Listen to the wise advise from Fly-Sig.

An example of a hyped IPO, Lucid Group, LCID.

10 Reasons You Shouldn't Ignore This Week's Sharp Reversal And Selloff

https://www.zerohedge.com/mark...reversal-and-selloff

This Still Isn't Panic

Fear is spreading across macro, tech, and emerging markets. The uncomfortable part is that this still feels like orderly de-risking rather than outright panic.

Good article chellim1, thanks for posting. I’m waiting to see how SpaceX ipo goes.

There's Much Riding On Earnings As Stock Valuations Hit Record High

The US stock market has hit a new all-time high valuation. That leaves a lot of room for downside if earnings expectations do not live up to the hype...




https://www.zerohedge.com/mark...ions-hit-record-high

Earnings are the reason for the high valuations.

quote:

Originally posted by bdylan:
Earnings are the reason for the high valuations.

The companies rising the fastest have no earnings:

That's just a sign of an overbought and predictive market.

It's a thin market right now, with the indices being driven by a small number of high flyers. It isn't necessarily a prediction of doom, but it shows a lot of speculation, aka wishful thinking.

In June 2026, outstanding margin debt, published monthly by FINRA, jumped to an all-time high of $1.502 trillion.
What's worth noting is that margin debt spiked 77%, from approximately $850.6 billion in April 2025 to $1.502 trillion in June 2026, over 14 months.

There have only been four relatively short periods over the last three decades in which outstanding margin debt has spiked by at least 65%:

March 1999 to March 2000: In the 12 months leading up to the official bursting of the dot-com bubble, outstanding margin debt soared 80% to just shy of $300 billion. In the wake of this bubble-bursting event, the S&P 500 and Nasdaq Composite lost 49% and 78% of their values, respectively.

June 2006 to July 2007: Mere months before the financial crisis really took hold, margin debt surged by 66% to approximately $416 billion. The Great Recession took an even greater toll on the S&P 500 than the dot-com bubble did, with this iconic index shedding 57% of its value.

March 2020 to October 2021: Following the height of the short-lived COVID-19 crash, and amid several rounds of fiscal stimulus, outstanding margin debt exploded by 95%. It peaked just three months before the 2022 bear market took shape, which lopped 25% and 33% off the S&P 500 and Nasdaq Composite, respectively.

April 2025 to June 2026: Outstanding margin debt peaked at a 77% increase over 14 months.

In July, FINRA reported that outstanding margin debt fell to $1.417 trillion, meaning it's risen by 67% over the last 15 months. When outsize risk-taking begins to wane on Wall Street, history tells us it never happens quietly. Every instance when outsize risk-taking reversed (vis-à-vis margin debt) was almost immediately followed by a significant reversal in equities.

While a one-month retracement in July doesn't make a trend -- outstanding margin debt briefly shrank for two months in February-March 2026 -- parabolic moves in margin debt that eventually reverse have consistently foreshadowed bear markets on Wall Street.

https://finance.yahoo.com/mark...e-may-105601442.html

If a 60/40 :: equity/bond is a typical mix for retirement accounts during average/bull markets, if heading toward a bear market, is there a recommended mix? 50:50? 40:60? 30:70? And then back to 60:40 once we're heading toward a bull again?

It's doing outstanding!

We are threading the needle right now, let's pray all assumptions hold up, or at least the majority of them. Being priced for perfection anny hiccups and we shed 20% in a few days.

I made out like a bandit from the war and have plenty of dry powder if we resume strikes or other geopolitical shit pops off.

quote:

Originally posted by konata88:
If a 60/40 :: equity/bond is a typical mix for retirement accounts during average/bull markets, if heading toward a bear market, is there a recommended mix? 50:50? 40:60? 30:70? And then back to 60:40 once we're heading toward a bull again?

It depends on what the equities are in. If it's all NASDAQ tech stocks then historically that has been a bad idea. Past performance is no guarantee of future performance and all that, but historically these ETF equity categories have faired well in a bear market:

Consumer Staples: Tracks non-discretionary items like food, beverages, and household goods. For example, people still need Proctor & Gambles products (consumer staple) but don't need a new iPhone (consumer discretionary). VDC is one of many consumer staple ETFs.

Utilities: Regulated companies with stable cash flows and high dividend yields that attract risk-averse investors. For example, everybody still needs electricity in a bear market. FUTY is one of many utility ETFs.

Commodities / Safe Havens: Gold often acts as an asset that climbs when equities drop. You can buy ETFs (e.g. GLD) that are much easier to get in and out of compared to physical gold.

---

Ego is the anesthesia that deadens the pain of stupidity

DISCLAIMER: These are the author's own personal views and do not represent the views of the author's employer.

What if the equity was sp500. And bonds were t bills.

Good historical chart on s&p 500 in both bear and bull markets. Key takeaway - The average Bear Market period lasted 11.1 months with an average
cumulative loss of -31.7%.

I'm not a t-bill investor, but it's a safe haven with capital preservation. The risk is missing an equity rally and they lag behind equities in bull market.

I'm 2 to 3 years from retirement and a little nervous about S&P 500 valuations so I shifted my 401k to 50/50 earlier this year (was 60/40). I'm at 9.43% year to date.

My portfolio managed by my financial advisor is at 3.94% year to date. Best one sentence summary is more sophisticated and more diversified version of Marc Faber Portfolio . Prior to hiring him, I did 20 year backwards comparison and ran some Monte Carlo analysis models comparing traditional Marc Faber Portfolio versus what big firms were proposing. Long story short is achieving similar returns with lower risks by having both smaller peaks and smaller valleys. For example, I'd lose a lot less if I get unlucky and the year after I retire is like 2008.

Not good . Just retired in 2024 so watching my TIAA and Fidelity accounts too much probably.

July both accounts lost money.

This month both accounts have made a few hundred dollars.

At least it’s not loosing yet . But a week to go and the Canada tariffs not looking good.

I've been casually advised, for my specific case, that it's okay to leave 60:40, even if we enter a short term bear market (down and recovery period for about 5 years). However, I'm risk averse and uncomfortable with that so I rebalanced to 50:50. I figure the short term upside for an index fund is 4% while the downside could be 30%.

quote:

Originally posted by konata88:
If a 60/40 :: equity/bond is a typical mix for retirement accounts during average/bull markets, if heading toward a bear market, is there a recommended mix? 50:50? 40:60? 30:70? And then back to 60:40 once we're heading toward a bull again?

I am a bit of a skeptic on the whole 60/40 or whatever mix. In addition, a lot depends on how you hold the bonds, when their maturity dates are, and if you plan to keep them to maturity. (*The following discussion simplifies the nuts and bolts of how dividends are paid on different duration bonds. The differences are irrelevant to the discussion).

In retirement, it makes sense to keep your allocations steady however you've configured your portfolio. This assumes you are in the investing mode and not the trading mode. In retirement, your goal is to preserve your buying power for the remainder of your life. All your moves should be focused longer term rather than inside of a year or two or three. Short term moves are more of a gamble. If you're dramatically changing allocations based on guesses what the near future brings, you're in the trading aka gambling mode.

Periodically in retirement, maybe once or twice each year, you rebalance your portfolio. Let's imagine you have half in Fund A and half in Fund B. When Fund A is hot, at the end of the year it will be more than half your portfolio. You need some money to live on, so you sell a bunch of Fund A and a little bit of Fund B, with each ending up 50% of your remaining portfolio.

You would choose Fund A and Fund B because you think they both will perform well over time, though maybe not always moving up or down together.

The classic 60/40 portfolio presumes that bonds will tend to go up during bear stock markets. Thus in good times you're selling stocks for the money you live on, and in bad times the bonds will be up so you sell those for money to live on. This means the bonds in your 60/40 are longer term bonds, with 10+ years remaining to maturity.

But, there is more to the story.

quote:

Originally posted by konata88:
What if the equity was sp500. And bonds were t bills

T-Bills are 52 week or shorter duration. For contrast, we'll consider 10 year or longer Treasury bonds.

Let's start with the long term 10+ year bonds. When interest rates go down during a bad economy, the value of an already existing bond rises because it pays a higher dividend than the new bonds. You can now sell this bond you already own for a profit.

If you hold that old bond all the way to maturity, it returns to its original value. Iow, you don't capture the increase in value it had when dividend rates went down. You only get the benefit of gains if you sell something when it is up.

Let's imagine a scenario. You buy $1000 of 30 year Treasury Bonds at 6%, then five years later the economy tanks and new Treasuries pay only 3%. But then 5 years after that the rates are back to paying 6%. Across that arc of 10 years your Treasury went from being worth $1000 to something substantially more, but then returns back to the nominal $1000 at the end. You only profited if you sold while it was worth more in the middle of that scenario. If you hold onto it, you only get the 6% dividend along the way plus your original $1000 back at maturity.

So let's talk about maturity. The farther away the maturity date, the more the value will swing based on what the dividend rates do after the bond initially is purchased. If you buy a bond with 10+ years left to maturity, the value will change a lot when new bonds have different dividend rates. The time value of bonds close to maturity is much less.

So let's look at T-bills. They are so close to maturity that the value doesn't really change much when newer bonds have a different dividend rate. You pay $1000, you get some dividends, and in 52 weeks or less you get your $1000 back. The purpose of T-bills then is to earn some dividends in a safe place with money you don't want in riskier investments. Short term money then.

So the purpose of holding longer term bonds would be to hopefully harvest some profits if the economy goes bad. The purpose of T-Bills would be to park cash in a safe place with a return hopefully close to inflation. So those are two very different functions for bonds in your portfolio. The 60/40 concept is designed with longer term bonds.

And here is a real concern. Stagflation. That's when there is both high inflation and a stagnant or recessionary economy. Inflation calls for higher interest rates, while a bad economy calls for lower interest rates. You can end up with both stocks and bonds losing value if the Federal Reserve lowers rates to stimulate employment.

Are we headed for a bad stock market soon? Probably, but I've been thinking that for a while. Eventually it has to happen. Are we headed for high inflation? What will the Fed do with interest rates? What will be the effect of the national debt on all of this?

For me, the value of bonds is as a place to park 3 - 5 years of needed spending money. A money market account can do the same thing. If the stock market crashes, it probably won't last more than a couple of years. Having spending money in a safe place means not having to sell stocks during that crash. The cost though is lost opportunity for that cash if the market goes way up.

Each year I rebalance my portfolio across the different funds and sectors, harvesting gains from the things that have gone up. I replenish cash into T-bills or money market. Bonds and money market are far less than 40% of my portfolio, because I am not looking to hold long term bonds as an offset to stocks. Historically, S&P far outperforms bonds.

quote:

Originally posted by konata88:
I've been casually advised, for my specific case, that it's okay to leave 60:40, even if we enter a short term bear market (down and recovery period for about 5 years). However, I'm risk averse and uncomfortable with that so I rebalanced to 50:50. I figure the short term upside for an index fund is 4% while the downside could be 30%.

You posted this while I was typing my previous post. I hate losing money, and you have to sleep at night, so I understand.

If you are 50% T-bills or maybe up to 3 or 5 year bonds, those will not vary much in value as the Fed changes interest rates. If you are in longer term bonds, they will vary in value more. Be aware of exactly how you own those bonds. A bond fund, either an ETF or a Mutual Fund, can lose value and lock in losses unexpectedly, depending on what the bonds are that it owns. If some of the bonds lose value because interest rates rise, people will want out of the fund which will have to sell bonds at a loss.

I much prefer to buy bonds myself. I've been burned in a bond fund. It is very simple to buy bonds through your broker, just like buying stocks or a fund. You can buy literally any length of bond you want, so you could buy some shorter and some longer term. I only buy bonds that I will keep to maturity, so they are like having a money market savings account that pays interest. If you are thinking you may want to sell for a profit if some longer term bonds go up in value, I think owning the bonds directly rather than in a fund is the way to go.

One nice feature of having half your portfolio in bonds is that you can buy stocks when/if the stock market goes down. You could set a few buy targets, such as 15%, 25%, 30%, 35% down. When the S&P goes down by those amounts, you buy a set amount of an S&P fund. You're dollar cost averaging as the market goes down, using money you don't need to live on in the next few years. When the market comes back in a few years, you've got a nice gain.

If you've got nearly 100% already in stocks, you don't have cash to take advantage of buying stocks during the downturn.

I have not checked my modest little portfolio in a few months.
Obviously I have no control over what the market is going to do. We stay somewhat engaged with someone who manages it for us for a modest fee based on quarterly comms. with them.
I do feel the market is long overdue for some kind of a serious correction and have prepared as much as possible for that. Just going to have to go with it, where ever it takes us. Best of luck all.