Thanks. That’s a lot of food for research. Stand by for news.
Strong agree.
I came to this thread tonight with the thought that the stock market collapsed on Tuesday October 29 of the first year of Hoover’s presidency. While I am a pure index fund investor, and totally against market timing, I’m guessing that it would not hurt to rebalance a bit tomorrow.
The big question though is: where are you going to put your ‘safer’ assets?
CDs don’t really pay enough premium over money market accounts to justify the illiquidity and withdrawal penalties. In fact I think they are a bit of a scam aimed at risk-averse people who are afraid of investing.
Individual bonds are not very liquid, of course. And bond ETFs again don’t seem to pay enough of a premium to justify the downside risk. I don’t have a good answer….
My credit union is currently offering a 1.00% rate on money-market savings accounts (MMSA) up to $25K, 1.06% on accounts up to $50K, and 1.45% on accounts over $50K.
Whereas 12-month CDs are at 3.85% for accounts up to $100K, and 3.90% for accounts over $100K. And there is a special 10-month CD at 4.15%.
So I think your premise is off-base.
And you can maintain access to your money by setting up several CDs with different time periods by laddering.
Finally, not everyone wants to put all their money into the market, especially if they are close to retirement.
I suggest you look around. There are much better rates available, even in insured acounts..
I’ll repeat myself: Small and mid caps are having a moment because people are looking for value.
Euro stocks (VGK is a very cheap ETF) are also having a moment because they aren’t here, and the Euro zone is spending to fill the gaps left by the US.
I am not a professional. I’m an idiot on a message board who may in fact be a dog. But the Euro stocks are if nothing else relatively safe from the factors roiling the US. Relatively.
A true epochal cock-up and your stock holdings will not be your biggest concern.
Thanks, I should probably do that.
Not sure why you’re replying to my post about CDs.
I moved to the Vanguard Total Bond Market Fund (VBTLX) from stock index funds based on the three fund portfolio idea.
I also have money in similar BND, Really I should consolidate into one of them as simpler is IMHO slightly better.
.
I’m admittedly cherry picking, but what do you mean by that. I’ve seen this sentiment a lot, but I’m missing something. I specifically would like your thoughts, but I’ll explain more below and it’s open to anyone who wants to chime in.
Why are European companies (or anywhere) considered safer or better than US companies? I’m assuming a normal 10-year timeframe.
Like, if America “tanks” in the next year because of reasons, that means specific American companies must tank for that to happen. I just don’t see a universe where Amazon, Walmart, Exxon, Apple, Google, Nvidia, etc all tank because of politics. Not in any real or long-term way. They’re hardly even American companies in a geographic sense. So unless you need money in the next few years, it’s fine. Wouldn’t any European company kill to trade places with any one of those American companies right now?
I feel I’m missing something.
You’re missing the possibility of open civil warfare in the USA and massive capital flight as the entire planet withdraws all their money from the USA as fast as they can.
I think I was a bit confused about who posted what, so I maybe shouldn’t have responded to you specifically.
I was responding to the search for safety in the context of not wanting nothing for yield.
There’s a space between these two where we become more authoritarian, less free, and Trump continues to push through stupid economic policies where the economy goes into the dumper, unemployment rises, and we have substantial capital flight. So maybe it’s not the end times, but it’s more like the 30s or the 70s, and a S&P index fund loses (say) 50% and stays there for a decade or more. But it’s not quite the apocalypse and we aren’t in civil or international war. But it’s bad (economically) for a good long time.
In THAT scenario, I think ex-US could still grow, if for no other reason than the capital flight. And 1.5% growth attracts more money than 0 or -2% growth. In that scenario I think foreign holdings could be attractive. And since China is neither less authoritarian nor less interventionalist than th US, I don’t like China for investing. But Europe is at least marginally more sane.
In a still less bad but still bad scenario, where the US doesn’t go all to Hell but the overbought Mag 7/S&P 500 bubble pops, people will seek value in small and mid caps.
So this year I’ve moved a chunk to small/mid caps and VGK (Europe), and while the S&P 500 is still soldiering on, those have treated me well and I sleep easier at night. That’s a change for me, since 5 years ago I had virtually all my equities in the S&P 500.
Your scenario is the more realistic one than mine. But here’s something you didn’t mention along side the trump-caused follies you did mention.
And that is the de facto shutdown of the SEC, at least for his cronies, but not for his enemies. If we think the Chinese government manipulates their market, we ain’t seen nothing yet as trump manipulates the whole market and various industries or companies to punish or rewards them while also having investments positioned to profit from decisions he’s about to announce.
And all with zero law enforcement oversight. That alone will scare a lot of foreign (and domestic) money into well-regulated markets. Of which Europe is the deepest.
We talked about this a lot earlier in the thread but the US has given up its place as the economic center of the world. Everyone is tearing up their trade agreements with us. They’re finding new trade with each other. As the US becomes more corrupt and more obviously a mafia state, there won’t be the trust in our financial markets. We benefit a lot from foreign entities buying our stocks and other financial instruments and that’s going to become a lot less appealing. We basically were the center of the economic world since the end of WW2 and we’ve basically deliberately and unilaterally decided to end that. You can’t assume that the US is going to keep on cooking economically like they have for the last 70 years. Even if we don’t collapse into a civil war, we’re going to be massively mismanaged, the dollar is going to lose a lot of value, our stocks are going to lose a lot of value (maybe not in actual dollar terms if the dollar falls faster). The world is sick of our shit.
It’s easy to break trust and hard to regain it. Even if Trump is gone and we regain some semblance of democracy (very unlikely in my view), the world knows we’re just one election away from losing our minds and setting fire to the US, the world economy, our alliances, or trade deals, etc. They will not trust us again for decades at least.
That is pretty much my take on things. The degree of self-vandalism is simply unfathomable.
Had trump been roundly defeated in 2024 and MAGA / Fascism widely seen as a spent force then, the healing of the damage from his first term might only take 20 consistent years of D or traditional R leadership.
That’s not what happened. IMO the 9 months of this term so far have done more total damage than all 4 previous years. And the criminal regime continues to pick up speed.
I expect the US dollar to lose its status as the reserve currency of the world, and that will increase costs for the US government (because other countries will no longer want to buy Treasury bonds).
While I agree that would seem likely, I still don’t see which currency is able to replace it.
The Euro is held back because there are 27 countries with differing interests fighting over policy- it isn’t one nation, after all. Nobody will trust the BRICS in terms of reporting, being open about policy, debt, etc. The Japanese economy is too small.
Where, then, can the world turn?
China is trying to replace the USD as the global reserve currency, perhaps with a basket of its currency and others.
And as I said, don’t hold your breath.
I bet you don’t know how much debt China has. Because nobody does.
Yeah not gonna be China. Other just a fractional part of a varied basket. Won’t be crypto which some hold up. Won’t be gold … other than as part of that diverse basket.
It will be more complex and added costs as everyone figures out how to best hedge their bespoke baskets against volatility.