Your investments

Having an all stock portfolio is fine until they drop in value by 50% and the investor sells out out of fear. If one could be expected to buy and hold stocks forever with no option of selling of course stocks will do better long term. However, the average person (little investing knowledge) with a modest income who has their money in a mutual fund and notices their portfolio has lost 30-50% of it's value in a month might be scared into selling out and that's a very real risk in an all equity portfolio. However the 60/40 portfolio (or any variation) would not see such a drastic drop and therefore, be less likely to sell out.

Of course I'm in favour of investing in stocks only but just wanted to point out one potential advantage of having a bond portion in a portfolio for the average investor.

 

can vouch for bonds being useful in a well-balanced portfolio

source: the stock portion of my portfolio is down 10% ytd and i hate myself

but seriously, i appreciate the thoughtful discussion recently

 

I was grandfathered over Apple Stocks when my uncle died, they've never really let me down and they were bought so cheap back in the day I could sell on them and make I believe it was calculated @ 3,200% profit. I'll look into it more later and post again.

 

The same logic could also work for a regular savings account though. If the argument is that if the investors made the worst decision possible (to sell, which I agree is sadly too common), then they will have made less money than they would have had they had some of that money allocated to bonds. To reiterate, you could say the same things for a savings account. If that is your principle, and argument then you are compelled to the conclusion that part bond allocation > savings account > all-stock portfolio. This seems patently absurd, since even if the savings account situation performs better than in the worst case scenario for stocks, I don't think anyone can seriously advise that therefore putting a large proportion of ones money into a savings account is a good investment strategy (save for liquidity for emergencies).

Ultimately it comes down to risk-reward, and I think that someone who puts their money into securities without understanding at least a little bit about them (the do-not-sell after a drop because it will more often than not go back up really is one of the first lessons, though I do definitely admit too many people do sell on the psychological fear, it's not exactly an esoteric idea or advanced lesson), exhibits an appetite for risk, and so then should utilize an all-stock allocation anyway.

I definitely understand where you are coming from, but if someone is that ignorant towards investing, and yet still invests a proportion of money, they've exhibited a high risk-tolerance, and so per that logic it would be better to invest in all-equities anyway, especially given the returns, and the potential for it to still out-perform a bond portfolio even if the someone sold on the dips (I'm not sure on the last point, but I reckon that might be true if the time between bear markets is significant).

 

I live in an area where house prices rose 30% in one year and some homes sell for over a million over asking price so I bought a house here and it's value keeps increasing

 

Sounds like 2006. Just make sure you can survive mortgage payments if your area is in a bubble that bursts

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40% bonds doesn't make much sense in the current interest rate environment

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I am 100% long market tracking ETFs (low fee from vanguard)

I've done some equity research in the past, but my general rule is that unless you're working in the markets you aren't going to have the information advantage you need to have a better chance of making money as an active investor.

 

bought SPXU

 

which ETF are you in? specifically does it track the dow? SPY?


also for those looking for a "diversified portfolio" check out motifinvesting; its essentially the ability for everyone to construct their own ETFs; it allows a collection of up to 30 stocks with a one time fee, and you can put weights into each one

 

so its not an etf then lol

 

long VRX 29.56

 

It runs the same purpose of an ETF, ETF's can only be constructed by financial institutions, market makers/movers, and those with a ton of $$$$$; this brings it to the individual level

 

looks good on paper but its a pretty messed up firm rn.

guess you're already 15% in the green though so nice

 

VO / VOO. S&P500 and total market

Should probably be weighted small cap value if Fama French is to be believed but couldnt be bothered

 

yea was definitely just a trade not an investment, i got out of it at around 8%

inspired me to do more research about their firm though. very interesting business model

 

Made a lot on the bounce back of oil from its lows. Now I'm just getting into some stable high dividend stocks and buying/selling USO options. I think airliners are a little high because of the markets rebound, but as a LUV holder for a while I think any airliner is a buy if you can get it 3-6% under market right now. Long KMI, SBUX, LUV, PLUG, NAT and USO (covering my options).

I really like any oil shipping or refining companies like NAT, KMI, WNR. If you want to get in pick a low entry and watch the volatility. I made a lot on NAT getting in on an oversell. They are especially good if they have a dividend to cover a little of your risk. NAT has a pretty high one for its low price. KMI does as well but they are apparently possibly slashing their div because their free cash is ridiculously high and they still felt the oil fall. Oil is definitely in a BIG rebound in the mid-term (3-7 years). I have lots of set entries on oil related stocks.

 

There doesnt really seem to be anyone else talking about IRL finances in this section, so I thought it'd be appropriate to ask this here:

How do you get into stocks exactly? I recently turned 18 a few months ago, in my last year in high school, and got about ~10K saved up and want to get as many financial revenue streams as possible. I'm not looking for a stock broker or something like that (at least not on here), but for someone to point me in the right direction since it seems a lot of you have gotten into this stuff already.

 

I am currently investing on Bitcoins.

 

i still think they're fucked in the short-term

i know you corrected this, but my two cents in case others are in the same boat - you dont really need a broker unless you want to do certain kinds of (e.g., high volume, high risk, exotic) trades or want to pay fees for no good reason. dont see any reason why an 18yo should be shelling out 2% in fees to have someone click buttons for him that he can click himself on any online brokerage. i use tradeking now because i trade less than i used to and dont do my research on TK anyway so tools that sites like TDA offer arent as valuable to me (fwiw though, opening a TDA account with $500 or $1k in it gives you access to thinkorswim, which is a pretty badass platform and makes you look like a stock-trading wizard when you open it in public - highly recommend it for fiddling around)

on learning about what works and what doesnt - investopedia is a good start, but eventually you have to trade to see what work for you; if there was a tried and true strategy that worked universally, everyone would use it and no one would make excess money anymore. this is not the case, so don't take anyone's word at face value, especially on sites like seekingalpha. i actually would recommend looking at some posts on SA to get a sense of what people are trying out, but, as mentioned, take it with a grain of salt. there's a lot of crap on there, and sifting through it will, hopefully, help you gain an understanding of what works for you and what doesnt in the long run

ALSO - if anyone wants an invite to the skype chat we set up for this kind of discussion, msg someone who's in it... anet, shall skill, me, etc.