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Frequent Contributor

Re: mlott1 portfolio changes


@dtconroe wrote:


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.  


"Market timing" and active management are different things. I also do not believe in market timing, but I do believe in active management adding value through security selection. Whether value or growth, good managers can identify underpriced stocks and/or companies with superior competitive advantages and strong price-appreciation potential. This is completely independent of "market timing".

There are, of course, active managers, especially where multi-asset funds are concerned, who will alter their asset allocations based on "market timing". And you can choose whether or not you believe in that. But plenty of funds are fully invested with no portfolio drift, but simply involve active security selection, which in some cases may be very active and result in a high turnover.

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Re: mlott1 portfolio changes

@mlott1

... right now I would prefer to build up my two bond funds [PONAX and FIJEX], 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.

There are many ways to invest successfully.  However, it's not just stocks that are priced at all time highs; so are bonds, not to mention real estate.

It's true that well run multi-sector bond funds like your two picks have had a great run.  However, I'd be uncomfortable with a portfolio that's 40%+ MBS products and makes use of complex derivatives, no matter how well managed these two bond funds are. 

I'm not pushing stocks, but I do believe in diversifying my risks.  I think that pairing high-quality stocks with Treasuries (as Helmut suggests) or investment-grade corporate debt is a viable, conservative "vanilla" strategy that would nicely complement your use of multi-sector bond funds. 

True, stock prices are generally more variable and unpredictable than bond prices.  However bond defaults are permanent, while price fluctuations of high-quality corporations are not.

FWIW,

Norbert

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Re: mlott1 portfolio changes

Further to Norbert’s comment, some stock funds are remarkable bear performers. Check out Yacktman (YACKX) from 2000-2002 compared to the S&P 500 (VFINX) ... or almost any other stock fund.

With some research, you can find equity funds like this which will save your bacon when things go south.
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Explorer ○○○

Re: mlott1 portfolio changes

in the rear-view mirror, yes; but you tell me now what that fund is and i'll retire a happy camper.

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Re: mlott1 portfolio changes

Hey, I’m the first one to blurt out that past performance does not guarantee future performance. But past performance is all we have ..... plus, of course, reading everything the fund / managers have to say about how they invest. That is a key part in choosing your funds.

So, sticking with my example below, if you research Yacktman you will see that the 2000-2002 case was not a fluke. They invest in a way that will outperform in bear markets.

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Re: mlott1 portfolio changes

At some point down the road I will most likely get back into the stock market.  I haven't put a lot of thought into it yet, but I'm thinking of just buying an S&P 500 index fund, then look for one good actively managed fund.  But that will be later on.  I'll take any recommendations into consideration, but again, it will be a while before I put some money in stocks.  That's why I haven't posted for stock recommendations.  As I've mentioned several times, I am a very small investor, and all my investment money is coming out of my retirement income, so I have to take it slow and focus on one thing at a time, which right now is my fixed income portfolio.  

Speaking of fixed income, since the Fed is holding steady, and looks like they don't plan on raising rates any time soon, that seems to me to be a positive for holding bond funds.  Yes? No? Maybe?  

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Re: mlott1 portfolio changes

mmm...let's go thru memory lane and use SP500.

Watch the last 10 years

last 10 years.PNG

The previous 10 years 1999-2009

previou 20 years.PNG

The last 20 years

last 20 years.PNG

PV for 20 years(link)

PortfolioCAGRStdevBest YearWorst YearMax. DrawdownSharpe RatioSortino Ratio
PRWCX10.47% 10.21%33.05%-27.17%-36.61% 0.871.32
SGIIX10.47% 10.30%38.03%-20.87%-32.48% 0.861.36
YACKX11.64% 13.66%59.31%-26.05%-41.01% 0.761.26
Vanguard 500 Index Investor6.09% 14.54%32.18%-37.02%-50.97% 0.370.52

 

The above table shows that indexing was a terrible choice in the last 20 years, even if it did best in the last 10 years.

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Re: mlott1 portfolio changes

@FD1001  Wow! That is something to think about.  Lately it seems to me that every time I read about a stock fund, I look at the returns posted, and I guess a lot of them only go back ten years, which would make sense from a marketing standpoint.  Gets rid of the dreaded 2008 figures.  And the returns will look good, but then I see the ten year S&P 500 and it almost always is better.  

But this is all casual right now, like I said in my last post, it will be a while before I'm ready to get back into stocks.

That info you posted is very helpful, and I'm going to print it out and put it in my investing book.  That will be a consideration when I do start a serious hunt for a stock fund.  Thank you very much, appreciate it.

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Re: mlott1 portfolio changes

mlott, just some food for thought. The market always climbs a wall of worry. More concretely, there are a number of volatility-generating situations going on. First, a bogus impeachment effort. Second, lots of trade-war posturing. Imho these will generate great dips to buy on. We have already seen great dips to buy on for the last three years.

I would consider multitasking a little, and looking for times and places to dribble a little dough into equity. I could be wrong and the market could drop 20-30% in the next 18 months.* Or it could easily rise another 10-15%. If that happens, how will you feel about getting into stocks then?

So, consider - just consider - a gentle DCA pattern into some well chosen funds. Could be $500 a month, or whatever you would consider a "pittance". Just to wet your feet.

Remember, *don't* *try* *to* *time* *the* *market*.

(* That's assuming, of course, that the current POTUS is re-elected. If we get a Warren or a Sanders, my numbers obviously would make no sense.)
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Re: mlott1 portfolio changes


@FD1001 wrote:

mmm...let's go thru memory lane and use SP500.

Watch the last 10 years

last 10 years.PNG

The previous 10 years 1999-2009

previou 20 years.PNG

The last 20 years

last 20 years.PNG

PV for 20 years(link)

PortfolioCAGRStdevBest YearWorst YearMax. DrawdownSharpe RatioSortino Ratio
PRWCX10.47% 10.21%33.05%-27.17%-36.61% 0.871.32
SGIIX10.47% 10.30%38.03%-20.87%-32.48% 0.861.36
YACKX11.64% 13.66%59.31%-26.05%-41.01% 0.761.26
Vanguard 500 Index Investor6.09% 14.54%32.18%-37.02%-50.97% 0.370.52

 

The above table shows that indexing was a terrible choice in the last 20 years, even if it did best in the last 10 years.


I'm not sure you proved it "was a terrible choice" in general, though, FD.  You showed there were a couple of choices which would have been BETTER if one included the period leading up to the tech implosion of the early 2000's, however.  The above 3 largely avoided those effects; while the S&P obviously stumbled.  As you noted, avoiding that period of time reversed the effects; even with the Depression of 2008-2009 being included.  If there's anything I've learned by experience, it is that data can often be gathered to support ANY conclusion if one is judicious about source and starting/ending points!

As an aside, I kind of wonder why the S&P was dropping during the tech explosion?!  Certainly different from today where the OPPOSITE seems to be the case!  I'm not sure what was IN the S&P (or OUT) during the '90s that accounts for the difference?  Yogi; I assume YOU'D know!  ;-)

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Re: mlott1 portfolio changes

Racq: "I'm not sure you proved it "was a terrible choice" in general, though, FD.  You showed there were a couple of choices which would have been BETTER if one included the period leading up to the tech implosion of the early 2000's, however.  The above 3 largely avoided those effects; while the S&P obviously stumbled.  As you noted, avoiding that period of time reversed the effects; even with the Depression of 2008-2009 being included.  If there's anything I've learned by experience, it is that data can often be gathered to support ANY conclusion if one is judicious about source and starting/ending points!"

One of the valuable lessons I learned in college is the difference in objective evaluation of a "theory", demonstrating objective gathering of facts to "support" or "refute" a theory, compared to forming an opinion about what you believe, and then just arbitrarily gathering only the information that supports that opinion.  Anyone can gather and manipulate data to support what you want to "prove".  In financial investing, we can look at various market scenarios that we think the data will support, but often there is something unpredictable that occurs, that we have to analyze, and then adjust our investing decisions to deal with those market conditions.  Politics often is used as a reason to expect something that will, or will not, occur with the market going forward, but history has shown that is rarely an accurate basis for financial investing decisions.  Right now, the popular factor that investors often use to predict future results of bond investing, is federal position on interest rates--that sole factor is not the only factor that can impact bond performance, but now we are hearing several posters discuss how it is "safe" to go all in on some specific bond oefs. 

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Explorer ○○○

Re: mlott1 portfolio changes

I find the 20 year chart the most interesting as it shows that every fund style(as per Mstar) has its day in the sun. Lg blend(SGIIX), Lg value(YACKX), Lg growth(PRWCX), (all managed) and 500 index(VFINX).  It's not surprising that the index has done better the last 10 years since it seems all you read about is how much money has flowed into those funds in recent years. So is that going to continue the next 10 years is the question. Are we now headed towards just buying companies stock based on their market cap whether they are highly profitable or not? No managers rebalancing as they see fit and just waiting for their market cap to be reduced by some other force so the index doesn't buy as much anymore? Those questions seem to be answered by the results of the 20 year chart posted by FD if you ask me.

Another interesting thing was when I looked at the holdings(as per Mstar) of the managed funds and saw that the cash holdings were  SGIIX - 15%, YACKX - 27%, PRWCX - 15% and the index VFINX - .16% . So if mlott isn't comfortable with stocks right now and wants to wait a little while he has some company.

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Re: mlott1 portfolio changes

@racqueteer , top 10 SP500 stocks at bull market peaks have been hot stocks that take big hits in subsequent selloffs.

YBB
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Re: mlott1 portfolio changes

OK, some good posts, thank you all.  

As for buying on dips, that is exactly what I am waiting for.  Last Dec I did buy my first ETF when we had that market correction, or whatever you want to call it.  Anyway, it was a global energy ETF, and I was going to do more buying, but the market jumped right back up before I was in a position to do any more buying.  I sold the ETF about 10 or 15 days after I bought it for a nice short term gain (and I did post the buy and sell).  A bit out of character for me to do a short term trade like that, but I couldn't resist.  

I am in a better cash position now than I was last year, so I am prepared to do some stock buying if the market goes down a bit, doesn't even necessarily need to be an official 10% correction, or whatever the benchmark is for a correction.  

I have followed the stock market since the late 70's, and did my first buy around 1982, when the DJIA was bouncing around between the low 800's and high 700's.  Just from long term observation and some buying and selling along the way, the ups and downs of the stock market doesn't bother me.  But I have only started seriously following the bond market last year, and I don't have much of a "feel" for the bond market yet.  I do have a vague sense that the bond market is somewhat high on a historical level, but I want a fixed income portfolio that can throw off some cash each month, so all I know to do is to dollar cost average and do some buying every month, and hope that the DCA and reinvesting the monthly distributions will give me some degree of protection.  And I'm trying to be judicious in selecting a small portfolio of bond OEFs, hence my frequent posts on this and some of the bond threads.  I'm also doing a lot of reading, trying to learn more about bonds and bond funds.

So, yeah, I'm keeping an eye on the stock market, and I will get back in at some point.  I just don't feel the need to be in a hurry about it.  And info like FDs post is helpful.  It doesn't necessarily change my mind about buying an S&P 500 index fund, but I do like to hear other's opinions.

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Re: mlott1 portfolio changes

Since Vanguard has low balance fees, you may want to consider whatever variation of PBRNX is available at your brokerage. It's Vanguard stock index funds + Pimco active bond funds, and has kept up with highly regarded Wellesley Income with a similar stock allocation. As you probably know, I love Target Date funds and their simple elegance.

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Re: mlott1 portfolio changes


@racqueteer wrote:


I'm not sure you proved it "was a terrible choice" in general, though, FD.  You showed there were a couple of choices which would have been BETTER if one included the period leading up to the tech implosion of the early 2000's, however.  The above 3 largely avoided those effects; while the S&P obviously stumbled.  As you noted, avoiding that period of time reversed the effects; even with the Depression of 2008-2009 being included.  If there's anything I've learned by experience, it is that data can often be gathered to support ANY conclusion if one is judicious about source and starting/ending points!

As an aside, I kind of wonder why the S&P was dropping during the tech explosion?!  Certainly different from today where the OPPOSITE seems to be the case!  I'm not sure what was IN the S&P (or OUT) during the '90s that accounts for the difference?  Yogi; I assume YOU'D know!  ;-)


In general, the SP500 is never a bad choice because it's the market but it was a terrible choice compare to these managed funds. 

What changed? the tech companies were a major factor of why the SP500 was down a lot in 2000-2002. Look at the tech sector from 1995 to 2000 it was up over 450% while the SP500 was up over 150%

tech.PNG

Since 2000 I started looking for the best risk/reward funds and I believe that you can find handful funds that beat the SP500 for risk-adjusted.  It was much harder in the last 10 years. I held the following 3 funds (+ trading 2-3 others) most of the years from 2000-2010...FAIRX,OAKBX,SGIIX

fairx.PNG

How many years have I been talking about PRWCX?  :-)

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Re: mlott1 portfolio changes

Obviously I'm moving mainly into bond funds right now, but it seems to me that indications are that there won't be much of a move either way in interest rates for a while.  To this untrained eye, looks like the Fed has indicated that they aren't going to mess with rates for the next few months, barring sudden unforeseen circumstances.  Not a sure thing, but it seems to me that putting money into bonds right now might be a good time.  That's what I'm doing, anyway.  Not as a short term trade, but as a longer term buy and hold.  

Merry Christmas, everyone, hope you all have a happy holiday season.

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Re: mlott1 portfolio changes

You stated this in a previous post: "I have followed the stock market since the late 70's, and did my first buy around 1982, when the DJIA was bouncing around between the low 800's and high 700's.  Just from long term observation and some buying and selling along the way, the ups and downs of the stock market doesn't bother me."

Any insignificant investment (minimum) in almost any stock fund in the late 70's, today would be worth some significant amount if left alone since that time. Timing the market does not work. Proven.

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Re: mlott1 portfolio changes


@Poorfolio wrote:

You stated this in a previous post: "I have followed the stock market since the late 70's, and did my first buy around 1982, when the DJIA was bouncing around between the low 800's and high 700's.  Just from long term observation and some buying and selling along the way, the ups and downs of the stock market doesn't bother me."

Any insignificant investment (minimum) in almost any stock fund in the late 70's, today would be worth some significant amount if left alone since that time. Timing the market does not work. Proven.


 

Timing the market does not work. While this has been known among researchers, academics, fund managers and informed investment advisors, it will never prevent others from trying.

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Re: mlott1 portfolio changes

mIott, good that you do what's best for you. Times and situations change as we mature, and most of us will alter our behaviors as well as finances as needed.  Another's target isn't yours.

“It is not the man who has too little, but the man who craves more, that is poor.” —Seneca

"When we think of people that are wealthy, we may think of people with nice houses and fancy cars. But that’s not necessarily what truly wealthy people look like. In fact, if we keep wanting more and more, we will be stuck in a limitless cycle that keeps us poor. But if we take an inventory of what we already have — and stay grateful — we can enjoy what we have and build a wealthy life around what is truly important."

Merry Christmas

 

 

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