Dump Bonds -- buy AAPL & TSLA split?

[konafire]

We currently sit on $250K in BND in one of our IRAs.

As a completely out of character move, I am considering moving all of this into Apple and Tesla with tomorrow's split.

We have already "won the game," so to speak, and this is more out of fascination than anything else (chasing performance perhaps?).

I have a company pension that has a current value beyond the bond amount which will kick off at 65, in 17 years, thus my willingness to place a bet that these juggernauts keep rolling for the 17 year time period.

[Elysium]

We currently sit on $250K in BND in one of our IRAs.

As a completely out of character move, I am considering moving all of this into Apple and Tesla with tomorrow's split.

We have already "won the game," so to speak, and this is more out of fascination than anything else (chasing performance perhaps?).

I have a company pension that has a current value beyond the bond amount which will kick off at 65, in 17 years, thus my willingness to place a bet that these juggernauts keep rolling for the 17 year time period.

Do you also like to bet at the casinos? some people have found the stock market as a means to satisfy their gambling urge now that they cannot go to the casinos.

[nix4me]

What has changed? The company is worth exactly the same and people have exactly the same amount of value in their Apple and Tesla stocks after the split. Do you understand fully what a stock split means?

[pasadena]

What has changed? The company is worth exactly the same and people have exactly the same amount of value in their Apple and Tesla stocks after the split. Do you understand fully what a stock split means?

A lot of people think the split will drive the stock price up by giving access to a lot of small investors who used to be priced out of them - especially Tesla.

[pasadena]

Going from bonds to just two individual stocks is a HUGE change in AA and portfolio risk level.

[ruralavalon]

We currently sit on $250K in BND in one of our IRAs.

As a completely out of character move, I am considering moving all of this into Apple and Tesla with tomorrow's split.

We have already "won the game," so to speak, and this is more out of fascination than anything else (chasing performance perhaps?).

I have a company pension that has a current value beyond the bond amount which will kick off at 65, in 17 years, thus my willingness to place a bet that these juggernauts keep rolling for the 17 year time period.

Don't do out of character investing.

[am]

We currently sit on $250K in BND in one of our IRAs.

As a completely out of character move, I am considering moving all of this into Apple and Tesla with tomorrow's split.

We have already "won the game," so to speak, and this is more out of fascination than anything else (chasing performance perhaps?).

I have a company pension that has a current value beyond the bond amount which will kick off at 65, in 17 years, thus my willingness to place a bet that these juggernauts keep rolling for the 17 year time period.

Probably a better bet for returns then staying with total bond which very likely to lose real money assuming rates dont go negative. If market tanks, you can lose a big chunk of that 250k, and unlike index funds, recovery may or may not happen in the timeframe of your liking.

[Nate79]

Now I have seen everything. Thanks for the entertainment.

[chw]

No offense, but this is a dumb move. If you've won the game, stand down, don't go down the path of risking your "safe" assets on a pure undiversified gamble. If the gamble doesn't work out, you could end up being in a position of not having won the game.

[HomerJ]

this is more out of fascination than anything else (chasing performance perhaps?).

Investing should be boring.

Go to the casino if you need a thrill.

It doesn't sound to me like you've "won the game".

[MotoTrojan]

Dump it into small-value. Why would you go into something that’s just had a record setting tear? If you simply like momentum as a factor just buy QMOM, it holds both right now.

[nisiprius]

You're playing it awfully safe by diversifying into two different stocks that are in different sectors--Information Technology for Apple Corporation (AAPL), Consumer Discretionary for Tesla, Inc. (TSLA). Aren't you worried about "diworse-ifying" and "diluting your best ideas?" Don't you have any opinion on which of the two is a better "idea?" Why should you put any of your money into something, when it might underperform something else? <---- Note, this post contains irony.

[mojorisin]

My buddy put $1m of his 401k into Amazon 2 years ago. Dumb idea.

[CurlyDave]

No offense, but this is a dumb move. If you've won the game, stand down, don't go down the path of risking your "safe" assets on a pure undiversified gamble. If the gamble doesn't work out, you could end up being in a position of not having won the game.

From out here on the left coast, $250k in BND is a pretty paltry "win". It might be a good start, but it doesn't look like winning the game to me.

[nisiprius]

1) Do you have anyone else who is involved in your future financial security? Have you discussed this with them? Have you made them aware that you are considering making a move that you say is "completely out of character" for you?

2) If your convictions are as you say they are, and your time frame is as you say it is, then consider John C. Bogle's maxim, "Time is your friend. Impulse is your enemy."

In order to avoid acting on impulse, once you have finished considering this "completely out of character" move, and have made your decision, if the decision is to do it, then don't execute it immediately. Write it down. Then choose some appropriate waiting period, to prove to yourself that you are making this move out of conviction, not out of impulse. Let's say you choose 30 days as your waiting period. You would write down a plan: "I will buy $125,000 each of AAPL and TSLA on September 30th, 2020." Then wait until September 30th, and see if you still want to do it.

When I've literally done this myself, it was always some fairly wimpy move involving a Vanguard mutual fund and I would actually set it up as an automatic exchange to occur on the target date. I don't know if there's a way to do that with a stock purchase.

[Ed 2]

We currently sit on $250K in BND in one of our IRAs.

As a completely out of character move, I am considering moving all of this into Apple and Tesla with tomorrow's split.

We have already "won the game," so to speak, and this is more out of fascination than anything else (chasing performance perhaps?).

I have a company pension that has a current value beyond the bond amount which will kick off at 65, in 17 years, thus my willingness to place a bet that these juggernauts keep rolling for the 17 year time period.

You have to ask yourself some questions first before to make such radical move to begin with. Like : 1. Why I had this bond allocation? 2. What can I do if AAPL and Tesla will take a plunge next couple of weeks of 10-30% because many institutions will decide to relocate money into other underpriced and oversold stocks ? 3. How I became emotional investor after so many years of been disciplined investor? .................................saying that you’ve got to look how this two individual stocks are trended during times when nobody cared or after every split (AAPL) . I had AAPL for a while now, it gave me very crazy nice return. BUT I was buying and will be buy only on a deeps. If I ever buy more of this .

[surfstar]

snatch defeat from the jaws of victory

[TheLaughingCow]

Troll post

[rich126]

I actually don't have any issues with buying stocks but stock splits mean nothing in terms of success of a stock and if you are buying for that reason you shouldn't be buying stocks. If anything it means a stock is richly valued.

I've been lucky enough to have bought Apple stock at $65 a stock (pre split). So I'm up over 600%. I'm not bragging because I sure didn't buy enough to make any sizable lifestyle changes. If I knew it was going to be this good I would have put in more than a few % of my investment account.

I just find it baffling that after investing for close to 40 years people still think stock splits mean something in terms of stock buying.

Take your money and buy small amounts of the various cloud stocks and watch them go up/down. At least you'll know those will be exciting and maybe one of them will be a 10X stock in a few years. There is an index WCLD and I'm referring to things like DDOG, CRWD, ZM, OKTA, TDOC, and a bunch of other ones. I'm certainly not recommending buying them is wise but it could be entertaining.

[nix4me]

I wish there was a way to sell everything and buy 100% Amazon stock and put all of it into an annuity. Now that would be sweet!

[tdmp]

I have a company pension that has a current value beyond the bond amount which will kick off at 65, in 17 years, thus my willingness to place a bet that these juggernauts keep rolling for the 17 year time period.

if your asset allocation somehow changed, then maybe...why did you not do this when AAPL was valued at $1 trillion or when TSLA was valued at $180 billion? What have changed? Is it FOMO or YOLO? There is nothing wrong per se to FOMO or YOLO. Remember the boglehead tenets of risk tolerance: Ability, Willingness, and Need to take risk. You have the ability and willingness. I am unsure if you have the NEED. Valuation of company shouldn't change due to split. I do agree with previous poster that said that since price of stock is lower, you have potential for more buyers and bid up the price. However, fundamentals of companies do NOT change b/c of splits. If you have an itch that you need to scratch, then maybe $25-50K in AAPL and $25-50K in TSLA???

[Kookaburra]

In my casual discussions with folks, I get the feeling that many do not understand what a stock split means for their portfolio or for the valuation of the company. Seemingly but not totally unrelated, many of these same people do not understand what “asymptomatic carrier” means.

[Dottie57]

Going from bonds to just two individual stocks is a HUGE change in AA and portfolio risk level.

+1

If OP wanted bonds in the past, what has fundamentally changed in his point of view? In no way are AAPL/TSLA a substitute for the asset class of bonds.

What is going on here?

Alternative Universe?

[HomerJ]

I wish there was a way to sell everything and buy 100% Amazon stock and put all of it into an annuity. Now that would be sweet!

I give this troll attempt 9/10 stars... Would read and be enraged again!

[anon_investor]

Going from bonds to just two individual stocks is a HUGE change in AA and portfolio risk level.

+1

If OP wanted bonds in the past, what has fundamentally changed in his point of view? In no way are AAPL/TSLA a substitute for the asset class of bonds.

What is going on here?

Alternative Universe?

FOMO pure and simple.

[ruralavalon]

We love Amazon, it fills our shopping needs while home during COVID times.

But we won't sell any bonds to buy the stock.

[EnjoyIt]

My buddy put $1m of his 401k into Amazon 2 years ago. Dumb idea.

It’s interesting how one often hears about the great stock picks but not to much about the blunders.

I’ll give you a blunder. Back in 1999 when telecom was a booming industry I bought Nortel. They went bankrupt. Dumb idea.

[Elysium]

My buddy put $1m of his 401k into Amazon 2 years ago. Dumb idea.

As someone who originally bought Amazon for $68 back in '99, I think this is a dumb idea. As tech started crumbling, I sold Amazon stock for a small profit, $2 per share for 100 shares, and it was a smart idea back then as the stock went down to $15 in the ensuing grinding down of tech/growth stocks. The stock bounced around going nowhere for years and it took more than a decade for it to hit the price I sold for. The rest is history. Many things could have happened during those dark ages for Amazon, someone else could have toppled them, they could have lost market share, had to face damaging lawsuits, went bankrupt, anything... Just don't look at lucky outcomes and think that could be a good strategy.

[mrtwstr]

My buddy put $1m of his 401k into Amazon 2 years ago. Dumb idea.

It’s interesting how one often hears about the great stock picks but not to much about the blunders.

I’ll give you a blunder. Back in 1999 when telecom was a booming industry I bought Nortel. They went bankrupt. Dumb idea.

I also lost a lot on Nortel... man they ran that company right into the ground

[wander]

Enjoy the ride. Thanks for sharing the idea.

[palanzo]

From a previous thread the OP has a portfolio of $2.8 million.

viewtopic.php?f=2&t=257804&p=4095484#p4095484

[retire2022]

Op

Thanks for affirmation

I will be doing this with Inherited IRA 20k which is 1% of my entire 1.979 million portfolio

The initial return on the 20 inherited IRA has already been recovered.

If I lose all of Apple shares I’m ok with it.

Since i have to take out in 10 years all of Apple it could be zero or five times when I am 70.

[bostondan]

Obviously putting $250k into TSLA is a fairly bad idea prospectively, but could certainly end up working out in OP's favor. Nobody knows for sure.

My prediction is that the split will drive up the price over the next few days due to a short squeeze, similar to what has already happened to TSLA previously. It is currently the most shorted stock and sudden increases in price will lead to short sellers needing to buy TSLA to avoid additional losses, which will only drive the price up even higher (leading to even more people with short positions needing to buy TSLA to avoid losses).

At some point TSLA will probably plummet, but who knows when it will be. It feels a bit like that game at the arcade where it lights up around a circle quickly and you have to push the stop button at just the right time to win the jackpot. I was never particularly good at that game and suspect I would not be successful at shorting TSLA at the right time either.

[flyingcows]

Why?

If you want to gamble with 250k, that’s your choice, but you shouldn’t feel rushed into this trade. You could dial up huge leverage with options and futures and make foolish short term directional bets on any underlying at anytime for huge risk/reward

[anoop]

My buddy put $1m of his 401k into Amazon 2 years ago. Dumb idea.

It’s interesting how one often hears about the great stock picks but not to much about the blunders.

I’ll give you a blunder. Back in 1999 when telecom was a booming industry I bought Nortel. They went bankrupt. Dumb idea.

I also lost a lot on Nortel... man they ran that company right into the ground

Nortel had serious execution problems. Apple would have to completely bomb on its annual iPhone refresh (i.e. do something like Intel like say they are going to skip a year or sell someone else's phones and try and spin it as something positive). [This is why I exited Intel. It's OK to say you got delayed, but the announcement this time to use TSMC means they pretty much had no idea how to fix the problem. They have a lot of cash but financial engineering can only go so far.]

A better comparison would be to Cisco. They continued to execute very well, just their customer base dried up (heavily levered CLECs) and by the time the market started to recover, new competitors had emerged (Huawei). CSCO is still below its ATH from the dotcom era. Apple doesn't have Cisco's problem because of their brand cachet. The competitors already exist but the competing OS is the problem because it likes to spy and there is no alternative to iOS for someone that cares about privacy. MS Windows is another basket case compared to macOS.

The only risk right now is with overvaluation. But overvaluation is bound to persist until there is some event to cause it to correct. It's not like people wake up one day and decide to dump their stock. What that event is or when it hits is anyone's guess (it could take a year, it could take 10 years). What broke the dotcom bubble was rising rates. We don't have that now, so the main risk now is execution risk.

[burritoLover]

Millions of other investors have the exact same knowledge you do. What you are considering is obvious to everyone. In fact, both or either stock could tank after the split. Why? If you wanted to liquidate your position in Apple or Tesla, thinking that retail investors might drive it up further after the split would be the perfect time to sell. Of course, that is also known to investors. What will happen - no one knows, no one knows, no one knows, no one knows, and no one knows.

If you don't care about this money, why don't you donate it to a good cause?

[palanzo]

My buddy put $1m of his 401k into Amazon 2 years ago. Dumb idea.

It’s interesting how one often hears about the great stock picks but not to much about the blunders.

I’ll give you a blunder. Back in 1999 when telecom was a booming industry I bought Nortel. They went bankrupt. Dumb idea.

I also lost a lot on Nortel... man they ran that company right into the ground

Nortel had serious execution problems. Apple would have to completely bomb on its annual iPhone refresh (i.e. do something like Intel like say they are going to skip a year or sell someone else's phones and try and spin it as something positive). [This is why I exited Intel. It's OK to say you got delayed, but the announcement this time to use TSMC means they pretty much had no idea how to fix the problem. They have a lot of cash but financial engineering can only go so far.]

A better comparison would be to Cisco. They continued to execute very well, just their customer base dried up (heavily levered CLECs) and by the time the market started to recover, new competitors had emerged (Huawei). CSCO is still below its ATH from the dotcom era. Apple doesn't have Cisco's problem because of their brand cachet. The competitors already exist but the competing OS is the problem because it likes to spy and there is no alternative to iOS for someone that cares about privacy. MS Windows is another basket case compared to macOS.

The only risk right now is with overvaluation. But overvaluation is bound to persist until there is some event to cause it to correct. It's not like people wake up one day and decide to dump their stock. What that event is or when it hits is anyone's guess (it could take a year, it could take 10 years). What broke the dotcom bubble was rising rates. We don't have that now, so the main risk now is execution risk.

Nortel did have execution problems but recall Apple in the late 90s. There are many other risks. Conflict in the South China Sea that renders TSMC and other vendors unable to proceed components.

[anoop]

My buddy put $1m of his 401k into Amazon 2 years ago. Dumb idea.

It’s interesting how one often hears about the great stock picks but not to much about the blunders.

I’ll give you a blunder. Back in 1999 when telecom was a booming industry I bought Nortel. They went bankrupt. Dumb idea.

I also lost a lot on Nortel... man they ran that company right into the ground

Nortel had serious execution problems. Apple would have to completely bomb on its annual iPhone refresh (i.e. do something like Intel like say they are going to skip a year or sell someone else's phones and try and spin it as something positive). [This is why I exited Intel. It's OK to say you got delayed, but the announcement this time to use TSMC means they pretty much had no idea how to fix the problem. They have a lot of cash but financial engineering can only go so far.]

A better comparison would be to Cisco. They continued to execute very well, just their customer base dried up (heavily levered CLECs) and by the time the market started to recover, new competitors had emerged (Huawei). CSCO is still below its ATH from the dotcom era. Apple doesn't have Cisco's problem because of their brand cachet. The competitors already exist but the competing OS is the problem because it likes to spy and there is no alternative to iOS for someone that cares about privacy. MS Windows is another basket case compared to macOS.

The only risk right now is with overvaluation. But overvaluation is bound to persist until there is some event to cause it to correct. It's not like people wake up one day and decide to dump their stock. What that event is or when it hits is anyone's guess (it could take a year, it could take 10 years). What broke the dotcom bubble was rising rates. We don't have that now, so the main risk now is execution risk.

Nortel did have execution problems but recall Apple in the late 90s. There are many other risks. Conflict in the South China Sea that renders TSMC and other vendors unable to proceed components.

That came with a change in leadership. If Tim Cook were to leave, that would be a big red flag. Also, there is no brain drain happening from Apple. It is still very much a coveted employer.

Nortel was hemorrhaging talent all through the dot com era, well before they crashed.

[Pacific]

Troll post

+1
You took the words right out of my mouth.

[000]

LOL.

I do however think it is likely they will both get a nice short-term bump from the split and continuing euphoria momentum.

You need an exit strategy though...

[palanzo]

It’s interesting how one often hears about the great stock picks but not to much about the blunders.

I’ll give you a blunder. Back in 1999 when telecom was a booming industry I bought Nortel. They went bankrupt. Dumb idea.

I also lost a lot on Nortel... man they ran that company right into the ground

Nortel had serious execution problems. Apple would have to completely bomb on its annual iPhone refresh (i.e. do something like Intel like say they are going to skip a year or sell someone else's phones and try and spin it as something positive). [This is why I exited Intel. It's OK to say you got delayed, but the announcement this time to use TSMC means they pretty much had no idea how to fix the problem. They have a lot of cash but financial engineering can only go so far.]

A better comparison would be to Cisco. They continued to execute very well, just their customer base dried up (heavily levered CLECs) and by the time the market started to recover, new competitors had emerged (Huawei). CSCO is still below its ATH from the dotcom era. Apple doesn't have Cisco's problem because of their brand cachet. The competitors already exist but the competing OS is the problem because it likes to spy and there is no alternative to iOS for someone that cares about privacy. MS Windows is another basket case compared to macOS.

The only risk right now is with overvaluation. But overvaluation is bound to persist until there is some event to cause it to correct. It's not like people wake up one day and decide to dump their stock. What that event is or when it hits is anyone's guess (it could take a year, it could take 10 years). What broke the dotcom bubble was rising rates. We don't have that now, so the main risk now is execution risk.

Nortel did have execution problems but recall Apple in the late 90s. There are many other risks. Conflict in the South China Sea that renders TSMC and other vendors unable to proceed components.

That came with a change in leadership. If Tim Cook were to leave, that would be a big red flag. Also, there is no brain drain happening from Apple. It is still very much a coveted employer.

Nortel was hemorrhaging talent all through the dot com era, well before they crashed.

No that came with poor products.

[Robert T]

.
M* tells me the price/earnings ratio for Tesla = 1069.
Or put another way paying $1069 per $1 of (current) earnings. Compare that to Toyota with a P/E ratio of 12.
.

[Actin]

I don't think Tesla is a good choice, but Apple definitely is. If the money isn't needed, then it's actually a really good gamble.

[Prettyfrtnt]

There is not a lot of good insight about individual stocks on bogelheads cause it’s so antithetical to their way of thinking. The four bogelheads take homes about individual stonks: 1) less than 10pct net worth play money. 2) get something you will want to buy and hold for 10+ years. 3) capital gains is a pain (force you to DAF). 4) Klangfools advice: don’t take these swings unless 40x upside. And then also don’t do it buy indexes.

I have been a tsla bull on BH for 2 yearsish. Received nothing but ridicule... tuned it out... I don’t trade, buy and hold forever. Younger and have the audacity to drive in one and see the future like I did in 2007 with the iPhone. It’s just like amazon 12 years ago. You have to know how to dissect a mega cap growth. They throw around PE and stuff which isn’t how you look at these (projected PEs). I find Gary Black on Twitter to be an excellent source of information on these MAAFTA stonks. These are your top seven market cap USA companies -Berkshire. Notice Netflix is gone. Note: peoples emotions and justifications make them highly polarized on these valuations. A lot “it’s a terrible valuation” comes from “how could I have missed this.” Most tsla longs know this isn’t over. We know the roller coaster can take us either direction and hard. But we believe in a clean future and we see competition that can’t beat a 2013 Tesla. And we see tens of industries on their way to disruption. Insurance: car tells the insurer how safe you drive. Many here would be surprised to know Tesla insurance exists already. So many more...

[TimeTheMarket]

TSLA is nothing but a FOMO stock now. It's completely, irrevocably and massively divorced from fundamentals. It makes no sense at $500 even, yet it's 4X that. Not saying it won't go to $20k/share even after the split. Maybe it will?

[crswvc]

which will kick off at 65, in 17 years,

From a previous thread the OP has a portfolio of $2.8 million.

viewtopic.php?f=2&t=257804&p=4095484#p4095484

post by konafire » Thu Aug 30, 2018 1:07 pm

Recently my wife and I (both around 40 years old)

I have a company pension that has a current value beyond the bond amount which will kick off at 65, in 17 years,

40 + (2020-2018) + 17 = 59. Retiring at 60

[abuss368]

I am staying the course with Total Bond. Bonds provide dry powder and ballast to a portfolio.

If there is a material pullback investors may be thankful for a balanced approach.

[anoop]

I am staying the course with Total Bond. Bonds provide dry powder and ballast to a portfolio.

If there is a material pullback investors may be thankful for a balanced approach.

Would LQD be a better choice since the fed is buying?

[abuss368]

I am staying the course with Total Bond. Bonds provide dry powder and ballast to a portfolio.

If there is a material pullback investors may be thankful for a balanced approach.

Would LQD be a better choice since the fed is buying?

What is LQD?

[anoop]

I am staying the course with Total Bond. Bonds provide dry powder and ballast to a portfolio.

If there is a material pullback investors may be thankful for a balanced approach.

Would LQD be a better choice since the fed is buying?

What is LQD?

Bond ETF. I guess some of the bonds will be part of BND too, but since they are buying LQD, why not just front run them?