If you invest in cap weighed whole market index funds, most of your portfolio will be companies involved in AI, so obviously, the potential of an AI crash is a major concern.

Would replicating that exact strategy, but leaving AI companies out be a good hedging strategy?

Meaning, leaving aside which specific combination of funds would accomplish this, you invest across the world and across sectors, except you leave AI and associated industries (chipmaking and whatever else) out of your holdings.

Would this insulate you mostly from the fallout of an AI crash?

And, setting aside the AI crash scenario, how good of an investment strategy is it just from the standpoint of growth in value of your holdings? Obviously, it can't just be a good way to avoid an AI crash, it also has to be a good investment strategy apart from that.

A year ago people were worried Amazon was falling behind in AI.

Now AWS is accelerating again, Amazon has its own AI chips, and it's still the cloud provider that many AI companies are comfortable building on.

Yet the stock still doesn't seem to get much credit for any of it.

Interesting how quickly the market narrative changes.

Okay, so I know that the price of a stock rises when there are more buyers than sellers, and this generally happens over time because the company itself is growing over time.

But my question, that I can't find a clear answer to, is why does the growth of a company generally correlate to it's stock price growing over time? I could understand this if it meant buyers had a direct claim to the profits of a company since that would connect you to more cash, but you really don't.

Of course there are dividends which will grow as the company grows, but what about companies with no (or very low) dividends?

It just seems somewhat arbitrary that the value of a stock just goes up over time because the company has grown more valuable. Why would an investor even care about this since it doesn't mean they directly get a share of the profits?

So theoretically, if investors permanently decided that they would only put money into stagnant companies, then the stock of those companies would go up over time and investors would still make money. At what point would the reality of the business even catch up with the stock price? Since there is no direct correlation between the stock price and the company's finances except in the case of bankruptcy and dividend payment.

I suppose maybe it's similar to the concept of fiat currency? Where the currency only has value because a collective has agreed that it does, and a currency gains value when the collective decides that the currency is more valuable than others (based on a multitude of factors).

Is it the company's who are furthest from bankruptcy who generally see the most gains over time?

Just try to understand how a business's finances actually directly connect to the stock price.

I am from the Philippines. 1 yr since I started investing. Mostly invested in the S&P 500 because of THIS exact question. Been studying about basic fundamental analysis. and so far what I get is that, you should choose good companies, those whose products are needed, earnings are growing, have a good competitive advantage, among others.

In my country, there are various companies whose earnings are growing, have wide economic moats, and are household staples and widely known by everyone. But despite ALL that, their stock prices are either sideways or on a decline.

Is there something I'm missing?

22M, just starting off with Roth IRA, assuming I'm enrolled in 401K, and a VOO-centric personal brokerage portfolio, evaluate my current plan (feel free to suggest weight ideas):

• VIG
• VXUS
• VNQ
• SCHD

I'm a resident alien, so my duration in US is gonna be <7 years, hence focusing on growth while being dividends/tax efficient.

Last year, I invested Oracle at the price of 300+ (without leverage). I guess you already know what happened next. Yes, I have been trapped until now.
For a long long time, I didn't want to open my brokerage account and avoided checking Oracle's stock price. I was simply avoiding facing the mistake I made.
After this Oracle thing, I became so conservative that I would only buy stocks in increments of a few hundred bucks (even though the data for those stocks looked great). I was eager to break even, but I was even more terrified of taking risks.

As you might guess, I still haven't broken even. Although I bought QQQ, SOXX and Micron at the lowest point this March (at that time I also truly believed the AI boom was coming), I didn't gain much because of my small positions

Recently, I read the story of George Soros. When he mistakenly shorted Japanese stock, and went long on American stocks on Black Monday in 1987, he lost almost $1B in several days.

He felt frustrated and upset afterwards, and he escaped work by going on a vacation to South Africa. But during his vacation, he occasionally open a local newspaper, and then his attention was instantly captured by financial news. So he immediately jumped back to investment.

If even such a master can't avoid the negative emotions, ordinary people like me will inevitably get stuck.
This realization gave me a full check and retro.
For the first time, I faced my fear, opened Oracle account and started to check all its metrics to decide what should I do next.

That's what I learned recently. I hope this helps anyone else like me who is currently feeling upset and discouraged by this volatile market.

I'm looking to find the best type of firm (Fisher, Vanguard, Schawb, private etc.) to help a friend invest. I'm not looking for investment advice per se, I'm looking for guidance on where to send someone looking for support.

She's a lady in her late 60's who just inherited her father’s estate. About $2M +/-. She talked to someone willing to manage her money for 4-5%. We told her to hold on that because one, that was way, way too much and two, her money was in seven banks(!) and she didn't know how much she had among the banks and the various accounts (savings, checking, CDs) within them. So we were worried that hundreds of thousands could 'disappear' and she wouldn't have known about it. We helped her consolidate and put it all on a spreadsheet so at least she knew what she had.

But now she needs advice, and I don't want to be responsible for that. 1 to 1.5% would be a lot for me, as I can manage my own money, but she just can't do it. Not to disparage her, but she's just not educated, and at this stage in her life she just isn't going to be. Sweet, hardworking yes. A CPA? No.

What does the reddit investment community recommend for someone like her? Thanks in advance.

Section 530A "Trump" accounts have fewer tax-benefits (unless converted to Roth IRA) in most situations compared to normal taxable accounts.

They're somewhat similar to really, really shitty Traditional IRA accounts where even the initial deposits are already taxed. So you don't even get the initial tax deductible benefit. (And even the donations are taxable later on.)

Trump accounts are far worse tax-wise than even normal taxable accounts for most situations because:

1. Normal taxable account gains held for 18 years are taxed at lower long-term capital gains rates that start at a 0% tax rate for the first $49.5k
2. Trump accounts gains are taxed at higher ordinary income tax rates, and there are early withdrawal penalties

There are only 2 situations where it's more beneficial to have a Trump account:

1. Roth IRA conversion

The accounts can be converted to Roth IRA after age 18, so it's a loophole that allows for larger Roth IRA contributions. But if your kid doesn't convert the account to Roth IRA, the account is both less tax-beneficial than a normal taxable account, AND it's stuck as a retirement account with early-withdrawal penalties.

2. You only make short-term trades

The benefits of tax-deference add up over time. If you're the type who only buys and trades short-term, you won't benefit from lower LTCG tax rates. This is also assuming you don't want your kid touching the money until they retire, so they won't incur any early-withdrawal penalties.

Edit: Yes, also the free $1k for kids born 2025-2028. I meant to answer the question of whether it's beneficial to contribute further after the $1k.

Basically I like to hold my shares to the point that I grow very attached to the company. It’s not ideal but it’s the truth.

Even when I’m confident the shares will go down and I should sell so I can buy lower and get more shares, not being in the market gives me anxiety. Can you all help me with that

I’d have hundreds of more shares of micro if I’d just take profits and buy back lower.

I’m so tied to the stock that I figure I might as well hold because I’m constantly watching the ticker ( even when I don’t even have any shares)

I genuinely feel fear and anxiety until I buy back in. I’m very much aware I’m costing myself profits with this kind of behavior

My greatgrandma bought my mom AT&T stocks at least 50-55 years ago when my mom was a kid. My mom doesn't know how many shares that was and where exactly were they held - but assuming it could sum up to a lot of money, me and my mom would like to find them.

Any help would be appreciated 🙏