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.
I am currently overweight cash and awaiting a better buying opportunity for the equity side of my portfolio as I recently cut my allocation to fixed income and raised cash. By my old college professors formula ... my target to do some buying is around the 1575 range for the S&P 500 Index. I might start an average buy in later in the month if stocks don't pull back soon after the upcoming June FOMC meeting. Not a boat load mind you, just a percentage point or two increase in my equity allocation. After all, we still have July, August and September and most of October to transverse before the Sell In May axiom calls for reentry towards the end of October and first part of November. Certaintly, I'll watch technicals and stock prices to aid me with selection of my entry point(s) more so than the calendar.
Also, I think it important to invest in companies that have the capacity to grow their revenue stream as well and their earnings. My thoughts are the Global Titans can do this and it is one of the areas that I am looking to invest.
Thanks Skeeter, What are your cash investments these days... Ultra short duration bonds, Short duration high yield bonds, laddered CD's, or plain old mattress stuffing (cash)?
Do you or others see Sherriff Bernacke's walk off into the sunset casting a pretty large shadow on the financial markets? Markets don't do well in the shadow of an event and I consider his departure as more than just a psychological hurdle for markets. Predictable goverance is key for stable markets. Congress will posture during the new Fed chairman appointment process and news agency will remind us that the sky is falling and maybe then markets will begin to renavigate under a new helmsman.
Are there other events bigger than this one?
Finally, your Global Titan theme seems worthy of a lot further discussion by others. I beieve that not only are these good good companies (funds) to own, but also the offspring of these Global Titans that locate themselves in smaller world markets.
I think Yellen would probably offer the smoothest transition if she replaces Bernanke. The fact that Bernanke said a month or two ago that he would not be attending the Jackson Hole meeting should have given anyone an indication that he was not going to be sticking around for a whole lot longer.
I continue to like real estate, infrastructure and particularly mobile/mobile-related, as well as a few other odds/ends. I added to Jardine Matheson (JMHLY) the other day and am looking for other emerging markets opportunities after the drop in EM lately. I am looking for things that are multi-year holds - not that there's anything wrong with trading, but am tired of concerning myself with noise ("EM is not the place to be right this very minute!") Oy.
I agree on the Yellen choice. Smooth transitions are appreciated. We will have to decipher the Yellenspeak as time goes by. I have added to short duration bonds and also a bit more into MAPTX with this recent slide.
Reply to @JohnChisum: "We will have to decipher the Yellenspeak " Same speak, coming from very different form. Hence the smooth transition. In fact, if anything, everything I've ever read from Yellen seems much more straightforward and clear - whether I agree with it or not - about her views.
Yes, that's been my feeling also. I think she'd be fine, but is she confirmable by the current Senate? And if not, what happens to the financial markets while the president and the Senate are fighting over a compromise candidate?
Reply to @Old_Joe: I think she is. Deny her and deny a likely continuation of easy monetary policy that everyone is pleased with and acts like is a free lunch. Deny that and you're probably not going to be popular and politicians these days care about nothing else but being popular - especially with those who are wealthy. Some people act like ZIRP and QE are permanent fixtures of the economy - "entitlements" that will upset people if they are taken away because they act like it's now expected.
I would FAR rather have Grandma Yellen than Summers or Geithner, and that's saying something.
Reply to @Old_Joe: Well, it's a continuation of this "reality" - people want to continue the status quo, whatever the mid-to-long term cost that will be. Go against that and you're not going to be very popular politically. It's also a lot easier for congress to do absolutely nothing to tackle structural issues that would help create something sustainable and instead effectively say, "Go to work, Mr Chairman" (or, Ms. Chairwoman).
And additionally, as I noted before, I think Yellen has had very similar views to Bernanke but has been more straightforward and transparent.
I'll continue to say this: devote a portion of your portfolio to productive and needed assets. Apartments (the only RE I really don't like is retail, I mention apartments because of the need - medical REITs is another more "need-based" REIT sub-sector), infrastructure (although I like the larger, more established companies - particularly Kinder Morgan), oil wells, whatever. In terms of RE, I also like triple-net REITs as long-term holdings (WP Carey being the biggest example.)
I also continue to like mobile because it's just becoming such a commonplace aspect of daily life and what so much computing is shifting to. There's also the whole experience of mobile, from e-commerce and news to fitness (which I think will be a very large movement in the years to come - there are some very good fitness apps - Nike and others stand to benefit.)
I also continue to like emerging markets and am looking at EM given the sell-off. People do get some EM exposure from US companies, but I like having EM exposure inside EM and there are some fascinating individual stories in EM markets. Some US companies have seemingly fallen out of favor a bit in EM recently as well (Yum Brands being the biggest example lately.)
Additionally, dividend paying equities have fallen out of favor recently - I think (especially for those who closer to retirement), stable, large, consistently paying dividend companies have fallen out of favor presents a buying opportunity, especially if things head South again.
I am not selling anything, but do think that there will be better opportunities waiting a bit.
Currently, I am holding about 20% of my portfolio in cash with no surrogate holdings. With this, I am about 20% cash, 30% income, 40% equity and 10% alternative.
I have for the most part held about 15% in cash as a normal allocation for me. That would be 5% demand and 10% in investment cash (a cd ladder). Currently all my cash is held in the demand sleeve of the cash area of my portfolio and the investment sleeve currently has no assets in it.
In the income area of my portfolio I have two sleeves. A fixed sleeve and a hybrid income sleeve. In the fixed sleeve I have three short term bond funds along with two multi sector income funds. In the hybrid income sleeve I currently hold seven hybrid income funds.
I had parked some of my excess cash in some income investments but recently reduced my holdings in the income area of the portfolio and called the cash cack home to the cash area of the portfolio.
So far I will stay with my plan and hold cash until I can buy equities at my stated price levels of about 1600 on the S&P 500 Index to round out some equity positions and to open new equity positions I am looking at around 1575 on the Index. I am not a trader as some on the board might think but to make money, the old fashion way, you have to buy back of what you feel securities might be worth sometime in the future. I learned a long time ago don’t buy at or near new 52 week highs. I value my principal and I will protect it through a sell off of securities if I feel that it is warranted. In a low inflation environment one can hold cash for a reasonable period of time without much loss to inflation. Right now I’d rather have a good amount of cash to pursue perceived opportunity coming in the near term.
My guess is that when old Ben says … Folks I am out of hear … Well we knew what we had with Ben and folks need to be thankful we had him for as long as we have. Who knows what the thinking will be with a new chairman or if the confirmation proceedings will cause disruption. My best guess is the market will pull back regardless of what is said until something of posture is forth coming. I am, surprised that the markets are up today “on the come” that good news will be coming out of the FOMC with tomorrows’ announcements. I am personally looking for a dip in the markets.
Also, if we are going to have a good fall stock market rally then stock market valuations need to pull back so there is room for substainable run. Think back on the past two summmers. Stocks pulled back and we had a good fall run.
The reason I recently have not been a seller of equities is I started right sizing my equity allocation at the first of the year through a systematic sell process as equities advanced. This is a fed induced rally and if interest rates begin to rise then by my thinking is there will be some profit taking in the equity markets with prices pulling back. This is perhaps not to far out in the future. With bonds, buckle up. With stocks, take advantage of the pull back and buy those companies that can grow their revenue and earnings in uncertain times.
So for me, it is be careful of what you buy … how much of it you buy … and, at what price you pay for it ... and, last but not least, what you choose to continue to hold.
Reply to @Old_Joe: Bernanke leaving Fed is almost certain as implied by Obama. Here are the possible candidates and possible issues in the way of their confirmation:
Along this thread, I am reassured that some of you/us are finding EM interesting, a good prospect, in light of the recent pullback. I've scouted out the estimated 2Q dividends due this month, in the funds I own. It helps to stick it out right at the moment:
I agree with you on sticking it out. With sticking it out, to me, does not mean selling out but trimming back to a more comfortable level with your asset allocation. I have been trimming equities since the first of the year and raising my cash. Most recently I trimmed form the fixed side too. However, I did not sell out just down for I too get a good income stream off my portfolio and don’t want to give it up. In addition, if I sell out I have a good amount of capital gains that would have to be paid. I do have a systematic harvest plan in place to keep my unrealized gains from ballooning. This was another reason for my systematic sell down process with my equities.
With some of the cash I raised, by trimming, I will wait for better valuations on the equity side before I do much buying. I have adjusted my equity allocation downward to about forty percent of my portfolio and will now begin to possibly raise it to about 50% over the next couple of years. I trimmed about five percent per year over the past three years. Now, I will most likely head the other way and raise it about one per cent per quarter through the fed's rate increase cycle. My thinking is that equities will be better to have than most fixed assets. I do plan to run with three short duration fixed income funds, three multi sector bond funds and about six hybrid income funds. This means one of my hybrid income funds must go and I'll need to add one multisector bond fund to my present mix.
In addition, I will soon start to restore my cash investment sleeve within the cash area of my portfolio with the opening of some time deposits (CDs) at one of my local banks. One of my banks is now offering a 24 month cd allowing its holder two rate adjustment step ups at anytime the holder wishes to exercise this option. Plus they will pay the interest directly to you rather than rolling it back into the cd.
I have provided a link below to their web site incase anyone might be interested in looking over their rates. The link will take you to their home page and then click on “rates.” And, the find the 24 month step up cd product. http://www.bankofcommercenc.com/
Anyway Max, this is some of the investment moves Skeeter is up to.
fwiw, I've been using Ally Bank (formerly GMAC) for the last 7 years and I'm very pleased. Rates are higher than you will get at a brick and mortar bank. On top of their stated rate, they will add .25% to CD's you roll over for another term. For example, for 2 CD's that matured last January, I got their 1% plus the additional .25% for a total 1.25%. Not to shabby for a 1 year CD.
I continue to read and learn. Skeeter, holy cow: I'm just in a different place. I just mean that I've made a prior decision not to own so many different funds and monitor so many different sleeves. I get it, and it makes sense. Maybe what's going on is that my total is just much lower than your own(?) No need to answer that. Anyhow, from an all-time high of approx. $123,000 I am down at the moment by 6%. My strategy includes keeping enough in each fund to make it worth holding in the first place. It's terribly unbalanced, but in the broadest of terms, I'm about 50/50, stocks/bonds. ....Soon , but maybe not very soon, my equities will move up, and I'll be at about 55/45--- stocks/bonds...... Thanks for the reminder, AndyJ, about Matthews.
Thank you for continuing to make comments and ask questions. I am writing from my own thoughts. I am sure there others that have other perspectives on the subject. I have friends that use a three avenue approach to their portfolio. That being cash, bonds and stocks. To keep it simple and low cost they use etfs to represent these basic asset classes. They are happy and have good success with just these three asset classes. However, it is my belief that the more avenues you have leading in the more ways you have to feed the portfolio.
My back ground is in factoring, credit, accounts receivable and risk management. Yours I believe is that of the clergy. I have drawn form my work experience to help me improve my investing experience, not that it is for everyone … it’s not, but it fits my fancy … and, that is what counts.
A brief review of how I have set this up. I have four areas within my portfolio: a cash area, an income area, a growth & income area and a growth area. Within the cash area I have two sleeves. One for demand cash and one for investment cash, mostly bank time deposits. In the income area I have two sleeves. One is for fixed income investments (six funds) and the other one is for hybrid income investments (six funds). In growth and income area I have four sleeves. One is for equity global assets (three funds), another for global hybrid type assets (three funds) then there is a third for domestic equity assets (six funds) and the fourth is for domestic hybrid type assets (six funds). In the growth area of the portfolio I have four sleeves. One is for global growth type assets including emerging markets (five funds), a second one is for domestic large mid cap assets (five funds), the third is for domestic small mid cap assets (four funds) and the fourth is a specialty area that can hold most anything that I wish to dabble in (five funds). So we have four areas with a total of twelve sleeves and any number of funds you might wish to hold in each sleeve from none to up to six in my case. To vary the weighting of each sleeve you simply adjust the number and the size of the position(s) held. My normal allocation to each area in approximate percentages is cash area 15%, income area 30%, growth & income area 35%, and the growth area 20%. Now, when you put all this in the Instant Xray mixer is what I report for my asset allocation comes from the Instant Xray analysis itself and not from my area weightings.
I hope this helps you understand how I have approached the deployment of my capital. Whether, it is 100k or more it makes no difference. Determine what is right for you and run with. Don’t do what others do … Do what you feel is best for you.
Max, I sincerely wish you the very best with your investing endeavors.
Reply to @Skeeter: Very gracious of you. Thank you. Tonight, I'm chewing on ashes, but MFO remains vital to me. I not only get information in here, but perspective, and often, a way to interpret data so that it MEANS something to me, also. ...Lotsa changes in many ways for me, lately. Thank goodness for my wife. And MFO.
Reply to @MaxBialystock: We're rooting for you Max! If I were you, I would just sit tight for a while and see what happens. If things continue to fall apart in the next few weeks you might consider DCA-ing out for a while. With your setup, I'd worry more about China and Japan than the US or Europe. Haven't a clue re Japan, but I think that China will recover within a reasonable time-frame, probably about the same as the US.
Hello, OJ! ..... Yes, I've never been in the military, but as they say, in this adventure, "I'm in for the duration." Presently, it would be advantageous for me if Mr. Market STAYS depressed at least through mid-July, when I anticipate buying MORE shares--- perhaps in another new fund. I've looked at wifey's retirement options in her 403b, and none are wonderful. It's wrapped in an annuity, too. Why on earth? So, for the time being, following another MFO-ers advice, I plan on just letting the employer stick the retirement money in their default selection, which is a MM or equivalent. It's a crazy set-up. In the Spring following any year my wife works enough hours to qualify, the employer GIVES X amount of dollars to her, into the 403b plan. She need not even contribute for a "match." The freedom to DO BETTER applies to the portfolio I've been building since '03. My Matthews divs. this evening added $431.12 to my total.
About dca-ing OUT, OJ: A huge chunk of my stuff could temporarily be stowed very easily in a TRP MM or equivalent, if need be....
Comments
I am currently overweight cash and awaiting a better buying opportunity for the equity side of my portfolio as I recently cut my allocation to fixed income and raised cash. By my old college professors formula ... my target to do some buying is around the 1575 range for the S&P 500 Index. I might start an average buy in later in the month if stocks don't pull back soon after the upcoming June FOMC meeting. Not a boat load mind you, just a percentage point or two increase in my equity allocation. After all, we still have July, August and September and most of October to transverse before the Sell In May axiom calls for reentry towards the end of October and first part of November. Certaintly, I'll watch technicals and stock prices to aid me with selection of my entry point(s) more so than the calendar.
Also, I think it important to invest in companies that have the capacity to grow their revenue stream as well and their earnings. My thoughts are the Global Titans can do this and it is one of the areas that I am looking to invest.
I wish all ... Good Investing.
Skeeter
What are your cash investments these days... Ultra short duration bonds, Short duration high yield bonds, laddered CD's, or plain old mattress stuffing (cash)?
Do you or others see Sherriff Bernacke's walk off into the sunset casting a pretty large shadow on the financial markets? Markets don't do well in the shadow of an event and I consider his departure as more than just a psychological hurdle for markets. Predictable goverance is key for stable markets. Congress will posture during the new Fed chairman appointment process and news agency will remind us that the sky is falling and maybe then markets will begin to renavigate under a new helmsman.
Are there other events bigger than this one?
Finally, your Global Titan theme seems worthy of a lot further discussion by others. I beieve that not only are these good good companies (funds) to own, but also the offspring of these Global Titans that locate themselves in smaller world markets.
Here a list of what I would consider these Global Titans and their offspring.
emerging-market-companies-having-a-multinational-parent-makes-a-big-difference
I continue to like real estate, infrastructure and particularly mobile/mobile-related, as well as a few other odds/ends. I added to Jardine Matheson (JMHLY) the other day and am looking for other emerging markets opportunities after the drop in EM lately. I am looking for things that are multi-year holds - not that there's anything wrong with trading, but am tired of concerning myself with noise ("EM is not the place to be right this very minute!") Oy.
I would FAR rather have Grandma Yellen than Summers or Geithner, and that's saying something.
And additionally, as I noted before, I think Yellen has had very similar views to Bernanke but has been more straightforward and transparent.
I'll continue to say this: devote a portion of your portfolio to productive and needed assets. Apartments (the only RE I really don't like is retail, I mention apartments because of the need - medical REITs is another more "need-based" REIT sub-sector), infrastructure (although I like the larger, more established companies - particularly Kinder Morgan), oil wells, whatever. In terms of RE, I also like triple-net REITs as long-term holdings (WP Carey being the biggest example.)
I also continue to like mobile because it's just becoming such a commonplace aspect of daily life and what so much computing is shifting to. There's also the whole experience of mobile, from e-commerce and news to fitness (which I think will be a very large movement in the years to come - there are some very good fitness apps - Nike and others stand to benefit.)
I also continue to like emerging markets and am looking at EM given the sell-off. People do get some EM exposure from US companies, but I like having EM exposure inside EM and there are some fascinating individual stories in EM markets. Some US companies have seemingly fallen out of favor a bit in EM recently as well (Yum Brands being the biggest example lately.)
Additionally, dividend paying equities have fallen out of favor recently - I think (especially for those who closer to retirement), stable, large, consistently paying dividend companies have fallen out of favor presents a buying opportunity, especially if things head South again.
I am not selling anything, but do think that there will be better opportunities waiting a bit.
Hi bee,
Currently, I am holding about 20% of my portfolio in cash with no surrogate holdings. With this, I am about 20% cash, 30% income, 40% equity and 10% alternative.
I have for the most part held about 15% in cash as a normal allocation for me. That would be 5% demand and 10% in investment cash (a cd ladder). Currently all my cash is held in the demand sleeve of the cash area of my portfolio and the investment sleeve currently has no assets in it.
In the income area of my portfolio I have two sleeves. A fixed sleeve and a hybrid income sleeve. In the fixed sleeve I have three short term bond funds along with two multi sector income funds. In the hybrid income sleeve I currently hold seven hybrid income funds.
I had parked some of my excess cash in some income investments but recently reduced my holdings in the income area of the portfolio and called the cash cack home to the cash area of the portfolio.
So far I will stay with my plan and hold cash until I can buy equities at my stated price levels of about 1600 on the S&P 500 Index to round out some equity positions and to open new equity positions I am looking at around 1575 on the Index. I am not a trader as some on the board might think but to make money, the old fashion way, you have to buy back of what you feel securities might be worth sometime in the future. I learned a long time ago don’t buy at or near new 52 week highs. I value my principal and I will protect it through a sell off of securities if I feel that it is warranted. In a low inflation environment one can hold cash for a reasonable period of time without much loss to inflation. Right now I’d rather have a good amount of cash to pursue perceived opportunity coming in the near term.
My guess is that when old Ben says … Folks I am out of hear … Well we knew what we had with Ben and folks need to be thankful we had him for as long as we have. Who knows what the thinking will be with a new chairman or if the confirmation proceedings will cause disruption. My best guess is the market will pull back regardless of what is said until something of posture is forth coming. I am, surprised that the markets are up today “on the come” that good news will be coming out of the FOMC with tomorrows’ announcements. I am personally looking for a dip in the markets.
Also, if we are going to have a good fall stock market rally then stock market valuations need to pull back so there is room for substainable run. Think back on the past two summmers. Stocks pulled back and we had a good fall run.
The reason I recently have not been a seller of equities is I started right sizing my equity allocation at the first of the year through a systematic sell process as equities advanced. This is a fed induced rally and if interest rates begin to rise then by my thinking is there will be some profit taking in the equity markets with prices pulling back. This is perhaps not to far out in the future. With bonds, buckle up. With stocks, take advantage of the pull back and buy those companies that can grow their revenue and earnings in uncertain times.
So for me, it is be careful of what you buy … how much of it you buy … and, at what price you pay for it ... and, last but not least, what you choose to continue to hold.
I wish all … “Good Investing.”
Skeeter
http://www.cnbc.com/id/100825049
MAINX 10 cents/share
MACSX 24 cents
MAPIX 14 cents
SFGIX 14.6 cents
MAPOX ... perhaps .35 cents expected.
Just FYI.
I agree with you on sticking it out. With sticking it out, to me, does not mean selling out but trimming back to a more comfortable level with your asset allocation. I have been trimming equities since the first of the year and raising my cash. Most recently I trimmed form the fixed side too. However, I did not sell out just down for I too get a good income stream off my portfolio and don’t want to give it up. In addition, if I sell out I have a good amount of capital gains that would have to be paid. I do have a systematic harvest plan in place to keep my unrealized gains from ballooning. This was another reason for my systematic sell down process with my equities.
With some of the cash I raised, by trimming, I will wait for better valuations on the equity side before I do much buying. I have adjusted my equity allocation downward to about forty percent of my portfolio and will now begin to possibly raise it to about 50% over the next couple of years. I trimmed about five percent per year over the past three years. Now, I will most likely head the other way and raise it about one per cent per quarter through the fed's rate increase cycle. My thinking is that equities will be better to have than most fixed assets. I do plan to run with three short duration fixed income funds, three multi sector bond funds and about six hybrid income funds. This means one of my hybrid income funds must go and I'll need to add one multisector bond fund to my present mix.
In addition, I will soon start to restore my cash investment sleeve within the cash area of my portfolio with the opening of some time deposits (CDs) at one of my local banks. One of my banks is now offering a 24 month cd allowing its holder two rate adjustment step ups at anytime the holder wishes to exercise this option. Plus they will pay the interest directly to you rather than rolling it back into the cd.
I have provided a link below to their web site incase anyone might be interested in looking over their rates. The link will take you to their home page and then click on “rates.” And, the find the 24 month step up cd product. http://www.bankofcommercenc.com/
Anyway Max, this is some of the investment moves Skeeter is up to.
I wish all “good investing.”
Skeeter
Best rates are found on the web. Bankrate.com is a great source to find good rates.
http://www.bankrate.com/cd.aspx
Hi Max,
Thank you for continuing to make comments and ask questions. I am writing from my own thoughts. I am sure there others that have other perspectives on the subject. I have friends that use a three avenue approach to their portfolio. That being cash, bonds and stocks. To keep it simple and low cost they use etfs to represent these basic asset classes. They are happy and have good success with just these three asset classes. However, it is my belief that the more avenues you have leading in the more ways you have to feed the portfolio.
My back ground is in factoring, credit, accounts receivable and risk management. Yours I believe is that of the clergy. I have drawn form my work experience to help me improve my investing experience, not that it is for everyone … it’s not, but it fits my fancy … and, that is what counts.
A brief review of how I have set this up. I have four areas within my portfolio: a cash area, an income area, a growth & income area and a growth area. Within the cash area I have two sleeves. One for demand cash and one for investment cash, mostly bank time deposits. In the income area I have two sleeves. One is for fixed income investments (six funds) and the other one is for hybrid income investments (six funds). In growth and income area I have four sleeves. One is for equity global assets (three funds), another for global hybrid type assets (three funds) then there is a third for domestic equity assets (six funds) and the fourth is for domestic hybrid type assets (six funds). In the growth area of the portfolio I have four sleeves. One is for global growth type assets including emerging markets (five funds), a second one is for domestic large mid cap assets (five funds), the third is for domestic small mid cap assets (four funds) and the fourth is a specialty area that can hold most anything that I wish to dabble in (five funds). So we have four areas with a total of twelve sleeves and any number of funds you might wish to hold in each sleeve from none to up to six in my case. To vary the weighting of each sleeve you simply adjust the number and the size of the position(s) held. My normal allocation to each area in approximate percentages is cash area 15%, income area 30%, growth & income area 35%, and the growth area 20%. Now, when you put all this in the Instant Xray mixer is what I report for my asset allocation comes from the Instant Xray analysis itself and not from my area weightings.
I hope this helps you understand how I have approached the deployment of my capital. Whether, it is 100k or more it makes no difference. Determine what is right for you and run with. Don’t do what others do … Do what you feel is best for you.
Max, I sincerely wish you the very best with your investing endeavors.
Skeeter
Best to you- OJ
About dca-ing OUT, OJ: A huge chunk of my stuff could temporarily be stowed very easily in a TRP MM or equivalent, if need be....