Since a lot of us here have expressed interest in not starving to death in a gutter, I figured I'd start a weekly thread to discuss financial matters.
Ground Rules
- Remember that we're all just Internet randos. Don't bet your life savings on a hot tip from this thread.
- Keep culture war in the culture war thread. Yes, global events may impact our personal finances, but that does not mean we have to incessantly harp on culture war aspects here. If you are going to discuss it, please stick to the practical impacts of it on an individual level.
- Be kind. Remember that everyone here comes from different circumstances. We all have different resources available and different risk tolerances.
- Don't let the perfect be the enemy of the good. Better is better. Celebrate people when they take a step up and work to move their finances in the right direction. Don't flame out because they haven't followed what you consider the optimal path. Everybody has to start somewhere.
Jump in the discussion.
No email address required.
Notes -
That would just be trying market-timing/trying to outguess the market. No need to get fancy when you can just HODL the market.
The SPY return from the recent bottom on March 30th was about 16.7%, which is a solid haul for 29 trading days (from me manually counting). However, the historical annual volatility of the S&P500 is about 19% which means a 29-day has an expected SD of about 6.5%. Thus, a 16.7% return would be expected for about 1 in 200 independent randomly selected 29-day periods. Rare, but not unthinkably so—one could expect to see 2 or 3 of them over their investment lifetimes. Plus, stock returns tend to be thick-tailed and I selected this 16.7%, 29-day period retrospectively with the benefit of hindsight, so this is already a rigged experiment.
A less cherry-picked selection of March ME to April ME already drops the SPY return to a still impressive but-much-less-so 10.51%. You'd expect to see such a result or higher about every 1 in 20 months.
I myself have a sizeable allocation to leveraged ETFs, but I've long held leveraged ETFs as it was part of my planned investment glidepath. I'm trying to reduce my LETF exposure, as they've well-exceeded my planned allocation given the market run-up. My net worth to income ratio is making this rather difficult, though, as I've already cleaned them out from my tax-advantaged accounts and I refuse to sell positions with large capital gains from non-tax-advantaged.
Yeah it's a long shot, but if the AGI narrative is true, then I think it's possible. Imagine the S&P 500 goes up 20-30% in 3 months. I would be beating myself up for not buying those contracts for $100. I have already acted by putting $ in 5-month contracts and more in 900+ day SPY contracts in anticipation of either rapid or slower "takeoff". This is only 1% of my total account value, but the upside is 300x or more, so I see it as a positive EV. I can easily hedge out the 1% with selling index puts or bonds.
The rest of the $ is in the usual index fund mix, but then there is the lottery play of OTM calls when AI AGI FOMO takes over. If AI is once in a lifetime technology, we could see a once in a lifetime or ever rally.
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