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  1. #1421
    Quote Originally Posted by Jeffrey View Post
    To be clear, since my post leaves room for many interpretations, the substantial financial adjustments I’ve already made are earned income (substantially reduced my 2021 compensation) and capital gains/equity sales (minimizing substantially in 2021). I have not changed my 60% equity allocation.
    Some of us don't mind making more money in 2021 even with higher taxes. Or can't defer/choose the year of when that income hits. (But yes, if I could choose and an impact was possible, might make some adjustments in that regard.) Seems like Biden only wants to increase cap gains rate for those with incomes >$1M/year. Yes, if I was in that category, the prospect of a 39.6% rate instead of the current 20% rate might make me do some step ups...Seems like the other key threshold in the Biden tax plans are $400k/income per family (for increases/changing deductions). He also wants to make 401k contributions a credit (like 12% for everyone) as opposed to a deduction where higher income people get more benefit from it. So, that could theoretically make high income individuals less likely to contribute to 401k plans. I'm holding steady for 2021 at least...The above are just proposals as who knows where they'll actually end up and when they'll take effect.

  2. #1422
    Join Date
    Sep 2007
    Location
    Undisclosed
    Jeffrey may mean he reduced his reasonable salary under an S Corp and will take more funds (hopefully) as a return on investment.

    At least, thatís how the legal racket often works.

  3. #1423
    Join Date
    May 2007
    Location
    Winston-Salem, NC
    No clue.

    I'd guess short-term market increase (today - ) with likely more volatility and greater risk for downside. Many are rotating out of the tech and growth stocks and into value now. But no one knows.

    Except Jeffrey. I have confidence in Jeffrey. He's so money!
    Last edited by richardjackson199; 01-20-2021 at 07:25 PM.

  4. #1424
    Quote Originally Posted by richardjackson199 View Post
    Except Jeffrey. I have confidence in Jeffrey. He's so money!
    Thanks, this is probably a good time to confess my real name is Randle McMurphy.

  5. #1425
    Quote Originally Posted by richardjackson199 View Post
    No clue.

    I'd guess short-term market increase (today - ) with likely more volatility and greater risk for downside. Many are rotating out of the tech and growth stocks and into value now. But no one knows.

    Except Jeffrey. I have confidence in Jeffrey. He's so money!
    VTWV - Vanguard's Russell 2000 Value ETF is up 39% since the end of October. And while a third of that gain has come since January 4th, November and December were similarly robust. Over many other time frames it still lags the large caps substantially, but it has had a nice run as of late.

  6. #1426
    Quote Originally Posted by richardjackson199 View Post
    No clue.

    I'd guess short-term market increase (today - ) with likely more volatility and greater risk for downside. Many are rotating out of the tech and growth stocks and into value now. But no one knows.

    Except Jeffrey. I have confidence in Jeffrey. He's so money!
    So can someone opine on moving into Value stocks now. I got some discussion from a broker that said maybe this is the time to get some stuff out of high flying growth stocks (taking profits) and moving into Value stocks. I'm obviously not convinced

  7. #1427
    Quote Originally Posted by gep View Post
    So can someone opine on moving into Value stocks now. I got some discussion from a broker that said maybe this is the time to get some stuff out of high flying growth stocks (taking profits) and moving into Value stocks. I'm obviously not convinced
    There are really two arguments: 1) value has lagged growth for a couple years so some view a catch up in value as inevitable, 2) many of the value stocks are in sectors that should benefit from a "reopening " of the economy; i.e. faster economic growth. Pre-pandemic, while many viewed the economy as strong due to low unemployment, headline GDP growth was about 2.3% for the entire year of 2019. A decline from the year prior and after significant stimulus in substantially lower corporate income tax rates that went in to effect in 2018. What Jeffrey alluded to, higher Federal taxes passed via reconciliation at the end of this year, might signal to some a short lived trade into value. This is why my comment that the move, as signaled by small cap value being the most economically sensitive, started a couple months ago. I should have noted the S&P 500 was up 17% during the same time period that small cap value was up 39%.

    Personally, I came to that trade late (right around Thanksgiving, the day after Turkey day to be exact) but have done nicely with it. This was offset by my much smaller but disastrous short of some Tesla shares.
    Last edited by YmoBeThere; 01-21-2021 at 04:07 AM.

  8. #1428
    Join Date
    Jan 2010
    Location
    Outside Philly
    Another thing to keep an eye on is whether the perennial bluster on infrastructure spending finally gets translated into legislative action.

    https://www.cnn.com/2021/01/20/econo...lus/index.html.

  9. #1429
    Quote Originally Posted by YmoBeThere View Post
    There are really two arguments: 1) value has lagged growth for a couple years so some view a catch up in value as inevitable, 2) many of the value stocks are in sectors that should benefit from a "reopening " of the economy; i.e. faster economic growth. Pre-pandemic, while many viewed the economy as strong due to low unemployment, headline GDP growth was about 2.3% for the entire year of 2019. A decline from the year prior and after significant stimulus in substantially lower corporate income tax rates that went in to effect in 2018. What Jeffrey alluded to, higher Federal taxes passed via reconciliation at the end of this year, might signal to some a short lived trade into value. This is why my comment that the move, as signaled by small cap value being the most economically sensitive, started a couple months ago. I should have noted the S&P 500 was up 17% during the same time period that small cap value was up 39%.

    Personally, I came to that trade late (right around Thanksgiving, the day after Turkey day to be exact) but have done nicely with it. This was offset by my much smaller but disastrous short of some Tesla shares.
    Thanks a bunch for your insights. Amazing the many things that I learn on DBR...

  10. #1430
    Join Date
    Feb 2007
    Location
    Boston, MA

    Short term money

    Gurus:

    1. If you had $30k that you needed in 3 years, where would you park it? The yields for bonds and CDs are pitiful. Is there a safe alternative to equities that will at least provide some return?

    2. Does anyone think there will be a market correction over the next year? So many P/E's seems ridiculously high.

    Thanks,
    Slim

  11. #1431
    Quote Originally Posted by SlimSlowSlider View Post
    Gurus:

    1. If you had $30k that you needed in 3 years, where would you park it? The yields for bonds and CDs are pitiful. Is there a safe alternative to equities that will at least provide some return?

    2. Does anyone think there will be a market correction over the next year? So many P/E's seems ridiculously high.

    Thanks,
    Slim
    IMO, you would not want to make that decision in isolation. All of your assets and liabilities should be analyzed in aggregate. Your overall portfolio risk and personal risk tolerance are critical factors in providing an informed recommendation. Marital status, age, household income and expenses, etc. are also appropriate considerations.

    Said differently, where I would invest the $30k may be a very different place than where you should.

  12. #1432
    Join Date
    Feb 2007
    Location
    Boston, MA
    Quote Originally Posted by Jeffrey View Post
    IMO, you would not want to make that decision in isolation.
    Fair point. Let's assume this money is a young adult's, they do not have other assets, and will need to use this money in 3-5 years.

  13. #1433
    Quote Originally Posted by SlimSlowSlider View Post
    Fair point. Let's assume this money is a young adult's, they do not have other assets, and will need to use this money in 3-5 years.
    Then, with only that information, where I would invest the $30k is a very different place than where I think they should. Iíd recommend they invest in a stable NAV product.

  14. #1434
    Join Date
    Feb 2007
    Location
    Boston, MA
    Quote Originally Posted by Jeffrey View Post
    a stable NAV product.
    Thanks. What is a NAV product?

  15. #1435
    Quote Originally Posted by SlimSlowSlider View Post
    Thanks. What is a NAV product?
    Sorry, stable net asset value product.

    https://www.investopedia.com/terms/s...value-fund.asp

  16. #1436
    Join Date
    Feb 2007
    Location
    Boston, MA
    Quote Originally Posted by Jeffrey View Post
    Sorry, stable net asset value product.

    https://www.investopedia.com/terms/s...value-fund.asp
    Thanks. I feel foolish for asking, but the Investopedia link makes me wonder ... how is this different than cash?

    "Stable value funds remain just that: stable. They don't grow over time, but they don't lose value either." (Is it merely a hedge against inflation?)

    If you can recommend a stable NAV fund from Fidelity, I am all ears... Thanks.

  17. #1437
    Quote Originally Posted by SlimSlowSlider View Post
    Thanks. I feel foolish for asking, but the Investopedia link makes me wonder ... how is this different than cash?

    "Stable value funds remain just that: stable. They don't grow over time, but they don't lose value either." (Is it merely a hedge against inflation?)

    If you can recommend a stable NAV fund from Fidelity, I am all ears... Thanks.
    Letís keep it simple, Iím not a Fidelity customer but believe they have a prime money market fund (who doesnít?). It would have a stable NAV. That buck will not break, even though it legally could.

  18. #1438
    ^"High yield" savings account (the term is relative these days...) or I-bonds if it's 5 years. The most recent I-bond issuance had a fixed rate of 0%, but an inflation rate of 0.84%. At least, your money won't LOSE purchasing power with I-bonds...If you cash in an I-bond before five years, you lose three months interest, which isn't the worst.
    https://www.treasurydirect.gov/indiv...esandterms.htm

    Stable value funds are really only in 401ks...But yea, money markets have a "stable NAV" but are paying peanuts.

    No good place for short-term money with no risk. That's why people have no choice but to plow into equities if they want growth (but that requires much more risk).

  19. #1439
    Join Date
    May 2007
    Location
    Winston-Salem, NC
    Quote Originally Posted by Jeffrey View Post
    Thanks, this is probably a good time to confess my real name is Randle McMurphy.
    Tread lightly. I believe Nurse Ratched is applying to be a moderator. Lobotomies are reserved for Category 5 Infractions,

    but can probably be negotiated down with good investment tips


  20. #1440
    Quote Originally Posted by richardjackson199 View Post
    Tread lightly. I believe Nurse Ratched is applying to be a moderator. Lobotomies are reserved for Category 5 Infractions,

    but can probably be negotiated down with good investment tips

    Much thanks for the warning! Iím firing up the magic bus right now. Iíve got to get out of this place, if itís the last thing I ever do.

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