Reviewing Allocation Funds in a Retirement Portfolio One strategy that I have attempted to include as part of my portfolio review and yearly reallocation is to use "allocation funds" as the destination for other funds that need paring back. I consider these allocation funds as having attributes that served my goals well when I started investing and I now see them as serving a different goal in retirement.
I began my investing (call this my 30's) by first owning well diversified allocation funds such as VGSTX, OAKBX, VWINX, VWELX, DODBX, PRPFX, PRWCX, and others. These funds provided me with a way to funnel small contributions into one or a few of these funds based mainly on their availability to my workplace retirement plan. It exposed "my meager, but dear savings" into what I consider a long term well managed (hopefully), well diversified investment. These funds often had a history of good risk / reward, solid management, were reasonably priced (low ER ratio) and made "staying the course" pretty certain.
As my savings increased and my knowledge base grew (call it my 40-50's) I began realizing that I could create my own personal portfolio allocation using not only these funds, but a combination of "non-equity" funds (Bonds, RE, Commodities) and equity funds that had an "alpha/growth" strategy (sector, size, class, valuation, manager, etc.). These "fund combos" provided me with the biggest momentary losses and the largest momentary gains, but in the end have kept me up at night more often than the allocation funds I also still owned.
I began to discipline myself to trust my fund choices to "stay the course" and use these momentary ups and downs in the market to reallocate between the "non-equity" portion and the "equity" portion of these investments, but as I reach my 60's, 70's and beyond I see myself developing a third approach.
I see some of my low risk / low return "non-equity" funds along with some very conservation allocation funds as serving a roll in holding a portion of my portfolio for short term needs. (1-3 year, call these PONDX, PTIAX, CBUZX) for distributions of income, RMD, emergencies and retirement "fun".
I see the higher risk / higher reward "non-equity" funds along with the higher risk / higher reward "equity" funds as serving a roll in maintaining long term growth. (10 years and longer), and I'll place my stallions here (POAGX, VGHCX, FSRPX, etc). Note to self: "I have too many of these..."
I see my conservative, moderate & aggressive allocation funds as having a larger and key place in my retirement portfolio as the core of my holdings will occupy this space. These are investments have a (3-9 year) holding period that provide good portfolio diversification as well as "growth and income" to reallocate and "feed" ongoing (1-3 years) needs.
The Conservative Allocation fund (3-5 year) needs in VWINX, GLRBX or CBUZX.
The Moderate Allocation fund (5-7 year) needs in JABAX or OAKBX.
The Aggressive Allocation fund (7-9 year) in PRWCX or BTBFX).
Each of these allocation funds will periodically "feed" the 1-3 year funds over time.
Each of the long term funds (10 years or more) "feed" the allocation funds.
Hopefully there will be enough "feed" to go around.
If you have any thought on this approach or suggestions for potential candidates for:
1-3 year funds -
3-5 year funds -
5-7 year funds -
7-9 year funds -
10 and longer funds -
I'd appreciate it.
John Hussman: Warren Buffett Could Be Setting Stocks Up For 'One Of The Worst Disasters In History $350M in that thing, wow
John Hussman: Warren Buffett Could Be Setting Stocks Up For 'One Of The Worst Disasters In History And his "market timing" fund where he puts his opinions into action:
HSGFX:
1y= -17
3y= -12
5y= -10
10y= -7
John Hussman: Warren Buffett Could Be Setting Stocks Up For 'One Of The Worst Disasters In History
Here Comes Earnings Season: Brace For A Slowdown In Growth Howdy folks,
So the forward earnings game is still own. Folks, the earning numbers that the press reports are top line estimates. The real number (from my perspective) is "as reported" or TTM and this is what companies actually take to the bottom line. For full year 2017 TTM is estimated at $114.90 as of 09/29/2017 by S&P. Full year 2017 top line forward estimates were in the $135.00 range not long ago. It sure is real confusing these earnings numbers and that is why Old_Skeet uses a blended number of forward estimates in conjunction with TTM. The number I am using in the barometer is $122.50 through 3rd quarter and $125.00 for 4th quarter ending.
Let's see, 20 X $122.50 = 2450. For me 2450 is the fair value number for the S&P 500 Index as we closed out the 3rd quarter by my mytholodgy. And, 2500 would be the fair value number for 4th quarter ending. With this, the earnings feed in the barometer indicates for the S&P 500 Index is currently at a 2.2% premium. Please know, there are other feeds used in the barometer beside earnings to produce its current reading of 135 which indicates that the Index is currently trading at about a ten percent premium putting it currently at the top of the overvalued scale. Next upward stop is overbought. In addition, to the earnings feed there is a breadth feed and a technical score feed which is also derived from a blended numbers coming from the RSI and MFI technicals. The breadth feed comes from the number of stocks in the Index that are above their 200 moving average. Then there is a short interest feed that has not been spoken much about until now.
In short words, the higher short interest moves the higher the barometer reading moves. Since short interest is currently at about 2.8 days to cover the barometer reading is currently a little higher than it normally would be without this feed.
Old_Skeet's market barometer is a neat way for me to measure the Index because it blends many inputs into a single reading that has been scaled.
In my book ... Stocks are Currently Richly Priced! And, with this, have outpaced earnings.
And, so-it-goes.
Buy, Sell and Ponder October 2017 On the equity front: May add a tad to certain REITS (VTR). Possibly also small positions in GE & GIS (TBD). Just re-entered small position in AMZN and a position in UTG on the price-weakness surrounding the rights-offering. Bought a small, starter position GBTC (the bitcoin trust) --as a pure speculation. Will pyramid up this position if it moves my way. In the event of a selloff in WTI/energy space, will add to my positions in MMP and EPD, as they remain "high-conviction" (assuming one doesn't overpay).
On the bond/bond fund side: Avoiding major new commitments here, until we get some price weaknesses (or until I need the income). Sold a l/t position in DLTNX in my taxable account. -- to generate a meager tax-loss. Redeployed proceeds to SEMPX.
Bond CEFs are 'off the table' for me here.
Cash/cash-management: Dumped majority of taxable & IRA positions in my l/t holding ACVVX - a market-neutral OEF -- decided to de-fund the position in the event they declare a year-end disty. Used/using/will use proceeds to increase my T-bill ladder, as s/t rates continue to edge higher (6-month T-bill now at ~ 1.25%). Also, after an entirely UNSATISFACTORY discussion with my Wells Fargo brokerage rep about ways to generate a bit of yield on my cash there, I de-funded my taxable Wells Fargo brokerage account, and swept the cash to an internet bank paying +1% . Dealing with the Big 4 banks remains a truly painful/aggravating experience.
Vanguard's Global Wellesley Income and Global Wellington Funds in registration & prospectus
Abandoned Property
I recently received a written reminder from one of my IRA custodians that they apparently mailed all their clients. (I think it came from Oakmark.) The abandonment laws vary by state.
Their advice was to either (1) phone them once a year or (2) login to your account online once a year. Since I login to all my accounts at least once a year, I let it go at that. I think it’s a good practice to change passwords once or twice a year. And doing so ought to satisfy anyone looking on that you’re still alive.
As I recall, you're in Michigan. I don't know whether all states follow this rule, but in Michigan, its three year clock doesn't begin running until you're 70.
5:
An IRA (Individual Retirement Account) account, Keogh plan, or 401K plan becomes distributable under the terms of the account or plan [i.e. RMDs for the IRA]. If the plan or account requires a distribution at a certain point in time, then the three-year dormancy period begins at that point.
https://www.michigan.gov/documents/2013i_2598_7.pdfI don't know any state that has law that property escheats in less than three years, though some financial institutions may be obnoxious and freeze your account after a year of inactivity. (I made an old post somewhere about WF doing this, and making a lot of errors along the way.) So it's still a good idea to check in yearly.
DSENX Can't find the post where someone interestingly pointed out what happens w/ DSEEX / DSENX when US LCV persistently lags (a bit), but graphs are here (I added div etfs for the heck of it):
2yhttp://quotes.morningstar.com/chart/fund/chart.action?t=DSEEX&region=usa&culture=en-US&dataParams={"zoomKey":11,"version":"US","showNav":true,"defaultShowName":"name","mainSettingId":"main","navSettingId":"nav","benchmarkSettingId":"benchmark","sliderBgSettingId":"sliderBg","volumeSettingId":"volume","defaultBenchmark":false,"id":"F00000QBBZ|F00000MVE2|FEUSA04AF8|FEUSA04ABY|F00000Q6JF|FEUSA04AEW|F00000OVWX|FEUSA00001","type":"FO|FE|FE|FE|FE|FE|FE|FE","region":"USA","name":"XNAS:DSEEX|ARCX:SCHD|ARCX:VIG|ARCX:DVY|ARCX:NOBL|ARCX:RPG|ARCX:CAPE|ARCX:SPY","baseCurrency":"USD","defaultBenchmarks":["",""],"chartType":"growth","startDay":"10/14/2015","endDay":"10/14/2017","chartWidth":955,"SMA":[]}and
1y, with RPG and SPY pulling even or outperforming (I know RPG is equal weighting):
http://quotes.morningstar.com/chart/fund/chart.action?t=DSEEX&region=usa&culture=en-US&dataParams={"zoomKey":6,"version":"US","showNav":true,"defaultShowName":"name","mainSettingId":"main","navSettingId":"nav","benchmarkSettingId":"benchmark","sliderBgSettingId":"sliderBg","volumeSettingId":"volume","defaultBenchmark":false,"id":"F00000QBBZ|F00000MVE2|FEUSA04AF8|FEUSA04ABY|F00000Q6JF|FEUSA04AEW|F00000OVWX|FEUSA00001","type":"FO|FE|FE|FE|FE|FE|FE|FE","region":"USA","name":"XNAS:DSEEX|ARCX:SCHD|ARCX:VIG|ARCX:DVY|ARCX:NOBL|ARCX:RPG|ARCX:CAPE|ARCX:SPY","baseCurrency":"USD","defaultBenchmarks":["",""],"chartType":"growth","startDay":"10/14/2016","endDay":"10/14/2017","chartWidth":955,"SMA":[]}
It Would Take An ‘Immaculate Conception’ To Create Bear Market In Stocks Right Now:
Buy, Sell and Ponder October 2017 Hello,
I was wanting to make Old_Skeet's market barometer a monthly comment feature on the board; however, I am finding, thus far, some things of weekly interest to make comment on. This past week saw the S&P 500 Index advance about +0.1% and end the week with a barometer reading of 135 putting it towards the top part of overvaluation on the barometer scale and close to an overbought reading. The barometer is indicating that staples (XLP), healthcare (XLV) and utilities (XLU) currently offer the best value form a technical score perspective. It is also interesting that staples and utilities were up 1.4% and 1.35% respectively for the week and were two of the three best performing major sectors of the 500 Index with the third being real estate (XLRE) which was up 1.9%. This week also saw earning season begin so perhaps investors were seeking cover in the traditional defensive sectors.
In listening to some of the talking heads onTV this past week many are favoring financials from a longer term outlook and in a rising interest rate environment. It is interesting that financials (XLF) was down 0.83% for the week as earnings season began with major banks reporting.
In addition, Morningstar's Market Valuation Graph indicates that stocks, in general, are currently at a premium now being about four to five percent overvalued.
With this, it seems, to me from review of my barometer data feeds, money sought out value this past week over growth and foreign over domestic.
I remain in the cash build mode within my mutual fund portfolio due to a richly priced market. According to my equity weighting matrix, which is driven by my market barometer, and used to help set my allocation in equities within my mutual fund portfolio I am now overweight equities by six percent according to the matrix. However, due to a seasonal trend calendar, I have chosen to remain overweight equities over what the matrix is currently calling for. Generally, I load equities in the fall through winter and maintain an overweight position in them through the winter months; and, come spring I usually rebalance and return to a more neutral weighting position within my asset allocation through the summer months. Come late summer I repeat the process and again begin to rebalalnce and load equities taking into account my equity weighting matrix reading. This past spring when I rebalanced and reduced by equity weighting I used the sell proceeds to move, over time, into some good yielding hybrid funds over the summer where prices are generally more favorable. This has, thus far, proved to be a good strategy move because there has been some good capital appreciation on the hybrids I purchased plus I have increased my mutual fund portfolio's yield by about ten percent along the way through this process as well.
Currently, I have six funds on my shopping list to add to them when better valuations can be had. With this, I remain in my current cash building mode while I await the next stock market pullback. I call this investment and rebalance process throttling my asset allocation of which my barometer and equity weighting matrix as well as the calendar are key drivers in helping me determine my portfolio's equity weighting and positioning.
So, is investing considered an art, or is it a science? I'm thinking, it is some of both.
Have a good weekend ... and, thanks for stopping by and reading.
Old_Skeet
Barron's Cover Story: Black Monday 2: The Next Machine-Driven Meltdown
Abandoned Property
The Cost Of Missing The Market Boom Is Skyrocketing Everything is relative. In my situation, I feel like I'm sitting on a pile of cash waiting for a shoe to drop. But...since I was 90% equity about 5 years ago, the harvesting of profits and allocations to a bucket 1 for several years of spending money have taken my portfolio to about 60% equity. So I guess the moral of the story is that I don't need to have 90% to have a foot in the market.
Fidelity OTC Portfolio Manager Fired
Wife's job change and her 401K @Gary,
You would complete an (Traditional, 401K, 403b, etc.) IRA to Roth IRA Conversion if the future Rate of Return (ROR) will be higher for the Roth IRA comparef to a tax deferred IRA. Article below discusses this in detail using this calculator (
Optimal Retirement Planner).
From Article:
A onetime conversion of the entire IRA during the first year of retirement is technically feasible, sometimes practiced, but rarely part of an optimal plan.
Also, for strategic periodic IRA to Roth IRA conversions,
We find that in comparing two optimal plans, differing only in whether or not conversions are allowed, that there is in the neighborhood of a 1 percent improvement in the conversion plan’s disposable income compared to the non-conversion plan.
In the conclusion of article:
It would seem desirable to convert when asset prices are depressed because there is less tax paid and the state of the market is amenable to a recovery. Following the same logic, converting when asset prices are inflated would seem imprudent.
Measuring the Financial Consequences of IRA to Roth IRA Conversions
Consuelo Mack's WealthTrack: Guest: Rupal Bhansali, Ariel & Andrew Foster, Seafarer Funds @rforno: Here in Chicagoland the show is not at a convenient time for me. Its not even shown on our main PBS station WTTW, but has been relegated to Chicago City College station WYCC on Monday at
5:00 PM.
Regards,
Ted
