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Re: mlott1 portfolio changes

@racqueteer  Just replied to your message, good thing you alerted me or I would never have thought to check that area.

@dtconroe  Hah! You, sir, are an astute observer of human nature.  You hit it right on the head, I am committed to PONAX and FIJEX and don't plan on divesting either one.  However, I am very open to the possibility of adding one or more bond funds, so the suggestions have been noted, in fact I spent quite a bit of time yesterday afternoon looking into the funds on FD's post, and a few others.  I have also noted the fund you mentioned and the next time I'm on the Schwab website I will check it out.  Ever since I read arriba's post about putting together a group of bond funds and then letting them all do their thing and letting them average out the returns, I've been of a mind to do so, but I am in no hurry, and any additions will be carefully thought out.  I have pretty much pared my portfolio to the bone, and I don't want to just start adding funds willy-nilly (I keep thinking of one of the Jurassic Park movies, I think the second one, where the creator of the park is bedridden, and is talking to Jeff Goldblum, and reassures Goldblum that he's not making the same mistakes.  And Goldblum replies, no, no, you are making all new ones...)

This thread has actually proven to be quite productive and useful to me, I'm glad now that I overcame my initial trepidation and put out the post.  Several good comments, ideas, suggestions, etc. 

 

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Re: mlott1 portfolio changes


@kzug wrote:

@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.  


mmm...1) one should not pick a fund that her shiny days are behind her  3) why 3-4 years is not enough and 5-6 are OK? why not 20 years, after all, if you want to be really sure you want to see a LT cycle  4) and why pay over 1% for PIMIX? one of the most basic successful investing ideas is to use low ER funds.

I explained why I selected these funds as a complete portfolio based on the OP.  Please come up with your own portfolio and explain your reasons.

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Re: mlott1 portfolio changes


@mlott1 wrote:

@racqueteer  Just replied to your message, good thing you alerted me or I would never have thought to check that area.


OT, but note to Morningstar: if it’s easier for a member to read a notice from another poster buried deep in a conversation with 500 posts that he’s got a private message, than to just see that he’s got a private message, then the private message feature isn’t as good as it should be.

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Re: mlott1 portfolio changes

@chang  That was on me, I had never had anyone send me a message, so I would never have checked that area.  In fact, I thought that sending those types of messages was something that you had to set  up with M*, I had no idea you could just go there and send/receive messages.  Maybe if the screen went all blue and had YOU HAVE A MESSAGE in huge caps, I might have got the message, so to speak.  Otherwise, I would be blissfully clueless, as usual...

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Re: mlott1 portfolio changes

Mail-icon at the upper-right, next to the notification-Bell. indicates new message(s).

YBB
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Re: mlott1 portfolio changes


@yogibearbull wrote:

Mail-icon at the upper-right, next to the notification-Bell. indicates new message(s).


I see the icon and I clicked on it, and it says -

You have no private messages.

Does the icon change when you do have a message?

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Re: mlott1 portfolio changes


@PN wrote:

@yogibearbull wrote:

Mail-icon at the upper-right, next to the notification-Bell. indicates new message(s).


I see the icon and I clicked on it, and it says -

You have no private messages.

Does the icon change when you do have a message?


@yogibearbull, I just sent you a private message with the above post in it. I had to submit 3 times. The first attempt I got a message that it had to remove some coding from the above post and that I should review and resubmit. The second attempt I got a message stating -

You have reached the limit for number of private messages that you can send for now. Please try again later.

Note: I've never sent a private message before so not sure what happened there.

The third time it said successfully sent.

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Re: mlott1 portfolio changes


@PN wrote:

@PN wrote:

@yogibearbull wrote:

Mail-icon at the upper-right, next to the notification-Bell. indicates new message(s).


I see the icon and I clicked on it, and it says -

You have no private messages.

Does the icon change when you do have a message?


@yogibearbull, I just sent you a private message with the above post in it. I had to submit 3 times. The first attempt I got a message that it had to remove some coding from the above post and that I should review and resubmit. The second attempt I got a message stating -

You have reached the limit for number of private messages that you can send for now. Please try again later.

Note: I've never sent a private message before so not sure what happened there.

The third time it said successfully sent.


OK, mystery solved!

I got your reply - Similar to the notification Bell, the Mail icon will have a red circle with number of messages received.

And I do see a red circle with a 1 in it next to my mail icon.

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Re: mlott1 portfolio changes

Not that I'll use it much, but it is nice to know about the message feature.  I had no idea...

On another subject, my request to close out the JOHCM Global Income Builder fund (JOFIX) has been processed, I was cashed out on 3 Dec at $10.24 per share and the check is in the mail.  This is the fund that I was dealing with directly, and I had to do my business by mail, sending a check for buys, and a written request to close out the fund.  Their agent, or whatever, is the Northern Trust bank in Chicago.  I'm pretty old-fashioned in a lot of ways, no cell phone, no facebook, twitter, etc., but I'm not gonna be doing that sort of thing again.  I like being able to buy and sell through my computer.

My last FIJEX purchase put my total to just about the same amount as PONAX, so I will most likely be buying both funds in equal amounts from now on.  Still mulling over making additions, but I don't feel any need for speed.  Like I've said earlier, I'm happy with both funds, in fact FIJEX is even growing on me, I'm feeling better and better about that one.

I recently posted on the book thread that I'm rereading "The Birth of Plenty" by William J. Bernstein (2004).  I had forgotten how good this book is, and I'm really glad I decided to go back and pick it up again.  Any time I start to feel sorry for myself, a book like that is a good reminder of just how lucky I am to be born when and where I was, and whatever disappointments I've endured is absolutely nothing compared to just about everyone else who ever lived.  

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Re: mlott1 portfolio changes


@mlott1 wrote:

I recently posted on the book thread that I'm rereading "The Birth of Plenty" by William J. Bernstein (2004).  I had forgotten how good this book is, and I'm really glad I decided to go back and pick it up again.  Any time I start to feel sorry for myself, a book like that is a good reminder of just how lucky I am to be born when and where I was, and whatever disappointments I've endured is absolutely nothing compared to just about everyone else who ever lived.  


Thanks for the book recommendation mlott, looks like it might be an interesting read – I’ll put it on hold at my local library and check it out.

Link to book on Amazon -

https://www.amazon.com/Birth-Plenty-Prosperity-Modern-Created/dp/0071747044/ref=sr_1_6?keywords=Will...

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Re: mlott1 portfolio changes


@mlott1 wrote:

@chang  That was on me, I had never had anyone send me a message, so I would never have checked that area.  In fact, I thought that sending those types of messages was something that you had to set  up with M*, I had no idea you could just go there and send/receive messages.  Maybe if the screen went all blue and had YOU HAVE A MESSAGE in huge caps, I might have got the message, so to speak.  Otherwise, I would be blissfully clueless, as usual...


Not entirely. The PM feature is flawed. For example, you cannot see whether you have a PM at all if you are using an iPhone.

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Re: mlott1 portfolio changes

@PN  I love to read, and on the nonfiction side, anything to do with business, investing, economics, etc. appeals to me.  You might also take a look at "The Ascent of Money: A Financial History of the World" by Niall Ferguson (2008). 

Ron Chernow has written some great biographies, and his earlier books dealt with financial figures.  "The House of Morgan" is a fantastic book, one of the best finance type books I've ever read (I absolutely love economic history, so I might be a little overboard). Also "Titan", which is a biography of John D. Rockefeller. 

Roger Lowenstein and Michael Lewis have both written some really good books in the financial genre, you might want to see what they have written, lots of good reading between those two.

I'll stop there, but if you want some more recommendations, I'll be glad to put together some suggestions. 

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Re: mlott1 portfolio changes

There is overwhelming evidence that individuals, and stock experts, cannot predict the future.  Market timing does not work.  Pick your allocation of stocks to bonds, and stay with it.  There are lts of articles about this subject, so i will end this comment.

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Re: mlott1 portfolio changes


@BD wrote:

There is overwhelming evidence that individuals, and stock experts, cannot predict the future.  Market timing does not work.  Pick your allocation of stocks to bonds, and stay with it.  There are lts of articles about this subject, so i will end this comment.


Amen to that. 

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Re: mlott1 portfolio changes


@Poorfolio wrote:

@BD wrote:

There is overwhelming evidence that individuals, and stock experts, cannot predict the future.  Market timing does not work.  Pick your allocation of stocks to bonds, and stay with it.  There are lts of articles about this subject, so i will end this comment.


Amen to that. 


I don't see mlott trying to "predict the future".  If you want to just pick passively managed index funds, then just go to Vanguard and pick one.  If you want to pick an actively managed fund, with quality managers to adjust assets to fit changing market conditions, then you will want to evaluate which actively managed fund does that compared to other actively managed funds.  

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Re: mlott1 portfolio changes

@BD @Poorfolio @dtconroe  I tried to post a response to BD yesterday but the computer ate it, and I didn't feel like doing it over at the time.  Anyway, thanks to all for the comments.  

I do not consider my recent activities market timing, simply a portfolio readjustment.  As mentioned earlier, I have come around to the idea of separate stock and bond mutual funds vs. all in one.  With the stock market at all time highs, it just seemed like a very fortuitous time to cash out the income builder fund.  Although I will admit that stocks at this level make me nervous, and I'm not looking to dive right back in.

As also noted earlier, my emphasis right now is building up my fixed income portfolio.  Not going to go into the whys again, but the money from the income builder fund will go directly to fixed income.  So, again, cashing out at market highs seemed like a good idea. 

Ever since I retired eight years ago, I have been able to live on my retirement annuity and, since Nov 2017, my social security.  Even with recent and projected increased monthly expenditures, those two income resources should still cover everything with a bit left over.  I have never had to depend on stock market gains to fund my retirement, nor do I anticipate having to do so going forward.  

Right now, and for at least the next year, my emphasis will be on the fixed income investments in my portfolio.  I always stand ready to reenter the stock market, but it will be after a market pullback, whenever that might occur.  Unless, as the economist Irving Fisher said, "Stocks have reached a permanently high plateau".  In which case I guess I will have missed the boat. 

No worries.  There is actually a plan here.

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Re: mlott1 portfolio changes

Fd.

I don’t hold or recommended the Browne’s Permanent Portfolio but you could do much worse.  The returns of the PP pretty much keep up with the bond portfolios you recommended. Link Yes, I know the risk formulas you use say that your funds are safer but a three-year record that has not experienced a full market cycle is hardly something I would hang my hat on.  The PP on the other hand has a record that expands over 30 years and more than one complete market cycle that shows a pretty low level of risk.

 

Mott1

I would be careful about committing my entire portfolio to funds with lower quality bonds.  PIMIX did not do as well in 2008 as higher quality corporate bonds. Link

I don’t know of any major pension fund that uses exclusively debt to finance the pensions that they pay out very month. According to Investopedia the largest pension fund in the U.S. is California’s Public Employees’ Retirement System, that seeks an annual return of 7.5% only uses approximately 23% of its $365 billion portfolio for income investments.

Alfred Lee Loomis thinking the stock market was extremely over valued before the market crash in 1929 sold all his equities and invested in Treasuries and cash.  When the stock market crashed, he bought stock at bargain basement prices. It is estimated he made over $50 million dollars in the early years of the great depression.

If you are buying lower quality bonds for interest income I would look again because lower quality bonds react to market conditions much like equities.  If you are buying debt to protect your investment during a market downturn then treasuries make better sense.

helmut

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Re: mlott1 portfolio changes

@helmut  Some food for thought, definitely.  I'm ultimately looking at executing arriba's idea of a handful of bond funds and holding them, and just let it all average out.  I understand SEMPX is lower quality than some with their portfolio, but FIJEX seems pretty high quality, and PONAX I have always designated as my wild card fund, it is classified as a multisector fund, but to me it feels more like an unconstrained fund.  Also, in the grand scheme here, SEMPX will probably have the lowest rated portfolio of any of my bond funds.  I have some funds in mind that I haven't mentioned or asked for opinions, just don't want to try to do too much at once.  One step at a time.

I have nothing against treasuries, and I do have a TreasuryDirect account for my I-Bonds.  I'm not interested in locking in any treasuries at the present low rates, but if the 10 year moves up a bit I might nibble, with the idea of buying and holding.  It all depends on the rates, of course.

Earlier this year I was seriously considering buying some gold and/or silver, but the market moved up before I could pull the trigger.  This is one thing that I keep an eye on, just as the possibility of a tactical investment.  Especially since I can buy and sell ETFs at no cost through Schwab.  And no, I'm not tempted to buy and sell just because I can.  I just know it's there if I want to use it.

I'm actually a lot more flexible than you might think, but until a compelling opportunity presents itself, it will be fixed income (and online savings) for me.

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Re: mlott1 portfolio changes

@mlott1 We all have to do what makes us sleep better at night and I don't think there is just one way to achieve one's financial goals.  I've certainly change my investment paradigm more than once.

helmut

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Re: mlott1 portfolio changes

Bought initial shares in SEMPX yesterday at $10.43.  Posted on the Dec buy/sell/why thread but forgot to update this thread.  I also received my check for the JOHCM Global Income Builder fund and deposited it in my checking account.  Will transfer the money to Schwab as soon as the hold comes off the check.  

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