Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
@Ted: that may be true, but your post rated only 8 views and no comments. It's a little much to expect other posters to comb through 40 of your linkposts posts a day before daring to post something that they find interesting or believe is relevant.
You may find duplicate linkposts to be irritating, but I am unaware of any MFO policy on this. If you're going to flood the site with linkposts, then take it as it comes.
Nothing like a little hostility to scare off new posters, Ted. Thanks.
Ted is one of our senior members here at MFO both in age and time on the board. He does a good job of bringing links to the board for all of us to enjoy. And, at times it happens that one of us will duplicate one of the links that he has already posted. It has happen to me more than once in duplicating one of Ted's links. Both of us are still here as this is a board made up of fellow mutual fund investors that believes in helping one another become better investors.
There is a lot of talent on the board from teachers, college professors, investment advisors, engineers, traders, and others form many different walks of life. I myself am recently retired and a former credit manager.
We need new folks, like yourself, to share their thoughts and perspectives. But, in doing so be prepared for some here that enjoy taking others to task. So just know in advance to get some thick skin as ... again ... you'll most likely be challenged from time-to-time.
Thanks for the heads up about posting links. Had no clue. I will try and add to the discussions but I don't plan on taking anyone to task. I appreciate you making me feel welcomed.
As a new poster and frequent visitor to MFO, what transpired over the last couple of weeks has definitely inhibited my participation. After reading Ted's comment above, it is my opinion that it is more part of the problem than a solution. I did the only thing I could...I flagged his post.
Let me extend a welcome having been a member of Fund Alarm and the MFO community.
Just know for every poster that might inhibit your participation and even at times call you out on certain things ... there are others that value new people coming to the board to read, lean and share their own experiences and thoughts on many subjects discussed.
I hope you will continue to post and bring your thoughts and perspectives to written words posted for all of us to read and enjoy.
Getting back to the topic at hand, "New highs doesn't mean you should sell", but is it really time to buy more equities? Between my core balanced funds and dedicated bond funds, my portfolio has about 50% bonds (I'm 63). In light of pending problems for bonds going forward, I wouldn't mind reducing that percentage by a little...but with equities at all time highs? Cash is no fun....
To be honest, I don't open 99% of the article links here unless I see that someone has commented. I didn't open it when Ted posted it and backing out to look, I notice only about 10 people did open his link. So, you win with over 100 looks so far!!!
I am the same age as you and I am 70% equities, 30% bonds and cash. Depending on your needs and individual situation, as many here will tell you, you might be a bit too conservative. If however you have determined what you need in retirement and 50/50 can get you there and you sleep better at night, its fine. I am currently adding to three funds at market tops from the sale of a stock , not too much at a time, but have learned that whether you dollar cost average in or do it in a lump sum, if they are retirement accounts, it won't matter too much in the long run, assuming they are not huge amounts. If we do have a blow out second half, I will reallocate at year end, as I do not want to be over 75% equities.
Welcome to the board and please keep posting, and let us know what you decide.
Slick, I have achieved my retirement goals (retired)...and won't really need to draw upon any of the funds for at least another 5-7 years (when my wife retires). However, along the way with asset allocations similar too or greater than yours, we endured portfolio fluctuations of 3-500K several times. From 1987 going forward, I've experienced them all and as I age, in an effort to avoid losses of that magnitude again, I have become perhaps overly concerned about limiting downside risk (not the 10% kind...the 50% kind). I agree that my portfolio at 42% equities is conservative...perhaps overly so, but for the present, I sleep much better at night. There are worse things than just reinvesting the bond income stream. Have you seen what the YTD total return of PIMIX is?
If you are sleeping well as it is, you are ahead of many others. If you are well diversified, you should not see a 50% loss or have to worry about it. I am more diversified than I used to be and as we age, that is always a good thing since we have less time to recover. If we have learned anything from the past ten years it is this: its very tempting to belong to the church of whats working now, but diversification works best in the long run. My funds that were flat last year are year to date best performers with 12% + ytd. I have no pimco funds but congrats on your PIMIX.
slick, Spoken like a true Financial Advisor. However, diversified asset allocation offered little or no protection against the types of extra ordinary losses my portfolio suffered via the tech bubble, 911 or the real estate financial crisis. Market meltdowns were correlated across all asset classes and global regions. But here is my point: If your retirement portfolio is going to be used as an income generation machine to support your retirement, at our age you don't have as much time to recover from events outside that of normal market cycles. The last thing you want to do is to eat your seed corn to support retirement. Thus, in my opinion, as you approach retirement portfolio risk must take on additional consideration (especially when markets are at all time highs). That is why the topic of this discussion ("New highs doesn't mean you should sell" is of interest to me. Just my two cents, which I'm hoping won't be degraded by half if and when we are confronted with the next potential Black Swan event.
>> [[DG]] diversified asset allocation offered little or no protection against the types of extraordinary losses my portfolio suffered via the tech bubble, 911 or the real estate financial crisis.
Huh? How do you figure? When I chart, say, GLRBX and FPACX against, say, FCNTX, I see significant protection in, and smoothing out of, each one of those dips you cite. Just as diversification is supposed to do.
Now, if you really cannot afford a 3-4 years (often less) to recover within a given bucket, then yeah, low equities for you would be best. Ditto some dividends, given your seed corn philosophy (some of us newly retired eat ours regularly).
davidrmoran, I'm not sure you completely understand the context upon which I made the statement. The discussion was pertaining to a total 70/30 asset mix portfolio (with the equity position increasing throughout the balance of the year) close to retirement, as opposed to my portfolio that was closer to 40/50 mix (which Slick said might be on the conservation side). And I assumed that Slick intended diversification to mean LC/MC/SC domestic, international and emerging markets. FCNTX lost upwards of 38% in 2008. Diversified? Large Cap domestic is not diversified. FPACX? Hardly diversified enough by itself or in conjunction with the others you mentioned...and wasn't it it's large position in cash that limited the slide in 2008. GLRBX is a 50/50 balanced fund...much more to my liking, but hardly the thing that an entire million and a half $ portfolio is made of. As far as not being able to afford waiting 3-4 years for the market to recover, and eating your portfolio seed corn while you wait...good luck with that. I would rather "afford" to be conservative.
To me, being diversified is more than LC/MC/SC intl and emerging markets. Within these categories I also have sector funds and etfs such as biotech, pharma, utilities, reits and consumer staples, an allocation fund and 20 stocks across many sectors of the US economy. Not all of them will be up in any given year, and some will weather the climate better than others in a downturn.Nothing is fullproof and in a true market crash there is no where to hide except cash. I am not one to run to cash every time we have market tops afraid that the market will go down or go to cash in a crash. I am not a financial advisor, just a student of Mr Market like many of us. There are some very wise and experienced people at MFO along with some I don't agree with but I pay attention to all of them and choose which ones I feel help me the most. And yes, I eat a small portion of my portfolio seed as you call it and don't worry about it since I retired.
Professor Jeremy Siegel [author, Stocks For the Long Run] made an important point with respect to the bear market from October 2007-March 9, 2009, when the US stock market went down 57%. He said something to the effect of, iirc, 'there are only two asset classes, stocks and US Treasuries.'
In that bear market/financial crisis, it didn't matter if you had large cap, small cap, mid cap, REITs, US stocks, foreign stocks, value, growth......they all got clobbered. But one asset class did great: US Treasuries. There is a 'flight to safety' in US Treasuries. So that does provide important diversification. Check out the total return of US Treasury bond funds in 2008 and you will see they did great, and provided great diversification.
However, DGoodrow mentioned "In light of pending problems for bonds going forward". That is a duration issue, which only comes up if rates rise. If rates rise say 1% in one year, and if you are in a total US bond market index fund, which has a duration of 5.6 years, then your bond fund will likely lose approx. 5.6% in net asset value, which does not include the yield which is currently 2.1%, so the one year total return would be roughly -3.5%. Of course, there are many who believe that rates will rise significantly over an extended period, hurting bond holders a lot more, which may be what DGoodrow is alluding to.
So one solution for someone who is concerned about bonds going forward is to put some fixed income money into online FDIC insured banks. You can get .95% in a demand type savings account [with no minimum deposit], or more in certificates of deposit.
Another option for diversification is a gold fund, like GLD or IAU. Personally I don't feel comfortable doing that, as I would rather wait for a much more attractive gold price.
DGoodrow said... GLRBX is a 50/50 balanced fund...much more to my liking,.. If you're comfy with that fund co. and management,you've got to like JAZZX . The James Long-Short Fund has out performed GLRBX since its May 2011 start.http://www.jamesfunds.com/fund-overview.php?fund=JAZZX A L/S strategy would be a good diversifier as would the previously mentioned Precious Metals.Also you could use E M debt and the M L P /infrastructure space.Also look @ David Glancy's PYSAX or PVSAX. He has a good record and often holds 15-20% cash,mostly for an unforeseen opportunity.Use RSIVX for your 1-3 year expenses . Scott has often mentioned the need for infrastructure investment across the world and many of the funds specializing in that space are up nicely this year.$$ cost ave. into your chosen alternatives and re-balance @ your comfort level.
A number of companies have plans to sell dollar-denominated bonds, including the US$1.5 billion unsecured notes proposed by state-owned oil and gas giant PT Pertamina; $450 million bonds by coal miner PT Berau Coal Energy and $175 million bonds by property developer PT Pakuwon Jati, among others.
Pertamina’s notes, which are offered with 6.45 percent coupon rate and will be due in 2044, obtained a Baa3 rate from Moody’s Investor Service. Under the rating, the obligation is seen to have a moderate credit risk.
“The outlook of the rating is stable,” Moody’s wrote in a statement published on Friday.
And The Braver! Troubled coal miner PT Berau Coal Energy released late on Thursday a prospectus highlighting its plan to sell up to $450 million in debt papers Proceeds from the bond issuance would be used to refinance its $450 million bonds, which were issued in 2010 and are due to mature next year The new bonds will mature in five years and will be offered with a maximum coupon rate of 12 percent, the prospectus reads. That compares with Berau’s 2010 bond coupon rate of 12.5 percent.
Berau, one of the major coal miners in the country, is struggling to manage its liquidity as the global coal outlook remains uncertain.
The coal miner reported $10.18 million in net loss during the first three months of the year, leading to worries over the company’s ability to pay its debts.
Amid concerns of rising private sector debts, Indonesian companies are continuing to seek external funding in foreign currencies to support expansion or the refinancing of previous debts.
Comments
Regards,
Ted
http://www.mutualfundobserver.com/discuss/discussion/14189/john-waggoner-new-highs-don-t-mean-you-have-to-sell#latest
You may find duplicate linkposts to be irritating, but I am unaware of any MFO policy on this. If you're going to flood the site with linkposts, then take it as it comes.
Nothing like a little hostility to scare off new posters, Ted. Thanks.
I am new here and didn't mean to step on anybody's toes. I had no idea Ted was so territorial.
Don't be concerned about Ted.
Post as you choose with relevant links and/or your thoughts or questions.
Take care,
Catch
Let me say ... Welcome.
Ted is one of our senior members here at MFO both in age and time on the board. He does a good job of bringing links to the board for all of us to enjoy. And, at times it happens that one of us will duplicate one of the links that he has already posted. It has happen to me more than once in duplicating one of Ted's links. Both of us are still here as this is a board made up of fellow mutual fund investors that believes in helping one another become better investors.
There is a lot of talent on the board from teachers, college professors, investment advisors, engineers, traders, and others form many different walks of life. I myself am recently retired and a former credit manager.
We need new folks, like yourself, to share their thoughts and perspectives. But, in doing so be prepared for some here that enjoy taking others to task. So just know in advance to get some thick skin as ... again ... you'll most likely be challenged from time-to-time.
Join in ... and, keep on posting.
Cordially,
Old_Skeet
Guido
Let me extend a welcome having been a member of Fund Alarm and the MFO community.
Just know for every poster that might inhibit your participation and even at times call you out on certain things ... there are others that value new people coming to the board to read, lean and share their own experiences and thoughts on many subjects discussed.
I hope you will continue to post and bring your thoughts and perspectives to written words posted for all of us to read and enjoy.
Cordially,
Old_Skeet
To be honest, I don't open 99% of the article links here unless I see that someone has commented. I didn't open it when Ted posted it and backing out to look, I notice only about 10 people did open his link. So, you win with over 100 looks so far!!!
Ignore the bullying and link whatever you want.
I am the same age as you and I am 70% equities, 30% bonds and cash. Depending on your needs and individual situation, as many here will tell you, you might be a bit too conservative. If however you have determined what you need in retirement and 50/50 can get you there and you sleep better at night, its fine. I am currently adding to three funds at market tops from the sale of a stock , not too much at a time, but have learned that whether you dollar cost average in or do it in a lump sum, if they are retirement accounts, it won't matter too much in the long run, assuming they are not huge amounts. If we do have a blow out second half, I will reallocate at year end, as I do not want to be over 75% equities.
Welcome to the board and please keep posting, and let us know what you decide.
I have achieved my retirement goals (retired)...and won't really need to draw upon any of the funds for at least another 5-7 years (when my wife retires). However, along the way with asset allocations similar too or greater than yours, we endured portfolio fluctuations of 3-500K several times. From 1987 going forward, I've experienced them all and as I age, in an effort to avoid losses of that magnitude again, I have become perhaps overly concerned about limiting downside risk (not the 10% kind...the 50% kind). I agree that my portfolio at 42% equities is conservative...perhaps overly so, but for the present, I sleep much better at night. There are worse things than just reinvesting the bond income stream. Have you seen what the YTD total return of PIMIX is?
Spoken like a true Financial Advisor. However, diversified asset allocation offered little or no protection against the types of extra ordinary losses my portfolio suffered via the tech bubble, 911 or the real estate financial crisis. Market meltdowns were correlated across all asset classes and global regions. But here is my point: If your retirement portfolio is going to be used as an income generation machine to support your retirement, at our age you don't have as much time to recover from events outside that of normal market cycles. The last thing you want to do is to eat your seed corn to support retirement. Thus, in my opinion, as you approach retirement portfolio risk must take on additional consideration (especially when markets are at all time highs). That is why the topic of this discussion ("New highs doesn't mean you should sell" is of interest to me. Just my two cents, which I'm hoping won't be degraded by half if and when we are confronted with the next potential Black Swan event.
Huh? How do you figure? When I chart, say, GLRBX and FPACX against, say, FCNTX, I see significant protection in, and smoothing out of, each one of those dips you cite. Just as diversification is supposed to do.
Now, if you really cannot afford a 3-4 years (often less) to recover within a given bucket, then yeah, low equities for you would be best. Ditto some dividends, given your seed corn philosophy (some of us newly retired eat ours regularly).
I'm not sure you completely understand the context upon which I made the statement. The discussion was pertaining to a total 70/30 asset mix portfolio (with the equity position increasing throughout the balance of the year) close to retirement, as opposed to my portfolio that was closer to 40/50 mix (which Slick said might be on the conservation side). And I assumed that Slick intended diversification to mean LC/MC/SC domestic, international and emerging markets. FCNTX lost upwards of 38% in 2008. Diversified? Large Cap domestic is not diversified. FPACX? Hardly diversified enough by itself or in conjunction with the others you mentioned...and wasn't it it's large position in cash that limited the slide in 2008. GLRBX is a 50/50 balanced fund...much more to my liking, but hardly the thing that an entire million and a half $ portfolio is made of. As far as not being able to afford waiting 3-4 years for the market to recover, and eating your portfolio seed corn while you wait...good luck with that. I would rather "afford" to be conservative.
To me, being diversified is more than LC/MC/SC intl and emerging markets. Within these categories I also have sector funds and etfs such as biotech, pharma, utilities, reits and consumer staples, an allocation fund and 20 stocks across many sectors of the US economy. Not all of them will be up in any given year, and some will weather the climate better than others in a downturn.Nothing is fullproof and in a true market crash there is no where to hide except cash. I am not one to run to cash every time we have market tops afraid that the market will go down or go to cash in a crash. I am not a financial advisor, just a student of Mr Market like many of us. There are some very wise and experienced people at MFO along with some I don't agree with but I pay attention to all of them and choose which ones I feel help me the most. And yes, I eat a small portion of my portfolio seed as you call it and don't worry about it since I retired.
In that bear market/financial crisis, it didn't matter if you had large cap, small cap, mid cap, REITs, US stocks, foreign stocks, value, growth......they all got clobbered. But one asset class did great: US Treasuries. There is a 'flight to safety' in US Treasuries. So that does provide important diversification. Check out the total return of US Treasury bond funds in 2008 and you will see they did great, and provided great diversification.
However, DGoodrow mentioned "In light of pending problems for bonds going forward".
That is a duration issue, which only comes up if rates rise. If rates rise say 1% in one year, and if you are in a total US bond market index fund, which has a duration of 5.6 years, then your bond fund will likely lose approx. 5.6% in net asset value, which does not include the yield which is currently 2.1%, so the one year total return would be roughly -3.5%. Of course, there are many who believe that rates will rise significantly over an extended period, hurting bond holders a lot more, which may be what DGoodrow is alluding to.
So one solution for someone who is concerned about bonds going forward is to put some fixed income money into online FDIC insured banks. You can get .95% in a demand type savings account [with no minimum deposit], or more in certificates of deposit.
Another option for diversification is a gold fund, like GLD or IAU.
Personally I don't feel comfortable doing that, as I would rather wait for a much more attractive gold price.
Just some thoughts.
GLRBX is a 50/50 balanced fund...much more to my liking,..
If you're comfy with that fund co. and management,you've got to like JAZZX . The James Long-Short Fund has out performed GLRBX since its May 2011 start.http://www.jamesfunds.com/fund-overview.php?fund=JAZZX A L/S strategy would be a good diversifier as would the previously mentioned Precious Metals.Also you could use E M debt and the M L P /infrastructure space.Also look @ David Glancy's PYSAX or PVSAX. He has a good record and often holds 15-20% cash,mostly for an unforeseen opportunity.Use RSIVX for your 1-3 year expenses .
Scott has often mentioned the need for infrastructure investment across the world and many of the funds specializing in that space are up nicely this year.$$ cost ave. into your chosen alternatives and re-balance @ your comfort level.
From $4 Tril to $9 Tril in next 10 years.
http://news.yahoo.com/global-infrastructure-capital-spending-hit-9-trillion-2025-040519158--sector.html
E M debt for the brave.
A number of companies have plans to sell dollar-denominated bonds, including the US$1.5 billion unsecured notes proposed by state-owned oil and gas giant PT Pertamina; $450 million bonds by coal miner PT Berau Coal Energy and $175 million bonds by property developer PT Pakuwon Jati, among others.
Pertamina’s notes, which are offered with 6.45 percent coupon rate and will be due in 2044, obtained a Baa3 rate from Moody’s Investor Service. Under the rating, the obligation is seen to have a moderate credit risk.
“The outlook of the rating is stable,” Moody’s wrote in a statement published on Friday.
And The Braver!
Troubled coal miner PT Berau Coal Energy released late on Thursday a prospectus highlighting its plan to sell up to $450 million in debt papers
Proceeds from the bond issuance would be used to refinance its $450 million bonds, which were issued in 2010 and are due to mature next year
The new bonds will mature in five years and will be offered with a maximum coupon rate of 12 percent, the prospectus reads. That compares with Berau’s 2010 bond coupon rate of 12.5 percent.
Berau, one of the major coal miners in the country, is struggling to manage its liquidity as the global coal outlook remains uncertain.
The coal miner reported $10.18 million in net loss during the first three months of the year, leading to worries over the company’s ability to pay its debts.
Amid concerns of rising private sector debts, Indonesian companies are continuing to seek external funding in foreign currencies to support expansion or the refinancing of previous debts.
Raras Cahyafitri, The Jakarta Post, Jakarta | Business | Sat, June 21 2014, 2:47 PM
http://www.thejakartapost.com/news/2014/06/21/firms-sell-dollar-bonds-despite-rising-concerns-over-private-debt.html