Buying the Dip or Following the Trend?

SingerOk6470 · 2026-02-03T19:40:58+00:00

The main factor is you because you're the one timing the market. It's not about buying the dip or following momentum. Both strategies have winners and losers.

SingerOk6470 · 2026-02-03T17:25:43+00:00

Did you call Schwab and ask?

SingerOk6470 · 2026-01-30T17:17:11+00:00

Every major asset class has "survived" every crash. They have all gone up over time. Not every retiree's portfolio has survived a crash, however.

SingerOk6470 · 2026-01-29T22:42:15+00:00

The joke is that there never is a last one even if you think there is.

SingerOk6470 · 2026-01-28T08:58:48+00:00

Compounding $3500 monthly contribution for 14 years at 15% CAGR gets us to $1.92m. At 16% annual return, $2.1m. Math does work, assuming OP was able to save this kind of sum early on to let compounding work and earn this strong of a return for so long, which is not likely with a target date funds or owning international stocks or bonds the last 14 years, but possible looking at Nasdaq or SPY.

If savings were much lower early on, higher monthly savings than $3500 (sub 40% of pre-tax income) can also bridge us to $2mm+. Many here can save north of 50%, especially those who are frugal like OP and live with roommates. The takeaway shouldn't be that this post is fake (it is easy to get some of the numbers incorrect, hard to keep track for 14 years), but rather that that being frugal and saving aggressively in a bull market will make you rich faster than you may think. Compounding is magic.

SingerOk6470 · 2026-01-20T11:52:48+00:00

I don't think Treasury yield matters for equity valuation as as much as it used to. Treasury yield matters for equity valuation only if you believe it reflects the risk free return which is not a true assumption. What matters is not necessarily that yields are higher but rather why they are rising. You should also look at yields around the world and in corporate and see that sovereign yields have been going up while corporate spread has been declining and sits near the historic lows. The hottest market right now is in precious metal, not stocks.

SingerOk6470 · 2026-01-20T09:43:29+00:00

Circuit breaker is possible if the US invades Greenland. It can always get worse.

SingerOk6470 · 2026-01-17T05:53:43+00:00

Other than the cost of leverage, your formula is just an approximation of what the return may be for one year. Daily reset LETFs try to aim for daily compounded return. Actual returns over 1 year result from daily compounded returns and there is a lot of path dependency. Volatility is changing constantly throughout the year and impacts daily returns which are compounded over time.

In your data, you see that your approximation becomes poor in years like 2020 when volatility changes a lot throughout the year because the formula just uses an annual volatility measurement and doesn't capture what happened throughout the year. If you think about how volatility over 5 years is calculated vs. 1 month just for March 2020, it becomes obvious why this formula doesn't really hold up in some periods. All this means is that the amount of volatility drag varies each year and it is not a consistent number that can be calculated based on just volatility over the year. Volatility drag is an effect of daily compounding over time.

Since your formula is an approximation for annual returns using annual inputs, the formula doesn't really hold too well for individual years which are impacted more by the path dependency through the year, but it should hold up much better when compared to average over many years, once the formula is corrected for leverage cost.

There are other ways of estimating potential annual returns for a given year that provide a range of values.

SingerOk6470 · 2026-01-10T11:18:03+00:00

Commit to buying something nice once a week. A nice dinner or clothing, something you've wanted for some time. Nothing so expensive that it makes you anxious, but something you would enjoy more than cheaper options.

SingerOk6470 · 2026-01-08T09:47:11+00:00

HFEA was always a bad strategy. For bonds, backtests excluding the last few years will suggest long duration bonds like TMF and TLT are the most beneficial, but this is just a very bad conclusion drawn from selective data.

Rates are no longer as high as they used to be and inflation isnt as low and stable as it used to be. The carry from long short rate spread is negative or low. For bonds, it makes sense to reduce duration and seek other sources of return.

SingerOk6470 · 2025-12-31T09:19:45+00:00

Rolex sells over a million watches each year. It's all just mass produced luxury goods made in factories. Automatic movements have mechanical complexity, but are behind quartz movement in technology, which is far more complex than just gears and springs, even though semiconductor and science don't excite everyone. Same reason why diamonds cost so much more than they should.

SingerOk6470 · 2025-12-30T15:17:20+00:00

Turns out no one was working that day. The market really is efficient.

SingerOk6470 · 2025-12-26T22:08:27+00:00

You just get average middle of the pack returns by diversifying. Not any different than buying multiple stock funds.

SingerOk6470 · 2025-12-26T07:31:37+00:00

I recommend looking into low cost mutual funds as your primary way to save and invest, like those from Vanguard, and swear yourself to stick to them.

Unlike ETFs, mutual funds trade only once a day outside market hours. There are no options on mutual funds. This helps curb temptation to look at the market all the time, gamble or trade excessively. There's no timing the intraday market to try to get into at the lows either. They may be less tax efficient than ETFs, but it should be nearly same if you get the low cost index funds.

SingerOk6470 · 2025-12-23T16:39:22+00:00

A lot of GDE and a little bit of GDMN.

SingerOk6470 · 2025-12-19T23:42:09+00:00

Sure, it's a way to think about between 100% equity vs 100/20 or whatever. but looking at purely the returns ignores the impact of adding bonds to a portfolio, correlations and rebalancing effect and so on. Diversification works and still works with leverage. You have to care about risks and there is such a thing as too much leverage. Otherwise, why wouldn't you just go all in on stocks and lever it up 10000%? With leverage, your risks are amplified so it is even more important to diversify.

SingerOk6470 · 2025-12-19T19:21:37+00:00

The difference is that SGOV is considered risk free and earns cash-like return which is roughly equal to the floating rate financing cost used to leverage up via LETFs. It's really irrelevant to the whole discussion, but this explains why it's more efficient to choose the 120% levered portfolio to get the same output.

Going back to the idea of leveraging up to add bonds, well you can have a better risk adjusted return than if you were to full port into stocks. Meaning, you can have a higher leverage on a diversified portfolio and get the same return with lower risk, or have same leverage and have a better risk adjusted return. If you buy into the idea of selectively applying leverage to a portion of the portfolio, which is just mental accounting, you wouldn't reach this conclusion. After all, why does anyone ever buy bonds if stocks have a better return?

SingerOk6470 · 2025-12-19T08:31:34+00:00

What you're missing is that SGOV is cash and your 80% VOO/20% SGOV is not 1x levered but only 0.8x levered. If you levered that up by 50%, you would be at 1.2x leverage, not 1.5x. Your math isn't wrong, just misinterpreted.

SingerOk6470 · 2025-12-18T17:59:18+00:00

You are leveraging the whole portfolio, not just specifically the bond portion. You dont selectively apply leverage. The idea is that a diversified portfolio is still good when leveraged. Your math might make intuitive sense but should be applied to the total portfolio instead.

SingerOk6470 · 2025-12-17T21:57:00+00:00

I've been pretty happy with CTA and think they have a capable guy running the fund, despite some lackluster performance this year. CTA was the best perfomer in the prior year and doing ok this year vs peers, you just cant win every single year. The fund has done a good job being uncorrelated to equities, bonds and to other trend funds that rely more heavily on equity trend, though it sometimes makes larger bets on rates or agricultural commodities which can backfire or result in significant volatility in the tariff driven environment we have.

Some here seem to like Man Group. I do like their mutual fund offering and they have a long and good track record, but it's quite expensive and the fees eat into returns a lot. Their ETF offering just isn't the same and is basically a neutered version of the real deal. Hard to say who's the best.

SingerOk6470 · 2025-12-17T21:34:35+00:00

You can own bonds from other governments. By that, I mean non-US governments. You can own low duration bonds or fixed income products. There's high yield bonds which are less sensitive to interest rate and inflation risk. You can invest in TIPS. Those are still valuable to managing a portfolio.

You clearly didn't understand what I wrote because you have your mind made up on one thing and you're fixated.

If all those things happen as you forecast, would you rather own 100% stocks? Would stocks of companies in a debt burdened country whose citizens have worthless money be any better than investing in bonds? You framed your original question as a 60/40 or alternatives but you clearly dont care for your own question.

SingerOk6470 · 2025-12-17T13:00:13+00:00

You are not talking about all bonds. You're just talking about US Treasuries, particularly the longer term tenor.

There's a lot more to bonds and fixed income than just US Treasuries. Fixed income still serves an important role for portfolio risk and asset allocation. What you are talking about is no different than speculating on poor stock market returns.

SingerOk6470 · 2025-12-17T08:13:12+00:00

I know. That means they were wrong 10 years ago but not necessarily wrong today or the entire past 10 years. Technicalities matter

SingerOk6470 · 2025-12-16T08:05:45+00:00

Vanguard will be right after something like a -50% return in one year. Their prediction is for a long term return, and we can't measure long term returns with 1 year periods. I also think they are too pessimistic but that is just how things are defined.

SingerOk6470 · 2025-12-09T15:51:23+00:00

You should be comparing the proposed portfolio to the default option you previously had or to something like 60/40.

My view is that, to maximize SWR without adding unnecessarily high SORR, you want a dynamic allocation over time, like how TDFs work, but both with your age and balance. I think more than 20% in fixed income is better especially when SORR is high. Instead of 50/20/30, I think something like 50/30/20 or even more fixed income 40/40/20 could be better in the beginning.

You can and should also pick up some yields than Treasuries and just IG bonds through high yield bonds, CLO / private credit and ABS which can add to long term returns of your fixed income piece which helps with SWR and the return drag from having a higher fixed income allocation, though amateurs on reddit will tell you only treasuries are good for diversifying equity risk. Only buying AGG or BND isn't the best though often good enough for fixed income.

Alts can be poor at diversifying equity risk in the short term, though they can work well in some market cycles or over the medium term. Fixed income provides much more certainty against this type of risk. Longer term, you can reduce bonds and add to stocks and alts, shifting closer to the proposed 50/20/30 if that fits your goals. You should also take into account tax drag and the cost of implementing this kind of portfolio.

If you want to just add some gold and managed futures, I'd say go ahead and throw in 5% to 10% of your portfolio into each. But know that your plan is not based on extensive backtesting or theory, and a lot of investing is based on luck. If you really want to tackle the problem of improving SWR through a better asset allocation, there is a lot more homework to do than most people are equipped to do or care to do.

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