SES AI (stock symbol)

If any of you gamblers want to take a shot of this AI stock.  The company has an AI system that produce battery chemistry.  Great potentials so go do your DD.

Just go buy the S&P 500... it is littered w exposure to the AI ecosystem already.

Leave the gambling to your football picks.  

I am a huge proponent of AI stocks, ETFs, hyperscalers and startups right now.

The issue with SES is how much of the battery segment of the industry they can capture and maintain. 

One of the main researcher analysts has changed their target price to $4.00.

So, this is certainly a good company to take a shot with.

But I recommend getting some good exposure in AI with ETFs that are concentrated on the whole sector as well as some of the individual companies.

I have several of the individual companies but not this one, yet.  I have my eye on it for sure.

Good luck if you have it.

@Raiders22: I’m curious of your take on the tech sector nowadays. Are you buying the dip?

@soccergal

 I am not really sure how much detail you really want here.

The short answer is that I think the dip should be bought through normal DCA — Dollar Cost Averaging.

   There are various ways to do this.  Just keep it the same every ‘buy’ period and invest for the long-term.

Another method is to use key numbers, percentages or moving averages and ease up or buy more when they hit those areas.  You, essentially double-down when it dips into those areas and cut it in half when it reaches the highs, or even pause.  

For example, if you are DCAing and a stock reaches a 20% drop from its 52 week high then you double down.

All, of this assumes nothing in your thesis about the stock or sector has changed to cause the drop.  Say, it is just an overall market fluctuation.

   Right now the earnings report has passed for all of the Big-Tech companies.  But there has been a rotation away from some of the Tech sector, specifically AI areas, because of valuations, expectations, angst about an AI bubble, etc.

   But to me the DCA will allow folks to ride this out if they have full confidence in the overall Tech Sector and AI, in particular.  Volatility is expected in these areas and the dips are obviously time to take advantage to lower your cost basis.

 I feel there are four key areas that folks should have a portion of their portfolio in going forward:  AI, rare earth minerals, energy and pharmaceuticals.

How much they should relegate to each of them besides their main portfolio is wholely individual-dependent.

   There are some things folks should always be invested in, like the S&P 500 or SPY and some Consumer Staples, Defense, and normal Technology things like the NASDAQ or QQQ etc.

But I feel there are emerging markets that need to be looked at as well to build a well-rounded portfolio.

   AI is huge in many ways already and is going to be even bigger going forward.

   There are several segments that are involved and I think most people should have some exposure in each of these segments.

   You can catch that with ETFs or something along those lines to diversify your risk.  

   Or you can select one or two stocks in each of these segments of the AI sector that look to be positioned to do well right away.

   Then if you are feeling speculative, you can grab a small position in some of the stocks in those segments that look like they are ready to really take off.

   This all depends on the risk percentage and comfort level you have with isolating individual stocks, as opposed, to letting fund managers do it for you.

   With AI, it is just like the old ‘gold rush’ days.  Most of the guys that ‘prospected’ for gold lost out.  Some hit it big, but not that many.  The ones that did very well were the guys that sold the ‘picks and shovels’.  So, there is an argument that you want to concentrate in these areas of AI.

   The ways the models think are pretty much broken down into two very distinct ways.  These are called the ‘prefill stage’ and the ‘decode stage’.

Say you send a question to AI — It goes into ‘prefill’ stage or reading stage.  It looks at whatever you have asked and goes through all sorts of relationship calculations between the words, then does all sorts of math and places it all in a temporary memory bank.

   The issue is this is limited by computing power.  Nvidia GPUs do very well here because they are designed to use what is known as ‘parallel processing’.  So these GPUs handle this with ‘brute force’, and they are the very best at doing this.

   The next phase, the ‘decoding’ or writing phase is where the response(s) start to come in.  So now after responding, it has to continue to look back at what it has already computed to make sure it does not answer faulty.  

   The issue is how incredibly bandwidth consuming this part is.  

Now they are dong what they call SRAM, which is using memory on the chip itself.  This is now an advanced way of doing the decoding better than others are doing it.

   Now, as folks start to put these two things together it is going to make this infrastructure much cheaper and more efficient.  Therefore, it will become much more valuable.  This will reel in even more developers and more applications will be built.  This leveraging of SCRAM is going to be a big differentiator.  

 I think the AI ‘boom’ should be taken advantage of by having exposure to the following segments and key in on some of these stocks:  

Semiconductors — NVDA, AMD, TSMC, ASML

Hardware — NVDA, AMD, TSMC, ASML

Networking — ANET

Monitoring — DDOG

Software — PLTR

Cloud Storage — Google, Oracle, Amazon, Microsoft, AWS, AZURE

Cooling —  CEG, VRT

Cyber-Security — ZScaler, Crowdstrike

Real World AI Implantation — Tesla 

   Then if some riskier and smaller ones that are poised to boom — there should be a portion of very small capital in some of those.  BBAI, Innodata, Soundhound, etc.

   At any rate, yes I am still very invested in Tech overall and AI, in particular.

Thank you so much for that lengthy response. I’ve seen your posts in this forum and they are always very helpful and informative ( I do not have anywhere near your level of knowledge of AI or these companies that I invest in).   You seem like you do a great job with your portfolio, from the posts that I have read here.  I DO appreciate that level of detail.  I find myself in a very tech heavy portfolio, right now, with many of the companies that you mentioned ( Google, Apple, Nvda, Palntir, Microsoft, CRM, TQQQ, SPY, TSM,  Amazon etc).  I have owned NVDA since about 2016 and haven’t sold many shares at all.  I had a meeting recently with someone from TIAA and he said my portfolio was way too tech heavy.  So these past few weeks, I’ve been wondering how quickly I need to act to rebalance.  I really didn’t want to create a taxable event just to rebalance. I’m an investor that tries to buy well known companies ( almost treat my account as a savings account) and I never know when to sell.  I’ve been investing since 1995.   

I will look into buying some of these companies that you listed. My husband is also intrigued by this list! Thank you again!  I’m also strongly considering using a fee only fiduciary to help me with my investments.  

@soccergal

I know your question wasn't directed at me, but you have what we call " a good Problem" to have. 

BTW, I also own NVDA, CRM, GOOGL, and AMZN  in my "stock portfolio" .... I own a mess of GOOGL which I started buying almost 8 years ago.  I realized it as the best Engineering Company in the World many years ago, and that bet has really started paying off in the last 12 months. 

That being said, how much of your stocks represents your entire portfolio ?  For example, "ALL" of my stocks represents about 10% of my portfolio.... The rest is in ""INDEX FUNDS"..    

I get it... If you sell some of your stocks, you create a taxable event, but how much of a bet are you willing to take in MAG 7 ?   Only you can answer this question.  MAG 7 is going through what we can call a re-rating by Wall Street.  They don't trust the amount of money being spent by the Hyperscalers (GOOGL included) that will ultimately in a a legitimate payoff on their AI investments.    I think that's a rational conclusion, actually...   Skepticism by Wall Street is well grounded... even if it comes at the expense of some of the stocks I own.    Let's think about this.  How much of the """ Hundreds of Billions of Dollars """ being spent by META, GOOGL, MSFT, AMZN  on AI will result in a good return on their AI investment ?   Nobody knows... and this is the million dollar question... 

 But I will say if you have too much of your money centered on tech stocks, then your financial advisor was quite wise to tell you that you are too levered to big tech.... 

@soccergal

If you are simply moving your money around inside your TIAA account it should not affect your taxes.  This is just an internal move.  If you take it out of the TIAA account to put it in something else that can affect your taxes.

Buying well known companies is a very good strategy — that is investing.  When you buy too many not-so-well known companies — that is speculating.  It has its place, but a much smaller one.

But if you are a teacher or in government, I imagine you also have a pension.

This is a factor to keep in mind, because you have a tad bit more leeway than those that do not have a pension.

The person you talked to is very likely correct about your TIAA being too Tech heavy.  But your age, years to retirement, how debt-free you will be going into retirement are all factors to consider.

TIAA will have the ‘handsfree’ things as well, like Target Date funds.  These will automatically adjust your portfolio over time to prepare it for retirement.  They also will have some funds that are adjusted to your comfort level as well, like conservative or aggressive or a mix.

I am a big advocate of folks being far more invested in funds like ETFs or mutual funds than individual stocks for their retirement.  Just because the managers that choose the stocks inside them get paid very, very well to do a good job with them and they have a team working with/for them.  They are automatically diversified, whereas individual stocks are not.

However, if you have all of your retirement accounts set the way you or your advisor feels is appropriate for you and your time schedule heading into retirement — then it is fine to invest yourself on your own.

This is where you can choose the well known companies you like.  Or even speculate on some potential stocks you like — just like you did with Nvidia!

Very good job getting that as early as you did and holding onto it.

I highly recommend to sit down with a retirement advisor and just see what they have to say.  The tricky part is they will, of course, be incentivized to encourage you to shift things to their firm.  That is not what you are looking for.  You want to go see someone that will give you an honest assessment of your situation and make suggestions.  You should be able to get a decent flat fee review or an hourly rate to look at it.

But I would only do it if the TIAA person does not provide you the answers you like.  But they are free and should give you some decent advice.  And if you do not like the first TIAA person’s advice — you can always ask another of their consultants, just to see how much in agreement they are.

I would also sit down with an investment advisor.  These are different than retirement folks.  These will also want you to shift funds their way.  Because they generally get a percentage of assets managed, etc.   This is not what you want.  You want someone that can look at what stocks you are investing in outside of your retirement funds and give you some sincere feedback about how good you are doing and where you might improve.

Because even when simply investing, people tend to not be diverse enough.  They tend to be more interested or concentrated in one or two sectors.

For example, if you like NVDA you might also like MSFT, GOOGL, or INTC.  Just because people tend to see that another stock that is a peer of one they have is doing better for a short time and they do not want to miss out.  Or that is simply the sector that they keep up with and know all the news about.

But when you have a few high fliers it is hard to look around and choose WMT, XOM, GS, LMT, MCD, or MRK.  Just because those are not as volatile or flashy as what they have.

But these are also well known companies and give folks a more well-rounded personal investment portfolio also.

I also think a person’s retirement and investment and speculative portfolios should all three be diversified and somewhat different from each other.

I would start by asking a trusted friend or family member that you know has done very well in retirement or going into retirement to recommend someone that you could sit down with to go over these things with you.

I am very sure you know someone that uses an adviser that they really trust and can point you in their direction.

If you ever do sit down with someone I would be interested how it went.  I don’t mean any personal investment things.  Just some general overview of what they thought about how well you have done so far and how comfortable you were with their advice.

I am always happy when folks get to retirement with a financial peace of mind.

Good luck to you on whatever you decide!

@soccergal

 I will add one more thing.  

If you agree with the TIAA person that you are too Tech heavy and need to rebalance — you need to consider if this is the correct time to do it.  Even if it does not affect your taxes if you just shift it into something less tech-loaded in the TIAA account. 

Because as I mentioned before, there has been a sort of rotation away from tech right now.  This has been going on for a little bit.  

So, you really have to ask yourself (and your TIAA person) if this is the right time to follow suit?  Because, you could be, essentially selling at a low point — even if you are personally up in these holdings.  
You have to decide if this sector is about to rally again.  

As I always try to point out, you do not want to go to cash or stable funds with investments.  This is such a huge mistake people make.  I saw people doing it during the Pandemic and kept telling them not to.  But people get worried or scared.  This causes them to get out of the market at the wrong time and miss out on rallies.  Like I point out, there are a very few days that make up the largest gains in the market.  You do not want to miss out on these because of fear or worry by, essentially trying to ‘time’ the market about when to get back in.  

This is the same thing with the NASDAQ as with the SPY.  You do not want to shift out of tech at the wrong time because everyone else is.  So, even if you are just rebalancing you have to decide if this is really the thing to do; AND if it is the thing to do, is this THE time to do it. 

I always recommend folks look at their portfolio every quarter — not every day.  

I also recommend to rebalance once or twice a year. 

If you do this at a set time, you are removing other factors from it.  Like how the markets, or sectors are doing.  You are just rebalancing in order to keep your portfolio balanced the way you want it and not to time the market. 

@soccergal

 One more thing I will point out:

@Rush51 always has good insights into the markets.

@Rush and Raiders: much respect for both of you. Please feel free to respond as much as you want . I appreciate any/ all investment advice. Unfortunately most of my NVDA ( and equities in general ) positions are in taxable accounts right now. I have a small pension, when I am done working : about $11K annually.  I do agree with your “timing” advice. It just may not be the right time to rebalance. I was just wondering how long I could afford to be tech heavy. My estimate is that I have about 40% equities right now. Some of my non tech positions include Walmart, Costco, American Water, Verizon, BMY, GLD, VOO, FMAGX).  I always thought that I could wait until my non working years( maybe 4-6 years from now) before I sell positions like NVDA ( perhaps, decrease the tax implications). But, maybe that wouldn’t be the proper timing? Idk.  

Direct indexing has been brought up as a means of tax loss harvesting, but it would mean using a fee only advisor to help with the process.  One of my friends recommended a CFP  that she met in her Harvard MBA program. Opinions on direct indexing?

again ,  thank you  for taking the time to respond! 

@soccergal

 Direct indexing is usually used by folks that want to mimic a particular index by buying the individual stocks in it.  This its not really what you are doing, I do not think.

The advantage is that you can do what they call a 'tax-loss harvest' on the losing stocks to help offset any capital gains taxes.

But if you only have winners you are going to sell you will still have the capital gains to pay.  The $3000 loss per year that you can carry may be enough.

I would sit down with a tax advisor and see if this is worth it.  But if you do not really have that many losses to 'harvest' I do not think it is worth it.

I am of the opinion that NVDA should be a longterm holding.  But I certainly understand if the advisor and you have decided it makes you too tech-heavy and you want to unload some of it.

Again, yes, I recommend sitting down with a CFP, but only for a reasonable hourly fee.  Also, not to transfer funds to them.  You just want an assessment of sorts.

So, if your friend knows this one and trusts them -- I would do it.

@Raiders22

I think the direct indexing is  a method used to offset capital gains that I take by selling some long term positions ( e.g. Apple ,NVDA, etc).   I think the advisor will purchase stocks and try and capture losses in certain ones thruout the year. ( e.g. if Pepsi goes down, they sell the Pepsi shares and buy Coca Cola shares instead). That’s how it was explained to me. These harvested losses can be used to offset the  capital gains.    This is one reason that I am considering using a fee only advisor (fiduciary). As much as I enjoy reading / learning about the market, I am not sure that I have the knowledge that it takes to maximize gains/minimize risk/ be tax efficient.  For example, this past year I missed out on the international market and emerging market returns. I simply didn’t know to invest in those areas. 

I am not saying that it is not for you.  It could be.

There are some issues with this.

For one it does not create 'free alpha'.

Direct indexing 'improves' your post-tax returns.  It does not help with pre-tax returns.

Say the index that you using to direct index earns 10%.  That means that ETF returned 10% that year.  

So, in theory, your direct indexing earned 10%.  

Now you harvest losses.  Let us say that is 1%.  So, your post-tax return 'feels' like 9%.  That is what is referred to as 'alpha' on your tax savings.

But it is not free because you now have added advisory fees and it has to be somewhat actively managed.  It also loses the benefit over time.

In other words, if you have two separate folks that invest the same with the same return -- 10%.  But one 'harvests' $30,000 in losses to offset capital gains.  The second one did not 'beat the market' -- it just paid less in taxes.  This is known as 'tax alpha' not 'investment alpha'.

If your advisor fee is 1% and your tax alpha is .7% -- you are to the negative .3%.  Maybe not worth it.

If your advisor fee is .4% and your tax alpha is .8% -- you are to the positive .4%.  Maybe worth it.

This coupled with the diminishing returns over time may, or may not, make it a viable option for you.

However, if you do not have any losing stocks is there really any point to direct index.  

If there are no losses = there is no tax alpha.

Stocks are by nature volatile. So, the portfolio could see losses at some point.  But if you are holding well known stocks then I imagine nearly everything you have is in the positive at this point.

There is a sort of breakeven point by size for a portfolio where it becomes worth it as well.

Before you decide to go this route I would make sure they explain this in very complete detail.

It can be useful if you were to have a very large number of stocks.  Because then you would surely have some that would be held at a loss.

But if you are holding a handful of very well known stocks that are performing well then direct indexing is not worth it.  

It is far more useful as a forward thinking vehicle for large single stock portfolios.

There are instances where folks will absolutely intentionally buy stocks to seem to want to lose money to take advantage of harvesting.  But it is with the idea that those stocks may surge because they are undervalued.  But if they do not recover they know in the back of their mind they can harvest them to offset the gains from the winners they know they will sell.

But if you are not really intending to sell a bunch of stocks all of the time I do not think it is worth even looking into.  You are just doing a one time rebalance situation.  But even that is something I would reconsider.  This is your personal investment stuff and not your retirement investments.  So, these you may want to be a little top heavy with volatile stocks like tech that can have great returns.  Like the Nvidia.

At any rate I am very interested what your friend's advisor recommends if you decide to talk to them.

Thanks! Some good points that you make! 
I figured with direct indexing, if a company can harvest let’s say $20,000 in losses…I can then use that to offset $20,000 in gains that year.  Then I would be saving (approximately) 25% (less the advisor fees) of the capital gains tax on that $20k.  Unless I’m not looking at it properly? I’ve been watching videos related to direct indexing….I’m just beginning to understand the process.

I think some stocks in the index ( that they create by buying new stocks for me) are going to go  up in value and some are going to go down in value.  They isolate the losers and sell them, when they go down,  while still maintaining the integrity of the Index fund that they are trying to mimic.

Yes.  But keep in mind it is usually tax deferral and NOT permanent savings.

You, essentially just lower your cost basis by buying another similar stock cheaper.

But when it recovers you can have larger capital gains in the future.

If you are carrying a rolling $3000 a year loss into the next year that is a permanent carry over.

If you have, say, a $500K portfolio and the advisor fee is .5% or $2500, then your tax savings needs to exceed that cost.

In your example, if you harvest $20K in losses to offset $20K in gains and your capital gains rate is 25% (depending on state and length held, etc.).  

You save $5000 this year but the advisor's fee is $2000, then the net benefit is $3000.  You have to decide if all of that is worth it.

I think it comes down to your goals of whether you are just trying to save taxes this year or planning to have longterm future losses.

The other thing to consider besides fees is if you are comfortable letting others, more or less, choose stocks for you to use in place of your losers going forward.

You seem to be doing very well picking your own stocks.

Maybe see if the advisor can run up a couple of different sample excel sheets of various things they would consider to see if you like what they would consider.

Thanks again Raiders! Appreciate the dialogue very much! ( I’ve been reading and re reading your posts).   I’ve been trying to read / google as much as possible about Direct Indexing. My nvda position is what I am worried most about , from a tax perspective. I live in NJ, so my gains would be subject to state tax also.  I’m guessing that if I do decide to trim the position, I am probably going to pay between 20 and 25% capital gains tax.  I thought, for that reason, that regardless of the cost of direct Indexing,  I should stand to save a lot more than I spend.  I hope to only trim the NVDA position, not liquidate entirely.  Your point about timing the rebalancing is a good one tho. If I do use a portfolio manager ( the one my friend recommended), I was hoping he would add value by TLH and by rebalancing my portfolio ( that I failed to trim all of these years), so that , as I approach retirement , in the next five to  ten years, I can minimize my exposure and maximize my gains.  

@soccergal

 Yes ma'am.  

I am not trying to change your mind at all.  So, I do not want you to think that.  I fully understand if you and the advisor think you have too much Nvidia.

But you have to consider how much it has dropped and where you think it might go.  You have to be careful if you are concerned it might bounce right back up after you sell.  But if you have enough profit at this point then it is fine.

If you have all of your other retirement set up the way you like and the NVDA is just a large part of your side/personal investments then you might be able to hold off selling for a bit.

Maybe you can see some of your 'lesser' performing stocks besides NVDA just to make you less Tech heavy.  The issue would be you would then be NVDA heavy.  But NVDA is seen by most as an elite Tech holding going forward.

But it is all about your comfort level and your trust in your advisor.

I am going to try to copy a couple of links from a few analysts that came out last week.  I think you can read them without a subscription on most of them.  I am not sure if their ratings and target prices will copy right because it is in a table format.  

If it does not, I will just type it out.