2023 Investment Plans I think 2023 will be very trying and full of ups and mostly downs, due to persistent inflation.
Consequently, I am not increasing equity exposure, except maybe to Deep Value funds like PVCMX where I can count on the manger not being fully invested.
There is a lot of talk about the "undoing of globalization" and "multiple wars"
https://www.project-syndicate.org/commentary/high-inflation-long-term-problem-owing-to-real-and-metaphorical-wars-by-nouriel-roubini-2022-12?barrier=accesspaylog( I know Roubini is a perma Bear and disaster maven, but worth listening to)
which coupled with high interest rates will continue to pressure the winners of the last decade, ie Large Cap Tech. At the same time it is likely that there will be continuing event driven increases in prices of commodities like foodstuffs and energy, as instability prevents them from being easily moved to consumers, regardless of demand.
An 11% allocation to Energy saved my bacon last year and we are basically flat for the year. I don't see any reason to dramatically decrease energy.
As an early retiree, I am much more content to miss a big upside, than to get caught in a dramatic continuing bear market, so my equity exposure is probably lower than most here, with over 60% of our portfolio in Treasuries, CDs and Munis and
5% Gold.
Working now to figure out best and easiest way to add TIPS. Will probably start with SCHP or TIP and buy some bonds at the next auction, along with my allocation of I Bonds.
If there is a big correction will DCA back into equities, mainly US.
EVDAX - Camelot Event Driven Fund I have owned since it was the Pennsylvania Avenue Event-Driven Fund in 2008/2009. Since then, it was reorganized into Quaker Event Arbitrage Fund then moving to the Frank Funds. Since I have owned it when it was the Pennsylvania Avenue Event-Driven Fund investor share class, I was grandfathered from paying a load when it was transferred to the Quaker Event Arbitrage Fund as an "A" share class investor. My "A" share class shares are still load waived. I also bought a small position in the institutional share class through Scottrade.
Pennsylvania Avenue Event-Driven Fund reorganization with Quaker Funds:
http://www.sec.gov/Archives/edgar/data/870355/000145078910000169/quaker497forn14.htmExcerpt from the above SEC link:
Comparison of Sales Load and Distribution Arrangements
The Acquired Fund currently offers one class of shares, the Investor Class, which does not charge a front-end sales load at the time of purchase or a contingent-deferred sales load at the time of redemption.
The Surviving Fund offers three classes of shares: Class A, Class C, and Institutional Class. The Surviving Fund’s Class A Shares charge a front-end load of
5.
50% at the time of purchase.
This load will be waived for the Acquired Fund shareholders who receive Class A Shares of the Surviving Fund in connection with the Reorganization. The front-end sales load applicable to Class A Shares of the Surviving Fund will not be charged for the shares received in the Reorganization or for future purchases of shares of the Surviving Fund made by shareholders of the Acquired Fund.
Reorganization from Quaker Funds to Frank Funds:
https://www.sec.gov/Archives/edgar/data/1281790/000116204418000238/frank497201804.htm
All Asset No Authority Allocation good grief, reading comp
It is NOT an ad.
Brett Arends has been a v smart financial writer for decades
https://en.wikipedia.org/wiki/Brett_ArendsThe article:
Brett Arends's ROI
This ‘crazy’ retirement portfolio has just beaten Wall Street for 50 years
by Brett Arends
This strategy beats the market with less risk, fewer upsets and no ‘lost’ decades
You could call it crazy.
You could call it genius.
Or maybe you could call it a little of both.
We’re talking about a simple portfolio that absolutely anyone could follow in their own 401(k) or IRA or retirement account. Low cost, no muss, no fuss. And it’s managed to do two powerful things simultaneously.
It’s beaten the standard Wall Street portfolio of 60% U.S. stocks and 40% bonds. Not just last year, when it beat them by an astonishing 7 percentage points, but for half a century.
And it’s done so with way less risk. Fewer upsets. Fewer disasters. And no “lost” decades.
Last year, 2022, marked the 50th year of this unheralded portfolio, which is termed “All Asset No Authority,” and which we’ve written about here before.
It’s the brainchild of Doug Ramsey. He’s the chief investment officer of Leuthold & Co., a long-established fund management company that has sensibly located itself in Minneapolis, a long, long way away from Wall Street.
AANA is amazingly simple, surprisingly complex, and has been astonishingly durable. It consists simply of splitting your investment portfolio into 7 equal amounts, and investing one apiece in U.S. large-company stocks (the S&P 500 SPX, +2.28% ), U.S. small-company stocks (the Russell 2000 RUT, +2.26% ), developed international stocks (the Europe, Australasia and Far East or EAFE index), gold GC00, +0.04%, commodities, U.S. real-estate investment trusts or REITS, and 10 year Treasury bonds TMUBMUSD10Y, 3.562%.
It was Ramsey’s answer to the question: How would you allocate your long-term investments if you wanted to give your money manager no discretion at all, but wanted to maximize diversification?
AANA covers an array of asset classes, including real estate, commodities and gold, so it’s durable in periods of inflation as well as disinflation or deflation. And it’s a fixed allocation. You spread the money equally across the 7 assets, rebalancing once a year to put them back to equal weights. And that’s it. The manager — you, me, or Fredo — doesn’t have to do anything else. They not allowed to do anything else. They have no authority.
AANA did way better than the more usual Wall Street investments during 2022’s veil of tears. While it ended the year down 9.6%, that was far better than the S&P 500 (which plunged 18%), or a balanced portfolio of 60% U.S. stocks and 40% U.S. bonds, which fell 17%.
Crypto? Er, let’s not talk about that.
Last year’s success of AANA is due to two things, and them alone: Its exposure to commodities, which were up by about a fifth, and gold, which was level in dollars (and up 6% in euros, 12% in British pounds, and 14% when measured in Japanese yen).
Ramsey’s AANA portfolio has underperformed the usual U.S. stocks and bonds over the past decade, but that’s mainly because the latter have gone through a massive — and, it seems, unsustainable — boom. The key thing about AANA is that in 50 years it has never had a lost decade. Whether the 1970s or the 2000s, while Wall Street floundered, AANA has earned respectable returns.
Since the start of 1973, according to Ramsey’s calculations, it has earned an average annual return of 9.8% a year. That’s about half a percentage point a year less than the S&P 500, but of course AANA isn’t a high risk portfolio entirely tied to the stock market. The better comparison is against the standard “balanced” benchmark portfolio of 60% U.S. stocks and 40% Treasury bonds.
Since the start of 1973, according to data from New York University’s Stern business school, that 60/40 portfolio has earned an average compound return of 9.1% a year. That’s less than AANA. Oh, and this supposedly “balanced” portfolio fared very badly in the 1970s, and badly again last year.
You can (if you want) build AANA for yourself using just 7 low-cost ETFs: For example, the SPDR S&P 500 SPY, +2.29%, iShares Russell 2000 IWM, +2.25%, Vanguard FTSE Developed Markets VEA, +2.76%, abrdn Physical Gold Shares SGOL, +1.94%, a commodity fund such as the iShares S&P GSCI Commodity-Indexed Trust ETF GSG, +0.55%, the iShares 7-10 Year Treasury Bond ETF IEF, +1.29%, and the Vanguard Real Estate ETF VNQ, +2.69%.
The list is illustrative only. There are competing ETFs in each category, and in some — such as with commodities and REITs — they vary quite a lot. GSG happens to follow the particular commodity index that Ramsey uses in his calculations.
There are many worse investment portfolios out there, and it’s a question how many are better. AANA will underperform regular stocks and bonds in a booming bull market, but do better in a lost decade.
For those interested, Ramsey also offers a twist. His calculations also show that over the past 50 years the smart move to make at the start of each year was to invest in the asset class in the portfolio that performed second best in the previous 12 months. He calls that the “bridesmaid” investment. Since 1973 the bridesmaid has earned you on average 13.1% a year — a staggering record that trounces the S&P 500. Last year’s bridesmaid, incidentally, was terrible (it was REITs, which tanked). But most years it wins, and wins big.
If someone wants to take advantage of this simple twist, you could split the portfolio into 8 units, not 7, and use the eighth to double your investment in the bridesmaid asset. For 2023 that would be gold, which trailed commodities last year but broke even.
Crazy? Genius? For anyone creating a longterm portfolio for their retirement there are certainly many worse ideas — including many embraced by highly paid professionals, and marketed to the rest of us.
