patrick.net

https://rudy.substack.com/p/the-increasing-economic-fragility



Why is the rest of the world rushing into the US stock market?

KgK one says

Mplx 8% dividend energy stock

Similar to AMLP. Note of caution to anyone that starts investigating this. These are ETF's that own Energy MLP (Master LImited Partnerships). You may look at the MLP's these two ETF's own and think "why buy the ETF - the dividends of the underlying MLP's are much higher". You would be right in that but a word to the wise :

These MLP's get special tax treatment in order to pay these dividends. That means if you hold the individual MLP's you will get a K1 from each one that you will have to include on your taxes. If you buy these inside your tax deferred account (IRA, ROTH) you still have to pay these taxes - and it's an accounting hardship (people do it, but it's not straightforward).

Again, this isn't for the ETF's - AMLP and XMLP - they take care of the tax paperwork but they are charging you to do it - the dividends of what they hold are higher than what they pay you. I've owned AMLP in the past and it did a reverse split 1:5 so I dumped it as soon as I broke even on the principal - but I did receive the dividends the entire time.

OK semi-serious question for 12.6.25. Is it time to time the market?

I'm getting very concerned with the weight of MAG7+Nvidia in my favorite ETF's (IUSG, SCHB). I have a younger relative who codes LLM's for sub prime fintech's in the Bay area and he is adamant that AI is the biggest bubble he's seen in his life (granted he was not investing even as recently as the 2018 pullback).

I've started putting new money into (what I believe to be) a good alternative ETF called DGRO which is more focused on dividend growth (not yield) but still includes a small exposure to MAG7. I'm considering closing or at least severely downsizing my positions in IUSG and SCHB. I'm talking about a major repositioning of as much as 60% of our net worth so it's material to me.

I made this mistake in late 2007/ early 2008 and ended up regretting going conservative and lost out on big returns in 2009 - 2012.

I'm not California rich, but I am Appalachia rich and I want to stay that way. I'm interested in patnetters opinions because I believe the average street IQ on this board exceeds reddit and bogleheads (which is a board for retired public employees and financial Karens). Should I just stay the course (boglehead) or be proactive. I don't know If I will ever need this money because we live frugally and will both (wife and I) get nice SS at 70 and I have small pensions from a couple of too big to fail pharma companies - I say this so that no one advises putting everything into TIPS.

What does the collective wisdom of the board say? Are we nervous yet?

I'm not nervous, but on the other hand, I don't know how much exposure to AI stocks I have either.

I know I'm overweight AAPL because once upon a time I rolled the dice and bought some shares, and my funds also own AAPL usually.

However, what is really important to me is taxes; the tax on investments is what really costs money down the road.

For decades I have not made changes to my investments; I never "rebalanced" them as I got older.

The only change I made recently is exchange my International Stock funds for USA stock funds, and I'm selling the one in my taxable account bit by bit; it's my "piggy bank' these days.

Trump is pumping stocks, don’t expect crash anytime soon

stfu says

I'm getting very concerned with the weight of MAG7+Nvidia in my favorite ETF's (IUSG, SCHB). I have a younger relative who codes LLM's for sub prime fintech's in the Bay area and he is adamant that AI is the biggest bubble he's seen in his life (granted he was not investing even as recently as the 2018 pullback).

I've started putting new money into (what I believe to be) a good alternative ETF called DGRO which is more focused on dividend growth (not yield) but still includes a small exposure to MAG7. I'm considering closing or at least severely downsizing my positions in IUSG and SCHB. I'm talking about a major repositioning of as much as 60% of our net worth so it's material to me.
I made this mistake in late 2007/ early 2008 and ended up regretting going conservative and lost out on big returns in 2009 - 2012.

Same boat here - dodged the 2008 clusterfuck but stayed too conservative during the 2011-2013 runup.

I've been following Finster's (from iTulip) blog Financology ever since iTulip's hibernation. He's been talking about the same thing - diversifying stock positions away from the Mag-7 while maintaining one's overall allocation to equities:

https://financology.net/2025/11/26/how-to-survive-a-bubble/

He has several ETF-based model portfolios covering various investment strategies (growth, income, capital preservation, permanent portfolio) for various portfolio sizes:

https://financology.net/model-portfolios/

stfu says

What does the collective wisdom of the board say? Are we nervous yet?

My IRAs (rollover/traditional and Roth) are in a balanced fund arrangement, 50% investment grade bonds and 50% index funds, and I plan on keeping it the same for next 4 years as it has been for the last 5 years.

Generally the conservative rule is X% of savings in stocks whereas X is 105 minus your age.

CNBC’s article (Dec 8, 2025) outlines how financial professionals would invest $1 million depending on risk tolerance, balancing fixed income, dividend stocks, and equities.

https://www.cnbc.com/2025/12/08/where-to-invest-1-million-according-pros-risk-profile-fixed-income-dividends-equities.html

📌 Key Takeaways
• Risk Profile Matters Most
Advisors stress that the right allocation depends on whether the investor is conservative, moderate, or aggressive.
• Conservative Approach (Capital Preservation)
• Heavy emphasis on fixed income (Treasuries, municipal bonds, investment-grade corporate debt).
• Goal: steady income and principal protection.
• Example: 60–70% bonds, 20–30% dividend stocks, minimal growth equities.
• Moderate Approach (Balanced Growth & Income)
• Mix of dividend-paying equities and fixed income.
• Dividend stocks provide cash flow while equities offer growth.
• Example: 40–50% equities, 30–40% bonds, remainder in alternatives (REITs, infrastructure).
• Aggressive Approach (Growth-Oriented)
• Larger allocation to equities, especially growth sectors like tech and healthcare.
• Smaller slice in fixed income for stability.
• Example: 70–80% equities, 10–20% bonds, rest in alternatives or private markets.
• Dividend Stocks as a Core Theme
Across all profiles, dividend-paying companies are highlighted as a way to generate reliable cash flow while still participating in equity growth.
• Alternatives & Diversification
Some advisors recommend real estate, private equity, or infrastructure funds to hedge against inflation and diversify beyond traditional stocks and bonds.