Want New Views On Investing Premises

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Neutron_Star
Posts: 10
Joined: Tue Feb 27, 2018 3:50 pm

Want New Views On Investing Premises

Post by Neutron_Star » Thu Feb 28, 2019 10:17 am

I'm trapped in a filter bubble of my own design.
I have acquired lots of idiosyncratic beliefs about the state of: the World, and/or US markets/politics due to my bubble.
I want you guys to pick apart and hopefully correct the investing premises that I have developed in response to my beliefs.

About me:
I live in the USA so I earn, spent, and invest in USD.
I don't understand enough about any other currency to be interested in them.
I am 30 years old and want to be able to use any money I invest about 20 to 30 years from now.

My Premises:
1.)There are three ways debt is cleared: Default or Repayment with "Bad" money or Repayment with "Good" money
If the US-Government chooses one of the first two options then losing all of my investments will be a smaller problem then finding food.
If the US-Government doesn't chose the first two options to clear it's debt then taxes must go up by approximately 50% (this figure from a Peter Zeihan talk).
2.) Risk in the bond markets has not been properly priced since around 2006.
The "Zero Interest Rate Policies" (ZIRP right?) have allowed many non-productive businesses to survive long past their "sell by" dates. Corporate bonds are not safe.
There are at least three US States that are so hilariously insolvent they should be pushed into bankruptcy court as soon as we can make that legal. Municipal Bonds are not safe.
US Federal bonds seem as safe as any thing priced in dollars. If the Fed needs em they can print em and that lasts till USD inflates away. So the only "safe" return in bonds is T-bills, locking you into a 2.5% to 3% as max yield.
3.) Stocks of companies that survive the crisis should rebound so to be safe one should stick with Large Cap (It takes more time to sink a big ship then a little one)
4.) If the US financials look bad everyone else's are worse by a factor of 1.5x to 3x. The international rescission will be a lot harder and deeper then anything the US will see and only Africa, India, and Argentina (odd man out) can possibly recover cause they have young people and the rest don't. I have plenty of overseas exposure through the overseas assets of US companies I need no more. Growth vs risk says No to overseas.

My Strategy to work around the above Premises:
New Investments each year:
$6k/year ($500/month) into a Roth IRA Invested in VIGAX ie Vanguard Growth Index
$19k/year ($1,583/month) into a Roth 401k Invested in MXVIX ie Great western 500 Index (cause 401k /sigh)
Current Balences:
~$90k in a taxed account VFIAX ie Vanguard 500 Index
~$95k in Roth IRA VIGAX ie Vanguard Growth Index
~$70k in Roth 401k MXVIX Great western 500 Index
~$10k in checking acc as emergency fund
Other Assests
~$220k House with ~$125k of mortgage debt at 2.75% 12years left
~$20k Car with ~$12k of debt at 0% 1year left
Income:
~$90k/year

Please tell me why and how I am wrong about my premises or suggest your own but please keep the 20-30 year time frame in mind
(ie I have to care about the national debt because ether we pay it off or I lose everything that's not physical, just sticking the kids with the bill won't work for me).

If you buy my premises but my strategy is incorrect please suggest better alternatives. Thank you for the help

Jack FFR1846
Posts: 9492
Joined: Tue Dec 31, 2013 7:05 am

Re: Want New Views On Investing Premises

Post by Jack FFR1846 » Thu Feb 28, 2019 10:40 am

Take this as how I observe what you wrote, through my brutally clear style of writing.

Despite your wacky views, your current investing style is sound.

Have a nice day.
Bogle: Smart Beta is stupid

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galeno
Posts: 1551
Joined: Fri Dec 21, 2007 12:06 pm

Re: Want New Views On Investing Premises

Post by galeno » Thu Feb 28, 2019 10:49 am

Ditto what Jack FFR1846 said. My only (tiny) suggestion would be for you to invest all your IRA money into non-USA equities.
AA = 40/55/5. Expected CAGR = 3.8%. GSD (5y) = 6.2%. USD inflation (10 y) = 1.8%. AWR = 4.0%. TER = 0.4%. Port Yield = 2.82%. Term = 33 yr. FI Duration = 6.0 yr. Portfolio survival probability = 95%.

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mhadden1
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Joined: Tue Mar 25, 2014 8:14 pm
Location: North Alabama

Re: Want New Views On Investing Premises

Post by mhadden1 » Thu Feb 28, 2019 12:33 pm

Regarding retirement saving - I think Bogleheads would mostly agree that if you can save enough, invest in inexpensive index funds with an asset allocation you can tolerate, and stay the course, then your chances of success are as good as they can be. Don't worry too much about premises and first principles and such, except as something to yap about at a cocktail party.
Oh I can't, can I? That's what they said to Thomas Edison, mighty inventor, Thomas Lindberg, mighty flyer,and Thomas Shefsky, mighty like a rose.

2015
Posts: 2906
Joined: Mon Feb 10, 2014 2:32 pm

Re: Want New Views On Investing Premises

Post by 2015 » Thu Feb 28, 2019 1:03 pm

While you are busy chasing your tail looking for patterns to act on, risk in the complex adaptive system you live in will jump up seemingly out of nowhere and destroy any plans made on the pathological search for precision. Failing to regularly engaging in scenario planning, risk analysis and mitigation/minimization is like bungee jumping without the cord. A simple 3 fund portfolio allows one to pay attention to what is really important in life.

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galeno
Posts: 1551
Joined: Fri Dec 21, 2007 12:06 pm

Re: Want New Views On Investing Premises

Post by galeno » Thu Feb 28, 2019 1:09 pm

Yes!

I recommend the global 2 fund port: VT + BNDW. Or the USA-Centric: VTI + BND.
2015 wrote:
Thu Feb 28, 2019 1:03 pm
While you are busy chasing your tail looking for patterns to act on, risk in the complex adaptive system you live in will jump up seemingly out of nowhere and destroy any plans made on the pathological search for precision. Failing to regularly engaging in scenario planning, risk analysis and mitigation/minimization is like bungee jumping without the cord. A simple 3 fund portfolio allows one to pay attention to what is really important in life.
AA = 40/55/5. Expected CAGR = 3.8%. GSD (5y) = 6.2%. USD inflation (10 y) = 1.8%. AWR = 4.0%. TER = 0.4%. Port Yield = 2.82%. Term = 33 yr. FI Duration = 6.0 yr. Portfolio survival probability = 95%.

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