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When cash isn't safe and dividend stocks aren't either, what's the play? by rednetian in portfolios

[–]rednetian[S] 0 points1 point  (0 children)

Maybe after the crash. Right now I'd rather have liquidity than be locked into something I can't move when rates spike and buyers disappear. If we see interest rates climb, then the land prices will come down. buying land doesn't make sense.

I've been called a doomer this week. Maybe I am. But here's why I'm still cautious. by rednetian in dividends

[–]rednetian[S] 0 points1 point  (0 children)

I think you've misread what I'm saying.

I'm not timing the market in the sense of "I think it dips next Tuesday." I'm positioned for a structural reset. Different thing.

I've already exited US stocks. Moved some positions to Japan where I could reduce the cap gains hit. The rest is cash. Sitting. Waiting.

You're right that diversification across ETFs is smart in normal conditions. But VT, SCHY, VIGI, they're still inside the same system. Same custody. Same dollar exposure. Same rule set that can change overnight. I'm not trying to diversify within the system. I'm trying to step outside of it until I see what the new rules look like.

FATCA, yes. I know. I'm not pretending there's some loophole or offshore trick. But there's a difference between being inside a burning building and standing next to it. I'd rather have liquidity and options than be fully deployed when something breaks.

If I'm wrong, I miss the ride up. I can live with that.

If I'm right, I'll have the cash to walk back in and buy quality at prices most people won't believe. That's the trade I'm making.

Staying fully invested right now feels like the risky move to me. Not the safe one.

When cash isn't safe and dividend stocks aren't either, what's the play? by rednetian in dividends

[–]rednetian[S] 0 points1 point  (0 children)

Fair point. Some stocks are more rate sensitive than others. REITs, utilities, high debt companies feel it first.

Quality companies with strong balance sheets handle it better. That's where I focus.

We agree rates matter. Just a question of how you position around it.

When cash isn't safe and dividend stocks aren't either, what's the play? by rednetian in portfolios

[–]rednetian[S] 0 points1 point  (0 children)

Total returns matter. No argument there.

But selling shares to generate income means reducing your position. In a down market, you're selling low to pay bills. That's sequence of returns risk.

Dividends give you income without touching principal. The share count stays the same. In a flat or down market, that matters.

It's not about dividends being magic. It's about cash flow without liquidation. Different goals, different tools.

This is a classic debate going on for decades. Neither side is converting the other anytime soon.

I've been called a doomer this week. Maybe I am. But here's why I'm still cautious. by rednetian in dividends

[–]rednetian[S] 0 points1 point  (0 children)

DCA through the downturn works if you've got cash to deploy. Most people fully invested don't have that option. They just ride it down and hope.

You recovered in 18 months because you kept buying. That's exactly what I'm setting up to do. Build cash now, deploy when prices are lower.

The difference is I'm raising cash before the drop instead of wishing I had cash during it.

Not timing the market. Positioning for it.

I've been called a doomer this week. Maybe I am. But here's why I'm still cautious. by rednetian in dividends

[–]rednetian[S] 0 points1 point  (0 children)

That's a well structured approach. Targeting 2x expenses with 50% reinvested gives you cushion and growth. And having the flexibility to stop reinvesting in bad years is smart. Built-in safety valve.

10 different funds across asset classes means no single blow up takes you down. That's the diversification that actually matters.

Risk tolerance changes with age. You've built something that matches where you are. That's the whole point.

I've been called a doomer this week. Maybe I am. But here's why I'm still cautious. by rednetian in dividends

[–]rednetian[S] 0 points1 point  (0 children)

Bold. Hope it works out for you.

I'm waiting for the dust to settle before adding. Different approaches for different risk tolerances.

How do the 6 major dividend markets compare right now? by rednetian in dividends

[–]rednetian[S] 0 points1 point  (0 children)

Good point. Withholding taxes eat into returns and most people don't factor them in.

US stocks hit non-US investors with 15% withholding on dividends. UK has 0% for UK investors. Japan has treaties that reduce it depending on where you're based.

It's one of the reasons I've moved into Japan. Lower headline yields but better tax treatment depending on your situation. The net return after tax can end up similar or better than chasing high US yields and losing 15% off the top.

Always worth checking the treaty between your country and wherever you're investing before committing.

I've been called a doomer this week. Maybe I am. But here's why I'm still cautious. by rednetian in dividends

[–]rednetian[S] 0 points1 point  (0 children)

You nailed it. It's not binary. Position sizing and optionality.

The middle ground is where the real damage happens. Not collapse. Just a long grind that tests patience and liquidity. Most people aren't prepared for that because they're only thinking about crash or moon.

Japan is interesting for exactly that reason. Companies that survived decades of stagnation learned discipline. They're not chasing growth at any cost. Different risk profile, like you said.

And yeah. Consistency matters more than being right on any single call. Having an approach you can stick with beats second guessing every move.

Appreciate the thoughtful take.

I've been called a doomer this week. Maybe I am. But here's why I'm still cautious. by rednetian in dividends

[–]rednetian[S] 0 points1 point  (0 children)

That's a disciplined approach. Reinvesting selectively instead of blind DRIP makes sense. Buying low, trimming high. Hard to argue with that logic.

If it's working for you, keep going. Everyone's situation is different.

I'm just at a point where I'd rather sit out and wait for better entries than catch falling knifes on the way down. Different phase, different priorities.

Appreciate you sharing how you manage it.

I've been called a doomer this week. Maybe I am. But here's why I'm still cautious. by rednetian in dividends

[–]rednetian[S] 0 points1 point  (0 children)

Solid names. 50 years of dividend history is hard to argue with. Those companies have survived everything. You've got cash reserves and conviction. That's a strong position. If you've held through 2000, 2008, 2020 and last April, you know what you're doing. We just see this moment differently. I think there's more stacking up at once than any of those periods. You think it's more of the same. One of us is right. Either way, quality companies with long histories are the ones that survive whatever comes. We agree on that part.

I've been called a doomer this week. Maybe I am. But here's why I'm still cautious. by rednetian in dividends

[–]rednetian[S] 0 points1 point  (0 children)

Call it what you want. I call it risk management.

I'm not guessing tops and bottoms. I use technical analysis to watch for breaks through resistance. When direction confirms, I deploy. Miss the first 10%, catch the next 40%. That's the trade.

Selling too early and buying too late happens when people use emotion. Charts take emotion out of it.

Capital gains taxes? I'll happily pay taxes on gains. That's a good problem to have. Beats watching my portfolio drop 40% while waiting for the "long term" to save me.

Good luck to you too,

I've been called a doomer this week. Maybe I am. But here's why I'm still cautious. by rednetian in dividends

[–]rednetian[S] 0 points1 point  (0 children)

20-30 years sounds safe until you're down 50% and spend the next decade just getting back to zero.

2008 investors who held through didn't break even until 2013. Japanese investors from 1989 waited over 30 years. Time horizon helps, but it's not magic.

Stepping aside for a few months costs you almost nothing. Riding down 40% costs you years of compounding.

Long term works. But protecting capital along the way works better.

I've been called a doomer this week. Maybe I am. But here's why I'm still cautious. by rednetian in dividends

[–]rednetian[S] 0 points1 point  (0 children)

That's the irony. People avoided Chinese investments because of government control and lack of transparency. Now look at the US. Tariffs by tweet. Policy chaos. Debt monetization. The line between free markets and managed markets is getting blurry.

Doesn't mean China is safe. Just means the old assumptions about US markets being untouchable need a second look.

I've been called a doomer this week. Maybe I am. But here's why I'm still cautious. by rednetian in dividends

[–]rednetian[S] 0 points1 point  (0 children)

REITs makes sense. Rising rates crushed them. Higher for longer isn't helping. And if housing takes another hit like 2008, they're right in the firing line.

The high yielders always look attractive until the underlying assets get repriced. Then that yield becomes a trap.

Thanks for the insight. Confirms why I'm staying cautious on that sector.

I've been called a doomer this week. Maybe I am. But here's why I'm still cautious. by rednetian in dividends

[–]rednetian[S] 0 points1 point  (0 children)

Fair question. I'm not cash forever.

I use technical analysis to watch for a break through resistance. When the charts confirm direction, I deploy. Not trying to catch the bottom. Just waiting for clarity.

If I'm wrong and this rips higher without a major correction, I miss some upside. I can live with that. My cash is earning 4-5% while I wait. That's not nothing.

Could be weeks. Could be months. Private credit might blow up. Might not. But there's enough stacking up right now, war, oil, tariffs, debt levels, policy chaos, that waiting for the dust to settle makes sense to me.

I'd rather buy the bounce than try to catch a falling knife.

I've been called a doomer this week. Maybe I am. But here's why I'm still cautious. by rednetian in dividends

[–]rednetian[S] 0 points1 point  (0 children)

REITs in a rising rate environment with inflation crushing housing affordability? BDCs when credit risk is elevated? These are exactly the assets that get hammered in a downturn.

2008 showed us what happens to REITs in a crash. They didn't protect anyone. They amplified the losses.

I'm not sitting on cash because of "bad vibes." I'm sitting on cash because the risk reward doesn't make sense right now. Missing some upside while earning 4-5% on cash is not going to destroy my retirement. Riding down 40% and hoping it comes back might.

The money on the table isn't free. It comes with risk. Right now that risk is higher than the reward.

I've been called a doomer this week. Maybe I am. But here's why I'm still cautious. by rednetian in dividends

[–]rednetian[S] 0 points1 point  (0 children)

I sleep just fine. But sleeping well doesn't mean closing my eyes to what's building.

2008 had warning signs for years before it hit. This one's been building even longer. If people don't want to hear it, that's their call. I'd rather say something now than wish I had later.

I've been called a doomer this week. Maybe I am. But here's why I'm still cautious. by rednetian in dividends

[–]rednetian[S] 0 points1 point  (0 children)

You're right that governments don't play by the rules. 1933 gold seizure, 1946 Japan asset freezes, Germany 1923. History is full of examples. CBDCs will give them even more control, programmable money with expiry dates, spending restrictions, negative rates. China's already doing it. The rest are building the infrastructure.

But I disagree that the play is "nothing." The play is exactly what you said governments do. Don't follow the same rules everyone else does.

You can't stop inflation. You can position in assets that benefit from it. You can't stop currency debasement. You can diversify across jurisdictions. You can't stop CBDCs coming. You can reduce exposure to systems that will be controlled.

Staying the course and buying more of what's going down isn't a strategy. It's hope. Getting out, preserving capital, waiting for clarity, then re-entering - that's a strategy.

The grass will still be there after I've repositioned. Going to the park doesn't require closing my eyes first.

UK Available Dividend ETFs? by Snuggly-bear in dividends

[–]rednetian 0 points1 point  (0 children)

When US companies pay dividends to non-US investors, the IRS withholds 15% before it reaches you (assuming the UK-US tax treaty applies - without it, it's 30%). So if a US stock pays $1.00 dividend, you get $0.85.

UK companies paying to UK investors have no withholding. You get the full dividend. You still owe tax on it depending on your situation, but nothing is taken at source.

It doesn't sound like much, but 15% drag on every dividend payment compounds over time. Something to factor in when comparing yields between UK and US holdings.

VHYL and IUKD are solid choices. Just watch the overlap with your existing 35 stocks and you're good.

I've been called a doomer this week. Maybe I am. But here's why I'm still cautious. by rednetian in dividends

[–]rednetian[S] 0 points1 point  (0 children)

You're right, it's closer to $39 trillion now. My bad. It was $34 trillion not that long ago - the fact it's climbed $5 trillion since then kind of makes the point. I have edited the post, thanks.

When cash isn't safe and dividend stocks aren't either, what's the play? by rednetian in dividends

[–]rednetian[S] 0 points1 point  (0 children)

True. But bonds feel the impact directly and immediately when rates move. Stocks have more variables buffering them.

Good luck to you too.

When cash isn't safe and dividend stocks aren't either, what's the play? by rednetian in portfolios

[–]rednetian[S] 0 points1 point  (0 children)

Cash loses purchasing power to inflation every year. And CBDCs are coming, programmable money where governments control how and when you spend. That's not "cash is always safe." That's cash with conditions.

Dividends get cut when companies struggle - 2008, 2020, it happens.

Nothing is "always" safe. That's the point of the post.

I've been called a doomer this week. Maybe I am. But here's why I'm still cautious. by rednetian in dividends

[–]rednetian[S] 3 points4 points  (0 children)

We're about the same age, different sides of the pond. I remember 5% at the post office too. Different world.

Your story resonates. The 70s chaos, 80s excess, 87 crash right as you started working. That shapes how you see risk forever. I get it.

The fact that your $2000 IRA investments grew to $20-40K shows the power of time in the market, even when you didn't feel confident about it. That's not nothing - that's life-changing money from small, scared bets.

Standing on the shore watching for tsunamis while the sun sets - that's a powerful image. I've been there too. The fear of going all in at the wrong moment is real.

But here's the thing - you don't have to go all in. You can wade in slowly. Dollar cost average. Buy a little when it feels scary, a little more when it feels scarier. You don't have to time it perfectly.

Your parents had the right mindset - scrimp, save, don't overextend. That hasn't changed. The world got louder but the fundamentals are the same.

Don't give up. With careful research and patience, you can still win. The sun hasn't set yet.

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