from my research I know that in years where SnP500 drops too much (recessionary periods), BRK-B would soften the blow as Value stocks tend to do well in such times. And usually that works for me.
I see this argument a lot online: "You need more diversity." First, you didn't provide any reason or evidence about why this is a good idea. Second, "more diversity" isn't always better.
The S&P 500 has crushed VT since inception (June 2008). Most people will be surprised to learn that adding smaller cap (domestic) stocks, or international developed country stocks, or emerging market stocks will probably reduce your returns. As an example, you can compare the returns of S&P 500 vs Russell 2000 since 2005 [1]. It is not even close -- S&P 500 crushes again. Also, the vol in S&P 500 was lower than Russell 2000.
My investment philosophy comes directly from Warren Buffett: "Never bet against America". Of the three largest economic zones in the world with free markets (United States, Europe, and Japan), the United States is by far the most dynamic. Ask yourself: In the next 30 years (or more), which of those three regions will grow the most? In my view: Absolutely the United States.
Finally, to people who say that you need international stocks in your portfolio else you are "missing out". You don't. Why? The S&P 500 already has 30% of revenues from countries outside the United States. [2]
[1] https://curvo.eu/backtest/en/compare-indexes/russell-2000-vs...
[2] https://www.spglobal.com/spdji/en/documents/research/researc...
> The 10 biggest companies in the S&P 500 make up almost 40% of the index, and if Anthropic, OpenAI and SpaceX are added later this year, the concentration could approach 50%, see chart below. The bottom line is that the S&P 500 basically doesn’t offer much diversification anymore.
> My investment philosophy comes directly from Warren Buffett: "Never bet against America". Of the three largest economic zones in the world with free markets (United States, Europe, and Japan), the United States is by far the most dynamic. Ask yourself: In the next 30 years (or more), which of those three regions will grow the most? In my view: Absolutely the United States.
The next 30 years will not look like the last 30 years, and to be frank, this administration impaired any thesis of the US being at the center of the economic world globally for at least the next decade or two. The ultimate strength of the US economy was that global trade centered around the US. That trade is already reconfiguring around the US, and will continue to do so to de-risk and decouple. How is the US supposed to grow with restricted immigration? 21 states already have more deaths than births and this will continue to all 50 states eventually. India and Africa are the last parts of the world where any growth will be found, everywhere else is in terminal population decline.
https://www.visualcapitalist.com/fertility-rate-of-world-pop...
So! VT reduces your concentration risk from the AI bubble (versus the SP500) while still keeping you exposed to a risk asset class (total world equities) to capture higher returns than you’d get with bonds.
Your backtesting is of no value in this context, the world has changed permanently due to the actions of this administration. Portfolio composition decisions made today are for the future, not the past. Past performance is no guarantee of future results.
Citations:
https://web.archive.org/web/20210104201135/https://advisors....
https://www.morningstar.com/portfolios/experts-forecast-stoc...
https://www.aqr.com/Insights/Perspectives/The-Long-Run-Is-Ly... (click through to the full version, the last decade+ of US out performance was mostly just the US getting more expensive, not US companies being much better than foreign companies)
https://www.morningstar.com/stocks/you-might-think-industry-... (We see the same results looking at the more recent period of July 1963 to September 2024. US stocks returned 10.64% annually, high-tech stocks returned 11.35%, healthcare stocks returned 11.99%, and both were outperformed by beer, which returned 12.18%, smokes, which returned 14.56%, and guns (defense), which returned 12.77%. Even shops (wholesale, retail, and some services such as laundries and repair shops) outperformed, returning 11.88%)
Also -10% over the last 5 years vs. +103% for the S&P500
> the innovative China
These aren't in the CSI 300 and the legal constructs of listing them via HK or other stock exchanges is unfortunately often questionable.
To point, the economic uncertainties around geopolitics, AI, and war, plus irresponsible debt spending by governments and the prospect of QE (and higher inflation), is pushing long term rates steadily higher. There’s a reasonable chance that 30y treasuries are nearing 6% by the end of next year. Remember that rates and bond prices are inversely related. Anyone who holds bonds in this market will likely lose money. Holding to maturity won’t help much either because if inflation continues to rise, as is a major concern, most or all of that 5% yield gets eaten.
Yes, you lose money (or more precisely you lose opportunity) but you gain certainty. Which is what you want for retirement
That’s pretty much the definition of risk premium.
If you have more than enough saved to meet your basic needs, it does (IMO) make sense to give up some total income for lower variance.
Stocks generally rise with inflation, whereas bonds continue paying out the same nominal amount, which buys you less over time.
As a retiree I'm 50/45/5 in stocks/bonds/cash, having opted for a conservative portfolio. The stocks are the only reason I haven't lost buying power. But the bonds have performed so poorly that I've barely kept up with inflation despite the amazing bull run in stocks.
Currently you get 2.75% yield in real terms for the 30 year maturity: https://www.cnbc.com/quotes/US30YTIP
Are you referring to Anarkulova et al? Might be worth mentioning that the fixed income part is replaced with international equity, not more domestic equity.
Another good option for something that can give good current income is REIT stocks. The management fees on the funds that specialize in these tend to be high for my tastes (I like passively managed funds with management fees that could be rounding errors) so when I’ve had money in REITs, I’ve typically looked at the top stocks in the REIT funds and just bought those directly with dividend reinvestment. Note that because of the nature of REIT dividends and taxes, it’s better to use tax-advantaged accounts to buy these than to put money in a regular retail account towards them.²
⸻
1. Back during the first dotcom goldrush when tech stocks were especially volatile (1999–2001 in particular), people who bought dotcom mutual funds in taxable accounts often ended up with a big distribution from the fund and a drop in share price greater than that distribution so that they would end up not only losing money on their investment but they also had a tax bill for their troubles since distributions will count as realized capital gains.
2. Important to note that I’m not a financial advisor and my advice is probably garbage.
Also, it should be noted, just because it's the optimal to have the most $'s that shouldn't be the goal. The goal should be to survive your retirement with "enough".
And it should also be mentioned, most people can't stomach holding 100% equities, for a very good reason. When the 40-60% market crash happens, people get emotional and make emotional decisions. Sure there are the lucky few that can hold out, but most can't. Are you going to be one of the few lucky ones? If you haven't yet been through it once(last one in the USA was 2008/9), how do you know for sure?
People have forgotten this but equities are an infinite duration asset that are prone to periodic, significant, often violent crashes.
(Edit: often at a time when everyone is absolutely convinced they're the best asset class...)
You can keep some equity exposure but you don't want 1929 or 2008 to happen the day after you retire when you might live for another 30 years
That's assuming you sell the bonds before their end.
Bounds are not as volatile, so even if you lose some money from inflation, you are less likely to lose a lot of money, money you need to live, from the whims of the market. You want to protect your capital, yields don't matter as much if you near the end of your life.
If you are younger, and you make reasonable investments and not gambles, you can expect that your value will go up (more so than with bounds) within a decade or two, and because you have income, you don't need that money and you can wait for the market to recover before selling.
So I disagree that "If you're dreading equity drawdowns, that's what fixed income is for" is absolutely terrible advice.
If I’m 70 years old in 2008, the knowledge that my all-equities portfolio that lost 50% of its value would have recovered in 5 years and outperformed bonds/cash equivalents in 10 years is no consolation.
If I’m 70 years old and have $2,000,000, I don’t need to turn that $2,000,000 into $3,000,000, I need to make sure I don’t turn that into $1,500,000 or $1,000,000 before I get a chance to spend it.
If the 2008 crash is a once-in-a-century recession, that napkin maths out to a 20% chance of that sort of thing occurring during my last 20 years of life.
If you want to get intuition for why this works, this is a really fun and interesting video: https://youtu.be/TQuxVz52w2w
https://investor.vanguard.com/investment-products/mutual-fun...
Normally with these things when absolutely everyone is crowded on one side of the boat, you want to be on the other side
If you haven't lived through a market panic and crash(last one in the US was 2008/2009), then chances are you shouldn't count yourself as being able to do it.
Also, their 100% equity time frames are measured in many lifetimes, not in a single lifetime.
If the goal is to have the biggest $ balance, then sure 100% equities for the win, but if the goal is to survive your retirement with little worry, 100% equities is a terrible idea.
Bonds provide stable cash flow. Equities provide growth/return. Use both in the appropriate amounts for your situation.
> Bonds provide stable cash flow. Equities provide growth/return. Use both in the appropriate amounts for your situation.
Technically when bonds "go to $0", you actually get priority over any corporate assets vs stock ownership, but if the bond went to $0, there is likely not a lot of assets left either. So you can't expect to get saved completely from whatever asset sale happens.
> Technically when bonds "go to $0"
Exactly.
It looks excellent for your needs, and have an incredibly low expensive ratio of 8bps(!). Currently, it is 75% stocks, and 25% bonds. Don't worry about a bubble in the stock market.
EDIT (after reading many, many more negative comments below):
The problem with discussing your investments online, there are a million negative replies. No one ever says: "Yeah, looks pretty good. Leave it alone." I'm here to be that guy.
I really appreciate when someone chooses to be that guy.
Bonds are about steady cash flow, not about total return. "stable" dividend stocks are almost never really stable when the financial world crashes.
> "stable" dividend stocks are almost never really stable when the financial world crashes.
> As others have pointed out, bonds are barely (or not) keeping up with inflation.
For looking at corporate bond rates, it is useful to consider the Bloomberg US Aggregate Bond Index (aka "the Agg"). It has a weighted average maturity of about 8 years (intermediate-term), currently has a yield-to-maturity of about 4.75%.
Everytime I see a debate of stocks vs bonds on the Internet, someone pops into the convo to remind everyone about "stable" dividend stocks. Honestly, for sophisticated investors, I just to don't see this strategy frequently deployed. It seems more like talking heads on the Internet. Has anyone done backtesting on performance of high div stocks vs some combination of S&P 500 and investment grade corp bonds? I would expect the latter to greatly outperform.
So, the optimists all swim in the cash while your contrary position fails to keep pace with the bull market; and then the bear market hits and you all get obliterated equally.
The market of a good leader is a lack of chaos. We are seeing the effects of a chaotic mind untethered from an accurate view of reality. Buckle up
Other than that I’m just not over investing for retirement and instead making sure the money is spent today on family growth and experience.
I eventually just got tired of everyone with an opinion on what doing it right looks like or how to predict the market.
Robotaxi is the next great growth thing. After that, it's Optimus.
Amazon's PE in 2013 was 3000+, but you'd still be up almost 20x if you purchased their stock back then.
https://www.theglobeandmail.com/investing/markets/markets-ne...
That doesn't mean Tesla or SpaceX are good buys though. Maybe they are, maybe they aren't.
2025 total deliveries: 1,636,129
8% decline YOY, Tesla shut down production of Model S & X. Eventually, they will become a pure speculation as a service stock, with zero production. But its cheaper to produce than bitcoin, no energy needs to be expended, runs on pure Musk energy!
Tesla grows in large steps. Next big step is Robotaxis, which is well on its way. After that, robots, for which they have the best real-world AI platform for.
You could say Tesla is a speculation stock as well when they had released the Roadster. Tesla shorters always lose.
Isn't that true more often than not no matter what company you try to short? It's a tough game to play.
> Tesla shorters always lose.
Which Tesla models sell more than the S and X?
I think the mature part of their business is 3/Y, energy storage, and maybe cybertruck, although I also think it's too early to call it because it depends on lower cost cell in house cell production and they only started that recently.
In the near term, the growth part is Semi, cybercab, FSD, lithium cell production, and maybe cybertruck.
In the long term, it's potentially Optimus, more general autonomy, and gigafactories.
https://www.wired.com/2009/10/audi-etron/
That doesn't mean they can't make a mess of things all by themselves. But comparing their infra investments/growth strategy to snake oil when they've gone from nothing to $100 billion/year in 15+ years might be short sighted.
https://www.wired.com/2009/10/audi-etron/
They might might fail, but I wouldn't bet on it. Also cybercab isn't out yet, so any discussion is premature at best.
Cybertruck has been disappointing, but I think a big part of that is cost. They started in house dry 4680 cell/pack production a couple months ago, so we'll see how that goes over the next few years.
Even with China subsidizing cell production and being dominant in the world market, Tesla is still at 150gwh/year compared to 200gwh/year from BYD.
The big question is how the dry cell 4680 packs will perform and how well they can scale production if performance is adequate.
FSD is always a year away, but that's generally OK as long as it keeps improving and there isn't a comparable product in their cost bracket. If someone leapfrogs them, they're done. If not, they might be able to roll everything up all the way through Optimus.
Before finishing this reply, I checked for recent news about the Tesla Semi. I learned that they have a new separate factory (1.7m sq feet!) that has started production and has capacity to produce 50,000 Semis annually. It is next door to the original Gigafactory.
They started producing and selling the Semi in 2022 (after its unveiling in 2017, when they started taking pre-orders) and from everything I've dug up with a bit of Googling it seems they have shipped fewer than 200 trucks by 2025.
We'll see if this new 50k per year factory will actually have customers to ship to, but I wouldn't hold my breath given the current track record.
> The economics of diesel vs electric for heavy haul trucks is a no-brainer. Diesel is much more expensive per kilometer compared to electricity.
The economics you need to look at are dollars/hour/kg delivered. If the battery is too heavy or the charge time too long, the economics turn out much worse. We'll see once real world experiences start being published what it actually does.
> Volume production of the Semi started on April 29, 2026.
You wrote: "If the battery is too heavy". The 2026 version of Tesla Semi is 450kg lighter than 2022 model because they switched the internal voltage from 12W to 48W, which reduces required wire gauges.
You wrote: "The economics you need to look at are dollars/hour/kg delivered." The original idea for a heavy haul electric truck came from within Tesla. Senior execs wanted to know how they could reduce transport costs for parts manufactured in Fremont, Calif to the Gigafactory in Reno, Nevada. They were using heavy haul diesel trucks to move these parts.
> the charge time too long
Note that they never announced that the original run of the Semi would be just tiny. When they unveiled it in 2022, they explicitly said that this was the production version, as opposed to the 2017 concept. They even had a few more (still small 100-200 count) contracts where they kept delaying because they couldn't deliver enough - again suggesting that they were having problems, not intentionally running a pilot program.
> Everything that has actually happened so far with the Semi is that it didn't work as advertised and was deeply unpopular.
> no subsidies for electrification
We're certainly not as far along with the electrification of heavy duty trucks as we are with light duty cars, but the Semi seems fairly popular where it's suitable.
What are you basing this on? Again, they have sold 200 trucks in 4 years. There are some hundreds of thousands of trucks being used in the USA alone. Tesla themselves are claiming they are going to produce (and presumably try to sell) 50k trucks per year. So, by any possible measure so far, Semi has basically 0 adoption. Maybe this is strictly based on production issues and there is huge un serviced demand - I admit this is a possibility, theoretically. But I don't see any reason to actually believe it, and certainly neither the current sales, nor the link you provided, in any way show that this demand will materialize. We'll see soon enough, I guess.
https://www.teslarati.com/tesla-massive-order-semi-370-units...
2026 production is estimated to be 5k-15k.
https://sherwood.news/tech/what-we-know-about-teslas-semi-tr...
IIRC, 50k is full production, but it'll take a year or few to ramp up to that.
I think all signs keep pointing to another huge flop by the end of the year, and that Semi will remain a small niche product that various companies order a handful of and never go on to get more.
370 trucks is also still a tiny order, for a truck that supposedly is cheaper to operate than any other on the market, in the midst of an oil crisis no less.
Drone footage shows new builds, but they obviously need to get volume up.
https://youtu.be/WjkCKODoEjM?t=464
Like I mentioned, I think dry cathode 4680 production is key, and I think an earlier video from the same person discuses what they believe is equipment for a dry cathode line that will be set up inside the semi factory.
It took Tesla a year just to get Model 3 up production from nearly nothing over the first few months to 4k+ units/week, and the semi is larger/more complex. I'd be surprised if we saw 500+ units/month by December.
https://www.teslarati.com/tesla-model-3-production-surpasses...
While high oil prices are attractive in terms of investment, if oil companies aren't very confident about making large/fast investments in this climate, I don't EV manufacturers are going to be.
My guess is that Tesla will gradually ramp production in a cost effective way, like they have in the past. It's better to miss a timeline and deliver a cost-effective/competitive product than the other way around.
Stocks, bonds, etc are effectively NFTs of "you own a monkey image". That monkey image can go poof on a 'market correction' aka 95% of investors lose everything.
With precious metals, you own the material. And silver, gold, platinum, palladium, rhodium and others have innate usage for a variety of industrial and jewelery uses. Their prices may change, but catalytics arent just going to bottom out.
We still have stocks, cause 401k's. But we also have a sizable metal buffer now.
It fills me with a bit of dread about the future of the market. I am 10 years out from retirement, have a bit over 1M sitting in that market, and I wonder if it will implode in the meantime. I am fairly committed to the "invest like a dead man" (i.e. index funds, no touch), but the world we live in today makes me have real doubts that the next few decades will look anything like the last few.