when Trump started talking tariffs and invading Greenland every day.

just saying.

Jobs and markets at a peak. If Trump stimulates a grown economy we will see inflation, meaning higher interest rates ahead. If he displaces Powell and installs a stooge, more inflation, destruction of the currency. But there's no growth to be had. You need inputs to create growth. There are few if any idle inputs.

Nothing but red ink in my watch list these days. There is fear ahead.

It's pretty flat the last couple months,

If you’ve lost significant (more than 5%) value since the election, you probably need a new financial advisor.

The S&P 500 lost almost 20% in 2022, did you bail on the market then?

The market and the economy are expected to grow at least until mid-year- why miss out on all those gains.

My portfolio survived the crashes of 1987, 2001, 2008 and COVID and has gone on to provide us with a comfortable retirement.

If the market crashes more than 2008 (50%, although my portfolio only went down about 30%), and doesn’t recover, money will be the least of your worries- finding good recipes for squirrel and possum without the internet will be a priority.

Moving to high-fee, low-return MMA’s, your portfolio will be lucky to keep up with inflation, and you will probably end up losing money even if you show a nominal 1-2% return.

Timing the market is a fool’s errand.

It's just been a rough couple of weeks. It helps to look at a six-month or a one-year chart. Very reassuring.

Vanguard's default money market fund (VMFXX) and Fidelity's (SPAXX) are in the high 4's percent range, about the same as my best intermediate term bond funds, judging from the last 2 dividend payments. (On money market funds, I'm sure I can do better than that if I hunted around).

As for speaking with a financial advisor, they, and endless financial media pundits, have been yammering for decades about the need for elderly people to have a substantial allocation to fixed income, and not have it all in stocks. e.g. Bogle saying "your age in bonds" (i.e. a 70-year-old should be 70% in fixed income and 30% in stocks), and most who advocate something less conservative that amounts to fixed income = age - 10 percent, i.e. a 70-year-old should be 60% in fixed income and 40% in equities ... I'm even less conservative than that (more like fixed income = age - 30 percent) , but bonds are doing poorly since pre-pandemic (especially in terms of purchasing power thanks to inflation), and it's held down by overall portfolio growth to at modest amount.

Many financial advisors advocate diversity in equity holdings too, e.g. international including some emerging markets - but those have had considerably less returns than the major U.S. index funds. I too believe in diversity, especially in times like these, but that has been holding down my portfolio growth. Such is life.

The money market funds you quoted would be barely above inflation, and after fees (not just the fund’s fees, but potentially fees from the bank or advisor), could be below inflation, so moving a large portion of one’s portfolio into those kinds of funds would be inadvisable.

A 4% return in a market that is still producing double digit returns would be a bad choice.

S&P 500 gained 23% last year; last I checked, our portfolio was up something like 15%. IIRC, our allocation is about 50/50 stocks/bonds (we are in our 60’s).

Last edited Thu Jan 9, 2025, 12:42 PM - Edit history (2)

First, I said a high 4's return, not 4% return. As for high fees, VMFXX's expense ratio is 0.11%, while SPAXX's is 0.42%, and no bank or advisor fees on top of that. (I'll admit I'm a little disappointed by the 0.42%, I made a note to do something about that).

Since only my best intermediate term bond funds are doing about the same in current yield (high 4's), I've been OK with _some_ in money market for my fixed income portion of my allocation.

For those fearing interest rates rising - a very reasonable concern -- money market funds and other short-maturity funds would be a better idea than intermediate term or longer-term bond funds. Treasury yields beyond 1 year maturity have been rising sharply since early fall.

1 year is about breakeven https://www.cnbc.com/quotes/US1Y
above one year, they are all way higher than their September 19 levels when the first rate cut occurred...
2Y https://www.cnbc.com/quotes/US2Y
5Y https://www.cnbc.com/quotes/US5Y
10Y https://www.cnbc.com/quotes/US10Y
30Y https://www.cnbc.com/quotes/US30Y

Despite Fed rate cuts Sept 19 (-0.50%), Nov 9 (-0.25%), Dec 19 (-0.25%)

My overall fixed income -- mostly in intermediate-term bond funds -- has had total returns well below inflation since from just before the pandemic, the last time I looked at a couple or three sample funds. I certainly would be most interested to hear of any bond funds that have come close to matching inflation in total return, let alone beating it, since 2019, except perhaps some ultra-short-term ones.

I don't advocate now selling equities and getting more money market funds (or bond funds either), except to get back closer to my long-term target allocation, which I mostly did in October to rebalance closer to my target allocation. (Actually, I still have a ways to go to get within my target allocation, but have been held back by my best choices for doing that would, unfortunately involve capital gains tax, so I'll have to sell some equity(ies) in my IRA account where capital gains taxes isn't an issue. And use the proceeds to buy something fixed income in the IRA; I certainly wouldn't be withdrawing anything from an IRA as I'm well aware that would be a taxable event )

I'm fully well aware of the superiority of equities (like averaging close to 10%/year in total returns which means doubling about every 7 years on average)

More generally, I don't think timing the market is a "fools errand" - I'm kind of a buy-on-the-dips kind of person (speaking of broad indexes and I usually wait til its down 20 or 30% before I go off-allocation to overweight equities). Historically, anybody that has done that in the U.S. has gained every time. Personally, I think anyone who passes up these buying opportunities (called buying equities when they are on sale) is being foolish.

Also, many advise bucket strategies e.g. having some money in historically less volatile fixed income, so when the market is down, and one needs to make withdrawals for living expenses or other needs, one is advised to withdraw from the fixed income rather than selling equities at low values. That is a form of market timing that doesn't sound foolish to me.

I was 50% bonds, 50 % US equities. About a month ago, after tariff threats seemed to become serious, I switched the equities from Canadian to US, anticipating a decline in Canadian equities and a continued rise for a few months in US equities.

Today I switched to about 85 % bonds, 15% money market. I have been watchful for a couple of months, thinking I might want to do that maybe in March or April after a bit more bull market, but nope, I decided today after mulling it for a few days.

I think the stock market has become too risky right now, for me that is. It has basically gone sideways since the middle of October, with a bump up and back in the middle.

I think that the orange chaos agent, despite having a degree in economics, is incompetent about the subject. The single biggest indicator is that he seems to think he can magically switch the US economy overnight from taxation to import tariffs. He has some supposedly sane billionaires in his cabinet, but indications are that he is going to be headstrong and have his way. He probably picked them by questioning them on what they think of tariffs, so they might be compliant.

My biggest risk is that I don't understand this stock market this day/week/month. I think what is happening is that investors are being slow to react because many of them don't see tRump as a black swan (bronze swan?) yet. I don't think they are taking the deportations seriously enough and the tariff war seriously enough. Predictions that I've seen or heard for 2025 are sort of like a continuation of 2024 when we had a sane President who has done a great job managing the economy (to the limited extent that the Executive branch can influence things -- substantial but far from commanding).

I don't know why the SP500 has not fallen below October levels. I don't know why the Canadian market has not under-performed the US market lately. The only reasons I can think of are first that investors are imagining tRump 1.0 instead of the emboldened 2.0 plus Project 2025. Second, I think there is a lag with the analysts and pundits, etc., such that many investors just go on autopilot fixed allocations in their portfolio and don't tend to try to time the market. Many analysts go on recent earnings and such, so they do not apply forward looking intuitions. Generally that is a wise approach: diversification and not timing the market. Perhaps I'm a bit bolder in that department.

I will sleep well tonight. Not that I was sleeping badly from worry (I wasn't) but good sleep is worth something.