Stocking picking fail, how can we turn our retirement portfolio around?

[Anonymous]

Anonymous wrote:DH lost a significant amount this year stock picking in an ETrade account for retirement. His 401k is index funds but he followed Motley Fool with a bunch of overvalued tech companies and that account is down at least 50-60 percent YTD .. possibly more. He won’t tell me. I knew because he did the same to my personal 401k. We lost A LOT. Late 30’s. Some of these may recover like Airbnb and Amazon but some may not. Some are down like 85-90 percent.

After doing a little research I told him at this point forward I want him to just put any money into the S+P 500 index fund.
We have about $200k cash sitting we got from a company stock situation. Luckily we had planned to use that for something that didn’t pan out so it’s been sitting in cash all year and was not put into this super volatile account!

Where should we put that if we may need it in the next 1-2 years?

What should our investing strategy be moving forward? Right now we have several hundred thousand in these individual stocks with no plans to sell but I told him we cannot continue this strategy. IF they are winners long term we have enough risk now.

A few things you can do..

- Going forward, invest in index-based ETFs. I've been in this game for almost 25 years and was lucky enough to have bought Apple and Starbucks at very low prices. Apple is my largest position (about 15%) with a cost basis close to zero. However, my overall return would have been higher if I had just invested my $$ into an S&P index each paycheck rather that trying to pick winners. The losers over the years offset the winners.
- Your losing investments in non-retirement accounts - If you have long-term conviction on the stock (e.g. Amazon). Sell the stock now, wait 31 days, and buy back. You can write off the loss in your taxes and lower your cost basis. For those that are duds - Sell the stock and take the loss and invest the proceeds in an index based ETF.
- Your losses in tax sheltered accounts (e.g your personal 401K) - Sell the stocks. No point carrying losers. For those you have a strong conviction on, start selling Puts, a week or two out. This will give your good premium that pads your account while you wait for market to recover. You can buy the stock at any time.
I doubled my 401K over 2021, primarily by trading Tesla (options and stock). In January, i decided to get rid of most of it and just hold on to 100 shares. My cost basis was $1050. I sold covered calls around that price for a few weeks and prob. recovered $70-80 per share. Recently I sold the stock (at a loss) and have been selling Puts for about $10-15/share each week. I expect Tesla to move around within a price range for a while and I intend to milk that.