Do you get those periods where you just don't want to "play investments"? Or perhaps just become plain disgusted with the whole messy world of investments? Or whatever other reason(s) may come into place.
Well, now; no one has to reply to the questions above, but these may be some areas we all travel from time to time.
'Course, if one doesn't want to play investments at some point in time; this would also presume that one's investments are currently in some mode of market exposure, eh? What in the world would you do about that?
Where and what to shuffle; and why?
We have central banks playing race to the bottom for interest rates to "stimulate or force" investors to go play in shark (big money houses) infested waters. Reportedly the big players have at least 70% of the market action; and are not really always paying attention (i.e.; JPMorgans London whale trader) to where the monies may be playing. One may suppose that if I were a psychopathic minded person in charge of a large money operation and knew that I had the full faith and butt-coverage of any ill fated investments from a government organization; I too would have little concern of where the monies may be playing, eh?
With the U.S. population at about 315 million today; perhaps the best experiment would have been to place real money into the hands of the population. Would this be any less of a grand monetary experiment versus the current policies? Over the past 4 years, every citizen would have received about $15,873 (based on a $5 trillion number) or $3,970/person/year. For 2013, and the reported $1trillion of bond purchases to take place, the number would be $3,175/person. Better yet, the monies would be taxed; but the taxes wouldn't be paid (depending upon the tax bracket) until the next calendar year. A one year float for an individual or family of the monies. 'Course not all of the money would be spent properly; but this is no different than current policies; but at least the individual(s) would decide for themself, eh?
Bank of Japan does a full Ben Bernanke/Mario Draghi move.....official statement, Jan. 22, 2013BOJ, governor statement, Jan. 25, 2013 The news reports have changed quite a bit since August of 2012. There are less and less "official" and "reported" stories about the ills of the financial systems that still remains. Did all of the problems just go away? I think not.
Who/what is playing a game with this?
The long and drawn out circumstances; many of which have been discussed here, are still in place. Many of the common citizens of Europe and the U.S. have no more money in their pockets today, versus 2008. Have the large banks of the world become more stable with the quality of their reserve holdings? Find an official, current and truthful report and it may be discussed properly.
What are the true values of anything into which we invest? Perhaps our house should just grab the best 10 balanced/flexible funds, and let the money ride upon the high crest of the "funny money" and hope to also retain our mental balance at this house, at the same time.
It is not only that too much debt (bonds) continues to be issued in all forms by those needing to raise cash; but that the cheap and easy money continues to feed investment fires in many places. Is an indicator such as VTI worthy of a 12.3% increase since mid-November of 2012, with about 1/2 of this since Jan. 1, 2013? Five year and 52 week highs may be found looking over any equity investment fence one chooses to view from. Are these highs for real reasons; or just too much electronic money needing a good home for a few months at a time. Is the Federal Reserve, as has been noted from time to time, actually playing in equity indexes in an attempt to paint a brighter picture in this all important area of market psychology; that all is well or better or healing?
This house really does not like the smell in many areas. Easy to say and note to just watch and move away from something when the investment is no longer producing; be it income or capital appreciation or both. Easy thoughts, but a tougher action to command.
The wayback machine finds my recall of some of my generation and their perceptions of reality or not, with the use of certain "recreational" drugs. Not much difference in this current investing world; except the drug is now information and/or the lack of straightforward information and what to do with same; and at the same time, be in place among the players who really control the strings from which our house's investment puppet dangles.
The games and big players in the market place are not new, of course; as such actions would follow as far into the past as one could find recorded evidence. At some point in time, in the past; the "salt" markets were manipulated for gain. But, the rules, regs. and size of the game today is beyond any historical levels during this house's investment life span. This is the most troubling aspect today, in my humble opinion.
As noted a few weeks ago; our house will have much less time for several months going forward, with which to stay in the loop of current monetary events. While some of our bond holdings may maintain some forward value; the alternative at this time to smooth into a decent return for this year via a blend into some equity sectors is not favorable at this time; in our opinion. While some individual investors may indeed run back into the equity market at current price levels; we are not comfortable with adding monies at this point. 'Course, this may just be a 30% year for the SP-500, without much of an unwind period. If this is the case, our portfolio will not have much of a positive shine for 2013.
Our bond fund mixes are both up and down, resulting with a +.44% YTD. 'Course, some captial is being preserved; but capital appreciation is missing from many bond funds that have anything to do with investment grade. And yes, it sure is tempting to look at the equity side for the past 6 months and just get the itch. Heck, our 529 account using 50/50 of VBMPX and VITPX is + 5.2% YTD. Hopefully, the big kids won't be too nasty; if/when they choose to unwind some of the equity sectors.
Okay, enough from me today, about all of this. The writing helps to "de-funk" the attitude.
Take care of you and yours,
Catch
Comments
Catch
On a cold Sunday morning I decided to go to morninstar fund's category: total return and select ten well known moderate allocation funds and utilizing "EZbacktest" observe results after six years which included the debacle on 2008.
This buy and hold program, as suggested by you, obtained strong positive reports without angst and provided the solace for mental balance engendering returns superior to S&P 500. The difficulty is Catch, everything works until we try it and past will not guarantee future earnings.
funds selected were: LKBAX,BUFBX,CBALX,VILLX,ICMBX,RNCOX,MAPOX,PRWCX,JABAX,FPACX
philpill
Adding EDV (long duration treasuries) to this chart shows (in my mind) how important other types of bonds are to a portfolio mix that include equities. I'm seeing valuing in buying EDV with profits from VTI or any other equity fund that is out performing right now.
Regards,
Ted
You are always the bright ray of sunshine that peeks through the cloudy skies.
Apparently you have not been reading or absorbing properly, what you have read.
Our holdings are forced to be clustered among various accounts at this time. The sectors into which the monies have been invested do have some overlaps, as I have previously stated.
This is not by chance; but by choice, and may continue into the future.
We do not have your skill set or prescience to know which 4 or 5 funds are the proper and ultimate choices for our portfolio. You are indeed fortunate in this area for investments and life in general. Perhaps in my next rotation to planet earth, I too, will be so fortunate.
As to fund expenses: we use no load funds and M* indicates the current average expense is .57%. Yes, our holdings expenses are higher than etf or index funds.
You really should avoid reading my postings; as I suspect this desire is going to shorten your livespan from changes in body chemistry, resulting from a higher level of stress.
I always smile upon reading your statements; as I know I am helping you have a perceived better day than you may have expected. My comfort is taken from knowing that I am helping someone have a better day; whether in reality or otherwise.
Past this, you have your opinion about whatever; and that is your right to express.
Regards,
Catch
Thank you for the notations and the fine chart.
Regards,
Catch
Regards,
Ted
Thank you for your input and the time to study and place the list.
Regards,
Catch
Otherwise rebalancing a portfolio at least once a year is a sound policy.
Thanks Catch - a good provocative write-up on your part.
If you're all bonds, you're bummed today. If you're all equity, you're bummed the next time the market tanks. If you're nearly all Asia (which Max was for a while), then I'd guess you're not thrilled when Asia underperforms for 3-6 mo.
You don't HAVE to have balance - especially if you strongly believe in something - but if you don't have balance, then you have to be wiling to accept days, weeks and possibly months of underperformance.
I really have no interest in fixed income and don't find it appealing at the moment, so I'm mostly equity - but that's my choice. Catch has done remarkably well with nearly all bonds, but I don't understand how fixed income can continue performing as it has. Maybe I'll be totally wrong, but I can accept that.
Here's the thing that would concern me if I was all bond or equity though; if you're not balanced and are all bonds (for example) and you can imagine that - at some point in the near future - you want to switch a significant amount of your portfolio to equities, that's really a major instance of having to time the market to optimally make that switch, and that - at least to me - is really unappealing. If you have some degree of balance, you can tweak things in a much easier and more relaxed fashion.
As for a need to be conservative, I absolutely respect that people want to be more conservative as they move towards/into retirement age, but I do think there are relatiely low-risk ways to get equity exposure - there's a lot of Johnson and Johnson type plays that are dull ways to get equity exposure and a nice yield that may rise over time.J & J is never going to be a home run (although it's done pretty well in the last year or so), but it also only lost about 10% in 2008.
J & J (and Procter/Gamble and the like) are going to have their problems occasionally, but there are certainly names out there that a person in retirement age could add and not have to feel overly concerned by the day-to-day and collect the 3-3.5% yield. From what I continue to see, consumer staples companies are certainly increasing prices.
I mean, I've certainly changed my views to some degree over the last five years, but I think one thing that remains a constant is that it's okay to make choices (and large-scale choices - being heavily concentrated in a theme or asset class, etc), but you have to be willing to accept those choices. If they don't work out, learn from them, but if you're all Asia, bonds, stocks, US, whatever, then there's going to be times when that doesn't work - it may be months. However, if someone's all one thing, I'd hope they have a real, fundamental reasoning.
Additionally, beyond all that, does one's portfolio reflect their views, risk tolerance - is it achieving their goals? Everyone's goals are going to be different and people's investment time horizons are going to be different. What kind of investor are you? There are many different types, and that's okay. There is no one path, but I think there has to be some sort of generalized viewpoint/plan/outlook/structure.
I hate having to make large-scale or even mid-scale moves with the changes in money flows and asset classes, which are increasingly frequent in today's markets.
Someone once posted on the board that they were out of emerging markets because EEM had gone below the 200 day or something like that. 1:) If I'm invested in EM it's because I think it's a long-term story and 2:) having to be in and out of things because they've gone above/below a moving average is exhausting in this market and with how this market is, a visible technical move can be invalidated very quickly.
If someone can play off technical levels day in and day out, that's great. I think it's exhausting and personally, I'd rather focus on a long-term story. Maybe I'll be wrong, but every error in investing is - I think - a chance to maybe learn something.
I think my strongest view is that don't want to have a portfolio of all bonds and then go, "Gee, I want to move half to stocks in the near future." That's really market timing in an unappealing manner, especially now that there is suddenly significant inflows into retail equity funds.
If I own something, I may take profits in it sooner than expected, but I really am not getting into something unless I have an "over-the-horizon" viewpoint on it - the story isn't a "this year" story, but a story that I believe can play out over at least 3-5 years or hopefully longer. Otherwise, there's too much noise in this market and money flows from one asset class to another are too frequent.
I will say that I run a fairly widespread portfolio, but I think there's enough stories (individual names) and funds that I like. Lets say that there was a period where I didn't have as many ideas, there wouldn't be as many positions. I do occasionally have a lot in one particular theme, but multiple different names that fall under that theme.
I give all the respect for people who can sit and time the market and/or run a concentrated portfolio. I've tried market timing and while I really like investing in the broader sense, I've grown to dislike micromanaging.
That's really a good summary - I love investing, but having to even mildly "micromanage" and respond to asset class flows and other shorter-term factors in today's market is just tiring. An optimal situation for me is an individual long-term story or theme I like and that offers a solid yield and I can just reinvest dividends. Brookfield Infrastructure and Kinder Morgan are certainly a couple of examples.
People can and do live 20-30 years after reaching the retirement age. So, you have to have a portion of your assets invested in moderate growth, moderate risk funds. I think equity exposure of the portfolio should not be lower than 20%.