Down goes the Dow

3m returns. So this is starting near the summer peak, before the fall correction. So we'll see which sectors did well over a short market down and then up cycle. Could tell us where people see value.

Not a lot of return, unless you own mega cap tech.

3 months

Bitcoin +26%

Tech +5

ST Tips +1

Gold +1

ST Tips +1

SJNK +1

India +1

AI Stocks +1

ST Corps 0

Junk 0

SP500 -1

TIPS -1

Treasuries -1

Defense -2

EM ex-China -2

Corp bonds -2

Hussman -2

60/40 -2

Financials -3

Total world index -3

Emerging -4

Value -4

COWZ -5

CALF -5

Industrials -5

Utils -5

Non-US developed -5

Energy -5

Materials -6

Cons Discr -6

Health -6

Staples -7

REITS -8

ARKK -8

Retail -9

Small caps -9

China -11

TSLA -13

Clean Energy -32

PTON -44

I think we can say, again, that people are buying the dip on tech stocks and doing well with that strategy.

Solid pair trade idea: Long emerging markets ex-China (EMXC), short emerging markets (VWO). China is stinking up the joint. Markets are not confident there. EM ex-China up a solid 8% this year vs jusr +2% if you include China.

Clearly investors have decided it makes no sense to own 'safe' stocks when they can get 5% for a treasury bond. Utilities, consumer staples, healthcare crushed. Maybe time to buy those - they do well historically: 11%/year for the last 15 years, vs +13% for the SP500, but with much lower volatility.

Next war, buy BTC and sell defense stocks. I'd guess defense stocks are in the 'safe' category, and a lot of people are turning their weak currencies into BTC.

Artificial intel stocks did not rebound as well as the rest of techland. Sounds like that fad might be over.

Good to see some bonds do their job and hold value with stocks fall.

What is with clean energy? Why are they not trading with tech?

Selected Year to Date

BTC +124%

TSLA +74

Artif Intel Stocks +41

Tech +40

SP500 +17

EM ex-china +15

CALF +15

ST Junk +7

60/40 +7

Gold +6

COWZ +6

ST TIPS +3

Emerging +2

Small Caps +1

Value 0

Treasuries 0

TIPS 0

Hussman -11

China -15

Something I'm interested in is value investing, but with factors. COWZ and CALF have been beating the value indices by buying high cash flow stocks. I figure they are a way to avoid the high PE stocks in the market cap weighted indices. Cheap stocks but, hopefully, not value traps.

Dramatic year but all in all 60/40 returning 7% in 10ish months...is pretty average.

Now if we can have bonds give a 4-6% return over a year, we'll be in business. Will happen sooner or later. ST Corp bonds are up 3% over the last year... I expect most bonds to follow that soon.

Agip, nice overview of the markets, and thanks for that!

A couple of thoughts.
Small caps just don't seem to be getting any traction these days. Amongst the markets worst performers.

Not sure why you suggest AI play may be waning. Sure, a big downturn over the last few months as the market went south, but at least in so far as the big cheese in that sector, Nvidia is concerned, it is back to within a percent or two of an all time high. Must be more companies comprising that sector than just Nvidia.

As for bitcoin, as much as some love to disparage it and dismiss it as a bubble and just hype, you cannot overlook that it has done quite well, taking the long view. Well off it's highs, granted, but its ascension taken in its entirety over the last 5 or 6 years, is formidable. Frankly, one could claim that those among us who poo-pooed it two or three years ago, have eaten there words.

I think a main focus in this thread has been about saving and investing during working and earning years. I’m curious to know how those who are retired, or on the cusp of retirement, have changed their approach (or not) for the years of drawing from, rather than adding to, investment portfolios.

Anyone?

Very recently retired and I haven't significantly changed my investment strategy. At times, maybe 6 or 7 years ago, and earlier, I was a bit higher in the percentage of stocks in the portfolio, but I am reluctant to venture into leveraging anymore. I am not ruling that out, but I don't think now is the time, for a few reasons.

EDIT: I should add, though, that I am in the midst of re-balancing with an eye to future tax brackets when RMD kicks in, for example, and making plans therein with roth-conversions so as to be as well positioned as possible in regards to tax brackets.

Been retired since 6/1/20 and I'm a little more in bonds than I was. In the last 4-5 years I was working I stayed around 80/20, now I'm about 75/25. I'm comfortable there so I don't see it really changing.

I'm working, my spouse is retired. We hit our 'number' during the big 2008-2021 rally so we don't need to take as much risk as we used to. Used to be 80% stocks, now more like 65% stocks. Unfortunately, the 35% in bonds didn't protect us this time!

Our monthly spend is around 75% my income, 15% Social Security, 10% from the portfolio, at a less than 1% spend rate. So we could be spending more if we needed or wanted to...I'd be comfortable spending up to 4.5% of the portfolio each month.

Very bad call from JPM...they said in Feb 2023 that Q1 2023 would be a peak for US stocks. Instead the market went another 11% higher than its Q1 peak and was always higher than that peak, other than maybe one or two days during troughs. And note how terrible JPM's sector recommendations were. Advised buying what turned to be the worst sector and selling the best. It always sounds smart recommending selling the high valuation stuff.

JPMorgan says investors shouldn't get too comfortable with the stock market's impressive start to 2023.
"Big picture, we believe that the equity rally that started last October, and that we hoped would be driven by peaking bond yields/CPI, China reopening, and the fall in European gas prices, is unlikely to get the fundamental confirmation for the next leg higher as the year progresses," closely-watched JP Morgan strategist Mislav Matejka wrote in a note on Monday. "Once the positioning recovers, Q1 is in our view likely to mark the high point of the market."

Matejka recommends investors slash their exposure to stocks — which he says sport "questionably" high valuations — and eye more defense areas of the market. The strategist struck a notable cautious tone on tech stocks amid their big rally out of the gate this year.

finance.yahoo.com

Current stock market rally 'likely to mark the high point' for 2023: JPMorgan

@BrianSozzi

JP Morgan's Matejka recommends investors slash their exposure to stocks and eye more defense areas of the market.

Open link

Sp500 +7% from this bearish call.

Alf
@MacroAlf
The early stages of a healthy bull market require a positive growth impulse and a loose Fed policy.
Today you have weakening growth and a tight Fed.
Bull market how?
10:59 AM · May 2, 2023
·
175.2K
Views

Is that a typo, you’d be OK spending 4.5% of the portfolio each month, not each year?

I’m also curious how folks are bringing bonds into their portfolios. Individual bonds, or mutual funds / ETFs? And, what kind of bonds? Treasury, other government bonds, corporate, what grade / credit risk? My own thinking is that bonds, particularly investment grade bonds at the margins, closer to junk than treasury grade, I mean, but BBB or better, represent an enormous long term opportunity at the moment. Thoughts?

No wonder my portfolio is going down so much. This is bad.

(jk - yes, 4.5% per year.)

I'm looking at ticker AIQ, which owns a basket of AI-related stocks...the AI stocks haven't rebounded as much as regular tech has over this mini-cycle.

3m:

Generic tech (VGT): +5%

AIQ: +1

But that is just three months, and merely one basket of stocks. Seems a meaningful gap tho. Maybe the AI rally is tired and got ahead of itself.

Total bond market ETF (I keep it simple). I'll also keep loading up I Bonds as long as the base rate stays above zero.

I have a lot of target date funds which gradually transition from equities to bonds as you near retirement.

Why not just have one target date fund?

Also curious to know how much thought people put into portfolio design with consideration for their own objectives and risk tolerance. When someone says they are 75/25 or 60/40 stocks and bonds, that could be plain vanilla index-tracking funds at the simple end of the spectrum. Or, there could be more thought into what market sectors, which parts of the world, etc to be exposed to to get the right mix of risk and expected returns.

For us, being comfortable in retirement (but not "wealthy," depending on one's point of view, anyway), with fairly aggressive spending plans for the first 10-20 years while we are still relatively young and healthy, we can fund our lifestyle with a combination of payment and income from investments without drawing down net worth over time (in current year terms; it would come down in today's dollars after inflation) if we earn 4.5%. These days, it's easy to earn that, for the next few years anyway, with near-zero risk. This makes me reluctant to take on too much risk, except for some portion of our money that we can safely say we don't need to touch for 15-20 years or longer. Having lived a few decades, I've been scarred by past market plunges and would be reluctant to jeopardize near-term (10-20 year) retirement plans for the sake of probably better returns.

However, one can earn a fair bit more than that these days with somewhat more risk with investment grade corporate bonds, closer to the long term expectation for stocks, with far less volatility and risk than stocks.

I use exclusively ETFs, except for a iBonds position I add to every month. Just so easy, diversified, cheap and fat-finger free to use ETFs.

Not much insight other than I correctly had 1-3 year bonds for 2022-2023 but am now buying longer term bonds as I see inflation as done-for, and rates coming down in 2024. My guess is that locking in these high rates for a few years is a good strategy.

The biggest position I have is VCSH - short term corporates. 5.9% yield with little duration risk. But I've been moving into CORP - longer term investment grade.

But I have some of almost everything - treasuries, TIPS, etc.

I am staying away from junk because spreads are so tight. Just doesn't seem like you get enough extra return to compensate for the risk. If spreads blow open I'd probably take a flier in short term junk. That said, I've been wrong on that call - short term junk has been a good place to be as the recession keeps being pushed out in time.

combination of *pension* and...