Crashes and bubbles are persistent features of financial markets and are exacerbated by narratives. The narrative is always different but something’s don’t tend to change, most notably, returns after crashes are more often positive than negative and new paradigm bubbles tend to have disappointing returns.
I’ve heard you need to be right twice when you market time; right when you sell and right again when you buy. With COVID, I sold nearly half my portfolio at a good time and bought back at a good time - but only bough 25% back and still have 25% in a money market fund. So overall I would have been much better off by doing nothing.
Year later, this advice is still applicable and timeless. Anyone worried about recession who pulled money out the market would have missed the 15% gains in s&p and 30% in nasdaq in first half of 2023. Not to mention the money lost to taxes (gyrations in non tax advantaged accounts) or inflation if money was parked in cash.
Thank you for your advice, Rob, on keeping the same portfolio, updating income producing skills and reducing debts to prepare for the market crash... And also your reminder that nobody would be able to time the market as many investors/analysts have claimed otherwise. You are my go to guy when it comes to investment advices...
I still believe that the best approach is to always keep the bulk of your portfolio in solid companies that can withstand the economic storms, and a range of companies with low correlation. Keep near term needs in cash (beyond what you can rely on from dividends).
A really honest, candid and helpful perspective on being ready for a crash - and refreshing to hear a view that is not all about asset allocation, but on being continually ready to think how could one generate an income. Thank you
Excellent video- best advice is at the end. Debt is #1. I think knowing your expenses is #2. My part time job is retirement is a deep dive into my spending- cutting cable, finding health insurance, doing home jobs I contracted out previously.
Ben Graham recommended a 50/50 split between stocks and bonds and regular rebalancing but I would replace the stocks with cash. And then probably increase the cash % as you age over 50. The performance may not be optimal but it does allow you to sleep better and buy stocks after crashes which is the best time to
I'm happy with my 70/30 portfolio in retirement. You're right about keeping the debt down. I have no debt and have a 1% spend on my portfolio. I can withstand an 80% decline in the stock markets, at least for 3 years, probably more. In 1994 when I was setting investment parameters, I said, no gold, no Latin America (expanded to emerging markets, although I have about 1% in them). Mutual funds only (added ETFs in 2011). The 70/30 is recent for me. It had been 60/40, but decided that since I behaved well during downturns, I would increase it a bit. But it is a strict 70% maximum equity allocation. No junk bonds either. Me thinks that we are on the same plan, nearly. Your channel is great, Rob. "Just the facts, ma'am", as Joe Friday used to say.
@@coocoocachooglin My 30% bonds also has a lot of cash too. My IRA is mostly Vanguard GMNA with a little cash. In my taxable account I have Vanguard Wellesley, which is over 60% bonds. In my Roth, I have Wellington Fund, 35% bonds. I have several years living expenses cash in the credit union. I don't like all the bonds and cash, but that is the only way to keep below 70% equities. My IRA is only 16% of my total investments. I would rather have my taxable and Roth grow than my pre-tax IRA. My taxable accounts are where I want growth.
If the markets start to dip I'm increasing my retirement withholdings to take advantage of the fire sale. I completely agree that being debt free and keeping marketable skills sharp is the key to survival in a bear market. 😉
The way you communicate about the market is very unbiased and I appreciate that greatly, as someone who's just starting out in investing. Great to prepare for the good things, but smarter to prepare for the worst too. Analysis on point, instant subscribe!
Hi Rob, I'm amazed at how the things you say make sense in the United States, and the same way in Brazil. It's great to be able to follow you, reading your book, and watching the videos on CZcams. Thank you very much for the excellent job of financial education!
Great presentation Rob! It is a difficult proposition to come out from a bear market unscathed but “soften the blow” is the best piece of advice in your video. Thanks a bunch!
If you have a paid off rental at 65 that brings you in 4k a month, collect SS at $2700, a 90% stock position in a 4 Mil 401k is very reasonable....all the way.
So glad to find a no-nonsense approach to handling investments. I'm about to retire and need to set us up to ride out whatever is coming next - thank you Rob!
@ Rob. I am watching this video in June 2024. I am 53 years old and in healthcare. I’ve been watching many of your videos. Regarding asset allocation, is it considered safe for my bond allocation to be in treasury bonds? I just purchased some 10 year treasury bonds and plan on purchasing some 20 year bonds to take advantage of the nearly once in a lifetime high rates currently. So my non equity allocation would be primarily in treasury notes and bonds. I never paid attention so I don’t have the experience to remember what things were like 15 years ago when treasury had a lower interest rate. Thank you for any insights and your opinion.
Makes me nervous looking at the price charts of the market. Seeing an almost vertical line since the pandemic selloff worries me. Gives me a gut feeling it could give way any day now, and because of that I am going to risk not risking my money and keep all of my new income in a savings account until the price inflation works it's self out.
I never see people like you addressing the impact of retirement annuities or social security payments on peoples asset allocation for their portfolios. I consider these to be the equivalent of bond income streams. For me this has meant I invest almost nothing in bonds.
Defensive sectors do well. eg. Healthcare, Consumer Staples & Utilities If you stay in all the time you have as much growth with less volatility than a total market strat. Vanguard's sector ETFs have 0.10% ER. In portfolio visualizer a portfolio of 10% bonds & then splitting the rest equally in Healthcare, Consumer Staples & Utilities grows more & has less volatility than a classic 60/40 total market 2 or 3 fund portfolio.
Great video, well done. The only thing i can't understand - when the market is correcting/crashing - why wouldn't you pull out? i know we can't time the bottom perfectly, but we can at least sit out the majority of the storm and end up in a stronger position.
Knowing what you know about the high valuations in the market, why would you have or recommend a minimum 50/50 allocation of stocks to bonds, and not something lower such as 40/60 or even 35/65, given the excellent chances of the market experiencing a down turn in the near future and the possibility of greater loses with a 50/50 allocation ?
What if we're in the Japan scenario and we're just throwing money into a bottomless pit? Seems the world has some repairing to do before we're back in business.
In that situation dollar cost averaging will save you. If you DCA through the Great Depression from 1929-1950's you would have been up thanks to buying into the lows. The same would apply to a Japan investor from 1989-present.
Does portfolio visualiser give rolling year data? What you show here is one point from 72-now but what happened in every 10y between them is also important right?
I appreciate the sensible advice for a more stable life at the end, seems to be obvious but I can get so wrapped up in shares and movement I miss it. Subscribed!
Yes, but then it sets there and does nothing with no upside, and loses value because of inflation. Only hold cash for what you need (emergency fund) or want to purchase in the short term.
It really depends on so many factors. Certainly longer-term U.S. bonds expose investors to significant interest rate risk. Generally, bonds aren't great right now, but I own short and some intermediate-term bonds, in part, because what's my alternative? I could go all to cash, but I just not comfortable doing that either.
Crashes and bubbles are persistent features of financial markets and are exacerbated by narratives. The narrative is always different but something’s don’t tend to change, most notably, returns after crashes are more often positive than negative and new paradigm bubbles tend to have disappointing returns.
I’ve heard you need to be right twice when you market time; right when you sell and right again when you buy. With COVID, I sold nearly half my portfolio at a good time and bought back at a good time - but only bough 25% back and still have 25% in a money market fund. So overall I would have been much better off by doing nothing.
So where is the other 50%?
@@100perdido He only sold 50%.
One of the most honest advice I have every watched on CZcams. I think the last 2 min of your video is the most valuable - managed debt!
Year later, this advice is still applicable and timeless. Anyone worried about recession who pulled money out the market would have missed the 15% gains in s&p and 30% in nasdaq in first half of 2023. Not to mention the money lost to taxes (gyrations in non tax advantaged accounts) or inflation if money was parked in cash.
Thank you for your advice, Rob, on keeping the same portfolio, updating income producing skills and reducing debts to prepare for the market crash... And also your reminder that nobody would be able to time the market as many investors/analysts have claimed otherwise. You are my go to guy when it comes to investment advices...
I still believe that the best approach is to always keep the bulk of your portfolio in solid companies that can withstand the economic storms, and a range of companies with low correlation. Keep near term needs in cash (beyond what you can rely on from dividends).
A really honest, candid and helpful perspective on being ready for a crash - and refreshing to hear a view that is not all about asset allocation, but on being continually ready to think how could one generate an income. Thank you
Excellent video- best advice is at the end. Debt is #1. I think knowing your expenses is #2. My part time job is retirement is a deep dive into my spending- cutting cable, finding health insurance, doing home jobs I contracted out previously.
Ben Graham recommended a 50/50 split between stocks and bonds and regular rebalancing but I would replace the stocks with cash. And then probably increase the cash % as you age over 50. The performance may not be optimal but it does allow you to sleep better and buy stocks after crashes which is the best time to
Very realistic, sound, and practical advice! Thanks Rob!
I'm happy with my 70/30 portfolio in retirement. You're right about keeping the debt down. I have no debt and have a 1% spend on my portfolio. I can withstand an 80% decline in the stock markets, at least for 3 years, probably more.
In 1994 when I was setting investment parameters, I said, no gold, no Latin America (expanded to emerging markets, although I have about 1% in them). Mutual funds only (added ETFs in 2011).
The 70/30 is recent for me. It had been 60/40, but decided that since I behaved well during downturns, I would increase it a bit. But it is a strict 70% maximum equity allocation. No junk bonds either. Me thinks that we are on the same plan, nearly.
Your channel is great, Rob. "Just the facts, ma'am", as Joe Friday used to say.
what do you have your 30% bond allocation in?
@@coocoocachooglin My 30% bonds also has a lot of cash too. My IRA is mostly Vanguard GMNA with a little cash. In my taxable account I have Vanguard Wellesley, which is over 60% bonds. In my Roth, I have Wellington Fund, 35% bonds.
I have several years living expenses cash in the credit union.
I don't like all the bonds and cash, but that is the only way to keep below 70% equities.
My IRA is only 16% of my total investments. I would rather have my taxable and Roth grow than my pre-tax IRA. My taxable accounts are where I want growth.
If the markets start to dip I'm increasing my retirement withholdings to take advantage of the fire sale. I completely agree that being debt free and keeping marketable skills sharp is the key to survival in a bear market. 😉
The way you communicate about the market is very unbiased and I appreciate that greatly, as someone who's just starting out in investing. Great to prepare for the good things, but smarter to prepare for the worst too. Analysis on point, instant subscribe!
Thank you for such detailed explanation. Learning this stuff for the first time, and can easily understand your videos.
I love how you boil finances down into simple (manageable) bites. So helpful and solid, sound wisdom. No get rich quick schemes!
Right timing on sell and buy is key. For COVID drop, I sold late and jumped into value stocks which were flat while everything else boomed.
Thank you so much for sharing your thoughts , extremely helpful !
Hi Rob, I'm amazed at how the things you say make sense in the United States, and the same way in Brazil. It's great to be able to follow you, reading your book, and watching the videos on CZcams. Thank you very much for the excellent job of financial education!
Great presentation Rob! It is a difficult proposition to come out from a bear market unscathed but “soften the blow” is the best piece of advice in your video. Thanks a bunch!
Your end of video philosophy and overall perspective is spot on Rob. Insightfully critical to do. Appreciate it.
If you have a paid off rental at 65 that brings you in 4k a month, collect SS at $2700, a 90% stock position in a 4 Mil 401k is very reasonable....all the way.
The closing advice was superb
Nice one 👍. Thanks for sharing your tips 👍
Rob, this is one of your best videos ever. Such helpful information
Stocks will recover from a crash sooner or later. Good video. Thank you.
So glad to find a no-nonsense approach to handling investments. I'm about to retire and need to set us up to ride out whatever is coming next - thank you Rob!
@ Rob. I am watching this video in June 2024. I am 53 years old and in healthcare. I’ve been watching many of your videos. Regarding asset allocation, is it considered safe for my bond allocation to be in treasury bonds? I just purchased some 10 year treasury bonds and plan on purchasing some 20 year bonds to take advantage of the nearly once in a lifetime high rates currently. So my non equity allocation would be primarily in treasury notes and bonds. I never paid attention so I don’t have the experience to remember what things were like 15 years ago when treasury had a lower interest rate. Thank you for any insights and your opinion.
Makes me nervous looking at the price charts of the market. Seeing an almost vertical line since the pandemic selloff worries me. Gives me a gut feeling it could give way any day now, and because of that I am going to risk not risking my money and keep all of my new income in a savings account until the price inflation works it's self out.
Finally, it happened now in 2022 and I felt better after watching this.
One of the better and more grounded takes I've heard on youtube as a whole. Subscribed 👍
I never see people like you addressing the impact of retirement annuities or social security payments on peoples asset allocation for their portfolios. I consider these to be the equivalent of bond income streams. For me this has meant I invest almost nothing in bonds.
Diversification is the rule! US Stocks and ex-US, Reits, bonds, gold and comodity.
I will stick to the 50/30/20 portfolio and dollar cost average my way to profits.
Defensive sectors do well. eg. Healthcare, Consumer Staples & Utilities If you stay in all the time you have as much growth with less volatility than a total market strat. Vanguard's sector ETFs have 0.10% ER. In portfolio visualizer a portfolio of 10% bonds & then splitting the rest equally in Healthcare, Consumer Staples & Utilities grows more & has less volatility than a classic 60/40 total market 2 or 3 fund portfolio.
I like the way you explain the topic - it is well structured and clear (even for me that has no finance background)
When’s a good time to start migrating from pure growth stock funds to a balanced portfolio ?
Great learning Sir... Thanks🙏🙏
Very good , specially the final part
Love the non-investment, "wholistic" comments at the end. This sets one up for being able to weather thru the financial storm.
Thanks Rob, this was illuminating
Very valuable video! Thanks!!!
How does BND compare with 5-10 year US Treasury bonds as a defensive part of your portfolio?
Hi Rob, l’m considering to replace 50% of the S&P 500 core, with S&P 500 financials as a defence. Appreciate your wisdom on this .
From artgstone UK..
Genius 👏🏻👏🏻👏🏻👏🏻
Fantastic video Rob, keep it up
Awesome topic Rob. Thanks !
Great content!
Great video, well done. The only thing i can't understand - when the market is correcting/crashing - why wouldn't you pull out? i know we can't time the bottom perfectly, but we can at least sit out the majority of the storm and end up in a stronger position.
Because you don't know if it's a dip, a correction or a crash until it's over.
There are far more 3% dips than 10% corrections in the stock market.
Great video... love the discussion and analysis. I have always kept my life well diversified and it has paid for itself multiple times over again... 🙂
Outstanding points about life skills.
Great advice Rob!
Great video…. Really enjoy your insights. Thanks for doing great work and helping understand these financial topics.
Knowing what you know about the high valuations in the market, why would you have or recommend a minimum 50/50 allocation of stocks to bonds, and not something lower such as 40/60 or even 35/65, given the excellent chances of the market experiencing a down turn in the near future and the possibility of greater loses with a 50/50 allocation ?
Good solid advise.
Such great info. Thank you for this
Hi Rob, please share your thoughts and know how of today's article in WSJ "Buy, Borrow, Die: How Rich Americans Live Off Their Paper Wealth"
You have great content.
Easily understandable. Thanks.
I hear you :))) Thanks!
Great video and advice, especially on the debt. How do you find covered call ETFs in a bear marke6
This is on time.
What if we're in the Japan scenario and we're just throwing money into a bottomless pit? Seems the world has some repairing to do before we're back in business.
In that situation dollar cost averaging will save you. If you DCA through the Great Depression from 1929-1950's you would have been up thanks to buying into the lows. The same would apply to a Japan investor from 1989-present.
another great video! thanks for your work
Fantastic content. Love the term you used Defense Investing. Copyright that one...
When you say "short term treasuries" what amount of time do you mean?
Isn't gold too expensive right now? in 2013 gold prices crashed. Wouldn't be reasonable to think that that could happen again?
That's one of my issues with Gold. How do you know when it's expensive?
@@rob_berger it becomes cheap when the price completely tanks. Then you buy a modest amount depending on your means.
Is 30% a safe number to estimate taxes (federal and Virginia) I want to overcompensate for planning. I will be in the 22% tax bracket in retirement.
Does portfolio visualiser give rolling year data? What you show here is one point from 72-now but what happened in every 10y between them is also important right?
Great video
Great Video!
Good stuff Rob!
I appreciate the sensible advice for a more stable life at the end, seems to be obvious but I can get so wrapped up in shares and movement I miss it. Subscribed!
The key to surviving market crashes is being invested in the runup before the crash. If the question is "should we market time" the answer is no!
wouldn't the best way to prepare for a market crash be to just hold physical cash?
Yes, but then it sets there and does nothing with no upside, and loses value because of inflation. Only hold cash for what you need (emergency fund) or want to purchase in the short term.
Nice video, I'm looking to buy bonds, should I wait, since people are saying it's a bad time to buy them?
It really depends on so many factors. Certainly longer-term U.S. bonds expose investors to significant interest rate risk. Generally, bonds aren't great right now, but I own short and some intermediate-term bonds, in part, because what's my alternative? I could go all to cash, but I just not comfortable doing that either.
Bond Buying is equivalate to "Return free Risk" at this moment ;)
How to Prepare for a Market Crash?
A bear market fund like PBRCX.
One major healthcare crisis can get you bankrupt. Good nursing home care is 5 to 6 thousand a month. How can your retirement savings last?
bndx is really expensive now, is it worth going in now? Looking to diversify a bit