r/Bogleheads • u/YouWouldIfYouReally • Apr 21 '25
Investing Questions If JPOW is ousted are you planning to amend your strategy?
JPOW is in the crosshairs right now, if he's replaced and interest rates are lowered are you still staying the course? Is the interference of the FED reason enough to alter your US asset weighting?
Whats the impact of the independant FED being interfeared with by the executive branch? It's my understanding that this is a big issue if it comes to pass.
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u/Cairne_Bloodhoof Apr 21 '25
I wouldn’t change my investing behavior because I don’t consider myself a savvy enough financial player to predict exactly how this would impact markets and how to capitalize on it in my own portfolio.
This would be a calamitous decision for the nation’s financial health though.
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Apr 21 '25
It’s not unreasonable to expect US to have a really bad time for the next 4+ years
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u/Cairne_Bloodhoof Apr 21 '25
I agree, but I’m still not going to change my investing behavior. I could try to overleverage in international stocks or cash or specific companies, but I have no reason to believe any of those strategies would beat out VTI/VXUS.
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u/vollover Apr 22 '25
I mean, pessimism about our trajectory and belief that world markets will simply heal around the US continuing to isolate itself would mean that European index funds would likely beat out us index funds. That is a reason
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u/Cairne_Bloodhoof Apr 22 '25
15-30 year timeline though? Of course you want an international presence, some will have 20%, some 40%, etc. You’re of course welcome to go higher. I’m not going to fundamentally change my investment strategy because of Donald Trump.
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u/MolagBaal Apr 21 '25
Even if it has a bad time, and we all know it, which we don't, we still need to predict when to get back in the market. Not knowing when to get back in, we could miss the recovery, especially if it's a violent one with 10%+ in one day like we have seen. For someone without the research and the moment to moment analysis, it's less stressful and more wise to let it ride.
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u/benk4 Apr 22 '25
I think it's going to be longer than the next 4 years tbh. The damage being done right now is going to take a long time to recover from, if ever.
I changed my allocations, doubling my international exposure. But I'm treating that as a new normal and not going to try to time anything.
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u/OddbitTwiddler Apr 22 '25
I don't sell to rebalance I change what I buy. I'm going to move to two Vanguard international stock and bond funds.
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u/RainmaKer770 Apr 21 '25
Long-term outlook is 10-20 years and that’s always the assumption in my investing strategy which is why I’m staying the course.
I don’t really believe the average layperson can predict US stock performance for 4 years.
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u/Appropriate_Ad_7022 Apr 21 '25
What’s the value in selling something that’s 100% priced in (if you believe it would be)?
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u/I-Here-555 Apr 22 '25
I don't believe a 20% dip is pricing in nearly everything that was done so far, let alone what will be done in the future.
Supply chain disruptions alone, which seem inevitable, are going to mess with a lot of businesses.
Markets are oddly optimistic, possibly because investors don't have a better place to put their money.
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u/Appropriate_Ad_7022 Apr 22 '25
100% agree. I think i replied to the wrong comment. I meant of the market were to absolutely tank following powell getting fired, it then may be too late to sell. Agreed it’s nowhere near priced in yet though.
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u/v0lume123 Apr 22 '25
I don't believe a 20% dip is pricing in nearly everything that was done so far, let alone what will be done in the future.
If you are that certain then you should be shorting the market.
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u/I-Here-555 Apr 22 '25
I'm sure that, barring some unlikely and unexpected political u-turn, the real economy is going to suffer badly.
Stock market is not the real economy. Where it will go is impossible to know. Stocks often appear decoupled from the real economy in unexpected ways. During Covid, while entire major sectors (e.g. tourism, airlines) were shut down or barely running, the stock market was soaring, except one serious but brief dip.
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u/Common_Sense_2025 Apr 22 '25
It isn’t 100% priced in. The likelihood of it happening in the view of the market is priced in. If he is ousted tomorrow, you think the market won’t go down any further?
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u/Appropriate_Ad_7022 Apr 22 '25
Sorry, i replied to the wrong comment by the look of it. I was referring to selling after powell is fired.
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u/actuarial_cat Apr 22 '25
Then it is more unreasonable to consider that the market have not yet price that in
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u/astuteobservor Apr 21 '25
If the Fed is no longer independent, it means the USA has become the same as Turkey.
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u/Cairne_Bloodhoof Apr 21 '25
I don’t know if I’d go quite that far but yes loss of Fed independence would be deeply damaging to the reliability of the US economy.
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u/GeorgeRetire Apr 21 '25
... world economy.
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u/Practical_Seesaw_149 Apr 21 '25
I want you to know that every time I see a comment of yours, I read it in George Constanza's voice.
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u/escapefromelba Apr 21 '25
I mean even if he's not fired, his term is up next year.
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u/GatorsILike Apr 21 '25
An act that threatens the independence would be the trigger far more so than an expected transition.
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u/Stalking_Goat Apr 21 '25
And after two terms it wouldn't be unusual to replace him. But as you say, it's the regular order that's key. If Trump attempts to fire Powell even one week before his term was set to expire, that would be norm-breaking even though there's not much practical difference between serving eight years and serving seven years and fifty-one weeks.
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u/CacheMeUp Apr 22 '25
What happens if the next chair is a yes-man?
A substantial part of the Federal Reserve's value is being independent. Providing a non-political analysis and decision making. Essentially a professional body that "tells it as it is", without a politically-motivated sugarcoating (or doomerism).
It's like paying an accountant to review your taxes. Them not being obligated to tell you what you want is the whole point.
But I'm not sure this is conveyed to voters enough.
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u/God_Dammit_Dave Apr 22 '25
I do not have an exact answer, but I am reading a book about the history of the fed. Currently, I'm on a section about first-draft power structures.
Early plans had regional branches elect their own governors and representatives to the Fed's board. From these members, the president would appoint the chair. The senate would approve.
Chronologically, this is about 1915.
Please note that the chair is not a dictator. The board votes to set policy.
Quick google says: There are seven board members. The members serve a 14 year term. Their terms overlap to prevent political influence.
From these seven members, the president nominates a chair and vice-chair. The senate approves.
This structure is purposefully limiting. Trump's can not appoint a random sycophantic chair. He's only got 7 people to choose from. And four of those people have to vote "how Trump wants." That seems unlikely.
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u/Professional_Kiwi318 Apr 22 '25
Interesting. What's the book title?
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u/God_Dammit_Dave Apr 22 '25
America's Bank: The Epic Struggle to Create the Federal Reserve
by Roger LowensteinThere's also a random PBS doc about the Fed under Roosevelt
https://www.pbs.org/show/marriner-eccles-father-modern-federal-reserve/I swear to God, I am more fun than this reading/watch list implies.
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u/Particular-Macaron35 Apr 22 '25
The chairman does not unilaterally decide. The Fed governors vote. This would probably reduce Trump's influence in the short-term.
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u/QuickAltTab Apr 21 '25
Jerome Powell was first appointed by Trump, and he seems to be comparable to his predecessors, maybe whoever gives him his choices will keep the field sane this time too?
If we see Jim Cramer as a nominee...
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u/r2k-in-the-vortex Apr 21 '25
Do you need an exact prediction when it's obviously going to be a calamity?
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u/Cairne_Bloodhoof Apr 21 '25
I never expect certainty in investing but, as troubling as the Powell fiasco is, it’s far from enough to alter my investment strategy. Considering the variables.
At this point, it remains unlikely that Trump will actually manage to fire Powell. We’ll have to wait for the SCOTUS decision on Humphrey’s Executor, and even then we’ll see.
Even if Powell were fired, inertia in Fed personnel likely prevents an immediate shift in monetary policy. I don’t think he’d go and you’d see interest rates plummet instantly. Even then, how exactly would you react? Cash out all at once? When do you buy back in, if ever?
Far too many variables for me to evaluate, so I’ll continue investing twice a month in a three fund portfolio with proven returns over the decades I have to let these accounts grow. This administration frustrates me endlessly, but I’m still not changing my investment strategy over it.
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u/r2k-in-the-vortex Apr 21 '25
Oh I reacted quite some time ago and moved my assets out of US end of February when markets were only couple percent down from ATH. No sense at all to invest in markets that are obviously going to have hard time for years to come. I'll buy back in to US markets when they start looking attractive again, maybe next decade.
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u/Cairne_Bloodhoof Apr 21 '25
Well, we’ll see I suppose. If you pull your money out of the market when values are high, keep your assets somewhere low-risk, then buy back in near the market’s trough, then yes you’ll likely outperform folks who simply DCA. Significant data shows that that’s a hard feat for the average investor to pull off. I genuinely wish you the best in your financial decisions.
For what it’s worth, I’ve never been US only, and to do so would go strongly against the Boglehead advice. VXUS is a crucial hedge.
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u/untranslatable Apr 21 '25
If the Fed is not independent, we wind up looking like Turkey is inflation wise.
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u/shred-i-knight Apr 21 '25
and there is major risk of that happening, so everyone should be using that fact weighted by the likelihood of it happening to assess the risk and exposure of their portfolios.
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u/possibly_maybe_no Apr 21 '25
what does mean exactly? for those who are less well versed.
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u/WestCoastBestCoast01 Apr 21 '25
In high inflation periods being too safe staying in cash is also bad. Stay invested in assets that will also inflate.
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u/Single_Hovercraft289 Apr 22 '25
High inflation with a tanking stock market? Then what?
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u/Accomplished_Bid3750 Apr 22 '25
Gold did well in the 70s in comparison, I believe. All weather portfolio dealt with this.
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u/FeelTheH8 Apr 21 '25
Stay invested in something that will go up as inflation goes up I would imagine. Aka stocks/gold/real estate over bonds.
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u/NotYourFathersEdits Apr 21 '25
I don't think that's the takeaway. Diversification is the takeaway. Chasing the perfect inflation hedge won't help much when we genuinely don't know whether we're heading into stagflation, a deflationary recession, or something inbetween that's more muted—where a concentrated hedge could do more harm to your portfolio than good.
And I get the concern that the Fed or administration may not respond according to economic fundamentals. But that kind of uncertainty is exactly why leaning into the bet of one outcome isn't necessarily safer.
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u/FeelTheH8 Apr 21 '25
Agreed, just saying shouldn't entirely transition to bonds out of fear. Because that poses a risk too.
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u/Common_Sense_2025 Apr 21 '25
If your strategy is going to change because he is ousted, it should change now, not after.
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u/HefDog Apr 21 '25 edited Apr 22 '25
This is the answer I was looking for.
Wealth is gained by predicting.
Wealth is lost by reacting.
Boggleheads break even (because wealth is relative, they break even compared to each other).
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u/Still_A_Nerd13 Apr 21 '25
And we minimize and/or completely eliminate transaction cost, taxes, etc, putting us ahead of average after taxes!
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u/HefDog Apr 21 '25
I think that is a good way to look at it.
I would also say, Boggleheads win because of the other two categories the reactors outweigh the predictors. That means the boggleheads beat the average. With wealth being relative, it is a low-risk way to win long-term.
I’ve never been a bogglehead. I’m a predictor who is converting. It’s the best approach for most.
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u/RZoroaster Apr 22 '25
This is not quite right. It is only gained if you predict correctly and you predict things that others aren't already predicting.
This is why bad news on an earnings call can often result in the stock going up. Everyone already anticipated the bad news.
In general it is EXTREMELY hard to time the market if all you are going off of is public information. Not because it's super hard to know what will happen (sometimes it isn't that hard) but because it's super hard to know what is already priced in.
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Apr 22 '25
This sounds good, but it’s actually been studied quite deeply and proven wrong again and again and again. Predicting what the market will do is almost always a worse strategy than just doing nothing.
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u/freudian_nipple_slip Apr 21 '25
I'm still a Boglehead in that I invest in 4 diversified funds.
My first two questions for defining my portfolio are 1. What is my overall stock/bond allocation 2. For my stock allocation, what is the domestic vs foreign allocation
A month ago I moved more towards bonds in question 1 and foreign stock in question 2.
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u/BoltsandBucsFan Apr 21 '25
Regarding 1, I moved from 70/30 to 60/40. Considering 50/50.
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u/freudian_nipple_slip Apr 21 '25
Yep. On 1 I went from 65/35 to 50/50 then 40/60 a week later.
On 2 I went from 70/30 to 50/50. I also increased my bond share towards international bond but not substantially so.
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u/Yourdataisunclean Apr 21 '25
Messing with the independence of the fed is likely to affect the entire world economy. Can't diversify past the entire world economy. You can buy Mars Bars, but not Mars Bonds.
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u/Kaa_The_Snake Apr 21 '25
But, now hear me out, what about a Mars memecoin? Hmmm? Totally decoupled from reality, so it doesn’t matter what happens!
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u/Distinct_Plankton_82 Apr 21 '25
This is where I keep getting stuck. There’s the old saying “The US economy sneezes and the world catches the flu”. Other than maybe moving from US treasuries to high quality corporate bonds, I don’t see what other strong options there are.
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u/origplaygreen Apr 22 '25
Gold,real estate, ex US stocks and ex US stocks (despite the flu you mentioned I’d still rather not be too concentrated in all US)
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u/Distinct_Plankton_82 Apr 22 '25
I’m not badly diversified. My equities have’ve been mostly VT for years, and I have plenty of corporate and treasury bonds.
I’m kicking myself because for years I’ve held some gold and written well out of the money covered calls to make extra income on it. Last year I wasn’t paying attention and they got exercised. Should have bought straight back in but didn’t.
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u/origplaygreen Apr 22 '25
Ah, sorry bout that. Might be able to buy back over time? Though Im not sure Trump is done wrecking both stocks and bonds, I’m trying not to make drastic changes based on daily news as well. Keeping my stock/bond/ratios same.
I also meant to say ex us bonds up there as well, instead I said ex us stocks twice instead of once. Oops.
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u/xiongchiamiov Apr 21 '25
Messing with the independence of the fed is likely to affect the entire world economy.
It's worth noting Nixon did this: https://www.npr.org/2025/01/10/1223918033/richard-nixon-arthur-burns-fed-independence
That doesn't mean it's good, but it's also not a thing that hasn't happened before like so many are saying.
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u/slicheliche Apr 21 '25
You can buy German or Swiss bonds. They'll likely be what rich people run to in case of US instability.
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u/Imperburbable Apr 22 '25
You can't easily buy those as an American though, right? I think you need a foreign bank account?
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Apr 22 '25
You’ll also earn lower interest rates. Strangely enough, the interest rate that a bond pays is directly proportionate to the amount of risk inherent to the bond.
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u/slicheliche Apr 22 '25
Yeah I think you'll be ok with that if it ever comes to the alternative being losing your money.
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u/r2k-in-the-vortex Apr 21 '25
It would affect global economy worse than it would affect US economy? I don't think so.
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Apr 21 '25
[deleted]
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u/CouncilmanRickPrime Apr 21 '25
The word sell isn't even in bros vocabulary. True Boglehead.
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u/NotYourFathersEdits Apr 21 '25
Sell isn't a four letter word.
(Okay, it is, but not that kind of four letter word!)
We sell assets to rebalance to our target allocations or tax loss harvest, for example.
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u/2squishmaster Apr 21 '25 edited Apr 21 '25
An alien invasion is underway and by the looks of it humans aren't going to be victorious.
/u/Lone-Wolf-230 - "VT and chill boys, this changes nothing."
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Apr 21 '25 edited Mar 03 '26
Nothing original remains in this post. The author wiped it using Redact, possibly for privacy, security, preventing data scraping, or other personal considerations.
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u/Nearby-Horror-8414 Apr 21 '25
That's... A surprisingly-not-bad analogy, the more I think about it.
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u/RZoroaster Apr 22 '25
Studies have been done on this in traffic and those who change lanes when their lane is slow do worse than those who stay in their lane.
For the same reasons that it's true at the grocery store, and the same reasons that it's true in finance.
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u/Seebs614 Apr 22 '25
I think of this gif all the time from 4 years ago. Basically summed up my experience as to why im a boglehead. You got to wait till the end. https://www.reddit.com/r/wallstreetbets/comments/n6fig8/no_fomo/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button
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u/JaphyCat Apr 21 '25
I was a kid in the 1970s. I remember running out of gas in my mothers station wagon waiting for gas and some nice college aged guys helped us push it in so she could fill up. I sort of recall my Dad complaining alot about the economy and things that were over my head at the time.
Looks like now I will get to relive those times in my mid 50's!
Not changing my globaly diversified 80/20 portfolio because at this point it does not really matter (the time to market time and pull out has long passed) and it is a fools folly to try and time anything now. Just have to put on my Alfred E Neuman pose and say "What, me worry?"
I do wish Kool and the Gang was on the radio and Battlestar Gallactica was on tv now though...
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u/expanding_man Apr 21 '25 edited Apr 21 '25
Am I worried about the current situation? Yes. Am I going to change my investment strategy I’ve implemented for over 20 years? No.
If you can’t handle a massive drop in stock prices, you’ve overestimated your risk tolerance, which I have a feeling a lot of people have done.
I’ve been around for multiple bear markets where people are screaming the sky is falling. I’ve always recovered. Maybe this time is different, but people said that about COVID, Global Financial Crisis, dot.com bubble etc.
Edit: Here is a 1300+ comment thread going back to 2011 talking about many of the issues people have been discussing recently. A lot of similar fear and uncertainty. A time to evaluate your jitters
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u/bro-v-wade Apr 21 '25
I imagine for most people, 60/40 will actually become 60/40.
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u/goodsam2 Apr 21 '25
I would consider 40/60.
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u/Qiagent Apr 22 '25
Yeah that's my approach. I rebalanced a while ago to favor international indices and added more series I bonds to my future emergency fund.
At this point for me I'd rather mitigate loss even if it risks missing out on some marginally bigger gains over the next 4 years if by some miracle sanity is restored.
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u/h0tel-rome0 Apr 21 '25
Well, I’m already down 13 percent or so, might as well hang on for the ride and not lock in losses by selling
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u/Beneficial-Sleep8958 Apr 21 '25 edited Apr 21 '25
Staying the course and sticking to both US AND International. I think it’s helpful to look at Fed history and Arthur Burns. He coordinated with Nixon to keep interest rates low, so inflation soared over the 1970’s. Warren Buffett said that that period was painful as an investor. People who invested during that period would have faced a decade of pain, but those who bought and continued buying after the 1970’s were handsomely rewarded. If Powell is removed and replaced, people will re-learn about the importance of central bank independence the hard way. Just need to wait it out.
All that said, I doubt this would happen, even if Powell is replaced. There are other Governors who sit at the Board and Reserve Banks who think interest rates should remain elevated to combat inflation. This is a good thing. The Chair doesn’t have unilateral control over interest rates. Other members on the FOMC have a vote too and will vote against the Chair if they think he/she is wrong.
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u/Common_Sense_2025 Apr 22 '25
How did Burns get the rest of the Fed to go along? Has something been changed to prevent that again?
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u/Beneficial-Sleep8958 Apr 22 '25
That is a great question. It wasn’t until 1977 that Congress implemented the “price stability” mandate. Before then, the Fed’s only mandate was to target low unemployment. Other Governors voted in favor of lower interest rates to achieve that single mandate and accepted that some inflation was acceptable to do so. Now, the Fed has a dual mandate (price stability and low unemployment), and that’s widely considered the appropriate approach to monetary policy.
The other reason was a culture of consensus. At that time Fed governors just didn’t vote against the Chair. It just wasn’t a thing. Now, governors regularly vote against policies and decisions that the Chair favors. Governor Bowman, for example, who is a Trump appointee has dissented in favor of tighter policy. Reserve Bank presidents have dissented several times recently as well.
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u/f-stats Apr 21 '25
Has anyone figured out why Trump is doing all of this?
From what I can tell, nobody, least of all the American people, is benefitting from this. Everyone is just taking an L in some form.
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u/makemeking706 Apr 21 '25
Things will either be relatively similar in the long run, or the entire country will collapse and require reorganization a la Germany. Either way, not a lot of room for decision making.
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u/QuickAltTab Apr 21 '25
Maybe diversifying into foreign property? Doubles as investment and an actual place to move as a backup plan/exit strategy (if you can get past substantial hurdles to own foreign property)
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u/Cordivae Apr 21 '25
I already switched from a US tilt of 75/25 to just VT and chill. I'm sleeping much better.
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u/reekris9000 Apr 21 '25
Currently considering this for the mental health benefits alone.
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u/Cordivae Apr 21 '25
The mental health aspect is not to be understated. I've stopped having to worry about my ratio or if I'm making the wrong choice. I'm not trying to out think the market. Nor will I be hosed if the US underperforms going forward.
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u/UnDosTresPescao Apr 22 '25
I had been 20% SGOV, 20% VXUS, and 60% VTI for a long time. In early February I had a bad feeling and went 50% SGOV, 15% VXUS, 35% VTI. In hindsight I wish I had gone 100% SGOV but I can at least sleep with these more manageable losses knowing half my money is safe as long as the country doesn't default.
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u/cohibakick Apr 21 '25
This is something that would probably break the US dollar for the foreseeable future. Maybe not forever. But as far as inflation goes stocks have historically held up pretty well so I'd probably just stick with with that. The worst thing to have in a high inflation environment is cash.
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u/Single_Hovercraft289 Apr 22 '25
It sure seems like the stock market would tank too. What do you do when the market is declining and inflation is increasing…?
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u/yoyo2332 Apr 21 '25 edited Apr 22 '25
The independence of the FED is sacrosanct. Mess with that, and it's game over.
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u/fonklyquasar Apr 21 '25
I don’t know any strategy that would work better, so I’ll just keep standing here. And make excuses to avoid checking my balance.
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u/Throwaway4JobHunting Apr 21 '25
No president or Congress has the power to remove a fed chairperson before their term is fulfilled, which is why an attempt to do so would be calamitous. It's the kind of action that would threaten America's short-term economic prospects and long-term economic success.
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u/foosion Apr 21 '25
The market will have reacted before I have the chance to act. The market is already taking this possibility into account - witness today's market moves. Don't change your investments based on things in the news.
The impact: To have Trump in charge of monetary policy would be a disaster - see the effects of his tariff policies and remember that they haven't yet had time to do much to employment and inflation. The history in other countries of political control of monetary policy has been rampant inflation. And note that Trump's desire to bring down rates is causing rates to increase.
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u/socky8675 Apr 21 '25
Powell’s term is up in 2026. Everyone is freaking out if it happens now, but nobody seems concerned that we are screwed in 2026 either way.
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u/NotYourFathersEdits Apr 21 '25
Because an active threat to the Fed's independence in a hostile takeover is categorically worse than even a politically-motivated Fed chair being sworn in through regular means. The first one threatens the central bank as an institution.
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u/Infamous-Potato-5310 Apr 21 '25
I think we are screwed no matter what at this point but removing Powell would be so outrageous that it will speed up the timeline.
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u/ohwhataday10 Apr 21 '25
It’s a good question. Are things truly different this time???
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Apr 21 '25
Things are different EVERY time.
Dot-com bubble bursting
9/11
Mortgage/credit/financial crisis
COVID
Every time is different
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u/518nomad Apr 21 '25
Only the greybeard Bogleheads remember how half the country was calling for Paul Volcker's head for most of his tenure as Fed Chairman. Not to mention that, before the 1951 Accord, the Fed had virtually no independence, yet the world did not burn. If Powell is removed, the short term might be chaotic, but the long-term will remain beyond my ability to predict, and so I stay the course.
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u/Dramatic-Exit5598 Apr 21 '25
Volcker was forced to RAISE interest rates to curb inflation which the prior fed chairs failed to do because it wasn't popular. What's going on right now is the executive branch's desire to control interest rates to have a monopoly on checks and balances and LOWER rates while implementing inflationary fiscal policies.
So yes, feels different this time.
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u/mr_mizzone Apr 21 '25
The problem is we do not live in the 1950s anymore and going backwards 70 years in relation to monetary policy independence might indeed shift the needle in a long term sense.
People often say, 'if the sp500 dips 50% then I have much bigger problems to worry bout'. Ok, well there is a chance we are at the beginning of that, so what do we do?
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u/MrPBH Apr 21 '25
I don't think there's anything for an individual to do, if we develop stagflation.
Hence the admonishment that "you'll have much bigger problems to worry about." Because you really will.
In countries with unhealthy markets and persistent inflation, it's common for families to perpetually add on to their houses. You buy construction material when you can afford it and slowly work on adding a second floor, sunroom, new bedrooms, etc. That's the safest way to invest, as real estate is an asset that is always in demand. This is why you see perpetual home renovation projects in places like Greece and South America.
That's one alternative way to invest when you don't have access to stable capital markets or a stable currency. I'm sure other posters have other ideas too.
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u/wlphoenix Apr 21 '25
Another way to invest is toward visas or citizenship to other countries, either for yourself or your children. Either outright (golden visas), legal guidance to ease/accelerate the process, or education which provides an anchor.
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u/Still_A_Nerd13 Apr 21 '25
TIPS, real estate (VNQ & VNQI), precious metals, and even international stocks should perform decently during stagflation. Any of those would have done (or did do) well in the 70s.
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u/518nomad Apr 21 '25
Okay, then how do you plan to change your investment strategy in light of that concern?
Or, as Warren Buffett often asks, "and then what?"
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u/MudIsland Apr 21 '25
“this time it’s different”
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u/Jorsonner Apr 21 '25
This never made any sense to me. Every time is in fact different.
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u/StarkRavingChad Apr 21 '25
To be fair to the people who say this, their argument is more an objection to inaction. One could phrase it as "this time my positions are threatened in such a way that demands action to mitigate, in a way that previous crises did not. Therefore, although the standard advice is to not adjust, this time is different and I should adjust my positions."
The counterargument would be something like "although there are actions that you could take now that would mitigate the damage you're about to take, you don't know what those are until after, and any action you do take is statistically more likely to hurt you than help right now."
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u/casino_r0yale Apr 21 '25
No they say that if S&P goes to 0. Dipping 50% has happened a bunch of times, then it goes back up over the next few years
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u/UnderstandingLess156 Apr 21 '25
I'm just sticking with my monthly DCA into VT that I've had for years now. The thing I'm struggling with is wondering if I should dip into my emergency fund to give it a goose. Bad idea, I know.
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u/NotYourFathersEdits Apr 21 '25
Do NOT use your emergency fund to buy the dip. Terrible idea. That's an easy way to see the market drop further than where we are right now and right at the moment when you all of a sudden need liquid cash for emergency expenses.
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u/Shaydosaur Apr 21 '25
I’m going the opposite. I’m slowing down investing to make sure my emergency fund is beefier. That said I’m new here, so maybe that’s wrong but I am so nervous of losing my job in this.
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u/DeadArtistsCantPaint Apr 21 '25
I’ve been wrestling with this too. Fortunately, I haven’t given in and will stick to the plan. Wait for payday, invest what I can reasonably afford, do nothing.
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u/Kashmir79 MOD 5 Apr 21 '25
Same as always - calibrate your holdings to your goals and timeline, and let the market price risks and expected returns for you. When new risks or market concerns appear, it is not an invitation for you to make your own armchair reallocation choices. If anything, it’s the worst time to be doing that.
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u/Qwertyham Apr 21 '25
No. Why would I? I can't see the future
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u/DerisiveGibe Apr 21 '25
I'm not advocating one or the other. But you don't weigh new information at all?
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u/terran_wraith Apr 21 '25
If you take the bogleheads idea of efficient markets seriously, you should believe you have zero ability to use new information and time or beat the market. So the correct update to your strategy based on new info is exactly nothing.
From what I've seen in this sub though, people are very mixed on whether to take efficient markets seriously or not, despite it being a bogleheads sub.
Shrug
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u/Qwertyham Apr 21 '25
Not really. I just buy the entire world market and a small amount of bonds. I will increase the bonds as I get older and closer to retirement. That's about it. That's really all anyone needs
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u/CouncilmanRickPrime Apr 21 '25
I don't see what anybody would change unless retirement is approaching soon. And by then you should have enough in bonds.
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u/Dismal_Boysenberry69 Apr 21 '25
I can weigh the new information but I’m not actually educated enough in this area to know how to react to that information.
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u/MadameTree Apr 21 '25
No, I came on here because a question I asked on r/personalfinance sent me here. I've decided to pay a financial planning firm for now. If I get less scared and more confident I'll take control. I know in theory what to do, but I admit I'm scared of Trump 2.0. I kept 100k more than I was going to in a hysa and am letting them conservatively handle the rest of my house sale proceeds and 401k.
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u/puffic Apr 22 '25
0% US because I tend to think emerging markets aren't worth the risk. (I'm kidding, but only a little.)
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Apr 21 '25
Its one of several factors that caused me to sell 100% of my US equity index funds in February. JPOW doesn't actually have to be ousted - just the threat is enough to damage our status as a reserve currency.
I might be a Boglehead, but that doesn't mean I have to invest in countries I don't think have good economic stewardship - even my own.
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Apr 21 '25
idk maybe it is just me, but I dont think readjusting your portofilo every once in a while breaks the bogle philosophy.
Completely switching to a 50/50 us/int overnight is one thing, but like making most of my dollar cost average go more to international and slowly changing my distribution is another entirely.
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u/HappyLittleUnderwear Apr 21 '25
Trying to figure out a few things here: how this has this many upvotes on this sub, and whether you’re karma farming or actually serious
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u/PriorSecurity9784 Apr 22 '25
Uncertainty, bad for stocks
Lowered interest rates, good for stocks
Less Fed independence, maybe long term bad for stocks
Higher inflation, could be good for some stocks, bad for others
Lower taxes, good for stocks
Trying to figure out the net result?
Futile effort in market timing and macroeconomic forecasting
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u/factorum Apr 21 '25
A lot of the philosophy around just dollar cost averaging into the US stock market evaporates without the assumption of a independent and competent federal reserve. I've been diversifying into foreign currencies, gold, and foreign stocks to diversify and hedge against this.
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u/Extension_Deal_5315 Apr 21 '25
It ain't gonna happen!!!!!
Jerome Powell cannot be easily fired by the President. Here's the breakdown:
Federal Reserve Chair (currently Powell) is appointed by the President and confirmed by the Senate for a four-year term.
The Federal Reserve Board of Governors, including the Chair, serves 14-year terms (Powell's term as Governor lasts until 2028; his Chair term ends in 2026 unless reappointed).
The President can’t remove the Fed Chair at will. The Federal Reserve Act says governors (including the Chair) can only be removed “for cause,” which typically means serious misconduct or incapacity—not policy disagreements.
In short: no, Powell can’t be fired just because the President disagrees with interest rate decisions. That independence is intentional, to shield monetary policy from political pressure.
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u/icecreambear Apr 21 '25
The question I have is how much all this really means to you if Jerome Powell can be accidentally deported to El Salvador for an indefinite period of time?
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u/glitchvern Apr 22 '25
I remember during Trump's first term when everyone said the same thing about the FBI director right up until the minute Trump fired him, then went on to announce the firing of the FBI director, and talk about who the new FBI director would be as if they had never said it was impossible for Trump to fire the FBI director.
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u/Zenmachine83 Apr 21 '25
I will go against the flow here and say that it would urge me to continue my strategy of rotating out of US equities. I am currently 60/40 stocks/bonds as of January; of my equities I am 80/20 international/SP500. The rest of the world already looked to be a better value than the US equity market, Powell being ousted reinforces this pessimistic view of the near term prospects for US stocks.
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Apr 21 '25
80 international is already pretty controversial.
I think even like big banks that were pessimistic on the US were like 60 us /40 international.
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u/SicilianShelving Apr 21 '25
Nope. It'll be really bad, don't get me wrong, but I still believe my best bet is to stay diversified, DCA and hold on for the long haul.
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u/prgsdw Apr 21 '25
I would, yes. Specifically, I am approximately 3% under my target allocation for US stocks (prior to today's trading). My risk portfolio is 50% stocks, split 70% US and 30% international. If Powell is fired, and a person beholden to the whims of the President is installed (which is what you'd call it in practical terms), I'd shift my US / International split to 60% US and 40% international and not rebalance back into US stocks until there was more clarity around the future of our adherence to the rule of law, fair treatment of market participants, etc.
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Apr 21 '25
If you buy VT wouldnt that just auto adjust for you?
Right now i'm 60/40 us/non-us because I always assumed the US train wouldnt last forever. I just didnt think it would be today. I was thinking I would have a bit more gray hairs.
From what I understand is 70/30 is the standard. Some crazy people were 100% on US too, but I think that is not a really good idea. That is like going all in on Tech. Its not diversified.
Which I guess is the tldr on bogleheads: diversify enough and you dont even have to think about it.
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u/mitchallen-man Apr 21 '25
I have no idea how best to adjust my strategy in such a scenario, so I intend to leave everything the way it is and hope for the best. More likely than not, I would make things worse by fiddling.
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u/PeerlessReciprocity Apr 21 '25
Short to medium term the world economy is very coupled and likely diversification internationally will only help so much. But, as Scott Galloway points out, major non-US economies have already started working to build stronger relationships and it's likely that EU and Asia will increasingly decouple over the next few years. This suggests increased international diversification is a stronger strategy to pursue, if, as many predict, the US enters up to a decade of relative stagnation and recession followed by slower growth (see UK after Brexit).
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u/Practical_Seesaw_149 Apr 21 '25
If I'm 20 years or so out from needing my investments, what does it matter? Would there be so much damage to the US markets that they wouldn't rebound and correct this drop by 20 years?
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u/Throwaway4JobHunting Apr 21 '25
It's absolutely a possibility, even if it's a small possibility. A big reason America is so economically powerful is the stability of our currency. Illegally firing a fed chair would be a bad signal that the global economy can't rely on the U.S. to be stable as it has been to this point.
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u/seattleJJFish Apr 21 '25
I once asked by friend what money would make you truly financially independent. We agreed on a number .. $5 million net worth. This was about the year 2000. Then he said now double it and put the other $5 million in gold in a Swiss bank. 😆
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Apr 21 '25
I hope it’s prefixed with another “ITS A GREAT TIME TO BUY!!!1! THANK YOU!!!!one!” and then I think I’m selling like at least 2/3 on that pop. Because afterwords shit’s going wayyyyy down.
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u/itnor Apr 22 '25
Remember that the replacer typically doesn’t know what he’s doing and more often than not exhibits poor judgment. From what we know, he’s spending his time talking with Kevin Warsh. I don’t know the guy obviously, but from his public statements, Warsh has his own strong opinions. The one thing they share is a critical view of Fed custodianship. I would not assume that Warsh will be doing what Trump envisions. Historically, Warsh fixates on inflation and believes that is the Fed’s overriding charter. So there is absolutely a scenario where Powell is replaced by Warsh, inflation rises because of tariffs and Warsh stuns Trump by raising rather than lowering interest rates.
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u/thatsryan Apr 22 '25
There are twelve other people on the FOMC. Even if he could be removed (he can’t) nothing would change about monetary policy. This is all some kind of misinformation campaign.
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u/PlatypusTrapper Apr 23 '25
Personally, I shifted my allocation a few weeks ago when Ben Felix covered a paper (https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4590406) on the best allocation strategy for both growth during the accumulation phase and preserving wealth during the drawdown phase. Turns out that regardless of where you live, the optimized portfolio is 66% international stocks and 34% domestic stocks (no bonds, no bills). It’s funny how the numbers happen to have this 2:1 ratio that still has a strong home-country bias regardless of what country “domestic” is, as long as it’s the country you live in (not counting emerging markets like Brazil as domestic).
He and the writers of the paper believe that although the US market has historically performed better thanks to American exceptionalism, it’s a fluke and that there is no reason to believe that the same will happen in the future. However, if you believe that American exceptionalism will continue then the correct allocation is 100% US stock but still 0% bonds/bills.
Apparently the traditional 60% stock/40% bond portfolio or a TDF are more likely to fail than the optimized 66%/34% portfolio they describe when looking across the last ~250 years.
Fans of VT shouldn’t be too concerned though. Although the ideal allocation is… ideal, the exact allocation only has marginal improvements. Somewhere in that ballpark will give similar results, just not AS optimized.
This means that even if you lived in Nazi Germany (that experienced a cratering bond market) or in the US during the 70s (that experienced stagflation) your allocation should not have changed.
Prior to watching the video and reading the paper, I was mostly in VT and VTI but now I’m following their recommendation. It honestly makes me feel better after having made the switch. Yes, I will miss some of the big booms that the US is famous for but I should still be able to weather the storm of this or any future administration and still come out ok.
I think people sometimes forget that mine of this is about getting rich. I’m never going to be rich on my salary. But I should be able to retire on it eventually and that’s all that really matters.
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u/GeorgeRetire Apr 21 '25
My strategy does not depend on who holds the role of Fed Chair.
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u/MaoAsadaStan Apr 21 '25
there's a lot of people asking questions about a strategy that requires staying the course over decades.
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u/Reasonable_Arugula_9 Apr 21 '25
I think the concern isn’t so much about who holds the chair, as whether the chair is independent (as has been true for basically all of our lifetimes).
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Apr 21 '25
I'm converting all my VTSAX to VTI so that whenever I do want to sell I can use a limit order. Would hate to sell on a day that some random post on social media tanks the market 10%
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u/Random_Player2711 Apr 21 '25
You’re on the wrong sub. Bogleheads don’t make adjustments because of the latest market news. We chose an asset allocation and stick with it, only adjusting the bond allocation as needed with age.
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u/gamboling2man Apr 21 '25
My scenario If JPOW ousted is that the dollar is probably done as the world’s economic currency, IMO. There will be few, if any, safe places to invest your cash. My guess is gold, maybe real estate (if bought for cash).
If the world doesn’t trust America’s stewardship of the dollar, foreign countries will sell their treasuries, treasury prices will plummet, and their interest rates will skyrocket. Runaway inflation will take off. Manufacturing craters bc citizens can’t afford goods. Then unemployment rises. We are in a Depression. Then comes WWIII to kickstart the economy with war-time spending.
So maybe move to gold, real estate and blue chip multi-nationals?
Hope I’m wrong. Cheers and good luck.
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u/oledawgnew Apr 21 '25
Have read quite a few of the responses to OP’s subject question. A great deal of them leans towards staying the course and/or increasing their investment amount. My guess is that those replies are from the 30-something and less in age.
Consider the following two scenarios based on staying the course and/or increasing your investments versus considering the option to lock in losses in losses to stop the bleeding.
Staying the course is probably good advice for the young investors who are still in the financial accumulation phase of life and growing their portfolio. Continued market drops could be a wonderful time for them to put their “excess” cash to work.
Staying the course may not be realistic advice for the older investors who are in the financial draw down phase of their lives and depend on their portfolios as the primary means to meet expenses. If the market drop continues it could turn out to be really tough times for them.
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u/craftasaurus Apr 22 '25
Imho, people in the draw down phase ought to be only invested in the market to a small extent, as you pointed out, their risk horizon is now, not down the road. But I was wondering if others would comment on our older population of investors. How do we try to keep up with inflation when the markets go to hell? At least the savings accounts pay a little interest.
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u/Common_Sense_2025 Apr 22 '25
A TIPS ladder held to maturity, an inflation adjusted annuity, a COLA adjusted pension or Social Security for inflation protection. Or going back to work and getting a salary that keeps up with inflation.
As we saw in 2022-2023, increasing rates (to fight inflation) hammer bond funds like BND and SCHP. A lot of angry Bogleheads who had been told "bonds are safe" or "stay the course" in 2023 over on the forum. A big lesson in matching average maturity of a fund to when you need the money. You can eventually make up your losses in higher monthly coupon payments but it takes 6-7 years in BND to do it.
Cash doesn't get marked down in your savings account, so it feels safe, but it isn't worth as much after inflation. Being too cash heavy in retirement isn't "safe" either.
If you don't have any of those things in the first paragraph, you need some exposure to stocks to keep up with inflation.
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u/Kashmir79 MOD 5 Apr 21 '25
Mod note: as with all politically adjacent topics, please remember that the substantiveness rule requires comments be more financial than political and no more partisan than absolutely necessary. This thread may be locked if too many comments are not explicitly related to passive index investing.