I have a ton of growth too but if you believe the theory behind how money moves high IR is not in the best of environments for growth.

Low-interest rate means a lot of fixed income money has to search for returns, so you have money flow into the stock market, including growth, to generate alpha. When you have the 10 year giving you a 1% yield then even the boomers and retired folk don't want to hold that and have their wealth eroded.

Higher IR means you don't have to take on risk to get some desired return, so money flows to the safer less volatile investment aka various types of bonds and debt instruments.

A lot of portfolios structured by professionals have like 70/30, 80/20 equity/bond breakdown. I bet a lot of smart managers were overweight equities for the last couple of years, but if yields continue to go up expect a bid to start forming on the bond side.


Also if anyone bought FB as I was talking about it ad nauseam for the last 2 months congrats. Glad i made it by far the largest position in my portfolio.

This post was edited by ofthevoid on Mar 19 2021 08:44am

I have little concern for interest/dividend income or yields going up to 2-3% this year. I'll be investing in high growth/growth for the foreseeable future.

Everything has its place. Don't get addicted to sick gains at the cost of any gains at all.

I am not chasing returns. I have zero interest in buying bonds or stagnant companies. I'm confident that my portfolio will outperform the indexes and that is how I am focusing my portfolio. Chasing yields in this environment is a bad idea.

Just saying, everybody thinks that. Retail investors tend to drastically underperform the market, so if you're sure you will outperform you better have a very very good reason to think so and be financially ready to take the loss if you don't, while understanding there is a greater than chance probability that you will underperform.

Lol

Investment grade =/= stagnant.

We’ve been spoiled and conditioned with massive gains for too long and think a 4% return on a very safe investment to be a waste of time.

Going all in on growth may work out but in the long run there’s at least some reversion to mean, so there’s a price to pay for not being diversified.

Retail investors often underperform because they chase high-flying stocks, buy at the worst possible times, and have paper hands. Rising yields are providing great opportunities to purchase pulled-back high-growth stocks. Why would I want to rotate out of these stocks during pullbacks vs. add to them? These are the same people buying Tesla at $850 but not when it was in the $500s a week ago.

but but but my S&P, Finch, and Moody's have these as investment-grade!!!!

I agree that now is a good time to buy growth stocks at a discount. I think PLTR is an absolute steal right now if you're willing to hold it for at least 3 years. Just remember you're going to have to wait for multiple years to see these pan out, and in that time you could be seeing significant growth in other areas, and you have to take that opportunity cost into account when assessing your strategy.

Still, it's easy to look in hindsight and think that you can tell when the best time to buy is, but history shows the average trader can't do that (hell, it shows that institutional investors are dog shit at it too lol). Just make sure you're always looking for information that can contradict your thesis to avoid confirmation bias.

This post was edited by Thor123422 on Mar 19 2021 11:01am

I have 6 portfolios. Three of those hold a significant percentage/all in high-growth stocks. The other three are set and forget (like the one posted on this forum that holds 2 retirements & a general LT-term; which was recently moved over into high-growth during the pull-back).

I am comfortable being in my 20s, taking on the risk I am. I'm still sitting on significant cash that will be deployed until I'm likely at $1,000.