Tao Economics

Navigating Economics Cycles for Preservation and Survival

Risk Management

Posts on risk management for your stocks and assets.

Intel reported some bad numbers, has layoffs and stopped it's dividend.

Below is why you want proper position sizing. I don't care if you inherited the money, and I'm sure this guy actually does as well despite what he says.

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Giving a heads up here. If you have large retirement accounts, it would be good to check the index funds you are invested in right now.

Here are the current weightings of the S&P 500 index.

https://www.slickcharts.com/sp500

Top 3 below:

1 Microsoft Corp MSFT 7.02%   

2 Apple Inc. AAPL 6.99%   

3 Nvidia Corp NVDA 6.27%

If you are heavily invested in a S&P 500 index fund, 20% of your holdings are in these three stocks.

All 3 are fantastic companies, but extremely overvalued. Especially Nvidia, which is reminiscent of Cisco Systems during the 2000 tech bubble.

If you have $100K in a S&P index fund, then $20,000 of which would be in these three companies.

You may also have some overlap from other funds.

Chart wise, Nivdia is looking bearish short term ~2 months.

Given that, I don’t know what these stocks will do tomorrow, next week or next month. They could always go higher. This post is so that you are aware of what is in your retirement account and if you are currently comfortable with this allocation.

If not comfortable, it would not be a bad time to re-adjust.

Great interview with George Gammon. One note I wanted to call out around the 50 minute mark. George talks about what the pros do versus retail investing.

Watch the interview here:

..most retail investors I would argue spend 99% of their time trying to figure out what to buy or what not to buy and they spend 1% of their time on the portfolio management the money management or the risk management and from what I can tell the pros do the exact opposite

It's worth watching the entire interview.

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