A Peaceful Retirement Strategy Prepared Through Risk Management and Asset Allocation

The S&P 500 index turned back from its early market decline and closed 0.17% higher.

The Russell Index also rose 0.84%, showing a balanced upward trend across both large-cap and small-cap stocks.

This can be interpreted as a positive signal that market investor sentiment remains robust.

The VIX index also fell sharply by 4.53%, easing market anxiety.

Stock prices gained momentum as U.S. Secretary of State Mark Rubio announced that negotiations with Iran were progressing positively.

Investor sentiment appears to have recovered rapidly as rumors circulated that an agreement would be reached within a few hours from the Iranian side.

Brent crude prices, which had briefly shown an upward trend, have also stabilized and are currently trading at around the $10.4 mark. QQQ stocks, centered on tech stocks, continue their upward trend, holding firm above the 5-day moving average.

While investors are waiting for an appropriate dip or pullback, the strong market continues to offer few entry opportunities.

Building permits have also increased from 1.36 million to 1.44 million, supporting the robustness of economic indicators.

On the other hand, Jamie Dimon has predicted that long-term U.S. bond yields will continue to rise.

According to FED Watch, the prevailing view is that U.S. interest rates will be raised at least once in the second half of this year.

However, the market is anchored by optimistic forecasts that the AI ​​data center boom will continue until 2030.

Currently, the P/E ratio of memory manufacturers is around 7, which is significantly lower than the S&P 500 average of 22; therefore, it is judged that stock prices are not in an overheated state. While there are no immediate signs of a Nasdaq crash, as a retiree in my 50s who has weathered the IT bubble, the subprime mortgage crisis, and the COVID-19 pandemic, I always harbor concerns about a market crash in the back of my mind.

Therefore, I have been constantly analyzing defensive capabilities during market crashes by personally backtesting numerous portfolios.

The recently popular barbell strategy of rebalancing 50% QQQ and 50% SCHD yields higher returns than holding only VOO, but lower returns than holding QQQ alone.

However, the maximum drawdown (MDD) of the barbell strategy is greater than that of VOO but smaller than that of QQQ, making it a popular choice as an easy-to-manage middle-ground portfolio.

In my experience, precursors to a bubble appear when there is a surge in IPOs, a flood of leveraged products, and the mass emergence of financial products with complex structures. Covered call ETFs like JEPQ, which prioritize monthly dividends, are very popular these days, but I am exercising caution as I feel a sense of déjà vu, as if I am looking at ELS from 20 years ago.

I hope that my peers preparing for retirement who hold QQQ or DRAM-related stocks will also never let their guard down and continue to protect and grow their valuable pension assets through asset allocation.