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Will you revise your fund holdings going into 2013, regardless of "fiscal cliff", etc.?
I plan no changes whatsoever at this time regardless of any, and all, 'talk' of the fiscal cliff. Frankly I tend to move when the market speaks to me. But, FWIW I don't hold that many funds anyway.
My simple response to your simple question is that I plan to retain all of my current holdings.
I do plan to rebalance towards a slightly lower equity allocation. That decision is not prompted by a fear of equity volatility, but rather reflects my age and need for wealth protection as opposed to wealth creation.
The calendar date change is an artificial decision criterion. If I carefully crafted my portfolio to satisfy my investment targets for 2012 (I did), there is absolutely no incentives to trade, excluding tax benefit harvesting, simply because it is year’s end.
We will be inundated with economic and market forecasts for 2013. These forecasts will provide a huge scatter in predicted outcomes. But they will all share one common characteristic: They will all be guesstimates supported by historical references, but highly unreliable relative to the future. The future is forever uncertain.
Instantaneous reactions are usually wrong-headed and hyperactive trading is a loser’s game. I forget who said something like this, but “investing and soap share a common trait; the more you handle the soap, the smaller it gets”. Year end trading erodes wealth.
Studies demonstrate that nobody has the talent to select future “hot” managers, nobody effectively times the market, nobody is prescient enough to reliably forecast the economy or market rewards, and no financial wizard consistently beats the market. Those are the cruel facts.
So I shall stand-pat on a portfolio that I smartly cobbled together over a lifetime of successful and failed investment decisions. I will monitor to detect Black Swans, but, by definition, these events are not predictable.
Staying the course works in the long haul.
One universal truism in the investment world is that “the only certainty is that there is no certainty”.
I'm selling VWIAX and parceling the proceeds out to other stock and bond funds I own in roughly equivalent proportion, and may do something different with some or all of $ at DoubleLine ... e.g., PIGIX and/or more BOND instead of DBLFX.
I'm planning on sticking with basically the same strategy I've used for the past 2-3 years, with a few minor tweaks ... e.g., adding to EM stock on dips, and shifting some core bond $ to safer multi-sectors ... sort of a GMO-outlook-lite, homemade risk-parity approach (bond tweaks, but no freakouts here).
No changes. Some moderate additions to current holdings likely but this year I did less changes than last year and I see next year as likely even less changes than this year.
nothing unusual here either beside some tax-related moves. continue to massage my 20% credit bucket by replacing and/or rebalancing some of the line items. but that's not dependent on the calendar.
As Mark intimated, I will let the market tell me what to do. Being a believer in less is better I try to hold as few funds as possible. Having rolled out of my small position in ABTYX, that leaves me with PONDX, WHIYX, SUBFX, and ANGIX. MWCRX is something I have been in and would probably still be in were it not for the outperformance of PONDX. It's an excellent fund with an excellent management team and in the tight rising channel I like to place my capital.
no changes. adding into indexes for TSP. Talked to the advisor, I still have some times left to make up if there are bad crashes/recessions. still ~ 80s/20s in stocks/bonds in 401k/tsp
“Investing and soap share a common trait; the more you handle the soap, the smaller it gets.”
I like that!
"Studies demonstrate that nobody has the talent to select future “hot” managers, nobody effectively times the market, nobody is prescient enough to reliably forecast the economy or market rewards, and no financial wizard consistently beats the market. Those are the cruel facts."
Ha, well, after reading...
...I'm not so sure. I suspect Ed Thorp and others might disagree with you.
We're we supposed to wait until 2013? Musta jumped the gun a bit early. Just sold PRHYX & bought PRFRX. The assumption being: "It's time to go."
I rarely sell all shares of a fund. Most are long term holds. Couple reasons to sell: (1) Fund has become a dismal failure due to mismanagement or other persistent causes, and its prospects appear bleak (though bounces can occur). Two such dogs in 2012 were HSGFX and QRAAX - both of which I sold. (2) I'll also sell a fund if it invests in a single sector that has had a great run and appears due for a significant correction. This was the case with PRHYX. The recently acquired replacements as we enter 2013 are: PRFRX (fixed income), PRAFX & OPGSX (commodities), and PRPFX (alternative strategies). Regards
Thanks for your comments. I don’t disagree with you.
I’m sure that a whole bevy of financial advisors, market gurus, active fund managers, and especially hedge fund managers totally concur. It’s the same horde who descend on us, and try to sell us their expertise at some considerable cost.
Does the evidence support their sometimes exaggerated claims? With few exceptions, the academic study answer to that question is a resounding “No”, especially over any meaningful timeframe.
The accumulated data finds that only a small percentage of wizards beat their proper benchmarks annually, and that percentage drops precipitously as the time horizon is expanded. Superior performance persistence is almost nonexistent.
Although I do not recall specific statistics, that dismal record is repeated even more frequently for Hedge fund management. Just observe the number of Hedge fund failings each year; their bankruptcy rate is frightening and devastating to their clients.
Are there noteworthy exceptions? Absolutely “Yes”. But that is the nature of statistically characterized uncertain outcomes. Some rare winners will emerge. In that sense my ironclad assertions overstated my true understanding, but not by too much. They were made for simplicity and for emphasis.
It is very likely that Ed Thorp, author of the popular “Beat the Dealer” blackjack card counting technique, is one of the exceptions. He is a very smart, prolific, and persistent man. I understand that he runs a Hedge fund from the beach area of Southern California.
I do not doubt his success. But I do not have access to his performance record, and likely do not qualify as a perspective customer anyway. Too bad. Exceptions like Thorp prove the general rule.
My honest assessment is that most investment experts are most expert at extracting fees from their clients. Their expertise at securing excess returns for their customers is dubious at best. It’s not that they are dishonest; they truly believe that they are financially gifted; the evidence does not support that belief.
Nothing to do with either the "cliff" or year end, but lightening up on bonds (ABNDX) and trading into equities with some non-domestic exposure (ANEFX). Not all at once, but watching, watching...
Will most likely also be reducing AIBAX, BGNMX, ADFIX, and ACITX also in coming days, with shift to maybe PONDX and a bit more equity (SFGIX and/or ARTGX) or balanced fund exposure. Just thinking out loud, here.
Like MJG, I try to adjust for a reasonable annual target, and then back off if accomplished.
I don’t plan to make any major changes in my portfolio with respect to its holdings or even with my asset allocation except to move ballast from the cash area to equity area and back to the cash area, form time-to-time, as market valuations change. I often reduce equities if I feel they have become overbought … and, likewise, I will increase my allocation to equities should I feel they become oversold. In short words, buy equities when they are towards their 52 week lows and sell some of them off as they near or approach 52 week highs.
I currently have a total of fifty investment positions within my taxable, 401k and IRA accounts combined. From a recent Xray analysis the asset allocation bubbles at about 15% cash, 25% fixed, 50% equity and 10% other & not classified. The portfolio’s yield is north of five percent on amount invested and has about 20% of its value comprised of unrealized capital gains. Certainly, if a major downdraft developed I’d book some of these gains … especially, in the tax deferred accounts, where the tax man does not knock until distributions are taken. Within both equities and fixed I am about two thirds domestic and one third foreign. Within fixed I am about 40% short, 40% intermediate and 20% long maturities.
I have already sold or reduced positions for tax selling reasons in the taxable account for this year. I feel I am well positioned in all my accounts as 2013 approaches. From a price to earning ratio I have the S&P 500 Index selling on blended earnings at about 14.3 and feel it has room to run. I believe we will see the Index reach 1500 sometime between now and the end of the first quarter next year. In addition, I believe we might even see 1600 sometime in 2013. So, with this, I favor equities over fixed.
I wish all “Good Investing,” a great Christmas … and, a prosperous New Year.
No changes because of the cliff. We might adjust allocations as the picture becomes clearer. We will continue our regular philisophy of real diversification. Currently, a typical 60% stock/40% bond allocation has only about 40-50% in dedicated stock funds, 30-40% in fixed-income, and 15-20% in alternatives. We have been discussing how we might keep alternatives at about the same level, but reduce fixed-income exposure as rates move higher in coming years. We are already using pretty short-duration bonds funds, with a couple of exceptions, so we are pretty cautious now. Our international/emerging market bonds have blown by domestic bonds the last two years, so we are culling them back. So no, we are not doing anything in anticipation of a cliff. We have a handful of clients who have stayed in cash/CDs and lost out on very nice returns the last three years. But that's their decision, not ours.
I was thinking of adding to my positions in oakbx, fpacx, vwinx, glrbx, prpfx and pasdx, as well as moving out of cash and into bond positions, which I don't have except for the above funds. I'm having second thoughts though.
I took profits in 2 equities I held and plan to buy shares of these equities again after New Year's. They've depreciated quite a lot just since the election and I still believe in their biz. models, but they're on sale now and I'll wait until the fire sale appears to have ended before buying them again on what I believe to be their rebounds. As many people here have stated (typed?), "you never lose money by taking profits".
Most of my savings are in a few mutual funds, and I have no intention of making any changes with my funds.
I love the soap metaphor! I agree, although I think that some equities have become much too oversold due to profit taking resulting from the hype over the fiscal cliff. There are some incredible values now, so I will go against this metaphor temporarily due to what I consider to be some exceptional circumstances.
I made a big change - converted an IRA to a Roth. Taxes are going up, so I am using this opportunity to make a big conversion. The Medicare surcharge tax is already in place and will be in effect in 2013. And the odds are that income tax rates will be higher in 2013. Big tax hit for me this year, but I am betting that it will pay off in the long run. I do have some time to recharacterize if the income tax rates go down.
I will increase the proportion of cash(a stable income fund paying about 2%) in my 401k(no tax consequences to the move) by about 10% of my assets in the plan. I will take this number from equities and bonds equally. If the market drops more than 10% as a result of the cliff 1 will put the money back in at that time. If it doesn't will probably put the money back in fairly quickly and gladly take the small loss on my niot so clever moving knowing that it helped me sleep better. To avoid overtrading consequences I will probably have to put the money into slightly different funds.
Comments
2-YAFFX 1 YEAR=11.9%, 3 = 10.8%, 5= 10.7%
3-VWINX 1Year = 12.6% , 3 = 10% , 10= 7.2%
4- VILLX 1 YEAR = 18% , 3=17% ,10= 9.4%
5- SFGIX
6- PAUIX
7- DBLTX
My simple response to your simple question is that I plan to retain all of my current holdings.
I do plan to rebalance towards a slightly lower equity allocation. That decision is not prompted by a fear of equity volatility, but rather reflects my age and need for wealth protection as opposed to wealth creation.
The calendar date change is an artificial decision criterion. If I carefully crafted my portfolio to satisfy my investment targets for 2012 (I did), there is absolutely no incentives to trade, excluding tax benefit harvesting, simply because it is year’s end.
We will be inundated with economic and market forecasts for 2013. These forecasts will provide a huge scatter in predicted outcomes. But they will all share one common characteristic: They will all be guesstimates supported by historical references, but highly unreliable relative to the future. The future is forever uncertain.
Instantaneous reactions are usually wrong-headed and hyperactive trading is a loser’s game. I forget who said something like this, but “investing and soap share a common trait; the more you handle the soap, the smaller it gets”. Year end trading erodes wealth.
Studies demonstrate that nobody has the talent to select future “hot” managers, nobody effectively times the market, nobody is prescient enough to reliably forecast the economy or market rewards, and no financial wizard consistently beats the market. Those are the cruel facts.
So I shall stand-pat on a portfolio that I smartly cobbled together over a lifetime of successful and failed investment decisions. I will monitor to detect Black Swans, but, by definition, these events are not predictable.
Staying the course works in the long haul.
One universal truism in the investment world is that “the only certainty is that there is no certainty”.
Best Wishes.
I'm planning on sticking with basically the same strategy I've used for the past 2-3 years, with a few minor tweaks ... e.g., adding to EM stock on dips, and shifting some core bond $ to safer multi-sectors ... sort of a GMO-outlook-lite, homemade risk-parity approach (bond tweaks, but no freakouts here).
still ~ 80s/20s in stocks/bonds in 401k/tsp
“Investing and soap share a common trait; the more you handle the soap, the smaller it gets.”
I like that!
"Studies demonstrate that nobody has the talent to select future “hot” managers, nobody effectively times the market, nobody is prescient enough to reliably forecast the economy or market rewards, and no financial wizard consistently beats the market. Those are the cruel facts."
Ha, well, after reading...
...I'm not so sure. I suspect Ed Thorp and others might disagree with you.
I rarely sell all shares of a fund. Most are long term holds. Couple reasons to sell: (1) Fund has become a dismal failure due to mismanagement or other persistent causes, and its prospects appear bleak (though bounces can occur). Two such dogs in 2012 were HSGFX and QRAAX - both of which I sold. (2) I'll also sell a fund if it invests in a single sector that has had a great run and appears due for a significant correction. This was the case with PRHYX. The recently acquired replacements as we enter 2013 are: PRFRX (fixed income), PRAFX & OPGSX (commodities), and PRPFX (alternative strategies). Regards
Hi Charles,
Thanks for your comments. I don’t disagree with you.
I’m sure that a whole bevy of financial advisors, market gurus, active fund managers, and especially hedge fund managers totally concur. It’s the same horde who descend on us, and try to sell us their expertise at some considerable cost.
Does the evidence support their sometimes exaggerated claims? With few exceptions, the academic study answer to that question is a resounding “No”, especially over any meaningful timeframe.
The accumulated data finds that only a small percentage of wizards beat their proper benchmarks annually, and that percentage drops precipitously as the time horizon is expanded. Superior performance persistence is almost nonexistent.
Although I do not recall specific statistics, that dismal record is repeated even more frequently for Hedge fund management. Just observe the number of Hedge fund failings each year; their bankruptcy rate is frightening and devastating to their clients.
Are there noteworthy exceptions? Absolutely “Yes”. But that is the nature of statistically characterized uncertain outcomes. Some rare winners will emerge. In that sense my ironclad assertions overstated my true understanding, but not by too much. They were made for simplicity and for emphasis.
It is very likely that Ed Thorp, author of the popular “Beat the Dealer” blackjack card counting technique, is one of the exceptions. He is a very smart, prolific, and persistent man. I understand that he runs a Hedge fund from the beach area of Southern California.
I do not doubt his success. But I do not have access to his performance record, and likely do not qualify as a perspective customer anyway. Too bad. Exceptions like Thorp prove the general rule.
My honest assessment is that most investment experts are most expert at extracting fees from their clients. Their expertise at securing excess returns for their customers is dubious at best. It’s not that they are dishonest; they truly believe that they are financially gifted; the evidence does not support that belief.
Merry Christmas.
Will most likely also be reducing AIBAX, BGNMX, ADFIX, and ACITX also in coming days, with shift to maybe PONDX and a bit more equity (SFGIX and/or ARTGX) or balanced fund exposure. Just thinking out loud, here.
Like MJG, I try to adjust for a reasonable annual target, and then back off if accomplished.
FPACX
OAKBX
RYSEX
DODIX
RYOTX
FAIRX
I don’t plan to make any major changes in my portfolio with respect to its holdings or even with my asset allocation except to move ballast from the cash area to equity area and back to the cash area, form time-to-time, as market valuations change. I often reduce equities if I feel they have become overbought … and, likewise, I will increase my allocation to equities should I feel they become oversold. In short words, buy equities when they are towards their 52 week lows and sell some of them off as they near or approach 52 week highs.
I currently have a total of fifty investment positions within my taxable, 401k and IRA accounts combined. From a recent Xray analysis the asset allocation bubbles at about 15% cash, 25% fixed, 50% equity and 10% other & not classified. The portfolio’s yield is north of five percent on amount invested and has about 20% of its value comprised of unrealized capital gains. Certainly, if a major downdraft developed I’d book some of these gains … especially, in the tax deferred accounts, where the tax man does not knock until distributions are taken. Within both equities and fixed I am about two thirds domestic and one third foreign. Within fixed I am about 40% short, 40% intermediate and 20% long maturities.
I have already sold or reduced positions for tax selling reasons in the taxable account for this year. I feel I am well positioned in all my accounts as 2013 approaches. From a price to earning ratio I have the S&P 500 Index selling on blended earnings at about 14.3 and feel it has room to run. I believe we will see the Index reach 1500 sometime between now and the end of the first quarter next year. In addition, I believe we might even see 1600 sometime in 2013. So, with this, I favor equities over fixed.
I wish all “Good Investing,” a great Christmas … and, a prosperous New Year.
Skeeter
Regards,
Ted
If it ain't broke, it might still be worth fixing:
http://www.tvspots.tv/video/13548/IBM-REFRIGERATOR
Cute commercial. (With Cisco's current hype about the Internet of Everything, this 2000 ad for a network appliance may bring back old memories.)
Regards,
Ted
http://www.chicagotribune.com/business/yourmoney/sc-cons-1213-started-20121214,0,5459150,print.story
DLFNX
MACSX
MAINX
MAPIX
MAPOX
MSCFX
TRAMX
PREMX
SFGIX
Most of my savings are in a few mutual funds, and I have no intention of making any changes with my funds.
I love the soap metaphor! I agree, although I think that some equities have become much too oversold due to profit taking resulting from the hype over the fiscal cliff. There are some incredible values now, so I will go against this metaphor temporarily due to what I consider to be some exceptional circumstances.
Happy Holidays to all!