All Stocks Anyone?

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.

All Stocks Anyone?

Postby DouglasDoug » Sun Jun 02, 2013 6:54 am

In the weekend WSJ article, "The 100% Stock Solution", it states instances in which an all equity portfolio may be fitting. This strategy flies against Mr. Bogle's philosophy, or does it? Do any Bogleheads go full throttle with an all stock portfolio?
DouglasDoug
 
Posts: 123
Joined: Mon Aug 18, 2008 5:38 pm

Re: All Stocks Anyone?

Postby pennstater2005 » Sun Jun 02, 2013 7:00 am

DouglasDoug wrote:In the weekend WSJ article, "The 100% Stock Solution", it states instances in which an all equity portfolio may be fitting. This strategy flies against Mr. Bogle's philosophy, or does it? Do any Bogleheads go full throttle with an all stock portfolio?


I'd say even if you were 90/10 or so is there that much of a difference? I'm 80/20 and 100% stock is just a little too scary for me.
Friendship is like peeing on yourself: everyone can see it, but only you get the warm feeling that it brings. - Robert Bloch
User avatar
pennstater2005
 
Posts: 1359
Joined: Wed Apr 11, 2012 8:50 pm
Location: PA

Re: All Stocks Anyone?

Postby z3r0c00l » Sun Jun 02, 2013 7:06 am

Stocks have been doing well for the past few years, perfect time to pile in...
z3r0c00l
 
Posts: 621
Joined: Fri Jul 06, 2012 11:43 am
Location: NYC

Re: All Stocks Anyone?

Postby nisiprius » Sun Jun 02, 2013 7:08 am

100% stocks surfaces over and over, typically whenever the stock market has had a good run-up.

But William J. Bernstein recently wrote, here in this forum, my boldfacing:
95% of investors, this one included, don't do well long-term with 100% stocks.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
User avatar
nisiprius
Advisory Board
 
Posts: 26044
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: All Stocks Anyone?

Postby IlliniDave » Sun Jun 02, 2013 7:39 am

I've only recently read Common Sense on Mutual Funds, and yesterday was reviewing parts of it. Bogle did write that for a young person just starting out it may not be imprudent to invest 100% in stocks. And at the risk of bringing up a contentious topic, I've heard him say in an interview that in light of anticipated SS benefits (present value ~ $300k) he didn't see any reason why a 55-year-old with $150k to invest shouldn't put it all in stocks.

So, as a blanket strategy, it doesn't fit with his most general recommendations, but he's apparently not uniformly opposed to it either. He seems somewhat more flexible in his thinking than he gets credit for, probably because his unyielding convictions on costs and indexing are what he's best known for.

I spent the first 18 years of my investing life essentially 100% in stock funds. I don't have any regrets, but if I had to go back, I would not do so again.
Don't do something. Just stand there!
IlliniDave
 
Posts: 1383
Joined: Fri May 17, 2013 7:09 am

Re: All Stocks Anyone?

Postby The Wizard » Sun Jun 02, 2013 7:43 am

If you have LOTS of money then 100% stocks is OK since if $10 million falls in paper value by 50%, you still have $5 million to live on while stocks recover...
Attempted new signature...
The Wizard
 
Posts: 6615
Joined: Tue Mar 23, 2010 1:45 pm
Location: Reading, MA

Re: All Stocks Anyone?

Postby cheesepep » Sun Jun 02, 2013 8:19 am

*raises hand* I'm 100% all stocks and all individual stocks also.
cheesepep
 
Posts: 388
Joined: Wed Feb 17, 2010 10:58 pm

Re: All Stocks Anyone?

Postby am » Sun Jun 02, 2013 8:21 am

"If you have LOTS of money then 100% stocks is OK since if $10 million falls in paper value by 50%, you still have $5 million to live on while stocks recover..."

But if you have 10 million than you do not need to take risk anymore.
am
 
Posts: 1594
Joined: Sun Sep 30, 2007 9:55 am
Location: Illinois

Re: All Stocks Anyone?

Postby Johm221122 » Sun Jun 02, 2013 8:22 am

Try this very recent post
viewtopic.php?f=10&t=92874
John
Johm221122
 
Posts: 4863
Joined: Fri May 13, 2011 6:27 pm

Re: All Stocks Anyone?

Postby dbr » Sun Jun 02, 2013 8:36 am

DouglasDoug wrote:In the weekend WSJ article, "The 100% Stock Solution", it states instances in which an all equity portfolio may be fitting. This strategy flies against Mr. Bogle's philosophy, or does it? Do any Bogleheads go full throttle with an all stock portfolio?


There are some that do. Most do not.

The article itself provided a pretty good analysis of the ins and outs of taking such a position.

Mr. Bogle's statement, if it is the absolute one, does not agree. Mr. Bogle's statement, if it is the one that capitalizes income streams, can produce the silly result that one should actually leverage more than 100% in stocks under some circumstances. (Or maybe not silly as one can find exactly that recommendation surfacing sometimes).

You pays your money and you takes your choice. I prefer a more nuanced view based on concepts such as need, ability, and willingness together with some immunity to recency and respect for moderation in all things.
dbr
 
Posts: 14704
Joined: Sun Mar 04, 2007 9:50 am

Re: All Stocks Anyone?

Postby TomatoTomahto » Sun Jun 02, 2013 8:40 am

am wrote:"If you have LOTS of money then 100% stocks is OK since if $10 million falls in paper value by 50%, you still have $5 million to live on while stocks recover..."

But if you have 10 million than you do not need to take risk anymore.

True, you don't need to anymore. But, you can afford to, and perhaps you have children, grandchildren, charities, etc. you'd like to provide for.
User avatar
TomatoTomahto
 
Posts: 2949
Joined: Mon Apr 11, 2011 1:48 pm

Re: All Stocks Anyone?

Postby dbr » Sun Jun 02, 2013 8:45 am

TomatoTomahto wrote:
am wrote:"If you have LOTS of money then 100% stocks is OK since if $10 million falls in paper value by 50%, you still have $5 million to live on while stocks recover..."

But if you have 10 million than you do not need to take risk anymore.

True, you don't need to anymore. But, you can afford to, and perhaps you have children, grandchildren, charities, etc. you'd like to provide for.


I would add that "need" really means "What are your objectives?"
dbr
 
Posts: 14704
Joined: Sun Mar 04, 2007 9:50 am

Re: All Stocks Anyone?

Postby Toons » Sun Jun 02, 2013 9:16 am

z3r0c00l wrote:Stocks have been doing well for the past few years, perfect time to pile in...


Why wouldn't you want to do just the opposite and pile in when stock prices are at historic lows? :happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
User avatar
Toons
 
Posts: 4570
Joined: Fri Nov 21, 2008 10:20 am
Location: Hills of Tennessee

Re: All Stocks Anyone?

Postby nedsaid » Sun Jun 02, 2013 9:50 am

An all stocks strategy seems tempting, particularly since many stocks yield more than bonds do. I was 90 plus percent invested in stocks for a long time. I learned about diversification and portfolio theory just before the 2000 crash and fortunately diversified with something more like 70 percent stocks and 30 percent bonds and cash.

Bonds seem riskier to me now and with yields so low don't offer as much downside protection. So I am still buying them with new money at a 40% plus rate of new funds but I have not rebalanced my portfolio. Bonds seem to be a more expensive asset class than stocks and I have held off rebalancing.

Despite the risks of bonds, I can't bring myself to a 100% stock portfolio. Been there, done that, bought that T-Shirt.
A fool and his money are good for business.
User avatar
nedsaid
 
Posts: 2681
Joined: Fri Nov 23, 2012 12:33 pm

Re: All Stocks Anyone?

Postby IlliniDave » Sun Jun 02, 2013 10:09 am

dbr wrote:
DouglasDoug wrote:In the weekend WSJ article, "The 100% Stock Solution", it states instances in which an all equity portfolio may be fitting. This strategy flies against Mr. Bogle's philosophy, or does it? Do any Bogleheads go full throttle with an all stock portfolio?


There are some that do. Most do not.

The article itself provided a pretty good analysis of the ins and outs of taking such a position.

Mr. Bogle's statement, if it is the absolute one, does not agree. Mr. Bogle's statement, if it is the one that capitalizes income streams, can produce the silly result that one should actually leverage more than 100% in stocks under some circumstances. (Or maybe not silly as one can find exactly that recommendation surfacing sometimes).

You pays your money and you takes your choice. I prefer a more nuanced view based on concepts such as need, ability, and willingness together with some immunity to recency and respect for moderation in all things.


Here's the quote I was alluding too, from p.85 of the 10th Anniversary Edition

It would not be imprudent for a highly risk-tolerant young investor (25 years old or so), who is just beginning to invest for retirement, to allocate everything to stocks, provided that the investor has confidence that regular investments could be made through thick or thin.

Of course that is in the context of a discussion on the broader advice to generally allocate more aggressively early in the accumulation phase and gradually more conservatively approaching and within the distribution phase, all along adjusting for one's own risk tolerance.
Don't do something. Just stand there!
IlliniDave
 
Posts: 1383
Joined: Fri May 17, 2013 7:09 am

Re: All Stocks Anyone?

Postby dbr » Sun Jun 02, 2013 10:20 am

IlliniDave wrote:Of course that is in the context of a discussion on the broader advice to generally allocate more aggressively early in the accumulation phase and gradually more conservatively approaching and within the distribution phase, all along adjusting for one's own risk tolerance.


It's not disingenuous when someone actually takes the advice literally without understanding what they are doing.
dbr
 
Posts: 14704
Joined: Sun Mar 04, 2007 9:50 am

Re: All Stocks Anyone?

Postby IlliniDave » Sun Jun 02, 2013 10:36 am

dbr wrote:
IlliniDave wrote:Of course that is in the context of a discussion on the broader advice to generally allocate more aggressively early in the accumulation phase and gradually more conservatively approaching and within the distribution phase, all along adjusting for one's own risk tolerance.


It's not disingenuous when someone actually takes the advice literally without understanding what they are doing.


Sorry, I decided to remove that. But his advice is only to consider it a bond-like asset (PV of fixed income streams). He never (that I'm aware of) advises there's some mandatory equity allocation that must be maintained even if it requires leverage. In an example from a recorded interview with Forbes, he says the investor could put his investment all into stocks, but he doesn't go beyond (leaving the investor with a 30/70 allocation 15 or so years before retirement).

Your point is a fair one that people can take just about any "advice" they hear and employ it (especially by overextending it) to their own demise. That doesn't make it bad advice.
Don't do something. Just stand there!
IlliniDave
 
Posts: 1383
Joined: Fri May 17, 2013 7:09 am

Re: All Stocks Anyone?

Postby Valuethinker » Sun Jun 02, 2013 10:48 am

These threads have a strong recency effect.

I predict we won't see them after the next 20% stock market correction. Which is just about due, given what markets have been doing.

Let's summarize the Boglehead wisdom:

- above 60% equities, the return gain is surprisingly small for the extra volatility take on along the efficient frontier - certainly above 70%

- most of us turn out to have a much lower tolerance for volatility ex post (after the fact) than ex ante (before the fact)

- the rallies post October 1987 and post March 2009 are false signals. There are good examples in history (1929-1940, 1968-1980, Japan 1990-present) of *long* bear markets. Bears when they come are often crushing and long lived
Valuethinker
 
Posts: 25443
Joined: Fri May 11, 2007 11:07 am

Re: All Stocks Anyone?

Postby bayview » Sun Jun 02, 2013 9:00 pm

My AA is way higher in stocks than is common for my age and retirement outlook, but I would always keep something in fixed income to provide money to buy more stocks at firesale prices when the stock market crashes again.

And it will. :D

There's no point in being 100% equities when the market drops 30%, but you don't have anything non-equity to sell off to pick up more stocks cheap. (I realize that it might be different for those with tons of reserves in taxable and in the bank, but everything we have is in tax-advantaged.)
bayview
Moderator
 
Posts: 536
Joined: Thu Aug 02, 2012 7:05 pm

Re: All Stocks Anyone?

Postby Rick Ferri » Sun Jun 02, 2013 9:04 pm

People who talk brave in a bull market tend to run with their tail between their legs when stocks hit the skids. Very few people can handle all stocks all the time.

Rick Ferri
Mutual fund investing is simple. There is risk, there is return, and there are costs. All else is marketing.
User avatar
Rick Ferri
 
Posts: 7846
Joined: Mon Feb 26, 2007 11:40 am
Location: Home on the range in Medina, Texas

Re: All Stocks Anyone?

Postby leo383 » Sun Jun 02, 2013 9:27 pm

We were all equities up until about two years ago. I was drinking the Siegel Kool-Aid for sure.

Funny, I didn't find it hard to hang in there during the 08-09 crash. I just "knew" it would eventually recover and go on to new highs.

We are now 80/20. I'm 44 and my wife is 38. I think we will end up 60/40 at some point, but it's hard to go there now given how bonds appear to be a certain underachiever going forward.
leo383
 
Posts: 452
Joined: Thu Nov 29, 2007 9:36 pm
Location: Durham, NC

Re: All Stocks Anyone?

Postby z3r0c00l » Sun Jun 02, 2013 9:29 pm

Toons wrote:
z3r0c00l wrote:Stocks have been doing well for the past few years, perfect time to pile in...


Why wouldn't you want to do just the opposite and pile in when stock prices are at historic lows? :happy


Market timing is always foolish, but never more so than when things are going well. I would rather be the foolish value hunter than the last greatest fool buying into the new paradigm of Dow 35,000.
z3r0c00l
 
Posts: 621
Joined: Fri Jul 06, 2012 11:43 am
Location: NYC

Re: All Stocks Anyone?

Postby grabiner » Sun Jun 02, 2013 10:19 pm

Rick Ferri wrote:People who talk brave in a bull market tend to run with their tail between their legs when stocks hit the skids. Very few people can handle all stocks all the time.


And this is why my standard advice is that you should not have more than 80% stock unless you have already been through a bear market with 80% stock and know how you react to it.

(And this applies to me as well; I had 80% stock in 2000, rebalanced as needed, and went to 85% stock near the bottom in 2002, 90% stock since 2004.)
David Grabiner
User avatar
grabiner
Advisory Board
 
Posts: 13513
Joined: Tue Feb 20, 2007 11:58 pm
Location: Columbia, MD

Re: All Stocks Anyone?

Postby animule » Sun Jun 02, 2013 10:26 pm

Someday, somebody is going to do an academic study of bogleheads posts as a way of signaling market tops and bottoms.

Any time you see these "I'm 100% stocks" or "All Stocks Anyone?" posts as well as the "Do You Really Need Bonds?" threads, you know you may be near an inflection point.

I don't think bogleheads are any more immune from irrational exuberance than anyone else.

I think Benjamin Graham had famous advice on this - no more than 75% stocks, and no less than 25% stocks.

100% stocks is crazy.

No matter what your age.
animule
 
Posts: 85
Joined: Sun Jan 06, 2008 12:29 pm

Re: All Stocks Anyone?

Postby IlliniDave » Mon Jun 03, 2013 6:58 am

leo383 wrote:We were all equities up until about two years ago. I was drinking the Siegel Kool-Aid for sure.

Funny, I didn't find it hard to hang in there during the 08-09 crash. I just "knew" it would eventually recover and go on to new highs.

We are now 80/20. I'm 44 and my wife is 38. I think we will end up 60/40 at some point, but it's hard to go there now given how bonds appear to be a certain underachiever going forward.


I admit that for reasons that have nothing to do with investment strategy I was completely out of equities during 2008 and part of 2009, but I wallowed through the early 2000's 100% in equities, and similarly didn't find it particularly distressing. I doubt my genetic/psychological makeup is particularly anomalous, and I don't see the point of the condescension here towards that tack (especially when the namesake of the group sees it as a reasonable/acceptable approach under some circumstances). Maybe I am/was foolish for thinking decades ahead rather than month-by-month, or maybe I'm indeed a psychological freak :) ; dunno, to me it's just keeping one's eye on the ball and has nothing to do with false bravado. I'm nearly 50 now and in the last couple years I've tapered the aggression somewhat. And as I said earlier, if I were to go back and do it again, I'd think I'd be a bit more conservative. But only because I've read too much and analysis paralysis has me in it's grips. :-)
Don't do something. Just stand there!
IlliniDave
 
Posts: 1383
Joined: Fri May 17, 2013 7:09 am

Re: All Stocks Anyone?

Postby Scotttheking » Mon Jun 03, 2013 8:49 am

It depends on how you look at it.
For me, I have 2 (well, 3) portfolios.
Each portfolio is tracked independently.

The retirement portfolio is currently entirely tax advantaged accounts. It is varies between 97% and 99% stock, and one of these days I'll get rid of the last 1% of bonds.

The non-retirement portfolio is a mix of taxable and Roth IRA investments, with the expectation that the money will be used for shorter term needs. That portfolio is 40-50% bonds. This portfolio funds "I'll buy it when I can afford it" purchases, with items that need buying at a certain date being saved for in cash.

The third portfolio is inherited, and while I'm not much for bonds, I'm also not going to sell 6-7.5% yielding bonds :) The interest is rolled into stock funds.

So it depends on how you count. As an entire portfolio, I'm at ~85% stock. As a liability matching portfolio, my retirement liabilities are 99% stock and my shorter term liabilities are 50-60% stock.

All of the above also excludes the cash emergency fund, which in combination with a mid and late 20s DINK household that allows us to live mostly within one income, affords us a higher risk tolerance.

To me it isn't "money", it is just a pile of numbers on the screen.
Scotttheking
 
Posts: 70
Joined: Wed Apr 09, 2008 7:58 pm

Re: All Stocks Anyone?

Postby kenyan » Mon Jun 03, 2013 9:49 am

I wonder how frequent these threads were throughout late 2008 and early 2009. I wasn't a member of these forums back then, but October 2008 must've looked like a fantastic time to invest for the unemotional market timer. Of course, I think there are far more people who believe they are unemotional investors when the market has been steadily increasing for years, than when the bottom is falling out.
Retirement investing is a marathon.
User avatar
kenyan
 
Posts: 2457
Joined: Thu Jan 13, 2011 12:16 am

Re: All Stocks Anyone?

Postby dmcmahon » Mon Jun 03, 2013 9:51 am

animule wrote:Any time you see these "I'm 100% stocks" or "All Stocks Anyone?" posts as well as the "Do You Really Need Bonds?" threads, you know you may be near an inflection point.


The number of such threads appearing lately is enough to make even a bond bear like me question his thinking... :twisted:
User avatar
dmcmahon
 
Posts: 1774
Joined: Fri Mar 21, 2008 10:29 pm

Re: All Stocks Anyone?

Postby Confused » Mon Jun 03, 2013 9:53 am

I'm at 90/10. 100% stock seems pretty scary, not to mention, I don't have enough money to do anything aside from Vanguard's Target Retirement Fund 20XX, which don't have any options higher than 90/10.
Confused
 
Posts: 418
Joined: Wed Jun 20, 2012 1:23 pm

Re: All Stocks Anyone?

Postby stemikger » Mon Jun 03, 2013 10:04 am

z3r0c00l wrote:Stocks have been doing well for the past few years, perfect time to pile in...


http://www.youtube.com/watch?v=Bu2rNcoynVU

She seemed to do alright with just one stock. As a Boglehead I obviously don't agree with this, but I do admire her for following her own plan and tuning out the noise. I'm glad this turned out so well for her, but the story could have easily been like the Secretary who was planning to retire from Enron with 2 million. We all know how that went.
Last edited by stemikger on Mon Jun 03, 2013 2:45 pm, edited 1 time in total.
Stay the Course!
stemikger
 
Posts: 2426
Joined: Thu Apr 08, 2010 5:02 am

Re: All Stocks Anyone?

Postby tylerherman » Mon Jun 03, 2013 10:33 am

For me I don't really see the harm in it. I'm 100% stocks (VTSMX and VGTSX) and will probably always will be, because I just don't worry about it.

I'm still youngish (30) and only contribute to my 401k and IRA, nothing taxable until I get paid more... I've been doing 100% stocks for 8 years or so. Survived the last crash just find. Honestly, didn't even notice it cause I don't watch television "news" very often. I don't worry about making sure I have 10% of this or 30% of that. The money gets taken from my check and my bank account each month just like taxes. The money was never in my hands so I don't even really consider it mine to touch yet. I could probably figure out how to sell but currently have no idea how I'd even do it. Selling just isn't in the equation.

The only number I look at is the # of individual shares I own. I'm a squirrel hording for the winter. Honestly, if you're a person in my shoes you should be hoping for a crash.
tylerherman
 
Posts: 37
Joined: Tue Feb 19, 2013 7:07 pm

Re: All Stocks Anyone?

Postby pkcrafter » Mon Jun 03, 2013 10:34 am

cheesepep wrote:*raises hand* I'm 100% all stocks and all individual stocks also.


How many stocks do you own?

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.
pkcrafter
 
Posts: 8357
Joined: Sun Mar 04, 2007 12:19 pm
Location: CA

Re: All Stocks Anyone?

Postby l2ridehd » Mon Jun 03, 2013 11:06 am

I put my new born grandson's 529 in 100% stocks. 80% TSM and 20% TISM. My plan is as I add to his 529 every year I will make the allocation 5% year one in TBM (95/5) and continue to increase that until year 12 where he will be at 40/60. Will retain that % until he starts college then continue to migrate to 20/80 over the 4 years of college. If the plan stays on track, by adding 4K each year he should have 100% of in state tuition when he starts college. I based this all on the VA pre-paid tuition plan and an average return of 6% over the next 18 years. If college costs makes a sharp upturn during that window, I may need to adjust the amount I contribute. I can adjust it by checking the four year pre-paid cost each year to see if I am on track and tweak each year up or down to remain in that position. My spread sheets may be off, inflation and or college cost may change, but I believe I will be close. When I started the plan this past March a 4 year pre-paid in VA costs 58K. I believe in 18 years it will be 167K. I will have the option with the VA plan to actually purchase the 4 year pre-paid up until he is in the 9th grade. I will adjust the contribution each year to stay on track to meet the 9th grade option. By then he should know if he plans to attend a VA college. His parents did UVA and VA Tech so there is a good chance he will do that as well. VA has 22 colleges that qualify under their 529 pre-paid plan.
User avatar
l2ridehd
 
Posts: 233
Joined: Sat Sep 10, 2011 5:18 am

Re: All Stocks Anyone?

Postby stemikger » Mon Jun 03, 2013 11:28 am

tylerherman wrote:For me I don't really see the harm in it. I'm 100% stocks (VTSMX and VGTSX) and will probably always will be, because I just don't worry about it.

I'm still youngish (30) and only contribute to my 401k and IRA, nothing taxable until I get paid more... I've been doing 100% stocks for 8 years or so. Survived the last crash just find. Honestly, didn't even notice it cause I don't watch television "news" very often. I don't worry about making sure I have 10% of this or 30% of that. The money gets taken from my check and my bank account each month just like taxes. The money was never in my hands so I don't even really consider it mine to touch yet. I could probably figure out how to sell but currently have no idea how I'd even do it. Selling just isn't in the equation.

The only number I look at is the # of individual shares I own. I'm a squirrel hording for the winter. Honestly, if you're a person in my shoes you should be hoping for a crash.


You seem to have a good handle on this at such a young age. Good for you!! You are probably going to be very wealthy (money wise) when you are older.
Stay the Course!
stemikger
 
Posts: 2426
Joined: Thu Apr 08, 2010 5:02 am

Re: All Stocks Anyone?

Postby grap0013 » Mon Jun 03, 2013 12:43 pm

animule wrote:100% stocks is crazy.
No matter what your age.


Why? It is psychological. As long as you are not picking individual stocks it is fine if you are not in the withdrawal stage. You would have to have some unique circumstances for it to matter. Job loss, exhaust emergency fund, have large bill where you'd have to withdraw entire tax deferred accounts in March 2009?
If you can't explain it simply, you don't understand it well enough.
User avatar
grap0013
 
Posts: 1345
Joined: Thu Mar 18, 2010 1:24 pm

Re: All Stocks Anyone?

Postby grap0013 » Mon Jun 03, 2013 12:52 pm

Valuethinker wrote:above 60% equities, the return gain is surprisingly small for the extra volatility take on along the efficient frontier - certainly above 70%


I agree that the difference in returns between 100:0 and 80:20 has been historically been very small ~0.5%. However, when bonds have bad decades for example, no surprise that this typically widens the gap between 100:0 and 80:20. With current yields there could be a 1% plus spread between the two portfolios for the forseeable future. Investors will have to decide for themselves if this is worth it to them.
If you can't explain it simply, you don't understand it well enough.
User avatar
grap0013
 
Posts: 1345
Joined: Thu Mar 18, 2010 1:24 pm

Re: All Stocks Anyone?

Postby InvestorNewb » Mon Jun 03, 2013 12:55 pm

I'm 100% stocks (see sig). I haven't experienced a big paper loss yet, so I don't know how I would react yet.

But on "down days" I don't bother looking at my account. This definitely helps, and I'm sure it would if a crash ever happened.

The only time I really need to look at my account is quarterly, when dividends are paid out.

I also think that if I want to fund a nice retirement, taking risk is critical at this stage of my life. No risk = no reward.
Current Holdings: VTI, VXUS, VNQ, VCE (largest to smallest)
User avatar
InvestorNewb
 
Posts: 1031
Joined: Mon Sep 03, 2012 11:27 am

Re: All Stocks Anyone?

Postby Clearly_Irrational » Mon Jun 03, 2013 1:06 pm

If I were going to do a 100% stock plan I would likely buy individual securities that paid a dividend. Under that scenario I would just focus on ignoring the market value of my securities. If your holding period is "the rest of my life" then price swings would really be irrelevant.
User avatar
Clearly_Irrational
 
Posts: 2677
Joined: Thu Oct 13, 2011 3:43 pm

Re: All Stocks Anyone?

Postby Mel Lindauer » Mon Jun 03, 2013 2:03 pm

This thread has become the topic of a blog post on the WSJ web site (link below). Careful what you say because you may end up being quoted! :-)

http://blogs.wsj.com/totalreturn/2013/0 ... in-stocks/
Best Regards - Mel | | Semper Fi
User avatar
Mel Lindauer
Moderator
 
Posts: 22431
Joined: Mon Feb 19, 2007 8:49 pm
Location: Daytona Beach Shores, Florida

Re: All Stocks Anyone?

Postby core5 » Mon Jun 03, 2013 2:17 pm

I'm in 100% stocks. I'm in my mid-20s and I'm not really impressed with bonds, since I'm still in the low 5 figures in my 401(k). If my holdings all dropped by 50% tomorrow, it would suck, but then again I'm adding a relatively significant amount to my 401(k) with each paycheck. If that happened, I'd consider them going on sale and me reaping the rewards for another 30+ years.

Eventually when I get the point where I can't stomach losing half, without a rebalance option, I'll start buying into bonds (hopefully interest rates will pick up by then).
[size=85]The problem with closed-mindedness is it that it's rarely accompanied by a closed mouth[/size]
core5
 
Posts: 111
Joined: Thu Apr 18, 2013 9:07 am
Location: Georgia

Re: All Stocks Anyone?

Postby bayview » Mon Jun 03, 2013 10:22 pm

Mel Lindauer wrote:This thread has become the topic of a blog post on the WSJ web site (link below). Careful what you say because you may end up being quoted! :-)

http://blogs.wsj.com/totalreturn/2013/0 ... in-stocks/

On that point, a poster going by the name “grabiner” noted, “… my standard advice is that you should not have more than 80% stock unless you have already been through a bear market with 80% stock and know how you react to it.”

Ol' what's-his-face. :D
bayview
Moderator
 
Posts: 536
Joined: Thu Aug 02, 2012 7:05 pm

Re: All Stocks Anyone?

Postby staythecourse » Mon Jun 03, 2013 10:31 pm

There is nothing wrong with 100% stocks, but one must be honest if they "qualify" to even consider it.

Qualifiers:
1. The have AT LEAST 1-2 yrs. EF
2. Time horizon of 20+ yrs. until needing the money
3. Expanding on the above... NO need for that money until then, i.e. money is only for retirement sake. No liquidity issues.
4. Recession proof job. This is one MANY are overconfident and found out how dispensable they are in 2008 economy crash. Unless your a government employee, tenured professor, or physician I think it would be hard to qualify.
5. And the hardest of them all... STAYING THE COURSE. You have to be immune to behavioral mistakes. Perfect example is this site alone. Many pooh- pooh 100% stocks, but are okay with 80/20. The difference is very small. In the worst case it is a 10% drop in portfolio value in the WORST market conditions, but yet the psychology of holding the two are totally different.

If you can't say yes CONFIDENTLY to ALL of the above you have no business considering it.

Good luck.
...we all think we're above average investors just like we all think we're above average dressers... -Jack Bogle
staythecourse
 
Posts: 3171
Joined: Mon Jan 03, 2011 9:40 am

Re: All Stocks Anyone?

Postby IlliniDave » Tue Jun 04, 2013 5:40 am

bayview wrote:
Mel Lindauer wrote:This thread has become the topic of a blog post on the WSJ web site (link below). Careful what you say because you may end up being quoted! :-)

http://blogs.wsj.com/totalreturn/2013/0 ... in-stocks/

On that point, a poster going by the name “grabiner” noted, “… my standard advice is that you should not have more than 80% stock unless you have already been through a bear market with 80% stock and know how you react to it.”

Ol' what's-his-face. :D


Holy Moly, I got called out! Dang. At least they caught me quoting JB and didn't dredge up any of my other blathering 8-)
Don't do something. Just stand there!
IlliniDave
 
Posts: 1383
Joined: Fri May 17, 2013 7:09 am

Re: All Stocks Anyone?

Postby Mel Lindauer » Tue Jun 04, 2013 7:03 am

IlliniDave wrote:
bayview wrote:
Mel Lindauer wrote:This thread has become the topic of a blog post on the WSJ web site (link below). Careful what you say because you may end up being quoted! :-)

http://blogs.wsj.com/totalreturn/2013/0 ... in-stocks/

On that point, a poster going by the name “grabiner” noted, “… my standard advice is that you should not have more than 80% stock unless you have already been through a bear market with 80% stock and know how you react to it.”

Ol' what's-his-face. :D


Holy Moly, I got called out! Dang. At least they caught me quoting JB and didn't dredge up any of my other blathering 8-)


Sorta like when someone takes a really good picture of you when you weren't even aware of the camera. :D
Best Regards - Mel | | Semper Fi
User avatar
Mel Lindauer
Moderator
 
Posts: 22431
Joined: Mon Feb 19, 2007 8:49 pm
Location: Daytona Beach Shores, Florida

Re: All Stocks Anyone?

Postby Matin » Tue Jun 04, 2013 8:49 am

staythecourse wrote:There is nothing wrong with 100% stocks, but one must be honest if they "qualify" to even consider it.

Qualifiers:
1. The have AT LEAST 1-2 yrs. EF
2. Time horizon of 20+ yrs. until needing the money
3. Expanding on the above... NO need for that money until then, i.e. money is only for retirement sake. No liquidity issues.
4. Recession proof job. This is one MANY are overconfident and found out how dispensable they are in 2008 economy crash. Unless your a government employee, tenured professor, or physician I think it would be hard to qualify.
5. And the hardest of them all... STAYING THE COURSE. You have to be immune to behavioral mistakes. Perfect example is this site alone. Many pooh- pooh 100% stocks, but are okay with 80/20. The difference is very small. In the worst case it is a 10% drop in portfolio value in the WORST market conditions, but yet the psychology of holding the two are totally different.

If you can't say yes CONFIDENTLY to ALL of the above you have no business considering it.

Good luck.


Stay the Course makes some good points. I'm 100% in stock in my retirement accounts. I've had this same allocation for over 20 years. I never plan to change this asset allocation.

My Qualifiers:

1. I have a fairly strong emergency fund and I own my house outright.

2. My current plan has be staying in the work force for another 15 years. I would note that I'm planning for a minimum of 20+ years of retirement.

3. I don't anticipate drawing upon this money before I retire.

4. Recession proof job. I'm a Federal Government Employee doing a job that will probably never go away.

5. Staying the course. My first money went into a retirement fund in the early 90s. Even through all the turbulant markets of the last decade, I have stayed the course.

Additional Qualifiers:

a. I get a FERS pension with my job. Although I can not live on FERS, I can probably get by on Social Security and FERS.

b. I am a Disabled American Veteran. In a worst case scenario, I can fall back on the Veteran's health care system.

How did I get to a place where I would be comfortable with a 100% stock asset allocation?

First of all, I don't need a gut check when the market goes down or up. If I was smart, I would sell off every time I see a post on the Boglehead's forum about going to 100% stock allocation. When the Boglehead's forums has post entitled; "How is that 100% Stock Allocation working for you?," I should leverage money to put into the stock market. Rather than trying to time the market, I simply leave my accounts alone. In other words, I don't suffer from behavioral mistakes.

Second, I actually believe in the United States of America and our economic system. I'm not going to say this country or economic system is perfect. I will say that I believe that our system works for us. I have no problem investing in that very idea.

Third, I believe in the Keep It Simple Stupid (KISS). I don't have to re-balance. I buy when the market is down. I buy when the market is up. I invest in index stock market funds that own a majority of the stock market. My IRA and Roth IRA accounts are at Vanguard. The majority of my money is in the Federal Governments thrift plan. My expenses are about as low as you can get.

I do not recommend my asset allocation to friends and family. I do not recommend this asset allocation to anyone. This plan seems to work for me.
Matin
 
Posts: 47
Joined: Wed Mar 09, 2011 4:20 pm

Re: All Stocks Anyone?

Postby stemikger » Tue Jun 04, 2013 8:59 am

IlliniDave wrote:
bayview wrote:
Mel Lindauer wrote:This thread has become the topic of a blog post on the WSJ web site (link below). Careful what you say because you may end up being quoted! :-)

http://blogs.wsj.com/totalreturn/2013/0 ... in-stocks/

On that point, a poster going by the name “grabiner” noted, “… my standard advice is that you should not have more than 80% stock unless you have already been through a bear market with 80% stock and know how you react to it.”

Ol' what's-his-face. :D


Holy Moly, I got called out! Dang. At least they caught me quoting JB and didn't dredge up any of my other blathering 8-)


Your a celebrity after only 91 posts. May I have a signed copy of your upcoming book.
Stay the Course!
stemikger
 
Posts: 2426
Joined: Thu Apr 08, 2010 5:02 am

Re: All Stocks Anyone?

Postby IlliniDave » Tue Jun 04, 2013 11:53 am

stemikger wrote:
IlliniDave wrote:
bayview wrote:
Mel Lindauer wrote:This thread has become the topic of a blog post on the WSJ web site (link below). Careful what you say because you may end up being quoted! :-)

http://blogs.wsj.com/totalreturn/2013/0 ... in-stocks/

On that point, a poster going by the name “grabiner” noted, “… my standard advice is that you should not have more than 80% stock unless you have already been through a bear market with 80% stock and know how you react to it.”

Ol' what's-his-face. :D


Holy Moly, I got called out! Dang. At least they caught me quoting JB and didn't dredge up any of my other blathering 8-)


Your a celebrity after only 91 posts. May I have a signed copy of your upcoming book.


Ha, what I am is a poster boy for why you should never put too much credence in investment strategy gleaned from the internet. Imagine the Hindenburg-likeaftermath of betting the farm on a what a noobie aspiring Boglehead thinks. :mrgreen:
Don't do something. Just stand there!
IlliniDave
 
Posts: 1383
Joined: Fri May 17, 2013 7:09 am

Re: All Stocks Anyone?

Postby grabiner » Tue Jun 04, 2013 10:59 pm

bayview wrote:
Mel Lindauer wrote:This thread has become the topic of a blog post on the WSJ web site (link below). Careful what you say because you may end up being quoted! :-)

http://blogs.wsj.com/totalreturn/2013/0 ... in-stocks/

On that point, a poster going by the name “grabiner” noted, “… my standard advice is that you should not have more than 80% stock unless you have already been through a bear market with 80% stock and know how you react to it.”

Ol' what's-his-face. :D


My name is in my signature, but the WSJ could reasonably have decided that they didn't want to quote me by name without my permission. (I wouldn't have objected.) On the other hand, if they noticed my signature, they should presumably have guessed that they were quoting me by name anyway.
David Grabiner
User avatar
grabiner
Advisory Board
 
Posts: 13513
Joined: Tue Feb 20, 2007 11:58 pm
Location: Columbia, MD

Re: All Stocks Anyone?

Postby animule » Fri Jun 21, 2013 6:32 am

So how is that "100% stock" portfolio holding up these days?

Interesting to see if any views have changed over the last 10 days.
animule
 
Posts: 85
Joined: Sun Jan 06, 2008 12:29 pm

Re: All Stocks Anyone?

Postby Scotttheking » Fri Jun 21, 2013 7:00 am

animule wrote:So how is that "100% stock" portfolio holding up these days?

Interesting to see if any views have changed over the last 10 days.


They are still numbers on a screen.
The only change is I dumped my last little bit of bonds when I logged in to change my 401k contribution rate.
Scotttheking
 
Posts: 70
Joined: Wed Apr 09, 2008 7:58 pm

Next

Return to Investing - Theory, News & General

Who is online

Users browsing this forum: random1, RunningRad and 28 guests