Investor dumps portfolio, reinvests 92% in inflation bonds

Sell and rebuild: the exit anticipating a correction

Liquidating a portfolio and staying put is a market position, not a surrender. The person behind this strategy explains they closed all positions except one — a tech services company — leaving their portfolio with 8% in cash and 92% split between bonds, commodities, and real estate, aiming for a twenty-year horizon. Their five reasons all point to the same conclusion: the Federal Reserve is accelerating the end of tapering, unprofitable tech stocks are deflating (citing Peloton, Lemonade, Tesla, Roku, Teladoc, and sector ETFs), the S&P 500 will adjust by 25% or more, some countries have half their debt held by the ECB, and US inflation is running at 6.5%.

The plan: inflation-linked bonds, commodities, and 15% cash

New money enters monthly without trying to time the market. Half goes to ten-year US Treasury Inflation-Protected Securities (TIPS), 2% to commodities, 2% to energy, 1% to emerging markets, 1% to crypto, and another 15% stays in cash waiting for crash prices. The rest is real estate. On the equity side, they admit trinc an exchange-traded fund mixing stocks, bonds, commodities, and emerging markets that rebalances early in the year to increase fixed income holdings. "I am rebuilding the portfolio," they insist, annoyed by those reading their message as a permanent retreat.

Why do some see 'suicide' in buying Treasury bonds?

The objection appeared quickly and without elaboration. The original poster’s response focuses on the coupon: a ten-year TIPS pays 0.875% plus inflation, low in absolute terms but sufficient — they argue — to preserve purchasing power until better times arrive. The opposing alternative suggests metals, especially gold and silver, arguing they will fall the least. One tax detail was missing, which the investor verified themselves: silver is taxed at their income bracket rate.

Expensive property, cheap land, and self-sufficiency scenarios

Real estate is also inflated, warn others in the discussion: it would only be worthwhile with discounts exceeding 40% below market price. The counterargument is that inflation erodes cash just as fast. In this tug-of-war, a middle path emerges: unrenovated houses up to 50% cheaper and land with water, hunting, and private forest. The example shared is a plot of 20 hectares with a nearly 4-hectare lake for $79,000, near the Canadian border. The fine print: thirty degrees below zero in winter and snow that must be cleared daily or you cannot leave the house.

Time in the market: the reply to those timing the crash

Here the clash is direct. Those advocating monthly contributions regardless of conditions recall that apocalyptic warnings have been read weekly for a decade without stopping the market from rising. A data point serves as ammunition: a reference fund from a well-known Spanish manager returned 134% between 2014 and 2021 compared to the 205% of the S&P 500 including dividends. Regarding Warren Buffett, it is argued he no longer beats the index due to size, not lack of skill, and Ray Dalio is remembered for being ahead for three decades until his vehicle grew too large. A classic irony remains: if everyone waits for the crash, perhaps it never comes.

The Fed and 6.5% inflation

The timeframe matters. At its meeting on December 15, 2021, the Federal Reserve kept rates in the 0% to 0.25% range and maintained its commitment to support the economy, while the market priced in the end of tapering. With inflation at 6.5%, the dilemma is the usual one: print or not print. Underlying this is a geopolitical scenario that, according to another comment, will serve as an excuse to clean up indices. And a year-end prediction with names attached: S&P 500 at 5,200 points, Tesla at $1,800, and gold not passing $2,000.

The final gesture by the plan’s author when the drop arrived was brief and revealing: "UP!!! This is what I was waiting for. Got lucky. Buy." Whether they are right or wrong will be shown by the next decade, not the next quarter.