Personally, I believe the biggest factor is ultimately the impact of the AI investment cycle.
The difference from the dot-com bubble era is that companies are now actually making money.
Since AI server, semiconductor, and cloud companies are demonstrating actual revenue and operating profit, it feels like market capital continues to flow in.
Recently, there have been persistent reports that major players on Wall Street are significantly increasing their stock holdings compared to before.
In particular, the trends for the ETFs listed below are very strong.
QQQ
MAGS
SMH
VTI
There are also many opinions that this trend will not end in the short term, as the AI infrastructure market itself is growing.
However, what seems important here is "risk management" rather than "returns."
What I consider most important these days:
Recently, the US 10-year Treasury yield has risen to near 5%.
There is also persistent talk in the market that if it surpasses 5.2%, stock market volatility could increase again.
If interest rates rise, corporate financing costs will eventually increase, inevitably placing a burden on growth stock valuations.
Corporate Bond Spreads
At the tail end of a bubble, warning signs have always appeared first in the credit market.
That is why I view corporate bond spreads as extremely important.
I have observed that the bond market often sends warning signals before the stock market.
Increase in IPOs
During periods of market overheating, IPOs have always increased rapidly.
Images comes from https://finance.google.com/
In particular, I view the upcoming listing of SpaceX as extremely important.
This is because the emergence of a large-scale IPO could potentially cause a shift of funds from existing Nasdaq stocks.
Therefore, asset allocation seems more important these days.
In retirement investing, I believe that ultimately, surviving for a long time is the most important factor.
I am increasingly convinced that managing Maximum Drawdown (MDD) is far more important than returns.
This is because if an account is severely shaken during a market downturn, the power of compounding itself eventually comes to a halt.
For this reason, I personally prefer a structure that includes both offensive and defensive assets.
For example, it feels like this:
Offensive Assets
VTI
VXUS
QQQ
MAGS
SMH
Defensive Assets
BND
IAUM
SGOV
Especially after retirement, I feel that the proportion of dollar cash equivalents is more important than expected.
Personally, I believe it is advisable to hold 20% in Bonds (BND), 20% in Gold (IAUM), and 10% in Dollar Cash (SGOV), all proportional to your age.
To reap the benefits of long-term compounding, you must limit the extent of losses during a bear market.
As for aggressive assets:
VTI 15%
QQQ 5%
MAGS 5%
AIPO 5%
SMH 5%
VXUS 15%
Reading the posts below will actually be very helpful.
This articles deals about HIVE economy system and the big Potential of HBD, HIVE Stable coins.
https://bomspring.com/clarity-act-hive-hbd/
This article explain what AI infra ETF will make profits in the future.
https://bomspring.com/strl-fix/
