I did. I moved to sovereign debt (not US), bonds and stocks of boring companies (staples, energy, medicine, ...) that have at least AA rating. Might miss out a few months of glamorous growth, but fuck that, it reached a point that just one company hiccuping will send the whole thing tumbling (IMHO).

Energy and healthcare has big AI exposure too. If it pops, you're going to be better off but not totally spared. I suppose that's probably a smart move though...

Fair enough and thank you for the comment.

I went with a bit of Roche, Novartis, ... So something that would at least cushion the fall with dividends and not being in the GenAI crossfire since they definitely use AI/ML (I got them through an ETF). Also almost all my assets are now either CHF or Euro denominated/hedged. I am also not comfortable with the dollar weakening and the next Fed head probably cutting rates again like Trump wishes

You’d be surprised. A lot of biotech is using genai not just traditional ml. And hiring for genai and LLM. They want to build their own chatbots, only trained on their own data and primary literature not reddit comments from armchair biologists.

Yeah, I figure. The thing is that I have a mix of bonds and stocks. Bonds should remain stable or even rally a bit if a crash happens. I mean, usually governments cut interest rates in time of crisis, so existing bonds should go up. It is definitely a hard time to invest as everything feels expensive

The Market can stay irrational longer than you can stay solvent.

Yes. Went from 100% S&P500 fund into a gold ETF and a high-dividend fund (SCHD). Still a good portion in S&P but gotta hedge some.

How do you handle the capital gains taxes? I’d love to be able to rebalance the massive S&P 500 portion of my portfolio into other things but it would trigger huge federal and state taxes. Was hoping to hold on to these until retirement at which point I’d slowly be selling it for living expenses and the income taxes would be much smaller.

I'm very curious about this as well. This is the main thing that has held me back from a meaningful rebalancing. Eating a huge tax bill to avoid a theoretical future loss of unknown size and duration while also losing out on potential gains if that loss ends up not materializing is a hard pill to swallow. I suppose this is probably why most long-term investment advice suggests not trying to time the market unless you have a very short time horizon. (Note: for me, I'm referring to funds in taxable brokerage accounts.)

I have a family member who once told me that their net worth was roughly halved in 2008. They probably recovered it if they stayed in the market after, but I don't know what they did.

I suppose the real question is whether you can weather the storm long enough for the market to recover. And beyond that, how cynical you are overall about everything taking completely before that can happen. I wonder a lot about that second one.

If you'd been DCAing a fixed amount monthly into stocks for 10 years prior to the 2007 peak, then during the crash continued doing so without selling, the total value of your portfolio would've matched its pre-cash peak in just 3 years and exceeded it significantly by the time the market itself recovered in ~5.5 years.

3 years is really not a long time. So I'd say it comes down to emotional fortitude and probability of staying employed. If your time horizon is longer than 3 years, the calculation of whether to sell should essentially come down to calculating your odds of keeping your job. I bet it's possible to build a robust mathematical model that recommends a decision given your best personal estimate of your layoff probability during a severe market crash.

You vastly overestimate the money a lot of people have. A lot of people will be destroyed by this.

I did this in my IRA and 401(k). No tax penalty or gains tax in doing that.

You pay taxes with the proceeds from the sale? You sell all the losers in your portfolio to offset what gain you can?

this is the spot i'm in too, i can move my 401k and IRAs around fine but ye'old brokerage account is a different story. Unless my losses are greater than the capital gains i'm going to pay then i'm better off just staying put. That brokerage account is dedicated to funding college for my two boys. I have enough now for about 6 years of undergrad. The bills start coming in 2 years, idk if that's enough time to recover from a dot-com level crash...

If you need the money in 2 years, I wouldn't leave it in the stock market. Find a money market or CD to avoid the gamble. You're going to get hit with capital gains taxes either now or in 2 years, so that shouldn't impact your decision.

My personal time frame is 4-5 years of emergency funds. You can adjust that for your own risk tolerance, but have a look at various past crashes to make an educated decision.

I'd only leave it invested if you don't actually need it, because college can be delayed or financed with student loans.

Is high-dividend a signal that the equities are more value oriented than growth oriented?

Yep, the fund picks the equities with the highest dividend payout, therfore the most value-oriented. Those tend to be old blue chips which have stood the test of time and pay out well to their shareholders. Lockheed Martin, Merck, Coca Cola, etc. When the growth economy tanks, it's an oasis of relative stability. People love their cheap sugar water.

Similar. Went from near 100% VOO down to 25%, with about 50% in SCHD and the remaining 25% sitting on cash, for now.

Valuations really aren't that crazy, but the incestuous deals between Nvidia, Oracle, and OpenAI might cause a decent correction. I'm not too worried about my portfolio personally. It'll be a small bump in the road and you're better off not trying to time the market.

> Valuations really aren't that crazy

Okay

What public company is massively overvalued in your opinion? Nvidia right now is trading at 44 P/E which is higher than the S&P average, sure, but not anything like the dotcom bubble with a median of 120x earnings.

The problem with this hype cycle has always been that the hyperscalers are pouring unbelievable amounts of capital into a technology that hasn't proven it can generate the revenues needed to justify that.

Nvidia might have an ok P/E right now, but the question is if the industry can sustain buying over $50B of GPUs every quarter(or that it even needs to).

This exactly. How sustainable are the current spends in the wake of needing ROI against these spends in the not too distant future? And who will be able to afford an upgrade cycle only 2-3 years from now given none of the capex spent will have hit positive ROI 2-3 years out.

Will everyone just accept negative ROI in the name of hype? Will scalers be able to meaningfully increase service prices without eroding customer interest?

These are all unanswered questions that a simple PE statement can't support.

Look at TSLA pe

No for a few reasons. I'm not close to retiring, I already own a good deal of bonds, and moving money based on emotion defeats the purpose.

I rebalanced the same as I always have.

Yep. And I've already moved it back. I think we can all see this is a bubble, but it has been for over a year now, and I cannot predict when it will pop.

Also, there aren't a ton of great options that are safer.

I thought about it. The bulk of my 401k money is in a growth fund that i found has something like 30% in the big tech companies.

Then again, I'm 20+ years from accessing it, so I figure I'm about 5 years out from moving more to S&P tracking and bonds. I am not a financial advisor.

Enough VXUS to minimize the impact of Mag 7 exuberance on my portfolio.

I'm not so sure VXUS will protect from the AI bubble popping since ~10% of its holdings are TSMC, ASML, Samsung, Tencent, Alibaba, and SK Hynix which are all way overvalued due to the AI bubble and will most likely crater when it becomes clear the LLM companies have no business and the data center lenders start calling in their debts.

Those companies had baseline demand before the AI bubble. They will have demand after.

Sure, they won't go to 0 but they will certainly go down once it becomes clear the LLM companies don't have money to pay for chips or RAM. That will cause VXUS to go down as well but much it goes down is anyone's guess.

Drawdown will be limited compared to the S&P500 or other indexes that weight the Mag 7 heavily. I'm unsure what your point is? It's impossible to predict the future, but it is trivial and straightforward to derisk against this current market environment ("AI bubble") with a basic level of capital market understanding.

To anyone reading, don’t do this.

This is the ONE thing you aren’t supposed to do as a passive investor. A play like this will cause you to lose upside almost always, and some people never get back in and miss out on almost a lifetime of growth.

THE MARKETS ARE NOT RATIONAL.

My concern is shifting from maximizing upside to minimizing downside because I'm only about 10-12 years from retirement.

The laziest safe thing to do is put money into a target fund that is managed. So you could look for "Target 2040" and in theory, they change the asset mix as it approaches that date.

But that’s people, what do they know about 2040 that I don’t?

If I was 10 years away, I’d maybe look at bonds or GICs or is that too conservative?

That's a terrible idea. Never ever do that. Never even think about what's in your retirement account unless you are actually about to retire.