Investments Pinglist: QQQ Daily at the close, 02-13-24

Thanks.

One of the reasons I go with 30 equities mutual funds is to have a larger portion in equities during retirement (75%). Basically, when the stock market tanks, by being more spread out I increase the odds that even a few of my equities funds are up. If I wasn't so spread out I might decrease my equities portion to about 50% of the portfolio, which IMHO makes it harder for my portfolio to keep up with inflation. It's my intention for my annual 4% withdrawal (pretending I was fully retired now for the rest of my life) of my portfolio to on average go up at least as much as inflation.

That's also part of why I have tons of solar and do most of our driving in an EV. I've done away with energy cost inflation by replacing my sky high power bill + sky high natural gas bill + sky high cost of gasoline at the pump with a HELOC payment with a fixed low interest rate paying for the solar and other energy improvements I did to the house (including converting my two nat gas appliances to electric, variable speed heat pump, and hybrid water heater that runs at only 380W and produces a free cold air byproduct that I utilize for cooling my home during the warm half of the year). As I pay down on the HELOC balance, the HELOC minimum payment goes down (less expense), while I'm avoiding most of my energy costs that on average go up (last year my power bills averaged $74/month, including charging the EV at home for over 1,300 miles per month, because 83% of my power was produced in-house with only 17% of my power having to be pulled from the grid). Even if Trump and/or someone else gets back in power and lowers our energy costs, I've removed a lot of the uncertainty in future energy expenses by making it so we have to buy less energy anyway. That allows me to better plan my future expenses (a predictable HELOC payment instead of unpredictable energy costs), which lets me better plan my investments to handle future expenses.

What does a one-penny spread mean?

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That’s the difference between the bid (what the highest price a buyer is willing to pay), and the ask (what a current shareholder is willing to sell it for).

A one penny spread means the market for that stock is quite liquid, with lots of buyers and sellers. The higher the spread, the fewer buyers and sellers there are.

IMHO the simplest way to play the game of prices is to have a diversified portfolio in many asset classes ...

Agreed. Additionally, a critical factor that needs to be considered in investing is time horizon. The portfolio of a 25 year old has considerable more time/years to recover from a bear market as compared to someone who's 70. Respective investments need to factor the investor's remaining years on earth, i.e.. his investment time-horizon.

On a different note, I read some posters talking about buying low and selling high. If there was a science/method to accurately time the market, we'd all be billionaires. This is why conventional investment wisdom would agree with you: "The simplest way to play the game of prices is to have a diversified portfolio in many asset classes."

If you think about investments in retirement, we need to ditch the concept of portfolio balance and think instead of our portfolio providing a steady income. A diversified portfolio helps provide that even in market downturns.

For example, if we have a simple withdrawal strategy of 4% annually (or 1/3rd of 1% monthly) and you had $1.5 million last year (which would be $60K withdrawal), you still want at least $60K withdrawal this year even if your overall portfolio balance is down from a market downturn (so you don't give yourself a "pay cut"). So, yeah, it might make you grumble a bit to log into your investments account and see your overall balance down a bit (say it's down to $1.2 million). But what matters is that you're diversified enough so that something is up (i.e. in mid 2020 it was my tech funds and health sciences fund, if I was retired and need to withdraw some living expense money). During the Y2K downturn that bottomed in the fall of 2002, it amazingly was my small-cap value PRSVX and mid-cap value TRMCX funds that were up (as well as traditional inverse funds like long-term treasury PRULX fund). In the Oct 2007 to March 2009 downturn I had no equity funds that were up, but my long-term PRULX and mid-term PRTIX treasury funds were up.

Those are examples from the 3 past big market downturns how a diversified portfolio always has something that's up for a steady withdrawal for a steady income even if the overall portfolio balance is down. But with a 75% equities portfolio you have an overall market gain in the good years to help you keep up with inflation. I'm comfortable going with 75% equities in retirement so I can keep up with inflation, but only because I'm diversified enough to handle the market downturns.

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