Success stories ?]

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Success stories ?]

Postby RFoss5 » Fri Feb 01, 2013 9:15 pm

I would like to have the opinions and/or sucesses of bogleheads who have or have had in the past one or more of the following mutuals in their portfolios as far as return on investment is concerned : Vanguard VGSTX, Vanguard VIVAX, Vanguard VWELX, Fidelity FSHOX and Fidelity Fieux . Did they live up to your ROI expectations ove the past 3 years ? Did you make money on these ? Thanks very much from a novice investor.
Last edited by RFoss5 on Wed Feb 06, 2013 8:55 pm, edited 1 time in total.
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Re: Diversification [Portfolio Help, Asset Allocation]

Postby LAlearning » Fri Feb 01, 2013 10:24 pm

I know nothing!
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Re: Diversification [Portfolio Help, Asset Allocation]

Postby mlewis » Fri Feb 01, 2013 10:32 pm

Could you give a bit more info?

I'm confused by your totals, they only add to 60%.
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Re: Diversification [Portfolio Help, Asset Allocation]

Postby RFoss5 » Sat Feb 02, 2013 1:46 pm

Sorry, I noticed my own errors after I posted the info. Actually my current diversification is as follows :

20 % Vanguard VGSTX fund ( 60% stocks/40% bonds)
10 % Fidelity FSHOX construction/housing fund
15 % Fidelity FIEUX European large growth fund
10 % Fidelity FSRBX financial bank stock fund
15 % Vanguard VIVAX index large value stock fund
20 % Vanguard VWELX fund = 2/3 stocks , 1/3 bonds.
10 % Stryker ( SYK) individual stock
Is this a good diversification at may age ( 72) ? Thanks to anybody for an opinion or recommendation. I am very conservative risk-averse investror and cannot risk losing much of my principal/.
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Re: Diversification [Portfolio Help, Asset Allocation]

Postby damjam » Sat Feb 02, 2013 8:52 pm

RFoss5 wrote:Sorry, I noticed my own errors after I posted the info. Actually my current diversification is as follows :

20 % Vanguard VGSTX fund ( 60% stocks/40% bonds)
10 % Fidelity FSHOX construction/housing fund
15 % Fidelity FIEUX European large growth fund
10 % Fidelity FSRBX financial bank stock fund
15 % Vanguard VIVAX index large value stock fund
20 % Vanguard VWELX fund = 2/3 stocks , 1/3 bonds.
10 % Stryker ( SYK) individual stock
Is this a good diversification at may age ( 72) ? Thanks to anybody for an opinion or recommendation. I am very conservative risk-averse investror and cannot risk losing much of my principal/.

Here we subscribe to the Boglehead Philosophy:
Develop a workable plan
Invest early and often
Never bear too much or too little risk
Never try to time the market
Use index funds when possible
Keep costs low
Diversify
Minimize taxes
Keep it simple
Stay the course

Your portfolio doesn't fit that philosophy for a few reasons, the most glaring is that you are taking too much risk. Assuming this is your total portfolio, you only have 14.6% of it in bonds (40% of 20 % Vanguard VGSTX + 33% of 20 % Vanguard VWELX). Stocks in general a riskier than bonds. A typical breakdown of stock/bond would be 60% stock/40% bond. A more conservative approach would call for age in bonds. In your case that would be ~70% bonds. So you are obviously to stock heavy.

Investing in a single stock is very risky. Most Bogleheads stick to diversified mutual funds or ETFs for this reason. Even those who invest in individual stocks recommend that you hold at least 20 different firms spread over different sectors of the market to achieve minimal diversification and therefore risk reduction.

You have a couple of sector funds (10 % Fidelity FSHOX construction/housing fund and 10 % Fidelity FSRBX financial bank stock fund). Again your concentrating your risk. Since we don't know the future with certainty, we can't know what sectors or individual stocks will outperform the market. That is why we buy the entire market and not try to guess what will outperform. This guarantees Market return - fees. Fees are why we invest in Index funds, because they typically have the lowest fees of all funds.

In order to diversify fully you would invest in the total market, if you could. Well you can invest in the almost the total market with a portfolio constructed of Vanguard Total Stock Market, Vanguard Total International Stock Market, and Vanguard Total Bond Market. Such a portfolio would give you the greatest diversification with the least effort. See: Three-fund portfolio for more information. To give greater protection from inflation you could add TIPS as part of your bond holdings to create a Four-fund portfolio.

So in summary, if I were building your portfolio, I would increase the amount of bonds and invest in total market funds for the remaining equities.
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Re: Diversification [Portfolio Help, Asset Allocation]

Postby dbr » Sun Feb 03, 2013 12:09 pm

damjam has given you good advice.

Diversification means first of all to invest in a large collection of individual stocks and bonds, which is automatically accomplished by buying funds and is very difficult to do trying to assemble individual stocks on your own.

Asset class diversification begins by distinguishing stocks from bonds and then by distinguishing US stocks (for US investors) from OUS stocks. The three fund portfolio accomplishes that. It is not necessary to go further.

Selecting sector stocks is generally not helpful, nor is it necessary to try to randomly pick growth and value. Euro growth and US value as two selections would have no rationale at all.

A very helpful book might be Rick Ferri's All About Asset Allocation, and there are many others. I like Larry Swedroe in general.
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Re: Diversification [Portfolio Help, Asset Allocation]

Postby retiredjg » Sun Feb 03, 2013 12:39 pm

Welcome to the forum! I agree with the others that you have way too much stock if you consider yourself to be risk averse. Your portfolio reflects nothing like being risk averse, so it is curious how you got there. Did you hold something like this during the last stock market crash?

We could help you figure out a portfolio that suits you better than what you have now. See the link at the bottom of this post for the information needed to help do that.
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Re: Diversification [Portfolio Help, Asset Allocation]

Postby retiredjg » Sun Feb 03, 2013 12:40 pm

Wiki article link: Getting Started

This link is a good place to get started learning something about investing. There's a lot of info, but you don't have to digest it all today. :D
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