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Re: mlott1 portfolio changes

To me the biggest risk is that "international" has underperformed the US for a long time.


@ironranger61 wrote:

Just a few comments regarding SGENX. It is no doubt a good world allocation fund, but it is not without risk. It has around 76% stocks, split between domestic and international and the max drawdown is 32.61%, not the 11+% in a prior post. If you're concerned about safety first, this may not be the fund for you.  


 

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Re: mlott1 portfolio changes

I expect a lot more risk in stocks or stock funds vs. bonds.  I have an informal cutoff of a one-third max drawdown for fund consideration.  Not a hard and fast rule, but for me a 33% hit is probably about all I could stand.  As for international lagging domestic, I'm OK with that.  I like the coverage of domestic and foreign stocks and some gold in this one fund, and more importantly, I like the fund's investment objectives and their management.  From an emotional standpoint, it will be easier for me to hold and add to a fund like SGENX rather than an index fund.  If I give up some gains vs. an index fund, so be it.  From a purely logical viewpoint, that is not the best way to look at it, but I am not Spock, and through the experiences of investing since the early 1980's, I know myself pretty well when it comes to investing.  

I expect SGENX to be my core stock holding.  If and when I deem it appropriate, I am not adverse to adding stock funds, or even some individual stocks, but that would be more of a tactical investment.  While it is not cast in stone, I plan on holding SGENX for the long run.  I have some money coming in next week that is earmarked for investing, and I should be making my initial purchase of the fund next Thursday or Friday.  As with my other (infrequent) buys and sells, I'll post it on the buy/sell/why thread.

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Re: mlott1 portfolio changes

One minor addition to the portfolio last week.  Several months ago, or maybe even close to a year ago, I opened up an account with Fidelity.  But when I tried to link the account to my credit union checking account, it rejected.  I called and talked to a customer service person, told them I thought it was strange that I couldn't do the link with them, as I had successfully linked that account in the past to a couple of online savings accounts, and with Schwab, without any problems.  Didn't really get a satisfactory answer, so I just dropped it. 

A couple of weeks ago I remembered that I had an open account with them, and went online to see about closing it.  Oddly enough, it looked like my account was linked up with my credit union account, so I did a test deposit, and it processed just fine.  So I put in what I refer to as my "odds and ends" money and bought the Fidelity Total Bond Fund.  This money is just various little bits of money that comes my way on occasion, like jury duty money, an annual $50 for doing a health survey with my health insurance provider, a recent $225 for opening a checking account with Citizens Bank, and ongoing cash back for using my new Citizens Bank credit card.  I get 1.8% on all purchases.  I've already earned $75 - more odds and ends money!

This is just mainly a goof, something to have a little fun with.  I've been jotting down the various monies for the last two or three years, but had never added it up.  I was surprised at how much it came to.  

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Re: mlott1 portfolio changes

So did you buy SGENX?

This stock market is really something. It just won’t go down. Which a pity, because I’ve got a “buy list” that just keeps getting more and more expensive.

I guess I’m kinda glad that I’m retiring next month. Every day my portfolio goes up in value about equal to a month’s salary. Doesn’t seem much point in working if that’s the way it’s gonna be.

I sorta remember that the stock market can go down, but it’s been so long, the details are all fuzzy in my mind.
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Re: mlott1 portfolio changes


@chang wrote:
This stock market is really something. It just won’t go down....
...I sorta remember that the stock market can go down, but it’s been so long, the details are all fuzzy in my mind.

no worries... like riding a bike - it'll come right back to you.

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Re: mlott1 portfolio changes

@chang  Got to confess, I'm having a real hard time pulling the trigger on buying a stock fund right now.  SENGX is still something I'm pretty sure I will buy at some point, but I've decided to put it off for now.  If I buy any stocks or funds right now it will be in the energy area.  

I also don't have as much money available as I had anticipated.  The ex-wife hit an unexpected financial pothole and I'm helping her out.  Yeah, sounds strange, but the ex and I have a great relationship and we have helped each other out many times over the last few years.  

Anyway, I was able to put in my monthly ten percent into my bond funds, but no extra money right now.  But, it's all good.

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Re: mlott1 portfolio changes

And the higher the market goes, the harder it’s going to be to pull that trigger.
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Re: mlott1 portfolio changes

@chang  True, but the thing with me is that I don't need stock market returns to fund my retirement.  I'm mainly looking at a little stock market participation for diversification, but I don't want to buy at full retail, so to speak.  For some reason I've been a bit anxious to get back in, and I've halfway convinced myself a couple of times to make a buy, but at the end of the day it just didn't sit right with me.  My fixed income investments and online savings could still use some beefing up (actually, a lot of beefing up, since I started from zero back in the summer of 2018), so for now I will probably continue to direct my money in those areas.  

I don't feel the need to maximize my returns, otherwise I would be in the stock market.  My monthly retirement annuity and social security more than funds my retirement needs, and I like the idea of having a solid fixed income portfolio behind me in case I need a third source of income, or additional funds should I encounter another medical misadventure.  

I continue to believe that there will be a time and place for me to buy stocks, but the moment doesn't feel right, so I will just forge ahead with what I've been doing for the last year-plus.

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Re: mlott1 portfolio changes

mlott: given what you've said, there seems to be no harm in abstaining, and you must do what you are comfortable with.

I feel likewise queasy about infusing money into stocks, but unlike you, I have a decent stock allocation already. I have been pouring new money into bonds for the last few years, but the rising stock market has buoyed up my stock portfolio balance, and I haven't sold.

I have been "letting it ride" since 2009. In the decade prior to that, I sometimes applied the value investor's mantra, "buy on weakness, sell into strength." Well, selling into strength, I realized, hurt me more often than helped me. I discovered that I was selling things into strength but they just got stronger and stronger ... and stronger and stronger ... and I felt like an idiot to have sold.

I should have done more buying in the last ten years ... a lot more buying. But at least I decided to "let it ride" and didn't sell. And I don't rebalance. (Obviously, since that requires selling.) So I have benefited from the bull market. I have bought a few stocks now and then since 2009, but no enormous buys (alas).

Now, however, I am getting ready to buy the most unloved of the unloved: energy. Ready to pull the trigger on XLE any day now.

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Re: mlott1 portfolio changes

@chang  I really like the outlook for bond funds.  From what I have seen, heard, and read over the last few months leads me to believe that we are entering a period where there will be little to no swings in interest rates.  I can't see our rates going up to any degree when the overall worldwide trend is down.  And I think that cooler heads will prevail at the Fed and they will be inactive for a while, and ignore pleas/threats from the White House for lower (negative, even!) interest rates.  Not sure about the long end of the spectrum, but I have never felt comfortable with long term bonds, intermediate bond funds are as far out as I want to go.  Despite the NAV increase for most bond funds in 2019, I think buying and holding some of the quality bond funds that have been discussed on this forum is an opportunity.  I know that people smarter than me have called this a "bond bubble", but I just don't feel that way, and to put it simply, I think this is a good time to be in bond funds.  

 

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Re: mlott1 portfolio changes


@mlott1 wrote:

@chang  I really like the outlook for bond funds.  From what I have seen, heard, and read over the last few months leads me to believe that we are entering a period where there will be little to no swings in interest rates.  I can't see our rates going up to any degree when the overall worldwide trend is down.  And I think that cooler heads will prevail at the Fed and they will be inactive for a while, and ignore pleas/threats from the White House for lower (negative, even!) interest rates.  Not sure about the long end of the spectrum, but I have never felt comfortable with long term bonds, intermediate bond funds are as far out as I want to go.  Despite the NAV increase for most bond funds in 2019, I think buying and holding some of the quality bond funds that have been discussed on this forum is an opportunity.  I know that people smarter than me have called this a "bond bubble", but I just don't feel that way, and to put it simply, I think this is a good time to be in bond funds.  


The red and the blue parts of your comments are almost contradictory. If you're not worried about interest rate rises, then you should be investing in VWESX.

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Re: mlott1 portfolio changes

@chang  Well, I'm not really "sure" about interest rates, I just think that at least for now they won't increase.  And if I'm wrong and they do increase, I'll get killed if I'm in long term bonds.  Intermediate term is as far out as I'm comfortable with.  Right or wrong, I have enough of a conviction on rates being stable for a while that I'm putting as much as I can into my three bond funds, PONAX, FIJEX, and SEMPX, but as I said, I don't have a feel for the long end of the bond market, so I don't go there.

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Re: mlott1 portfolio changes

2020 sure feels a little different so far than last year. Most of my funds would react to the 10 year but not so much now.


@chang wrote:

@mlott1 wrote:

@chang  I really like the outlook for bond funds.  From what I have seen, heard, and read over the last few months leads me to believe that we are entering a period where there will be little to no swings in interest rates.  I can't see our rates going up to any degree when the overall worldwide trend is down.  And I think that cooler heads will prevail at the Fed and they will be inactive for a while, and ignore pleas/threats from the White House for lower (negative, even!) interest rates.  Not sure about the long end of the spectrum, but I have never felt comfortable with long term bonds, intermediate bond funds are as far out as I want to go.  Despite the NAV increase for most bond funds in 2019, I think buying and holding some of the quality bond funds that have been discussed on this forum is an opportunity.  I know that people smarter than me have called this a "bond bubble", but I just don't feel that way, and to put it simply, I think this is a good time to be in bond funds.  


The red and the blue parts of your comments are almost contradictory. If you're not worried about interest rate rises, then you should be investing in VWESX.


 

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Re: mlott1 portfolio changes

A couple of thoughts on my evolving portfolio strategy, such as it is.  Basically, phase one, buying some bond funds, which I have done over the last one and one-half years.  I'm done with adding bond funds for the time being.

PIMCO INCOME (PONAX) - Multisector

SEMPER MBS TOTAL RETURN (SEMPX) - Nontraditional

FROST TOTAL RETURN BOND INST (FIJEX) - Short Term

FIDELITY TOTAL RETURN BOND  (FTBFX) - Core Plus

I have pretty much the same dollar amount in the first three funds.  The Fidelity fund I opened recently and used what I refer to as my "odds 'n ends" money.  But after holding the fund, and giving it some more thought, I'm going to treat it like my other bond funds, and bring it up to speed, money-wise.  I know I have not covered all the bases in bondland, but I think this is a good assortment.  And I am a small investor, I want to keep my portfolio clean and simple.  

In my first step towards diversification, I also recently added a real estate index fund.

SCHWAB FUNDAMENTAL GLOBAL REAL ESTATE INDEX (SFREX)

I have absolutely no feel for real estate investing, either through funds or physically buying a property, so I figured that I couldn't go too far wrong with an index fund.  The fund has a good track record, and the portfolio turnover seems on the low side, which I guess it would be since it is an index fund.  Decent dividend payout, which is one of the main things I am looking for in all of my investments.  I have no money in any physical real estate, so some exposure seems reasonable.  

More generally, I started doing some heavy thinking about how I wanted to structure my portfolio, and my long term plan.  Over the last couple of years I have run across a few threads here that have really stuck in my mind and seemed to resonate quite strongly with how I felt about investing.  One was from Bentley, where he said in part "I hold my investments forever and do not trade", and that is how I am approaching my portfolio.  I am very comfortable with the handful of funds that I have, and am quite content to just add to them as I can.  This is another reason that I am taking my time adding things, whatever I add I want to add with the idea that this is pretty much a permanent investment.  

Right now, and for the foreseeable future, I am reinvesting all distributions, with the idea that I can, whenever I need/want an additional income stream, I can direct the distributions to me.  And to backtrack a bit on bonds, a while back I read a really good book, "The Bond Book, third edition" by Annette Thau (2011).  I wrote down this quote from her book: "I continue to believe that the best course is to stay away from both the longest and shortest instruments, and to stick to relatively straightforward high-quality securities".  

I know I keep mentioning this, but I do so in case a reader is not familiar with my previous posts.  I have two monthly income streams, a small but very secure retirement annuity, and social security.  Between the two, all my monthly expenses are taken care of, with money left over.  So even if my portfolio was entirely wiped out, it would not change my lifestyle one bit.  This allows me to invest strictly as I see fit, I have no specific targets to hit, and no specific allocations to worry about.  

Anyway, if you made it this far, thanks for sticking with me.  Just felt like getting this out there, for some reason.  

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Re: mlott1 portfolio changes

@mlott1 , good to see how your portfolio is evolving.

On the bond side, you got the territory covered. I have said in the past that a combo of intermediate/total-return and multisector bond funds is good for most investors. Your 4 bond funds sort of do that.

I do question global RE as the only equity choice. Surprisingly, the US RE has high affordability due to price/income ratios and the US mortgage markets. RE in many countries is hugely more expensive and often requires cash upfront - yes, in many developing countries, there are super rich people who can just put up all cash for RE.

I think a good diversified US or global equity fund would be a better buy-and-hold than a global RE fund.

YBB
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Re: mlott1 portfolio changes


@yogibearbull wrote:

@mlott1 , good to see how your portfolio is evolving.

On the bond side, you got the territory covered. I have said in the past that a combo of intermediate/total-return and multisector bond funds is good for most investors. Your 4 bond funds sort of do that.

I do question global RE as the only equity choice. Surprisingly, the US RE has high affordability due to price/income ratios and the US mortgage markets. RE in many countries is hugely more expensive and often requires cash upfront - yes, in many developing countries, there are super rich people who can just put up all cash for RE.

I think a good diversified US or global equity fund would be a better buy-and-hold than a global RE fund.


Agreed on all points and hoping mlott appreciates your insights.

Global RE is one of the last boxes to fill on my (and I trust many others) list of categories, and one that I never directly/intentionally fill when there are so many other places to more confidently and consistently produce solid TRs OR divies.    

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Re: mlott1 portfolio changes

Thanks for the comments.  An equity fund is the next thing on my list, but with my limited income I am having to take this one step at a time.  I picked the real estate fund first to give myself more time to evaluate exactly how I want to approach the (ex real estate) stock portion of the portfolio.  To me, equities in general are too high for my comfort zone.  The real estate fund is going to be more of a supplemental investment, some money but not a major weighing when all is said and done.  So I figured, go with the RE and dribble in a little money here and there.  It was a low-cost way of adding a building block to the portfolio, and it makes me feel like I'm making progress.  It was a bit discouraging to have my previous portfolio wiped out, even though it was for a good cause (my health), so I want to keep the momentum going with this current endeavor.  

I'm also in the middle of doing a mental reset on my approach to stock market investing due to recent changes in the financial marketplace.  Now that I can buy stocks commission-free I am thinking more of a hybrid approach, with a core stock fund plus individual stocks.  This was not really feasible in the past, since I'm working with relatively small amounts of money, but obviously things have changed.  I'm still in the process of processing, so to speak.  And as indicated in the earlier post, I've used up quite a bit of my online savings money in the bond funds, so I need to accumulate more funds before I make my next move.  

All in good time...

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Re: mlott1 portfolio changes

What a difference a month can make!  This time last month I thought I was all safe and secure with three bond OEFs, and was planning on keeping them and gradually filling out the portfolio with some equity exposure. 

I did own a stock and bond allocation fund, the JOHCM Global Income Builder (JOFIX), but cashed it out back in December.  I can't claim that I saw anything in particular coming, I had simply become increasingly apprehensive about how high the stock market was.  

I added the Schwab Fundamental Global Real Estate Index (SFREX) fund in late Feb, if I recall correctly, and then what I consider to be my core holding, the American Funds Capital Income Builder (CAIBX) fund on 4 Mar.  

I sold my three bond funds, PONAX, SEMPX, and FIJEX on 11 Mar.  Should have sold a little earlier, but I still missed a lot of the subsequent downturn in the funds, so overall I made out OK. 

I have since added two stocks, KO and WFC; an ETF, SCHD; and two more mutual funds, the Franklin Income (FKIQX) fund and the Franklin Utility (FKUQX) fund.  Initially used the proceeds from the bond fund sales, and then some other monies that I had here and there.  

While I am buying the above with the idea of buy and hold for the long term, things can change, as we have all just seen.  All have been bought with the idea of dividend income generation.  I'm a bit early, but as I've said before, I am not smart enough to be able to pick the very bottom.  While I am down a bit from my various purchase prices, it's not really all that much, most were down significantly when I started buying.  

As long as the market is down, or going lower, I'll buy whenever I have the money.  

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