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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.

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September Commentary, The Young Investor’s Indolent Portfolio

Hi David, And yes, for the young one's to start investing. Many can't or won't for a variety of reasons; but for those who can help promote such a situation, do your best to poke and prod. The results can be very gratifying on a personal level. The investments can be very simple for the task.
Thank you for your write; and everyone else for the contributions this month.

From my write of August 22: A Conservative portfolio design, thread.

A real world example of a very lazy portfolio using two index funds.

Criteria:
--- Utah 529 education account, open for 18 years
--- inception, May 2006
--- self directed with self choice(s) of investment sectors
--- 13 years of contributions (1st and 15th of each month) = $ cost averaging
--- 5 years to date; no additional contributions
--- the 50/50 equity/bond portfolio is reset to 50/50 each September, per the Utah 529 contract
The institutional funds (for 529 accounts) are VITPX (U.S. Total stock market) and VBMPX (U.S. Total IG bond market). All distributions reinvested in the fund(s).
The annualized returns data are from Vanguard, M* and the 529 account.
--- annualized 15 year combined return = 8.125%
--- YTD return = 10.47%
Remain curious,
Catch

Comments

  • Flcsx ffs

    Fido large cap is typoed in the lede article
  • @David Snowball, QRLVX is stated to be FPA Queens Road Value.
    M* and Yahoo both show that ticker is Fed. Hermes MDT LC Value.
  • edited September 5
    @Charles, good to see addition of eTF benchmarks (eTF to avoid confusion with MFO Premium ticker ETF - not recognized at Yahoo Finance, Morningstar, etc).

    Just to clarify my understanding of the related MFO Premium data, these new benchmarks are used to assess relative performance only, and the MPT stats are largely unchanged. So, we see various levels of depth of data, but no additional column added for the eTF benchmarks.

    R vs peer, BF BM, SP500, etc (widest possible benchmarks)
    beta vs SP500, BF BM
    alpha vs ? (unspecified; Definitions generically mention benchmark)

    Of course, SD isn't benchmark dependent. Similar for Sharpe Ratio.
    MFO Risk is also relative to overall market "as defined by SP500 index".
  • @davidrmoran: does “ffs” contain a vulgarity?

    I understand the “lede” of a paragraph, but what is a “lede article?” Is the reference to Snowball’s article?

    Color me unable to decipher cryptic posts.
  • edited September 5
    @yogibearbull.

    Thank you.

    Glad you like. Another Devesh-ism, honestly.

    "... new benchmarks are used to assess relative performance only, and the MPT stats are largely unchanged."

    Yes.

    From MultiSearch Results Table, go Groups/Benchmarks.

    You will find all benchmarks (and tickers) associated with each fund, including the "Best Fit," assigned by Lipper, and the eTF, assigned by us. If the fund is an eTF BM, you will also see its assigned or "target" category. Also, fund names are emboldened for eTF BMs .

    From MultiSearch Results Table, select Groups/Return Metrics.

    You will fund metrics associated with BF and eTF BMs; namely, APR vs BF and APR vs eTF, plus their attendant ratings, APRBF and APRBE Ratings.

    These ratings are based on fund performance relative to the BM, regardless of category. Most all other ratings on site are based on fund performance relative to category average (APR vs PEER).

    The Definitions page has been updated with all the Benchmark descriptions.

    All Alpha Beta Metrics are versus their "Best-Fit" Benchmark (BF BM), unless noted otherwise.

    From MultiSearch Results Table, hover over the column title to see a metric's definition.

    Will post more soon.

    But hope that helps for now.
  • edited September 6
    Time to bring out Devo's replicating portfolio exercise.

    A 50/50 portfolio of LCORX and RPHYX generate a beta of .26 over ten years. So the clone is 26% SPY and 74% the 3 month T-Bill. Here is the result: Dinky linky.

    The second portfolio recommends a 50/50 split of FPACX and ICMUX. The clone works out to 46% SPY and 54% 3 month t-bills. Here is the result of that run: YADL.

    What advice would you give any indolent youths known to you?

    Edit to add: PV does not seem to be accounting for fixed annuals contributions of 6500$. Suggestions and solutions are welcomed
  • The typos in the cover essay have been corrected.
  • Hi, guys.

    Mostly, given the Morningstar research and my own preferences, I was shooting for two parameters: (1) maximum simplicity hence 50/50 and (2) a multi-asset manager who might make some adjustments to moderate risk as things evolved. Too, I've spoken to a bunch of managers who are corrosively skeptical about the weaknesses of a debt-weighted passive index. Absent those constraints, Vanguard Balanced Index would be the logical choice.

    Really, anything we can do to get anxious young investors to take the first, tentative step, would be wonderful. Colleges are hiring faculty later in life (our "youngsters" are starting 5-7 years later than I did) and they're not starting to save until their mid-30s. I spend a lot of time cheerleading for "take the first small step".

    David
  • @David_Snowball, I guess I don't see anything simple about advising beginning investors to spend a lot of ER money on funds that successfully short the NASDAQ every once in a while, but can't out-perform Devo's replicating portfolio exercise on much of anything over any period of time.

    On the one hand we have the 500 "best" companies in America and three-month T-Bills. What is corrosive about cash?

    OTOH we have bonds, preferreds, derivatives, shorts, hedges, puts, options, junk, and assorted gyrations the BRAINIACs invest in that are less corrosive, and can be sold to buy a new set of tires if you need cash without taking much of a loss?


  • BenWP said:

    @davidrmoran: does “ffs” contain a vulgarity?

    I understand the “lede” of a paragraph, but what is a “lede article?” Is the reference to Snowball’s article?

    yes to all
  • edited September 6
    We are in the age of Coinbase and Robinhood. (I did not want to mention FTX, Kraken, Xena Exchange, CoinDCX, etc. lest you stop reading.) Who birthed these? It is the demand from the youngsters. So, I do not get why you all are trying to use kid gloves to cajole some of the youngsters who want things done for them. I always try to examine my potential role as an enabler of unproductive behavior before volunteering to help.

    If you are trying to help (the indolent? of) them, then what @WABAC said makes sense. KISS!

    "I've spoken to a bunch of managers who are corrosively skeptical..." I would speak with their family members about their own investments.
  • edited September 6
    What's more fun than complaining about kids these days? I say: Giving the indolent ne'er do wells advice they won't take.

    Here are what I call Grumpy Grampy's Simple Portfolios for Widows, Orphans, and Kids that probably don't wash behind their ears. Can Grumpy Gramp's portfolios beat the clones? Let's find out together.

    The first mimics the beta of the ICMUX/FPACX: Dinky linky.

    And this portfolio mimics the beta of the LCORX/RPHYX portfolio: YADL.

    Disclaimer: I am not a grandfather or an investment advisor.

    Edit to add: PV does not seem to be accounting for fixed annuals contributions of 6500$. Suggestions and solutions are welcomed
  • @WABAC, PV is adjusting the annual contributions for inflation because you have that option checked.
  • A big thank you to @yogibearbull. I always appreciate the education.

    @Devo, Devo's Replicating Portfolio (DRP) is hella cool.
  • @WABAC and @yogibearbull
    Too early in the day for me, I do think. The 2 holdings (50/50) portfolio indicates a 31.9% annualized return! Is this number generated as such from the $6,500 annual contribution setting?; which would equate a Roth contribution.
    Thank you.
  • catch22 said:

    @WABAC and @yogibearbull
    Too early in the day for me, I do think. The 2 holdings (50/50) portfolio indicates a 31.9% annualized return! Is this number generated as such from the $6,500 annual contribution setting?; which would equate a Roth contribution.
    Thank you.

    You're asking the wrong guy. I'm just a tool monkey.
  • @WABAC I really should get off my arse and set a proper account for PV. I wish there was a 'chat' for Sherman and Mr. Peabody; as I'm sure they could provide an answer.:)
    I'm going to have to look around PV for some definitions.
  • chip said:

    The typos in the cover essay have been corrected.

    +1. Excellent.

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