Stop ! Or Tinker, Tinker, Tinker
- LiveSimple
- Posts: 2312
- Joined: Thu Jan 03, 2013 6:55 am
Stop ! Or Tinker, Tinker, Tinker
Edited to follow Ladygeek's advice to post in the Required format.
Last edited by LiveSimple on Fri Mar 01, 2013 6:08 pm, edited 4 times in total.
Invest when you have the money, sell when you need the money, for real life expenses...
Re: Stop ! Or Tinker, Tinker, Tinker
Stop!Ruby wrote:Stop ! Or Tinker, Tinker, Tinker
That's a pretty pie-chart... but if you don't mind (no answer needed*), how much money are we talking about?
* the question is mostly thought-provoking.
Landy |
Be yourself, everyone else is already taken -- Oscar Wilde
Re: Stop ! Or Tinker, Tinker, Tinker
I assume this is a follow-on from your previous thread: One fund or more fund in an account
Instead of total dollars, why don't you post what you have in this format? Asking Portfolio Questions
The format is designed to give us the information we need to answer your questions, while making you think about the "big picture." It will put all the pieces together from that nice pie chart and your Morningstar style box from Subject: Post your Morningstar X-Ray Style Box
Instead of total dollars, why don't you post what you have in this format? Asking Portfolio Questions
The format is designed to give us the information we need to answer your questions, while making you think about the "big picture." It will put all the pieces together from that nice pie chart and your Morningstar style box from Subject: Post your Morningstar X-Ray Style Box
You're showing a 55/44 (stock/bond) asset allocation ratio. With no further information, I'd say stop.Ruby wrote:
Tilting vs Speculating
Ruby,
Two quick thoughts:
1. In general, "tilting" is in reference to holding broad return dimensions in greater-than-cap-weighted proportions. These dimensions are most commonly small and value in equities and maturity and credit in bonds. Adding sectors, on the other hand, is more akin to speculating (taking risk without an expected return). The difference is, after diversifying fully, what you are left with in terms of expected performance are these aforementioned dimensions of return--they drive results almost exclusively. Instead, isolating individual sectors adds risk without an expected return--you aren't compensated for betting on one sector over another. Any random sample of a few sectors has an expected return of the market (ignoring size/value orientation) with additional risk. To eliminate this risk, just add the other sectors until you arrive at the market--reducing risk without affecting expected return.
2. Now, how to allocate using that framework?
a) Start with the "Core 3"--US TSM, Int TSM, TBM, lets say 42/18/40.
b) To tilt to small and value globally and include real estate, add the following: 24% US TSM, 12% US SV, 6% RE, 9% TISM, 9% World exUS SC, 40% TBM
c) If you want additional inflation protection, add 10% TIPS (from TBM),
d) If you want added liquidity, add 10% ST Bond Index (from TBM)
e) if you want both combined, use ST TIPS (from TBM)
Eric
Two quick thoughts:
1. In general, "tilting" is in reference to holding broad return dimensions in greater-than-cap-weighted proportions. These dimensions are most commonly small and value in equities and maturity and credit in bonds. Adding sectors, on the other hand, is more akin to speculating (taking risk without an expected return). The difference is, after diversifying fully, what you are left with in terms of expected performance are these aforementioned dimensions of return--they drive results almost exclusively. Instead, isolating individual sectors adds risk without an expected return--you aren't compensated for betting on one sector over another. Any random sample of a few sectors has an expected return of the market (ignoring size/value orientation) with additional risk. To eliminate this risk, just add the other sectors until you arrive at the market--reducing risk without affecting expected return.
2. Now, how to allocate using that framework?
a) Start with the "Core 3"--US TSM, Int TSM, TBM, lets say 42/18/40.
b) To tilt to small and value globally and include real estate, add the following: 24% US TSM, 12% US SV, 6% RE, 9% TISM, 9% World exUS SC, 40% TBM
c) If you want additional inflation protection, add 10% TIPS (from TBM),
d) If you want added liquidity, add 10% ST Bond Index (from TBM)
e) if you want both combined, use ST TIPS (from TBM)
Eric
- LiveSimple
- Posts: 2312
- Joined: Thu Jan 03, 2013 6:55 am
Re: Stop ! Or Tinker, Tinker, Tinker
Thanks Eric
Invest when you have the money, sell when you need the money, for real life expenses...