated he eventually lost $250,000! Pyr Up prevents this. R48
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Post by retiredat48 on Jul 28, 2021 16:42:44 GMT
I know traders use PUP sometimes if it is not a high conviction buy, though they are firm believers that there is a lot of fish in the ocean. So, I want to keep an open mind about PUP for speculative investing if it comes with a reliable exit strategy. Traders sell into strength as well. But traders always have tight stops and they do not mind whipsaws. I must say I do not enjoy averaging down speculative buys. I am more inclined to average down indices and average up speculative buys. If the price of a speculative buy goes below my initial entry price, the next buy has to be at least 10% lower if I have to average down but even then I am not a happy camper buying the second tranche. During March 2020, I made some speculative buys where the second tranche was 25-30% lower. Then I also end up selling too soon or too late. That is not the case with buying indices - once I start buying, a lower price has never bothered me. For me, buying has always been easier than timing sells. That works for investing in indices but not for speculative buys. Good post. I agree that short term trading is different. There I can see using momentum / PyrUp, paying close attention to the market action. R48 reply..It's independent of the market. Its applied to each stock or fund newly bought. In 2009 bear bottom, fund FXI China was zoomong upward and staying up, at least 30 days before the stock market bottom. Wall Street has a mantra: "Everybody is a speculator. For after they buy something, they look in the newspaper the next day to see if it went up. And if it went down, that's when they become a "long term investor."! But, it's moments like March 2020 that offer fantastic opportunity for longer-term investors: a sudden 25% discount appeared. Ditto for late 2008-2009. Why would you assume Pyr Up buying negates bear market buying opportunity? My kids loaded up on stock funds during that period.
N.
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Post by paulr888 on Jul 28, 2021 19:24:34 GMT
R48 ... I will likely have an inheritance some day. Here's my plan. My IRA is complicated as it has lots of holdings for max diversification and coverage of tail risks as well as designed to generate 4% distribution yield. I track it on one Excel spreadsheet but the numbers are getting smaller and time to update getting longer. Inheritance will go into my taxable trust account. I have decided to simplify that account even though not tax efficient. 50% of inheritance will go almost immediately into 7 conservative allocation funds (4 are 35% to 40% equity; 3 are 40% to 50%). The other 50% will go almost immediately into my favorite bond OEFs and adding 2 Vanguard high quality California Municipal bond funds.
While the reality is in my retirement I have no plans to use Pyr Up, if I knew about it about 20yr to 25yr ago, it would have saved me a lot of money and grief as I was stupidly Pyr Down and buying stock in company I worked. I thought I was lowering my cost basis. I was. But the stock price was lowering faster and company went Ch 11.
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Post by anitya on Jul 28, 2021 19:53:54 GMT
This thread is becoming beyond my pay grade (for useful discourse or new info) and will not be following for sometime in the hope it might find its bearings in the meantime. No need to reply or tag me.
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Post by paulr888 on Jul 28, 2021 21:05:29 GMT
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Post by Karen on Jul 29, 2021 1:08:14 GMT
In my husband's over three decades in the investment business, he never met a person who believed he/she was fully invested in the market if NONE-to-only a nominal amount of their money was invested in stocks.
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Post by Norbert on Jul 29, 2021 6:50:57 GMT
R48 ... This did bring back memories and gave me chuckle: elder...Bought second bucket of USCI. Pyramid up. Bill/
I owned this commodity fund for awhile and it was a loser. Nothing would have helped this, not even Pyr Up. Actually, this is the essence of Pyramid Up. It is a buy-in technique that, by the math, one has to be in a net positive position, when done. You can think straight if the fund starts to drop. Question yourself. Start reverse selling buckets...and so on. Consider this post above by Rosemary yr 2011... "Rosemarie...Bought 100 shares of GE at $20.86 on 2/7/11. Why? I already had 200 shares of GE at $16.98. Thought I was pyramiding up."Great. We all know GE went to $5/share eventually. So while would be interesting to see if Rosemary held all the way down, fact is she is in a net gain/positive position. She bought into an out-of-favor stock, thinking she caught a bottom. She did...for awhile. But as GE begins to decline, she can now assess much better from a gain position, an whether to sell or not. The forum in those days was filled by posters (many threads) buying GE in the forties, then the thirties, then especially in the twenties...averaging down. They averaged down to disaster. We had posters in MLPs averaging down, one poster stating KMI was surely a better buy at lower prices. He stated he eventually lost $250,000! Pyr Up prevents this. R48 PyrUp may or may not prevent losses. It may have worked for KMI, but that's an exception. I repeat, consider the example of a VGENX investor who bought his last bucket at the sector top in 2014. All PyrUp accomplished was to increase his cost base. I suggest not pushing it as some kind of "sure thing" or "guarantee", because it's not. N.
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Post by Norbert on Jul 29, 2021 9:24:11 GMT
In my husband's over three decades in the investment business, he never met a person who believed he/she was fully invested in the market if NONE-to-only a nominal amount of their money was invested in stocks. There are many professional bond traders who do very well in the fixed income space. They just don't talk about it all the time.
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Post by FD1000 on Jul 29, 2021 19:19:53 GMT
In my husband's over three decades in the investment business, he never met a person who believed he/she was fully invested in the market if NONE-to-only a nominal amount of their money was invested in stocks. There are many professional bond traders who do very well in the fixed income space. They just don't talk about it all the time. Just curious. Please name the bond traders you know that did well (let's make it 10+% annually) in the last 3 years for all their bond OEFs in this board or other boards that are still active. BTW, I'm not a pro trader, but just for fun, I really like to know this since I love to learn new stuff.
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Post by Norbert on Jul 29, 2021 19:29:04 GMT
There are many professional bond traders who do very well in the fixed income space. They just don't talk about it all the time. Just curious. Please name the bond traders you know that did well (let's make it 10+% annually) in the last 3 years for all their bond OEFs in this board or other boards that are still active. BTW, I'm not a pro trader, but just for fun, I really like to know this since I love to learn new stuff. No, can't post their names and need permissions to disclose. Yes, it's good to learn new stuff.
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Post by fishingrod on Jul 30, 2021 0:06:50 GMT
I am one who made 7.4% annually on my total bond fund holdings in the last three years, Intermediate and long term Investment grade munis. I am far from a bond trader, just lucky and brave. One that is willing to buy bonds when they are on sale.
I bet that with all that trading and changing, that you may have missed some real gains in the bond market. Fear can immobilize one to the point they can't take chances.
If you are making 10% (are You?) on your bonds annually then it is only a small portion of your portfolio that you are doing this with, one would call it play money. Nothing to be ashamed of but nothing to brag about...
Fishingrod
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bf22
Commander
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Post by bf22 on Jul 30, 2021 4:13:17 GMT
Norbert stated that great bond traders don't talk about it all the time.
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Post by FD1000 on Jul 30, 2021 13:53:15 GMT
( www.fidelity.com/learning-center/trading-investing/market-signals-now?ccsource=email_weekly_AT) Key takeaways
- Only 30% of the S&P 500 constituents were trading above their 50-day moving average as the stock market moved to new all-time highs recently. That is a rarely seen signal for market technicians. - Such narrow advances are unusual and have preceded significant drawdowns in the past. I don't expect that to happen now but, in my view, the current cycle adjustment may continue to produce a sideways trading range. - On the bright side, 2021 earnings continue to soar, and I remain constructive on equities.
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Post by anitya on Aug 2, 2021 7:11:12 GMT
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Post by FD1000 on Aug 31, 2021 18:30:00 GMT
April 1, sell EEM,IWM,QQQ and buy SCHD (see below) June 25, sell SCHD, buy QQQ (see below) SPY/VOO continues to be a great, easy, "stupid" choice. Growth(VOOG) is ahead of value(VOOV) for YTD(CHART), for 3-5 years growth is killing.Basically, growth is still in charge.
Remember what the "experts" predicted for 2021, all were wrong. 1) Value finally will take over 2) EM has a great value and this year, cross their heart, will be ahead...every year in the last several years. 3) Rates will get to 2%...and they are still at 1.3% BTW, the SP500 had 50+ times all-time highs in 2021. Attachments:
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bf22
Commander
Posts: 135
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Post by bf22 on Aug 31, 2021 18:54:28 GMT
April 1, sell EEM,IWM,QQQ and buy SCHD (see below) June 25, sell SCHD, buy QQQ (see below) SPY/VOO continues to be a great, easy, "stupid" choice. Growth(VOOG) is ahead of value(VOOV) for YTD(CHART), for 3-5 years growth is killing.Basically, growth is still in charge.
Remember what the "experts" predicted for 2021, all were wrong. 1) Value finally will take over 2) EM has a great value and this year, cross their heart, will be ahead...every year in the last several years. 3) Rates will get to 2%...and they are still at 1.3% BTW, the SP500 had 50+ times all-time highs in 2021. Sort of correct. But, some of the "experts" recommended about one year ago: value, commodities, real estate. If you look at September'20-July'21: VOOV, VCMDX, TRREX did much better than VOOG. Maybe this tactical trade has run its course, but it certainly worked.
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Deleted
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Post by Deleted on Aug 31, 2021 19:14:37 GMT
I read two things recently:
1. US tapering will be bad for EM. I saw two articles on it. But did not read in detail to understand why.
2. People are optimistic about Indian economy and stock market. One reason is that Covid increased number of Indians buying stocks and this participation is expected to increase further in current generation of Indian millennial. Currently only 3.7% of Indians invest in stock market. Not sure what other reasons are.
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Post by yogibearbull on Aug 31, 2021 19:30:50 GMT
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Post by FD1000 on Sept 1, 2021 3:28:25 GMT
April 1, sell EEM,IWM,QQQ and buy SCHD (see below) June 25, sell SCHD, buy QQQ (see below) SPY/VOO continues to be a great, easy, "stupid" choice. Growth(VOOG) is ahead of value(VOOV) for YTD(CHART), for 3-5 years growth is killing.Basically, growth is still in charge.
Remember what the "experts" predicted for 2021, all were wrong. 1) Value finally will take over 2) EM has a great value and this year, cross their heart, will be ahead...every year in the last several years. 3) Rates will get to 2%...and they are still at 1.3% BTW, the SP500 had 50+ times all-time highs in 2021. Sort of correct. But, some of the "experts" recommended about one year ago: value, commodities, real estate. If you look at September'20-July'21: VOOV, VCMDX, TRREX did much better than VOOG. Maybe this tactical trade has run its course, but it certainly worked.
Sure, if you listen to 100 of them, you will always find things correct. Are they going to tell you when to sell? Did they tell you 10 years ago that growth will be way better? How can I be sure? Let these experts manage a mutual fund for 15-20 years and see if they can do better. The stats show indexes beat most of them and why they are so popular. But, I also posted that for some investors, trading works well. Many can use a certain % for explore too. BTW, the US market can cool down too, SP500 is up 21+% YTD but there is no way to know. It can go another 10% in 2021 and why predictions are useless. They say that earnings are the best way to predict performance, wrong again. See the table below. In 2018 earning grew up by about 18% and the SP500 was down -4.4%. In 2019 earnings were up by about 3% and the SP500 was up 31.5%. Attachments:
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bf22
Commander
Posts: 135
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Post by bf22 on Sept 1, 2021 6:49:28 GMT
Sort of correct. But, some of the "experts" recommended about one year ago: value, commodities, real estate. If you look at September'20-July'21: VOOV, VCMDX, TRREX did much better than VOOG. Maybe this tactical trade has run its course, but it certainly worked.
Sure, if you listen to 100 of them, you will always find things correct. Are they going to tell you when to sell? Did they tell you 10 years ago that growth will be way better? How can I be sure? Let these experts manage a mutual fund for 15-20 years and see if they can do better. The stats show indexes beat most of them and why they are so popular. But, I also posted that for some investors, trading works well. Many can use a certain % for explore too. BTW, the US market can cool down too, SP500 is up 21+% YTD but there is no way to know. It can go another 10% in 2021 and why predictions are useless. They say that earnings are the best way to predict performance, wrong again. See the table below. In 2018 earning grew up by about 18% and the SP500 was down -4.4%. In 2019 earnings were up by about 3% and the SP500 was up 31.5%. I guess you missed the point.
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Post by racqueteer on Sept 1, 2021 11:51:33 GMT
A lot of stuff, but are talking around each other... It's pretty simple in practice:
No one KNOWS what WILL happen. 'Experts' can (perhaps) see parallels between what IS happening and what HAS happened and position based on the odds; in most cases, better than an individual investor can (access to more information; time availability; experience). If you are content to 'trade', then you can attempt to follow momentum - what IS happening. Also, it should be noted that it is not incorrect to say that ANY investment is a 'prediction' of future events; REGARDLESS of the methodology employed. This, if only because you're 'predicting' that what you're seeing will persist (and THAT is based on past performance; which is precisely what the 'EXPERTS' are doing). In short, the 'argument' is focusing on a triviality and a limited one at that.
The "past is prologue" pov, suggests that simply buying whatever low-cost index applies to one's needs, at whatever allocation level is comfortable, is the best way to go for most investors. No one, I suspect, is going to argue with THAT advice (DESPITE being based on what HAS happened). What is the best way to TRADE is tougher! Listen to the 'experts' (which ones)? Follow momentum (past)? Charting (past again)?
It should also be noted, FD, that you are putting yourself in an untenable position. Your posts paint you as an infalable trader; an EXPERT, if you will, but at the same time, you quite correctly indicate that 'experts' get it wrong all the time. I'm not sure you're seeing the contradiction in that... 8^b
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Deleted
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Post by Deleted on Sept 1, 2021 13:55:49 GMT
Raqueteer - you are quite the communicator. Right now everyone is happy about index investing. Great. If you invest in indexes you expect the average market return over the long run. Which has handily exceeded long run average inflation. This is obviously based on the past. Mathematics tells you for averages, what goes up, must come down to arrive at the average. Timing - no one knows. Bull for 20 straight years, 1 year, none. Who knows. This run is based on 5 or so superstars and TINA. To each his own, but I don't ever call investing large sums of money simple. Right now everything is simple and has been for years. Things will change and best to have a plan. Like, we have a recession for 5 years, with the market making negative real returns to get back to that mean return. Better hope bonds return to their old relationship with stocks.
And yes - index investing is based on the past and the prediction the mean return will prevail. That would make me helluv nervous holding an index after the last 10 or so years along with a jacked up US treasury market due to the Fed intervention.
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Post by uncleharley on Sept 1, 2021 15:21:04 GMT
"yes - index investing is based on the past and the prediction the mean return will prevail. That would make me helluv nervous holding an index after the last 10 or so years along with a jacked up US treasury market due to the Fed intervention."
FWIW, I have chosen to become nervous when QE has a chance of ending.
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Post by racqueteer on Sept 1, 2021 15:30:42 GMT
And yes - index investing is based on the past and the prediction the mean return will prevail. That would make me helluv nervous holding an index after the last 10 or so years along with a jacked up US treasury market due to the Fed intervention. I've been nervous for some time now, but the market, in the face of all logic, seems to be impervious to reason. I confess that I've suffered some opportunity cost by BEING "nervous"; I've been repeatedly surprised at the control the Fed has been able to enforce on the market! Most of my nervousness, I confess, is due to the handful of stocks which are supporting the advance; along with the, well, speculation that has occurred in tech to get us to this point. Couple that with the fact that the kind of 'bonds' which move counter to equity are paying nothing. The best 'bonds' now, in terms of performance, are, imo, often as 'risky' as some equity. Munis have done well, but I think that's at least partially because they suffer less from taxation. The risk involved? Well, just how many cities and states do YOU consider to be solvent and stable financially?! I get that it is often a big basket of debt instruments, and the failure of a couple wouldn't have a big impact, but how 'safe' are they in actuality?
Everything just seems more like a throw of the dice than it did in the past. I'd like to think that the market can hold its gains when the music (government interference) stops, but...
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