I know this is not a financial blog, but this is the second time your podcast made me want to share an article on money matters (the first being “Building a home”). If you are like me and believe that American capitalism is going to stay the most powerful system for the upcoming decades then just buy all US companies that matter and stay for the long run. When the current bubble bursts, chances are that stocks are going to be dirt cheap. If you still have a job, I’d advise against dumping your positions, it’s actually a good opportunity to buy more of them, since they are on sale. Obviously you can look at it the other way (“oh my God, I’ve lost half of my savings”), but that’s only relevant if you’re near retirement in which case you need more bonds in your portfolio.
I’ve come to believe the recipe is not that complicated: earn a good amount, spend little (you can afford luxury from time to time but don’t waste money) and invest in the S&P 500. If you do this for 15 years consistently you can even retire early. Or just have a ton of money and work on any software project you like without the financial pressure or take up carpentry or whatever in the world you want to do.
Some early posts of Mr Money Mustache are worth a read, like this one: https://www.mrmoneymustache.com/2011/06/06/dude-wheres-my-7-investment-return/
Unfortunately the guy pulled a “Musk” IMHO, so don’t read his recent stuff 🙂
I hope I didn’t mislead people. I’m trying to say: “Dump positions at their highest value before they crash, but no one can tell you where the top is.” What I would add is, “After the market crashes, buy stocks that are the best value with the profits gained from selling at the top.”
I think you’re saying, if someone is more of a Buffet-esq investor and less of a day-trader, it doesn’t matter – just hold your position indefinitely and it will continue to rise over time *if* the stock is for a company that will continue to grow. The challenge of investing is figuring out which companies will grow over the next 10 years and which won’t.
We are living in the age where “investing” only means “speculating,” so everyone is pulling a “Musk” is seems. That’s why I recommended watching “The Big Short,” to get a feel for how everyone can believe they’re rich just before they lose everything. I just hope people are gambling with money they can afford to lose and not their retirement savings when they are close to retirement.
I remember visiting investment banks on Wall Street as a part of working for a big FinTech, and thinking, “I will never win against these people.” When it’s all said and done, people with billion-dollar positions will move markets, and the rest of us will be left holding the bag.
Thanks for the reply, you literally say something among the lines “don’t listen to me” and “I’m not here to give you financial advice” so I don’t think you’ve mislead anyone 🙂
What I was trying to say is that as a software engineer it’s actually possible to be mostly free from financial worries. In “Building a home” you’ve touched on working for a salary vs. doing what you always wanted and in this podcast the bubble that’s going to burst. I just wanted to share my perspective on the money part on the topic.
As on which stocks to buy: all of them 🙂 Thankfully Mr. Jack Bogle solved this issue for us by inventing low-cost Index Funds. As you mention Warren Buffet recommends them to the average investor as well (search for eg. VTSAX, VOO or VUSA in the UK or Europe). You are right, competing with Wall Street giants in beating the market is a fool’s errand, so it’s just easier to track the market consistently for 15-20 years and you’re golden.
By the way I haven’t mentioned so far, but thanks for the podcast, hearing your experiences about the job market in the previous crashes as well as your other advice are invaluable!