Preparing a lopsided portfolio for economic uncertainty

[Anonymous]

Long story short, the past 7 years I’ve received RSUs as about 1/3 of my compensation and because it’s a FAANG I’ve held all the stock, it’s done well, and I now have more in my brokerage than I do in my 401K. So my investment mix is very stock heavy. I’m 41 so I’ve just been letting it ride. But, I’m married to a fed and my private sector job is government focused, so I am thinking I should move some stock now to bonds or something else to recession proof a bit. We have emergency funds to last us about 8-10 months in the event of losing both jobs. So should i just plan to rely on savings to ride out any near term impacts to the stock market and local economy? Or move some stock now while it’s high?

Thanks, this is probably a dumb question but I was practically broke until I was 35 and these “having money” problems are new to me

[Anonymous]

I'd suggest posting this question on Bogleheads. https://www.bogleheads.org/forum/viewforum.php?f=2

[Anonymous]

Anonymous wrote:I'd suggest posting this question on Bogleheads. https://www.bogleheads.org/forum/viewforum.php?f=2

+1. need more details.

[Anonymous]

If you were broke not long ago, you should be a master of living on less. Those downturns last under two years usually.
You will pay tax on that stock, then you kill the growth of the money in a bond. Once it starts moving again, you will miss the first leg up.
Cut down on expenses, put more into savings account, and can you or partner get a par time job if needed? A roommate?
Faangs are fine at 41. Your 401k is probably the slow mover. See if it keeps up with S & P 500 returns at minimum. JMHO.

[Anonymous]

I would sell a minimum 30-35%,and sit in cash for 6 months, especially if all this is in 1 Faang. You need to diversify.

Not trying to be political, but Trump is creating some uncertainty, so I would lock in some of those gains now, and use this to diversify. (I voted for Trump by the way, so don’t come back at me based on that.)

[Anonymous]

Thank you all. I checked some threads on Bogle about similar situations and the general guidance seems to be don’t have more than 15% of your portfolio in one stock; however, many posters point out that in certain stocks (like mine) you might leave a lot of money on the table with that approach.

I think what I’ll do for now is sell some and hold it in cash - not a ton, but enough to help mitigate any disastrous downturn and lock in some gains since I never really expected this money and I’d hate to have it all disappear overnight.

We have a few things we can cut back but honestly we never inflated our lifestyle and are saving every month.

[Anonymous]

It sounds like you're in a solid position with good habits. Congratulations and GL!

[Anonymous]

I've always been 100% in high tech stocks that I've selected myself, and never plan to change this, OP. I'm 44. I have millions.

There are always going to be ups and downs. Don't stress over them.

[Anonymous]

Diversification is for people who don't know how to invest. The only way to serious wealth in the stock market is to take risk. You won't get there going with the flow.

Since you work for the company that you are invested in you probably have a lot better insight on how the company is doing than you realize (short of having inside info on earnings etc).

[Anonymous]

Why would you hold anything in cash right now when you can get at least 4% in short term CDs and money market funds?

What you need to do is determine what asset allocation is right for you, for this portion of your life while you’re in your main earning years. Since it seems that you have some concern about the market, it seems like you want less than 100% in equities. But there are quizzes that the brokerages have that can help you figure out what is right for you - I know Schwab has one.

Once you have that determined, then decide how much of your equities you want in your company stock.

[Anonymous]

Look at NVDA recently or at tech stocks just a couple of years ago. I have one IRA with a lot of tech stocks and it was down almost 50% (end of 2021) for a year for some of it's stocks (AMZN) or so from it's peak. Painful to look at tbh, now it has rebounded and is a bit higher than that peak (+25% for AMZN +37% APPL +31% goog) during the same time period SP500 is +27%.
Basically SP500 is so heavily weighed by the top 7 tech stocks that I think it is more prudent to exchange individual stocks with SP500 and have better exposure to some new potentially hot individual stock while limiting some of the volatility.
You already have won to some extent if you have a lot of RSUs and potentially you will keep on winning while working at the top tech company. You do not need to be a gambler "hand picking" stocks, lol,

[Anonymous]

Don't listen to these fools telling you about how you need to beat the stock market. These guys are clowns. Even people in Investment Banking or Venture Capital won't give you shitty advice like that. The posters above are likely trolls. Or they think they are the smartest guy in the room.