Wondering how folks are positioned relative to their equity holdings. Hopefully, the five possible responses provide enough latitude. Please select the one that best describes your current equity investments compared to what you consider "normal" (given your age, situation, needs, risk tolerance, etc.). *** Note - There are 5 voting tabs on the right side of this page. Register your vote by clicking on one.
1. Cautious - You currently have LESS in equities than normal - based on your reading of valuations, the economy, or other factors.
2. Neutral - You currently have your NORMAL allocation to equities (within 2 or 3%)
3. Aggressive - You currently have MORE in equities than normal - based on your reading of valuations, the economy, or other factors.
4. Buy & Hold with rebalancing - You never vary your allocation to equities except for occasional (quarterly, semi-annual, annual) rebalancing back to whatever you deem normal.
5. Buy & Hold - Never rebalance ("Gone Fishing"
Here's the link to another poll put up by Accipiter today - just in case you missed it. Hope the two polls serve to complement each other. (Plus I wanted to learn how to do one:-)
http://www.mutualfundobserver.com/discuss/index.php?p=/discussion/3965/are-you-selling-buying-or-staying-the-course-these-days-#Item_13Thanks in advance for your responses. FWIW - I voted "Neutral" - (but am trending towards cautious)
#polldata
Comments
Voted cautious on your poll.
Regarding the guide, I never thought that I'd be able to contribute anything useful to FA or MFO, since I regard my financial acumen as less than impressive. Nice to be able to repay for the help and guidance I've been getting here for years.
Take care-
Thanks for doing the poll.
Score me conservative even though I am at the mid point in my equity allocation at about 50%. As of Friday close I compute the Index selling on a forward price to earnings ratio at 13.3 and on a trailing price to earnings ratio at 16.0. From this, I conclude it is fully priced. Should the S&P 500 Index continues its upward march I’ll be reducing equities as they will have become overbought from my thinking. Should there be a five percent, or greater, pull back I’ll be modestly increasing my allocation in equities accordingly.
Based upon my risk tolerance score as determined by my broker my allocation to equities ranges form forty to sixty percent. As stated above I am currently at the mid point and have room to maneuver either upward or downward based upon market valuation movement.
Currently, I am about 20% cash, 30% income and 50% equity & other.
Good Investing,
Skeeter
Equities by my analysis are currently fully priced as I noted above. Those that are on the side line and want to board the equity train will have to pay up to do so ... and, then there are the shorts that I feel have started to cover and that says volumes as to why the S&P 500 Index rallyed about two percent last week.
But, hold on to your hat ... I feel the wind is coming and perhaps the wind will blow in better equity valuations in the near term. At least that is my thinking.
And, yes I hold positions in high yield, multi sector, short duration along with some hybrid income funds. The high yield fixed positions is why I have kept my equity allocation towards a mid point within my portfolio along with ample cash that affords me the ability to put in place special spiff investment positions form time-to-time. However, before doing so, I am awaiting the set-up signals to appear within my matrix. Currently, we are not yet there.
In the near term should equities continue an upward run ... I'll be reducing my equity positions by about five percent around S&P 500 at 1500. That allows for about another five percent upward movement.
Have a great day ... and, Good Investing!
Skeeter
One sided to bonds at this house, too. Our portfolio chugs along, not receiving the gains of equity sectors YTD; but we sleep okay with this. One may suspect there are some 20% portfolio gains among members here YTD. I do hope that they are able to maintain this until year end; but I remain doubtful.
We retail investors continue to reside within a most perverted monetary and economic scenario. There still remains, a lot of dirt that has been swept under the carpet, by others.
The large players continue to cause some to wonder what to chase next.....
A short summary of the current environment may be noted here:
Take care,
Catch
Out of curiosity - don't have to say if you don't want to, what would be a recent example of this?
Took profits, changed allocation to 17% Equity Funds / 32% Bond Funds / 51% Cash. Captured ~10% gain ytd... good enough for us.
Don't forget, though- we're retired, in our 70's.
A spiff position is a special investment position that is put in play with some type of goal in mind. It is usually not a long term position although I have had some that I held for more than a year. I usually use an index fund or a well diverisfied fund for this although I have used some hybrid type funds to. One was IVY Asset Strategy, WASAX. Currently, I have cashed out all my spiff positions and if I continue to trim back my equity allocation, as the market continues its upward march, I'll have to trim some core positions. However, I feel it is better to book gains this year rather than next year from a tax perspective.
Also, I perfer to trim in an updraft rather than a downdraft. If I have not trimmed by the time the downdraft gets here, from my thoughts, I have waited too long. In this way I don't have to right size my portfolio when everybody is selling bacause I am already right sized.
Let me ask you this. Where do you feel corporate earings and revenue are headed over the next twelve months or so? And, if earnings and revenue are flat ... and, the market continues it upward march it is simply because investors are willing to pay more ... price to earnings ratio expansion ... for a dollars worth of earnings. As of the market close today, I compute the S&P 500 Index is selling on a trailing price to earnings ratio of about 16.2 and a forward price to earnings ratio of about 13.6. Its getting kinda of pricey form my thinking ... although I admit ... it can go higher depending on what investors are willing to pay for earnings. Should the S&P 500 Index get to a trailing price to earnings ratio of about 16.7 (1500, S&P 500 Index), I plan to scale back equities some more ... and, I'll do it again should it reach a trailing P/E Ratio of about 17.6 (1585, S&P 500 Index) in the near term.
In addition, the Index is making new fifty two week highs ... and, for it to continue to make new highs it will need more fuel (earnings and revenue).
I am making good money with my system ... and, I am happy.
Thanks for the question ... and, I hope the above response has provided the answer you sought.
Good Investing,
Skeeter
I think my view on earnings is that last quarter's earnings were not spectacular, although there were pockets of industries that were/are doing particularly well, including anything related to mobile, health/nutrition (although I sold a European nutrition company the other day, it had gone up an insane amount and was feeling toppy), ag and a few others. Earnings as a whole will likely remain flat, although I think there are themes that will continue to do well here-and-there - I think the problem with that is that there's not really a fund way to play things like nutrition. I'm SHOCKED there's not a mobile-related ETF.
The other issue with earnings is that you're going to see many companies having to face cost input pressure (as oil just went back over $100.) Some will be able to pass it off (I can't wait to see " Much Less, But Stronger!" on paper goods at the grocery store), some will not.
"In addition, the Index is making new fifty two week highs ... and, for it to continue to make new highs it will need more fuel (earnings and revenue). "
Well, you have Von Bernankestein who will continue his attempts to push people out of cash and further into risk, although a lot of that money will flow into oil and other commodities. If the desired results don't happen, we'll get more of it - I can't imagine many people thought there was going to be a QE into a market high - I fully thought that there was going to be another QE, but it was going to come in a 10-15% market decline.
I actually predict this may be the week when you start seeing inflows into equities. Not giant, but visible, consistent trickling in. If not, there seems to be more than enough money (and more on the way) looking for a home that it will send equities higher, whether or not the fundamentals and valuations make sense.
Seriously, if you don't see inflows into equity funds after this, that's it - people who are out ain't coming back in for yeeeearrrrrrrrrrrssss.
I think your system is fantastic, I find your posts really informative and what you are doing is disciplined and really successful. I question whether these are rational times, but even in irrational times one must maintain some degree of discipline.
Been on the move here.......trying to finish outside projects, before the weather changes too much; as the fall season is in the air. Thus, the late reply.
You asked: "Morning Catch. Thanks for chiming in ... First, a question: What would it take for you to increase your equity position to a more "traditional" 40 - 60% weighting? I'm wondering if your long standing preference for bonds is based more on a cautious market outlook, or a conviction that someone of your age and circumstances ought to avoid the risks associated with equity investing."
>>>>> First, the old saying of don't fight the Fed has valid points; at least the "old Fed". I'm not sure about the outcomes of the "new Fed" in the long run and I am even more concerned with short term (monthly basis) market flips from the large traders/machines. Yes, we are missing some of the market rally; mostly related to the equity area. Our saving grace is positive action in some of our bond funds; as the recent Fed action is currently pushing this area, too.
As to a "traditional" 40 - 60% weighting of equity; well, whether that traditional is still valid will be discovered again; in spite of, or in conjunction with current economic circumstances.
Also, you noted: "a conviction that someone of your age and circumstances ought to avoid the risks associated with equity investing".
>>>>> This is a tough area of decision. There will remain equity areas that are very good investments. This is where one must also decide two parts of equity investing: have full faith in circumstances and one's ability to move in and out as needed from equity sectors via indexes and/or etf's; and related, to place the decision choices of an equity investment fully into the hands of an active managed fund.
You may be assured that our house is not willing, at this time; to hang the "bigger risk" sign on the front porch. If we had a very large pot of money at this time, it would be easy to fling more money towards some equity sectors. By facts, I luckily will have 20 more years on this 3rd rock from the sun; and if we had a nest egg invested that exceeded $3 million dollars, though I would not want to cough up 20% in a market down turn; there would still remain enough monies to "not worry". Although we had very small losses during the market melt of 2008 and have not had to "make up" large losses, we will keep our risk to a lower level. If we can average 8% per year going forward, after inflation and taxes; we may be slightly ahead of the curve for purchasing power going forward.
At the very least.......being right now, and for the next 6-9 months would keep this house on the conservative sidelines; as the elections, congressional cranial/rectal inversion and the current run-up in equities cause me to want to be a watcher. Our equity-like exposure is with our high yield bonds and real estate equity.
I/we have no complaints with our YTD 10% return and the weekly swings have been very small..........kinda just inching along with an upward slope of the chart.
Lastly, we don't presume here and now that bonds are "riskless". With all of the credit market manipulation via central banks; everything is at risk; as it is difficult to determine what is a real and true valuation of too many sectors. One broad area which we have not visited for some time; but had monies in previous, is the tech/science area; being everything related from telecomm to biomed. This would be or should have been an existing equity investment. Today, I see this area being as close to a "buy and hold" as anything else. Yes, we too; like many others have regrets about not being invested in this or that, as we peer into the rearview mirror. But, as rearview implies; it lets one view the exit that was just passed..... I personally have had less time this past year to study and observe than I would prefer; and this has kept this house to be on the "shy" side of equity investments. Finally, children; at least to provide them with as many positive experiences and exposure to many areas, tend to be large consumers of budget monies. We have a daughter currently gaining these experiences and exposure; and not yet in college. Whether I/we are right or wrong with our investment mix; this too, does adjust our risk/reward nature. As has been discussed at FA and here; many variables lend to how a house invests the available monies.
Michigan State University, check total expenses
Regards,
Catch
Sierra Core (SIRIX) actually has 8% total return yearly as a goal, and it is a fund-of-funds that can be entirely in bonds, or equities, or anything. It is an absolute return fund geared towards retirees.
You've done well in terms of achieving your goals, but if you were to want to farm out a portion of your portfolio to a manager that pretty much has the same goals but can "go anywhere", might be something of interest.