Investment BS Thread - Stocks/Futures/Mutual Funds/Bonds/Commodities/Options/ETFs/401ks/Etc

I think I talked to you on another thread about loans vs. investing, best place to put money, etc.

I have been thinking about cashing out a few stocks that I am up a lot on to pay off the remainder of my truck loan, $14,000. The interest rate on the loan is low, but I would free up about $400 a month. That money that would become freed up would probably end up back in the market anyways. I am just considering it because it will force me to take profits that could disappear in the next correction.

Still deciding though. Anyone have input on this? The truck loan interest rate is around 3%, and my portfolio yields just under 5%, so I don’t know if it would be a good idea to remove money from something that’s making me money.

 

From Marketwatch:

Can you successfully pick stocks with a dart board? The writers at The Wall Street Journal thought so.
To test their idea, the writers threw darts at a stock list in the newspaper. From those random hits they built a portfolio to stack up against highflying financial elites.
Those elites meet at the Sohn Investment Conference, held each May in New York. The attendees are full-time active investors, people who spend 365 days and nights a year thinking hard about what investments to own and why.So how did the dart-throwing journalists do this year? “The results were brutal,” recounts Spencer Jakab of the Journal. The random writer picks beat the pros by 27 percentage points in the year through April 22. “Only 3 of 12 of the Sohn picks even outperformed the S&P 500 SPX, -0.12% ” Jakab said.

 

ergh so close

 

They did another study and let a cat pick stocks, which ended up outperforming everyone too. The moral of the story is either take advantage of insider trading, only invest in efts, or get a cat, and play more darts.

 

Sorry I’m the Johnny Come Lately to the party.

What are you all invested in?

 

I am all in individual stocks, all dividend payers, portfolio yields 4.8% at current prices. I think everyone in this thread is mostly stocks.

 

My wife and I are dominantly invested in broad ETFs - we have a vanguard account. I have an IRA with a family broker that is also in ETFs. I love writing high frequency trading bots to trade cryptos. For example, I made a lot of money off the crypto flash crash that happened about an hour ago.

 

100% in the market, largely in small cap and higher risk/higher reward areas. I’m young and have lots of time so I’m not worried if I lose even 50% of my portfolio

 

Makes perfect since to me. Ive been thinking of doing the exact same thing.

 

It all depends on how closely you want to watch the market. Sure, taking profit a fine idea assuming you have good reason to think there is a correction on the horizon. The logic is perfect, but reality always has a tendency to bite you. Given the profits over the lest year, compared to the year before, I am getting an uneasy feeling that we likely have a correction coming soon as well. Maybe not a huge 20%+, but certainly a 5-10%.

 

That’s the only reason I’m considering it, I have consumer staples stocks up 20% in the 6 months I’ve held them, I don’t see them running much higher anytime soon. I don’t want to become a trader or speculator though either so I’ll probably just hold.

 

Be honest with yourself. How much would that stock have to go up to beat the amount of money you are spending on your truck interest? If its a lot, like above 10% for the next year, I would think about selling it, paying off the truck, pooling the 400$ cash per month you would have spent on your truck for the next year, and waiting for an optimal buy in to pad your portfolio post correction. Do the math and think about the numbers. In your case, this is the kind of the sale that makes sense. Plus, lets assume the correction drops by 20%+, like a possible recession. It would be nice to have that truck payment off your mind. Think about. Make a logical decision.

 

Good post, thanks. The only place where the logic gets called into question is this: say I do it, and then that extra $400 per month gets put back into the stock market over the next 3 years (the time period of the remaining loan), did I really make a good move? It depends, if the market continues higher, then no because I’m buying back what I already had at a higher price. That’s what I’m afraid of, I locked in some great yields during the last 20% dip, I don’t know if I will get that lucky again.

 

I profoundly believe that no matter what anyone tells you at least 50% of your investments should go in to broad market ETFs. Absolutely nothing will beat these investments long term. You have to get very lucky picking individual companies and beating the market. Given the conversation over the last two pages, we mentioned several studies that profoundly illustrate this point. If you enjoy investing - I find it fun and I love the math involved in my strategies - carve out a little something for yourself; but under no circumstances short yourself what you need for retirement (put your money into broad market ETFs and don't look at them, ever). Some people like small cap, or more focused ETFs - for example a "tech" ETF tat is heavy in Amazon google etc may out pace the market in the short term, but these are not great long-term investments because as regulations and society changes these industries will change and so will their values. Look at the history of car companies from 1950 through now for an example. If you are a hands off investor, get a vanguard account (almost no money to have it managed), and dump it all into broad market etfs.

 

It was a good day to sell my Micron stock-

 

Look at the s&p from june this year to june last year. No one's portfolio has "made" money. We all lost a lot of money in the fall and early winter early 2018, and we just made it back. If you do the same analysis for the year leading up 2018, there is a clear market gain. We are going to see tech get regulated, we are entering into an election year... how many more signs do you need that the market is not going to steadily rise on a solid foundation in 2020? It will fluctuate wildly. All you have to do is pay off your truck so you stop paying the interest, put the cash you would spend on your truck each month into a high APY electronic savings account (and make money), and when the market starts to crash/correct, move the money and the interest you made into the your investment account and reinvest when you are comfortable.

 

I know what you’re saying, but if you get dividends you made money. What about a person (not me) with a $1m portfolio yielding 5% who didn’t sell a share during that year. They made $50k.

 

Like you said, not you. If you made 50k this year you would just pay cash for your truck and reinvest the difference... different scenario, different recommendations. Come on now, you cant change the parameters and expect me to give the same answer.

 

Well I don’t want to disclose how much I have invested on a public forum, but the dividends I get every month are a lot more than my truck payment.

I consider that making money, regardless of the market’s daily prices.

This goes back to the original dilemma and why I posted, do I take money away from something that’s making me money? I look at my portfolio as a small business, the dividends are what I make, capital appreciation is only a bonus.

 

WHY DO YOU HAVE A TRUCK LOAN?! Thats like money 101 - never take on debt unless it is necessary. No need to give specifics, but do give enough info that people can give you applicable answers. Also, regardless of your net investments, its not like you would sell any more shares than necessary to pay off your truck. So in this case, assuming you are 1m+, I would still sell 14k of something to pay off your truck, pool the 400$ monthly payment and buy in at the ideal moment. Clearly you are successful enough to make a respectable portfolio, so it makes sense that you have the capacity to buy in at the right moment and make money.

Anyway, congrats on your investments. If my advice goes against what you are comfortable with, ignore it because you are plenty successful trusting your gut... assuming you didnt generate a 1M+ account by losing a 1B+ account.