Friday, July 3, 2020

Short Takes: Tesla, Reducing Stock Allocation, Retirement Strategies, and more

I had to laugh watching Elon Musk gloat on Twitter about Tesla’s recent success and rising stock and the effect it’s had on short sellers.  “Tesla will make fabulous short shorts in radiant red satin with gold trim.”  He’s not a fan of the U.S. Securities and Exchange Commission (SEC): “Will send some to the Shortseller Enrichment Commission to comfort them through these difficult times.”  “Who wears short shorts?”

Here are my posts for the past two weeks:

Investing Perfection

Talk Money to Me

Here are some short takes and some weekend reading:

David Aston says now is the time to reduce your allocation to stocks if you couldn’t stand the recent stock market turmoil.  The best advice is to stick to a financial plan and its asset allocation percentages, but for those who’ve learned that they just couldn’t stomach the 30% drop in stock prices, the best move is to wait until stock prices have recovered before selling off some stocks.  Today’s higher prices are giving these investors their opportunity.  Unfortunately, it was when stocks were low that social media was filled with bad advice to reduce your stock allocation.

The Rational Reminder Podcast interviews retirement expert Fred Vettese who has done excellent work on finding retirement strategies that can work for you rather than working for banks, insurance companies, mutual fund companies, and their salespeople.  I’ve written before about some areas where I disagree with Vettese, but I consider these differences to be minor.  Following his advice is very likely to give a good outcome.  The main area of disagreement concerns spending patterns as we age.  I’ve read the same studies Vettese references, and what I see is data that mixes together retirees who made their own choices of how much to spend with some retirees who were forced to spend less as their savings dwindled prematurely.  The net effect is that if we back out data from forced spending reductions faced by some people, retirees’ natural tendency to spend less as they age will start later and be less severe than the full data set appears to show.  This is disappointing news for people looking for the green light to retire with less saved and to spend freely in their 60s.  However, we need to ask ourselves whether we want to model our own retirements on the experience of others who made their own choices, or whether we want to include a component of forced spending reduction from dwindling savings.  All that said, though, Vettese’s retirement plans are better than most I’ve seen.

Christine Benz
has some excellent advice for young investors just starting out, as well as a few words for more experienced investors.

Robb Engen at Boomer and Echo says COVID has eliminated any chance of meeting his stretch goal of becoming a millionaire by the end of 2020.  But, he says “I won’t get kicked out of the personal finance blogger guild if it takes a few extra months to make it.”  The housing and stock markets may have something to say about it taking only a few extra months.  This illustrates the problem with getting too tied to net worth goals.  Robb has the right attitude of not being too concerned.  We have some control over our incomes and saving rates, but no control over the prices of volatile investments.  In the long run a net worth target can be a reasonable goal, but in the short run, it’s more of a hope.

Big Cajun Man gives an overview of the Registered Disability Savings Plan (RDSP) along with links to more details.

The Blunt Bean Counter
describes his experiences working from home.

1 comment:

  1. Thanks for the inclusion this week. The RDSP is really something you need to understand before setting one up.