Vanguard's worst fund (also #1) in 2013.

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Taylor Larimore
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Vanguard's worst fund (also #1) in 2013.

Post by Taylor Larimore »

Bogleheads:

What was Vanguard's worst performing fund (-35.13%) in 2013 but #1 in its Morningstar category of 73 funds ?

You guessed it: Vanguard Precious Metals and Mining Inv (VGPMX)

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In my opinion, this fund is for speculating--not investing.

Happy New Year!
Taylor
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Re: Vanguard's worst fund in 2013.

Post by indexfundfan »

Not the worst fund, but worth noting is that in 2013, the Vanguard Total Bond index fund has it's first loss since 1994.
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Total Bond Market provides safety and income

Post by Taylor Larimore »

indexfundfan wrote:Not the worst fund, but worth noting is that in 2013, the Vanguard Total Bond index fund has it's first loss since 1994.
Indexfundfan:

TBM's worst annual loss was -2.66% in 1994. Total Bond Market did its job (safety) in 2008 when the S&P plunged -37.02% and Total Bond Market gained 5.05%.

Best wishes.
Taylor
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Re: Vanguard's worst fund in 2013.

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Re: Vanguard's worst fund in 2013.

Post by dkturner »

Taylor Larimore wrote:Bogleheads:

What was Vanguard's worst performing fund (-35.13%) in 2013 but #1 in its Morningstar category of 73 funds ?

You guessed it: Vanguard Precious Metals and Mining Inv (VGPMX)

Image

In my opinion, this fund is for speculating--not investing.

Happy New Year!
Taylor
I guess 2012 really was a stock pickers market. (;-)
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Re: Vanguard's worst fund (also #1) in 2013.

Post by Fat-Tailed Contagion »

Could there be a more reliable signal of capitulation than when Taylor throws in the towel on an asset class?

PME is getting more and more attractive.

Does reversion to the mean not apply to this asset class?
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Re: Vanguard's worst fund (also #1) in 2013.

Post by letsgobobby »

Fat-Tailed Contagion wrote:Could there be a more reliable signal of capitulation than when Taylor throws in the towel on an asset class?

PME is getting more and more attractive.

Does reversion to the mean not apply to this asset class?
It had 12 straight years of gains, then 1 year of loss. Where's the mean reversion?
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Re: Vanguard's worst fund (also #1) in 2013.

Post by Fat-Tailed Contagion »

Year Total return
2013 – 35.13%
2012 – 12.98%
2011 – 21.70%
2010 37.45%
2009 76.46%
2008 – 56.02%
2007 36.13%
2006 34.30%
2005 43.79%
2004 8.09%
2003 59.45%
2002 33.35%
2001 18.33%
2000 – 7.34%
1999 28.82%
1998 – 3.91%
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Re: Vanguard's worst fund (also #1) in 2013.

Post by nisiprius »

In 'The Quest for Alpha,' in the section on 'Rules for Prudent Investing,' as Rule #17, Larry Swedroe wrote:Owning individual stocks and sector funds is more akin to speculating, not investing. The market compensates investors for risks that cannot be diversified away, like the risk of investing in stocks versus bonds. Investors shouldn't expect compensation for diversifiable risk--the unique risks related to owning one stock or sector or country fund. Prudent investors only accept risk for which they will be compensated with higher expected returns.
And in his essay, The Longest Discipline, William J. Bernstein, while saying that French's data series show a long-term theoretical benefit to precious metals equities (PME), also notes:
...since 1963, the precious metals equity (PME) series has lost more than 35% five different times and, on one occasion, nearly 70%... For the more than 24 years between October 1980 and December 2004, the real return of PME was –0.3%. That’s nearly a quarter century of zero real returns, pilgrims.

What percentage of investors has the discipline to stay the course with an asset capable of withering away for an entire generation before reverting to its mean?... I wouldn’t even venture a guess, but I’m pretty sure that the answer is not too far above zero. I don’t know how much further or longer this asset class has to run. Maybe a decade, maybe two, or maybe ten minutes. But I can tell you the disenchantment that will follow the inevitable next period of underperformance will make the flight from tech stocks in the 1990s look like an infant’s post-bottle burp.
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Re: Vanguard's worst fund (also #1) in 2013.

Post by madbrain »

Fat-Tailed Contagion wrote:Could there be a more reliable signal of capitulation than when Taylor throws in the towel on an asset class?
For him to capitulate, he would have to have bought into it in the first place. Somehow, I doubt he did.
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Re: Vanguard's worst fund (also #1) in 2013.

Post by gkaplan »

Taylor did own this fund at one time, I believe, which he frequently has professed (and possibly lamented).
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Re: Vanguard's worst fund (also #1) in 2013.

Post by Buddtholomew »

Take a peek at the performance of VGPMX today, 1-2-14 and compare it to VTSMX (VG Total Stock Market Index). It is called diversification.
"The first principle is that you must not fool yourself and you are the easiest person to fool" --Feynman.
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Re: Vanguard's worst fund (also #1) in 2013.

Post by staythecourse »

It is up to each individual to decide what the adv. and disadv. of every subasset is and then each person's responsibility to decide if it has a role in one's portfolio.

No matter what each individual thinks there is NO REASON to make decisions on ANY asset class based on any one year's performance. There are many reasons not to like VGPMX, but having one year's lousy results is not one of them. Have we, bogleheads, ourselves gotten to attach to short term performance?

Good luck.
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My experience with Gold and Precious Metals fund.

Post by Taylor Larimore »

gkaplan wrote:Taylor did own this fund at one time, I believe, which he frequently has professed (and possibly lamented).
gkaplan:

You're right. We owned Vanguard's Gold and Precious Metals fund in 1993 when it gained +93%. At the end of 1998 (five years later) it had the WORST 5-year return of ANY Vanguard fund.*

I learned my lesson about this and other specialty funds the hard way because there was no Bogleheads forum at that time.

* Source: 1999 Independent Guide to the Vanguard Funds

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Taylor
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Re: Vanguard's worst fund (also #1) in 2013.

Post by fishnskiguy »

Our IPS calls for 10% of our equity allocation to be in PM&M, and 10% to be in VG Emerging Markets.

Our IPS also calls for 25/75 stock/ bond for us at our not much longer spring chicken age of 70 him, 67 her.

Accordingly, yesterday I moved .3% of our portfolio from Prime (all of last years distributions in our taxable account) to EM, and .3% from VG Small Cap Value Index to PM&M in DW's TIRA.

It's looking like I made out on the EM trade :D and not so much on the PM&M move :( which only proves for the umpteenth time that market timing is futile.

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Re: Vanguard's worst fund (also #1) in 2013.

Post by Dibbels81 »

VGPMX didn't even have a distribution in December, which is a head scratcher for me, since mining funds tend to have a somewhat high dividend.
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Re: Total Bond Market provides safety and income

Post by abuss368 »

Taylor Larimore wrote:
indexfundfan wrote:Not the worst fund, but worth noting is that in 2013, the Vanguard Total Bond index fund has it's first loss since 1994.
Indexfundfan:

TBM's worst annual loss was -2.66% in 1994. Total Bond Market did its job (safety) in 2008 when the S&P plunged -37.02% and Total Bond Market gained 5.05%.

Best wishes.
Taylor
And the TIPS fund dropped too for a bond fund in 2008 and 2013!
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Re: Vanguard's worst fund (also #1) in 2013.

Post by abuss368 »

gkaplan wrote:Taylor did own this fund at one time, I believe, which he frequently has professed (and possibly lamented).
Didn't you have a sizeable allocation to this a few years ago when gold was knocking on $2,000?
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Re: Vanguard's worst fund (also #1) in 2013.

Post by gkaplan »

abuss368 wrote:
gkaplan wrote:Taylor did own this fund at one time, I believe, which he frequently has professed (and possibly lamented).
Didn't you have a sizeable allocation to this a few years ago when gold was knocking on $2,000?
I've never owned this fund.
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Re: Vanguard's worst fund (also #1) in 2013.

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by Dibbels81 » Thu Jan 02, 2014 11:05 pm

VGPMX didn't even have a distribution in December, which is a head scratcher for me, since mining funds tend to have a somewhat high dividend.
As a group precious metals miners have been for years among the most poorly managed companies in the world. Many of these companies have made foolish capital outlays seeking new sources of precious metals. Most of these didn't work out. When things don't work out at some point you have to write off your mistakes and this comes off the bottom line. In addition many of the places in the world where precious metals are located are 3rd world countries that are politically unstable and do not have adequate protections of property rights. Some of these countries have created a source tax on mined precious metals that has further eaten away at profits for mining companies. When there was a bull market in gold ($300/oz. to 1800+/oz) investors were willing to overlook these risks and purchase shares. Those days are over. PM equity never kept up with the rise in prices during the bull market in gold partly due to poor management and now that gold prices have declined and the expense per ounce of producing gold continues its inexorable upward trend, reducing profit margins further each year, investors seem to have lost their appetite for speculating in PM miners at all.

In my opinion as a former PM equity investor, speculation is the right word for what it is. PM equity is not a long term set-it-and-forget-it holding like TSM. Its extreme volatility can make it a trading vehicle for those who have iron nerves and very high tolerance for risk, but there aren't many such people on this forum. Gold prices can have massive bull runs or massive bear collapses or, alternately, they may remain negative for 2 decades. In my opinion, as unpredictable and volatile as stocks seem to be, they are much less so than either gold prices or PM equity and stocks also have a long term expected return greater than inflation which I don't believe is the case with gold.

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Re: Vanguard's worst fund (also #1) in 2013.

Post by Buddtholomew »

I believe it worthwhile to point out that VGPMX has outperformed VINIX (S&P500) by approximately 2.5% YTD. This is not significant by highlights the importance of remaining invested in an asset class that has under-performed over a period of time. As investors, we do not know how an asset will perform moving forward and should not extrapolate from past results.
"The first principle is that you must not fool yourself and you are the easiest person to fool" --Feynman.
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Re: Vanguard's worst fund (also #1) in 2013.

Post by rkhusky »

Historical returns give you insight into the probable and the possible.
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Re: Vanguard's worst fund (also #1) in 2013.

Post by Buddtholomew »

rkhusky wrote:Historical returns give you insight into the probable and the possible.
Sure, but don't depend on historical returns to guide you in the future.
"The first principle is that you must not fool yourself and you are the easiest person to fool" --Feynman.
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Re: Vanguard's worst fund (also #1) in 2013.

Post by abuss368 »

gkaplan wrote:Taylor did own this fund at one time, I believe, which he frequently has professed (and possibly lamented).
Did you own this fund during the 2008 downturn?
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Re: Vanguard's worst fund (also #1) in 2013.

Post by abuss368 »

I have always considered this fund pure speculation. I have always thought investing experts such as Jack Bogle, David Swensen, Rick Ferri, and Warren Buffett's views on gold, commodities, and precious metals are too hard to ignore or pass up.

I would rather own business and real estate, topped off with a wonderful low cost and diversified bond fund.

Keep investing simple.
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Vanguard's worst fund (also #1) in 2013.

Post by Buddtholomew »

abuss368 wrote:I have always considered this fund pure speculation. I have always thought investing experts such as Jack Bogle, David Swensen, Rick Ferri, and Warren Buffett's views on gold, commodities, and precious metals are too hard to ignore or pass up.

I would rather own business and real estate, topped off with a wonderful low cost and diversified bond fund.

Keep investing simple.
That's great, you are in good company. For those that have an allocation to PM&M, YTD returns are as follows.

VINIX YTD: -0.48%
VGPMX YTD: 6.13%
"The first principle is that you must not fool yourself and you are the easiest person to fool" --Feynman.
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Specialty funds ?

Post by Taylor Larimore »

abuss368 wrote:
gkaplan wrote:Taylor did own this fund at one time, I believe, which he frequently has professed (and possibly lamented).
Did you own this fund during the 2008 downturn?
Abuss:

We owned Vanguard's Gold Fund in 1993 when it was the best Vanguard fund gaining 93%.

At the end of 1998 renamed Gold and Precious Metals Fund had the worst 5-year return of ALL Vanguard funds.

We sold this fund long ago and no longer endure the ecstasy and agony of specialty funds.

Best wishes.
Taylor
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Re: Vanguard's worst fund (also #1) in 2013.

Post by jmndu99 »

I just noticed that indexfundfan and abuss... avatar are the same.

How many more use that same avatar?

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Re: Vanguard's worst fund (also #1) in 2013.

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Re: Vanguard's worst fund (also #1) in 2013.

Post by selftalk »

Buy straw hats in the fall and be very very patient. VGPMX will have a large tracking error to the S&P 500 but hang in there with a very small allocation if you want. Even Taylor capitulated at the bottom and he had much experience with the markets up to that time. It ain`t easy! Buy at maximum pessimism when you are scared to do so like now.
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Re: Vanguard's worst fund (also #1) in 2013.

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jmndu99 wrote:I just noticed that indexfundfan and abuss... avatar are the same.

How many more use that same avatar?

Big Smiles
This is very odd and troubling and should be resolved. But how ? indexfundfan has more seniority but abuss has more posts.
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Re: Vanguard's worst fund (also #1) in 2013.

Post by nisiprius »

selftalk wrote:...Buy at maximum pessimism when you are scared to do so like now.
Has there ever been a case when anyone bought at what they thought was maximum pessimism and they were scared to do so and it turned out badly? How do you know when you are at "maximum pessimism?" Is it easier to call the bottom in pessimism than to call the bottom in stock or fund price?

If you think something different from the market, and you are right and the market is wrong, you get rich.

If you think something different from the market, and the market is right, you don't.
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Re: Vanguard's worst fund (also #1) in 2013.

Post by Bustoff »

selftalk wrote:...Buy at maximum pessimism when you are scared to do so like now.
selftalk - haven't you heard ? BTFD has been replaced with BTFATH. :greedy
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Re: Vanguard's worst fund (also #1) in 2013.

Post by sunnyday »

How does Jack Bogle feel about gold (answer at 16:43) - http://live.wsj.com/video/jack-bogle-wh ... 329DDF5CA0

The whole interview is excellent.

In one interview I believe I heard him compare gold with investing in a table and how they both don't produce anything. Does anyone know where that interview is?
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Re: Specialty funds ?

Post by rustymutt »

Taylor Larimore wrote:
abuss368 wrote:
gkaplan wrote:Taylor did own this fund at one time, I believe, which he frequently has professed (and possibly lamented).
Did you own this fund during the 2008 downturn?
Abuss:

We owned Vanguard's Gold Fund in 1993 when it was the best Vanguard fund gaining 93%.

At the end of 1998 renamed Gold and Precious Metals Fund had the worst 5-year return of ALL Vanguard funds.

We sold this fund long ago and no longer endure the ecstasy and agony of specialty funds.

Best wishes.
Taylor

Many of us are grateful for your willingness to share hard learned lesson with us. We must all listen to others better. With age comes wisdom and understanding that youth ignore all to often. Thank you Taylor for all you share with us.
Even educators need education. And some can be hard headed to the point of needing time out.
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Re: Vanguard's worst fund (also #1) in 2013.

Post by Bustoff »

I heard certain forms of gold are exempt from IRS reporting when bought or sold. I heard this from an acquaintance who has been with a major wall street firm for over 30 years. About ten years ago he told me was putting everything he had into gold. I think he he bought the gold when it was in the $400/oz. range. Last year he sold his house for a little over a million -- he paid a little less than $400K for it. Now he rents a waterfront home and pays his rent in gold. I never followed his advice. :(
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Re: Vanguard's worst fund (also #1) in 2013.

Post by selftalk »

Nisiprius, the small cap Russian etf (RSXJ), VWO and GLD are at maximum pessimism levels and are cheap and of good value now.. Of course they can go lower but they`re in the bottom range. Sentiment sure can be measured. Keep an eye on it and see for yourself.
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