On February 24th, 2020, I initiated two rollovers: one from my old job's 401(k) account to my existing IRA; and one from my relatively small, choice-limited, terribly underperforming Roth IRA set up by a naive young me in 1999(!) to a new Roth IRA account with a comparatively infinite amount of investment choices.
The former account rollover was executed fairly quickly, allowing me to do the thing I intended to do for both accounts: allocate most of my funds in index ETFs (IWM, QQQ, VOO), and the remainder in higher-yield ETFs (HYLB, USHY, VIG, VYM). My preference is always to be fully invested, such that I don't miss any market upside.
The latter account rollover took...a while. It finally completed on March 13th, 2020. In the meantime, the market - and the world - went through some drastic changes. And having been forced out of the market by this extended rollover process, I was now in the uncomfortable position of having to time my reinvestment back into the market.
I thought about holding my nose and investing everything as soon as I could, just as I had originally planned. It just didn't feel right.
I thought about investing some now, and some later. It just didn't feel right.
I thought about investing all of it at a later date, based on some back-of-envelope math from the previous 2 bear markets. It just didn't feel right.
I thought about making some bets on volatility via VXX. It just didn't feel right.
I thought about rolling with an all-bond portfolio...it just didn't feel right.
So, I stayed in cash. Until today.
I've been reading a lot of investment books lately, including The Winning Investment Habits of Warren Buffett & George Soros: Harness the Investment Genius of the World's Richest Investors by Mark Tier. I already knew a lot of Buffett's philosophies - I've been trying to emulate him, as it were - but not about Soros. (I had previously read the chapter about his successor at the famous Quantum Fund, Stanley Druckenmiller, in the book The New Market Wizards: Conversations with America's Top Traders by Jack D. Schwager.)
I can summarize my understanding of Soros (and Druckenmiller) as that of a thoughtful, concentrated, high-conviction bettor. It is a philosophy that I haven't had room for in my Buffett-like stock account or Jack Bogle-like IRA account.
Coincidentally, I have had a high-conviction feeling in my gut for a stock outside of my current holdings for several weeks running.
Then, it struck me. Instead of treating my Roth IRA as just a smaller version of my IRA, I could treat it as vehicle for Soros-like bets. Half is in my one (mystery!) high-conviction stock. The other half is in bonds via the AGG ETF. If my convictions fade, I'll tilt into AGG, until another high-conviction stock is found; if my convictions strengthen, I'll tilt out of AGG. It just feels right.
For my next post, I will summarize my entire investment portfolio in both non-retirement and retirement accounts.
