[rootusrootus]

TSLA has a forward PE of ~200x. That is probably the most logical comparison with SpaceX. Proof that the market can stay irrational for quite a long time.

It fills me with a bit of dread about the future of the market. I am 10 years out from retirement, have a bit over 1M sitting in that market, and I wonder if it will implode in the meantime. I am fairly committed to the "invest like a dead man" (i.e. index funds, no touch), but the world we live in today makes me have real doubts that the next few decades will look anything like the last few.

[davedx]

Start gradually converting your equity to bonds is the standard advice on that timeframe. If you're dreading equity drawdowns, that's what fixed income is for.

[Gareth321]

Bonds are no longer recommended. Current research indicates 100% equities to be the best composition leading up to, and past, retirement.

To point, the economic uncertainties around geopolitics, AI, and war, plus irresponsible debt spending by governments and the prospect of QE (and higher inflation), is pushing long term rates steadily higher. There’s a reasonable chance that 30y treasuries are nearing 6% by the end of next year. Remember that rates and bond prices are inversely related. Anyone who holds bonds in this market will likely lose money. Holding to maturity won’t help much either because if inflation continues to rise, as is a major concern, most or all of that 5% yield gets eaten.

[k2enemy]

> Bonds are no longer recommended. Current research indicates 100% equities to be the best composition leading up to, and past, retirement.

Are you referring to Anarkulova et al? Might be worth mentioning that the fixed income part is replaced with international equity, not more domestic equity.

[dhosek]

That’s been something I’ve started doing. The nice part of the bond chunk of my investment portfolio is the current income aspect of it, with monthly dividends that give an annualized return of a touch under 4% on top of the capital growth.

[chrisweekly]

4% on top of the capital growth? Please ELI5.

[dhosek]

So there’s two ways you make money from any mutual fund: the first is that the value of the shares can go up (that’s called capital growth). The second is through dividends and distributions. Dividends will be higher with a bond fund than stocks just because the trend for the last few decades has been for corporations to focus on growing share price rather than paying out dividends to shareholders. Distributions are realized capital gains in the fund that are paid out to shareholders, typically annually or semiannually.¹ Stock funds usually pay dividends on a quarterly basis, while bond funds may pay monthly. In my case, I’m getting a monthly dividend of about ⅓% from my bond fond (Fidelity bond index fund), although checking my records, the share price has been relatively steady over the last few years so my IRR is not that much above the dividend rate.

Another good option for something that can give good current income is REIT stocks. The management fees on the funds that specialize in these tend to be high for my tastes (I like passively managed funds with management fees that could be rounding errors) so when I’ve had money in REITs, I’ve typically looked at the top stocks in the REIT funds and just bought those directly with dividend reinvestment. Note that because of the nature of REIT dividends and taxes, it’s better to use tax-advantaged accounts to buy these than to put money in a regular retail account towards them.²

⸻

1. Back during the first dotcom goldrush when tech stocks were especially volatile (1999–2001 in particular), people who bought dotcom mutual funds in taxable accounts often ended up with a big distribution from the fund and a drop in share price greater than that distribution so that they would end up not only losing money on their investment but they also had a tax bill for their troubles since distributions will count as realized capital gains.

2. Important to note that I’m not a financial advisor and my advice is probably garbage.

[jonfromsf]

Stocks for the Long Run makes the pretty compelling case that over longer holding periods stocks are less risky than bonds.

[zie]

Their definition of long run and your definition of long run are probably different.

Also, it should be noted, just because it's the optimal to have the most $'s that shouldn't be the goal. The goal should be to survive your retirement with "enough".

And it should also be mentioned, most people can't stomach holding 100% equities, for a very good reason. When the 40-60% market crash happens, people get emotional and make emotional decisions. Sure there are the lucky few that can hold out, but most can't. Are you going to be one of the few lucky ones? If you haven't yet been through it once(last one in the USA was 2008/9), how do you know for sure?

[skywhopper]

Yes, and “I’m nearing retirement” is the opposite of the long run.

[gommm]

What would you recommend to increase international equity exposure? Index funds ETF like VWRA?

[Gareth321]

For most people, $VT (or VWRA) is optimal. You should have a U.S. tilt because most growth is coming out of the U.S. $VT will naturally rebalance into international equities on that growth. If you already have a U.S. heavy portfolio and want more international exposure, $VXUS.

[gretch]

> Anyone who holds bonds in this market will likely lose money.

Yes, you lose money (or more precisely you lose opportunity) but you gain certainty. Which is what you want for retirement

That’s pretty much the definition of risk premium.

[randerson]

Bonds only give you certainty to the extent that inflation remains certain.

Stocks generally rise with inflation, whereas bonds continue paying out the same nominal amount, which buys you less over time.

As a retiree I'm 50/45/5 in stocks/bonds/cash, having opted for a conservative portfolio. The stocks are the only reason I haven't lost buying power. But the bonds have performed so poorly that I've barely kept up with inflation despite the amazing bull run in stocks.

[kgwgk]

You may not have heard of TIPS (Treasury Inflation-Protected Securities) but they give you certainty even if inflation is uncertain.

Currently you get 2.75% yield in real terms for the 30 year maturity: https://www.cnbc.com/quotes/US30YTIP

[Marazan]

That's why you buy inflation linked bonds

[throwaway2037]

Wow, I am surprised that you think 50% in stocks as a retiree is a "conservative portfolio".

[marticode]

Are we talking about bonds or government bonds here? The former will beat inflations assuming you don't just buy AAA rated ones. Investment grade perpetual bonds in US dollars yield over 6.5% on a Yield-to-call basis.

[riffraff]

Which perpetual bonds yield 6.5% on a UTC basis?

[lokar]

It depends on the goal / priority. In most financial / retirement advice they are focused on average middle class Americans. They tend to have too little savings, and not a lot of options.

If you have more than enough saved to meet your basic needs, it does (IMO) make sense to give up some total income for lower variance.

[SecretDreams]

I sleep on certainty. I feel bad for the people based their futures entirely on a trajectory from a time we'll look back on as "utterly unsustainable".

[toomuchtodo]

If you don’t have hope when you have little else, you don’t have anything. The behavior is understandable, even if wildly irrational.

[ifwinterco]

Bonds will give you poor (probably negative) real returns, but if you're 10-20 years away from dying you're more concerned with wealth preservation than growing your wealth.

People have forgotten this but equities are an infinite duration asset that are prone to periodic, significant, often violent crashes.

(Edit: often at a time when everyone is absolutely convinced they're the best asset class...)

You can keep some equity exposure but you don't want 1929 or 2008 to happen the day after you retire when you might live for another 30 years

[GuB-42]

The theory I have seen when they say we should convert into bounds near retirement is that you don't really get to decide when to sell, that's money you need to live. And if you are unlucky enough to need money when there is a market crash, you are screwed.

Bounds are not as volatile, so even if you lose some money from inflation, you are less likely to lose a lot of money, money you need to live, from the whims of the market. You want to protect your capital, yields don't matter as much if you near the end of your life.

If you are younger, and you make reasonable investments and not gambles, you can expect that your value will go up (more so than with bounds) within a decade or two, and because you have income, you don't need that money and you can wait for the market to recover before selling.

[bradleyjg]

TIPS are yielding 2.1-2.75% _real_ across the curve from 10 to 30 years out.

[queuebert]

Worth noting the cost of dealing with Treasury's absolute dumpster fire of a website, though.

[bradleyjg]

I bonds have to be bought from that website but tips can be bought from dealers.

[throwaway2037]

Why not use a broker? I usually recommend Interactive Brokers here.

[tony69]

There’s TIPS ETFs

[SkiFire13]

> Remember that rates and bond prices are inversely related. Anyone who holds bonds in this market will likely lose money.

That's assuming you sell the bonds before their end.

[davedx]

"Current research" Citation needed. Multiple, given the extraordinary claim.

[throwwbonds]

Could you please link to the research?

[rootusrootus]

I'm technically not really in pure index funds, I just wanted to avoid trying to complicate my thoughts. Nearly all of my investments are in VFORX or Schwab's equivalent, and have been for a long time. So they are really composed of total market funds, bonds, etc, and Vanguard changes the ratio a bit as 2036 approaches. So while not really an index fund, from my perspective as a lay investor I treat it like that and consider myself an honorary Boglehead. I just put money in and forget about it.

[throwaway2037]

I looked at the fund (VFORX) here: https://investor.vanguard.com/investment-products/mutual-fun...

It looks excellent for your needs, and have an incredibly low expensive ratio of 8bps(!). Currently, it is 75% stocks, and 25% bonds. Don't worry about a bubble in the stock market.

EDIT (after reading many, many more negative comments below):

The problem with discussing your investments online, there are a million negative replies. No one ever says: "Yeah, looks pretty good. Leave it alone." I'm here to be that guy.

[rootusrootus]

> I'm here to be that guy.

I really appreciate when someone chooses to be that guy.

[digitaltrees]

You absolutely need to get inflation adjusted bonds. Otherwise you’ll get wiped out. I am in the krugman, stiglitz monetary camp; so not prone to constant fear of hyperinflation but what the government is doing makes inflation certain and the only way out a fairly painful recession either of will be hard on equity and bonds.

The market of a good leader is a lack of chaos. We are seeing the effects of a chaotic mind untethered from an accurate view of reality. Buckle up

[bsder]

One of the lessons from 2008 is that even the contrary position gets obliterated when the whole damn system implodes.

So, the optimists all swim in the cash while your contrary position fails to keep pace with the bull market; and then the bear market hits and you all get obliterated equally.

[gorgonian]

As others have pointed out, bonds are barely (or not) keeping up with inflation. I would like to suggest a third alternative to stock index and bonds: stable dividend stocks. They should increase in value along with inflation but still pay out a steady dividend as long as the company is strong.

[throwaway2037]

    > As others have pointed out, bonds are barely (or not) keeping up with inflation.

I see this sentiment a lot, but the stats do not hold up. For example, the annual inflation rate in the US in 2025 was 2.7%. That number comes from the US Bureau of Labor Statistics.

For looking at corporate bond rates, it is useful to consider the Bloomberg US Aggregate Bond Index (aka "the Agg"). It has a weighted average maturity of about 8 years (intermediate-term), currently has a yield-to-maturity of about 4.75%.

Everytime I see a debate of stocks vs bonds on the Internet, someone pops into the convo to remind everyone about "stable" dividend stocks. Honestly, for sophisticated investors, I just to don't see this strategy frequently deployed. It seems more like talking heads on the Internet. Has anyone done backtesting on performance of high div stocks vs some combination of S&P 500 and investment grade corp bonds? I would expect the latter to greatly outperform.

[zie]

Very different risk profiles.

Bonds are about steady cash flow, not about total return. "stable" dividend stocks are almost never really stable when the financial world crashes.

[throwaway2037]

    > "stable" dividend stocks are almost never really stable when the financial world crashes.

Completely agree. Also, many div stocks are just one industrial accident or scandal away from a huge drop in their stock price. People who tout preferred shares are in a similar camp in my opinion. As we discovered in 2008/2009, during a crash, there is no where safe except cash. Suddenly, all financial assets have a correlation of 1.0.

[oezi]

With the big caveat that strong dividend yields can be an indicator that the market is considering the company to do poorly in the future.

[riffraff]

Buy inflation linked bonds? They won't yield much above inflation but if you have >1M that's enough to last through retirement.

[solenoid0937]

This is absolutely terrible advice and is out of touch with modern financial understanding. Bonds feel psychologically safer, but lead to failure more often than total market equity portfolios, even when you account for market crashes.

https://youtu.be/p25PPBgMiEk

[rootusrootus]

I feel like I should go learn some more. I'm not in a pure index fund, I'm really in VFORX (almost completely, I'm not too original nor sophisticated financially and don't try to pick my own stock picks these days except with my "lunch money" just for fun). Do you think something like VFORX is a bad option? It's actively managed, so the fees will be a little higher than a pure index fund, but it's Vanguard and the fees are still really low. And it has total market components in addition to bonds.

[solenoid0937]

Active management in general is a poor idea. You'll get better risk adjusted returns by investing in total world equities (like VT). Check out Bogleheads to learn the basics. If you want to get more advanced, you can learn about factor investing as well, but VT is enough for the vast majority.

If you want to get intuition for why this works, this is a really fun and interesting video: https://youtu.be/TQuxVz52w2w

[donbox]

For VFOROX, the expense ratio is 0.08% which is pretty low. Also VT is 45% of it. VFOROX looks well balanced to me, with 3:1 equity to bond ratio.

https://investor.vanguard.com/investment-products/mutual-fun...

[ifwinterco]

The boglehead approach has worked fantastically for ~40 years, but now that everyone is doing it, it may no longer be the case going forwards.

Normally with these things when absolutely everyone is crowded on one side of the boat, you want to be on the other side

[OvervCW]

What exactly is the opposite side? Is it actively managing a portfolio? Because most people don't have the time to do that.

[senordevnyc]

I always thought the psychological safety was exactly part of the point, since 100% equity portfolios do better in theory than practice, because people are more likely to panic sell.

[GoatOfAplomb]

I agree with everything in the video you linked (which is not surprising, given it's Ben Felix). That includes the parts about equities being less risky than bonds in very important ways, but also the parts about behavioral loss tolerance and risk capacity, and how they can indicate higher bond allocation.

So I disagree that "If you're dreading equity drawdowns, that's what fixed income is for" is absolutely terrible advice.

[eep_social]

What you said is not what the linked video says, so at best this is terrible advice piling onto terrible advice.

[solenoid0937]

It is precisely what the video says. Ben has discussed this multiple times as well, not just in this video. If you have better behavioral tolerance for volatility (as in you're not the type to panic sell), total market equities will outperform and lead to less failure in retirement.

[zie]

While partially true, that "If you have better behavioral tolerance for volatility" is HUGE. Most people can not do this. Once they see their net worth go from $x to $x/2 or worse, they panic sell. People are emotional beings and it's very very hard to not let your emotions dictate what's going on.

If you haven't lived through a market panic and crash(last one in the US was 2008/2009), then chances are you shouldn't count yourself as being able to do it.

Also, their 100% equity time frames are measured in many lifetimes, not in a single lifetime.

If the goal is to have the biggest $ balance, then sure 100% equities for the win, but if the goal is to survive your retirement with little worry, 100% equities is a terrible idea.

Bonds provide stable cash flow. Equities provide growth/return. Use both in the appropriate amounts for your situation.

[throwaway2037]

    > Bonds provide stable cash flow. Equities provide growth/return. Use both in the appropriate amounts for your situation.

This is sound advice. I want to add some nuance about "bonds": Consider some broad categories: (1) regular gov't bonds, (2) inflation protected gov't bonds, (3) investment grade corporate bonds, and (4) high yield corporate bonds. In category (4), it is possible to get both cash flow and capital appreciation. It is the bond-equivalent of "stock picking".

[omgwtfbyobbq]

PE isn't a great way to value a company in their growth phase.

Amazon's PE in 2013 was 3000+, but you'd still be up almost 20x if you purchased their stock back then.

https://www.theglobeandmail.com/investing/markets/markets-ne...

That doesn't mean Tesla or SpaceX are good buys though. Maybe they are, maybe they aren't.

[throwawaycan]

Bus Tesla isn’t in anything looking like a growth phase

[thelastgallon]

2024 total deliveries: 1,789,226

2025 total deliveries: 1,636,129

8% decline YOY, Tesla shut down production of Model S & X. Eventually, they will become a pure speculation as a service stock, with zero production. But its cheaper to produce than bitcoin, no energy needs to be expended, runs on pure Musk energy!

[throwaway2037]

I feel that the value of their supercharger network is overlooked. No one outside of China is even close to their global footprint. It would probably be a great business to spin out of Tesla if they pivot away from building cars. When I watch YouTubers talk about the trouble of getting their EVs charged, many complain that competitors are much worse on a variety of metrics. Time and time again, they favour Tesla. And these are not Tesla fanatics -- many don't even own a Tesla.

[thelastgallon]

The charging networks will be largely irrelevant in the long run. People go to gas stations because there is no supply of petrol to homes/offices. Electricity is available at every building, where people live and work. Cars are parked for 22+ hours a day, and eventually you can charge anywhere you park. No need to going to a special place just to charge cars.

[blonder]

That value is only growing as new supercharger builds are now compatible with almost all EVs in the US. Supercharge.info is a good 3rd party website for tracking superchargers, and is interesting to play around with filters to look at how the supercharger buildout has progressed.

[maxlin]

They shut down production of S & X to make more capability for cars that they want to focus on and which sell way more, AND Cybercab.

Tesla grows in large steps. Next big step is Robotaxis, which is well on its way. After that, robots, for which they have the best real-world AI platform for.

You could say Tesla is a speculation stock as well when they had released the Roadster. Tesla shorters always lose.

[throwaway2037]

    > Tesla shorters always lose.

This is categorically untrue. Look at a chart of their stock from 2020 forward. It has massive spikes up and down. Plenty of shorters made good money in those falls using put options.

[mrhottakes]

> They shut down production of S & X to make more capability for cars that they want to focus on and which sell way more, AND Cybercab.

Which Tesla models sell more than the S and X?

[omgwtfbyobbq]

Most/all of them. Even cybertruck sold more in 2025 (20k) versus S+X (30k combined), and that's after cybertruck sales were more or less cut in half.

[rootusrootus]

> Tesla shorters always lose

Isn't that true more often than not no matter what company you try to short? It's a tough game to play.

[sroussey]

It is in the shrinking stage with robot dreams.

[omgwtfbyobbq]

It might be. It might not be. That's where the money is or isn't.

I think the mature part of their business is 3/Y, energy storage, and maybe cybertruck, although I also think it's too early to call it because it depends on lower cost cell in house cell production and they only started that recently.

In the near term, the growth part is Semi, cybercab, FSD, lithium cell production, and maybe cybertruck.

In the long term, it's potentially Optimus, more general autonomy, and gigafactories.

[sethops1]

The growth part of Tesla is the increasingly large promises of snake oil Elon can spin.

[omgwtfbyobbq]

That's what many said when they were ramping the S/X, the 3/Y, and energy storage.

https://www.wired.com/2009/10/audi-etron/

That doesn't mean they can't make a mess of things all by themselves. But comparing their infra investments/growth strategy to snake oil when they've gone from nothing to $100 billion/year in 15+ years might be short sighted.

[tsimionescu]

Semi is DoA, FSD has been 1 year away for 10 years now give or take, cybercab is flailing, cybertruck same, and China is eating everyone's lunch on lithium cells.

[throwaway2037]

Why do you think "Semi is DoA"? The current offering for heavy haul electric trucks is tiny (very few competitors), but the addressable market is huge. I think there is a good chance we will be surprised by its success. Even if you dislike the wild hype around Elon Musk (I don't care for it), it is hard to disagree that he has built an incredible EV company. The products they produce are excellent (minus the Cybertruck, too early to say for Cybercab), both from a hardware and software perspective. I think they can do the same for heavy haul electric trucks. The economics of diesel vs electric for heavy haul trucks is a no-brainer. Diesel is much more expensive per kilometer compared to electricity. And maintenance is much cheaper for electric vehicles.

Before finishing this reply, I checked for recent news about the Tesla Semi. I learned that they have a new separate factory (1.7m sq feet!) that has started production and has capacity to produce 50,000 Semis annually. It is next door to the original Gigafactory.

[tsimionescu]

> Why do you think "Semi is DoA"?

They started producing and selling the Semi in 2022 (after its unveiling in 2017, when they started taking pre-orders) and from everything I've dug up with a bit of Googling it seems they have shipped fewer than 200 trucks by 2025.

We'll see if this new 50k per year factory will actually have customers to ship to, but I wouldn't hold my breath given the current track record.

> The economics of diesel vs electric for heavy haul trucks is a no-brainer. Diesel is much more expensive per kilometer compared to electricity.

The economics you need to look at are dollars/hour/kg delivered. If the battery is too heavy or the charge time too long, the economics turn out much worse. We'll see once real world experiences start being published what it actually does.

[omgwtfbyobbq]

What you're saying about Semi and cybercab is what everyone said about S/X and 3/Y.

https://www.wired.com/2009/10/audi-etron/

They might might fail, but I wouldn't bet on it. Also cybercab isn't out yet, so any discussion is premature at best.

Cybertruck has been disappointing, but I think a big part of that is cost. They started in house dry 4680 cell/pack production a couple months ago, so we'll see how that goes over the next few years.

Even with China subsidizing cell production and being dominant in the world market, Tesla is still at 150gwh/year compared to 200gwh/year from BYD.

The big question is how the dry cell 4680 packs will perform and how well they can scale production if performance is adequate.

FSD is always a year away, but that's generally OK as long as it keeps improving and there isn't a comparable product in their cost bracket. If someone leapfrogs them, they're done. If not, they might be able to roll everything up all the way through Optimus.

[Waterluvian]

About 10 years out as well. I’ve concluded I just invest a very balanced set of index funds and bonds and GICs across a handful of institutions, and then invest in my home because even if the housing market collapses I get to enjoy my nice home.

Other than that I’m just not over investing for retirement and instead making sure the money is spent today on family growth and experience.

I eventually just got tired of everyone with an opinion on what doing it right looks like or how to predict the market.

[zuzululu]

would you invest in vending machines

[tony69]

Plenty of hedged equity funds out there. Trade some performance for peace of mind.

[throwaway2037]

What is a "hedged equity fund"? Can you provide an example?

[zuzululu]

there's no such thing. He's talking about L/S funds. The market neutral funds survive by capitalizing edge cases but during real market turmoil the whole thing blows up.

[davedx]

Eh, Tesla had a relatively normal growth company valuation for a while when they were growing strongly. The problem is the stock still hasn't compressed the multiple back down as growth stagnated... because the market swapped out "valuation based growth" for "call option on robotaxi success" at the blink of an eye.

[WarmWash]

Robotaxi failed so now it's Optimus bots.

[maxlin]

Failed? When? It's not doing too bad last I checked. While the competition flounders.

Robotaxi is the next great growth thing. After that, it's Optimus.

[sroussey]

The truly terrifying thing is that someone could short the Musk companies, and with one bullet can cause them to drop 50-90% right away (thanks to meme-ness). And they are valued so high that such a person could make billions overnight, maybe 10s of billions. Terrifying to be Must or anyone that shares a car or plane with him.

[simondotau]

Add that to the litany of reasons why shorting should be illegal. There is some value to shorting, but it doesn't justify the consequences.

[gowld]

And also, longs? The war in Iran has actually killed thousands of people, for market-manipulation purposes.

[mystraline]

We've been diversifying with physical metals.

Stocks, bonds, etc are effectively NFTs of "you own a monkey image". That monkey image can go poof on a 'market correction' aka 95% of investors lose everything.

With precious metals, you own the material. And silver, gold, platinum, palladium, rhodium and others have innate usage for a variety of industrial and jewelery uses. Their prices may change, but catalytics arent just going to bottom out.

We still have stocks, cause 401k's. But we also have a sizable metal buffer now.

[gowld]

"Stocks, bonds, etc" are nearly the entirely of the real economy. 95% of the value of gold is "you own a monkey image". The value of gold for catalytics is tiny. If gold wasn't used as a reserve currency for the world economy, it would be extremely cheap for industrial and jewelery uses.

[gordon_freeman]

In a similar situation: I basically have just 2 funds in my retirement portfolio: SnP500 index fund (75%) AND Berkshire Hathaway B shares (25%)

from my research I know that in years where SnP500 drops too much (recessionary periods), BRK-B would soften the blow as Value stocks tend to do well in such times. And usually that works for me.

[toomuchtodo]

What about swapping the SP500 for VT (total world equities)?

[throwaway2037]

For those unaware (myself included), VT is the Vanguard Total World Stock Index Fund ETF which "tracks the FTSE Global All Cap Index, covering roughly 9,000 stocks across more than 40 developed and emerging markets."

I see this argument a lot online: "You need more diversity." First, you didn't provide any reason or evidence about why this is a good idea. Second, "more diversity" isn't always better.

The S&P 500 has crushed VT since inception (June 2008). Most people will be surprised to learn that adding smaller cap (domestic) stocks, or international developed country stocks, or emerging market stocks will probably reduce your returns. As an example, you can compare the returns of S&P 500 vs Russell 2000 since 2005 [1]. It is not even close -- S&P 500 crushes again. Also, the vol in S&P 500 was lower than Russell 2000.

My investment philosophy comes directly from Warren Buffett: "Never bet against America". Of the three largest economic zones in the world with free markets (United States, Europe, and Japan), the United States is by far the most dynamic. Ask yourself: In the next 30 years (or more), which of those three regions will grow the most? In my view: Absolutely the United States.

Finally, to people who say that you need international stocks in your portfolio else you are "missing out". You don't. Why? The S&P 500 already has 30% of revenues from countries outside the United States. [2]

[1] https://curvo.eu/backtest/en/compare-indexes/russell-2000-vs...

[2] https://www.spglobal.com/spdji/en/documents/research/researc...

[mafuy]

I do not understand how you can talk about US, EU and Japan but not mention China. Because I'd bet China is in a similar league and has better prospects than any of the three.

[oezi]

China's equities aren't really tradable. If they were it would be nice.

[throwaway2037]

This is incorrect. There are lots of ETFs that now directly hold China A shares. CSI 300 index is the equiv of S&P 500 in mainland China. Also, via HK Stock Exchange, you can buy China A shares via "northbound connect". A broker like Interactive Brokers supports this type of trading and the bizarre/special currency (CNH) required for it. That said, I excluded China because it is not developed and has awful transparency.

[throwaway2037]

China is not considered a developed market nor "free". Also, in most developed markets, when the economy is strong, the stock market will boom. China has many, many years when the stock market is weak, but the economy is strong. It is hard to be excited about the Chinese stock market.

[toomuchtodo]

https://www.apolloacademy.com/sp-500-concentration-approachi...

> The 10 biggest companies in the S&P 500 make up almost 40% of the index, and if Anthropic, OpenAI and SpaceX are added later this year, the concentration could approach 50%, see chart below. The bottom line is that the S&P 500 basically doesn’t offer much diversification anymore.

> My investment philosophy comes directly from Warren Buffett: "Never bet against America". Of the three largest economic zones in the world with free markets (United States, Europe, and Japan), the United States is by far the most dynamic. Ask yourself: In the next 30 years (or more), which of those three regions will grow the most? In my view: Absolutely the United States.

The next 30 years will not look like the last 30 years, and to be frank, this administration impaired any thesis of the US being at the center of the economic world globally for at least the next decade or two. The ultimate strength of the US economy was that global trade centered around the US. That trade is already reconfiguring around the US, and will continue to do so to de-risk and decouple. How is the US supposed to grow with restricted immigration? 21 states already have more deaths than births and this will continue to all 50 states eventually. India and Africa are the last parts of the world where any growth will be found, everywhere else is in terminal population decline.

https://www.visualcapitalist.com/fertility-rate-of-world-pop...

So! VT reduces your concentration risk from the AI bubble (versus the SP500) while still keeping you exposed to a risk asset class (total world equities) to capture higher returns than you’d get with bonds.

Your backtesting is of no value in this context, the world has changed permanently due to the actions of this administration. Portfolio composition decisions made today are for the future, not the past. Past performance is no guarantee of future results.

Citations:

https://web.archive.org/web/20210104201135/https://advisors....

https://www.morningstar.com/portfolios/experts-forecast-stoc...

https://www.aqr.com/Insights/Perspectives/The-Long-Run-Is-Ly... (click through to the full version, the last decade+ of US out performance was mostly just the US getting more expensive, not US companies being much better than foreign companies)

https://www.morningstar.com/stocks/you-might-think-industry-... (We see the same results looking at the more recent period of July 1963 to September 2024. US stocks returned 10.64% annually, high-tech stocks returned 11.35%, healthcare stocks returned 11.99%, and both were outperformed by beer, which returned 12.18%, smokes, which returned 14.56%, and guns (defense), which returned 12.77%. Even shops (wholesale, retail, and some services such as laundries and repair shops) outperformed, returning 11.88%)

[simonebrunozzi]

Watch a lot of Ben Felix. Tons of good advice for you.

[holoduke]

Inflation is covering all the inflated valuations eventually.

[runako]

PE of 380 against deteriorating margins & profit. This story doesn't end well. But to your point, it's likely a cult of personality that can stay upright until Musk leaves the company.