With all the uncertainty about the debt limit and potential impact a default would have on equities I thought I’d toss this out for fun. U.S. stocks might get hammered hardest. But many global markets would probably also be sent reeling. U.S. bonds are owned by foreign governments and investors as well. Assuming there’s a silver lining somewhere in all this, what would you buy?
Not sure what I’d do.
- Commodities have been in a funk for awhile. If they fell further I’d sink some $$ there.
- Maybe just “cop-out” and spread a sum equally among the several different multi-asset / alternative funds I own. In effect, let the managers deal with it.
But if the market does pull back by double-digits, I would be buying a bit of everything. Keeping it simple....priorities in order:
1) S&P Index ETF (setup Limit orders).
2) Balanced/allocation funds to get some debt exposure (FBALX, FMSDX).
3) Add to SCHD (again, via Limit orders).
4) Maybe scoop up some beaten down sector ETFs.
For the taxable, looking at new positions in SPGP, RWJ, SYLD, and RWK. Might choose FMIMX over RWK. I'm still looking a midcaps. Then adding to SCHD, PEY, and CSB. In sectors, maybe new positions in PSCC, GRID, EVX, and FIW and adding to TDV and CSGZX. I have more cash in the taxable.
Still thinking about the IRA. Would probably add equally to VWELX, VWINX, PRWCX, GLFOX, FSMEX, FSUTX, PSCC, IYK, PRBLX, VDIGX, RWJ, and SYLD. Nothing new there. And not a lot of room to maneuver until I get rid of a few things.
Great question @hank.
FWIIW, the Capital Group continues to roll out active ETFs, both equity and fixed income, that have a seeming chance of doing well. CGGO, CGDV and CGXU certainly have performed well during their short lives, although I can't judge the FI funds.
Not many folks out there are forecasting an early summer rally, but I would not be at all surprised.
You could be absolutely right regarding a relief rally upon an agreement.
Biden, McCarthy and McConnell all making comments directly or alluding to the fact that a default is off the table. Actually, it doesn't seem as though the stock markets have been all that concerned about a default possibility. Even after today the S&P 500 is still up over 8.5% YTD.
What will I buy? Some more high-end single malt scotch.
... and equitiies on my shopping list that may plunge in value to fire-sale prices if/when/as the markets respond to the abject delusive insanity emanating from the idiots across the river from me.
Watch the markets pop higher on *any* news of a deal. If it's a short-term deal, 30-day delay, or other punting, I would expect a pop higher that's completely driven by the algos followed by a retracement down (or down hard) hours later once reality sets in and human traders get involved having had time to contemplate things. In which case, after things settle within 24-48 hours, expect more of the same chop until the next decision point is announced.
If it's a permanent deal, I think the market goes higher in a straightforward but perhaps accellerated / maniacal fashion that might be good for a swing trade at least.
One of the sticking point in the current negotiations is that there seems agreement for extension to some pre-election date (longer than 30-days) but not to 2024 post-election date.
A true permanent solution would be future balanced budgets, or making the debt-ceiling an integral part of the deficit budgets, i.e. , no pork-barrel/Christmas-tree deficit budgets without an appropriate increase in the debt-ceiling to keep all on the same page.
They say maybe 10% drop next few wks/large corrections
10% down I will nibble as appropriate. (IMO such a move is hardly worth getting excited over.)
20% down I will buy in larger quantities.
30% down I will buy aggressively.
nb: not buying indices, buying individual stocks for the long-term