Ask HN: How should I invest $200K in this market?

[buy-the-dip]

Investment horizon: long term to forever

Risk appetite: If I lost this money, my lifestyle would only slightly be impacted.

[WheelsAtLarge]

The market will rebound and a few years from now we will be wishing we had invested. We will see stocks that doubled or tripled. The big problem is that there's really no way to know now what those winners will be.

The best advice is to pick a broad index, S&P 500, and invest the money over a period of time, maybe 6 months. You won't hit a homerun but you'll do better than most.

[basch]

There are considerably safer bets than S&P500, with similar returns, including a classic 60/40.

https://portfoliocharts.com/portfolio/portfolio-matrix/

https://portfoliocharts.com/portfolio/risk-and-return/

[johnchristopher]

But even if stocks double or triple, isn't there a likely scenario that a dollar wouldn't buy you the same thing as today or that some supplies or furniture would have considerable different price tags than today ?

[fnbr]

This is exactly the right answer. Broad based index funds, invested over time.

You could also consider a 70/20/10 portfolio of S&P 500, international equities, and bonds.

[laksmanv]

why do you invest over 6 months instead of at once?

[cbanek]

This is just my feeling from watching the markets for a while, is not financial advice, isn't necessarily the best, etc., etc.. I still think we have further to fall, but when we do, I'm looking to put money to work. It's hard to time a bottom, so maybe buy in a few lots over a while as each drop happens.

Of course you should probably buy at least some index fund at some point. I also think the tech chip stocks are being pounded: Intel is in the DJIA, and has been brought down a lot I think rather unfairly because of the index. Taiwan Semiconductor is top of class and TSMC has also been pretty pounded. Texas Instruments, Qualcomm, Western Digital. All down, and all have really pretty reasonable dividends. Their moat is the IP as well as the manufacturing facilities. Tech isn't going to just stop, if anything it will end up in everything even more than now.

Be careful on the airlines. They'll get a bailout almost certainly, and maybe will merge down. Warren Buffet, who recently bought a lot of airlines was known for saying:

"Now if I get the urge to invest in airlines, I call an 800 number, and I say: 'Hello, my name is Warren, and I'm an air-o-holic,'" he has said in the past.

He got burned in US Air in 1989. He relapsed in 2016.

[alecco]

If you are so confident with how the market will move you should put your money where your mouth is and trade options accordingly. Hint: you shouldn't be so confident.

[auslegung]

I like generalpass's answer, "Not based on information obtained here." And yet I'm going to give a genuine answer.

I'd use [dollar cost averaging](https://en.wikipedia.org/wiki/Dollar_cost_averaging) and invest in a index funds. I would personally try to wait out the freefall so you can start investing closer to the bottom, but you will never know when the bottom is, only when the bottom was, so I wouldn't get too fancy with waiting.

[f-maga]

Hedge your bet.

Buy stocks in Facebook, Microsoft, Amazon, Google and Apple. (F-MAGA).

If they go up, you make a lot of money.

If they go down, the world has become a better place.

[runawaybottle]

It might be prudent to ask more simpler questions, such as: will humans ever take a cruise again? Will they ever take planes again? Will they ever go back to restaurants?

There, now go invest.

[streetcat1]

First of all, ignore the news. Most news is there to sell ads, clicks, etc. Nobody really knows what the market will do in the next minute/hour/day. Nobody.

Also, price is always leading the news, not the other way around.

And, a lot of fund managers (who already entered the long positions) will go on TV and start suggesting their own version on how to handle the crisis and why this is an opportunity of a lifetime. Assume that everyone is talking the book.

So a bear market is lower lows/lower highs. The SP is still in this bear market. As long as this bear trend continues, do not enter.

However, there will be one day in the future when the market will reach capitulation. The news will be so bad and panic so high, that the market will fall hard, but then you would see very high volume of buyer, and the market would end positively for the day.

At that day you can start to gradually enter.

[jpn]

Berkshire (BRK-B)

https://finance.yahoo.com/quote/brk-b/

- Buy it now.

- Check in on it every quarter.

- You might lose money in the short term.

- But not participating in the eventual rebound would be a huge missed opportunity.

[raincom]

In a way, BRK-B is an index on it's own.

[gigatexal]

My strat is this: (not baked on historical testing so take a free strat for what it is, free) I am buying stocks again hat are at half or less of their 52 week highs and only large cap companies. I’m in Boeing now and United Airlines and Ally bank to name a few. The thesis is: this will pass and large core companies that make up a big portion of the economy will come back and will either be acquired or buy up smaller players (remember these larger companies with large bank reserves...).

My time horizon is the same as yours.

[coderintherye]

I won't tell you how to invest, as who knows, other than that if Buffet buys then that is probably a good time to buy.

I will ponder a question though, will the flight from markets drive more money into other assets asides cash?

For instance, we are selling a farm property right now (in a small city, not a hot market) and don't yet know if it will be impacted by the overall economic climate. Part of me thinks more people might move their assets into farm/raw/rural land as another "hard" asset during these times. But there's no way to really know without observing.

[User23]

This is not advice and I am not a financial advisor.

That said, I noticed that put options for Delta airlines with a strike price of 18 were trading at $4.10 which is $410 per contract, so I wrote (sold) 10 of them. That means that either I’m going to get to keep $4100 in a month or I’m going to get 1000 shares at an effective price of $13.90 per share. If that happens I’ll sell for a profit if I can or otherwise hold for a couple years and hope to profit off the bailout. Worst case is a net loss of $13900, which I can absorb if need be.

[MR4D]

I must be missing something - that looks like a horribly asymmetric payoff. Why would you ever do that?

[thedudeabides5]

Don't take investment advice from overconfident folks on HN.

Try www.reddit.com/r/wallstreetbets if you really need it

[pests]

Is this a joke?

[throwGuardian]

Because overconfident Reddittors >> HNers

[johnchristopher]

So, you have 200K you can lose without being impacted and you decide to take advice from an Internet forum instead of a financial advisor ?

Can't you lobby for a better world or something instead ?

[sys_64738]

Is a Financial Advisor really better than random opinions from here?

[lancewiggs]

Yes - if you want to speculate. Buy puts or calls. No - if you want to invest. This is not a rational market.

I still see a long way to fall. Wait months until the market is dead before buying.

[SenHeng]

VGT, because you’re on HN. I would just put it all in now and not look at it for a few months.

Long term, it probably doesn’t matter if you buy it $200 or $150.

Do not forget to reinvest the dividends.

[sytelus]

VGT is still far from "good" price. My yard stick is crash of Dec 2018 which is not too far in past. If price hasn't fallen below that then the stock is holding up still well. Also, instead of VGT, why not QQQ? I like to go for ETFs that have the biggest assets because they track prices well and are "too big to fail".

[congulio]

One-sixth per month in VTWAX, for the next six months.

[jdkee]

Cash until 2021.

[bbimbop]

This is the worst suggestion. Cash will be eroded by inflation faster than you think,

[alecco]

If you do that for risk aversion, keep it diverse within the ~100k guarantees per account/country, if possible have multiple currencies. YMMV.

Note some countries are playing dangerous liquidity games and that will affect currencies. Always hedge. Even currencies. Ask any FX trader.

[adventured]

A lot of people won't give you actual suggestions. I will. I'll offer my opinion. All of these are meant to be held for years, not played short-term.

Square (SQ) as close to $30 or under as you can get. I was buying today below $35. I'll keep buying if it wants to keep going down. At a $14-$15 billion market cap, it was a comical steal to hold long-term. It's a future $100b market cap company.

Pinterest (PINS) here (below ~$12), to be held for a minimum of five years.

Grab some financials, the stronger companies. These are not going to collapse, short of the US collapsing. They're classic too big to let fail. They survived the great recession, the Fed will inject whatever it has to in order to prop them up. I'd suggest a basket of JPM, WFC, BAC, GS, MS.

IBM (IBM). Below $100 ideally. Their future will be brighter with the new management and they're trading for 9-10 times earnings with a good dividend. It was cheap before the crash, it's very cheap now.

Micron (MU), particularly if you can grab it below $30.

Beyond Meat (BYND). I like their valuation at this point, it has been crushed. They've demonstrated strong operational controls on costs and they have plenty of cash. I think they'll be fine coming through this.

I'd like to suggest Cloudflare (NET), I don't love their valuation here though, it hasn't gotten beaten down enough. It was briefly down a few days ago, but it's back up again. If you can get it below ~$15-$16, I like it there for a long-term hold.

Buy some silver (small position), however you prefer to go about that. The recent shock plunge is an opportunity to be taken advantage of. The same is true about a few other commodities. People are in panic mode, dumping most everything.

Luckin Coffee (LK). Big coin flip on the situation in China and the physical space in general with the virus. However, if they survive (presently burning plenty of red ink) they have a decent shot at being the Starbucks of China. They raised some capital in January, they'll certainly need it. It had held up well, but cracked today and dropped 13%, rolling back to November's prices. Stalk it for the low $20s or below.

Medifast (MED). To be held for several years minimum.

In the energy industry, Schlumberger (SLB) maybe. Their valuation has gotten very tempting here. $36 to $12 in a month. I don't like most of the energy industry, including XOM, CVX, much less OXY or APA or CLR. It's an amazing double smashing, from Covid and the oil war.

John Deere (DE) is getting close to interesting. I'd like it below $100. $180 to $106 in the past month, it's getting there. I like them a lot more than companies such as Caterpillar (CAT) or 3M (MMM).

iRobot (IRBT) has my attention here. They got hammered first from the China trade war concerns previously, then later from Covid as China went down. Their most recent quarter had popped the stock, until they got smacked again by Covid. I might like it below $30 at this point, we'll see if it gets there in the coming days or weeks. Plenty of competitive risks with the company, however the value proposition is very interesting now (below one times 2019 sales, 11x operating income).

Companies to avoid: retailers (too much risk, not enough upside); airlines (who knows what's about to happen to them); the classic FAANGS etc (AAPL, NFLX, GOOGL, MSFT, AMZN, FB - they haven't gotten cheap enough yet to warrant buying); avoid Tesla, GM, Ford; I don't like UBER or LYFT here; I don't like PayPal, Visa or Mastercard, they were all stupidly overvalued before and still are; I dislike Shopify, they're worth $60-$80 / share, trading for $336. At current valuations, I'd avoid Intel, AMD, Cisco, Oracle, nVidia and numerous other larger tech companies (not beaten down enough). I don't like most of the classic bluechips at all here, including KO, JNJ, PG, XOM, MCD, CVX, PFE, PEP, MMM, and so on, they're just not cheap enough. Give me MCD at a ~9 PE ratio and I'll consider it. I'd avoid the telecoms, including T-Mobile, AT&T, Verizon, Comcast, not cheap enough vs growth (plus I just plain dislike them as investments, unless they're being given away), they haven't been pounded in this. I don't like a lot of the more recent class of tech stocks, the Workday generation, their valuations aren't crushed enough (stocks like Twilio, ServiceNow, Splunk, Atlassian, etc) and most are either bleeding red ink or barely making money along with having extreme valuations (most still have the bulk of their epic gains from years of running).

Delta (DAL) and Southwest (LUV) would both be interesting to track on an intricate basis (you have to stay on top of every little detail about what's happening to them and the industry here). DAL is trading for three times 2019 earnings now, LUV is at eight times. If they're going to remain independent, survive and get back to normal (whether it takes two years or five etc), this is a steal, and their stock prices will plausibly go lower yet. I'd stalk them for a cheaper entry yet if I were going to bother.

And if I had Berkshire's $130 billion in cash, I'd eat Kraft Heinz, refurbish Kraft, keep Heinz for myself, and then spin Kraft off or sell it in a few years to a peer in the segment. Most companies in that segment aren't worth touching here though (that includes KHC), not unless they get a lot cheaper yet.

[sytelus]

I think AMZN and FB will be few of the companies that would have killer quarterly earnings.

[n13]

Thanks that's very helpful. Alas! You don't have any contact info in your profile.

[spectramax]

Just curious about your statements regarding SQ. Their entire model is that they're a bank (I think they got approved a day or two ago) based on credit-card transaction volumes in retail business. Retail businesses are the shadow of SEARS and it is likely to be the slowest segment to recover after this pandemic. So, I am not so sure about SQ - their credit-card gateway isn't as successful as Stripe & Braintree. Personally, I would stay away from any business that depends on retail foot traffic.

Also, I would add:

EA/ATVI/TTWO: They're outperforming relative to the SPY

Innovo/Moderna/etc. : Any of the Cov vaccine companies, a pot pourry of them

OLED/LG: LCD/OLED semiconductors

And, I would disagree:

AMD/INTC/AMAT/KLAC/NVDA/MU: Semiconductors are a solid investment, not beaten down enough because the demand of semiconductors will soar in the future.

[Reedx]

Thoughts on Boeing?

[ryansmccoy]

IMO, the biggest unknown right know is that we don't know how long this pandemic is going to last or when the new case curve will start to flatten. This creates uncertainty and markets HATE uncertainty. I think once we get a sense of this, the market will be able to price in the overall impact and thus bottom out. Other things that would accelerate this understanding of the timeline would be things like a vaccine, cure, etc. Obviously, a big risk is that we continue to see infection rates rise.

Some interesting statistics I found regarding US Economy, According to the BEA, Housing and Heath account for more than 50% of services spending in the United States. Transportation, restaurants and recreation account for a bit more than 20%.

The other issue the market is trying to digest is the Oil shock brought on by Saudi/Russia price war. I almost want to say that I'd wait for some sort of agreement on this as well before I even attempt to invest in the sector.

In terms of what I'm investing in, I don't currently try to pick individual stocks, something I did for nearly a decade for Institutional Investment funds, instead I prefer to diversify across market cap, so a large cap (Russell 1000, IWB), mid cap (Russell Mid Cap, IWR), and small cap (russell 2000, IWM) index to diversify.

[7402]

If you haven't already done so, you could invest some of that in your local food bank.

[malux85]

Is that an investment? I.e. is there a monitory return?

What you’re saying is charity right? (Which I’m not against, it’s just I didn’t think you could invest in food banks)

[kevincrane]

Honestly, if he can live without the money (as he says in the post), he should be donating almost all of it to local charities and massive tips to service workers.

He doesn't need the money, they do.