Do you have too much of your money invested in the stock market?

Dow Jones

02-08

MW Do you have too much of your money invested in the stock market?

By Philip van Doorn

Also: A big warning for Tesla's shareholders, Roth IRA timing and companies that are likely takeover targets

Over the years, you may have seen advice in the financial media about the "60/40 portfolio," which consists of 60% stocks and 40% bonds. This type of portfolio can be put together without too much trouble through the use of mutual funds or exchange-traded funds.

But the strong performance for U.S. stocks over the past 15 years, along with low interest rates, has led some investors to build retirement nest eggs that are 100% allocated toward stocks. Conventional wisdom is to reduce your allocation to stocks and increase your exposure to bonds as you get closer to retirement, in order to reduce risk and lean more toward income generation.

This week Quentin Fottrell - the Moneyist - answered a question from a woman in her 50s who is semiretired and, with her husband, is 85% invested in stocks. She wonders if their investment portfolio allocation is too aggressive for the next 10 years.

The Moneyist also helps readers facing difficult family conflicts over money:

-- My son's father died, but his stepmother won't return his calls. We don't even know if there is a will. What now?

-- My husband secretly gives my daughter, 37, thousands of dollars. She spends the money wildly. How do I stop this?

-- My friend, 62, may only have weeks to live. How does he prevent his second wife from inheriting everything?

An alarm bell for Tesla - and its shareholders

Steve Goldstein highlighted a shocking set of numbers for Tesla Inc.'s $(TSLA)$ vehicle sales in Germany. Then he looked into the company's sales volume in China.

Too late for a Roth IRA?

This week in the Help Me Retire column, Alessandra Malito answered a complicated question from a MarketWatch reader who wondered if it might be too late for her to benefit from contributing to a Roth IRA. The answer encompasses her age, her husband's age, tax implications and decisions on when to withdraw from retirement accounts.

More: I'm 67 and plan to work for five more years. I was told to claim Social Security now. Should I?

A housing and retirement quandary

Beth Pinsker writes the Fix My Portfolio column. This week she helped a reader with a difficult set of problems - she is 70 and thinks she cannot retire because of a mortgage loan. This is how she can reorganize her finances.

Beth also addressed a different type of retirement problem, working with Andrew Keshner, Jessica Hall and Venessa Wong to answer the question of why retirement buyout offers - such as the one being pushed for federal workers by President Donald Trump - are such a hard sell.

The stock market is still hot - even the Magnificent Seven

Here are some investment performance figures (with dividends reinvested) through Thursday for the Magnificent Seven group of stocks, which make up nearly a third of the SPDR S&P 500 ETF Trust SPY. Returns for the ETF are at the bottom of the table:

   Company                      Ticker    2025 return through Feb. 6  2024  return  2023 return  2022 return 
   Apple Inc.                   AAPL                           -5.8%           31%          49%         -26% 
   Nvidia Corp.                 NVDA                           -4.2%          171%         239%         -50% 
   Microsoft Corp.              MSFT                           -1.5%           13%          58%         -28% 
   Amazon.com Inc.              AMZN                            8.3%           44%          81%         -50% 
   Alphabet Inc. Class A        GOOGL                           7.8%           36%          58%         -39% 
   Meta Platforms Inc. Class A  META                           17.7%           66%         194%         -64% 
   Tesla Inc.                   TSLA                            0.2%           63%         102%         -65% 
   SPDR S&P 500 ETF Trust       SPY                             3.5%           25%          26%         -18% 
                                                                                             Source: FactSet

This year's performance for the Magnificent Seven group has been mixed, with Apple $(AAPL)$ the worst performer, followed by Nvidia $(NVDA)$. But Joe Adinolfi reported that individual investors have been very enthusiastic about Big Tech stocks this week.

Related: The valuation gap between Big Tech and the S&P 500 has narrowed

On the other hand: This stock fund is fully diversified from the S&P 500 - and pays high dividends

An Apple-related setback

Shares of Skyworks Solutions Inc. $(SWKS)$ fell 21.5% on Thursday, after the maker of connectivity components said that it expected to have a lower "content position" in new equipment being made by its largest customer, which it didn't name. That customer is understood to be Apple. Emily Bary explained the implications of the announcement, including the timing of its expected effect on Skyworks' revenue and earnings.

Therese Poletti: Apple escaped tariffs last time. This time, it may have to raise prices.

DeepSeek fallout

Long ago, on Jan. 27, shares of Nvidia declined 17% after reports that Chinese company DeekSeek had developed competitive artificial-intelligence technology for far less money than the competing ChatGPT had spent. Despite that day's volatility, the S&P 500 SPX was down only slightly from Jan. 24 through Thursday.

So what's next? Joy Wiltermuth interviewed managers of large stock portfolios, who explained how they expected the DeepSeek news to affect the Magnificent Seven and a broader set of companies.

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Do you have too much of your money invested in the stock market?

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