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mlott1
Participant ○○

mlott1 portfolio changes

Not that it's any big deal, but I am making a few changes in my portfolio, such as it is.  Right now I have two online savings accounts, some Series I Savings Bonds, two bond fund with Schwab (PONAX and FIJEX), and the JOHCM Global Income Builder fund, a mixture of stocks, bonds, and some other odds and ends.  

I don't think that the sky is falling or anything, but I have become increasingly uncomfortable with owning any stocks, so I have put in a request to liquidate the global income builder fund.  It has been a decent fund, but right now I would prefer to build up my two bond funds, and I figure that with the stock market at all time highs, it might not be the worst time to cash out of the fund.  Also, over the last year or so I have followed with increasing interest the threads and posts about having separate bond and stock funds vs. having them mixed together in one fund, and the more I've thought on it, the more I like the idea.  

I do not plan on immediately jumping into a stock fund, but if/when we have a market correction, I will look seriously at some sort of index fund, most likely a basic S&P 500 fund.  I am a very small investor, and that should give me good exposure to the stock market.  And as has been pointed out, about 40% of the S&P 500 companies earnings come from overseas, so that will also give me some international exposure, albeit indirectly.  

I also like the idea of having actively managed bond funds, and index funds for stocks.  So I have the bond funds in place, and whenever I'm ready, an index stock fund is just a few clicks away at Schwab.

I am in the process of cashing out my I-Bonds (gasp!) and should have them all sold by this coming April.  Proceeds are being funneled into the two bond funds.

I have a small retirement annuity and I draw social security, and between the two my monthly living expenses are covered, with a bit left over for saving/investing.  But just in case things get tight, I want to be able to draw some supplemental money from investments, thus my preference for fixed income investing.  I recently moved into an apartment, and while the rent and associated monthly bills are reasonable, it is taking more of my monthly income than in the past.  And late next year I will be paying the monthly premium for Medicare part B.  I should still be OK, but I want a backup in case a little more money is called for.  

Bottom line, right now, and for the foreseeable future, my investment money will be specifically targeted towards the bond funds.  A boring, plain vanilla plan, but one the I feel good about.

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55 Replies
chang
Valued Contributor

Re: mlott1 portfolio changes

I'm sure you know all of these things, but I'll say them anyway:

1. More money has been lost waiting for a correction than in corrections.

2. The long term direction of the market is up. The market will hit infinitely many new highs (if you do not take into account the Sun eventually turning into a white dwarf extinguishing all life on Earth).

3. 100% stock and 100% bond portfolios invariably have lower risk-adjusted returns than some combination of stocks and bonds. The same is true for 100% domestic and 100% international. Google "efficient frontier".

4. The US economy is in good shape, corporate taxes have been reduced, inflation is low to non-existent.

5. Bond yields are very low; and there are probably some significant risks to all-bond portfolios that aren't obvious now, despite the existence of six separate threads with 15,000 posts about bond funds (5,000 posts if you exclude the ones about PIMIX).

6. December is traditionally a good month for stocks.

mlott1
Participant ○○

Re: mlott1 portfolio changes

@chang  Thanks for the post.  Yep, I pretty much agree with everything you said.  But for me, I am simply more comfortable right now not owning stocks, I prefer the fixed income and the dividends it throws off.  And while stocks are no doubt the best long term investment, my long term is probably not that long, so I don't feel comfortable at all with the possibility of a stock downturn and having to wait a few years to make up my losses.  

I figure that one more year of adding to my bond funds will put me in a good position, and after I start paying the Medicare part b premium, and having lived in the apartment for over a year, that will give me a better handle on my monthly monetary requirements.  I'm not swearing off stocks forever, just changing my priorities a bit.  

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DJANG0
Explorer ○○

Re: mlott1 portfolio changes

If you have risks that you are unsure you can afford to take, then I think you are smart to eliminate them. After my last big life change, I tracked every penny spent, what was a necessity and what was discretionary and came up with a new budget and savings plan. It was well worth the time and easily done with a computer and basic excel spreadsheet skills. 

Sorry you are going through changes you hadn't anticipated. Life sure gets messy, and I hope it's not getting you down too much.

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yogibearbull
Valued Contributor

Re: mlott1 portfolio changes

I assume that you are selling I-Bonds gradually due to rules for them.

1. If sold within 5 years of purchase, there is some interest penalty.

2. Interest is credited semiannually based on the issue month, and then the interest is credited at the start of the interest-credit month. So, it is good to cash them at the beginning of the interest credit months [6 months apart].

YBB
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myob
Explorer ○○

Re: mlott1 portfolio changes

We all have to live within our means, however limited.  There is no big brother to come to our rescue and bail us all out since we are all NOT, "too big to fail."  Everyone has their own situation and what works for one will not work for the other.  "Walk a mile in my shoes".  As I always say, "Explain yourself to no one.   Friends wont ask and no one else will believe a word you said."

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mlott1
Participant ○○

Re: mlott1 portfolio changes

Thanks for the replies.  I'm not swearing off the stock market forever (hopefully), I just don't feel comfortable with the market risk right now.  

@DJANG0  While changing my living arrangements was not my idea, as so often is the case, it has really, really turned out for the best.  I absolutely love being in my own (larger) space, just me and the two cats, not having to share space and put up with minor annoyances that can come about even with the best of housemates.  And I should still be well under budget, I just won't have as much money free for investments each month.  It is a studio apartment, a little over 500 sq ft, and has a nice new wood (type) floor.  Even that worked out, because I was dreading having to put up with carpet.  If I could have a "do-over" and go back to my previous arrangement, I would choose to stay with this one.  The only thing that has gotten me down to any degree this year has been some health issues, but they are currently under control, so, all things considered, I'm actually in a good frame of mind (and I've always been one to more or less stay on an even keel).

@yogibearbull  I will lose a little cashing out the I-Bonds before the five years are up for these last few bonds, but it's not worth worrying about.  But your post is a good reminder for anyone who has the bonds and might be thinking about redeeming some of them.

@myob  Your post is spot-on, everyone is different, and circumstances can and do change, which might cause one to reevaluate their investment approach.

Again, thanks for the thoughts.  Truth to tell, I was a bit apprehensive about posting this at all, I was sort of afraid I would get "Who cares?" or "Boy, are you stupid!".  

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dtconroe
Contributor ○○

Re: mlott1 portfolio changes


@mlott1 wrote:

Thanks for the replies.  I'm not swearing off the stock market forever (hopefully), I just don't feel comfortable with the market risk right now.  

@DJANG0  While changing my living arrangements was not my idea, as so often is the case, it has really, really turned out for the best.  I absolutely love being in my own (larger) space, just me and the two cats, not having to share space and put up with minor annoyances that can come about even with the best of housemates.  And I should still be well under budget, I just won't have as much money free for investments each month.  It is a studio apartment, a little over 500 sq ft, and has a nice new wood (type) floor.  Even that worked out, because I was dreading having to put up with carpet.  If I could have a "do-over" and go back to my previous arrangement, I would choose to stay with this one.  The only thing that has gotten me down to any degree this year has been some health issues, but they are currently under control, so, all things considered, I'm actually in a good frame of mind (and I've always been one to more or less stay on an even keel).

@yogibearbull  I will lose a little cashing out the I-Bonds before the five years are up for these last few bonds, but it's not worth worrying about.  But your post is a good reminder for anyone who has the bonds and might be thinking about redeeming some of them.

@myob  Your post is spot-on, everyone is different, and circumstances can and do change, which might cause one to reevaluate their investment approach.

Again, thanks for the thoughts.  Truth to tell, I was a bit apprehensive about posting this at all, I was sort of afraid I would get "Who cares?" or "Boy, are you stupid!".  


This is basically the way you started the original Slightly Different Bond OEF Thread, so why not do it again?  It appears there may be some poster fatigue in replies, as I am seeing more complaints about too many bond oef threads.  I am getting close to just not posting for awhile and let posters pick what threads they most want to support, or not!

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mlott1
Participant ○○

Re: mlott1 portfolio changes

@dtconroe  I think the thread that you started would be a good forum for bond OEFs in general, with the exception of frequently trading bond funds.  FD had a separate thread for that, and I assume that it could be revived if needed.  Yeah, it is getting a little confusing as to where exactly to post about bonds.  I just thought it would maybe be more appropriate for me to start a new thread since I was covering my portfolio in general, even though the bottom line is that for right now, the portfolio is pretty much pared down to online savings and the two bond funds.  

It's pretty easy to simplify when you don't have much money!  :-)

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helmut
Explorer ○○○

Re: mlott1 portfolio changes

Mlott1,

The trepidation in your post is not uncommon so I will tell you what I have come up with.

After 2000 I decided I needed to rethink my investment plan, so I started looking at several different strategies.  I started looking at Harry Browne’s permanent portfolio.  

Plenty of safety but not enough growth for me.  Unless inflation gets serious, I find no real good reason to invest in gold, but I really like long-term treasuries. Currently I hold 25% in long-term treasuries, 15% cash and working on increasing equities to 50% in growth stocks and about 10% in value stocks.

I know everybody says 25% in long-term treasuries is foolhardy, but I’ve owned LT Treasuries in one form or another since 2003 and I feel very comfortable with them.  They are not a perfect hedge and don’t react uniformly opposite to equities on a day by day basis but usually work fairly well on in the long term.

Usually when EDV is taking a beating my equity funds are way up and vice versa.  Most of my equity funds and ETFs are not quite as volatile as EDV and on any given day I can feel like a hero or a goat, but through the years I am very happy with my sequence of returns.  

I rarely talk about the performance of my holdings because I worry enough over my money, I don’t want to worry about someone else’s so please don’t take this as a recommendation.

helmut

chang
Valued Contributor

Re: mlott1 portfolio changes


@dtconroe wrote:


I am getting close to just not posting for awhile and let posters pick what threads they most want to support, or not!


I think posters will do that anyway. That's the internet!

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chang
Valued Contributor

Re: mlott1 portfolio changes


@mlott1 wrote:

@chang  Thanks for the post.  Yep, I pretty much agree with everything you said.  But for me, I am simply more comfortable right now not owning stocks, I prefer the fixed income and the dividends it throws off.  And while stocks are no doubt the best long term investment, my long term is probably not that long, so I don't feel comfortable at all with the possibility of a stock downturn and having to wait a few years to make up my losses.  

I figure that one more year of adding to my bond funds will put me in a good position, and after I start paying the Medicare part b premium, and having lived in the apartment for over a year, that will give me a better handle on my monthly monetary requirements.  I'm not swearing off stocks forever, just changing my priorities a bit.  


Don't misunderstand me. I am the first to advise staying in your comfort zone. Be sure you can sleep with what you own. My comments were offered with zero awareness of any personal issues that might intercede (I hope that was obvious).

Stocks are already lower today than they were when I posted, and I'm sure there will be more and better dips, although I am essentially a B&H investor because I do not believe I can time the market (but I do look for dips to add on). Good luck.

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mlott1
Participant ○○

Re: mlott1 portfolio changes

@chang  I thought your post was just fine, I basically wanted to get some feedback as to what I was doing.  I've followed your posts and you always have interesting and insightful comments, so I appreciate you taking the time to post your thoughts.

@helmut  I've actually read quite a bit on Browne's Permanent Portfolio, and I have seriously thought about going that route.  But when I start thinking about specific investments for the portfolio, I find myself changing or modifying things, and it ends up looking totally different.  I just can't bring myself to purchase long-term bonds, especially at current low interest rates.  And I'm in the process of bailing on what little stock exposure I have, so buying stocks right now when the market is hitting all-time highs, that's just too rough for me.  I get an uncomfortable feeling just thinking about stocks and long term treasuries right now.  I'm glad it's working out for you, and I found your comments about holding long term bonds quite interesting.  

I was browsing through some back issues of Kiplinger's Personal Finance magazine earlier today, and found an article titled CUT YOUR INVESTING RISK AT EVERY AGE in the Nov 2018 issue.  For the early sixties and older, it starts out "If you are in this age group, capital preservation and income generation (from bond interest or stock dividends) become increasingly paramount..."  That's exactly what I want right now, capital preservation and income generation (from bonds).  

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FD1001
Valued Contributor

Re: mlott1 portfolio changes


@mlott1 wrote:

@chang  I thought your post was just fine, I basically wanted to get some feedback as to what I was doing.  I've followed your posts and you always have interesting and insightful comments, so I appreciate you taking the time to post your thoughts.

@helmut  I've actually read quite a bit on Browne's Permanent Portfolio, and I have seriously thought about going that route.  But when I start thinking about specific investments for the portfolio, I find myself changing or modifying things, and it ends up looking totally different.  I just can't bring myself to purchase long-term bonds, especially at current low interest rates.  And I'm in the process of bailing on what little stock exposure I have, so buying stocks right now when the market is hitting all-time highs, that's just too rough for me.  I get an uncomfortable feeling just thinking about stocks and long term treasuries right now.  I'm glad it's working out for you, and I found your comments about holding long term bonds quite interesting.  

I was browsing through some back issues of Kiplinger's Personal Finance magazine earlier today, and found an article titled CUT YOUR INVESTING RISK AT EVERY AGE in the Nov 2018 issue.  For the early sixties and older, it starts out "If you are in this age group, capital preservation and income generation (from bond interest or stock dividends) become increasingly paramount..."  That's exactly what I want right now, capital preservation and income generation (from bonds).  


Forget about Browne's Permanent Portfolio.

"  That's exactly what I want right now, capital preservation and income generation (from bonds). "...that sounds very close to home and what I do but I make adjustments for you.

Several thoughts:

1) Forget stocks or invest a small % like 10-20%.  Instead of stocks use PCI which in my opinion have a good chance to do better.

2) Forget MM, I-bonds, bank saving accounts.  There are plenty of bond OEFs to select from where you can buy and hold and replace any time with ease without opening other accounts and follow rules.

3) Take some "risk" with bond OEFs.  It's amazing to me how we spend so much time looking for RISK in bond funds with SD < 3-4.

================================

Let's get real, after all, an opinion without examples is not really an opinion.  

1) You already own FIJEX which is a great ST bond fund and why you don't need (or very small %) in cash,MM,CD.

2) Let's post again several of the best risk/reward funds(link) for 3 years 10/31/2016 to 10/31/2019(the numbers changed because now we have them 11/30/2016 to 11/30/2019)

PortfolioCAGRSDBest YearWorst YearMax. DrawdownSharpe RatioSortino Ratio
VCFIX5.70%1.75%8.39%-0.57%-1.03%2.335.52
JMSIX5.67%2.38%10.75%-0.46%-1.22%1.743.85
SEMMX5.12%0.77%6.19%0.89%-0.38%4.0610.92
JMUTX5.51%2.04%9.61%0.07%-1.09%1.934.6
PUCZX7.01%2.24%10.54%1.37%-1.13%2.376.64
IOFIX10.29%2.61%14.04%1.08%-0.87%3.1613.08
PIMIX5.38%1.91%8.60%0.58%-1.11%1.943.97
IISIX5.32%1.52%7.39%1.14%-0.93%2.426.29
        

 

Observations:

Genarally, I still like the securitized category the most and where great managers can find opportunities.  The best fund for lower-rated bonds is IOFIX(used to be PIMIX).  For very low SD<1 use SEMMX.  For a generic securitized use VCFAX/VCFIX because of diversification among securitized categories + close % between IG to lower-rated bonds.

PUCZX as your best diversified MS.

IISIX - same managers as VCFIX but more diversified into Corp and attention to absolute return.  If you look at Sharpe+Sortino IISIX is better than VCFAX.  After looking more I would go with IISIX.  It is an Inst share and you can buy it now at Schwab with just $100 min with no fee.  IISIX ER=0.62 and cheaper than VCFAX ER=1%

For you: replace PONAX with IISIX.  Add PUCZX

3) Final portfolio: FIJEX, IISIX, PUCZX, 10% in each(PCI + SWPPX(Schwab SP500 ER=0.02%) ) + no more than 10% in MM,CD,bank savings,I-bond

Let's see PV(link) for 3 years with 30% in each FIJEX, IISIX, PUCZX + 10% PCI.  Also pay attention to a small adjustment in the second line.  Also watch how to beat one of the best conservative allocation funds such as VWINX, pay attention to worst year when VWINX lost money

PortfolioCAGRStdevBest YearWorst YearMax. DrawdownSharpe RatioSortino Ratio
30% each (FIJEX, IISIX, PUCZX) + 10% PCI6.63% 2.05%10.30%1.02%-1.52% 2.415.63
30% each(FIJEX, IISIX)  +  20% each (PUCZX,PCI)7.87% 2.74%12.29%1.32%-2.43% 2.234.74
VWINX7.31% 4.36%15.08%-2.57%-3.48% 1.32.15
mlott1
Participant ○○

Re: mlott1 portfolio changes

@FD1001  Thanks! Great post, lots of good information, and I am going to go over it carefully.  I have been thinking about adding one or two bond funds.  One of them will most likely be in the securitized area, you and some others make a pretty good case for exposure in that part of the bond market.  

Also encouraging that you like FIJEX, it seemed like a good fund to me, but I can't do a deep dive into investments like you and others on this forum.  I did do a good bit of research, in my own way, and I liked what I saw.  I've mentioned this before, but you are the one that pointed out the institutional class of FIJEX when I was looking at FATRX (I think that's the right symbol).  

I have actually lightened up quite a bit on the online savings (my version of a MM fund), and as noted, am in the process of liquidating the I-Bonds.  And I don't own any CDs, although I'm still annoyed that I didn't lock any of that 3+ percent that I could have gotten before rates trended back down.  Oh well.

I can't put my finger on any one thing, but just a gradual buildup of little things here and there, and from doing a lot of reading, I have a strong feeling that bonds are best for me right now.  

Hey, thanks again, after I get a few things taken care of, I'm going to bounce over to Schwab and check out a few of those funds you have in your charts.  I appreciate the work you did on that.

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kzug
Explorer ○

Re: mlott1 portfolio changes


@FD1001 wrote:

@mlott1 wrote:

@chang  I thought your post was just fine, I basically wanted to get some feedback as to what I was doing.  I've followed your posts and you always have interesting and insightful comments, so I appreciate you taking the time to post your thoughts.

@helmut  I've actually read quite a bit on Browne's Permanent Portfolio, and I have seriously thought about going that route.  But when I start thinking about specific investments for the portfolio, I find myself changing or modifying things, and it ends up looking totally different.  I just can't bring myself to purchase long-term bonds, especially at current low interest rates.  And I'm in the process of bailing on what little stock exposure I have, so buying stocks right now when the market is hitting all-time highs, that's just too rough for me.  I get an uncomfortable feeling just thinking about stocks and long term treasuries right now.  I'm glad it's working out for you, and I found your comments about holding long term bonds quite interesting.  

I was browsing through some back issues of Kiplinger's Personal Finance magazine earlier today, and found an article titled CUT YOUR INVESTING RISK AT EVERY AGE in the Nov 2018 issue.  For the early sixties and older, it starts out "If you are in this age group, capital preservation and income generation (from bond interest or stock dividends) become increasingly paramount..."  That's exactly what I want right now, capital preservation and income generation (from bonds).  


Forget about Browne's Permanent Portfolio.

"  That's exactly what I want right now, capital preservation and income generation (from bonds). "...that sounds very close to home and what I do but I make adjustments for you.

Several thoughts:

1) Forget stocks or invest a small % like 10-20%.  Instead of stocks use PCI which in my opinion have a good chance to do better.

2) Forget MM, I-bonds, bank saving accounts.  There are plenty of bond OEFs to select from where you can buy and hold and replace any time with ease without opening other accounts and follow rules.

3) Take some "risk" with bond OEFs.  It's amazing to me how we spend so much time looking for RISK in bond funds with SD < 3-4.

================================

Let's get real, after all, an opinion without examples is not really an opinion.  

1) You already own FIJEX which is a great ST bond fund and why you don't need (or very small %) in cash,MM,CD.

2) Let's post again several of the best risk/reward funds(link) for 3 years 10/31/2016 to 10/31/2019(the numbers changed because now we have them 11/30/2016 to 11/30/2019)

PortfolioCAGRSDBest YearWorst YearMax. DrawdownSharpe RatioSortino Ratio
VCFIX5.70%1.75%8.39%-0.57%-1.03%2.335.52
JMSIX5.67%2.38%10.75%-0.46%-1.22%1.743.85
SEMMX5.12%0.77%6.19%0.89%-0.38%4.0610.92
JMUTX5.51%2.04%9.61%0.07%-1.09%1.934.6
PUCZX7.01%2.24%10.54%1.37%-1.13%2.376.64
IOFIX10.29%2.61%14.04%1.08%-0.87%3.1613.08
PIMIX5.38%1.91%8.60%0.58%-1.11%1.943.97
IISIX5.32%1.52%7.39%1.14%-0.93%2.426.29
        

 

Observations:

Genarally, I still like the securitized category the most and where great managers can find opportunities.  The best fund for lower-rated bonds is IOFIX(used to be PIMIX).  For very low SD<1 use SEMMX.  For a generic securitized use VCFAX/VCFIX because of diversification among securitized categories + close % between IG to lower-rated bonds.

PUCZX as your best diversified MS.

IISIX - same managers as VCFIX but more diversified into Corp and attention to absolute return.  If you look at Sharpe+Sortino IISIX is better than VCFAX.  After looking more I would go with IISIX.  It is an Inst share and you can buy it now at Schwab with just $100 min with no fee.  IISIX ER=0.62 and cheaper than VCFAX ER=1%

For you: replace PONAX with IISIX.  Add PUCZX

3) Final portfolio: FIJEX, IISIX, PUCZX, 10% in each(PCI + SWPPX(Schwab SP500 ER=0.02%) ) + no more than 10% in MM,CD,bank savings,I-bond

Let's see PV(link) for 3 years with 30% in each FIJEX, IISIX, PUCZX + 10% PCI.  Also pay attention to a small adjustment in the second line.  Also watch how to beat one of the best conservative allocation funds such as VWINX, pay attention to worst year when VWINX lost money

PortfolioCAGRStdevBest YearWorst YearMax. DrawdownSharpe RatioSortino Ratio
30% each (FIJEX, IISIX, PUCZX) + 10% PCI6.63% 2.05%10.30%1.02%-1.52% 2.415.63
30% each(FIJEX, IISIX)  +  20% each (PUCZX,PCI)7.87% 2.74%12.29%1.32%-2.43% 2.234.74
VWINX7.31% 4.36%15.08%-2.57%-3.48% 1.32.15

Good analysis, but 3 years is too short.

Use something like 8 years (replace PUCZX with PIMIX..), and Sharpe/Sortino are about the same.  VWINX still loses a little in 2018, but it is probably superior for most people, IMO.

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racqueteer
Participant ○○○

Re: mlott1 portfolio changes

Mlott1, you have mail...

0 Kudos
FD1001
Valued Contributor

Re: mlott1 portfolio changes


@kzug wrote:

@FD1001 wrote:

@mlott1 wrote:

@chang  I thought your post was just fine, I basically wanted to get some feedback as to what I was doing.  I've followed your posts and you always have interesting and insightful comments, so I appreciate you taking the time to post your thoughts.

@helmut  I've actually read quite a bit on Browne's Permanent Portfolio, and I have seriously thought about going that route.  But when I start thinking about specific investments for the portfolio, I find myself changing or modifying things, and it ends up looking totally different.  I just can't bring myself to purchase long-term bonds, especially at current low interest rates.  And I'm in the process of bailing on what little stock exposure I have, so buying stocks right now when the market is hitting all-time highs, that's just too rough for me.  I get an uncomfortable feeling just thinking about stocks and long term treasuries right now.  I'm glad it's working out for you, and I found your comments about holding long term bonds quite interesting.  

I was browsing through some back issues of Kiplinger's Personal Finance magazine earlier today, and found an article titled CUT YOUR INVESTING RISK AT EVERY AGE in the Nov 2018 issue.  For the early sixties and older, it starts out "If you are in this age group, capital preservation and income generation (from bond interest or stock dividends) become increasingly paramount..."  That's exactly what I want right now, capital preservation and income generation (from bonds).  


Forget about Browne's Permanent Portfolio.

"  That's exactly what I want right now, capital preservation and income generation (from bonds). "...that sounds very close to home and what I do but I make adjustments for you.

Several thoughts:

1) Forget stocks or invest a small % like 10-20%.  Instead of stocks use PCI which in my opinion have a good chance to do better.

2) Forget MM, I-bonds, bank saving accounts.  There are plenty of bond OEFs to select from where you can buy and hold and replace any time with ease without opening other accounts and follow rules.

3) Take some "risk" with bond OEFs.  It's amazing to me how we spend so much time looking for RISK in bond funds with SD < 3-4.

================================

Let's get real, after all, an opinion without examples is not really an opinion.  

1) You already own FIJEX which is a great ST bond fund and why you don't need (or very small %) in cash,MM,CD.

2) Let's post again several of the best risk/reward funds(link) for 3 years 10/31/2016 to 10/31/2019(the numbers changed because now we have them 11/30/2016 to 11/30/2019)

PortfolioCAGRSDBest YearWorst YearMax. DrawdownSharpe RatioSortino Ratio
VCFIX5.70%1.75%8.39%-0.57%-1.03%2.335.52
JMSIX5.67%2.38%10.75%-0.46%-1.22%1.743.85
SEMMX5.12%0.77%6.19%0.89%-0.38%4.0610.92
JMUTX5.51%2.04%9.61%0.07%-1.09%1.934.6
PUCZX7.01%2.24%10.54%1.37%-1.13%2.376.64
IOFIX10.29%2.61%14.04%1.08%-0.87%3.1613.08
PIMIX5.38%1.91%8.60%0.58%-1.11%1.943.97
IISIX5.32%1.52%7.39%1.14%-0.93%2.426.29
        

 

Observations:

Genarally, I still like the securitized category the most and where great managers can find opportunities.  The best fund for lower-rated bonds is IOFIX(used to be PIMIX).  For very low SD<1 use SEMMX.  For a generic securitized use VCFAX/VCFIX because of diversification among securitized categories + close % between IG to lower-rated bonds.

PUCZX as your best diversified MS.

IISIX - same managers as VCFIX but more diversified into Corp and attention to absolute return.  If you look at Sharpe+Sortino IISIX is better than VCFAX.  After looking more I would go with IISIX.  It is an Inst share and you can buy it now at Schwab with just $100 min with no fee.  IISIX ER=0.62 and cheaper than VCFAX ER=1%

For you: replace PONAX with IISIX.  Add PUCZX

3) Final portfolio: FIJEX, IISIX, PUCZX, 10% in each(PCI + SWPPX(Schwab SP500 ER=0.02%) ) + no more than 10% in MM,CD,bank savings,I-bond

Let's see PV(link) for 3 years with 30% in each FIJEX, IISIX, PUCZX + 10% PCI.  Also pay attention to a small adjustment in the second line.  Also watch how to beat one of the best conservative allocation funds such as VWINX, pay attention to worst year when VWINX lost money

PortfolioCAGRStdevBest YearWorst YearMax. DrawdownSharpe RatioSortino Ratio
30% each (FIJEX, IISIX, PUCZX) + 10% PCI6.63% 2.05%10.30%1.02%-1.52% 2.415.63
30% each(FIJEX, IISIX)  +  20% each (PUCZX,PCI)7.87% 2.74%12.29%1.32%-2.43% 2.234.74
VWINX7.31% 4.36%15.08%-2.57%-3.48% 1.32.15

Good analysis, but 3 years is too short.

Use something like 8 years (replace PUCZX with PIMIX..), and Sharpe/Sortino are about the same.  VWINX still loses a little in 2018, but it is probably superior for most people, IMO.


Exactly why I don't want to use PIMIX because 1) too big, it's superiority. is behind it  2) the other funds have enough securitized  3) the same managers run PCI which is a much better choice because AUM stays the same + more tools + can implement their best ideas.  

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kzug
Explorer ○

Re: mlott1 portfolio changes


@FD1001 wrote:

@kzug wrote:

@FD1001 wrote:

@mlott1 wrote:

@chang  I thought your post was just fine, I basically wanted to get some feedback as to what I was doing.  I've followed your posts and you always have interesting and insightful comments, so I appreciate you taking the time to post your thoughts.

@helmut  I've actually read quite a bit on Browne's Permanent Portfolio, and I have seriously thought about going that route.  But when I start thinking about specific investments for the portfolio, I find myself changing or modifying things, and it ends up looking totally different.  I just can't bring myself to purchase long-term bonds, especially at current low interest rates.  And I'm in the process of bailing on what little stock exposure I have, so buying stocks right now when the market is hitting all-time highs, that's just too rough for me.  I get an uncomfortable feeling just thinking about stocks and long term treasuries right now.  I'm glad it's working out for you, and I found your comments about holding long term bonds quite interesting.  

I was browsing through some back issues of Kiplinger's Personal Finance magazine earlier today, and found an article titled CUT YOUR INVESTING RISK AT EVERY AGE in the Nov 2018 issue.  For the early sixties and older, it starts out "If you are in this age group, capital preservation and income generation (from bond interest or stock dividends) become increasingly paramount..."  That's exactly what I want right now, capital preservation and income generation (from bonds).  


Forget about Browne's Permanent Portfolio.

"  That's exactly what I want right now, capital preservation and income generation (from bonds). "...that sounds very close to home and what I do but I make adjustments for you.

Several thoughts:

1) Forget stocks or invest a small % like 10-20%.  Instead of stocks use PCI which in my opinion have a good chance to do better.

2) Forget MM, I-bonds, bank saving accounts.  There are plenty of bond OEFs to select from where you can buy and hold and replace any time with ease without opening other accounts and follow rules.

3) Take some "risk" with bond OEFs.  It's amazing to me how we spend so much time looking for RISK in bond funds with SD < 3-4.

================================

Let's get real, after all, an opinion without examples is not really an opinion.  

1) You already own FIJEX which is a great ST bond fund and why you don't need (or very small %) in cash,MM,CD.

2) Let's post again several of the best risk/reward funds(link) for 3 years 10/31/2016 to 10/31/2019(the numbers changed because now we have them 11/30/2016 to 11/30/2019)

PortfolioCAGRSDBest YearWorst YearMax. DrawdownSharpe RatioSortino Ratio
VCFIX5.70%1.75%8.39%-0.57%-1.03%2.335.52
JMSIX5.67%2.38%10.75%-0.46%-1.22%1.743.85
SEMMX5.12%0.77%6.19%0.89%-0.38%4.0610.92
JMUTX5.51%2.04%9.61%0.07%-1.09%1.934.6
PUCZX7.01%2.24%10.54%1.37%-1.13%2.376.64
IOFIX10.29%2.61%14.04%1.08%-0.87%3.1613.08
PIMIX5.38%1.91%8.60%0.58%-1.11%1.943.97
IISIX5.32%1.52%7.39%1.14%-0.93%2.426.29
        

 

Observations:

Genarally, I still like the securitized category the most and where great managers can find opportunities.  The best fund for lower-rated bonds is IOFIX(used to be PIMIX).  For very low SD<1 use SEMMX.  For a generic securitized use VCFAX/VCFIX because of diversification among securitized categories + close % between IG to lower-rated bonds.

PUCZX as your best diversified MS.

IISIX - same managers as VCFIX but more diversified into Corp and attention to absolute return.  If you look at Sharpe+Sortino IISIX is better than VCFAX.  After looking more I would go with IISIX.  It is an Inst share and you can buy it now at Schwab with just $100 min with no fee.  IISIX ER=0.62 and cheaper than VCFAX ER=1%

For you: replace PONAX with IISIX.  Add PUCZX

3) Final portfolio: FIJEX, IISIX, PUCZX, 10% in each(PCI + SWPPX(Schwab SP500 ER=0.02%) ) + no more than 10% in MM,CD,bank savings,I-bond

Let's see PV(link) for 3 years with 30% in each FIJEX, IISIX, PUCZX + 10% PCI.  Also pay attention to a small adjustment in the second line.  Also watch how to beat one of the best conservative allocation funds such as VWINX, pay attention to worst year when VWINX lost money

PortfolioCAGRStdevBest YearWorst YearMax. DrawdownSharpe RatioSortino Ratio
30% each (FIJEX, IISIX, PUCZX) + 10% PCI6.63% 2.05%10.30%1.02%-1.52% 2.415.63
30% each(FIJEX, IISIX)  +  20% each (PUCZX,PCI)7.87% 2.74%12.29%1.32%-2.43% 2.234.74
VWINX7.31% 4.36%15.08%-2.57%-3.48% 1.32.15

Good analysis, but 3 years is too short.

Use something like 8 years (replace PUCZX with PIMIX..), and Sharpe/Sortino are about the same.  VWINX still loses a little in 2018, but it is probably superior for most people, IMO.


Exactly why I don't want to use PIMIX because 1) too big, it's superiority. is behind it  2) the other funds have enough securitized  3) the same managers run PCI which is a much better choice because AUM stays the same + more tools + can implement their best ideas.  


That wasn't the point.  3 year is too short.  For a longer time frame analysis, PUCZX needs to be replaced because it it not very old, take your pick...  Point is that one should not just pick 3 years or 7 months to confirm their bias.  

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dtconroe
Contributor ○○

Re: mlott1 portfolio changes


@mlott1 wrote:

@dtconroe  I think the thread that you started would be a good forum for bond OEFs in general, with the exception of frequently trading bond funds.  FD had a separate thread for that, and I assume that it could be revived if needed.  Yeah, it is getting a little confusing as to where exactly to post about bonds.  I just thought it would maybe be more appropriate for me to start a new thread since I was covering my portfolio in general, even though the bottom line is that for right now, the portfolio is pretty much pared down to online savings and the two bond funds.  

It's pretty easy to simplify when you don't have much money!  :-)


I see you are getting some recommendations regarding your portfolio, and I suspect some of those recommendations may be a little too major to fit your investing style.  Based on what I know about you, I think you are very committed to PONAX and FIJEX, and I suspect suggestions that you sell PONAX , and replace it with another OEF or CEF, will not be seriously considered by you.  My recommendation is that you find another bond oef that you are comfortable with, and consider building that up over time to get you closer to the total portfolio changes you are trying to achieve.  I think a fund like SEMPX would be a nice addition to your portfolio--different than your other 2 funds, but relatively low risk, low SD, and solid income producing fund.  Good luck.

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