CFB51 College Football Fan Community
The Power Four => Big Ten => Topic started by: Cincydawg on March 12, 2026, 08:27:48 PM
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(https://i.imgur.com/MC0qT0v.png)
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This is a choppy year for the markets. I don't expect any meaningful gains or losses at this point.
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I expect continuing significant gains for Tech stocks, especially those most closely associated with AI. First half will be a bit sketchy, second half will be strong.
There's no stopping that train by the way. Expect significant growth and signicant improvements to margins and operating income over time.
Yes, that implies, at the expense of workers and jobs.
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I expect continuing significant gains for Tech stocks, especially those most closely associated with AI. First half will be a bit sketchy, second half will be strong.
There's no stopping that train by the way. Expect significant growth and signicant improvements to margins and operating income over time.
Yes, that impliaes, at the expense of workers and jobs.
I have a lot of mixed thoughts on that front. My advice is to be careful.
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I'm careful.
I leave it to the professionals that do it for a living
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I have a lot of mixed thoughts on that front. My advice is to be careful.
My advice is buy low sell high.
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I've given that exact advice to the pros working for me
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I had "professionals" manage my retirement account for three years. They did a pretty decent job, I asked a lot of questions and tried to learn from what they did, and didn't do. They gave me the book by Howard Marks which was ... interesting. I've been managing on my own for the last decade or so and still doing reasonably well.
I don't get excited about market swings up or down. Well, actually, I usually do get excited, but temper my enthusiasm with a longer term perspective.
I haven't used options at all of late, Brad reminded me that I had used them in the past, more for insurance than gambling.
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So we've talked about these sorts of things in a lot of places on this board, but I think it may make sense to discuss things that we're doing, thinking about doing, are curious about doing, etc wrt to money.
I.e. a few weeks ago I had the combination of a planned stock sale and the need to buy a new car. I thought "maybe I should just pay cash from the proceeds of the sale" until I realized I could buy the car at 1.9%, right now that cash from the sale is sitting in a MM account making 3.35%, and I'm just waiting to decide what other ways I can put that money to use.
There are people more savvy by far than I on this board when it comes to financial matters, as well as probably people less savvy than me. So let's have an OT thread to discuss.
I'm going to pull over a few posts from the rankings thread and then kick it off with a riff on what CD said in the latest in that thread...
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One phrase I liked was "Get rich slowly." Another book I really liked way back was "The Only Investment Guide You'll Ever Need" by Andrew Tobias. He updated it sometime later. For a starting investor, which i was, I found really good practicable advice in it.
Another tactic I don't use often enough I think is stop loss orders. You see a stock you like at say $50 and decide to buy it, but you're of course not sure it's a winner, so you put in a stop loss order to sell if it broaches say $40. If it goes up to $60, you can lock in that stop loss now at $50 and play with "House money".
There are some more complicated tactics with options I use at times, pretty varied, another way to "buy insurance".
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Ok, so my merge didn't work as well as I'd have liked as those posts all predated my intro post... Oops.
But to quote CD:
I haven't used options at all of late, Brad reminded me that I had used them in the past, more for insurance than gambling.
Insurance, gambling, whatever you call it... When doing a covered call (out of the money), it seems that there are three scenarios:
- You write a call, it trades sideways and expires worthless, you pocket the premium: Win, because you kept the premium and still own the stock at the same value
- You write a call, it gains and expires in the money, you pocket the premium and are forced to sell the stock at the strike price: Win, in the sense that you gained both a premium and stock gains, but a partial loss depending on how far above the strike the stock went--you missed out on the upside
- You write a call, the stock falls in value, you pocket the premium but your principal is lower: Loss overall, but the value of the premium is a hedge as long as the stock didn't completely crater
Now, that's not every scenario. You don't *have* to let a contract go to expiry. If you have a scenario where it's advantageous to buy back your contract and walk away or roll it into a new call with different strike/premium/duration, you can play around with it.
So I'm sitting on a stock that I've got very large paper gains (cost basis <$32, current price $633). I want to sell that (and my other stock which I can't trade options) over time to diversify my portfolio. But with the very large paper gains, I'd be taking a massive principal haircut in taxes.
(Note for below: options contracts are in 100-share blocks. I'm doing it below in "per share" numbers because it's easier to think about it that way.)
So I'm playing around with the options numbers. Selling a call with a 790 strike and May 15 expiry is currently earning a premium of 56.97/share. If I write that option and it doesn't hit 790, that's just income in my pocket (minus taxes on the premium) for 2 months of doing nothing. And because I will still own the shares, I can write another option contract and do it again. If I got lucky and was able to do this with similar premiums for the rest of the year, it's would be 5 bites at the apple over 10 months meaning almost $300 per share in income--almost a 50% return while not doing anything. Not like I'd get that lucky with such a volatile stock, but that's why the stock trading sideways and pocketing the premiums is such a win.
If I were to write an option and it reaches that price and gets called away at 790, I'd have $846.97 per share in my pocket. But I'd owe (846.97-31.85)*.243 = $198/share in taxes. Well, 846.97-633 is >$200, so I'd still be in a positive principal position to where I am today. And now I'm still sitting on a ton of cash AFTER paying the taxes, so I'm forced to diversify the position I already wanted to diversify, but doing it in roughly a principal-neutral way.
That seems like the only way to lose on this trade would be a massive crash in the stock price. Which would screw me anyway. But right now if I sold the stock I'd be taking an immediate hit of almost $150/share on taxes anyway... So writing the option and the shares dropping a fair amount doesn't kill me, especially because if it remains a volatile roller coaster I still own the shares and can continue trying to earn premiums on options.
So... What's the downside here?
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Another variant would be to write put options at say $575 and let'er ride, or buy puts AND write OOM calls. You have to stay on top of this because one scenario leaves you with naked calls.
And you can write 3 month calls and buy 6 month puts, the famous butterfly straddle.
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I haven't used options at all of late, Brad reminded me that I had used them in the past, more for insurance than gambling.
I'm more of an options gambler but I'm also a little bit younger so it makes sense for me to have a higher risk/reward strategy.
I've almost never bought options (the insurance use) but I've sold quite a few. My advice though is to be VERY careful because there are a few problems including:
- When you sell options you gain and lose equity VERY fast. Ie, if you just own a stock and it goes up 5% your equity increases 5%. Conversely if it goes down your equity goes down 5%. Options are very different. If the underlying stock (or commodity or whatever) goes up or down 5% your stake could easily go up or down by 90%.
- There isn't MUCH insider trading because the Feds do a good job of watching that and they HAMMER violators when they catch them (Martha Stewart) but what insider trading there is tends to be done in the Options markets because of what I said in #1. Ie, if I have inside information that XYZ Drug Company's trial on _____ Drug was successful then I KNOW that XYZ Drug Company's stock price will increase by say 2%. If I just bought the stock that wouldn't make me much money. Even if I had a spare $1 Million (https://youtube.com/shorts/8H26qHVkvJk?si=6GjikpVzAq86STi4) I'd still only make $20k, that isn't enough to buy a new car. Now if I put say $10,000 into call options on XYZ and the price went up 2% I'd probably make enough to buy a brand new Corvette. This is why people trading on inside information usually trade options. It happens. I'll give another example from the fixed income segment. I've been involved in getting several credit rating upgrades for my municipality and each time I was informed IN ADVANCE by Moody's of what the credit rating adjustment would be. The reason for this advance notice is that I get an opportunity to protest (in the case of a downgrade, I don't think anyone would protest an upgrade). Anyway, when I got that advance notice it was VERY limited by Moody's, like literally about an hour and within the email they sent to me they had laid out the Federal Statute prohibiting trading on this information. Finally, because Moody's keeps the window so short, it would be REALLY easy to prove Insider Trading if I had done it because everything is timestamped.
- There is an old saying that "The market can stay irrational longer than you can stay solvent." That is SO VERY TRUE. I learned it the hard way back in the 2008 credit crash at a cost to me that ran into six figures. I say this as a warning. If you sell a bunch of XYZ short because you "just know" that it will go up and then it goes down instead there is a big temptation to just sell MORE short to make even MORE money when it eventually goes back up and that works but only if it actually does go up before the call date AND you can somehow keep your head above water until it moves your direction. If either of those things fails to happen you can find yourself getting a quarter-million dollar lesson in options and futures trading really quick.
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(https://i.imgur.com/iRD9uh6.png)
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Yup, options are leveraged to the hilt, generally.
I like ETFs, I mostly own "sector ETFs". One I like is SCHD, the Schwab dividend fund. It doesn't seek the highest dividends (which often are risky) but the ones with a record of increasing over time. I manage my wife's portfolios also, with a more conservative bent, and she owns SCHD.
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https://www.morningstar.com/financial-advisors/etf-tax-loophole-that-wall-street-is-exploiting (https://www.morningstar.com/financial-advisors/etf-tax-loophole-that-wall-street-is-exploiting)
The ETF Tax Loophole That Wall Street Is Exploiting
Section 351 ETF seeding is gaining traction with wealthy investors, but the practice may invite IRS scrutiny.
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Ok, so my merge didn't work as well as I'd have liked as those posts all predated my intro post... Oops.
But to quote CD:
Insurance, gambling, whatever you call it... When doing a covered call (out of the money), it seems that there are three scenarios:
- You write a call, it trades sideways and expires worthless, you pocket the premium: Win, because you kept the premium and still own the stock at the same value
- You write a call, it gains and expires in the money, you pocket the premium and are forced to sell the stock at the strike price: Win, in the sense that you gained both a premium and stock gains, but a partial loss depending on how far above the strike the stock went--you missed out on the upside
- You write a call, the stock falls in value, you pocket the premium but your principal is lower: Loss overall, but the value of the premium is a hedge as long as the stock didn't completely crater
Now, that's not every scenario. You don't *have* to let a contract go to expiry. If you have a scenario where it's advantageous to buy back your contract and walk away or roll it into a new call with different strike/premium/duration, you can play around with it.
So I'm sitting on a stock that I've got very large paper gains (cost basis <$32, current price $633). I want to sell that (and my other stock which I can't trade options) over time to diversify my portfolio. But with the very large paper gains, I'd be taking a massive principal haircut in taxes.
(Note for below: options contracts are in 100-share blocks. I'm doing it below in "per share" numbers because it's easier to think about it that way.)
So I'm playing around with the options numbers. Selling a call with a 790 strike and May 15 expiry is currently earning a premium of 56.97/share. If I write that option and it doesn't hit 790, that's just income in my pocket (minus taxes on the premium) for 2 months of doing nothing. And because I will still own the shares, I can write another option contract and do it again. If I got lucky and was able to do this with similar premiums for the rest of the year, it's would be 5 bites at the apple over 10 months meaning almost $300 per share in income--almost a 50% return while not doing anything. Not like I'd get that lucky with such a volatile stock, but that's why the stock trading sideways and pocketing the premiums is such a win.
If I were to write an option and it reaches that price and gets called away at 790, I'd have $846.97 per share in my pocket. But I'd owe (846.97-31.85)*.243 = $198/share in taxes. Well, 846.97-633 is >$200, so I'd still be in a positive principal position to where I am today. And now I'm still sitting on a ton of cash AFTER paying the taxes, so I'm forced to diversify the position I already wanted to diversify, but doing it in roughly a principal-neutral way.
That seems like the only way to lose on this trade would be a massive crash in the stock price. Which would screw me anyway. But right now if I sold the stock I'd be taking an immediate hit of almost $150/share on taxes anyway... So writing the option and the shares dropping a fair amount doesn't kill me, especially because if it remains a volatile roller coaster I still own the shares and can continue trying to earn premiums on options.
So... What's the downside here?
If you basically want to sell anyway then the only downside relative to that is that if the stock price craters you take the loss where if you had just sold you wouldn't.
Ie, you own the stock currently at $633. If you sell it you get $633 less tax. If you sell a call option at a strike of $790 that expires three months out (Saturday, May 16 because it is always the third Saturday of the Month) and you get $56.97 you pocket $56.97 and your assessment of the three possibilities is almost exactly on. There is a fourth unlikely but possible scenario. American options (unlike European ones) can be exercised by the holder ANYTIME up until expiration so the stock might go up to $800 and get called then go back down below $790 before the expiration. This is RARE but it does happen (usually for dividend reasons. Ie, if the XD date is say May 8 and it is trading at $800 on May 7 I might exercise the call on May 7 to get the dividend on May 8 but the earnings report usually comes out on the XD date so if that is bad news on May 8 the stock might drop to $600. This would be fine for you since you'd get the $790 and the $56.97 and the only thing you'd miss out on is the May 8 dividend.
The main three you are spot on:
- Stock closes on May 15 between $633 and $790. You still own the stock and you have $56.97 (less taxes) that is basically found money.
- Stock closes on May 15 above $790. You sell the stock for $790 but it is really $846.97 because you also got the option money as you explained above.
- Stock closes on May 15 below $633. You still own the stock and you have $56.97 (less taxes) that is basically found money. The downside is that you didn't take the $633 when you could have and you STILL own the stock. Now if it closes above $576.03 you could sell on Monday, May 18 at anything over $576.03 and still be in just as good a position as you would have been in had you sold for $633 today. However, if it craters and closes at say $233 then you are MUCH worse off than you would have been if you had simply sold the stock for $633 today. NOTE BELOW
NOTE: You can insure against this. If you take the $56.97 and use some of it to buy puts at say $470 that would offset. Ie, if the stock went down to $233 then you'd pocket the $56.97 that you got for the call and put the stock to someone else at $470. This is a form of a straddle.
When I do options I usually do straddles. The advantage of straddles is that you can't possibly lose on both sides of the transaction so it effectively doubles your return while keeping the risk only moderately higher.
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Since I don't pay attention to politics, I can't call it anything more than dumb luck that we decided to move from BCBS Gold to Bronze this year, which is now eligible for HSA. So I was quite excited to learn that we can now access one of the best tax-advantaged investment vehicles.
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Explaining straddles:
I'll use General Motors (GM) as my example because obviously everyone has heard of GM. The stock currently is at about $72.50 mid-day, March 13.
A May call at $80 can currently be sold for $1.64. NOTE: Volume in options is LOW so the bid/ask spreads can be LARGE. Right now the bid is $1.64 and the ask is $2.51. When you trade stocks you don't need to worry about that because there is so much volume that the bid/ask spread is typically nominal.
A May Put at $65 can currently be sold for $1.48. The spread is again large, $1.48 vs $2.01.
This is all just for example because you usually don't actually sell the May options until the March options expire, then the volume picks up. Anyway, on with the example:
I own 1 share of worth ~$72.50. I sell an $80 May Call for $1.64 and a $65 May Put for $1.48. For those less familiar with Options what that means is:
- The $80 Call means that my GM Share can be called away from me for $80 anytime between now and the third Saturday in May.
- The $65 Put means that another share of GM can be put to me for $65 anytime between now and the third Saturday in May.
So in total I've collected $3.12 which means that if GM shares are trading anywhere between $61.88 and $83.12 on May 14 I'm ahead. More detail:
- If GM closes above $83.12 it WILL BE called away from me at $80 and I'll be worse off than I would have been if I had just kept the stock and sold it when it got there.
- If GM closes between $80 and $83.12 it WILL BE called away from me at $80 but I got that $80 plus the $3.12 for the options so I am better off than I would have been selling the stock in this range.
- If GM closes between $65 and $80 then it will neither be put to me nor called away from me and I'll just pocket the $3.12 as basically "found money".
- If GM closes between $61.88 and $65 then it WILL BE put to me at $65 but I'll still be better off than I would have been without the options because my effective price is $61.88 ($65 less the $3.12 that I got for selling the options).
- If GM closes below $61.88 then I am out money because I'll have the share I originally owned plus $3.12 but I'll also have to buy another share at $65 and both shares will be worth <$61.88 each.
Basically I'm betting against volatility.
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Another variant would be to write put options at say $575 and let'er ride, or buy puts AND write OOM calls. You have to stay on top of this because one scenario leaves you with naked calls.
And you can write 3 month calls and buy 6 month puts, the famous butterfly straddle.
Yeah, I looked at buying OOM puts while selling OOM calls. That limits downside risk because my downside can never be lower than the put, but it's requiring liquidity (eating into the premium I earn on the calls) and that balance against the premium of the call means I'm limiting my upside even further, and not allowing the premium to offset taxes on the upside. And if I sell at the lower price I'm still paying taxes at the sale, which let's say I buy a put at $450 is still roughly $420/share in cap gains, so my effective sale price is actually closer to $345.
I'm more of an options gambler but I'm also a little bit younger so it makes sense for me to have a higher risk/reward strategy.
I've almost never bought options (the insurance use) but I've sold quite a few. My advice though is to be VERY careful because there are a few problems including:
- When you sell options you gain and lose equity VERY fast. Ie, if you just own a stock and it goes up 5% your equity increases 5%. Conversely if it goes down your equity goes down 5%. Options are very different. If the underlying stock (or commodity or whatever) goes up or down 5% your stake could easily go up or down by 90%.
- There isn't MUCH insider trading because the Feds do a good job of watching that and they HAMMER violators when they catch them (Martha Stewart) but what insider trading there is tends to be done in the Options markets because of what I said in #1. Ie, if I have inside information that XYZ Drug Company's trial on _____ Drug was successful then I KNOW that XYZ Drug Company's stock price will increase by say 2%. If I just bought the stock that wouldn't make me much money. Even if I had a spare $1 Million (https://youtube.com/shorts/8H26qHVkvJk?si=6GjikpVzAq86STi4) I'd still only make $20k, that isn't enough to buy a new car. Now if I put say $10,000 into call options on XYZ and the price went up 2% I'd probably make enough to buy a brand new Corvette. This is why people trading on inside information usually trade options. It happens. I'll give another example from the fixed income segment. I've been involved in getting several credit rating upgrades for my municipality and each time I was informed IN ADVANCE by Moody's of what the credit rating adjustment would be. The reason for this advance notice is that I get an opportunity to protest (in the case of a downgrade, I don't think anyone would protest an upgrade). Anyway, when I got that advance notice it was VERY limited by Moody's, like literally about an hour and within the email they sent to me they had laid out the Federal Statute prohibiting trading on this information. Finally, because Moody's keeps the window so short, it would be REALLY easy to prove Insider Trading if I had done it because everything is timestamped.
- There is an old saying that "The market can stay irrational longer than you can stay solvent." That is SO VERY TRUE. I learned it the hard way back in the 2008 credit crash at a cost to me that ran into six figures. I say this as a warning. If you sell a bunch of XYZ short because you "just know" that it will go up and then it goes down instead there is a big temptation to just sell MORE short to make even MORE money when it eventually goes back up and that works but only if it actually does go up before the call date AND you can somehow keep your head above water until it moves your direction. If either of those things fails to happen you can find yourself getting a quarter-million dollar lesson in options and futures trading really quick.
I don't want to get into naked calls, shorting stocks, or anything like that--at least as a relative newbie. I own the stock so I'd be selling OTM covered calls. And I'm basically (as far as I understand it) not really "using margin" on that. The only possible risks I see:
- Call expires ITM (or goes ITM during the duration of the contract and is called away). Now I've got the premium plus the gain but if the stock absolutely explodes my "risk" is that I haven't captured the upside above the strike price. Given that I might write a call at 790 I'm effectively betting the stock doesn't go above 790. If it does? Ok. I'm just going to have to live with leaving money on the table. I'm still ahead (even less taxes).
- Stock craters. That's not an options risk... That's a risk of holding any stock. However I don't have to ride it all the way down until the contract expires. As the stock falls, the premium on a 790 call (especially as we're getting closer to expiry) will drop massively as well. So I use some of the premium from the sale to buy out my contract. I give up some premium but I'm now free and clear of the contract so if I decide the stock is going to KEEP falling I can at least exit.
On an OTM covered call written for a 25% upside strike price, I basically only make the premium if the stock goes up 2%. I mean, on paper my stock is worth 2% more, but that's an unrealized gain so it could go down 2% an hour later. So I don't see how covered calls will have *wild* swings or dramatic risk...
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I expect continuing significant gains for Tech stocks, especially those most closely associated with AI. First half will be a bit sketchy, second half will be strong.
There's no stopping that train by the way. Expect significant growth and signicant improvements to margins and operating income over time.
Yes, that implies, at the expense of workers and jobs.
Will be interested how smooth that growth is. Mostly the process of converting investment into paying customers to match said large investment.
It that it won’t end up at that point, but could see some growing pains as that comes together.
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Explaining straddles:
I'll use General Motors (GM) as my example because obviously everyone has heard of GM. The stock currently is at about $72.50 mid-day, March 13.
A May call at $80 can currently be sold for $1.64. NOTE: Volume in options is LOW so the bid/ask spreads can be LARGE. Right now the bid is $1.64 and the ask is $2.51. When you trade stocks you don't need to worry about that because there is so much volume that the bid/ask spread is typically nominal.
A May Put at $65 can currently be sold for $1.48. The spread is again large, $1.48 vs $2.01.
This is all just for example because you usually don't actually sell the May options until the March options expire, then the volume picks up. Anyway, on with the example:
I own 1 share of worth ~$72.50. I sell an $80 May Call for $1.64 and a $65 May Put for $1.48. For those less familiar with Options what that means is:
- The $80 Call means that my GM Share can be called away from me for $80 anytime between now and the third Saturday in May.
- The $65 Put means that another share of GM can be put to me for $65 anytime between now and the third Saturday in May.
So in total I've collected $3.12 which means that if GM shares are trading anywhere between $61.88 and $83.12 on May 14 I'm ahead. More detail:
- If GM closes above $83.12 it WILL BE called away from me at $80 and I'll be worse off than I would have been if I had just kept the stock and sold it when it got there.
- If GM closes between $80 and $83.12 it WILL BE called away from me at $80 but I got that $80 plus the $3.12 for the options so I am better off than I would have been selling the stock in this range.
- If GM closes between $65 and $80 then it will neither be put to me nor called away from me and I'll just pocket the $3.12 as basically "found money".
- If GM closes between $61.88 and $65 then it WILL BE put to me at $65 but I'll still be better off than I would have been without the options because my effective price is $61.88 ($65 less the $3.12 that I got for selling the options).
- If GM closes below $61.88 then I am out money because I'll have the share I originally owned plus $3.12 but I'll also have to buy another share at $65 and both shares will be worth <$61.88 each.
Basically I'm betting against volatility.
Ahh, so you were selling puts too, not buying them. The problem with that, for me...
100 shares of stock is worth $63,300 right now. If I sell a put at 570, that means that if the put exercises I need $57,500 liquidity for each block. The premium of a 790 call and a 570 put is only 121.97, so I'd earn $12,197 (less taxes) which is far lower than my current liquidity. If I write a put at 570 and a call at 790 against my entire position in that stock, I'd have to sell a significant portion of other holdings to buy if the put exercises. And it's on a concentrated position in a stock I want to diversify away from, so I don't necessarily want to own more of it right now.
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You can of course sell say 10 shares at market price, or put in an order above current market.
There isn't anything magic about 100 shares these days, though there used to be.
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A one possession game with 2 minutes left is about all you could ask for.
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Will be interested how smooth that growth is. Mostly the process of converting investment into paying customers to match said large investment.
It that it won’t end up at that point, but could see some growing pains as that comes together.
Note that one of the key things utee said was tech stocks closely associated with AI... The two holdings I have aren't "AI stocks". We just sell the stuff they need to build out these massive data centers, and their demand FAR outstrips supply.
I'll use the flash (i.e. SSD) industry as an example. When COVID hit, the WFH craze caused a significant demand for SSDs for PCs, chromebooks, tablets, etc. Suddenly people either needed to buy compute devices they didn't have, or needed to pull in the refresh of compute devices they owned but were a bit old. At the same time, the big cloud companies were expecting tremendous demand growth for their services, so they were buying everything they could for datacenters. The market was flying high.
Well, then we had a supply chain issue. And in a supply chain issue, if you have the components for 95% of a data center, you can't build 95% of a data center--you build 0% until those critical 5% of components become available. But the big companies... Kept on buying. They kept on buying and building up inventory positions they couldn't deploy, thinking the supply chain issues would work themselves out and they'd need the inventory. This was happening all through 2021...
Well, around the middle of 2022, they pretty much all wised up, right about the same time. And they... Just stopped buying. Demand hit the FLOOR. Prices fell. All the NAND flash makers were losing money. They were reducing what they call "wafer starts". NAND flash I think takes about 6 months from wafer start to having finished product. They needed to reduce supply to get into balance. So they cut back significantly, as the major data center customers digested the inventory positions they had. This led to losses, layoffs, and probably the most depressing time I've seen in my industry since the dot com bubble burst.
The pain lasted through about the end of 2023. 2024 we started to recover, but as you can imagine, producers were gunshy about ramping up production too quickly in case the pain wasn't over. You know, "Fool me once, shame on me. Fool me--you can't get fooled again." Everything normalized, and 2024 was a return to normal.
Well, starting in 2025, that return to normal went completely the opposite way. To the point where I know people saying that in 35-40+ years in the industry, they've NEVER seen anything like it. ChatGPT changed everything, and now there's absolutely booming demand for GPU, CPU, DRAM, SSD, HDD, networking, land, electricity, physical hardware like data center racks, etc... The capex being spent on data center buildout is enormous. And the industry was NOT ready and didn't build the supply for it.
So we're in a severe supply shortage across the entire industry. You see this in media if you look at anyone who has tried to build a high performance PC these days... Prices are through the roof. For consumer type equipment, between the 2023 trough and now, prices are at least doubled, but in many cases are 3-4x. The webinar I did a couple weeks back, the company I was doing it with was talking about the prices they'd seen, and 1 year pricing in the enterprise SSD market were up 3x--and prices are still increasing.
Well, that means that all the companies selling these products are posting revenue, gross margin, earnings, etc numbers that are REALLY good. And it's why my two holdings have 52 week lows of $28.83 and $27.89, while trading at 275.51 and 653.79, respectively, right now.
Most of the industry doesn't see supply catching up at least through 2027, and possibly through 2028.
I'm not going to predict the future of these stocks, and nothing I say should be used to do so... I don't know what the future holds. But that's what utee is talking about... Not what the AI stocks themselves are doing, but what's happened to the companies building the stuff they need to continue this massive AI data center buildout.
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A one possession game with 2 minutes left is about all you could ask for.
do you have $$$ on this game?
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Note that one of the key things utee said was tech stocks closely associated with AI... The two holdings I have aren't "AI stocks". We just sell the stuff they need to build out these massive data centers, and their demand FAR outstrips supply.
I'll use the flash (i.e. SSD) industry as an example. When COVID hit, the WFH craze caused a significant demand for SSDs for PCs, chromebooks, tablets, etc. Suddenly people either needed to buy compute devices they didn't have, or needed to pull in the refresh of compute devices they owned but were a bit old. At the same time, the big cloud companies were expecting tremendous demand growth for their services, so they were buying everything they could for datacenters. The market was flying high.
Well, then we had a supply chain issue. And in a supply chain issue, if you have the components for 95% of a data center, you can't build 95% of a data center--you build 0% until those critical 5% of components become available. But the big companies... Kept on buying. They kept on buying and building up inventory positions they couldn't deploy, thinking the supply chain issues would work themselves out and they'd need the inventory. This was happening all through 2021...
Well, around the middle of 2022, they pretty much all wised up, right about the same time. And they... Just stopped buying. Demand hit the FLOOR. Prices fell. All the NAND flash makers were losing money. They were reducing what they call "wafer starts". NAND flash I think takes about 6 months from wafer start to having finished product. They needed to reduce supply to get into balance. So they cut back significantly, as the major data center customers digested the inventory positions they had. This led to losses, layoffs, and probably the most depressing time I've seen in my industry since the dot com bubble burst.
The pain lasted through about the end of 2023. 2024 we started to recover, but as you can imagine, producers were gunshy about ramping up production too quickly in case the pain wasn't over. You know, "Fool me once, shame on me. Fool me--you can't get fooled again." Everything normalized, and 2024 was a return to normal.
Well, starting in 2025, that return to normal went completely the opposite way. To the point where I know people saying that in 35-40+ years in the industry, they've NEVER seen anything like it. ChatGPT changed everything, and now there's absolutely booming demand for GPU, CPU, DRAM, SSD, HDD, networking, land, electricity, physical hardware like data center racks, etc... The capex being spent on data center buildout is enormous. And the industry was NOT ready and didn't build the supply for it.
So we're in a severe supply shortage across the entire industry. You see this in media if you look at anyone who has tried to build a high performance PC these days... Prices are through the roof. For consumer type equipment, between the 2023 trough and now, prices are at least doubled, but in many cases are 3-4x. The webinar I did a couple weeks back, the company I was doing it with was talking about the prices they'd seen, and 1 year pricing in the enterprise SSD market were up 3x--and prices are still increasing.
Well, that means that all the companies selling these products are posting revenue, gross margin, earnings, etc numbers that are REALLY good. And it's why my two holdings have 52 week lows of $28.83 and $27.89, while trading at 275.51 and 653.79, respectively, right now.
Most of the industry doesn't see supply catching up at least through 2027, and possibly through 2028.
I'm not going to predict the future of these stocks, and nothing I say should be used to do so... I don't know what the future holds. But that's what utee is talking about... Not what the AI stocks themselves are doing, but what's happened to the companies building the stuff they need to continue this massive AI data center buildout.
I appreciate the long explanation, although I read the top and thought, “Ahhh, he means in a gold rush, don’t just sponsor mining, also invest in picks and shovels.”
That reading makes more sense.
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Note that one of the key things utee said was tech stocks closely associated with AI... The two holdings I have aren't "AI stocks". We just sell the stuff they need to build out these massive data centers, and their demand FAR outstrips supply.
I'll use the flash (i.e. SSD) industry as an example. When COVID hit, the WFH craze caused a significant demand for SSDs for PCs, chromebooks, tablets, etc. Suddenly people either needed to buy compute devices they didn't have, or needed to pull in the refresh of compute devices they owned but were a bit old. At the same time, the big cloud companies were expecting tremendous demand growth for their services, so they were buying everything they could for datacenters. The market was flying high.
Well, then we had a supply chain issue. And in a supply chain issue, if you have the components for 95% of a data center, you can't build 95% of a data center--you build 0% until those critical 5% of components become available. But the big companies... Kept on buying. They kept on buying and building up inventory positions they couldn't deploy, thinking the supply chain issues would work themselves out and they'd need the inventory. This was happening all through 2021...
Well, around the middle of 2022, they pretty much all wised up, right about the same time. And they... Just stopped buying. Demand hit the FLOOR. Prices fell. All the NAND flash makers were losing money. They were reducing what they call "wafer starts". NAND flash I think takes about 6 months from wafer start to having finished product. They needed to reduce supply to get into balance. So they cut back significantly, as the major data center customers digested the inventory positions they had. This led to losses, layoffs, and probably the most depressing time I've seen in my industry since the dot com bubble burst.
The pain lasted through about the end of 2023. 2024 we started to recover, but as you can imagine, producers were gunshy about ramping up production too quickly in case the pain wasn't over. You know, "Fool me once, shame on me. Fool me--you can't get fooled again." Everything normalized, and 2024 was a return to normal.
Well, starting in 2025, that return to normal went completely the opposite way. To the point where I know people saying that in 35-40+ years in the industry, they've NEVER seen anything like it. ChatGPT changed everything, and now there's absolutely booming demand for GPU, CPU, DRAM, SSD, HDD, networking, land, electricity, physical hardware like data center racks, etc... The capex being spent on data center buildout is enormous. And the industry was NOT ready and didn't build the supply for it.
So we're in a severe supply shortage across the entire industry. You see this in media if you look at anyone who has tried to build a high performance PC these days... Prices are through the roof. For consumer type equipment, between the 2023 trough and now, prices are at least doubled, but in many cases are 3-4x. The webinar I did a couple weeks back, the company I was doing it with was talking about the prices they'd seen, and 1 year pricing in the enterprise SSD market were up 3x--and prices are still increasing.
Well, that means that all the companies selling these products are posting revenue, gross margin, earnings, etc numbers that are REALLY good. And it's why my two holdings have 52 week lows of $28.83 and $27.89, while trading at 275.51 and 653.79, respectively, right now.
Most of the industry doesn't see supply catching up at least through 2027, and possibly through 2028.
I'm not going to predict the future of these stocks, and nothing I say should be used to do so... I don't know what the future holds. But that's what utee is talking about... Not what the AI stocks themselves are doing, but what's happened to the companies building the stuff they need to continue this massive AI data center buildout.
As Fonzie would say, correctamundo! It's like you know me and my thoughts better than I know myself. :)
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do you have $$$ on this game?
Wrong thread, sorry
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I understand the AI centers need a lot of power and water, so I was looking at some power producers like GE Vernova (which I own a bit of because I used to own GE).
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Perhaps more appropriate for the tech nerd thread, but what is the path to profitability for OpenAI and Anthropic? I'm not more than a casual observer to the investment side of this, but I guess I see four buckets: Supply chain (Brad covered), Major players in model development (OpenAI, Anthropic), minor player in model development and companies trying to build in-house models, companies leveraging major models.
Based on my limited observation:
Supply chain - $$$
Major players - ?
Minor players / in-house investment - ???
Consumers of major models - $$$
Thoughts?
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A one possession game with 2 minutes left is about all you could ask for.
You talking about the market today?
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Ahh, so you were selling puts too, not buying them. The problem with that, for me...
100 shares of stock is worth $63,300 right now. If I sell a put at 570, that means that if the put exercises I need $57,500 liquidity for each block. The premium of a 790 call and a 570 put is only 121.97, so I'd earn $12,197 (less taxes) which is far lower than my current liquidity. If I write a put at 570 and a call at 790 against my entire position in that stock, I'd have to sell a significant portion of other holdings to buy if the put exercises. And it's on a concentrated position in a stock I want to diversify away from, so I don't necessarily want to own more of it right now.
Yeah, I meant that as more of a general comment about options not specific advice to your situation.
I'll build that out a little with my upthread example, here is what I generally would do using the GM at ~$72.50 price.
Say that given my portfolio size and risk tolerance I want to hold stocks in roughly $5-10k amounts. Thus if I want GM, I ultimately want 100 shares of it (100*72.50=$7,250).
My opening position will be to write (the seller of an option "writes" it) a put a little under the current price for 400 shares (4 contracts) three months out. So I'd write a May put on GM at say $70 for 400 shares. Say I get $1.50 for it so that is $600 but now I have to have $28,000 cash available because if the stock gets put to me I need to pay that for it ($70*400=$28,000). However, I got $600 for writing the put so that is part of it, I just need the other $27,400. In the next three months one of two things happens either:
- The stock stays over $70 and I do NOT have to buy 400 shares for $28,000. In this case I pocket the $600 and start over. or
- The stock drops below $70 and I DO have to buy the 400 shares for $28,000. In this case I now own 400 shares of GM but my basis isn't actually $70 it is $68.50 because I got $600 then paid $28,000 for a net of $27,400 and I have 400 shares ($27,400/400=$68.50).
In case #1 I just start over and usually do it again.
In case #2 I now own 400 shares of GM that lets say is trading at $69. The good thing for me is that remember I only paid $68.50 for it so I'm up $0.50/share or $200. Now I do the straddle. Recall that I wanted to own 100 shares so I write a call on 300 shares at $70 and a put on 300 shares at $67. Say I get $1.75 for the call (because it is only $1 over current) and $1.25 for the put (because it is $2 under current). The spread here is intentional because I kinda DO want to sell 300 shares and I'd rather not buy 300 shares. Ok, for those options I get:
- $525 for the call ($1.75*300) and
- $375 for the put ($1.25*300) for a total of $900.
Viewing this holistically I now own 400 shares of GM and in total I have $26,500 in it ($28,000-600-525-375=$26,500) so I now have $66.25 per share in this ($26,500/400=$66.25). Now three things can happen (technically more but the others are more-or-less irrelevant):
- The stock goes above $70 so 300 shares get called away from me at $70. I get $21,000 and I'm left with 100 shares of GM. In this case I now own 100 shares of GM and in total I have $5,500 in it ($26,500-21,000=$5,500) which works out to $55/share.
- The stock stays between $67 and $70. In this case I still own 400 shares of GM which I have $26,500 in and I can do this all over again.
- The stock goes below $67 and I get another $300 shares put to me at $67 so I have to pay $20,100 and I now own 700 shares which I have $46,600 in ($26,500+$20,100=$46,600) which is $66.57/share ($46,600/700=$66.57.
In the case of #1 I'm pretty much done trading GM and I'll just hold the 100 shares that I originally wanted.
In the case of #2 I just rinse and repeat.
In the case of #3 I now have WAY more GM stock than I want to hold. I own 700 shares which I have $66.57 per share in and I ultimately only want to hold 100 shares. At this point I will sell two calls. I will sell a 2 month call that is either "in the money" or barely out of the money. Ie, if GM is trading at $65.25 I'll write a 2 month call on 200 shares at $65. Then I write a three month call on 200 shares at (usually) the next dollar up so my 200 share 3 month call will be at $66.
Then I wait a month and see what happens. If GM continues to fall such that I'm still stuck with it and it looks like neither of my existing options are going to be exercised then I'll write another 200 share in the money call at 3 months so that now I have three overlapping calls out:
- A 200 share 1 month call at $65 - this is the 2 month call that I wrote a month ago but now it is 1 month.
- A 200 share 2 month call at $66 - this is the 3 month call that I wrote a month ago but now it is 2 months.
- A 200 share 3 month call at something less than $65.
I own 700 shares and 600 of them are subject to call. I don't have any naked calls and if they all get exercised I'm back to the 100 shares that I wanted.
Then I'll usually roll the calls as they expire until they get exercised at which point I'll recalibrate.
Using this method essentially I am the house. If you think about the gambling analogy with a slot machine, the gambler loses small almost every time, wins big once in a while, and he loses overall. The house wins small almost every time, loses big once in a while, and wins overall. This is me. I usually win small. Once in a while I get hammered.
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Yeah, I looked at buying OOM puts while selling OOM calls. That limits downside risk because my downside can never be lower than the put, but it's requiring liquidity (eating into the premium I earn on the calls) and that balance against the premium of the call means I'm limiting my upside even further, and not allowing the premium to offset taxes on the upside. And if I sell at the lower price I'm still paying taxes at the sale, which let's say I buy a put at $450 is still roughly $420/share in cap gains, so my effective sale price is actually closer to $345.
I don't want to get into naked calls, shorting stocks, or anything like that--at least as a relative newbie. I own the stock so I'd be selling OTM covered calls. And I'm basically (as far as I understand it) not really "using margin" on that. The only possible risks I see:
- Call expires ITM (or goes ITM during the duration of the contract and is called away). Now I've got the premium plus the gain but if the stock absolutely explodes my "risk" is that I haven't captured the upside above the strike price. Given that I might write a call at 790 I'm effectively betting the stock doesn't go above 790. If it does? Ok. I'm just going to have to live with leaving money on the table. I'm still ahead (even less taxes).
- Stock craters. That's not an options risk... That's a risk of holding any stock. However I don't have to ride it all the way down until the contract expires. As the stock falls, the premium on a 790 call (especially as we're getting closer to expiry) will drop massively as well. So I use some of the premium from the sale to buy out my contract. I give up some premium but I'm now free and clear of the contract so if I decide the stock is going to KEEP falling I can at least exit.
On an OTM covered call written for a 25% upside strike price, I basically only make the premium if the stock goes up 2%. I mean, on paper my stock is worth 2% more, but that's an unrealized gain so it could go down 2% an hour later. So I don't see how covered calls will have *wild* swings or dramatic risk...
You are absolutely correct. The only risk of a covered call is that you lose the upside if it goes up but that is no different than selling it. Either way you don't get the benefit if it suddenly doubles.
The inverse is true with a "covered" put. Here when I say "covered" what I mean is that you HAVE the money. So long as you have the money there is no more risk in a put than there is in just buying the stock. Either way if it goes broke you are out everything but not more than everything.
The REALLY risky options are naked calls. This is because there is no mathematical limit to how much a stock can go UP. A stock can't go below zero so if you write a put the maximum you could possibly lose is a defined quantity. However there is no maximum price so the risk on a naked call is theoretically infinite. If you wrote a call on XYZ Drug Company at $50/share and DID NOT own the stock and they suddenly announced a cure for cancer with successful trials, you'd be in BIG trouble.
As for your specific situation my advice is worth what you are paying for it but here is what I would do:
I would write a three month calls above the current trading price EVERY month. I don't know (and I'm not asking) how much you own so I'll just make it up to fill out an example. Lets say you own 1,000 shares of this company and you said it is trading at $633. Now lets say that your portfolio is worth a total of $2 Million. No sane Financial Planner would advise you to keep 30+% of your portfolio in ONE company especially if you also own other companies in that same sector (which is typical). A typical situation might be that you portfolio consists of $633k of ABC Tech Company, $333k of DEF Tech Company, $334k of GHI Tech Company and $700k spread over 40 other stocks in random sectors from energy to banks to food. You have several issues. For one, you have way too much in tech. You've got $1.3 Million or 65% of your portfolio in tech. The second issue is you have WAY too much in ABC Tech (31.65% of your portfolio) and probably more than you should have in DEF and GHI (~16.7% of your portfolio each).
So you should diversify which you already said is what you are trying to accomplish here.
How risk tolerant are you and (closely related question) how quickly do you want to diversify?
When the March contracts expire (actually the Monday after), I would write a May call. In this example you own 1,000 shares and you *SHOULD* probably get down to around 300-400 to get it down to ~10% of your portfolio. Thus, you should be thinking of selling about 600 shares so, from your example:
- On Monday, March 23 I would write something like the $790 May call at $56.97 on 200 shares only I'd write it as a June call.
- On Monday, April 20 I would write a similar July call but it depends on what the stock does between now and then (I'll come back to that).
- On Monday, May 18 I would write a similar August call but again it depends on what the stock does between now and then.
Once you do that you'll have 600 of your shares subject to call and based on the price you quoted you'll get a little over $11k for each of these calls. Part of your diversification can be simply buying more stocks with the $11k/mo that you get for writing these options.
Then each month either the call that you have outstanding WILL BE exercised in which case you'll sell 200 shares which you pretty much wanted to do anyway, or the call that you have outstanding WILL NOT be exercised in which case you can just go out another three months and write another one.
Your only real enemy is volatility. If the stock jumps WAY up you would have been better off just keeping the stock and not selling options. If the stock drops WAY down you would have been better off just selling and not getting into options.
Here is the thing though. Had you held or sold you have still had risk of a drop or rise respectively. The overlapping calls allow you to adjust based on what happens. If the stock climbs such that it looks like the 200 share June call is going to be exercised then write the July call (sold in April) even higher. If the stock drops so that it looks like the 200 share June call is going to expire without being exercised then write the July call (sold in April) even lower.
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Writing nekkid calls is ….crazee. Buying calls is just Vegas.
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As for your specific situation my advice is worth what you are paying for it but here is what I would do:
I would write a three month calls above the current trading price EVERY month. I don't know (and I'm not asking) how much you own so I'll just make it up to fill out an example. Lets say you own 1,000 shares of this company and you said it is trading at $633. Now lets say that your portfolio is worth a total of $2 Million. No sane Financial Planner would advise you to keep 30+% of your portfolio in ONE company especially if you also own other companies in that same sector (which is typical). A typical situation might be that you portfolio consists of $633k of ABC Tech Company, $333k of DEF Tech Company, $334k of GHI Tech Company and $700k spread over 40 other stocks in random sectors from energy to banks to food. You have several issues. For one, you have way too much in tech. You've got $1.3 Million or 65% of your portfolio in tech. The second issue is you have WAY too much in ABC Tech (31.65% of your portfolio) and probably more than you should have in DEF and GHI (~16.7% of your portfolio each).
So you should diversify which you already said is what you are trying to accomplish here.
How risk tolerant are you and (closely related question) how quickly do you want to diversify?
At 47, I feel like I can take some risks. I'm far enough from retirement. I just don't want to squander the gains I've been blessed with...
And for that I need diversification. 70% of my portfolio is two highly correlated tech stocks. That have both gained due to the same reason (AI tailwind). They'll both be subject to the same downward pressure if it materializes. The problem is taxes. When you realize my portfolio has gone up an on the two names 5x and 20x compared to cost basis, it's going to be painful.
There's nothing I can do about my employer stock. I can't [due to company policy] trade options on it, so I'm going to have to work through the stuff that's long-term and just start selling. Thankfully(?) the gain on that percentage-wise is lesser. But the position is bigger. So the taxes on that will suck. And I'm stuck with some of it that's still short-term that I can't sell until it hits 1 year.
The non-employer stock therefore is the one that I want to milk the crap out of it for as much as I can. Ultimately I'll be happy when/that it sells, and like I said the good thing potentially about a covered call is that I can set up a scenario where I'm not only forced to sell, but that I am compensated such that it helps me stomach the tax penalty.
When the March contracts expire (actually the Monday after), I would write a May call. In this example you own 1,000 shares and you *SHOULD* probably get down to around 300-400 to get it down to ~10% of your portfolio. Thus, you should be thinking of selling about 600 shares so, from your example:
- On Monday, March 23 I would write something like the $790 May call at $56.97 on 200 shares only I'd write it as a June call.
- On Monday, April 20 I would write a similar July call but it depends on what the stock does between now and then (I'll come back to that).
- On Monday, May 18 I would write a similar August call but again it depends on what the stock does between now and then.
Once you do that you'll have 600 of your shares subject to call and based on the price you quoted you'll get a little over $11k for each of these calls. Part of your diversification can be simply buying more stocks with the $11k/mo that you get for writing these options.
Then each month either the call that you have outstanding WILL BE exercised in which case you'll sell 200 shares which you pretty much wanted to do anyway, or the call that you have outstanding WILL NOT be exercised in which case you can just go out another three months and write another one.
Your only real enemy is volatility. If the stock jumps WAY up you would have been better off just keeping the stock and not selling options. If the stock drops WAY down you would have been better off just selling and not getting into options.
Here is the thing though. Had you held or sold you have still had risk of a drop or rise respectively. The overlapping calls allow you to adjust based on what happens. If the stock climbs such that it looks like the 200 share June call is going to be exercised then write the July call (sold in April) even higher. If the stock drops so that it looks like the 200 share June call is going to expire without being exercised then write the July call (sold in April) even lower.
That's good thinking. Staggering could be really smart, especially given that this is a VERY volatile stock--which is part of the reason options premiums are high. That could also allow me to be more tactical about buy-to-close actions if something is close enough to expiry and close enough to strike that I can get out profitably without actually giving up my stock...
Ultimately I think I'm going to do what CD mentioned... Spend a few years working with a financial advisor milking him for as much knowledge as I can, and then eventually get to a point where I feel comfortable doing it myself. He should be mapping out an options strategy in the next week. I'm trying to learn as much as I can (and ask questions from all of you) so I can go into that discussion smartly. I'm already light-years ahead of where I was 2 months ago. But I've got a ways to go.
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Working with a fiduciary advisor is the best thing to do.
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Ed Zachery
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As I opined, an advisor can be of help. My tax situation got complicated for a year or so and they helped a lot. Then there are complications with SS and Medicare, trusts and wills, various and sundry. I think I got that behind me though we are redoing our wills just now.
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Bearish positioning by hedge funds is at extreme levels:
Hedge fund short positions in US-listed ETFs surged +10% on Thursday, the 2nd-largest single-day increase in data going back to 2016.
The only bigger day was April 2nd, 2025, "Liberation Day," when shorts jumped +16%.
As a result, US-listed ETF shorts soared +12% this week alone, following a +8% increase last week.
In total, short positions are up +23% over the last month.
Meanwhile, hedge fund short positions in US macro products, including index futures and ETFs, are up to 11.5% of total US exposure, approaching the 2022 bear market peak of 11.6%.
Over the last 5 years, short exposure has only been higher in 3% of cases.
Hedge fund shorts are at extreme levels. https://search.app/sz438
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Popped the covered call cherry today.
Now we wait and watch. Expiry of Jul 18 and a strike price that's 41% above current share price... Doubt it'll be called away, but if it does, I'll be pretty happy to earn a >50% total return in 108 days while achieving my actual goal of diversification.
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Popped the covered call cherry today.
Now we wait and watch. Expiry of Jul 18 and a strike price that's 41% above current share price... Doubt it'll be called away, but if it does, I'll be pretty happy to earn a >50% total return in 108 days while achieving my actual goal of diversification.
And if it doesn't you pocket the cash you got for writing the call. You can use that to buy something completely unrelated to AI which also accomplishes your diversification goal.
FWIW:
The volatility in your sector is immediately apparent. When I trade options I'm usually something like 5% over (writing a call) or 5% under (writing a put). When you first posted about writing a call at $790 on a stock trading at $633 my immediate thought was "who would pay you for that?"
In typical less volatile sectors with a stock trading at say $63.30 you'd be writing calls at $64 or $65 or MAYBE $66 not $79.
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FWIW:
The volatility in your sector is immediately apparent.
Yep. Stock hit an ATH of 777 two weeks ago, was down into the 560 range last week, and hit about 710 at its high point today...
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Went to go meet a CPA for the first time yesterday to try to establish as a new client. It did not go well.
I swear, she couldn't get over the fact that I have made my peace with the idea that I have high capital gains and I am just going to have to sell and pay taxes. That my stocks are in a VERY cyclical industry and that no, I can't hold these until 2028 or longer in the hopes that I can slowly sell piecemeal and income below certain levels to avoid certain tax levels... If I wait until 2028 or beyond, I don't know how much capital gains I'll still have--that solves my tax problem, but in the worst possible way.
Do you ever go through life wondering how people get into certain professional jobs when spending only a little bit of time with them, you realize they're idiots?
The worst was that this one was a personal recommendation.
You @betarhoalphadelta (https://www.cfb51.com/index.php?action=profile;u=19) should look into this option, as a place to hide money. We use them to hold our California real estate portfolio.
Self Directed IRA in 2026: Benefits, Fees & FAQs | The Entrust Group (https://www.theentrustgroup.com/self-directed-iras)
They always put on stuff like this too.
Alternative Investing Mastery Summit - Passive Investing Mastery (https://passiveinvestingmastery.com/summit/?utm_campaign=Alternative_Investing_Mastery_Summit_2026Q2&utm_medium=Organic&_hsenc=p2ANqtz-8VtykamqpWNoRNWP7wyKeRw9W4SaPWbB88Kf3IBFaOA6xWyGsgg-NxofNDhlQZI7wpteg2Bs8wsX2dilLci58xwfASSQ&_hsmi=415159959&utm_source=Bill_Neville)
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Working with a fiduciary advisor is the best thing to do.
These people scare me and I'll tell you why. It is a long story but, I think, worth the read to understand the industry.
When I was in my final quarter at Ohio State I was getting myself a Real Estate Major to add on to my Accounting and Finance Majors. One of the classes I needed for it was an appraisal class.
Everyone thinks of Ohio State as humongous and it is but the Real Estate major within the Business College is (or at least was 25 years ago) very small, like about a dozen graduates per year, REALLY small. I was in my final quarter at Ohio State so I literally knew EVERYONE in the Real Estate program. The appraisal class was only offered a night because the instructor was a working appraiser who wasn't available during the day and when I showed up there were ~40 people in the class and I only knew a handful. That surprised me because, as I said above, I knew literally everyone in the RE program and I didn't know until then that this class was also offered for an alternative purpose.
The professor was one of those guys who has everyone introduce themselves on the first day and as we went around the small number of people that I knew were, of course, Real Estate majors. The rest were all in the Arts College majoring in something called "Personal Finance". We (the small group of Business College Real Estate Majors) couldn't understand why the Arts College would offer a "Personal Finance" Major and why anyone would pursue it when you could get a lot more financial knowledge in ANY major in the Business College. One of my group finally asked: "What the heck is a Personal Finance Major?" One of them answered that it was "A business major for people who weren't smart enough to get into the Business College." Several of his colleagues vociferously objected to that characterization but over the course of the class we (business majors) learned that it was very much true.
Some of the appraisals were of income property (rentals) so we had to do the calculations to discount future cash flows. For those of us from the Business College this was standard stuff and the problems presented in the class were ludicrously easy. I kid you not, none of the Arts College "Personal Finance" Majors could grasp the concept. To them it might as well have been presented in Greek. We (Business Majors) tried to explain it to them but to no avail. They just couldn't understand it.
The reason I shared this whole long story is that at some point during the class one of us (Business Majors) asked what the Arts College people planned to do with their Bachelor of Arts in Personal Finance Degrees and they all said that they would be stock brokers and financial planners. We were aghast. These people couldn't comprehend simple cash flow valuation concepts and THEY were going to advise others about finances.
The above is @medinabuckeye1 (https://www.cfb51.com/index.php?action=profile;u=1547) 's warning to be VERY careful about trusting stockbrokers and financial planners because they might not know or even have any clue of WTF they are talking about.
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The good news on mine is when he doesn't have an answer he a) tells me he will find or b) refers me to an expert on the topic at hand.
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The good news on mine is when he doesn't have an answer he a) tells me he will find or b) refers me to an expert on the topic at hand.
That is frequently the hardest thing to find in any field.
I don't want an attorney or engineer who pretends to know the answer to my question. I want one who tells me when they know and if they don't know either tells me that they'll look into it or refers me to a specialist who will know.
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Yep. Stock hit an ATH of 777 two weeks ago, was down into the 560 range last week, and hit about 710 at its high point today...
Up in the 970s today.
Talk about a roller coaster!
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Buy low sell high
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Up in the 970s today.
Talk about a roller coaster!
You are in a really unique situation in that, as I understand it:
- You own a substantial amount of shares, and
- This makes up a VERY high percentage of your portfolio.
The vast majority of people are in neither or only one of those groups.
If you are in #1 but not #2 the dollar-value change is still just as large but since you are NOT in #2 this is only a small percentage of your overall portfolio so your overall net worth isn't impacted much (in a percentage sense). Ie, if you are worth $2M and it goes up by $800k because this stock goes up that is a big deal but if you are worth $200M and it goes up by $800k because this stock goes up that isn't really a big deal.
In your case, being in both of those groups, your overall total net worth is jumping all over the freaking place with THIS stock. That is nuts.
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In your case, being in both of those groups, your overall total net worth is jumping all over the freaking place with THIS stock. That is nuts.
Yeah, the swings are neckbreaking...
3 years ago, we were talking about the fact that we were in a terrible market that hadn't been seen in our industry in decades. Right now, we're in a good market at a level that hasn't been seen... Ever.
I feel very, very lucky.
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I feel blessed to have an education, and experience here.
I let professionals manage my retirement money but I watch closely.
Best advice I can give anyone is cliche it so simple:
1: diversify
2: play the long game.
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I feel blessed to have an education, and experience here.
I let professionals manage my retirement money but I watch closely.
Best advice I can give anyone is cliche it so simple:
1: diversify
2: play the long game.
Yep. You aren't in it to make a few hundred thousand today you are in it to make a few million over a few decades.
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don't trade. just don't.
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I feel blessed to have an education, and experience here.
I let professionals manage my retirement money but I watch closely.
Best advice I can give anyone is cliche it so simple:
1: diversify
2: play the long game.
Words to live by.
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My company has an option for an ESPP With a look back provision and buying at a discount. I’m Very much aware that I will pay less than taxes if I hold onto that stock for a year. But I also know that I can only sell the stock four weeks a year and have seen it swing absolutely wildly.
So we will be taking the short-term growth and any of the little extra boosts it provides and calling it a day from there.
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My company has an option for an ESPP With a look back provision and buying at a discount. I’m Very much aware that I will pay less than taxes if I hold onto that stock for a year. But I also know that I can only sell the stock four weeks a year and have seen it swing absolutely wildly.
So we will be taking the short-term growth and any of the little extra boosts it provides and calling it a day from there.
That's a good way to do things, if it works.
Mrs. 847 used to get her BAX stocks at a 25% discount, up to 20% of her pay.
We did that for 20 years.
BAX didn't start to get wild until after we unloaded (major tax event!), thankfully.
She knows a lot of people who have lost their ass.
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I feel blessed to have an education, and experience here.
I let professionals manage my retirement money but I watch closely.
Best advice I can give anyone is cliche it so simple:
1: diversify
2: play the long game.
this has worked very well for me, so far
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this has worked very well for me, so far
Indeed. Well enough to put a poor dirt farmer into a fancy Corvette!
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and more importantly, given me the freedom to retire comfortably and early
I guess a low budget Vette is part of the comfortably
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It was easier for me to marry my money manager.
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It was easier for me to marry my money manager.
Now that's love.
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I tried to help my Ex manage money - didn't work, she wouldn't allow it.
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My company has an option for an ESPP With a look back provision and buying at a discount. I’m Very much aware that I will pay less than taxes if I hold onto that stock for a year. But I also know that I can only sell the stock four weeks a year and have seen it swing absolutely wildly.
So we will be taking the short-term growth and any of the little extra boosts it provides and calling it a day from there.
Yeah, this can be a good thing. We have this where it's 5% below close on the ESPP buy date--and it's up to a 2-year lookback. So it's a minimum 5% immediate bump, but a lot more if the stock has moved. We don't have limits on when we can sell.
I'll have two more purchases this year that are based on a lookback to last May's stock price. Yesterday's close was just a hair over 10x what my purchase price is the next two rounds.
I max my 401K, just started the IRA last year, but the constant is that I put away the max (10%) of my income into the ESPP. I was largely looking at this money over the last decade as my emergency fund. But this year, if stock prices hold, buying stock using 10% of my income that's worth 10x my buy price is pretty much the equivalent of doubling my income.
Badge gets mad every time I talk about how the divorce wrecked my finances and pushed me into renting. Well, Badge doesn't need to cry for me any more :72:
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I'd like to think some of us around here were of some value.
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That's a good way to do things, if it works.
Mrs. 847 used to get her BAX stocks at a 25% discount, up to 20% of her pay.
We did that for 20 years.
BAX didn't start to get wild until after we unloaded (major tax event!), thankfully.
She knows a lot of people who have lost their ass.
In my first few years of the company, the stock dropped like 90% at one point.
And this mostly reflected that it had just been pretty overheated when I got there. That’s fine. But it also means the chances are it’s not gonna grow in line with a safer index fund and the inability to sell on demand leave me a little too antsy.
and considering I can get a 15% discount twice a year plus look back, that ain’t bad.
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But it also means the chances are it’s not gonna grow in line with a safer index fund and the inability to sell on demand leave me a little too antsy.
and considering I can get a 15% discount twice a year plus look back, that ain’t bad.
Immediate 15% return beats the S&P 500 annual return on average. And if you're buying based on a lower lookback price, it's even higher.
So selling it ASAP and then turning around and throwing that in an index fund is still worth maxing out your ESPP contributions. Only problem is that you pay STCG on that 15%, but it's still more than if you were just throwing it in the index from your paycheck.
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After we went private, and then back public, we no longer have an ESPP. I made a decent chunk on the first go-round but I'd only been working for the company for a couple of years when we went private.
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One of my good friends I used to talk about a lot here in my Austin days was fully vested in his company several years ago, which included a big chunk of company stock. Shortly after that they went public and the company's worth exponentially accelerated rather quickly. Then they laid him off. He wound up selling his stock, which had, in a matter of weeks, become worth a couple million. He took a nice tax hit for it, but overall he didn't regret it. And a piece of it helped float him along, as he wound up being out of work for well over half a year.
I guess if you get laid off, it's nice for them to hyper-inflate your net worth on your way out the door.
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This could go in the grumpy thread, but it's more related to this discussion...
What makes me grumpy--on the behalf of others, not me--is all the people I know who have either regularly sold their ESPP shares immediately as normal practice, or sold out of our spun-off company stock they got in the split really cheap over the last year before [or at an earlier stage of] the run up.
I mean, I just feel bad for them. The lotto numbers hit, and they missed it.
This run was probably a once-in-a-lifetime opportunity. I can't imagine how much they're probably kicking themselves right now. It makes me sad.
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My retirement was nearly all in an employee stock plan. The good news is the company put the money into it for us, and over the years that share went from 5% to 25% of our salary (not a deduction). The bad news is initially it was all in their stock, they allowed some diversification later but the options were not good. When I retired, I got it all out (from JP Morgan) into my IRA where I could self manage, but as I've said, I had pros do it for three years until I felt I could handle it. I got pretty lucky with 4-5 picks over the years, one was Costco which the pros said was too expensive, ha. Another was Apple.
I had THOUGHT a retiree should invest only in "safe" dividend paying securities and bonds, but I learned differently from the pros. That opened my eyes. Of course I still have ten years in "safer" investments, but the monies I might need further out are in some riskier investments, nothing crazy.
The other key is when a stock goes way up, you can find suddenly you have 25% or more of your portfolio in one stock, which isn't desirable, so rebalancing is key also.
I look at the basket almost daily and trade a few times a week, often selling something over the past couple of years, and buying bonds or less risky stocks.
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I kind of forgot about my IRA from the first company I worked for post-undergrad. When I was laid off from that company back in 1998, I rolled it out of the company's 401K and into an IRA. I'd only been there for 4 years, salaries were pretty depressed at the time, and there really wasn't that much money.
So fast forward to this year when I'm doing my taxes, and I finally decide to take a look at that fund. Last time I looked closely, it was maybe around $70K or $80K. It had been appreciating ok over the decades but like I said, the initial investments were pretty low. I obviously hadn't been managing it closely at all, I had originally put the money into some moderately aggressive funds plus I left some of it in the company stock and none of those returns were all that great, but since the investment was low, I'd never bothered to rebalance or diversify. Basically I thought of it as "just not that much money" and not worth my time.
So imagine my surprise when I finally looked closely at it a few weeks back, and saw that it was now up to about $250K. Apparently my aggressive funds had done pretty well sinve COVID, and also my old company had spun off my old division, given me shares of that stock when it split off, and that particular new stock had done pretty well over that span.
So, yeah. What I'd considered to be an insignificant part of my retirement portfolio has become something more important, and now that I'm finally paying attention, I'm in the process of rebalancing and diversifying it a bit.
This could probably go in the Happy thread although it didn't happen today....
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Immediate 15% return beats the S&P 500 annual return on average. And if you're buying based on a lower lookback price, it's even higher.
So selling it ASAP and then turning around and throwing that in an index fund is still worth maxing out your ESPP contributions. Only problem is that you pay STCG on that 15%, but it's still more than if you were just throwing it in the index from your paycheck.
It also hits twice a year, so it’s 15% on income between 6 and 0 months old. We’re a fan of that.
It’s been maxed. There’s a slight gap where we either get growth or a few losses to harvest, so that’s nice too.
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I kind of forgot about my IRA from the first company I worked for post-undergrad. When I was laid off from that company back in 1998, I rolled it out of the company's 401K and into an IRA. I'd only been there for 4 years, salaries were pretty depressed at the time, and there really wasn't that much money.
So fast forward to this year when I'm doing my taxes, and I finally decide to take a look at that fund. Last time I looked closely, it was maybe around $70K or $80K. It had been appreciating ok over the decades but like I said, the initial investments were pretty low. I obviously hadn't been managing it closely at all, I had originally put the money into some moderately aggressive funds plus I left some of it in the company stock and none of those returns were all that great, but since the investment was low, I'd never bothered to rebalance or diversify. Basically I thought of it as "just not that much money" and not worth my time.
So imagine my surprise when I finally looked closely at it a few weeks back, and saw that it was now up to about $250K. Apparently my aggressive funds had done pretty well sinve COVID, and also my old company had spun off my old division, given me shares of that stock when it split off, and that particular new stock had done pretty well over that span.
So, yeah. What I'd considered to be an insignificant part of my retirement portfolio has become something more important, and now that I'm finally paying attention, I'm in the process of rebalancing and diversifying it a bit.
This could probably go in the Happy thread although it didn't happen today....
The long game!👍
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one was Costco which the pros said was too expensive, ha.
I find COST fairly intriguing. I don't understand how a boring stock like that, with no explosive growth opportunities on the horizon, can trade at 40-50 forward PE.
I feel it's a VERY solid company, well managed, beloved by its members--myself included.
The stock just seems really expensive. It's not a meme stock like TSLA, so it's not like the fundamentals are completely divorced from performance. But it's not a growth stock, so trading at that high of a multiple is weird. It's trading at about 2x the forward PE multiple of NVDA, a company projected for 35% earnings and 30% revenue growth from FY27 to FY28.
How does COST stay so high?
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members keep buying stock
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Consistent earnings growth ... but other stocks have done about as well in the sector.
COST: 1,009.99 -4.39 (-0.43%) (https://www.cnbc.com/quotes/COST?tab=earnings)
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Annuities?
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Market performance is making me happy.
I generally agree...
But looking back, what seemed like a great decision (covered call) is something I'm now regretting... Considering the stock closed at $1562 today. The stock is in a MASSIVE run, and I capped my upside. Can't complain that much, given I'm locked into 3350% gain on that stock if I get assigned on the call. But I'm kicking myself more than a little bit. It's an expensive lesson.
In unrelated [I think] news, I'm stepping back from the financial advisor I started working with when I moved my funds from E*Trade to MSSB, and moving everything back to E*Trade. We'd done nothing together except the covered call, so it's pretty easy to unwind.
I just don't trust he's going to outperform boring ETFs. And that he's trying to steer me to products that might offer other advantages in the short term (tax loss harvesting) but then I'm fighting the fees--for the fund and his fees--long term.
So for the stock that's not in the covered call, I sold a chunk (~10%) today. The market forecast is good, so I'm fine letting it run somewhat, but I want to slowly start chipping away and locking in gains. Threw 35% of the capital gains into SGOV since I might have to pay estimated in July, and threw everything else into VTI. Let's hear it for boring index funds, amiright?
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Boring ETFs? Yeah, there are some out there that are boring (*no names from me), but we now have over 5,000 ETFs, 8 out of every 10 new one is 'active' and there sure are some not-boring ETF issues out there.
just wait, we're merely days away from Prediction Market ETFs being declared effective.:sign0065:
*i can't and won't name securities as an associated person of a BD.
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(https://i.imgur.com/FMSmXep.png)
How much your heirs inherit depends on where you lived. Here’s a state-by-state guide to estate and inheritance taxes and onerous probate fees.
Americans spend a lot of time thinking about where to live for tax purposes. States like Florida and Texas lure both billionaires and ordinary workers by touting their lack of a state income tax. Other states lure seniors with generous exemptions for retirement income. But another question gets less attention: Where is the most expensive place in the U.S. to die?
With the federal estate exemption for 2026 set at a generous $15 million per person ($30 million for a married couple), little more than one in a thousand estates is hit with the federal levy. In contrast, states’ estate and inheritance taxes, as well mandatory estate administration costs, can hit families with more modest wealth surprisingly hard. And since each state tax operates under its own often arcane rules, those costs can come as an unpleasant surprise. But with some advance knowledge and planning, they often can be minimized.
https://www.forb2026/05/15/state-estate-inheritance-taxes- (https://www.forbes.com/sites/kellyphillipserb/2026/05/15/state-estate-inheritance-taxes-probate-costs-2026/?utm_campaign=ForbesMainTwitter&utm_source=ForbesMainTwitter&utm_medium=social)
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One thing that "amuses" me is how one can read five stories that are major gloom and doom, and five more that are skies the limit.
I'm trimming some today mostly to rebalance. My "tech" stocks keep outrunning the rest and getting me over loaded.
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Yeah I'm definitely overloaded on Tech, but I always have been given my occupation and specializations. In general it's been very good for me, although I have taken a couple beatings at various points in time when Tech across the board has faltered.
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Choppy market.
It will settle when people stop reacting to some guy in Iran passing gas.
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Ironically, passing their gas (and oil) is precisely what we need everyone to do.
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Someone is awake.
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I think if you're under 50 or so, being tech heavy is "OK". I'm not, obviously. I try and maintain some balance, but it requires more attention than I often have.
That has been fine for me up until now.
The funds I expect to tap in ten plus years is more aggressively invested.
TFLO is an interesting kind of ETF investing in Treasuries with a decent return, meaning 4%.
If you are 2-3-4-5 years from expected retirement, I'd go hard conservative now, especially if you are under 60. You'll need to cover health insurance until you're 65. My cost for that went WAY down with Medicare. WAY. We're amidst our prime travel years now, I appreciate in a few more we physically won't feel like long trips.
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I'm probably 10 years away from retirement, I'll be working up until 65. Kids should be out of college (undergrad) in 6-7 years.
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I've always been pretty conservative so if I retire in 2 years, I'm in a good spot today and hopefully will be then
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If you are 2-3-4-5 years from expected retirement, I'd go hard conservative now, especially if you are under 60. You'll need to cover health insurance until you're 65. My cost for that went WAY down with Medicare. WAY. We're amidst our prime travel years now, I appreciate in a few more we physically won't feel like long trips.
That reminds me....PSA: everybody remember to switch to Medicare as soon as you turn 65. There can be major penalties that are permanent for waiting. I know seniors who have been slow about it and it puts them in a pickle.
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oh, I'm ready!
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Yes, signing up for Medicare is VERY important. You can of course delay SS longer, but not Medicare.
I keep seeing these social media sites claiming somee magic pill for converting to a Roth nearly tax free, but I am pretty sure they are scams to collect your personal information.
Doctor gave me a pll and I grew a new kidney!!!!
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One thing that "amuses" me is how one can read five stories that are major gloom and doom, and five more that are skies the limit.
I'm trimming some today mostly to rebalance. My "tech" stocks keep outrunning the rest and getting me over loaded.
I understand trimming to rebalance, given how much of my net worth is in two stocks.
However I'm not being rash and doing it quickly. If I'd started trimming a few months ago when I first started talking about it, I'd have missed some pretty big continued gains as these stocks continue to run.
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Yeah, I think you are too young to worry about it that much. I'm not.
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Yeah, I think you are too young to worry about it that much. I'm not.
Nah, I still need to rebalance/diversify. I'm WAY too concentrated.
My point was if you've got strong runners, and they're hitting higher concentration because of share price appreciation, it's a good problem to have lol. If you're thinking they will continue to run you can build in rebalancing to limit risk with things like stop losses or defined trailing stop losses rather than just selling. That way you can still participate if the upside keeps going up.
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I'm probably 10 years away from retirement, I'll be working up until 65. Kids should be out of college (undergrad) in 6-7 years.
My target right now is age 56, or 2035. That will be when the youngest should be done with college.
That assumes--which is probably a bad assumption, returns somewhere in the range of market average (~10%) over that time. With that, my portfolio value would double within 9 years. That would be within range of the right number considering a 4% or lower annual withdrawal rate.
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Doctor gave me a pll and I grew a new kidney!!!!
How silly. Everybody knows a pill can't make you grow a kidney.
Only Essential Oils can do that, and it needs to be one of the right brands. See your local Essential Oil dealer/cultist.
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In my experience, stocks that run up to the point of being "over valued" continue to run up longer than I had expected.
If you can stop loss and/or buy puts on runners, and let them run, it can work out for you, obviously.
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Rebalancing quickly out of tech is something that might be worth doing more slowly after NVDA's earnings report today...
Runners gon' run.
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Did a little stock market activity with my 3rd graders - had each group in each class pick a stock and 'buy' a share. We checked the price at the same time each day, graphed it for a week, and IDed which group in each class made the most money and which class did so altogether.
Probably not super meaningful to them, but it's the end of the school year and we were talking about different kinds of markets and ways to grow money.
Altogether, they 'made' around $25 for the week. They chose Youtube, McDonalds, etc....my homeroom was a little buji, picking Louis Vuitton and Rolls Royce, among others.
The best stocks for the week were Five Below and Minecraft (Microsoft). It was a good chance to show them how the companies they know are sometimes owned by bigger companies (Youtube > Google > Alphabet).
We also did an activity before that where we simulated 18 days of starting your own company. The focus was that spending money early on to hire workers and train them (and themselves) was worth it to make more money later on (a dollar to hire, a dollar to train, up to 3x, yielded $3/day for 3 workers for the length of the activity).
They had fun with it and loved having a fat stack of realistic learning money towards the end. The ones who just wanted to hold on to the money they made wound up with much less than the others. So that may have opened some of their eyes.
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being conservative for the next 20 years is silly
if you think you might die in the next 6-12 months - fine - be conservative
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Did a little stock market activity with my 3rd graders - had each group in each class pick a stock and 'buy' a share. We checked the price at the same time each day, graphed it for a week, and IDed which group in each class made the most money and which class did so altogether.
Probably not super meaningful to them, but it's the end of the school year and we were talking about different kinds of markets and ways to grow money.
Altogether, they 'made' around $25 for the week. They chose Youtube, McDonalds, etc....my homeroom was a little buji, picking Louis Vuitton and Rolls Royce, among others.
The best stocks for the week were Five Below and Minecraft (Microsoft). It was a good chance to show them how the companies they know are sometimes owned by bigger companies (Youtube > Google > Alphabet).
We also did an activity before that where we simulated 18 days of starting your own company. The focus was that spending money early on to hire workers and train them (and themselves) was worth it to make more money later on (a dollar to hire, a dollar to train, up to 3x, yielded $3/day for 3 workers for the length of the activity).
They had fun with it and loved having a fat stack of realistic learning money towards the end. The ones who just wanted to hold on to the money they made wound up with much less than the others. So that may have opened some of their eyes.
I remember a teacher doing a stock market activity like that with us, but I was in sixth grade. It was algebra class, of all things. Don't know how it helped us in algebra, but it was fun. McDonalds was a popular one for us kids to pick and track back then, too.
I wish more teachers did things like that with their students, and more consistently through the grade school years. Maybe it doesn't mean much to 3rd graders--or maybe it does--but if their subsequent teachers would do the same thing you did with them in the upcoming years.....a steady drip of a minor, side activity in class over time.....I bet they'd be in significantly better shape to actively think about their finances and either start a business or better understand the business world and how to leverage that to their advantage.
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I think ours was 6/7th grade.
I chose to buy Telex.
Heh.
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I ended up not selling anything, but gave it a once over. I read an interesting article critical of ETFs. I’ll find it again maybe, but it was selling other fund types so …..
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I think the day-by-day career/company game reached more students.
I actually had them all just pick a job type and the first 5 days get paid a dollar a day. Then it was decision time. Continue with your job, getting a dollar a day or start your own business, which cost $3. All students could pay to train themselves up to 3x, at one dollar a pop, but adding a dollar a day of earning power (leveling up their value).
As a company owner, they could to that AND hire people (up to 3) at one dollar each and train them up to 3x each at a dollar a pop.
Some lower kids just kept their job and didn't want to pay any money. We did it for 18 days, as that was enough to show the difference and that's all I could do and have enough learning money to use, lol.
By the last couple of days, maxed-out company owners were getting $12-13 per day, blowing the doors off those who just stayed in their job.
The stock market thing was just to kind of introduce the ideas of a share of a company they believe in. And we got a chance to discuss volatility (the idea, not using that vocabulary), as some stocks barely moved day-to-day and others like youtube would be down $9 one day and up $11 the next. We talked about stress and risk.
It was good for what it was. The higher kids really were into it most.
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I think ours was 6/7th grade.
I chose to buy Telex.
Heh.
I believe mine was McDonnell Douglas. iirc, I didn't even know what that was at the time, I think I told the teacher I didn't know any major stocks and she said that was a good one to track. I don't remember how it did.
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Picked up some COST on the dip today.
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BREAKING: Assets in US money market funds surged +$66 billion in the week ending May 28th, to a record $8.28 trillion.
+$41 billion of that came in a single day as investors rebalanced their portfolios ahead of month-end.
Year-to-date, money market funds have attracted +$172 billion in total inflows.
Since the 2020 pandemic, total assets have soared +112%, or +$4.4 trillion.
This comes as the market is pricing in a ~60% probability of a Fed rate hike this year, supporting demand for short-term cash-like assets.
Meanwhile, the 7-day average yield for US money market funds stood at 3.34% as of May 28th.
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Today was just a giant sea of red, huh?
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(https://i.imgur.com/s6Fzb2P.png)
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Historically, US recessions often have followed a steep rise in oil prices.
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Big IPO happening today, huh?
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I thought about it. Decided to pass.
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I wouldn't touch a Musk company with a 10 foot pole. And that includes shorting it.
I've just accepted that anything associated with him will trade with no relationship whatsoever to fundamentals.
As I posted elsewhere about this...
The key to any Musk enterprise is that you never actually really know what the company's aims or fundamentals are.
As long as he can keep changing and obfuscating what the company is trying to be, then you can never pin down an actual valuation based on fundamentals because he can always pivot to future promises on something else.
That's why SpaceX and xAI and Twitter/X have to be combined. Because if you don't like the valuation for the space company, he'll make exaggerated promises about future AI capabilities or social media. And if you don't like the valuation for the AI company, he'll make exaggerated promises about future space capabilities or social media. And if you don't like his social media, you'll make exaggerated promises about future AI or space capabilities. Either way, you just have to BELIEVE that they've got something really amazing just over the horizon.
If valuation can never be based on fundamentals because nobody knows what they are, then the share price can be forever elevated via copious ingestion of Musk's real drug: hopium (case in point: TSLA).
The endgame is the combination of SpaceX / xAI / Twitter-X / TSLA all under one roof. Then, nobody will have a clue how to value the company and therefore it'll have a market cap of $100T
:57:
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I'll leave it to the experts.
Hopefully, they make the right call for me :34:
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My prediction-- some people are going to make a lot of money on this stock.
Also, some people are going to lose a lot of money on this stock.
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My prediction-- some people are going to make a lot of money on this stock.
Also, some people are going to lose a lot of money on this stock.
Lather, rinse, repeat.
I decided to stay away from Musk stuff.
Oh, and he'll make money even if nobody else does.
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I was within a few inches today of over $5 million cash.
We visited the Fed museum, again, my kid is down from Columbus. It’s fairly interesting.
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I was within a few inches today of over $5 million cash.
We visited the Fed museum, again, my kid is down from Columbus. It’s fairly interesting.
We're getting very close as well. Been a great run for a while now.
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The cash in my case was in a large box in the Fed's museum, $5 bills, a lot of them. It's an interesting, and smallish, museum.
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We visited one of those when I was a kid....I don't remember which one. I recall they had a $10k bill on display, which blew my mind. The Googlez tells me that's the largest bill ever printed for public circulation, but all bills over $100 were discontinued in 1969. Which makes me wonder, if you still had one of those, could you actually do anything with it today? Presumably you could deposit it in a bank, but my time working for a bank years ago makes me think they would probably immediately send it to the Feds along with the damaged/destroyed bills they turn in.
Also says the largest bill ever printed (not for public use) was a $100k bill, only used for transactions between Federal Reserve banks.
Google's AI is terrible, so I'd be inclined to read more about it before I unconditionally accept any of that.
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The cash in my case was in a large box in the Fed's museum, $5 bills, a lot of them. It's an interesting, and smallish, museum.
The cash in my case is under my bed now.
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We visited one of those when I was a kid....I don't remember which one. I recall they had a $10k bill on display, which blew my mind. The Googlez tells me that's the largest bill ever printed for public circulation, but all bills over $100 were discontinued in 1969. Which makes me wonder, if you still had one of those, could you actually do anything with it today? Presumably you could deposit it in a bank, but my time working for a bank years ago makes me think they would probably immediately send it to the Feds along with the damaged/destroyed bills they turn in.
Also says the largest bill ever printed (not for public use) was a $100k bill, only used for transactions between Federal Reserve banks.
Google's AI is terrible, so I'd be inclined to read more about it before I unconditionally accept any of that.
I saw a $500 bill one time. I was young.
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The cash in my case is under my bed now.
If you've got $5M in cash under your bed right now, I wanna party with you!
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The cash in my case is under my bed now.
We always knew he did some of that “Chicago“ business.
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The cash in my case is under my bed now.
next to the .44 mag
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next to the .44 mag
The .357 is in my nightstand. All the rest of my arms and ammo are in a safe.
If you've never fired a .44, you should. It's a huge rush - so powerful.
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I have - enjoyed it
I had a .357
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Been intrigued and opened a position in a company that I think has some legs...
Blackberry (BB)
When y'all stop laughing, if you want me to give the thesis, let me know...
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(https://encrypted-tbn2.gstatic.com/images?q=tbn:ANd9GcR5nazJ2YPsHA0cqqXWq2ZttZTiC6-mEFl8-fZ0gMT0ZW_uZlPr)
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Ears open.
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they are killing it in a very stealth way making so many components found in your safety packages in your car/truck/SUV. nowhere is their name present.
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they are killing it in a very stealth way making so many components found in your safety packages in your car/truck/SUV. nowhere is their name present.
Yeah, this is basically it. People think of them as a failed smartphone company, which they were. They also seem to remember BB getting pumped during the meme stock craze of 2021, which also happened.
But they've quietly built a real business, shed some anchors, returned to consistent profitability, and they're set to benefit from a technology inflection point as we get to things like robotics, autonomous driving, etc.
The company I worked for that was acquired by my employer focused on small-scale durable flash storage for the embedded, industrial, medical, military, etc markets. The company I spent 5 years at before that was an embedded computing company focused on the same markets. These are markets characterized by long development cycles, often high regulatory burdens, and demands on suppliers that products remain the same over 5+ year time horizons, because change=bad. Thus, it becomes a market where getting designed in means you're probably NEVER getting designed out. Someone's not going to pivot away from you because a competitor's product is $0.50 less costly. It's very "sticky".
In that market, there is demand for what is called a real-time operation system, or RTOS. Essentially the difference between an RTOS and something like Windows or Linux or Android or iOS is determinism. In an RTOS, everything is basically guaranteed to execute when and how it is supposed to, things are made to be fault-tolerant so if you have to reset one function/capability it can be done without interrupting other running processes, and therefore it's necessary for mission-critical applications.
I.e. let's say it controls your car's ABS system. Well, your car's ABS system can't decide not take an extra 500 ms to operate because the processor got too busy doing something in your infotainment system. That might be the difference between hitting or not hitting a car in front of you. Or let's say it controls a surgical robot doing neurosurgery. It can't cut an extra 0.5 cm deep because some process hogged memory and it couldn't keep up. That's potential patient brain damage or death.
Blackberry owns QNX, an RTOS that's been around a long time and powers a lot of critical infrastructure. As MarqHusker mentions, they're big in automotive, and they're in something like 275M+ vehicles and growing, on top of various other embedded customers. They have a strong backlog relative to their annual sales, such that they have perfect line of sight to predictable recurring revenue well into the future.
They have somewhat of a moat with having already achieved several critical safety certifications (https://qnx.software/en/developers/developer-roadmap/certifications-and-compliance), things that will take years and many millions of dollars for other vendors to catch up.
(They also have a secure communications division, which I'm less familiar with.)
So that's what they do. They've restructured around a consistent, profitable, defensible business. They've now been profitable 9 of the last 10 quarters, and have increased EPS QoQ in 8 of the last 10 quarters. While there might have been bankruptcy risk 3-4 years ago, I think that risk has passed and at the very least, you now have a good, stable business. If I were looking for a job today and got an offer from Blackberry to work on / support QNX, I wouldn't have qualms or concerns accepting it.
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Why is it important? And where does the growth come?
This is where it starts to get speculative. The downside to the above business is while it's a good business to be in or work for, a good business doesn't also mean a strong stock, especially if it's overvalued. They [currently] don't pay a dividend, and sit at a forward PE of 52. In order for this to be a good investment, they need to grow.
Well, the first step is building on their vehicle platforms. Their newest OS version is built for modern multicore CPUs, and they've partnered with another company to create a platform called Alley Kore. One of the biggest vehicle trends is more convergence of compute, where instead of having a bunch of little processors distributed throughout the vehicle each handling one little function, more and more of the vehicle's functions will be centralized. What this means for QNX is that because it's already a known and trusted RTOS in automotive, they'll get the first crack at being designed in to control more vehicle functions. This offers the potential of increased licensing and higher revenue per vehicle. Because software is high-margin business, this could lead to multiples of revenue with no additional fixed costs or even requiring higher vehicle volume. While I think organic growth and volume increase in their vehicle business is happening, higher content per vehicle is the accelerant that can push the number up.
The second is a major societal inflection point. Robotics (or as many people are calling it, "physical AI") is expected to be one of the major growth stories over the next 5+ years. And if you're going to have a bunch of motile robots, many of which will weigh hundreds of pounds or more, and many built with appendages / control surface capable of exerting extreme force for whatever task they're designed for, that creates tremendous risk to human life. You're going to want to know that those robots are controlled by a deterministic OS like QNX, and you may demand that the OS be safety-certified in the way that QNX already is. Robotics is a greenfield business of unknown ulitmate revenue size--but again I believe that the potential is there for Blackberry to see multiples of revenue compared to their current business based on this trend. QNX could become the OS of physical AI.
Now, this won't happen overnight. I think part of the reason the market is sleeping on this is that the one thing about these markets is that things don't happen fast. Designs moving from concept to production can often take YEARS, and that means that some of the revenue gains I'm postulating here wouldn't actually show up on the balance sheet until 2028-30.
But I think the potential is a stock price that could be 5x or more by 2030. If they're laying the groundwork now and the revenue starts going hockey stick post-2028, it's better to get in before the market has recognized the potential than to be late to the party.
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But what if I'm wrong?
A former colleague once told me that he saw our company at that time as a "lifestyle business". Meaning it's a business that you know is stable, you know can keep paying you, your job is secure. The business doesn't have the potential for explosive growth, and that's fine, because you also have faith you're not going to come to the office one day and find padlocks on the door.
In many ways, that's the embedded business (which I was in). You're supporting the types of customers that fall into the "too hard" pile for the big boys. It's a niche business. Stable, predictable, but limited. The risk is that if it grows too big, then it gets the attention of other bigger, stronger, more well-capitalized competition.
And that's the risk with Blackberry. The stock already ran. It was trading in the $3-5 range up until mid-April. It's now $9.20 and my shares are at an average cost basis of $9.63. When I first started looking at them they were about $6 but I waited while doing my due diligence and didn't get in at that point. So the fear I have is that if the growth story doesn't materialize, the stock is currently a little bit overvalued.
I don't worry about bankruptcy risk or losing it all... I believe the company is strong, stable, and the restructuring was successful. But if my thesis is a 3-5 year story and the revenue growth over the next 5 years is incremental rather than explosive? Well, even if the current value around $9-10/share might merely be the fair value as earnings grow incrementally over 5 years, that'd be no better than money sitting in cash.
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So as a result, it's a small holding. Large enough that if it pays off it'll be at least a non-trivial sum, but small enough that it can't really hurt me if it doesn't.
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I bought a trifle. 100,000 shares. Or so ...
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We attended a presentation (with dinner) last night at our brokerage place (walking distance). It was of course a light sales job for a company that manages accounts, it wasn't awful, I may followup. Their pitch was to use covered call options on selected stocks to increase returns, a tactic I've used on occasion, but for an individual it can be a bit onerous to track.
They had some other tactics they outlined as well, I may actually follow up with them. They offered a "free" consultation and review and proposal.
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We attended a presentation (with dinner) last night at our brokerage place (walking distance). It was of course a light sales job for a company that manages accounts, it wasn't awful, I may followup. Their pitch was to use covered call options on selected stocks to increase returns, a tactic I've used on occasion, but for an individual it can be a bit onerous to track.
They had some other tactics they outlined as well, I may actually follow up with them. They offered a "free" consultation and review and proposal.
From the analysis I've seen, covered call ETFs and covered call strategy in general can be high yield, but the long-term return lags the underlying.
The covered call premiums aren't juicy enough to beat the downside risk of the underlying falling when they're capping the upside of it rising. Especially when the covered call premiums are taxed as STCG.
I've found this guy to seem pretty credible and evidence-based. Here is one of the key ones regarding covered call strategies or ETFs.
https://www.youtube.com/watch?v=xzDFbv_JSks
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I bought more last week which brought my average cost down to $9.27.
They announced earnings last week and the market is starting to believe the turnaround/growth story IMHO.
(https://i.imgur.com/U9Ll1g9.png)
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I bought a bit when you noted BB and have made a nice little pile in a taxable account.
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I bought more last week which brought my average cost down to $9.27.
They announced earnings last week and the market is starting to believe the turnaround/growth story IMHO.
Any current thoughts? Are you going to hold?
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Any current thoughts? Are you going to hold?
Yeah, my thesis is that this is a long term hold. Like 3-5 year hold. I think the opportunity is there for them to increase revenue by many multiples rather than incremental, but it's not a fast-moving industry. I think revenues will be more "hockey stick" than "sustained rise" due to the time it takes from design to mass deployment...
It got beaten down the last couple of days and is currently trading just under $11. I almost posted about it when it ran up over $13 that I didn't think anything short term supported that, and expected some pullback.
I'll be diversifying one of my positions via that covered call at the end of next week, and may add to my BB position.
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I think holding is a good plan for that stock. Many analysts agree.
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The only other single stock I've taken a position in is Rivian (RIVN). Sitting at average of $14.92.
Hence why I posted that video in the Electric Vehicle News thread--they've been top of mind for me.
This one is one that I have less conviction than BB, and IMHO has a much higher execution risk. But I think they might be at a critical inflection point with the release of the R2 model, and I think they've got some powerful backers with Amazon, VW, and Uber that identify possible opportunities beyond just vehicle sales.
Last week they announced CQ2 vehicle deliveries which came in above consensus, as well as raising guidance for their CY2026 total deliveries and for their CQ2 revenue.
All good things that pushed the price up to over $20 Monday... And then they announced a 75M share capital raise offering Monday after close and the share price tanked :91:
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I'm sure this type of thing happens daily to many of my holdings that are managed by a firm
but, I don't see ANY of it and therefore none of the :91:
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And then they announced a 75M share capital raise offering Monday after close and the share price tanked :91:
Best time to buy.
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I'm sure this type of thing happens daily to many of my holdings that are managed by a firm
but, I don't see ANY of it and therefore none of the :91:
I'm working on pivoting my holdings to pretty much all low-cost index funds (like VTI)... Things like BB and RIVN are the sort of small "play money" picks.
I should be about halfway diversified by the end of next week. (Although ESPP and vesting RSUs is going to increase employer stock holding over time needing to also then be diversified.)
I pay zero attention to what VTI is doing--even though what I've got there is much larger of my holdings than BB and RIVN, and will expand significantly as I work through my diversification.
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I'm working on pivoting my holdings to pretty much all low-cost index funds (like VTI)... Things like BB and RIVN are the sort of small "play money" picks.
I should be about halfway diversified by the end of next week. (Although ESPP and vesting RSUs is going to increase employer stock holding over time needing to also then be diversified.)
I pay zero attention to what VTI is doing--even though what I've got there is much larger of my holdings than BB and RIVN, and will expand significantly as I work through my diversification.
Done very similar thing. Hold mostly in various index funds, but have some but not as high a percentage in things like nvidia, lilly, Western Digital. Play money is in spacex and X-energy (figure small nuclear reactors are the future for ai energy needs) as well as a few others.
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I put my play money into a red sports car
horrible investment
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Ponies are running :)
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Done very similar thing. Hold mostly in various index funds, but have some but not as high a percentage in things like nvidia, lilly, Western Digital. Play money is in spacex and X-energy (figure small nuclear reactors are the future for ai energy needs) as well as a few others.
I'm interested in nuclear but not sure which company or companies to bet on, and don't really understand the market well enough, so I am not in it at all.
The main investment I'm making in nuclear is sending my son to Berkeley to study to be a nuclear engineer :57:
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I put my play money into a red sports car
horrible investment
It may lack as far as financial return, but in sheer enjoyment it beats the hell out of any index fund.
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Can’t remember if I asked this on here, but sort of a mortgage homebuying calculator question.
I am in a position where I have a decent amount of cash and am potentially looking to buy a home. In theory I could put more in, avoid interest, which sounds good. But people will tell me, you could invest that and with the possibility of a refi, that’s a good idea (betting on long term growth outpacing 6-plus percent seems dicy, especially with taxes involved). And make the point that paying later is paying in deflated dollars and the interest comes off taxes with weighting early.
The issue is I can get a calculator that will give me useful interest numbers, but no great calculator that would compare it to investment output/deflation. Does anyone know if there’s a good rule of thumb there or plug-in calculation? I to k there is some numerical in which I can enter growth, deflation, interest rate, other loan basics and get an inflection point, but damn if I know what it is.
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I'm interested in nuclear but not sure which company or companies to bet on, and don't really understand the market well enough, so I am not in it at all.
The main investment I'm making in nuclear is sending my son to Berkeley to study to be a nuclear engineer :57:
Plenty of etfs out there which are thematic for nuclear.playzls.
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Can’t remember if I asked this on here, but sort of a mortgage homebuying calculator question.
I am in a position where I have a decent amount of cash and am potentially looking to buy a home. In theory I could put more in, avoid interest, which sounds good. But people will tell me, you could invest that and with the possibility of a refi, that’s a good idea (betting on long term growth outpacing 6-plus percent seems dicy, especially with taxes involved). And make the point that paying later is paying in deflated dollars and the interest comes off taxes with weighting early.
The issue is I can get a calculator that will give me useful interest numbers, but no great calculator that would compare it to investment output/deflation. Does anyone know if there’s a good rule of thumb there or plug-in calculation? I to k there is some numerical in which I can enter growth, deflation, interest rate, other loan basics and get an inflection point, but damn if I know what it is.
I was looking at moving and buying a more expensive house
my adviser said it would probably be better to borrow the money than to pay cash
that was a few years ago and he said probably
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I think this is what you're seeking (calculator)
https://www.westernsouthern.com/personal-finance/pay-off-debt-or-invest-calculator
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If your ROI is roughly 3 points higher than your interest rate, investment makes sense.
You also need to factor in PMI if you're not putting at least 20 percent down.
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yup, I'll allow my advisor explain it to me, show me the numbers, and steer me in the right direction
that's why I pay him
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If your ROI is roughly 3 points higher than your interest rate, investment makes sense.
You also need to factor in PMI if you're not putting at least 20 percent down.
Yes.
Also might consider if there's an employer who contributes to a 401k match. And if you can reasonably project if you'll likely stay in this house or will be moving (selling and buying again) in the future. Several things could be considered to fine-tune a decision like that, but I think @847badgerfan (https://www.cfb51.com/index.php?action=profile;u=5) pegged the main one.
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I think this is what you're seeking (calculator)
https://www.westernsouthern.com/personal-finance/pay-off-debt-or-invest-calculator
Yes. Yes it is!
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If your ROI is roughly 3 points higher than your interest rate, investment makes sense.
You also need to factor in PMI if you're not putting at least 20 percent down.
Hmm, so right now I’d need 9-plus percent across a long haul. Or to hope I’d be able to refinance down a few points in the coming years.
Well that’s good to know.
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Hmm, so right now I’d need 9-plus percent across a long haul. Or to hope I’d be able to refinance down a few points in the coming years.
Well that’s good to know.
Yeah, over the past couple of decades, it's been a pretty wide spread in favor of investing. But not at the moment.
S&P 500 has returned on average a little over 10% long term, and around 7% after inflation. So it's better to invest up until that 7% interest rate. But what I'm hearing is that rates are a little over 6% now, so it's close.
But the possibility to refinance down is helpful. And the fact that the mortgage interest is deductible is helpful. For optionality's sake I'd say put down enough to avoid PMI and keep the rest invested. You have more liquidity options that way--at least as long as the market doesn't nose-dive!
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Yeah, over the past couple of decades, it's been a pretty wide spread in favor of investing. But not at the moment.
S&P 500 has returned on average a little over 10% long term, and around 7% after inflation. So it's better to invest up until that 7% interest rate. But what I'm hearing is that rates are a little over 6% now, so it's close.
But the possibility to refinance down is helpful. And the fact that the mortgage interest is deductible is helpful. For optionality's sake I'd say put down enough to avoid PMI and keep the rest invested. You have more liquidity options that way--at least as long as the market doesn't nose-dive!
That’s probably what it ends up being. And I’m sure when we get deeper into the process whoever we work with will have some guidance.
All in all, a good place to be.
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There is nothing structural or fundamental at this point that would cause a market nosedive.
The choppiness we are seeing in the markets is mostly based on emotions.
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There is nothing structural or fundamental at this point that would cause a market nosedive.
The choppiness we are seeing in the markets is mostly based on emotions.
I mean, the concern out there is that the market is largely surfing on the wave of AI right now. If that wave crashes, it's going to take a lot down with it.
YMMV on whether that's going to happen. As we've talked on other threads, I think this is fundamentally different than the dot com bubble, because this is being built out based on giant companies with giant revenue and earnings, not some speculative nonsense that people are getting massive valuations and VC funding based upon having pretty vaporware slide decks and a registered website.
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There is nothing structural or fundamental at this point that would cause a market nosedive.
The choppiness we are seeing in the markets is mostly based on emotions.
Eh.....we still like to print money and there are other structural realities that make a crash at least a non-fantasy.
And there's always the nuclear scenario of the dollar losing its status as the reserve currency. Opinions are very divided on if that has much feasibility of happening, and my opinion on it isn't worth much. But I suspect that's more a function of the other things I'm referencing, moreso than an additional causal factor in a nosedive. Just noting that if that happened, we'd need a term much more severe than "nosedive."
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Eh.....we still like to print money and there are other structural realities that make a crash at least a non-fantasy.
And there's always the nuclear scenario of the dollar losing its status as the reserve currency. Opinions are very divided on if that has much feasibility of happening, and my opinion on it isn't worth much. But I suspect that's more a function of the other things I'm referencing, moreso than an additional causal factor in a nosedive. Just noting that if that happened, we'd need a term much more severe than "nosedive."
Well you have to think about what would replace the dollar, and what it would take globally for that to happen. And think about how likely that is to happen.
And like you said, if that DID happen, well, none of our financial holdings would matter much anymore and not much else would either.
I don't think the rest of the world is ready to plunge into that no matter how much anti-American sentiment gets stirred up by the usual suspects.
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Well you have to think about what would replace the dollar, and what it would take globally for that to happen. And think about how likely that is to happen.
And like you said, if that DID happen, well, none of our financial holdings would matter much anymore and not much else would either.
I don't think the rest of the world is ready to plunge into that no matter how much anti-American sentiment gets stirred up by the usual suspects.
Exactly.
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Well you have to think about what would replace the dollar, and what it would take globally for that to happen. And think about how likely that is to happen.
Right. Which are of course some of the main points in favor of those who think it's extraordinarily unlikely. I don't mean to give the impression I disagree. I mean to say I'm not in a good position to weigh the realistic merits of the possibility, though there does seem to at least be widespread agreement that it's not likely.
I think one way or the other, it's not a bad idea to put some portion of investments in gold (or other, non-market-related holdings).
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I do believe the Dollar will be replaced - it's inevitable.
It ain't gonna be while my kids are still walking on grass.
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There is nothing structural or fundamental at this point that would cause a market nosedive.
The choppiness we are seeing in the markets is mostly based on emotions.
(https://i.imgur.com/2y8snNS.png)
You're on
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I got a late start on the retirement investing. Well, that's actually not quite true. I started early enough, I just lost most everything during a multi-year period of physical difficulty. However, the IRA I started some years ago has an average annual return of 12.8% so far, which kinda blows my mind. I've got it balanced extremely aggressively, so maybe that explains it. There has to be potential downside to that, or everybody would select that option. Not sure what the long-term outlook is on keeping up that pace, but it's coming up on 10 years old, and that's a decent chunk of time to show a track record. (That might go in the happy thread, 'cuz I'm pretty happy with that return.)
If I stick with this job, there will be a pension....won't be that much since my # of years worked wouldn't be high enough to really make the formula equal a lot, but much better than nothing. And whatever little bit SS gets me. If that's still solvent.
I've always been attracted to rental property as an investment, but for various reasons, never been able to pull the trigger on it. I'm at or nearing the age where I likely need to do something about that or forget it, because I don't want to get to retirement age and still carry a note on rental property. I know the income hypothetically takes care of the note, but I don't want that uncertainty of a rental property sitting empty, with me still owing on it, when I'm retired.
I'm not going to manage a property myself. I probably wouldn't want to anyway, but physically I can't do some of the repairs that would potentially need doing, certainly not in a timely manner. I'd be looking at using a property management company.
I guess I'm curious if any of you have experience in that, and if so, what things to look out for. How would you vet a management company? What do you look for and what do you stay away from? Or just any general advice. If I can talk the wife into it, seems kinda like it's now or never.
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I wouldn't want to manage properties (or anything anymore really). If I did, I'd have to deal with people and I'm not doing that.
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I don't enjoy managing our rental properties.
I enjoy even less dealing with the property manager that we hired for our first one, who we've just had to fire for negligence and dereliction of duty, and I'll almost certainly have to sue him to recover some of the money he's stolen from us.
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In the coming years, we are gonna have to decide if we want to get into the rental property space. Guessing we won’t, but who knows?
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You can participate in rental property with a REIT.
Your taxes can of course get more complex.
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We settled with our former propety manager. Not as much as he dicked us out of, but more than I was hoping we'd manage, and we avoided a lawsuit.
I'll eventually put some details in the grumpy thread but man, it's been an exhausting several weeks dealing with this. The good news is the property is back to being 100% in our control, and we're able to move forward free of any... entanglements.
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great investment monetarily
pain in the Arse
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We settled with our former propety manager. Not as much as he dicked us out of, but more than I was hoping we'd manage, and we avoided a lawsuit.
I'll eventually put some details in the grumpy thread but man, it's been an exhausting several weeks dealing with this. The good news is the property is back to being 100% in our control, and we're able to move forward free of any... entanglements.
You still have an entanglement.
It's called a tenant.
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Tenants are the necessary evil for sure.
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We have holdings in California through an LLP set up by my brother-in-law (RIP). His company has everything under one roof. Maintenance, management, procurement, etc. It's a big operation and none of the partners ever have to lift a finger.
His wife manages it now from up top and she's doing great. About 1,200 properties total with all the LLP's that are in place. I wish we were in more than just the one.
I think ours is going to sell soon. There are about 30-35 homes in this one now, I think - mostly in Compton.
Good news: My portion is in a self-directed Roth IRA. The proceeds will be tax-free.
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Yeah I'm in a partnership on our other rentals with my FIL. He runs them and I don't have to do anything.
This one is our first, it was our first home that we kept when we moved out of Austin and into the suburbs. I hired a property manager at the time and she did a good job for us for the first ten years or so. But then she retired, left the business to her son, who as it turns out is just a complete deadbeat. Started having all kind of problems when he took over. So now we're finally extricating ourselves from it.
The good news is that the property is completely paid off and as soon as it's leased again it'll be cash flowing positive enough to pay for my daughter's college.
My son, on the other hand, is screwed. :57:
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great investment monetarily
pain in the Arse
Yeah I remain Team Boglehead, mostly due to being lazy and pathological avoidance to speaking to people.
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Yeah I'm in a partnership on our other rentals with my FIL. He runs them and I don't have to do anything.
This one is our first, it was our first home that we kept when we moved out of Austin and into the suburbs. I hired a property manager at the time and she did a good job for us for the first ten years or so. But then she retired, left the business to her son, who as it turns out is just a complete deadbeat. Started having all kind of problems when he took over. So now we're finally extricating ourselves from it.
The good news is that the property is completely paid off and as soon as it's leased again it'll be cash flowing positive enough to pay for my daughter's college.
My son, on the other hand, is screwed. :57:
I think this happens more often than it doesn't.
Grumpy thread material.
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Bought the BB dip today... I'm now averaged down to 9.12 basis.
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Well, my covered call(s) expired yesterday.
I opened it 108 days out, when the stock had fallen 28% off its ATH, and then recovered up to only be about 9% below ATH. I got almost a 10% premium and set a strike price over 41% above the price when I sold the call(s)... Thinking "oh, wouldn't it be nice if I got out with that profit, but it probably won't get there!"
Well, it ripped through that number in 3 weeks and then kept ripping. It ultimately topped at 2.35x my strike price and 3.32x the price it was on Apr 1 when I wrote the call.
At close yesterday, it was still 35% over my strike and 27% over my break-even price.
And now it's done. Nothing left to do but temporarily hold what I'll owe in taxes and diversify the rest.
It's always tough to argue counterfactuals and I'm not going to claim that I would have actually sold it all at the top... But had I not written those calls, I'm fairly certain I would have sold most of them now above my break-even price. Stock getting called away with the share price significantly above break-even price is a lot better of a problem than writing the call and then watching the stock crater, of course. But I left a lot of potential money on the table.
An expensive lesson learned.
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Next time could be different of course…
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I wrote a couple "out of the money call options" and stocks that had some recent runups. If they sell, OK with me. If not, I'll keep the premium at least.
If I had the time, I'd do this frequently, Sell to Open 4-6 weeks out on some stocks.
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saw my financial guy yesterday
got a couple things done, then decided to start taking a few dollars a month off the top of the account and into my checking account
might as well spend it while I'm young - won't need it in 10-20 years
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saw my financial guy yesterday
got a couple things done, then decided to start taking a few dollars a month off the top of the account and into my checking account
might as well spend it while I'm young - won't need it in 10-20 years
We started that this year too.
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I was gonna wait a few months until I hit a goal. He talked me into starting now. Just showed me the numbers.
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Ever since I started taking money out, the fund I'm raiding just keeps growing. It's a nice feeling.
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Yup, I'm taking out so little per month/year it will obviously keep growing and still reach my goal.
I'm sure he wants to get me started this way to show me the obvious.
and start paying some taxes :73:
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I have a LT health care policy, which is expensive, but should hopefully prevent draining funds if I get disabled.
And there will be a time when travel is not really much of an option for us, at least overseas travel.
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Yup, I'm taking out so little per month/year it will obviously keep growing and still reach my goal.
I'm sure he wants to get me started this way to show me the obvious.
and start paying some taxes :73:
I have heard multiple investment advisors/retirement planners/wealth management folks say that having a hard time getting people to start digging into their savings is a real-world challenge, and a fairly common one. People are apparently so scared about their futures that they hesitate to touch their assets, or unnecessarily withdraw only bare minimums when they do access them. People living below their means, in other words.
Some have talked about having to encourage their clients to enjoy the fruit of their hard work and reassure them that it's okay, it's what was planned for. I've even heard some talk about doing little exercises to get their clients used to the idea and stop being scared. Maybe that's what your guy wanted to check.....a litmus test to see if you'll dig in or if you're one of the ones he's gonna have to beat over the head and force to have a good time.
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It's often a struggle for folks who have experienced hard times and tried to save. Some kind of balance is needed, and that gets tough.
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The rough rule of thumb is that 4% (+ annual inflation) is safe. Meaning that if you have, say, $2M in invested assets, you can withdraw $80K in year 1, then $80K plus inflation every year thereafter, and you'll be safe for at least a 30 year retirement.
For most people, a 4% withdrawal rate actually ends up with them having significantly more by the end than what they started with--it only becomes a problem if you retire into a major recession, due to sequence of returns risk (SORR). 4% even protects you from that.
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I want to start collecting some info and opinions from our population sample here, for anybody who's willing. I'm interested in the input of people who are actually living in retirement, or nearing it. I think it's valuable insight to consider, rather than just listening to "experts" and forecasting. I'll probably have several questions in the coming days, weeks, whatever.
For today I just want to talk about the 4% rule. i.e., annually withdrawing 4% from an indexed retirement fund, with the expectation that the value of the fund annually increases an average of 7%, inflation annually increases an average of 3%, so, 4% annual withdrawals maintains the same level of purchasing power, and the fund lasts indefinitely.....in theory.
In the real world, StUhdeEz!!! show that method lasts on average ~30 years until the fund is depleted, and the effectiveness varies based on what the market does in the first few years after retirement, and the particular cycle of the market's highs/lows (when they occur, how sharp they are, etc.).
It seems risk tolerance would play a huge factor there. I know the historical average is exactly that, so it kind of misses the point to worry about the particular market cycle one retires in, but there's something a little unnerving about leaving money you count on in retirement in more volatile assets. OTOH, there's something a little unnerving about parking your money in "safe" assets which don't earn much, and you're essentially just dividing your retirement savings by number of years you think you'll be alive, because they're no longer growing substantially. And you might live a lot longer than you think.
One method is to keep a mix, say, 40-60% in stock-indexed funds, 40-60% in bonds, T-notes, that kind of thing, and 1-2 years of spending in cash on hand or maybe a money market fund. There's a ton of ways to allocate, and there's also more recent research that finds the original 4% rule was designed around "worst case" data, and many beat the 30-yr horizon if they're willing to vary their spending a little bit, based on downturns and upswings. There's a lot more nuance to all that, but I'm sure y'all know more about that anyway.
What I'm interested in here is, what do you think about allocating savings in retirement? About the 4% rule in general? What are you actually doing? How has it worked out? Or as you near retirement, how does it look like it will go? (Obviously, the closer you get, the more accurate forecasts are.) Bear in mind, how much you managed to squirrel away or what level of lifestyle you maintain is not what I'm asking, so I'm not asking you to disclose that. Whatever you saved for retirement and whatever your average expenditures are, I'm just talking about how do you handle ensuring it lasts as long as you need it?
Obviously, someone who saved $5 million and didn't live extravagantly wouldn't really need to grow their wealth any further and could just park it somewhere extremely safe and just withdraw whatever they needed. That's different from someone who retires with, say, $850k and needs to at least beat or outpace inflation. So I guess that does matter some, but anyway, I'm curious to hear from you.
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I'm semi-retired and open for questions.
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I'm semi-retired and open for questions.
I just asked a bunch.
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The rough rule of thumb is that 4% (+ annual inflation) is safe. Meaning that if you have, say, $2M in invested assets, you can withdraw $80K in year 1, then $80K plus inflation every year thereafter, and you'll be safe for at least a 30 year retirement.
For most people, a 4% withdrawal rate actually ends up with them having significantly more by the end than what they started with--it only becomes a problem if you retire into a major recession, due to sequence of returns risk (SORR). 4% even protects you from that.
Well, you kind of stole my thunder while I was writing my post. As you have time, feel free to comment or elaborate further, even though I know you're not nearing retirement all that soon.
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In the real world, StUhdeEz!!! show that method lasts on average ~30 years until the fund is depleted, and the effectiveness varies based on what the market does in the first few years after retirement, and the particular cycle of the market's highs/lows (when they occur, how sharp they are, etc.).
You're reading the studies wrong. The studies don't show that the 4% method lasts on average ~30 years until the fund is depleted. The studies show that 4% is the safe withdrawal rate for a 30-year retirement in a worst-case scenario. Meaning that if you retire right into the worst possible historic recession (1968), at 4% your money will hold up for 30 years. 4% avoids failure, not just predicts when the funds will be depleted.
The reality that I was trying to get across is that in most cases, you retire with as much or significantly more than you started with. Because the average historic (S&P 500) return is a little over 10%, not 7%... That 7% is the inflation-adjusted rate. So if you're withdrawing 4%+inflation, you should be WELL within the 7% inflation adjusted rate and continuously growing your nest egg, not depleting it.
https://en.wikipedia.org/wiki/Retirement_spend-down#Withdrawal_rate
Note that these don't take external sources of income like Social Security into account. This gets really important for people who retire early, because they need to factor in that safe withdrawal rate during their "bridge" years, but often once they hit SS/Medicare age, they can reduce their withdrawal rate because SS substitutes income for what they were previously withdrawing, and Medicare reduces their health insurance costs if they had to be on an ACA plan during those bridge years.
So if you're modeling a spend rate based on 4% before you have things like SS/Medicare kick in and then can reduce the withdrawal from investments, 4% is actually a lot safer than it looks.
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I just asked a bunch.
I'm not big on the 4% thing - too choppy going on 6+ years now.
I go on what I see as trends and evaluate about once per quarter, with my advisor.
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You're reading the studies wrong. The studies don't show that the 4% method lasts on average ~30 years until the fund is depleted. The studies show that 4% is the safe withdrawal rate for a 30-year retirement in a worst-case scenario. Meaning that if you retire right into the worst possible historic recession (1968), at 4% your money will hold up for 30 years. 4% avoids failure, not just predicts when the funds will be depleted.
The reality that I was trying to get across is that in most cases, you retire with as much or significantly more than you started with. Because the average historic (S&P 500) return is a little over 10%, not 7%... That 7% is the inflation-adjusted rate. So if you're withdrawing 4%+inflation, you should be WELL within the 7% inflation adjusted rate and continuously growing your nest egg, not depleting it.
https://en.wikipedia.org/wiki/Retirement_spend-down#Withdrawal_rate
Note that these don't take external sources of income like Social Security into account. This gets really important for people who retire early, because they need to factor in that safe withdrawal rate during their "bridge" years, but often once they hit SS/Medicare age, they can reduce their withdrawal rate because SS substitutes income for what they were previously withdrawing, and Medicare reduces their health insurance costs if they had to be on an ACA plan during those bridge years.
So if you're modeling a spend rate based on 4% before you have things like SS/Medicare kick in and then can reduce the withdrawal from investments, 4% is actually a lot safer than it looks.
You're right, my wording there definitely means something different, and I worded it poorly. I did mention later that modern evidence suggests 4% is safer than people think. However, I still called 30 years the average, and in addition to poorly articulating the idea, that part was just wrong, so thanks for pointing it out.
Not all indexed funds are tied to the S&P 500, and I'm just using 7% as an annual historic average, probably aggregated from all markets. It seems to be the standard "safe" number from a variety of sources and projections tools. Any particular fund may well beat that, but I like to do my forecasting by A) assuming the worst for assets, and B) assuming the worst for expenditures. I figure there's less that can bite me on the ass in retirement if I plan that way.
I realize it doesn't factor in other sources of income. That's not really my goal with this round of questions. I'm assuming from your response that you plan on leaving everything in the market when you retire?
I'd probably call what I'm doing right now forecasting instead of modeling, which is a bit more complex and designed to account for the impact of different factors with a flexible mathematical framework. But that's just semantics, and I'm only clarifying that because you're an engineer, I figure you like precision, and it's a slow morning at work :)
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Well, you kind of stole my thunder while I was writing my post. As you have time, feel free to comment or elaborate further, even though I know you're not nearing retirement all that soon.
My own personal plan is to retire like CD -- with time and budget to live a nice life and travel. Essentially I want to retire into a life as comfortable as I live right now--and perhaps more so since my wife and I would have the time to actually spend on travel that we simply can't do while working M-F 9-5 jobs, while the kids are still in the house (even if only half the weekends), etc.
What that basically means is that I want to retire with enough money that the 4% withdrawal rate doesn't just cover housing/food/necessities... 4% will cover all manner of discretionary spending that can flex up or down based on how the market is doing. So if the desired budget calls for $20K+ of international travel annually but the economy / stock market takes a major dive, well, that's $20K that can be easily saved by just... not going.
That also means that more risk can be taken, meaning leaving more percentage of the nest egg in equities than bonds or cash equivalents, hoping for a higher return.
So I haven't figured it out yet... But assuming I hit my goals, I'm trying to build in enough buffer that I won't have to worry.
The earliest I could possibly see myself retiring is in 5 years when my youngest goes to college. So I've got time to keep accumulating and I'll figure out the details later.
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I'm not big on the 4% thing - too choppy going on 6+ years now.
I go on what I see as trends and evaluate about once per quarter, with my advisor.
By that, do you mean you periodically change how you allocate your savings between the market and stuffs like bonds/T-notes, or do you mean you periodically change how much you withdraw from an indexed fund? Or a mixture of the two? Or something else altogether?
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What that basically means is that I want to retire with enough money that the 4% withdrawal rate doesn't just cover housing/food/necessities... 4% will cover all manner of discretionary spending that can flex up or down based on how the market is doing. So if the desired budget calls for $20K+ of international travel annually but the economy / stock market takes a major dive, well, that's $20K that can be easily saved by just... not going.
That's going to be one of my upcoming questions, as far as the things people find they need or don't need in retirement. In forecasting, I'm of course projecting expenditures, and I did that by looking at our current budget and crossing off anything that shouldn't be there in retirement, like the mortgage, and then using an inflation multiplier. I figure that should tell me how much we need to maintain our current lifestyle. I found very little to cross off, really. Granted, I save monthly for things a lot more than most people do, but I don't see that going away in retirement. I don't let irregular expenditures like new tires, home repairs, etc. jump up and bite me unexpectedly now, and I wouldn't want that in retirement either. So I plan to keep contributing a monthly amount to prepare for those kinds of things when they inevitably come up.
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By that, do you mean you periodically change how you allocate your savings between the market and stuffs like bonds/T-notes, or do you mean you periodically change how much you withdraw from an indexed fund? Or a mixture of the two? Or something else altogether?
A lot of both, although I have not changed with withdrawals this year - yet. I'm going to bring it down.
We stay away from bonds and such.
Most of our retirement money is in managed funds with Waddell and Reed. They are great fund managers based on my 20 years with them. So, every now again (~quarterly), my advisor and I will balance things out based on trends and outlook.
Never panic or make investment decisions based on emotion.
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That's going to be one of my upcoming questions, as far as the things people find they need or don't need in retirement. In forecasting, I'm of course projecting expenditures, and I did that by looking at our current budget and crossing off anything that shouldn't be there in retirement, like the mortgage, and then using an inflation multiplier. I figure that should tell me how much we need to maintain our current lifestyle.
This is one of the things I need to figure out over the next 5 years...
I have no freakin' clue what our spend is today, or what I need to project it to be in retirement. I know how much we *make* on paper, but when I think about all the spend, I've never actually tracked it. All I know is that over the last 10 years as I've rebuilt my finances, the number in my taxable brokerage account (via ESPP and RSUs) was going up, so I knew I was earning more than I was spending--and everything else like 401k (which I was maxing) was growing but I didn't really pay attention to it.
And I know it changes once I would no longer be employed... I.e. suddenly I'm no longer contributing to 401k or ESPP or IRA, my SS/Medicare tax disappears, I'll be [likely] in a lower tax bracket, all of which means that when I think about what shows up on my W-2 likely significantly overstates my spend. Especially since child support is already going down and will diminish again a year from now and be gone completely once my daughter graduates HS. But I'll need to add an ACA plan for insurance, and depending on whether I retire while my daughter is still in college or not, I'm sure that'll be additional spend that I don't have today or while working.
So I need to figure out how to forecast my spend by the time she graduates HS to know whether I'll be ready or not.
But as I said... That's 5 years out. Right now I'm focusing on the accumulation phase... If by then I know what my number is and I've overshot, well, that's a good problem to have. I suspect I might still have a few years to go at that point though...
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My investments have done MUCH better than I forecast, not because I'm a savant, I did hit a couple homers, but because the markets have gone up, rather steeply. I keep an eye on allocations, this much to tech, this much to health care, this much to "stable" stocks, this much to "cash" or CDs. With big tech run ups, I can get over weighted versus my notional target pretty easily.
Instead of selling outright, I usually write out of the money call options on a stock. And it usually got called, but OK.
My wife wants to go to Marseille for a couple weeks in May. Comfort seats are $1500, premium seats are $4000. I'd like to spring for the latter, but it's obviously a $5 K difference, and I can't justify that.
It is tough to figure how much to spend each year on "extras", knowing at some point we won't be able to do this stuff much. I'm still playing baseball in January, which is pricey, and in a local league (which is not), we obviously travel and cruise quite a bit, we dine out fairly often, and splurge on Kroger sushi on Wednesdays.
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It's very complicated, in all honesty.
Need - Is it truly a need, or is it a want?
Want - Can be cross between a desire versus available spending. You can't do it if the money isn't there (unless you go to credit cards, which, well, yeah-no...). And if you can't get it, do you really want it? If so, why was it not prepared for?
Spend - that's all over the place in retirement. A few trips a year can be planned for. A major health event cannot be planned for - but it can be prepared for.
I hope everyone here is truly prepared for a major health event.
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Health, as you note, is the great unknowable. Even something treatable like a broken hip really sets you back when you are ~80, maybe not $$$ but in ability to get around.
Our friend had prostate cancer, he had the proton therapy and is now "cured", he said the cost would have been hundreds of thousands except for Medicare.
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But as I said... That's 5 years out. Right now I'm focusing on the accumulation phase... If by then I know what my number is and I've overshot, well, that's a good problem to have. I suspect I might still have a few years to go at that point though...
We're quite a bit further out, but keeping an eye on "the number" is a good idea. I'm forecasting pretty far ahead at the moment, and as I mentioned, I've factored in bottom-end returns, and (assuming I stay at this job) a worst-case scenario pension. I figure there's quite a decent chance we beat the amount I'm projecting, but I like to plan conservatively. I'm also relying on ssa.gov's projections for our projected SS income at various ages, which....I have no idea how accurate that is.
Point being, I have this all entered into a spreadsheet now where I can quickly update the inputs. I need to remember to revisit every so often, and it'll be a good idea to adjust the assumptions and consequent projections as time goes by and some of today's projections become yesterday's quantifiable reality. No sense in working past when we need to, I reckon. If returns outpace my conservative estimates and some other things transpire, we might be able to knock a few years off. We'll see.
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I hope everyone here is truly prepared for a major health event.
Two down, ? to go.
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I don't follow any withdrawal rule. I withdraw what I need when I need it, though I plan for expenses so I am not forced to liquidate an asset I don't want to liquidate.
Before I retired, I looked at my annual expenditures, being an anal CPA, I had detailed tracking of my expenses. Put in an allocation for travel. Look at projected SSI for my wife and I. Ran all this out for 30 years adjusting for projected inflation. I looked at the shortage SSI from Expenses. From there I looked at my assets and figure out what growth I need on those assets for my money to last. Figured I needed a 4% return, so I retired. Been retired for 2 and half years and up to this time I actually have more money than when I retired because my ROI has been much greater than 4%.
As to the mix, I originally had a more balanced mix with bonds, but as I have liquidate those assets, I have tended to be heavier in stocks. A financial planner might say I have let it go too far that way and I have consider reallocating but haven't taken the step.
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We're quite a bit further out, but keeping an eye on "the number" is a good idea. I'm forecasting pretty far ahead at the moment, and as I mentioned, I've factored in bottom-end returns, and (assuming I stay at this job) a worst-case scenario pension. I figure there's quite a decent chance we beat the amount I'm projecting, but I like to plan conservatively. I'm also relying on ssa.gov's projections for our projected SS income at various ages, which....I have no idea how accurate that is.
Point being, I have this all entered into a spreadsheet now where I can quickly update the inputs. I need to remember to revisit every so often, and it'll be a good idea to adjust the assumptions and consequent projections as time goes by and some of today's projections become yesterday's quantifiable reality. No sense in working past when we need to, I reckon. If returns outpace my conservative estimates and some other things transpire, we might be able to knock a few years off. We'll see.
my spreadsheet is updated daily after the market closes, as I said I am a bit OCD
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my spreadsheet is updated daily after the market closes, as I said I am a bit OCD
That's good hustle.
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too good
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I have heard multiple investment advisors/retirement planners/wealth management folks say that having a hard time getting people to start digging into their savings is a real-world challenge, and a fairly common one. People are apparently so scared about their futures that they hesitate to touch their assets, or unnecessarily withdraw only bare minimums when they do access them. People living below their means, in other words.
Some have talked about having to encourage their clients to enjoy the fruit of their hard work and reassure them that it's okay, it's what was planned for. I've even heard some talk about doing little exercises to get their clients used to the idea and stop being scared. Maybe that's what your guy wanted to check.....a litmus test to see if you'll dig in or if you're one of the ones he's gonna have to beat over the head and force to have a good time.
he knows who I am - he's my cousin's son
He's been tellin me for years I'm just like his grandpa. a cheap SOB that won't spend money.
He says, and I quote, "Fearless, you're just like my grandpa, the only question is,........ how much money you're going to leave for your children"
He beat me over the head for almost 10 years to get me to buy a red Chevy
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(https://i.imgur.com/WuKucbF.png)
This is for married filing jointly.
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he knows who I am - he's my cousin's son
He's been tellin me for years I'm just like his grandpa. a cheap SOB that won't spend money.
He says, and I quote, "Fearless, you're just like my grandpa, the only question is,........ how much money you're going to leave for your children"
He beat me over the head for almost 10 years to get me to buy a red Chevy
I've told my folks that I don't need them to leave anything for me, they should enjoy their money in their retirement-- as long as they don't end up leaving me a bill.
If that were to happen, they're going into the worst, cheapest home I can find.
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We will be staying at/around the top of the 22 percent bracket when I retire.
The 32 percent days are long-gone for us.
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(https://i.imgur.com/WuKucbF.png)
This is for married filing jointly.
"Taxable Income" is a trickier number to calculate for retirees than for working folks, near as I can tell from reading the gub'ment website. They have a tool that calculates it for you, though, as long as you know what the terms mean.
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I've told my folks that I don't need them to leave anything for me, they should enjoy their money in their retirement-- as long as they don't end up leaving me a bill.
If that were to happen, they're going into the worst, cheapest home I can find.
One thing I don't ever have to worry about is fighting with my siblings over an inheritance. Nothing to fight over.
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"Taxable Income" is a trickier number to calculate for retirees than for working folks, near as I can tell from reading the gub'ment website. They have a tool that calculates it for you, though, as long as you know what the terms mean.
It's a bit obscure because SS gets taxed in many cases, at some difference percentage. My wife and I get a decent chunk from SS each month, thanks. And we get taxed on parts of it. I just use Turbotax. When I withdraw from my IRA I withhold a guestimated amount, I usually get money back from the state and owe the Feds.
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My parents left us "too much", though they were both 93 when they passed and not in good enough shape to have spent more of their own. This is the conundrum of course, one can't be assured of not needing funds for health care/assisted living/etc. down the road, and then you wait so long to begin enjoying your savings, you can't because of health issues.
My uncle was 104 when he passed, and my great grandmother was 102, so I have to think about that many more years possibly.
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I've told my folks that I don't need them to leave anything for me, they should enjoy their money in their retirement-- as long as they don't end up leaving me a bill.
If that were to happen, they're going into the worst, cheapest home I can find.
after my dad died, mom wouldn't do so many things because she was worried about running out of money. She was very secretive about her finances when we tried to get her affairs in order. Well when she died, she left me and my 2 siblings a fair amount of money. Enough to give my wife the final push to go ahead and retire. Personally I wish she hadn't limited herself and just spend the money and did what she wanted and left me nothing.
I have no intention of doing the same thing, I want to run out of money and then die the next day. Probably not going to happen, figure unless something goes drastically wrong it will be hard to run out of money. Still with so many kids, none of them is going to get a great amount when I die.
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I have no intention of doing the same thing, I want to run out of money and then die the next day. Probably not going to happen,
I mean, I'm sure there's ways to make that happen...
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(https://i.imgur.com/00Uoh1K.png)
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This doesn't give me the warm and fuzzies. The SSA projects social security will be insolvent by 2037. Note I'm using their definition of "insolvent," by which I don't mean the fund is broke, I mean it's underfunded to pay the full benefits owed.
"The Social Security Board of Trustees project that changes equivalent to an immediate reduction in benefits of about 13 percent, or an immediate increase in the combined payroll tax rate from 12.4 percent to 14.4 percent, or some combination of these changes, would be sufficient to allow full payment of the scheduled benefits for the next 75 years."
It'd be nice if we didn't count at all on SS, but that's probably not the boat we'll be in. My latest forecast (which makes some fairly conservative assumptions which we may well beat) tells me we'll be counting on SS for about 25% of what I'd like us to have available for monthly income.
https://www.ssa.gov/policy/docs/ssb/v70n3/v70n3p111.html
It is an older report, but I haven't seen a newer one on their website.
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This doesn't give me the warm and fuzzies. The SSA projects social security will be insolvent by 2037.
Well, at least that projection hasn't changed in the last 20 years.
But guess when I turn 67 and become eligible. That's always been a fun thought, since seeing it so many years ago.
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The SSTF is projected to run out in 2033, which would mean about a 25% benefit cut if nothing is done.
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I'll probably start taking it in 2029, at 62.
Get it before it's gone.
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Right now it tells me I should be getting around $4K per month in SS benefits at 65. So it's going to be really fun watching those assholes run out of money and not pay me after a lifetime of paying in.
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Right now it tells me I should be getting around $4K per month in SS benefits at 65. So it's going to be really fun watching those assholes run out of money and not pay me after a lifetime of paying in.
I'll be highly disappointed if long before 65 you're not spending the bulk of your time out on Lake Travis in a houseboat pulled by a Ford truck, both of which are amphibious so that you tow it and then just drive it right into the lake.
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Right now it tells me I should be getting around $4K per month in SS benefits at 65. So it's going to be really fun watching those assholes run out of money and not pay me after a lifetime of paying in.
No worries, man. They'll just "print" more.
What could go wrong?
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I'll be highly disappointed if long before 65 you're not spending the bulk of your time out on Lake Travis in a houseboat pulled by a Ford truck, both of which are amphibious so that you tow it and then just drive it right into the lake.
I gotta pay for two kids in college so, uhhh, prepare to be disappointed. I know I am... :'(
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The SSTF is projected to run out in 2033, which would mean about a 25% benefit cut if nothing is done.
I have no doubt there won't be a 25% benefit cut in 2034 or 35, or 36
unless all hell breaks loose
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They subtract Medicare from your SS, it's a few hundred dollars. My total went down last year because that went up more than SS did with the COLA. Also, full retirement age is probably 67 for most of you.
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it is for me, I'm less than 36 months away
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No way I was waiting for full retirement age. The second I stopped working, I started collecting.
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yup, I could be only 11 months from collecting
we shall see
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No way I was waiting for full retirement age. The second I stopped working, I started collecting.
I will do the same.
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I will do the same.
Nope. Absent some calamity, I'll be waiting until full retirement bennies and keep on grinding. It's so much fun, what would I do with myself all day?
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I'm a boater and I want to take up golf. Can't do both while still working.
As it stands, I don't use my boat as much as I want to.
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I'm a boater which is one reason I've never taken up golf.
Another reason is that golf sucks.
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Golf sucks to watch, but I found it enjoyable to play.
For a while, anyway.
I didn't take to it quickly, and it frustrated me exceedingly, and it was too easy in those days to go to a gym or open court somewhere and join a basketball game and do something I was already good at.
So I dropped it.
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I'm a boater which is one reason I've never taken up golf.
Another reason is that golf sucks.
It takes a massive amount of time to get any good. Which is why I no longer fit in that category, if I had ever approached it.
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It takes a massive amount of time, lots of money, and also it sucks.
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It takes a massive amount of time to get any good. Which is why I no longer fit in that category, if I had ever approached it.
Time or money. As with any skill, a good coach can cut development time significantly, and take a person further than they'd ever get on their own.
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I'll definitely have lessons with the head pro here at BSMCC.
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good idea
wish I would have done that a few decades ago
maybe I wouldn't suck as much
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Time or money. As with any skill, a good coach can cut development time significantly, and take a person further than they'd ever get on their own.
Sure wish I had good coaches when I started.
It was not until I was playing men's night when I was about 26 my landlord/insurance agent taught me how to actually hit a draw--with the very simple advice to think about a softball swing and trying to hit the ball over the 2nd baseman's head. Which is counterintuitive as hell. Swing right, ball moves left.
But I don't think a coach can really affect your touch around the greens. Unless you're a mechanical mathematician like DeChambeau, I guess. It's feel and touch.
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When I tried it for a while, my game was very even.
I sucked at both driving and putting.
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Still need practice time but a coach can absolutely shortcut development time around the greens.
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No way I was waiting for full retirement age. The second I stopped working, I started collecting.
I'm hoping to stop working well before I'm of age to start collecting.
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I'm hoping to stop working well before I'm of age to start collecting.
Blackberry?
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Blackberry?
No. That's just a side piece. Less than 5% of my total holdings, and with expected vests of RSUs and future ESPP purchases, will trend down.
I'm about half diversified out of my concentrated position and into index funds (VTI) minus the small stakes in BB and RIVN. But the employer stock position should grow over the next 2-3 years due to continued RSU vesting, so I need to keep diversifying. Going to continue to sell tranches when it's at advantageous prices and lock in as much as I can into the index.
What I have right now plus the expected value of my future (granted) RSU vests over the next five years--at today's stock price--still isn't at my number. But the goal is those, plus maxing out 401k, plus stock market appreciation, gets me to the number somewhere between my daughter (last kid in the house) going to college (age 52 for me) and graduating college (age 56 for me).
I don't have enough in BB that it'll meaningfully hurt my goal even if it went to zero. However if BB really hits (i.e. 5-10x over the next half decade), I have enough that it might help pull the date forward.
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On what platform did you buy BB?
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My kids will be in college whilst I'm ages 54-60. Can't retire before then but maybe soon aftwerward.
My dad worked until he was 80. He didn't really need to, he just didn't want to stay at home. But I'm thankful because that, plus my mom's excellent benefits as a state employee of 25+ years, mean they are secure and I don't have to worry about them. Plus every now and then they give my family a really nice gift, like my daughter's $6,000 French horn!
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On what platform did you buy BB?
I bought some BB around $9. My accounts are with Schwab. I've had an account with them since they got started, almost. Now I manage those and my wife's.
My company at one point had their options running through E Trade, and I must say, I had a truly terrible experience with them. I was glad when my options were gone.
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On what platform did you buy BB?
ETrade.
That's where all of my company ESPP/RSU run through, and I haven't seen any reason to switch out of that account.
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I bought some BB around $9. My accounts are with Schwab. I've had an account with them since they got started, almost. Now I manage those and my wife's.
My company at one point had their options running through E Trade, and I must say, I had a truly terrible experience with them. I was glad when my options were gone.
Never used E-trade, so I can't compare, but I'm a very big fan of Schwab. Especially their Think or Swim software (thanks Ameritrade).
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Think or Swim was really cool back around 15-16 years ago. Haven't used it much since then, so I don't know much about it anymore.
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As with most surviving software from 15+ years ago, it's been consistently maintained and upgraded, as needed. I have yet to find a desired feature that it lacks.
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WTF happened to the market? I checked my stuff before a meeting and was up a fair bit, and then checked again and everything cratered by market close...
Seems like maybe things jumped right after the Fed said they were holding rather than raising rates... But what caused it to then reverse?
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BUY BUY BUY
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https://www.cnbc.com/2026/07/28/stock-market-today-live-updates.html
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WTF happened to the market? I checked my stuff before a meeting and was up a fair bit, and then checked again and everything cratered by market close...
Seems like maybe things jumped right after the Fed said they were holding rather than raising rates... But what caused it to then reverse?
all the talking heads being negative about what the fed did and said (or didn't say)
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all the talking heads being negative about what the fed did and said (or didn't say)
I'm much happier now that I wake up and see my company stock is up 15% today :72:
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Everything is up today, until someone on Wall Street farts.
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Not everything, my stock option gambit was on ABBV, a drug outfit, I sold August calls, and the stock shortly went well past $260. Today, the price has dropped to $257. So, my calls are now out of the money, again. It's good I think not to let daily gyrations impact your decisions.
I took a small position in SKHY, this Korean chip maker that just IPOd. It has swung from pillar to post.
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I've recovered pretty much everything I "lost" yesterday. Take a look at the 1-year return trendline on the market and you can't really even see yesterday. Noise.
But folks gotta freak out about something.
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I've recovered pretty much everything I "lost" yesterday. Take a look at the 1-year return trendline on the market and you can't really even see yesterday. Noise.
But folks gotta freak out about something.
Exactly.
Panic investors are the worst kind.
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Some, maybe a lot, of the volaility is due to algorithms.
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Some, maybe a lot, of the volaility is due to algorithms.
Animal spirits made flesh by encoding them into the globally interlinked financial systems. What could possibly go wrong???
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Exactly.
Panic investors are the worst kind.
I'm more like a panic buyer, if/when I have the ability to be, which isn't often.
Every time I see a tanking market, everything in me wants to liquidate everything I own and buy, buy, buy.
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I've recovered pretty much everything I "lost" yesterday. Take a look at the 1-year return trendline on the market and you can't really even see yesterday. Noise.
But folks gotta freak out about something.
I just sit back, don't think about it much, let a bunch of smart dudes with decades of experience handle it
if they do freak out about something, they don't let me know about it. (I doubt they freak out often)
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I'm much happier now that I wake up and see my company stock is up 15% today :72:
I've recovered pretty much everything I "lost" yesterday. Take a look at the 1-year return trendline on the market and you can't really even see yesterday. Noise.
Well, crap. Here at the end of the month is usually when I make my retirement "contributions" in the market. Looks like I missed my window to buy low.
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I took a small position in SKHY, this Korean chip maker that just IPOd. It has swung from pillar to post.
They didn't just IPO. They just for the first time got listed on US exchanges. They've been on the Kospi index in South Korea for a while and I believe have been listed on European exchanges as well.
Samsung and SK Hynix, just two companies, combined to be 60% of market cap of the Kospi index as this chip shortage and the ensuing market run pushed valuations up.
As I read about South Korean investors, it sounds like they're a bit insane. Love to invest with leverage. And there were recently-introduced 2x levered ETFs of Samsung and SK Hynix that they bought into in droves.
Well, things got crazy (https://www.investing.com/analysis/koreas-leveraged-chip-trade-hits-the-margin-call-wall-200684082)...
The damage has already reached extraordinary proportions.
According to Ioannis Blekos on Goldman Sachs’ trading desk, more than 1.2 million leveraged retail accounts across the Korean market had triggered margin calls by July 13. Approximately 320,000 to 360,000 accounts were fully liquidated by brokers.
South Korea has an adult population aged between 15 and 64 of approximately 35.7 million. On those estimates, roughly one in every 30 working-age adults has been hit by a margin call.
That is no longer merely an equity correction. It is a household balance-sheet event.
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So... Financial advice question.
I currently contribute 10% of my income to the company ESPP. There are a lot of benefits to it, such as a 5% discount with an [up to] 2 year lookback price. So if the stock appreciates relative to my lookback price, I can make a significant instant profit on a buy. I've traditionally used it as forced savings to have a SHTF fund. By keeping the money out of my hands it ends up only being used when needed, while if I'd just tried to put it in savings (or leave it in my checking) I know I would've spent it.
Well, going forward I have enough to cover a SHTF situation, so I don't really *need* to keep contributing. After my next purchase late 2026 which will be the last on the current lookback period, I don't expect another 10x+ movement in the stock from here (although I'd love it lol). So some of the upside might not be there for the instant profit on the stock going forward.
Next summer I want to buy a house. That'll coincide with another kid leaving the nest (and a commensurate reduction in child support). But houses here are expensive... No matter what, I can't afford a mortgage w/o including that 10%.
I'm planning to at least ride the 10% into the next purchase period that ends late spring 2027. But from there I'm considering dropping it to 1% so that I can actually contribute that 9% to mortgage payments. With that, I'm still in the program so if the stock price becomes advantageous vs lookback I can always ramp it back to 10%, but the 9% ends up in my bank account every month instead of only having it lump sum into ETrade every 6 months when we have a stock buy.
The alternative is to keep contributing 10%, live cash flow negative on a monthly basis, and sell stock as needed to make up the difference. That way I continue to have all potential upside of the ESPP program and just might accumulate more $$ over time. And if there's an unexpected stock price move I'm already at 10%, since I can only ramp up percentage every 6 months for the next offering period, not within a specific offering period.
Thoughts? What would you do?
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I have been leary about buying real estate for some years now, even though we did 8 years back. If you can manage putting 10% of your AT income into that plan, I'd probably continue, maybe I'd drop to 5% if needed.
Your picture is a bit complicated for me to add much advice though.
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I just sit back, don't think about it much, let a bunch of smart dudes with decades of experience handle it
if they do freak out about something, they don't let me know about it. (I doubt they freak out often)
This is basically me.
I saw an email this morning that my guy moved some stuff around this week.
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yup, I just delete those emails
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I didn't have faith in my guy at MSSB. So I handle it myself.
But I don't freak out. Even if it sounded yesterday like I was freaking out.
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(https://i.imgur.com/Y6ogcTL.png)
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(https://i.imgur.com/Y6ogcTL.png)
I haven't looked into any of this for some time, but used to be you had to completely retire to collect at 62. The chart obviously isn't taking into consideration the extra income/savings and potential investment gain by continuing to work past 62, to whatever age, can bring. Also, Medicare doesn't kick in until 65, so you're on your own for health insurance for 3 years.
But, if you can swing it, no reason not to try to get your'n back from the gubnmint.
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At 62 I could still make around $24.5K without penalty - if I wanted to.
That would put me at $58K/year or so, until I hit 65.
Only IF I wanted to. At this point, I don't.
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yup, I think I can make $2,000 per month w/o penalty
might start that in 12 months - if my current boss thinks part-time is a good plan for me
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So... Financial advice question.
I currently contribute 10% of my income to the company ESPP. There are a lot of benefits to it, such as a 5% discount with an [up to] 2 year lookback price. So if the stock appreciates relative to my lookback price, I can make a significant instant profit on a buy. I've traditionally used it as forced savings to have a SHTF fund. By keeping the money out of my hands it ends up only being used when needed, while if I'd just tried to put it in savings (or leave it in my checking) I know I would've spent it.
Well, going forward I have enough to cover a SHTF situation, so I don't really *need* to keep contributing. After my next purchase late 2026 which will be the last on the current lookback period, I don't expect another 10x+ movement in the stock from here (although I'd love it lol). So some of the upside might not be there for the instant profit on the stock going forward.
Next summer I want to buy a house. That'll coincide with another kid leaving the nest (and a commensurate reduction in child support). But houses here are expensive... No matter what, I can't afford a mortgage w/o including that 10%.
I'm planning to at least ride the 10% into the next purchase period that ends late spring 2027. But from there I'm considering dropping it to 1% so that I can actually contribute that 9% to mortgage payments. With that, I'm still in the program so if the stock price becomes advantageous vs lookback I can always ramp it back to 10%, but the 9% ends up in my bank account every month instead of only having it lump sum into ETrade every 6 months when we have a stock buy.
The alternative is to keep contributing 10%, live cash flow negative on a monthly basis, and sell stock as needed to make up the difference. That way I continue to have all potential upside of the ESPP program and just might accumulate more $$ over time. And if there's an unexpected stock price move I'm already at 10%, since I can only ramp up percentage every 6 months for the next offering period, not within a specific offering period.
Thoughts? What would you do?
My $0.02.....literally worth exactly that.
Your ESPP has already accomplished its original goal. In my high-yield savings account, I use a spreadsheet to split out categories, and have sinking funds for various things that can or might blindside us. Those are effectively my SHTF categories. One thing I've had to teach myself to do is to quit contributing to those when I know the reasonably estimated target goals have been hit (cue questions about how can you know what SHTF stuff is coming.....I'd say "I just do," but really, I've found most things can be forecasted and planned for). Things have "hit us" which didn't really hit us, and when appropriate, I resume building back up that portion of the account.
So the way I see it: Option A--1) contribute 10%, 2) the mortgage is effectively too expensive, 3) every month you're short, 4) you sell ESPP shares periodically as needed, 5) technically, your net worth might grow slightly faster. What I don't like is, practically, you're constantly selling investments to pay bills, timing may matter, it potentially makes your taxes more of a hassle, and every unexpected expense requires another sale. You said you don't expect another 10x movement.
Option B--1) contribute 1%, 2) mortgage is affordable from paychecks, 3) no monthly deficit, 4) you remain enrolled in ESPP, 5) you can increase contributions later if circumstances change.
I'm going with Option B. There's value in simplicity, and I wouldn't want to buy a house knowing that my monthly budget works because I plan to liquidate investments every so often. (I'll note that's different from selling stock for a down payment. No problems for me there.)
You can make an argument for looking at the discount value you've actually realized for the last X years and looking at the average gain from the lookback (presumably ignoring the big run you don't expect again). If you expect that extra 9% contributed to ESPP to net you, say, 6-7%.....I mean....maybe? If it were something in the realm of 20%....that's a different thing.
Not knowing specifics to think through any particular projections.......I'm sticking with Option B.
That said, you should probably do A. Fading every decision I make is probably the best way to get ahead.
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[img width=234.333 height=500]https://i.imgur.com/Y6ogcTL.png[/img]
What this doesn't take into account either I continue working until 67 or I start liquidating my investments. I can and have make more on my investments than the gain from delaying taking ss
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I'm working and I've already started taking money against accounts that I have to pay taxes on. Only to the point of staying just under the 22 percent tax bar.
My wife makes a lot of money not working.
I hit the jackpot with her (in other ways too) but don't tell her I said that.
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hah, I need to take a trip to Florida :72:
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I figure paying 24% if I hit that level is not end of the world. The next level up is 32% but starts a bit over $400 K married.
So, $211K to $405 K taxable income is 24%.
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We don't need more than $200K to live very well here. We could do fine with less, and we will.
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I'm sure we could "get by" with a lot less than we do, don't travel, don't eat out as much, just pay the bills we have, we're fortuate enough to be able to do other stuff which is of course ancillary and discretionary. I've run the numbers a few times on a Roth conversion. It's not a no brainer for us at all, I did a small bit one year. It would be kinda nice to have it all in a Roth and pay essentially no income tax going forward.
I had that plan once, convert everything and move to California.
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California is on shaky ground.
You don't get a warning.
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My area of interest in CA would be the slopes of the Sierra, not many quakes there. I really liked the area when we visited. Housing values were not insane. Not many tourists.
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One thing about options of course is how fast they can swing from worthless to worth a lot to worthless. ABBV has "tanked" after going into the money strongly, which I guess is good for me. Sorta.
The other weird thing to me is some company will miss earnings by 1% and the stock tanks 8%.
I may buy back those options today, and maybe buy another Call myself as a bet.
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Another "no stupid questions" question...
The money that I park for capital gains estimated tax payments from stock sales goes into SGOV. It's a safe short-term vehicle offering ~4% annual yield based on 0-3 month treasuries.
Without getting into politics / the Fed, I see a lot of stories this week about the Fed holding rates steady, suggesting that they're not serious enough about inflation, and that we're seeing "bonds sell off" and "yields rise".
What does this actually mean?
My gut reaction is that bonds "selling off" means investors don't want bonds at the current interest rates, so "yields rise" because bond issuers need to increase the interest rate yield to find buyers. Is that right?
And the corresponding result, *should* mean that my yield on SGOV should rise?
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Your 0-3 month yield may rise, but not much. The value of short term Treasuries is they don't change up or down much at all. And you have about 6 weeks before there is much turnover. 90 day Treasuries have ranged between 3.6% and 3.9% YTD, currently about 3.8%.
I park funds with TFLO, which is "inflation protected treasuries". Current yield is 3.8%.
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Gotcha. So in theory my understanding is correct, but in practice it won't affect much at least for my own funds parked in SGOV.
Makes sense.
I honestly don't worry about the yield here much, since it's funds that won't sit in there more than about a quarter before I have to sell and pay the taxes. But it's better than holding cash.
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It's kinda the same as a money market fund in effect. The few dollars extra you earn are not worth much bother IMHO. There are short term municipal bond funds if your tax bill is onerous.
Meanwhile, going further out doesn't bring much in either because the yield curve is almost flat, 0.45%.
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The headline stated interest rates SURGED ...
The yield on the benchmark 10-year Treasury (https://www.cnbc.com/quotes/US10Y/) note — used to price mortgages, auto loans and credit card debt — jumped almost 7 basis points, to 4.731%. The 2-year Treasury (https://www.cnbc.com/quotes/US2Y/) note yield rose 6.6 basis points to 4.295% while the 30-year Treasury bond (https://www.cnbc.com/quotes/US30Y/) yield surged 5.6 basis points to 5.263%.
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It's kinda the same as a money market fund in effect. The few dollars extra you earn are not worth much bother IMHO. There are short term municipal bond funds if your tax bill is onerous.
Meanwhile, going further out doesn't bring much in either because the yield curve is almost flat, 0.45%.
Yeah, the question was less around short-term, but more about the mechanism.
A "bond sell off" and "higher yields" seems counterintuitive, because usually lowering demand means lower price.
But if a "bond sell off" means that bond issuers have to increase yield to attract bond buyers, then it makes sense...
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I put my set-aside IRS money in a 5.6% money market that our credit union offers.
Slightly above inflation and I know it's there when it comes time.
I also pay an extra $500 for taxes out of each paycheck I get. I should probably not do that, but it makes things a little easier on me and it keeps me from having to file quarterly.
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I also pay an extra $500 for taxes out of each paycheck I get. I should probably not do that, but it makes things a little easier on me and it keeps me from having to file quarterly.
I can't imagine why you shouldn't do that... They're going to get it either way, so automatically withholding rather than paying quarterly seems like a fair tradeoff that makes your life simpler.
I have to file quarterly this year. If I tried to take it out of my paycheck, I'd have no paycheck left!
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I still set aside money on top of that, in the MM account.
My accountant advises I pay quarterly. They always have.
I don't listen and have never been penalized.
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I can't imagine why you shouldn't do that... They're going to get it either way, so automatically withholding rather than paying quarterly seems like a fair tradeoff that makes your life simpler.
I have to file quarterly this year. If I tried to take it out of my paycheck, I'd have no paycheck left!
When I get appointed King, I shall proclaim that there will be no more automatic withholding.
People don't realize how much in taxes they truly pay when just get a check after all the withholdings, and are ecstatic when they get a "refund" of their own overpayment.
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When I get appointed King, I shall proclaim that there will be no more automatic withholding.
People don't realize how much in taxes they truly pay when just get a check after all the withholdings, and are ecstatic when they get a "refund" of their own overpayment.
I 100% agree...
...and I'm not going to say anything more because that can't be done while avoiding politics :96:
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I 100% agree...
...and I'm not going to say anything more because that can't be done while avoiding politics :96:
Sometimes ya just gotta say F it.
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Sometimes ya just gotta say F it.
I do... Every time I do my taxes. And this year, I'm adding every time I have to pay estimated taxes. That word is in high usage...
I try to tell myself this ultimately, paying CG taxes is a good problem to have, and that I'd be in a lot worse position if I didn't have to pay it. And it *almost* works...
But it is for that reason that every year when I do my taxes, my wife is interested in what we're getting back (or what we're paying--last year was a pretty hefty payment). So I always total up our actual total tax liability, so she can get angry with me and I'm not doing it alone lol.
This year's gonna be a BIG number.
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The SS conversation above caused me to jump through the 40 hoops and log into see where I am on my social security benefits.
One thing it demonstrated to me is that incorporating my practice a few years ago has had a giant impact. Not only on how much tax I pay, but what my social security wages are. One is a fantastic thing, the other--it makes me look like a pauper as far as credits in/benefits to be received go. As the time approaches to start collecting, may have to go back to sole proprietor and pay the income tax to get the prior 3-4 years back up toward what they were.
But who knows what will happen in the next 12 years? AI is going to make us all rich, or a particular big city Mayor's brand of economic system could become the rage.
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I just looked mine up. Crazy that my earnings history goes back to 1993.
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I just looked mine up. Crazy that my earnings history goes back to 1993.
1987 for me. First time I had a documented "paying" job.
Doesn't count the years of forced servitude working in my family's restaurant of course.
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Mine goes back to when SS first started ….
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The SS conversation above caused me to jump through the 40 hoops and log into see where I am on my social security benefits.
One thing it demonstrated to me is that incorporating my practice a few years ago has had a giant impact. Not only on how much tax I pay, but what my social security wages are. One is a fantastic thing, the other--it makes me look like a pauper as far as credits in/benefits to be received go. As the time approaches to start collecting, may have to go back to sole proprietor and pay the income tax to get the prior 3-4 years back up toward what they were.
But who knows what will happen in the next 12 years? AI is going to make us all rich, or a particular big city Mayor's brand of economic system could become the rage.
If that happens then the certainty will be that neither you nor I gets a cent from the program.
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My retirement goals are coming into focus.
Ten years from now - age 57
100K pension
2 million in non house/non pension assets
Paid off house
Wife that keeps working to have insurance ;)
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I only pay in what I need to pay I, ie what I owed last year and usually wait until December to do that. The when I file on April 15th I pay the rest of what I owe
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I just looked mine up. Crazy that my earnings history goes back to 1993.
How about 1976
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How about 1976
That would be difficult as I hadn't even been conceived.
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I'm fairly amazed how accurate the SS earnings reports is, for me. It's my work history.
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I really wish the IRS would just tell me what they think I owe them each spring
should be a website like the SSA - just log in and make a payment
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Yeah, for many kinds of income, the IRS knows what you would owe. I think they know about everything we earn except occasional royalties.
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Found this little blurb in the SS website:
Your benefit amount is based on your 35 highest years of earnings adjusted for inflation. To calculate your benefit estimates we assume you'll continue to work and make around the same amount as last year until you claim benefits.
Every year your employer tells us how much money you earned so we can update your earnings record. You can adjust your annual income to see how a change in income would affect your future benefits.
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If that happens then the certainty will be that neither you nor I gets a cent from the program.
We need a dislike button. I hit like so it's noted I saw it, though.
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Today's question:
Anybody put any retirement contributions into gold, or converted a portion of your 401k/IRA into gold? If so, how do you rate the decision?
Or, even if you've never done it, you can just give your thoughts on it.
I've never messed with that, but I can see that since 1971 when we went completely off the gold standard, gold has massively outpaced the dollar against inflation. It also seems reasonable to hedge against rapid inflation (or the doomsday scenario where the rest of the world finally realizes we print too many dollars while owing too many of them).
OTOH, gold could be a completely different animal than stocks--I wouldn't know--and past performance may not be the same indicator of future performance as with stock indexes. Also, gold has been on quite a tear the last few years, and this might be a bad time to buy. There's been a little dip since February, but there's been no major pullback since, basically, 2000 or so. So maybe there's not really a "good" time to buy....just buy at the insane prices and hope it continues.
As I consider this, I'm not really thinking in terms of short-term investment and selling when the price rises. I'm thinking in terms of holding as part of a retirement portfolio and I'd be selling incrementally in those years.
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Actual footage of MDT:
(https://media2.giphy.com/media/v1.Y2lkPTZjMDliOTUydnY1cmcwdjY5MDAzYWIybHhpdWdpYm5yajdpejFoam10czJvbmIyZyZlcD12MV9naWZzX3NlYXJjaCZjdD1n/13yNFN1TlNCjC0/200.gif)
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Just to tack on to that:
In 1971 if you bought gold at ~$35, that's worth ~$4,080 today.
Alternatively, if you invested that $35 in a fund that returned an average of 7%, it's worth ~$1,626 today. Gold wins. But if it returned an average of 10% in the market, it's worth ~$8,371. Gold loses.
The key is, that's factoring in 55 years worth of compounding interest, which doesn't apply to me. I don't/won't have 55 years in the market. The key would seem to be what happens in the next 20-40 years, i.e., my potential retirement window. In the last 20 years, gold has kicked the ever-living $h!t out of the dollar.
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Actual footage of MDT:
(https://media2.giphy.com/media/v1.Y2lkPTZjMDliOTUydnY1cmcwdjY5MDAzYWIybHhpdWdpYm5yajdpejFoam10czJvbmIyZyZlcD12MV9naWZzX3NlYXJjaCZjdD1n/13yNFN1TlNCjC0/200.gif)
I've actually noted many times that I think this is exactly the image a lot of angry-about-billionaires types have in their minds.
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I have a one ounce gold coin and a fair amount of silver, mostly "rounds". Silver has done well since I bought most of it some 6-7 years back as a kind of hedge. It would be a very small portion of my retirement portfolio, but I do have some silver/natural resources stocks like NANR.
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Story about increasing "yield" by writing covered call options...
I had amassed 500 shares of ABBV, a drug stock, pays a decent dividend (2.8%), has done well over the years. I decided a few weeks back to sell some it. Often instead of selling I will write an out of the money call option, which I did on 400 shares, August 14 260s. If they ran up and sold for $260, OK. I got about $2500 for the premium.
So, within two weeks the stock ran up to 265 which puts me "out of the money", well OK fine. Then for some reason the stock turned around, went as low as about $242. OK, right? Not exactly, had I sold at $255 I'd have been better off than writing the option. It's $245 right now.
Anyway, the "lesson" may be that writing near our of the money options to sell a stock won't work out if the stock price drops a fair bit, versus selling.
I thought about closing out my position, which is the same thing as buying the call option. I didn't. Yet.
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I have some cash sitting in my self-directed Roth that I could throw at some gold.
Is now a good time?
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I stopped buying silver after it went past $40 except a bag of 40% silver coins I got a month ago. I can't tell when it's a good time to buy much of anything unless I'm in Costco. I have bought from MoneyMetals, they ship what they say.
Some outfits have "fine print" like how some coin is really clad, not pure.
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I'm thinking of gold bars. Some of my friends have them.
Maybe I should ask them.
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A thing about bars, if you ever want to sell them, you might need an assay, and you also of course need safe storage. Of course if you buy coins you're paying a premium vs bulk anyway.
Gold Bars - Buy Gold Bullion Bars Online - Various Sizes and Weights - Money Metals (https://www.moneymetals.com/buy/gold/bars)
I see gold bars going for around $4400, gold coins around $4500. I'd probably go with coins myself. Gold is trading at $4269 at the moment, that's a bulk price.
I figured silver coins might be more "tradeable" if the economy ever completely tanked.
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This is an ETF I hold, not that much, but some, as a "hedge" a bit:
State Street SPDR S&P North American Natural Resources ETF (NANR) Holdings - Yahoo Finance (https://finance.yahoo.com/quote/NANR/holdings/)
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I have a few "rolls" of silver coins I bought probably 15-16 years ago. I bought at a high, the price of silver dropped afterward and as far as I know, only just recently went up high enough to have been profitable. I never cared much though....I only bought them as a sort of TEOTWAWKI kind of thing. I never intended to trade them for profit. Only regret there is if I'd waited just a while longer I could've gotten more for the same price.
I'm not sure about this, but I think those outfits that help you convert retirement accounts to precious metals don't actually give you physical gold. Which makes sense well enough if it's a genuine investment. But if the goal is to survive the Zombie Apocalypse, then not so much. I guess then you'd want to have physical gold in hand. Or in the safe. Next to the gun.
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If everything fails, we'd be down to needing guns and ammo, water systems, penicillin, etc. I figure more likely is something akin to runaway inflation, I'm not predicting it any time soon, but a situation where civil order doesn't collapse but is strained badly, folks end up with retirement monies worth little unable to buy enough to keep going.
MAYBE then silver coins might be of use. Maybe not.
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Medical Emergency Kit– The Wellness Company (https://www.twc.health/products/emergency-preparedness-kit?h_campaign_id=521273248&bng_id=1317217325454180&h_ad_id=82326311215507&msclkid=776302b8600e13d3e15c68cbf0f3c9d2&utm_source=bing&utm_medium=cpc&utm_campaign=Search+-+All+MedKits&utm_term=best+survival+medical+kit&utm_content=Medical+Emergency+Kits+-+Phrase+%2F+Broad)
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If everything fails, we'd be down to needing guns and ammo, water systems, penicillin, etc. I figure more likely is something akin to runaway inflation, I'm not predicting it any time soon, but a situation where civil order doesn't collapse but is strained badly, folks end up with retirement monies worth little unable to buy enough to keep going.
MAYBE then silver coins might be of use. Maybe not.
IMHO if everything fails to where gold becomes money again, then we all have MUCH bigger problems than whether we have a supply of gold.
Hence, I don't own any gold.
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Yeah, I spent a bit of effort pondering what I'd do if "society" goes under, anarchy, etc. I figure very little useful. The med kit would be of use for a time. I don't want to live in the mountains in some compound, and realistically, one would need a group of likeminded to survive long.
I also have thought for decades that inflation was about to go ballistic, hyper etc. I've lived through some pretty bad inflation, but it was mostly tamed. I find our "financial system" to be remarkable, not all in a good way. Anyway, I think owning a small bit of PMs is an OK thing.
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(https://i.imgur.com/YinlqPU.png)
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(https://i.imgur.com/YinlqPU.png)
Not sure if I'm reading this correctly, but it sounds like it would only apply to traditional IRA's, not Roths. Roth withdrawals should already never touch your taxable income.
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Pretax IRAs only.
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Where would you stash short-term holdings (<1 year) for potentially planned expenses?
Assume it's a taxable account and you're in a state with high income tax (which applies to capital gains / dividends) like CA.
I've been stashing things short term (1-3 months) in SGOV when I've sold stock and needed to hold back for cap gains estimated tax payments. Figure it's a fine way to get a 3.5-4% annualized yield with basically zero risk. Better than a HYSA because the dividends are shielded from CA income tax.
But I'm looking at next summer being the optimal time to buy a house. And I'll have a decent chunk of vesting RSUs over the next 4 quarters (which if sold at vest aren't going to have material cap gains) between now and then. I've been thinking of just rolling those into a safe yielding investment until I decide what I'm going to do house-wise. It's more about recession protection, because if I weren't worried about that, I'd just drop it in VTI.
SGOV is easy, gives that 3.5-4% yield, is safe, and at least avoids the CA income tax (possibly 12.3% this year). I see other vehicles, like JAAA/JBBB/CLOZ, which have higher yields (5.34%6.95%/7.2%, respectively). But I don't know what the risk profile is, and I know they're not tax-advantaged like SGOV. Will the principal value markedly decline in a recession? I don't really know, but that would make them no better than VTI. I have some risk tolerance, but it's like the 5-10% level, not the 50% level.
Thoughts? Is there anything better than SGOV in this situation?
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My savings account or checking account
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I think you can find a tax-exempt money market fund that can do better.. specifically one which is state specific and maximize your avoidance of tax. you'll also want to check AMT free eligibility.
you live in a tax hell hole.
obligatory note: I'm an associated person of a BD, thus I will never name funds, or tickers on a public message board.
i iike making my own muni bond ladders for my less than 1 year time horizon cash, but I'm a nerd on that stuff. (emma is a bookmarked site for me).
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gotta have some serious $$$ in there to make much difference in under a year - 3-4%
something I don't need to worry about
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Tax equivalent yield is likely to be favorable if your combined state, local and federal tax bracket is 32% or higher.
Federal bracket reaches 32% alone right about 200k in income. (folks often have to be reminded, that's marginal rate. $ earned below $200k are 24%, then under $100k ish is 22%, and then I think 12% is currently around$50k). don't forget if you get hit by the 3.8% (net investment income tax) which is a sneaky bite.
CA. obviously has a high income tax, I bet 8% in the under $75k in income range, and likely 9+% on incomes over $75k.
on that crude math, if somebody lives in CA and makes $100k or more, you should be considering tax exempt MM funds. If you make over $200k you are a getting crushed on your cash savings to not use tax-exempt MMFunds.
T bills are fine, even in Fund form (liquidity advantages), but it is worth shopping for Tax Free MMFs in CA, and it will be much more valuable than a few nickels.
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A high-yield MM can be had for 4-5 percent, but why make Billions when you can make Millions?
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Treasury bonds are free of state income tax. One can of course get a MM fund based on T bills.
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Where would you stash short-term holdings (<1 year) for potentially planned expenses?
Assume it's a taxable account and you're in a state with high income tax (which applies to capital gains / dividends) like CA.
I've been stashing things short term (1-3 months) in SGOV when I've sold stock and needed to hold back for cap gains estimated tax payments. Figure it's a fine way to get a 3.5-4% annualized yield with basically zero risk. Better than a HYSA because the dividends are shielded from CA income tax.
But I'm looking at next summer being the optimal time to buy a house. And I'll have a decent chunk of vesting RSUs over the next 4 quarters (which if sold at vest aren't going to have material cap gains) between now and then. I've been thinking of just rolling those into a safe yielding investment until I decide what I'm going to do house-wise. It's more about recession protection, because if I weren't worried about that, I'd just drop it in VTI.
SGOV is easy, gives that 3.5-4% yield, is safe, and at least avoids the CA income tax (possibly 12.3% this year). I see other vehicles, like JAAA/JBBB/CLOZ, which have higher yields (5.34%6.95%/7.2%, respectively). But I don't know what the risk profile is, and I know they're not tax-advantaged like SGOV. Will the principal value markedly decline in a recession? I don't really know, but that would make them no better than VTI. I have some risk tolerance, but it's like the 5-10% level, not the 50% level.
Thoughts? Is there anything better than SGOV in this situation?
The annoying answer (or opinion, input, whatever) is "it depends." I keep funds like what you're describing in a high yield savings account. I could do slightly better in some of the options you and Marq mention, but I view those as emergency funds. I save for specific categories, some of which I know when they are coming around, but some are SHTF categories and I needed the $ rightnow. It's quicker for me to get it out of the savings account than any other source. If I knew for sure when I'd need those funds, then as mentioned, I know I could do a tad better with some CD's at a local credit union, or a short term bond. But I think Marq is on the right track....admittedly I'm not used to factoring in state taxes because I don't have them.....MarqH is likely far ahead of me in thinking through that off the top of his head. And it sounds like you don't anticipate needing them emergently.
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I stash "cash" in a money market called SWVXX. This money is available in a day if needed. My checking account is with Schwab also, so it's very easy to shift funds to pay bills. The money I have in SWVXX is in my IRA so the tax issue is not relevant.
One of my goals when I retired was to get all my accounts in "one basket", which I managed. I have a Roth, an IRA, a brokerage account, and a checking account all with Schwab. My wife also has accounts there which I manage.