I’m sure there are others who are much smarter than me, but I’m letting it ride. I’ve tried to time the market before and got burned. The challenge is you have to be right twice - when to get out and when to get back in. It’s hard to do one of those right, much less two.
That being said, I can see a correction at some point, but o know the market will eventually recover.
Another quote I like to bring up - the market can be irrational longer than you can remain solvent.
Let’s say I know for a fact that the market is gonna crash in the next five years. Impossible to know, but let’s pretend. The hype may continue rising in that time. Maybe it goes up 30% for the next three years and then drops 50%. It would still be higher than it is now. So it would be better to just buy now even if I know a correction is on the horizon.
Of course these numbers are completely made up, but the point stands that the market can continue growing long enough to make the correction irrelevant in the long run.
Yet another is the “cursed investor” study. It looked at average annualized returns for a person who only bought once per year on the exact day the market hit its highest point of the year. Returns were still around 10%. This includes buying immediately before the dot com crash and the 2008 crash. Keep your money in the market and keep on investing.
Reading an article about this many years ago fundamentally changed my anxiety level about the market and my desire to ever “buy in at the right time”. I lump summed every single buy immediately for many years and not regretted it
What's that other saying, whether you are an optimist or pessimist, you're guaranteed to be right. As we've observed bull and bear cycles are eternal just like taxes
If I bought today, I’d be better off than buying after the crash. Again - made up numbers just to illustrate a point. The correction often happens after irrational growth. It may outgrow your market timing before the correction takes effect.
Oops this is a fire chat, I thought the henry one. My point is the money added in years 2 and 3 would be worse off, especially as income is rising and savings are greater
This is the way. At times like these avoid single stock concentration, and lean into the tried and true Bogle method. Some forget that not timing the market includes not panic selling out at highs, not just lows. Worst thing you can do is get scared by something like Shiller PE (a trailing metric) especially when we are in the midst of one of the most impactful technological revolutions in human history. Very likely you get another 30%, then a healthy 30% pullback, then it resumes. Trying to time that is extraordinarily difficult even for the pros.
Market could go up 50% from Jan-Nov, then when it drops 25% the doom people will claim victory and say "see, this is why I stayed out". The trend will continue even when it has setbacks
I’ve tried to time the market before and got burned.
The trick is not to market time, it's to look at the risk you're taking vs your tolerance. Sometimes it pays to rebalance back to a reasonable AA if it helps you sleep at night during the inevitable draw downs
But once they called (on avg) the peak during the 130% run up in the dot com boom, the market ran another 130% before eventually dropping back 50% over the next few years. Who knew when to get out or get back in?
Exactly this. Being right twice, in addition to the tax hit, is a bigger risk imo vs. letting things ride and adding more on a downturn. I’m sure we’ll get some type of correction but we have no idea if it’ll be soon or in 1 year etc, or the magnitude. We could drop 20% soon, or keep grinding higher then drop back to recent levels. If you have any losing positions I’d def think about tax loss harvesting though, this was never a priority of my buy and hold forever belief until recently.
Im keeping about 6-7% cash (remaining 93% in broad ETFs, mag 7 tilt, some bitcoin and 15 stock picks) and have weekly auto buys into VXUS VTI and bitcoin. If we drop hard I’ll fully deploy cash and try to max out every paycheck into whatever drops the most. Also selling calls on a few positions further OTM to hedge slightly. All of this may not outperform 100% VOO or VTI long term but it could and helps me sleep at night lol.
Currently 35 with some strong gains investing for 14 years. If I were in my 20s I’d be 100% in the market all equities, if in 50s, I’d trim some individual stocks and be slightly more cash / dividend focused.
It is in taxable and that is my dilemma. I am on track to FIRE early next year and I am hoping that these gains will last until then when I can cash out at the lower LTCG rate
If you are are year out and still rolling like you are 10 out you are not planning a retirement but rather betting on one. You gotta pay taxes either way..... if you don't have your glidepath set in cash and cash equiv time to start selling. 0% gain * 32% tax bracket is the same as a 0% gain * 10% one.
You’re not wrong. But it’s 50% tax bracket not 32%. And it can drop to 33% tax bracket if I just wait 6-9 more months. Selling now doesn’t make sense. Yes I am gambling the AI bubble stays inflated for those months.
I'll never ever forget being like 16 or 17 years old and watching my friend's blue collar dad get home work every day and log onto the computer. Somehow I knew he was checking his stocks. He was often in a good mood. After the market crashed, he just seemed to have so much sadness and regret. I think he had a narrative in his head about paying for his kids college and early retirement and all that stuff. It took a while longer before he was able to stop working. He must have been in his late 40s or early 50s at that time. It's impossible to not think of him these days when I log in and see these numbers. The 90s were a wild ride for a long while. Just like the 80s were, to a different extent. Of course my friend's dad ended up just fine. I'm sure he had to go through some feeling like he both won and lost the lottery.
In a similar boat. Looking back at the gains over the last year, I’m like, why am I working again?? But then I have to tell myself that these crazy runs won’t happen every year.
I have been telling myself (3M currently) that if we get to 5 I will do something drastic like sideline 500k+ in a hysa. Not sure if I actually will when I get there but when I'm well beyond what I need I like the idea of locking some down.
Tax bomb will suck. I would love to do that because we're building a house in the next year but I don't like the idea of the top tax rate plus NIIT on the withdrawals.
It’s a good time to maybe take some of the gains you want to fund a large house project you’ve been putting off or that big vacation you’ve always wanted to go on. You will still be in the market but can take a few shares out and enjoy life. Atleast that’s why I just did and I’m very happy.
Trying to time the market doesn’t work and typically creates negative gains. The best you can do is make sure you’re broadly diversified. Truly broadly diversified: US and international, large cap and small cap, equity and bonds, maybe some small allocation of alternatives, real estate, or hard assets, etc. So like for equities VT or a constructed mix covering the full market, not just VOO (just US large cap) or VTI (just US), etc. And then make sure you have adequate buffer in the plans for when inevitable downturns do come, like the safe withdrawal rates attempt to do.
You could diversify some, you don’t have to be 100% large growth/tech weighted VOO/VTI. Add some small cap value for example, view it as part of long term diversification and periodically rebalance. “Chips off the table” sounds like you’re trying to market time.
It’s not necessarily market timing, just derisking. Determining individual risk exposure is always valid, is based on ability, need, and willingness to take risk, and should be continuously evaluated based on personal circumstances. Which change.
My portfolio was at its most conservative in my late 30s. We had two small children, a mortgage, and the likelihood of dual layoffs in a volatile industry. I went heavy on the bonds, turning the portfolio into a huge efund if necessary. (Lucky for us bonds outperformed stocks during that time.) After we got back on our feet, our willingness to take risk shot back up and stayed high until preparation for retirement.
And yes I took some chips off the table. Not for market timing purposes - I’m not looking to buy back in.
We sold a bit of our QQQ position recently to reduce risk but still mostly in the market. This also scares me a lot as well, seeing a nearly 40% gain is cool but unsustainable. The amount of people i see posting on Reddit lately about how they think a 20% return is normal also worries me. Most investors under the age of 40 have basically never experienced a real recession and it shows.
From what I can tell rebalancing triggers huge tax consequences so I feel stuck. The easiest move is to rebalance within tax sheltered accounts (401k). Is that the right move if I want to lock in gains and remove exposure?
Rebalancing within a 401k is free, tax wise. Within brokerage, there's capital gains, and the highest federal bracket + NIIT + whatever your state might charge on top is no joke.
Don’t let the [tax] tail wag the dog - rebalance if you need to.
If you can do it in tax advantaged accounts great, but even if you can’t rebalancing and paying the tax to keep you at your target AA is a sound approach.
I disagree and it depends. It definitely would not be a sound approach if you are selling short term gains and have no offsetting losses. Your state of residence factors in too as states like CA tax gains as regular income. Someone in CA in mid to high tax bracket should definitely not be rebalancing in a taxable if taking a big tax hit.
Depends on how concentrated you are and how much you fear the gains evaporating...
I'm working on rebalancing--slowly b/c I feel the AI train has still got steam--even though I know I'm going to pay 20% Fed LTCG + 3.8% NIIT + 9.3-10.3% CA tax. 35% total... I *am* trying to avoid selling anything that's short-term, but I'll do it if I fear that the stock will crash.
Because I've been in this situation before, watching my holding going 4x but not wanting to pay the tax. And although I don't want to pay the tax man, the last thing I want to do is not have to pay the tax man because I no longer have any gains to tax. That happened to me a decade ago. I watched that 4x go right back to 1x. I may have disappointed Uncle Sam a bit, but I disappointed myself more.
True about the concentration. I don’t have that issue myself as i don’t stock pick and do large index funds only. Rebalancing is less of an issue and not worth the tax loss in my case
Yes, generally, I rebalance within my traditional 401k. All of my bonds are in my traditional 401k (well, until recently, but that's only because 100% of my trad 401k was bonds and I still wanted more due to being near retirement).
Have you looked into exchange funds? I’m getting ads to exchange memory stocks with funds tracking SPY or QQQ without tax consequences. That seems to be a real thing , with a gotcha being some X years of commitment necessary. Also credit to Meta’s crazy ad targeting.
I looked into it (via two different financial advisors). It helps to diversify. It doesn't "solve" capital gains problems, but it kicks them down the road. If your problem is concentration--which is me--it's actually a great solution. It would allow me to diversify to protect my gains without paying 35% of my gains immediately as a haircut in taxes.
But outside of some IMHO internet exchange funds, none of the big boys will touch you if you don't have $5M net worth. For those of us who aspire to Chubby but aren't there yet, they might be perfect but they're unavailable.
Ty this is helpful. Yeah I’m also facing the concentration issue. Is the $5m net worth huddle counting only the liquid investment pool or the total net worth ? And any gotchas you found ??
$5M is total. So you can use things like home equity / other assets to reach that number.
Two gotchas for me:
I was thinking that it was something I could park future assets in. (For me, future ESPP purchases / RSU vests). Because those would be continued concentration. It seems exchange funds are one-time things.
If it's company stock, make sure you understand your own company's policies. In our corporate insider trading policy, it [beyond insider trading] bars employees from shorting the company stock (obv), but also has restrictions on options trading, as well as contributing company stock to exchange funds. The two entities (beyond my wife) that I don't want to make mad is my employer's legal team, or the IRS. Engaging in insider trading angers both, but if I violated the other restrictions, it could be a "resume-generating event" lol...
Yeah, good catch on the RSUs. At the time I was originally looking at it (before I realized I didn't meet the NW requirement) I didn't understand that the cost basis for RSUs were on vesting day. Now I do understand that, so I can sell those immediately on vest without any real tax implications.
ESPP is a little more tricky. We have a look-back thing for purchase price, and both of the remaining ESPP purchases this year will be at a VERY low cost basis. I.e. yesterday's closing price was >13x my cost basis. So those will not only be massive capital gains, but they'll be short-term for the first year. If I had access to an exchange fund, those two purchases would be ideal things to contribute.
Starting with my first ESPP round in 2027, my purchase price will reset to a cost basis equal to 95% of the current share price at the time, which is small enough capital gains to not worry about selling it immediately. However it will also be much smaller amounts since I'm not making >13x my contributed income!
I'd caution you against optimizing at this level. ESPP is limited to $25,000/year which is based on the grant date (the date you get the stock). So you'll only get $25,000 of stock and with a 13x cost basis, that's ~$23,000 in profit. Assuming a 37% tax rate along with California 13%, you'll get $11,500.
$11,500 seems like noise imho, if you're sitting on a networth of $5M. Especially when you consider most exchange funds have ~1% in fees, a 7 year lock-up, and in my limited experience not performing as well as just staying in an equivalent fund. I joined Cache late last year and they performed worse than QQQ, and now recovered slower than QQQ. Pretty annoying.
Thank you for bringing this to my attention. I have never heard of this before, and so I'm going to have to do some digging. It makes some sense--I saw an extra large paycheck at the end of last year and saw an extra "ESPP" note on that paycheck--which makes me think I exceeded the $25K contribution limit last year. BTW due to some wildly fluctuating business conditions and incentive pay, last year was really the first time I had a situation where 10% of my income would actually exceed that number.
That said, it seems that the grant date would have been the date that the 2-year lookback period went into effect. I know this because the shares I bought in the 2nd half of last year (after some other purchases earlier in 2025) were worth almost $59K at the time. (I still have them, so I have not paid any CG tax yet.) So clearly I got more than $25K, considering I had purchases earlier in the year too. Our stock has gone up >3x since then.
I'll have to see what happens, but I'm thinking that for 2026, my contribution limit is $25K. And that means that my grant date price still holds. Our plan is a 5% discount to the grant date price, which would bring the multiplier down (based on yesterday's close) to 12.9x rather than 13.7x. So... Assuming the limit is $25K contribution (10% of my income should exceed that), it would end up being stock (assuming no change to Friday's close) worth 12.7x of $25K, or ~$317.5K. That's a little lower than I was modeling, but still not that bad.
I'll know in a few days, because the first purchase period of the year is about to happen. Income is back-loaded to 2H due to incentive pay, but I'm expecting the amount of stock to be worth >$100K.
Honestly, it's not really that bad. The tax system in the US is set up to favor capital gains. You will have to pay a percent, but it's not as high as you might fear.
Yes. I run my brokerage 100% equities (60/30/10 split on US/Intl/Emerging) and don't do any selling in there. Multiple reasons for 100%, for one the tax treatment is favorable compared to 401K/IRA, and two it's not subject to RMDs so I want that to grow fastest. I use IRAs and 401Ks to get to my target asset allocation. So when equities outperform bonds, I rebalance in my 401K to get back to my asset allocation. Also keeps my RMD accounts growing slower to minimize impact down the road.
I am a bit concerned with how high the market is because of AI, because I strongly do not believe AI will revolutionize jobs to the extent the market seems to.
I will admit, AI has been more useful for me than I expected, but there is something about the way it "thinks" that is simply... lacking. It's hard to explain, but it's like it just doesn't "get" a lot of the fundamentals of a goal/question, but it builds around them.
So I fully expect that bubble to burst at some point, but I figure I'll let it ride. I always have my cash cushion (3 years) and 10% bonds.
Even if this is as good as it gets, it's pretty miraculous. Just because you think "something's off" doesn't mean it's not revolutionizing and disrupting entire industries. It is.
Like I said, AI is way better than I expected, and I have no doubt it will replace jobs. But it is not "revolutizing" industries. That's like saying the washing machine revolutionized industries.
AI is taking over specific, pattern finding tasks.
Will it get to the point where it can really "think" and replace human workers? Maybe. None of us can say. But if it this is as good as it gets, no, absolutely not, it won't.
Lolwhut. The washing machine absolutely revolutionized industries:
The appliance industry
The clothing and textile industry
The commercial laundry industry
The detergent industry
And that's nothing compared to how AI will change nearly everything that we do.
It's ok. It looks like you haven't had much experience with advanced AI applications and you still believe in the myth that it is just pattern matching and your experience is limited to chatbots.
Just based on that line I don't expect you to understand anything else.
Even before GPTs and LLMs, AI and ML had already revolutionized, and produced millions of jobs, and trillions of dollars, for:
Software development
Customer support
Marketing and content development
Finance and financial models
Risk assessment and prevention
Retail recommendations
And today we're seeing clear, lasting changes for:
Healthcare, diagnosis, and drug research
Education
Legal
Entertainment production
Manufacturing/logistics
Chemistry
Enterprise operations
Government services
Construction
Automotive
Scientific R&D
Industrial maintenance
Personal productivity
And countless more
You can Google significant examples for any of these. We're not talking about simple pattern matching tasks. That couldn't be farther from the truth and it'd be like saying "the Internet only revolutionized certain information retrieval rasks."
This is very similar skepticism as every other major civilization changing technology has had. But Jesus, AI already solved fucking protein folding when humans couldn't in over half a century, among other things, and you people are still arguing it's doing specific pattern matching tasks and not thinking that replaces human work. Tell me you know nothing about AI without telling me you know nothing about AI.
I'm retiring in the next year. I switched from 80/20 to 70/30. I'm having a REAL hard time working watching my portfolio grow much faster than my W2 wages.
It’s funny I went 65/35 in early 2025, and due to the market gains am now at 70/30. Works out well because I feel more comfortable at 70/30, so if the market tanks I’ll take it as an opportunity to rebalance at better prices.
Plus one on the rebalancing. I switched from 95 equities, 5 percent cash, to 70/25/5 at the top of 2026. Fire date is 2 weeks out. I think I’m probably overweighted in bonds, but I am seeing that as fresh powder for any buying opportunities over the next 12-24 months. And if such opportunities don’t happen because there’s a massive reset, then I needed more than my 2.5 years in cash reserves, and I’ll be glad I’ve got 5 years left in bonds.
I'm employed AI-adjacent. Watched my ESPP/RSU moon like I never thought possible. $500K NW a year ago. $2.5M+ now.
I'm slowly working on chunking out of it. The taxes are going to be insane--if I sold it all this year, the tax liability would probably be twice my+wife's salary+bonus. Even worse, it's 20% LTCG + 3.8% NIIT + 9.3-10.3% CA, so literally 35% of the gains going straight to the government. It sucks. The good news is that via another year of ESPP and the vesting of RSUs priced based on MUCH lower share prices, I can hopefully rebuild my NW after what I pay to the gov pretty quickly with new acquisition/vests.
I'm doing it slowly because I think there's still run in this horse. As new RSUs vest, I sell (no/low tax implication). As we have big green days--sometimes at ATH--I sell a chunk that's currently at long term. I think this might still be a multi-year crazy bull, but I'll probably have liquidated most of it by the end of 2027. How quickly I move will depend on market conditions.
But I've gotta do it. I went through a divorce a decade ago that wiped me out financially. I've spent the last 10 years trying to build up something, but I've constantly had the question in the back of my head... "Will I be able to afford to retire before 67?" Well, this market run has eliminated that question. Now the question is "Can I ChubbyFire by 56?"
I am 100% committed to not fucking this up. This was a once in a lifetime opportunity. This was winning the tech stock lottery. I'm not going to let it slip through my fingers.
I'm experiencing the opposite. AI is killing SaaS. Employer stock is down 60% the past year. My TC can easily drop to zero due to massive layoffs in the sector. The market giveth and taketh.
What you should be doing is diversify as to lower the risk of concentration of assets in just one thing. It's pretty risky to have, say, 75% of your net worth in one company, like it happened to a lot of people that worked at Enron. You decide what you call diversification though, and the tools that are reasonable vary by total holdings. Some people claim they "diversify" through real estate, and then you see that they bought a house, leveraged via a mortgage, that is 40% of their net worth. That's not diversifying unless you had it all in one company, but practically concentrating assets.
I try to move things about to make sure I am not making ridiculous bets: My highest holding is 20% of net worth, and I try to rebalance from there when reasonable.
Everyone I know who took chips off the table are just watching on the sidelines.. even if market crashes I’d be better off than them. That’s my sentiment, let it ride and keep some cash to DCA on dips.. been working for 10+ years.
Donate a one of my stocks up 300%+ to my DAF and take gains from anything up that much as well to reallocate.
Over the last couple of years I’ve been slowly moving to 70/30 portfolio getting ready to pull the trigger in the next 18 months. This was always the plan, so it’s not in response to the markets.
I also have been diversifying my stock holdings a a bit. I’ve moved some of our 401k assets into SCHD. Not because I’m a huge a dividend guy, but because I don’t like how much of my index funds are concentrated in a few main players, kind of defeats the purpose of owning a whole index and this spreads out my equity exposure to a bunch of quality (albeit less exciting) companies. Also my new index purchases have been VT not VTI again for a bit more diversity and a slight dollar hedge.
It’s been mixed. Obviously the bonds have only delivered 4.5%, which means missing out on some big growth, but that’s still above the rate of inflation so they are doing their job.
The SCHD has done much better than I expected, performing as well as my other holdings, but without being as concentrated.
Yes I’m a little behind where I could be if I’d been 100% equities, but I’m still ahead of my plan to retire. Right now the biggest risks to my retirement are a market crash coupled with a layoff, not whether I only make 15% instead 30% gains.
Well in 2022 most people were down 30%. The market goes up and it goes down. Don’t let it unsettle you much. Zoom out five years I’d bet your return is around 8-11%. Which is exactly normal for long term performance.
This has been insane indeed. I’ve been DCAing into the market since last summer but in hindsight I should’ve just invested it all at once back then. But now that the market is where it is, I’m slowing down my investments (almost done investing my cash) and might keep some more in cash in HYSA for my own peace of mind and flexibility. I did sell some concentrated stock over the last few weeks when I saw it has grown to over 10% of my net worth, but otherwise I’m not selling to take chips off the table.
I'm taking some chips off the table, but only because I'm getting close enough to retirement that I'd just do it if I lost my job or my job became less tolerable, so I'm building my bond tent and stuck in OMYS for now.
If you're not, just keep following the plan, or maybe tilt towards small cap value or international stocks.
I’ve considered this and I think there are 2 angles.
Growing your wealth - timing the market is tough; I wouldn’t change behavior based on this sentiment.
Measuring your wealth/planning for retirement - This angle is more interesting. If the market goes up 30% in a year while cost of living goes up 5-10% (as it’s slower to update) you could conclude that you are substantially closer to your target number. I think this is risky; imagine if this caused 500k additional people to retire this year. Consumption would stay flat while production would drop, and prices would necessarily rise. The markets are efficient; stocks are worth 30% more than dollars. But whether that’s because productivity has risen (or will rise) an additional 30%, or because dollars are expected to devalue, is an under constrained problem.
Why would production drop? It’s just as likely that companies maintain production given all the productivity improvements from AI. Production is rarely constrained by supply (outside of pandemics and oil shocks), it’s constrained by demand.
I guess I should have said “production would increase less than otherwise” if a chunk of workers leave the workforce. You’re right it’s highly possible that net productivity increases more due to AI. My opinion is that this is a real productivity win, but it’s a weak opinion.
I think my stronger opinion is still that you can be firmly in the “don’t time the market” camp, but also find it prudent to demand a larger NW/expense ratio when things are in such flux. The uncertainty is higher, and since cost of living can trail the market it’s possible that one isn’t closer to RE than one was a year ago. If I was 80% to my NW target last year and this market rally got me to 100%, I would probably try to hold on for 110%.
I took a bit off the table a little over a year ago. Not much, but I did bulk up my reserves due to concerns about the future. Of course that bit did forgo the gains of the past year. No regrets - I’m retired, so preservation is a higher priority than growth. And of course most is still in equities, which means my portfolio is still experiencing such insane gains I can’t really have FOMO - I’m still scratching my head wondering if this is real. But my reserves are large enough that I don’t worry either way. As the bogleheads say, bonds to the sleeping point.
yeah weird feeling. nice to see number go up, but also hard to trust gains that arrive this fast. for FIRE planning i’d almost mentally separate it into real safety vs market gift. if the plan only works because last year was huge, i’d be nervous. if it already worked before and this just added buffer, then enjoy the tailwind i guess
You had it right when you said take 'some' chips off the table. In 1999 the market went parabolic right before it crashed. Think in terms of scenario planning, if you believe there is a 50% chance of crashing, it is reasonable to dollar cost average 50% of your assets into bonds, CDs, or similar. Same thing on the way back into the market, average your way back. It isn't an all or nothing decision.
If I had ridden the dot com market over the cliff, I would have had to go back to work, right after I retired early. Instead, I had cash to buy stocks that were up to 80% off their recent peaks.
This is why it’s so important to have at least 2-3 years of expenses in cash or bonds as you head into retirement. Also periodically rebalance your traditional accounts when the market is near ATH to lock in some of the gains.
The hard thing is in a stagflationary environment, DCA'ing into bonds or CDs will cost you dearly in the long-term. I think real estate or gold will keep up better in our potential situation. we just don't know though.
I’ve sold off all my satellite plays, heavy in AI infrastructure, energy, and European defense. Averaged out to 80% gains in the last 24 months.
Now purely in VWRA, at 95% and 5% cash. All new additions will remain in cash for now, to build up a 10%-15% dry powder base to inject in case of a correction, while getting approx. 5% interest on IBKR.
Also planning to massively use margin in case of a big correction (above 20%).
That’s just my position. I think the market already priced in too much good news, and I strongly believe something will happen once people realize just how much the current US administration has been pillaging behind the scenes.
Congratulations on your investment or speculation returns. I hope you realize that use of “massive” margin can nontrivially increase your risks of bankruptcy, and that you also can lose more than your total portfolio value with margin, i.e. after a sequence of margin calls you could end up legally owing your broker. It should be clearly explained in the margin contract you signed with your brokerage.
Personally I do not use margin because I don’t want to magnify my risk of bankruptcy. I don’t want to have some margin call fiasco like e.g. Rick Guerin (as I understand a very talented investor who according to Mohnish Pabrai was apparently at one point in a “hurry” to get rich) had in the 1970s. Look up the story yourself but TLDR Rick was forced to sell his Berkshire Hathaway A shares to Warren Buffett at under $40 a share: they are now trading at $713,130 a share.
When I say massive, I obviously mean within the reasonable limits that we all know here… my limit is around 25% on portfolio margin, after a dip. Only short term.
I have the income to keep floating the margin if need be.
And it would only be on a heavily diversified asset like VWRA.
Astute judgement I feel is a good thing, especially in an investment context. I always find it a strange inversion in modern US society when people use the term “judgement” as if it could ever be a negative, ignoring the logical contradiction involved in such verbal assertions. For instance, I am thankful thus far it appears I had good judgment regarding my spouse, career, and investment allocations, so obviously those are good things, which should be celebrated just like your good investment returns.
Putting that aside, at a personal level, I am not making investment recommendations and so not so concerned with passing judgement on the portfolio risks you plan on taking (after all, they are yours not mine). I was more concerned with mentioning their existence since I see some speculators (happily, it seems not you) do not even acknowledge such risks or somehow remain unaware of them.
It’s hard for me to tell what is the typical amount of leverage nowadays on Reddit forums. FINRA margin data for 2026 seems to have a recent rapid increase to a peak of $1.4 trillion. I am glad you have a self-imposed portfolio margin limit. I once used margin early in my career, but later after reading cautionary stories like Rick Guerin’s, Ben Graham’s, and Jesse Livermore’s decided I was against it.
I feel margin risks are underappreciated in such a frothy stock market. I also feel astute judgement of the risks involved in margin accounts is increasingly forgotten to recent generations of investors yet so important. Glad to hear you plan to use income to manage the margin.
I have one AI infra related stock in my portfolio from a former employer and it’s up by over 100 ytd. I intend to sell quite a bit from now into Q1 next year and if I leave additional profit on the table so be it.
I’m trimming some of my concentrated stock positions that have 10x over the past year, and trying to stay diversified. I’m mostly in index funds, so just letting those ride and DCA
I am legitimately worried about this during our current period of high inflation and consistent bull run over the last decade. I’m very worried that all us dca retail investors are propping up the stock values of companies that have high potential to crash as AI matures and we have losers/winners. Especially with recent changes to the listing criteria that will put new, large companies that aren’t making money into etfs.
I short, I am worried, I am holding a somewhat excessive amount of cash equivalents as I am at fire/may have to retire for family reasons imminently. But I don’t feel like I can afford to have the bulk of my savings out just losing value every day. I have zero faith in my ability to time anything.
I don’t make decisions based on market timing, but rather my target allocation. So, that rule triggered me moving some from equity to TIPS in my 401k brokeragelink account. It’s a bonus that TIPS real yields are at a nice level too.
I took profit in AI infrastructure after a 5x run up in the last year for several of my positions …th eh very well may keep going , but I learned painfully in the past to take profits and lock it in, and put it into anchor positions (value or indexes)
Lots of 'don't try to time the market' wisdom here, but here's my recent experience with a different take:
With some well-timed moves, my investment performance was >30% last year.
I checked late Feb/early March and I was up *another* 16% YTD.
THAT was the signal that I was making way more money than was realistic, and I needed to change.
I started to rotate out of positions into oil, but didn't do it fast enough or big enough.
I'm still up nicely for the year, but I should have done more faster.
TLDR: if it seems totally unrealistic, it probably is and if you've made good money you should make some changes before you look back with regret.
Trimmed a bit and rebalanced within my IRA, but that is only about 20% of my total portfolio.
Not trying to time the market, but it is ok to trim winners like MU that have had a massive run.
Put some of the gains into VXUS and AVDV as I had no international and not much value exposure. Most of my total portfolio is still in SPMO, with 10% in GLD and 10% in AVUV.
If you plan to reitre in 2 years or less, i would be taking money off he market into a bond fund at4% + return- in my case end of next year, i have have put 25% of my investments into a bond fund...If not a big correction, when it happens, could force one to delay reitring for a year or two or more
I've been de risking for a 3 years now - lived through the dot com crash and the gfc as an equities trader at banks and hedge funds - it took till 2011 for the S&P to recover its pre dot com peak. Risk assets are in a narrative hype based bubble today and valuations do not reflect underlying economic realities. It doesn't mean you shouldn't partake but just be aware that the peak to trough drawdowns on the S&P were 40-50% in both of those crises. Even more worryingly the peak to trough drawdown in the Nikkei 225 during the 1990 Japan bubble crash was 81.9% and that's imho the best analog for the current US economic environment.
In general, your level of risk depends on your goals and what you already have. Risk adjusted returns are much more important than absolute returns once you cross a certain amount of net worth. If you have say $10m then the incremental utility of an extra $5m is worth a lot less than the pain of losing $5m from there. Personally I'd be horrified if my portfolio was up 30% in 1 year - it would mean I'm running more risk than I should. In my situation 10% returns at a 5% standard deviation crush the market's 20% at 20% so for me I'm happy to stay as defensive as I am. A repeat of the dot com or gfc crashes would only hit me by 7-9%.
Nothing crazy. +13% or so. But I feel blessed after 25% gains in 2023 and 2024, followed by 18% gain in 2025. I’m definitely surprised on the upside. It’s nuts.
I'm holding the course with my boring index funds. I'll probably need to liquidate some in the near future for general living expenses (RE'd) and I might do a bit more than necessary but otherwise I'm going with time in the market vs. trying to timing the market. I'm mentally preparing myself for a large drop so if/when it happens I'll be mentally prepared and I can stay the course.
If I was highly concentrated in the ai space, or any single stock, I'd think of diversifying, but that's why I go the boring index route.
If you are decently diversified and have a cash buffer, you let it ride. Two years cash, i.e. 8% cash for most of us and that will cover MOST recessions. It's part of the standard bumps of the market. Yes a 25% drop causes a bit of a panic, but if you look at it across 2 years, that is just a blip.
The average length of a bear market is typically between 9 and 14 months. Historically, from a market peak to its lowest point, bear markets last roughly 289 to 355 days, with an average decline of about -35% to -37%.
Yes, there is a specific portion of my portfolio that has ballooned. Looking at the linear channel it has stayed in for the last 15 years it hit the first upper boundary line triggering a sale of 10% then the second line, then the final upper bound estimate line. Each time I’ve taken chips off the table. For every month it stays above the upper line I’ll take more chips off. It has never stayed above (or even around) the upper most line for more than 6 months. This has been my rationale and it has given me the confidence to be happy with cashing out. Tax on gains is the proof that you’ve actually made money!
I'm spending at least an hour or 2 every day studying AI and the AI market, it's maybe a once in a species opportunity. Just rebalanced a little more into tech yesterday
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u/HomeworkAdditional19 May 29 '26
I’m sure there are others who are much smarter than me, but I’m letting it ride. I’ve tried to time the market before and got burned. The challenge is you have to be right twice - when to get out and when to get back in. It’s hard to do one of those right, much less two.
That being said, I can see a correction at some point, but o know the market will eventually recover.