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Post by steelpony10 on Mar 12, 2023 11:18:31 GMT
If you’re fairly new to investing (accumulating) and the above is true for an unknown period now would be a good time to seek out income investing in something like SCHD or pet rock no growth income investments. Dividend growth probably will slow but you will lose less purchasing power focusing on inflation rather then fleeing to cash other then to replenish a depleted reserve. Of course watching markets rally and crash over and over for an indeterminate time based on daily headlines frozen in indecision gets you nowhere and you lose ground. You need plans (2)* that allow constant adaption based on current facts. You’re the portfolio manager so you need to manage not wait for Mr. Market or divine intervention.
As a retiree thinking my income requirements may be short term, 10 years now and another 5 for my wife, I just tweak our cash holdings higher preparing for income cuts but anticipating a third year of a hefty SS COLA raise. Running up your SS as far as possible before you retire really helps in times of high inflation and bad market lulls of indeterminate length.
* There’s either good or bad markets of indeterminate length. We just split our portfolio to address both prior to retirement to lessen management by at least half as we age.
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Post by Fearchar on Mar 12, 2023 12:03:33 GMT
The thing about growth is that most growth stocks/funds/ETFs are pricey.
Historically, this didn't matter because declining interest rates provided a nice tail wind.
Also, momentum... buyers chasing buyers chasing positive returns.
Even though there has been a correction over the past year, growth funds/ETFs are trading still trading at a premium compared to value funds.
If tightening goes on for longer, then growth funds/ETFs will likely just oscillate within a trading range for another 5 years.
For now, the timing of rate cuts is so far out in the future, that assuming those cuts are near term is too risky.
So, better to focus on current income (value).
This includes appropriate bond funds too.
Even if rates are held higher for longer, bond funds should do well.
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Post by Fearchar on Mar 12, 2023 12:21:58 GMT
About SCHD specifically. Although I don't own any, here is how it stacks up against the funds I own and the S&P:  It ranks pretty high, but I prefer VFMFX for equity. |
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Post by steelpony10 on Mar 12, 2023 13:37:54 GMT
Fearchar , I only saw how that one stacks up on Fund Performance. I’am mainly interested in worst year plunges, costs and growth over time. A cheap, high yield stopper if things get worse and some growth similar to our core holding of VTI. In the past if I was late to recognize a recovery it would grow similar to VTI. Both of those have passive management which is our choice leading to lower costs. Of course managed funds should earn their fees during these types of markets and should get better results. I actually back tested that after the bank crisis to see if I was messing up. Anyway this is probably my last switch from VUG. VTI, duplication of 100 solid slower growing dividend value stocks plus AAPL, AMZN and MSFT will have to provide any principle growth from here on.
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Post by richardsok on Mar 12, 2023 14:56:12 GMT
About SCHD specifically. Although I don't own any, here is how it stacks up against the funds I own and the S&P: View AttachmentIt ranks pretty high, but I prefer VFMFX for equity. I would hesitate to put new money into any OEF at this point. They all have their own unique risks: in event of a crash you are locked into your position until close of business that day --- exactly what happened to me Black Monday 1987. I never forgot it. |
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Post by Fearchar on Mar 12, 2023 15:18:26 GMT
richardsok , Thanks. VFMFX has a nearly identical ETF: VFMF However, I'm not sure how wide the spread might be in extreme situations in which case VOO is probably best for equity trading.
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Post by steelpony10 on Mar 12, 2023 16:15:51 GMT
richardsok , I forgot that great point. That year was a come to Jesus moment for many. I probably learned to do “now stuff now” the same day. Instant factual results. In my case it also scared me away from equities as not totally dependable in my opinion at the moment I needed the money. I started easing away from equities into income investing where I had more control of my unknown future income needs. I still get a thrill from the coaster ride but it’s free for me now unless….
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Post by Mustang on Mar 12, 2023 19:42:16 GMT
I remember 1987's Black Monday. People loaded their computers with automatic sell orders. Fundamentals be damned, as the market fell more and more computers sold. People started to panic sell which created more panic. I didn't have any extra money so I just rode it out but a Major in my unit took the day off, re-financed his house and put every penny he had into the market. One year later the S&P 500 had recovered everything it lost on that day. (But had not yet got back to the July 1987 high.) After Black Monday the markets created circuit breakers to stop all trading until the next day to allow investors to re-group and re-program their computers. It was really something to watch. It also helps to have a long term view. I was about 80% equities at the time and pretty much stayed there though out the 90s and 00s. I didn't start transitioning to a 60/40 portfolio until around 2015.
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Post by steadyeddy on Mar 13, 2023 0:20:45 GMT
Not only growth, but all equity is dead (or declining) money for a while.
Bank failures do not happen in isolation... we have SVB and over-the-weekend Signature Bank.
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Post by roi2020 on Mar 13, 2023 0:37:41 GMT
The client base for Silicon Valley Bank (SVB) was predominantly tech startup firms (non-diversified).
These firms were strapped for cash and started withdrawing their money from SVB.
SVB invested in longer-term bonds which suffered significant losses after the Federal Reserve hiked rates.
To fund redemptions, SVB sold a $21bn bond portfolio for a $1.8bn loss on Wednesday.
Silicon Valley Bank neglected to provide adequate liquidity due to the mismatch of assets (longer-term bonds) and potential liabilities.
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Post by FD1000 on Mar 13, 2023 3:32:15 GMT
About SCHD specifically. Although I don't own any, here is how it stacks up against the funds I own and the S&P: View AttachmentIt ranks pretty high, but I prefer VFMFX for equity. I don't think the performance is up to date. For 1-2-3 years performance VFMF,SCHD the numbers are close. See 1 year chart( link) and change to 2-3 years. Using PV( link) dated as of 2-28-2023 for 3 year shows that SCHD had better everything(performance, SD, max draw, Sharpe)..and higher income if you care. |
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Post by Fearchar on Mar 13, 2023 10:44:37 GMT
About SCHD specifically. Although I don't own any, here is how it stacks up against the funds I own and the S&P: View AttachmentIt ranks pretty high, but I prefer VFMFX for equity. I don't think the performance is up to date. For 1-2-3 years performance VFMF,SCHD the numbers are close. See 1 year chart( link) and change to 2-3 years. Using PV( link) dated as of 2-28-2023 for 3 year shows that SCHD had better everything(performance, SD, max draw, Sharpe)..and higher income if you care. Thanks FD, I was ranking them using their most recent reported portfolio fundamental measures. VFMFX has better growth and value fundamentals. SCHD pays a higher dividend. Both of these rank higher than the S&P and of course higher than growth funds after correcting for valuations. |
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