Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
As a general self-imposed MFO rule I abstain from making specific mutual fund recommendations. I do not consider myself well informed enough in that arena, especially when contrasted against other talented and wise MFO members. That’s particularly true in the Hard Asset class of investments.
Therefore, I choose to punt on your question regarding favored specific mutual fund Hard Asset holdings. I suggest you query the broad and helpful MFO membership on this matter.
My initial partial Hard Asset position was with the Permanent Portfolio mutual fund in the early 1990s. I was very impressed with its founder, Harry Browne, after meeting the gentleman and one time Presidential candidate. I sold that position after Mr. Browne retired and gave the fund’s controlling reins to an inexperienced member of his organization.
Presently, my portfolio’s asset allocation reflects roughly a 10% commitment to the Hard Assets sleeve. About half that segment is in an actively managed commercial real estate fund and about half is a relatively passively managed precious metal component.
I consider myself rather inept in this segment of the marketplace. I feel that one of my few investing attributes is that I know my limits.
I have now reached my bus-stop and intend to get off this line of inquiry. It is time for closure.
I've lived through 2 or 3 periods in my lifetime when "How low can stocks go?" was the popular topic of the day (at the water cooler). Needless to say, those were not pleasant times.
Do your charts about the stock market drawdown during the Great Depression take into account dividends (which were pretty high back then) and deflation (which reduced the impact of the drawdown in real terms)? I believe that taking those two facts into account, it took a few years less for an investor to recover his/her money, though I don't have the statistics at hand and perhaps your charts take all that into account.
But of course starting off as a buy and hold investor in September 1929 would have hurt.
Sorry for the late addition. Looks like the thread was closed by mutual consent of the participants. Inasmuch as conflict and vitriol often attract attention, I've skimmed the lengthy proceedings and can't help offering a couple thoughts - but hope to shy away from the divisive elements.
1. One comments: "These statistics strongly demonstrate the asymmetric upward bias to positive market rewards." Hmm ... I doubt we need to resort to statistical analysis for this audience to appreciate that point. Seems to me it's pretty much a given that over longer periods of time ownership of productive assets, including (but not limited to) equities, does provide better rewards to participants than will investments in fixed income - or for that matter hybrid investments with both equity-like and fixed income-like characteristics. (I hope I haven't muddied the original premise too much.) Suspect most of us first learned this important economic concept somewhere during our junior high school years, along with a strong indoctrination in all the other finer attributes of the "Capitalist" system. In its simplest form, it was explained to me thru the provocative question: "Would you rather own a company or lend your money to those who do?"
2. My own belief is that the increasing concentration of wealth in the hands of the very rich in this country and a string of Supreme Court rulings which will serve to strengthen their influence on the levers of government will likely assure for the foreseeable future the advantages accruing to the wealthiest, namely those who own and control what may loosely be termed "the means of production" (accomplished in a variety of subtle and not so subtle ways, including through bias embedded in tax codes, lax government "oversight" of corporations, labor laws and regulation, and retrenchment on "entitlement" spending). As investors, I think that's a salient point - regardless of political persuasion.
3. I have never understood the importance some place on distinguishing between income-producing assets and more growth oriented ones within the context of long term financial planning. The goal is grow our money at a steady and reasonably predictable rate. Right? While no plan is foolproof, I suspect that a well diversified portfolio containing growth stocks, income-producing ones, fixed income investments of varying duration and credit quality and some hard assets, including real estate, should do just fine over most time frames and likely provide a slightly higher rate of return which is not much more volatile than a strategy fully invested in income producing stocks. (Of course, for time frames shorter than 5-10 years, one should avoid most investments riskier than cash or cash equivalents.)
Thanks for the opportunity to comment on the above deliberations at such a late time. Regards
Comments
As a general self-imposed MFO rule I abstain from making specific mutual fund recommendations. I do not consider myself well informed enough in that arena, especially when contrasted against other talented and wise MFO members. That’s particularly true in the Hard Asset class of investments.
Therefore, I choose to punt on your question regarding favored specific mutual fund Hard Asset holdings. I suggest you query the broad and helpful MFO membership on this matter.
My initial partial Hard Asset position was with the Permanent Portfolio mutual fund in the early 1990s. I was very impressed with its founder, Harry Browne, after meeting the gentleman and one time Presidential candidate. I sold that position after Mr. Browne retired and gave the fund’s controlling reins to an inexperienced member of his organization.
Presently, my portfolio’s asset allocation reflects roughly a 10% commitment to the Hard Assets sleeve. About half that segment is in an actively managed commercial real estate fund and about half is a relatively passively managed precious metal component.
I consider myself rather inept in this segment of the marketplace. I feel that one of my few investing attributes is that I know my limits.
I have now reached my bus-stop and intend to get off this line of inquiry. It is time for closure.
Best Wishes.
Do your charts about the stock market drawdown during the Great Depression take into account dividends (which were pretty high back then) and deflation (which reduced the impact of the drawdown in real terms)? I believe that taking those two facts into account, it took a few years less for an investor to recover his/her money, though I don't have the statistics at hand and perhaps your charts take all that into account.
But of course starting off as a buy and hold investor in September 1929 would have hurt.
Yes sir. Total Return. If you use only Price Return, the drawdown is -86% and does not recover until Aug 1954! Or, 25 years later...
I used same database here as was done for article published in David's July 2013 commentary "Timing Method Performance Over Ten Decades".
1. One comments: "These statistics strongly demonstrate the asymmetric upward bias to positive market rewards." Hmm ... I doubt we need to resort to statistical analysis for this audience to appreciate that point. Seems to me it's pretty much a given that over longer periods of time ownership of productive assets, including (but not limited to) equities, does provide better rewards to participants than will investments in fixed income - or for that matter hybrid investments with both equity-like and fixed income-like characteristics. (I hope I haven't muddied the original premise too much.) Suspect most of us first learned this important economic concept somewhere during our junior high school years, along with a strong indoctrination in all the other finer attributes of the "Capitalist" system. In its simplest form, it was explained to me thru the provocative question: "Would you rather own a company or lend your money to those who do?"
2. My own belief is that the increasing concentration of wealth in the hands of the very rich in this country and a string of Supreme Court rulings which will serve to strengthen their influence on the levers of government will likely assure for the foreseeable future the advantages accruing to the wealthiest, namely those who own and control what may loosely be termed "the means of production" (accomplished in a variety of subtle and not so subtle ways, including through bias embedded in tax codes, lax government "oversight" of corporations, labor laws and regulation, and retrenchment on "entitlement" spending). As investors, I think that's a salient point - regardless of political persuasion.
3. I have never understood the importance some place on distinguishing between income-producing assets and more growth oriented ones within the context of long term financial planning. The goal is grow our money at a steady and reasonably predictable rate. Right? While no plan is foolproof, I suspect that a well diversified portfolio containing growth stocks, income-producing ones, fixed income investments of varying duration and credit quality and some hard assets, including real estate, should do just fine over most time frames and likely provide a slightly higher rate of return which is not much more volatile than a strategy fully invested in income producing stocks. (Of course, for time frames shorter than 5-10 years, one should avoid most investments riskier than cash or cash equivalents.)
Thanks for the opportunity to comment on the above deliberations at such a late time. Regards