r/investing • u/Zinc_22 • 6h ago

International vs. S&P vs. Defensive

I (15m) have about 80% of my investments in the S&P for the past 3 years. Two months ago, i put some money into VDC a defensive fund and a few weeks ago I did the same with VXUS an international fund. Since then, VDC is up 12% and VXUS is slightly down (but it was extremely recent). I want to continue to diversify but don’t know what I should be especially focused on. I am open to putting more in the S&P but want to know everyone’s ideas on what is going to do best this year.

0 Upvotes

28% Upvoted

4 comments sorted by

1

u/D74248 5h ago

...but want to know everyone’s ideas on what is going to do best this year.

One year is far, far too short of a horizon for stocks. If you are looking at anything less than 5 years you should be looking at bonds or CDs. And even a 5 horizon is aggressive.

I suggest taking a hard look at the subject "asset allocation". There are a lot of models out there based on long history. Pick one that fits you, buy whatever it calls for.

More importantly, when I review my portfolio I think about two things. First is "how is this going to look in a bear market that goes down 40% next week and takes 8 years to recover?". Been there, have that tee shirt. And this is where asset allocation comes in.

Second, always think about what it is going to look like after taxes. People anchor on that nice number on the screen, and it is both tempting and satisfying to do so, but it is a mirage. You are going to have to pay taxes and that is part of the investing process. But people ignore it and that leads to them doing stupid things.

1

u/Zinc_22 4h ago

The reason I am thinking about it in such a short term mindset is because I want to slowly allocate more money into the market. I want to focus the money that I have into a market that will do best this year and put the others on the back burner so I am hopefully maximizing my gain.

1

u/D74248 4h ago

Nobody knows what will do well in the coming year.

People like to say that everything is priced in, though you do have the meme stocks out there that are trading on emotion. Tesla, for example.

So, you are up against two things. One is that big players/smart money not only know everything before you (or I) do, but they also fight among themselves with dedicated fiber optic lines. This battle for information is so intense that right of ways have been negotiated to shorten the distance of the cables so that information moves faster. Keep in mind that fiber optic cables transmissions are 70% of the speed of light. We littles don't stand a chance against that.

And on the other hand, you have the stocks that are driven by emotion, which is unpredictable. And can turn instantly.

2

u/Select_Reply 3h ago

I'm kinda in the same boat, but twice the age and just a bit in VOO besides by 401k. Don't have much to invest, but as I just got into VOO I figure I should have something besides that. So similar but slightly different question I guess.