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.
Thanks for your question in reference to my comment of this morning.
As to CD rates ... I'm still looking but have yet to target a certain interest rate mark to begin to start building my CD ladder. A tips fund? I'll have to think some more on this. I'm leaning more toward stocks to offset inflation over a tips fund. I'm thinking tips would be more for a fixed income investor. Although, I'm invested for a good income stream my portfolio is diversified accross many assets classes and it also provides for capital appreciation which offsets inflation.
@OlSkeet. Thanks for the report. My approach is a bit complex - but yours much more so. I'm sure it's effective for you. My own thoughts are that while, as Ted and a few others have in the past suggested, a half-dozen funds (or fewer) will work, having a plan such as yours or mine instills a degree of confidence. And I think the real unspoken Elephant in The Room is that one needs a great deal of confidence to ride out the nasty market bumps. (At least most of us do.) Having a disciplined plan like yours (or mine) instills confidence and helps us ride out the storms when others might bail at precisely the worst possible time.
Beating your boggie? Great. For the first time I can recall since '09 I'm trouncing my benchmark TRRIX. Not easy to do. Often times lag it. I think the secret ingredient this year has been exposure to nat resources and commodities, which I always overweight relative to that fund. (PRAFX & PRNEX are both up 18% YTD.)
@Derf: Reports are that a flood of $$ has been pouring into TIPS since the election on the assumption much stimulus will occur under DT. Isn't it ironic that Obama tried for nearly 8 years to get a big stimulus package through Congress and couldn't do it? Instead, they served up something called Sequester. Now that the Rs are set to control both the Executive and Legislative branches, there's talk of stimulus.
Back to TIPS - I never fully understood them as an investment and suspect most investors don't either. If I could see evidence they were dirt cheap I'd buy some hoping for a nice quick run-up. But don't think that's the case now. Perhaps C-22 will chime in? Instead of buying different types of bonds (or bond funds), I'd prefer to own something like RPSIX or DODIX. Both are fairly diversified - the former more so. If the manager sees value in TIPS, he'll increase his hold. I suppose these diversified income funds are a bit like consuming hash - which we occassionally ate at our house growing up. Instead of serving the potatoes, meat and onions on separate platters, Ma would chop them up, than mix and and cook them as one dish. Wasn't bad either.
Thanks for making comment on your perspectives and portfolio management techiques. It is for sure there is no one right, or wrong, way to have success, or failure, in investing.
My concept goes back to boy scouts. I learned that three paddlers in a canoe could out paddle one with two paddlers. Thus, I like to keep at least three paddlers going within my investment sleeves. Also, this type of strategy produced more money coming into my pockets when I use to bet the dogs. You might remember me writting about a win, place, show betting strategy I used years back. This strategy provided a higher return for me as my three dog pick bet to win, place or show did better than a single dog pick. Thus, I like to have some asset representation in my portfolio in things that are working when other assets are out of favor. Looking back to 2008/09, and some other years back of that, sometimes this turns out to be cash. And, yes, I usually keep a good representation of cash within my portfolio most of the time.
I'm thinking we each have to invest as to how we each feel most confortable. My background is such that I can manage a more complex constructed portfolio over some other investors. I am sure there are some that can be more complex than me. So, if you are an investor with just a simple 50/50 portfolio as my high school buddy that adjust his bond/stock allocation as to how he is reading the market this is fine with me as he has had good success with it. At times he leads and at other times I lead; however, my portfolio kicks off a higher yield than his plus over the past ten years it has out performed his by a couple of percentage points a year on average. Just a small two point annual gain spread over ten years can amount to a couple hundred thousand dollars on a million dollar portfolio spread over a ten year period. So, for me it has been worth it to use my portfolio management and sleeve investment system where as for some the simple 50/50 portfolio might be a better option.
Have you ever been asked to duplicate your sleeve system with using only "Low ER/Low fee" funds?
As I recall, your funds are selected on the basis of total return (performance-management cost). Many seem to have loads (that may be waived). Last I checked your fund list was very unique (not a single Vanguard, Fidelity, T Rowe Price fund in the bunch). There must be a good reason for this. Curious as to your selection process.
Also, curious if your friends "simple 50/50 portfolio" might be enhanced by a modified version of your sleeve portfolio that wouldn't require the in depth supervision your portfolio requires.
Simplicity might also be helpful as one ages and passes the reins to a less qualified family member.
In response to your question one. No, I have not given much thought to switching out my funds for other funds as my portfolio was built over the span of many years. Actually, I have some investments that were my parents that I received through gift and inhertance transactions. I'd face a sizeable tax bill for associated capital gains if I sold. A couple of the funds I own date back to my teenage years and are currently my two largest holdings. They are FKINX and AMECX. My parents also owed shares in these funds that I now have and I plan to pass them on to my son, in time.
In response to question two. Most of the funds I own, I can buy more shares commission free, or at reduced commissions, plus there is no wrap fee for my accounts at this time. If I were to move to noload funds I'd most likely have to pay wrap account fees to stay with my current broker. And, yes ... I currently have a Fidelity fund ... FRINX; and, I have also used their sector funds from time-to-time in prior years when I was more active in adjusting my sector allocations.
In response to question three. My high school buddy who was an engineer before he retired use to shadow invest behind me. However, his work enviroment was such that he could not devote the time to investing as I was able while at work. Thus he sought out a more simple model. You being a former school treacher might have experienced similar time constraints that he faced. At times he was 60/40, 50/50, 40/60 or some percentages in between but moved his allocation around from time-to-time as I would; but, not in concert with me. He also follows the traditional fall seasonal investment strategy as I do.
In response to question four. There are 57 facets on a standard brilliant diamond cut. From my perspective, a stone with two facets can not offer the brillance of the 57 facet stone. My son is in some ways a more skilled investor than I am. Where I have the edge is my wisdom. He positions more frequently than I do and he uses sectors funds along with his actively managed mutual funds to do this as I use to. Our family has used our sleeve investment and management system for a good number of years and I just do not see us moving away form it. He will govern my affairs when I become unable. Hopefully, that will be many years form now. With this, I plan to carry forward as I have in the past but with a less of an aggressive allocation now since I have retired. Currently, my base line allocation, by area, is 20% cash, 30% income, 35% growth & income and 15% growth. Interestingly, this too is a 50/50 allocation. For the most part, to raise my equity allocation, from its base, I reduce cash and buy equities in the growth area. To reduce my equity allocation I trim in the growth area and raise cash. Pretty simple? Yes. This is not to say I don't buy and sell in the other areas from time-to-time; but, most of the seasonal allocation adjustments are made between the growth and cash areas.
I agree, my system is not the gospel when it comes to investing as there is no one right, or wrong, way to succeed, or fail. What everyone must do is light on what they are comfortable with wheather it is a more complex system like I use or one more simple such as a 50/50 indexed portfolio that my buddy uses. However, his investment spectrum is much more narrow than mine with his two fund simple portfolio. Which ever one you might choose ... it is my belief that you will be far ahead of those that don't invest.
Thanks again for your question(s). I hope you will accept my response(s).
Take care ... and, I sincerely wish you the very best with your investing endeavors.
Just noticed I haven't made any changes in retirement portfolio now for 2 months - a dubious "record" of sorts for me. Last changes were on Sept. 28 when I lightened up a bit on PRNEX and DODBX while adding a little to RPGAX. Intention was to reduce risk level. Both moves backfired. Would have been better off staying put.
Will probably shift a bit around in the new year as distributions are taken. Not seeing any big changes however. Cash sits at 12%. That number's a bit misleading, as I also have a considerable stake in conservative allocation funds with their own allocations to short-term fixed-income.
Wishing I had gotten into a long position with TDVFX back before the 50 percent run up this year. The only way to play these deep value funds is to enter when things look bleak to really capture the outperformance.
Looking at the Fidelity sector funds, too. Solid outperformance over the past 10, 20, 30 yrs,
I'm beginning to think of taking some money off the table. I've been super aggressive (80% stocks) for years. On the one hand, I think this economic cycle has at least a year or two more to go. There's certainly no sign of recession that I see in any recent economic data. On the other hand, since I'm clearly poorly positioned to ride out a downturn, it's probably a good idea for me to raise cash sooner rather than later, especially since for personal reasons (I may want to buy a house in the next year or two) I may need a bunch of cash soon.
I don't think I can time the market, but it's starting to feel like the time to be fearful, not greedy, at least for me personally.
Forgot that I also recently bought QLENX to lessen the risk of my mostly individual stocks portfolio. Sam Lee sort of sold me on this, but the performance and diversification was compelling. Not sure if that one can continue on at it's breakneck pace, but there's nothing else like it out there.
There's some special sauce over at AQR and Doubleline with using derivatives.
I have the highest cash and bond allocation Ive had in a while,now 37% added to bonds when I took sold FBTIX, CTSH, VZ, VTR, VNQ (the last three for tax loss only, will likely rebuy in 2017). Of course I was betting on having Hillary win. Bonds started to go down after Trump won. The only change in bonds I made was selling a small part of GIBIX and rebuying OSTIX which I had sold a year ago. No mbos in it, low duration, making it different than my other bond funds. Still like GIBIX, largest bond fund I have but over 50% of bond allocation in 2 munis that I will hold til they mature. Strongly considering FRBAX but would like to see a pullback before I pull the trigger.
Thanks for keeping this going, good to see how people think and act.
As we enter 2017 I am looking at raising my equity allocation by using fidelity sector funds and adding about one percent each to my weightings in energy, financials, industrials and technoloy. Based upon my most recent Xray analysis this will raise me from about 50% to 54% equity along with raising my position in my bank loan fund by about one percent. In addition, I plan to restore my CD ladder, over time, as interest rates rise.
An alternate plan raising both my equity and bond allocations would be to use a hybrid fund that is allocated somewhat along these lines and pays a nice dividend of around 4.25%. The fund under study that I feel would do this is HWIAX. For those interested a Morningstar fund report on this fund is linked below for your easy viewing. The concern I have in doing this as an alternate option is since I already own this fund it would put me fund allocation heavy within its respective sleeve. But, on the other hand I would not have to manually adjust my sector allocations as it would be more automatic as this fund makes adjustments and repositions form time-to-time. It is a pretty active fund with a turnover ratio listed at 93%. I could split some money off to another fund that is also active in its position and sector rotations but not yet determined. Something for me to think more on as we move through December.
After the first of the year I plan to shift more of my port into income funds in order to start a stream. By doing this I also plan to simplify my holdings down to 4 or 5 funds versus the 8-9 I have now.
@Ted, SV TDVFX looks like a midpack winner (to coin a phrase) with its percentile 'winningness' resulting from its performance since April and especially the last three weeks, as noted above, wow. Lots of vol too; 3* M* and 5-3-1 Lipper.
I actually bought TDVFX about a year ago, entirely due to this board. It's a fund whose success actually makes sense to me, based on David's write up last year.
@MFO's: Bought some CIM-PA this morning with yield at 8% selling a a discount to par of $25. Already own the common CIM paying 12% that I bought in July of 2015 at $14.55 per share. Regards, ted
I only reinvest dividends in tax deferred accounts. Very rarely will I do so in taxable accounts unless I KNOW I will not be selling the fund. I find it a whole lot easier to track cost basis if I invest nice whole dollar amounts. Once a quarter I take distributions from all my funds and nicely round it up and then decide where I want to deploy. This year vs That year does not matter to me.
I collect most all fund distribution in cash within my portfolio and accumulate them within the demand cash sleeve of my portfolio. With this, I can feed other sleeves for investment purposes or take portfolio distributions to my pocket.
Like you, when some areas of my portfolio become over valued I'll throttle back in these investments and their respective sleeves; and, when I find opportunity I'll do some buying building positions within their respective sleeves.
Currently, I have been carrying large cash balances while I await a rise in interest rates where I will begin to restore my CD ladder within my investment cash sleeve which holds my savings and time deposits.
In short words, my cash area is my central banking system where I collect and pool cash, invest it in cash like instruments, or disburse it out.
Comments
Thanks for your question in reference to my comment of this morning.
As to CD rates ... I'm still looking but have yet to target a certain interest rate mark to begin to start building my CD ladder. A tips fund? I'll have to think some more on this. I'm leaning more toward stocks to offset inflation over a tips fund. I'm thinking tips would be more for a fixed income investor. Although, I'm invested for a good income stream my portfolio is diversified accross many assets classes and it also provides for capital appreciation which offsets inflation.
http://www.kiplinger.com/article/investing/T041-C009-S004-an-attractive-time-to-invest-in-tips.html
Skeet
Beating your boggie? Great. For the first time I can recall since '09 I'm trouncing my benchmark TRRIX. Not easy to do. Often times lag it. I think the secret ingredient this year has been exposure to nat resources and commodities, which I always overweight relative to that fund. (PRAFX & PRNEX are both up 18% YTD.)
@Derf: Reports are that a flood of $$ has been pouring into TIPS since the election on the assumption much stimulus will occur under DT. Isn't it ironic that Obama tried for nearly 8 years to get a big stimulus package through Congress and couldn't do it? Instead, they served up something called Sequester. Now that the Rs are set to control both the Executive and Legislative branches, there's talk of stimulus.
Back to TIPS - I never fully understood them as an investment and suspect most investors don't either. If I could see evidence they were dirt cheap I'd buy some hoping for a nice quick run-up. But don't think that's the case now. Perhaps C-22 will chime in? Instead of buying different types of bonds (or bond funds), I'd prefer to own something like RPSIX or DODIX. Both are fairly diversified - the former more so. If the manager sees value in TIPS, he'll increase his hold. I suppose these diversified income funds are a bit like consuming hash - which we occassionally ate at our house growing up. Instead of serving the potatoes, meat and onions on separate platters, Ma would chop them up, than mix and and cook them as one dish. Wasn't bad either.
Hash Recipe: http://www.simplyrecipes.com/recipes/traditional_roast_beef_hash/
Thanks for making comment on your perspectives and portfolio management techiques. It is for sure there is no one right, or wrong, way to have success, or failure, in investing.
My concept goes back to boy scouts. I learned that three paddlers in a canoe could out paddle one with two paddlers. Thus, I like to keep at least three paddlers going within my investment sleeves. Also, this type of strategy produced more money coming into my pockets when I use to bet the dogs. You might remember me writting about a win, place, show betting strategy I used years back. This strategy provided a higher return for me as my three dog pick bet to win, place or show did better than a single dog pick. Thus, I like to have some asset representation in my portfolio in things that are working when other assets are out of favor. Looking back to 2008/09, and some other years back of that, sometimes this turns out to be cash. And, yes, I usually keep a good representation of cash within my portfolio most of the time.
I'm thinking we each have to invest as to how we each feel most confortable. My background is such that I can manage a more complex constructed portfolio over some other investors. I am sure there are some that can be more complex than me. So, if you are an investor with just a simple 50/50 portfolio as my high school buddy that adjust his bond/stock allocation as to how he is reading the market this is fine with me as he has had good success with it. At times he leads and at other times I lead; however, my portfolio kicks off a higher yield than his plus over the past ten years it has out performed his by a couple of percentage points a year on average. Just a small two point annual gain spread over ten years can amount to a couple hundred thousand dollars on a million dollar portfolio spread over a ten year period. So, for me it has been worth it to use my portfolio management and sleeve investment system where as for some the simple 50/50 portfolio might be a better option.
Take care ... and, thanks for making comment.
Skeet
Have you ever been asked to duplicate your sleeve system with using only "Low ER/Low fee" funds?
As I recall, your funds are selected on the basis of total return (performance-management cost). Many seem to have loads (that may be waived). Last I checked your fund list was very unique (not a single Vanguard, Fidelity, T Rowe Price fund in the bunch). There must be a good reason for this. Curious as to your selection process.
Also, curious if your friends "simple 50/50 portfolio" might be enhanced by a modified version of your sleeve portfolio that wouldn't require the in depth supervision your portfolio requires.
Simplicity might also be helpful as one ages and passes the reins to a less qualified family member.
Thank you for your question(s).
In response to your question one. No, I have not given much thought to switching out my funds for other funds as my portfolio was built over the span of many years. Actually, I have some investments that were my parents that I received through gift and inhertance transactions. I'd face a sizeable tax bill for associated capital gains if I sold. A couple of the funds I own date back to my teenage years and are currently my two largest holdings. They are FKINX and AMECX. My parents also owed shares in these funds that I now have and I plan to pass them on to my son, in time.
In response to question two. Most of the funds I own, I can buy more shares commission free, or at reduced commissions, plus there is no wrap fee for my accounts at this time. If I were to move to noload funds I'd most likely have to pay wrap account fees to stay with my current broker. And, yes ... I currently have a Fidelity fund ... FRINX; and, I have also used their sector funds from time-to-time in prior years when I was more active in adjusting my sector allocations.
In response to question three. My high school buddy who was an engineer before he retired use to shadow invest behind me. However, his work enviroment was such that he could not devote the time to investing as I was able while at work. Thus he sought out a more simple model. You being a former school treacher might have experienced similar time constraints that he faced. At times he was 60/40, 50/50, 40/60 or some percentages in between but moved his allocation around from time-to-time as I would; but, not in concert with me. He also follows the traditional fall seasonal investment strategy as I do.
In response to question four. There are 57 facets on a standard brilliant diamond cut. From my perspective, a stone with two facets can not offer the brillance of the 57 facet stone. My son is in some ways a more skilled investor than I am. Where I have the edge is my wisdom. He positions more frequently than I do and he uses sectors funds along with his actively managed mutual funds to do this as I use to. Our family has used our sleeve investment and management system for a good number of years and I just do not see us moving away form it. He will govern my affairs when I become unable. Hopefully, that will be many years form now. With this, I plan to carry forward as I have in the past but with a less of an aggressive allocation now since I have retired. Currently, my base line allocation, by area, is 20% cash, 30% income, 35% growth & income and 15% growth. Interestingly, this too is a 50/50 allocation. For the most part, to raise my equity allocation, from its base, I reduce cash and buy equities in the growth area. To reduce my equity allocation I trim in the growth area and raise cash. Pretty simple? Yes. This is not to say I don't buy and sell in the other areas from time-to-time; but, most of the seasonal allocation adjustments are made between the growth and cash areas.
I agree, my system is not the gospel when it comes to investing as there is no one right, or wrong, way to succeed, or fail. What everyone must do is light on what they are comfortable with wheather it is a more complex system like I use or one more simple such as a 50/50 indexed portfolio that my buddy uses. However, his investment spectrum is much more narrow than mine with his two fund simple portfolio. Which ever one you might choose ... it is my belief that you will be far ahead of those that don't invest.
Thanks again for your question(s). I hope you will accept my response(s).
Take care ... and, I sincerely wish you the very best with your investing endeavors.
Skeet
Will probably shift a bit around in the new year as distributions are taken. Not seeing any big changes however. Cash sits at 12%. That number's a bit misleading, as I also have a considerable stake in conservative allocation funds with their own allocations to short-term fixed-income.
Looking at the Fidelity sector funds, too. Solid outperformance over the past 10, 20, 30 yrs,
Regards,
Ted
TDVFX Fund Performance:
http://performance.morningstar.com/fund/performance-return.action?t=TDVFX®ion=usa&culture=en_US
I don't think I can time the market, but it's starting to feel like the time to be fearful, not greedy, at least for me personally.
There's some special sauce over at AQR and Doubleline with using derivatives.
Thanks for keeping this going, good to see how people think and act.
As we enter 2017 I am looking at raising my equity allocation by using fidelity sector funds and adding about one percent each to my weightings in energy, financials, industrials and technoloy. Based upon my most recent Xray analysis this will raise me from about 50% to 54% equity along with raising my position in my bank loan fund by about one percent. In addition, I plan to restore my CD ladder, over time, as interest rates rise.
An alternate plan raising both my equity and bond allocations would be to use a hybrid fund that is allocated somewhat along these lines and pays a nice dividend of around 4.25%. The fund under study that I feel would do this is HWIAX. For those interested a Morningstar fund report on this fund is linked below for your easy viewing. The concern I have in doing this as an alternate option is since I already own this fund it would put me fund allocation heavy within its respective sleeve. But, on the other hand I would not have to manually adjust my sector allocations as it would be more automatic as this fund makes adjustments and repositions form time-to-time. It is a pretty active fund with a turnover ratio listed at 93%. I could split some money off to another fund that is also active in its position and sector rotations but not yet determined. Something for me to think more on as we move through December.
http://www.morningstar.com/funds/XNAS/HWIAX/quote.html
As always, this action plan is subject to change without me posting a change in plan notice.
I wish all ... "Good Investing."
Skeet
SV TDVFX looks like a midpack winner (to coin a phrase) with its percentile 'winningness' resulting from its performance since April and especially the last three weeks, as noted above, wow. Lots of vol too; 3* M* and 5-3-1 Lipper.
Regards,
ted
Taxable account, dipped into CIPDX and NCLIX. Waiting and watching before opportunistically DCAing.
Just curious...how do folks handle the capital gains and dividends thrown off by funds...is this year different?
I collect most all fund distribution in cash within my portfolio and accumulate them within the demand cash sleeve of my portfolio. With this, I can feed other sleeves for investment purposes or take portfolio distributions to my pocket.
Like you, when some areas of my portfolio become over valued I'll throttle back in these investments and their respective sleeves; and, when I find opportunity I'll do some buying building positions within their respective sleeves.
Currently, I have been carrying large cash balances while I await a rise in interest rates where I will begin to restore my CD ladder within my investment cash sleeve which holds my savings and time deposits.
In short words, my cash area is my central banking system where I collect and pool cash, invest it in cash like instruments, or disburse it out.
Hope my comment is helpful.
Skeet