Rethinking my 100% active portfolio

[Zemergefen]

5 hours ago, 73 Reds said:

Buy more of the stuff you like at reduced prices.  Or if you think this time is different, figure out why and profit from it.  I don't own index funds but BRK is an acceptable proxy.

Yeah, 

That’s a fair point. I need to sit down and decide exactly how much weight to give a proxy like BRK. I could slowly increase my position there to reach my 'passive' target, rather than jumping straight into a standard index fund.

 

[Zemergefen]

4 hours ago, Castanza said:

- Focus on your family

- Focus on your health

- Focus on your career

- Have yearly personal finances in order (emergency fund, debt reduction, manageable living expenses)

- Invest (index....just get as much as you can in there as often as you can as early as you can)

- Shift funds to individual stocks as you find opportunities

- Assess time spent on individual stocks / quality of family life / career advancement / other relationships and activities you enjoy

- Make adjustments based on how you feel about time sunk into one vs the other (this can change as you go through seasons of life...nothing wrong with that)

 

Great post and a important  reminder of what really matters -  Family and health.

 

We currently live frugally and are  investing a significant amount of our income. 

I've been thinking that increasing my emergency fund from 8 months to say, a year and a half might be exactly what i need for some peace of mind

 

 

 

[Zemergefen]

4 hours ago, thepupil said:

a few things

 

- the passive equity index is VT (which is 65% US). 100% US allocation is an active decision....one can go further and say 100% equity may not be the truly "passive" portfolio if you take the logic of market cap weighting to its logical conclusion, the global investible asset index is....more stuff...but just saying that I do think there's a case, for passive portfolios to include international....bogle/buffett themselves have said S&P 500 is fine and has sufficient diversification / international exposure, but i think in the end 100% US yhou're still picking US companies to win and that may not always be the case. 

 

- with that said, i think in real time we're seeing diminishing benefits of international diversification as AI is driving both the EM index (TSM / Samsung / Hynix etc) and the US indices. International Developed is a bit more balanced. whole world is large cap tech / AI trade whether its Taiwan Semi or Nvidia or Samsung or ASML. this is said w/o a strong view regarding the durability thereof...i did prefer it when international indices were less tech-y and less hot. 

 

- one of the tough things i have found with passive exposure is that it's more nebulous. we can all read about the historical earnings growth of indices, and have that provide us conviction to hold and continue to buy through volatility, but it's not quite the same as touching and feeling a business. active management provides a highly useful illusion of control. I have found myself wanting to sell my passive investments when certain global things happen (i rarely act on this), but haven't had the same urge with individual stocks bought with a margin of safety. some folks OTOH are the opposite and can keep the faith better in indices.

 

- you should ask yourself which type you are. set up your portfolio in a way that you think will allow you to make rational, long-term decisions. 

 

- the decision need not be binary. i am beneficiary to a small trust. i don't control the cash flows or the investment mandate. it's in a portfolio of ETF's/stocks that more or less makes global index - the advisor's fees. i also have a good bit in 401k's because ahve been at job for a few years now so haven't been able to roll to IRA in a while. the summation of these two things is i have a fair bit in indices of some kind. I can still actively manage the rest of portfolio and have some indices...obviously this dilutes my outperformance/underperformance to index....but...it's fine. I think it's reasonable to put 1/3 or 1/2 or more in passive and add to both portfolios over time and see who wins or rebalance b/w two to hedge your brain/abilities. let's say you're god's gift to investing. if so, the active portfolio will gain more share over time.

 

- passive is incredibly tax efficient, i pay 45% of short term gains to taxes. I presciently bought ALEX the month before it got taken over....cool. after tax, it kind of sucks. if you're high income, live in a blue state, and your assets are more weighted to taxable vs tax advantaged and you don't have ways to potentially offset gains....the case for some passive is strong. I like to actively manage portfolio and stuff as much dough as possible in tax advantaged and now run high gross offsetting indices/other stuff to try to create artificial tax losses, but i think it's really really hard to make case for active management after tax from a pure risk/return perspective....of course if i lived in FL or TN, and had lower income, this changes. you can monetize w/o selling and one's investment style will significantly impact the degree wo thich this matters. 

 

- 

 

 

 

Great point about tax efficiency. 

 

Some context on my situation, in Israel we have a flat 25% capital gain and dividend tax regardless of income bracket or whether the position is long term or short term. 

 

I actually already have some passive exposure through retirement accounts. I have an Israeli account similar to a 401k (currently 100% in an S&P 500 ) and I still have a remaining 401k from when I lived in the US.

Just need to find the correct balance for me. 

[Trophicdynamics]

I am not certified to provide portfolio advice, so I will not comment on yours. I will tell you this, learn to walk before you try to run - which means learn as much as you can about markets before going headfirst inton investing(learn from the people who have done exceptionally well especially over a long period of time, the longer their streak of winning the more weight you should put on their teachings). Nobody can accurately predict the short term direction of stocks or markets on a ongoing basis, you may get lucky once or twice but generally speaking it's fools errand. Instead focus on the long term and the longer the term the better. Understand that investing is more about psychology and emotional control then anything else. Learn qualitative analysis, the quantitative part does not matter as much as it is unlikely that you will have a competitive advantage against quants or Algos. create an investment philosophy and continuously refine that philosophy with new learnings and teachings.

Edited May 11 by Trophicdynamics

[This2ShallPass]

On 5/6/2026 at 11:59 AM, Zemergefen said:

 

Great post and a important  reminder of what really matters -  Family and health.

 

We currently live frugally and are  investing a significant amount of our income. 

I've been thinking that increasing my emergency fund from 8 months to say, a year and a half might be exactly what i need for some peace of mind

 

 

 

Don't forget to enjoy life along the way! If you have a long investing time ahead of you, just avoiding big mistakes will guarantee sufficient wealth. My suggestion is don't sacrifice things today to have more money later in life.
 

[DooDiligence]