The Investment Thread

[RobDeer 45]

23 minutes ago, LouisEly said:

I'm saying that if someone is close to and contemplating retirement, their financial planner should know to sell higher risk equities after a long market rally.

Cool, just wanted to clarify.  I'd add to that, most people should keep a good mix of equity stocks (with fixed income) in retirement because hopefully most people will have 20-30 years of life left and will want their money to continue to work for them.  

[wallus]

You still hear about the "4% rule" but I am definitely not going that route. My plan is to have dividends/real estate income more than cover anything I will need it retirement so I never sell any shares. Doing that, I should not have to care what the market is doing for the most part.

[homer]

18 minutes ago, RobDeer 45 said:

Cool, just wanted to clarify.  I'd add to that, most people should keep a good mix of equity stocks (with fixed income) in retirement because hopefully most people will have 20-30 years of life left and will want their money to continue to work for them.  

This is a good point. Everyone's risk tolerance is different obviously but for most people you probably don't need to remove a ton of risk when you retire.

[zurch1818]

I heard from our accountant in our 401k meeting that a lot of people in our company are taking their 2022 Q4 quarterly bonus (which for me was 10% of my annual salary) and pocketing it instead of investing into retirement.  I am still running the course and keeping my contributing 18% towards my Roth 401k.  I guess if the market tanks, I'll be buying at a low time.  It shouldn't be going down forever and with me having low expenses, I guess I don't really short-term care what my retirement account does as I'm 20+ years away from retirement.

I have stopped contributing to my brokerage account and started putting money in a HYSA.  My plan is to use the HYSA for more short-term expenses, the brokerage account for a bridge retirement account until I can start using my actual retirement accounts.  With son #2 and #3 on the way, we are going to have to buy a minivan, so I guess that we will have to use the HYSA for that.  It's going to be interesting having 3 kids under the age of 3. 

I just learned that I can convert the company match and profit sharing 401k contributions (pre-tax) into Roth (after-tax).  Does anyone think this is a good idea?  Our 401k advisor is not very big into Roth because he thought the government would tax it sometime down the road, so take the tax advantage now.   I on the other hand think that tax brackets are going to be more variable and I would much rather have a better pulse of how much money I'll have in my retirement accounts.

I look at it a different way.  When I pay taxes on it now, it has a smaller basis and it is effectively like investing more money because I am investing the taxes + the actually contribution.  I guess if you invest the tax savings into a brokerage account, this wouldn't be true.  With the Roth, I won't have to pay taxes on the contribution + growth.  Sure my tax bracket could be higher now than when I retire, but paying taxes on the growth seems like it could actually be more costly.

@GAME05 - Is your 401k Roth (after tax) or Traditional (pre-tax)?  One thing to consider is if it is Roth, you can always withdraw from the principal (not growth) without any penalty.  I don't know if your 401k allows for this or not...but when you retire, you should be able to roll over your 401k into an IRA and do this without issue.  Obviously, this is only beneficial if it is Roth as I don't think you can do this with traditional.

 

[homer]

6 hours ago, zurch1818 said:

I just learned that I can convert the company match and profit sharing 401k contributions (pre-tax) into Roth (after-tax).  Does anyone think this is a good idea?  Our 401k advisor is not very big into Roth because he thought the government would tax it sometime down the road, so take the tax advantage now.   I on the other hand think that tax brackets are going to be more variable and I would much rather have a better pulse of how much money I'll have in my retirement accounts.

I've considered that but given the number of voters with Roth IRAs (think it was 26 million as of 2020), I sincerely doubt they would ever do something so dumb. If they were to do something along those lines, my guess is they'd make it taxable for new contributions. I was in a regular 401K forever and switched to a Roth a few years back so I've got both angles covered :)

 

[Samurai Bucky]

On 2/14/2023 at 1:23 PM, homer said:

that happened to a friend of mine. he was laid off from Salesforce and got a job with a start up. 

The problem for small tech companies is that "good talent" or talent with experience often demands six figures.  The people who don't have the breadth of knowledge but have 5 or so years of experience are still looking for 80K or so.

[Fear The Chorizo]

On 2/16/2023 at 7:43 AM, Samurai Bucky said:

The problem for small tech companies is that "good talent" or talent with experience often demands six figures.  The people who don't have the breadth of knowledge but have 5 or so years of experience are still looking for 80K or so.

When sandwich artists and big box department store greeters are earning more than $15/hr with benefits, and with one of the end results of that policy push being $5/dozen eggs (not free range/conflict free/virtue signal-positive eggs, but the cheap ones most of us savages get), "good talent" should absolutely earn six figures in this economy.

[wallus]

2 hours ago, Fear The Chorizo said:

When sandwich artists and big box department store greeters are earning more than $15/hr with benefits, and with one of the end results of that policy push being $5/dozen eggs (not free range/conflict free/virtue signal-positive eggs, but the cheap ones most of us savages get), "good talent" should absolutely earn six figures in this economy.

Eggs being more expensive has very little to do with wage increases. It's pretty easy to tell on that because the prices have come down pretty quickly from around $8 a dozen to under $4 a dozen.

[igor67]

The eggs price made sense to the extent that a major bird disease caused a lot of herd culling. It's also helpful to understand that chicken used to be a luxury meat, the current most common breed used to be quite rare because they routinely carried a cancer causing virus. The designer of most childhood vaccines Maurice Hilleman ended up also developing a vaccine against that bird virus, which dramatically altered the economics of chicken breeds.

https://mag.uchicago.edu/science-medicine/man-who-developed-40-vaccines#

Macro policy has some impacts, but we had a fragile supply system and we'll get better outcomes not focusing on the macro side but instead trying to solve lots of micro problems.

[Fear The Chorizo]

34 minutes ago, wallus said:

Eggs being more expensive has very little to do with wage increases. It's pretty easy to tell on that because the prices have come down pretty quickly from around $8 a dozen to under $4 a dozen.

lol - ok.  in 2000 they were about $0.91/dozen, too.

My point wasn't specific to egg costs, anyways, so feel free to insert the exploding cost of just about anything.

[LouisEly]

When it comes to basic staples/commodities where the vast majority of volume is sold as store brands, wages have little to do with prices.  It's about supply, cost of getting supply to market, and lack of substitutes.

On the branded side, I think lack of competition has been the biggest driver of cost increases.  PepsiCo's gross profit and operating income the last 12 months is higher than it was in 2019.  If you want soft drinks in a can or bottle, it's basically Pepsi, Coke, or Keurig/Dr. Pepper brands.  All of the M&A activity the last 5-7 years had decreased competition to the point where most industries are oligopolies if not duopolies.  If you want bran flakes with raisins for breakfast, you usually have at most three choices - Kellogg's, the store brand, and maybe Post.  If one raises prices, the other two follow, and then so do you unless there are adequate substitutes. 

I used to make eggs almost every Saturday & Sunday.  Haven't bought eggs in at least 6-8 weeks; going with my Mon-Fri breakfast of oatmeal, a banana, and a protein shake.  But whey protein costs have shot up too; the brand I prefer used to be $45-50 for a 5lb tub, now that's $62+ even on Amazon subscribe & save.  So my substitutes have increased in price as well.

Few people actively look to spend more money.  Wages may make a difference in mid-to-high end brand usage, but not basic staples/low end of the cost spectrum products.

[owbc]

Eventually the price gouging is going to eat into demand. I agree with those who are predicting that consumer demand will start falling later in 2023. I'm kind of surprised it hasn't happened yet, but some sectors like tourism still seem to be in a post-COVID boost and we're not in a recession (yet). 

[nate82]

2 minutes ago, owbc said:

Eventually the price gouging is going to eat into demand. I agree with those who are predicting that consumer demand will start falling later in 2023. I'm kind of surprised it hasn't happened yet, but some sectors like tourism still seem to be in a post-COVID boost and we're not in a recession (yet). 

Severance package from the tech companies money is being spent on travel. 

[LouisEly]

3 hours ago, nate82 said:

Severance package from the tech companies money is being spent on travel. 

That, and the younger Millennial/older Gen Z population has an absurd level of "Keeping up with the Joneses" not seen since the 1950's.  With everybody bragging about "living their best life" on social media, there is a tremendous amount of pressure to keep up on travel/tourism/Instagram-worthy destinations, clothing (such as Canada Goose jackets), apartments (have to live in that new apartment building with the rooftop pool, yoga studio, coffee bar, dog wash...), etc.

They've said that in Q4 consumer credit card debt rose sharply, and now with interest rate hikes they're paying for it.  Milton Friedman said it takes 12-18 months to see effects of rises in interest rates, and we are only one year out from the first rate hike.  It also takes a while for people to get out of their apartment leases and into cheaper housing (if they can find it).  It's coming over the next 6 months, but as I mentioned above... what substitutes are there?

[owbc]

18 hours ago, LouisEly said:

That, and the younger Millennial/older Gen Z population has an absurd level of "Keeping up with the Joneses" not seen since the 1950's.  With everybody bragging about "living their best life" on social media, there is a tremendous amount of pressure to keep up on travel/tourism/Instagram-worthy destinations, clothing (such as Canada Goose jackets), apartments (have to live in that new apartment building with the rooftop pool, yoga studio, coffee bar, dog wash...), etc.

They've said that in Q4 consumer credit card debt rose sharply, and now with interest rate hikes they're paying for it.  Milton Friedman said it takes 12-18 months to see effects of rises in interest rates, and we are only one year out from the first rate hike.  It also takes a while for people to get out of their apartment leases and into cheaper housing (if they can find it).  It's coming over the next 6 months, but as I mentioned above... what substitutes are there?

Do the Millennials and Z's get blamed for everything? 

I was just in Hawaii and the average age of the tourist there is about 60. Very few people under 40 have enough time or money to do anything other than basic travel. 

I don't have social media, but I think what you're seeing are the "Influencers", who are getting paid to do all of that stuff by whoever sponsors then. 

[nate82]

10 hours ago, owbc said:

Do the Millennials and Z's get blamed for everything? 

I was just in Hawaii and the average age of the tourist there is about 60. Very few people under 40 have enough time or money to do anything other than basic travel. 

No not blaming them just stating a fact about most of the tech layoff people who were in high paying jobs.  Most are using their severance pay on vacations where some haven't taken one in a long time.  The younger Millennials and the two Z's that I work with are not really interested in Hawaii they see it as an old people vacation spot.  They prefer Mexico, Miami, Nashville, LA and the Caribbean over Hawaii.  Small sample and all that other stuff yes I know.

[homer]

I think most tech people probably get new jobs rather than go on a vacation. 

[MrTPlush]

22 hours ago, owbc said:

Do the Millennials and Z's get blamed for everything? 

 

Yah, and the statement really isn't accurate. Most in these generations of professional working age could probably not care less what people on social media think of them. Millennial/Gen Z grew up with social media...the comment is probably accurate through college, but after that these generations often dump social media...at least actively posting on it and sharing their lives. 

[owbc]

12 hours ago, homer said:

I think most tech people probably get new jobs rather than go on a vacation. 

Yeah especially right after the holidays when most were just on vacation. And everyone knows it's a tight job market so you can't just count on getting another job. 

I have a variety of experiences among friends...I do have one who went on a ski trip as soon as he got laid off from Google, but he probably would have done that anyway. He's not planning to return to the workforce in the near future. My contacts with kids were heavily job searching almost immediately. The severance buys them some time but that money goes quickly. 

[GAME05]

There's no way I'd ever have the self-confidence nor the job skills to go on a vacation after getting laid off.

[LouisEly]

On 2/22/2023 at 10:57 AM, owbc said:

Do the Millennials and Z's get blamed for everything? 

I was just in Hawaii and the average age of the tourist there is about 60. Very few people under 40 have enough time or money to do anything other than basic travel. 

I don't have social media, but I think what you're seeing are the "Influencers", who are getting paid to do all of that stuff by whoever sponsors then. 

As nate mentioned, younger Millennials and Gen Z don't go to Hawaii.  Go to Tulum, or southern coastal Italy, or (name your national park hiking trails in North America), or Nashville/Austin, or (name your ski resort in North America) and tell me what you see.  I manage a team of younger Millennials and Gen Z (5-7 people) and two have been to Tulum, two others have been to Italy (along with a couple of other international destinations), and another to Colorado all in the last year and none of them make anywhere close to $100K/year.

I just got back from Park City.  Single day walk-up lift tickets were $260 for holiday weeks, $219 for non-holidays.  The mountains were not empty, and they weren't Gen X'ers or Boomers.