Week 38 - Sept 19 Investment Moves
- Current US markets
- Sept 19 Investment moves
- After the FED cut, what now?
- Investing for 2030-2038
Current US markets
Here is how the markets are doing right now (2:30 PM EST).
Sept 19 Investment moves
Here are my trades for today:
I have been selling my "stable, boring" dividend stock and adding more "growth" stock to my portfolio. Yesterday, I sold $2K worth of RGP and purchased 50 shares of Palantir. Today, I sold 44 shares of MET (most of these shares I got for "free" from holding this for about 5 years). I added 7 shares of WING to my portfolio.
My focus has been on businesses valued at under 100 billion and adding them to my portfolio.
After the FED cut, what now?
Now that the FED is going to cut the rate from now to 2025, how should the average RETAIL investor do? To answer this, I will take a 6-year view based on Tom Lee's view of the world found in this article:
https://finance.yahoo.com/news/4-charts-show-why-wall-203102173.html
In the first chart, Tom believes the younger generation is what drives the cycle. Tom has used this type of logic in the past and I'm glad this one is included for the next cycle.
The concept here is simple. As a cohort, many of those people are entering the age where you spend the most money on housing, cars, and vacation because many folks are entering the PRIME INCOME years (or peak income). Therefore these types of spending can be "predictable" and they influence the stock market.
The second chart Tom uses is also a very interesting data point. He believes you can predict the Peak of the cycle based on the peak age of that cohort. He predicts that markets will do well by 2030, but his peak age is in the year 2038. I'm surprised the two dates are 8 years apart. Does that mean we will see flat/choppy markets between 2031 to 2038?
In the fourth chart, he claims that markets (the TECH sector) are based on the labor shortage/surplus cycle. We know that the average birth rate (replacement rate) has been dropping in many countries around the world including in America. This is often one of the biggest factors in the shortage of labor, which is often offset by high-skill labor from overseas (via H1B visa).
The way I read this is we are in a prolonged cycle of labor shortage for the next 15 years and technology needs to make up some of that lost productivity.
What if Tom is right on this one? Should I load up on QQQ instead of S&P 500?
Investing for 2030-2038
Now that you have looked at how Tom Lee determines what will impact the markets in the future, I will explain what I will be doing. I'm in the middle of the Gen-X group and many of my peers are starting to see how short they are for retirement. This can explain why they might be spending less and saving more since many of them have between 8-23 years between retirement.
I use a zero BOND portfolio allocation because I use stable dividend stocks as my "BONDS".
I have too much exposure to dividend stocks. I'm between 10-15 years away from retirement so I will continue to sell dividend stocks and buy QQQ.
I use S&P500 in my 401K plan since that is available in most employer sponsor plans. I added QQQ to the NON-401K plan that I have.
Due to my age, between the years 2033-2035 I need to start locking in the profits and moving things back to INCOME-type investment. I will not add BOND to my portfolio even at that age. This might be a good time for me to look at my QQQ/SP500/JEPI allocation percentage and move more into JEPI.
My QQQ and SP500 will never be ZERO either. Traditional portfolio allocation is 60% stock and 40% bonds. As I get older, my QQQ/SP500 position will get smaller and my JEPI will get bigger. But I don't think the SP500 will be lower than 30%.
What will I do with my BITCOIN holdings? I might follow a rule to take 5% off the table each time it doubles starting at 250K. Why? I model this assuming I have $5K and $21K in BTC today. Using a 5% cash out, I can reduce the risk and have cash out more than 100% by the time BTC hits $1M (selling only 15% of my total starting position).
Have a profitable day!