Poor performing portfolio

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stocknoob4111
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Poor performing portfolio

Post by stocknoob4111 »

Was just looking at my taxable account and noticed that my Year To Date gains are currently just $100. LOL! I kid you not. This is on a close to half million dollar position. Clearly I am doing something terribly wrong.

Positions :

VOO (S&P 500) - 14.14%
VFWAX (Total International) - 23.31%
VBILX (Intermediate Bond) - 15.70%
VTMSX (S&P 600) - 31.86%
VTSAX (Total Stock) - 6.58%
Cash Reserves - 8.40%

2020 beginning balance: $456,426, new money invested: $20,700, current balance as of today: $477,230, net gain: $104

I understand that I have Small and non-US and this is a 75/25 portfolio but still I was expecting at least more than a $100 gain on a half million dollar portfolio on what is supposed to be a bull market? :oops:

Can anyone provide feedback on what is wrong with this portfolio and if this will recover on a long term basis, i.e. what is the prognosis if I hold these positions for the next 10 years and continue pouring money into it?
retired@50
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Re: Poor performing portfolio

Post by retired@50 »

The over-weight position in VTMSX is hurting your returns. YTD it's -10.21%

Regards,
This is one person's opinion. Nothing more.
drk
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Re: Poor performing portfolio

Post by drk »

I wouldn't change anything based on the past eight crazy months. If you haven't gotten sick of the small-cap tilt in that time-span, you might as well stick with it.
CardioMD
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Re: Poor performing portfolio

Post by CardioMD »

I personally don’t see the point of holding anything other than the S&P 500. VOO (I choose FXAIX) is already a low-cost, well-diversified fund with large companies that do business throughout the world. The key, in my humble opinion, is to grow wealth in order to sustain a comfortable retirement and, maybe, leave a legacy for the next generation. Complicating a portfolio in order to squeeze a little extra doesn’t make sense to me. To each his own I guess.
“The stock market is a giant distraction from the business of investing.” -Jack Bogle
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TheTimeLord
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Re: Poor performing portfolio

Post by TheTimeLord »

On the bright side, futures for the Russell 2000 are implying an open of up about 1.3% right now, so maybe tomorrow you make some money.
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stocknoob4111
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Re: Poor performing portfolio

Post by stocknoob4111 »

TheTimeLord wrote: Thu Aug 27, 2020 11:13 pm On the bright side, futures for the Russell 2000 are implying an open of up about 1.3% right now, so maybe tomorrow you make some money.
The S&P 600 seemed like it was recovering but then it tanked badly again. I have most of my S&P 500 in my 401k which has been setting new records every day. I'm just perplexed as to why this taxable account where I have most of my Small and International is performing so miserably. I understand under-performance but this is way more than under-performance, it is essentially non-performance.

International seemed to be recovering nicely as well but lately it's started tanking again. Anything that is not US Large cap seems to be struggling to make any meaningful rebound.
bigfry
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Re: Poor performing portfolio

Post by bigfry »

CardioMD wrote: Thu Aug 27, 2020 11:08 pm I personally don’t see the point of holding anything other than the S&P 500. VOO (I choose FXAIX) is already a low-cost, well-diversified fund with large companies that do business throughout the world. The key, in my humble opinion, is to grow wealth in order to sustain a comfortable retirement and, maybe, leave a legacy for the next generation. Complicating a portfolio in order to squeeze a little extra doesn’t make sense to me. To each his own I guess.
Very much agree with this.
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Independent George
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Re: Poor performing portfolio

Post by Independent George »

The nine month window you are observing is basically meaningless for a long-term portfolio. Sooner or later, every slice of your portfolio will under-perform the others; if nine months is causing you this much worry, you have way too much equity and way too much factor exposure.
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stocknoob4111
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Re: Poor performing portfolio

Post by stocknoob4111 »

Independent George wrote: Thu Aug 27, 2020 11:34 pm The nine month window you are observing is basically meaningless for a long-term portfolio. Sooner or later, every slice of your portfolio will under-perform the others; if nine months is causing you this much worry, you have way too much equity and way too much factor exposure.
as I said it isn't under performance, I understand that some asset classes under perform from time to time. However, it isn't normal for one equity class of the same country to set new daily records while the other equity class is registering it's worst performance in it's entire history. The S&P 600 Small Caps which have historically performed within a range of the Large Caps is now at it's greatest divergence in history. Also, the S&P 600 has never still been in a bear market 24 months later - this is the first time in history it's done that, at least since 1995.

I do know the reason - it's because there are only 5 tech stocks in the S&P 500 driving that whole index which is absent in any other index... but is that sustainable? So which index do you trust as a better representation of the economy as a whole and what is going to happen in the future? A lot of analysts think that ultimately those 5 tech stocks get hit hard with reality as well.
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LilyFleur
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Re: Poor performing portfolio

Post by LilyFleur »

You are putting a portion of your portfolio under the microscope.

I don't do that. I have a spreadsheet that aggregates my 401k and my taxable account and gives me the % in stocks, bonds, and cash. I'm retired and right now I have about 50% in equities; included in that 50% are 5% in an international stock index fund and 5% in a Russell 2000 index fund. It also tells me what percentage is in taxable, Roth, and tax-deferred.

If I looked at the performance of only international, Russell 2000 and my stable value fund (or any combination of allocations that have had lower performance this year), I wouldn't be very happy.

I look at my overall asset allocations and rebalance as necessary.

I am questioning, though, if I really need the Russell 2000 and International index funds. I may decide to sell them at some point and put that money into the S&P 500. Lots of bogleheads choose that type of asset allocation. They keep it simple and don't bother with "tilts."

The history of any fund is just that and is no indicator of future performance.
Johm221122
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Re: Poor performing portfolio

Post by Johm221122 »

If your worried about a 9 month period you don't belong in the stock market and especially not small cap stocks. Watching the stock market is pointless. Just invest in a portfolio that "meets your need,willingness and ability" to take risk and then turn off the noise.
I personally haven't checked my portfolio in a decade at all except once a year to rebalance and real bad days for a rebalancing opportunity.
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McGilicutty
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Re: Poor performing portfolio

Post by McGilicutty »

Replace the International portion with QQQ (Nasdaq 100) and watch the money pile up. Also remember, this advice is worth what you paid for it.

Personally, I'm 83% S&P 500 with the rest in individual stocks for kicks. I like the S&P 500 because it seems like one of the more steadier indices. It's not too hot and not too cold.

I've toyed with the idea of moving money to QQQ, but haven't done it yet due to inertia (to my detriment).
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Noobvestor
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Re: Poor performing portfolio

Post by Noobvestor »

The market crashed this year, and you're back up close to even, and you consider that ... poor performance? I'm not really sure what to say. You held in, which was good. You did better than people who bailed, which is good. You were diversified, which was good. In a year with a lot of volatility and uncertainty, you've managed to do alright. Not every every year will yield positive returns. If this spooks you, maybe your allocation is too risky and you should shift more assets into fixed income? Or just count your blessing that the recovery was fairly quick? Or pick a set-and-forget target date fund?

To be really, very, extra clear: this year was not a 'bull market' year - globally, stocks have broken about even YTD. Your performance is par. Nothing is 'wrong' with your portfolio if you continue to stay the course. In fact, you're quite well-diversified. The only reason I can imagine you think you're doing poorly is if you're benchmarking off of the best-performing asset classes of the year (hint: no one knows what those are in advance).
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe
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Noobvestor
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Re: Poor performing portfolio

Post by Noobvestor »

McGilicutty wrote: Fri Aug 28, 2020 3:44 am Replace the International portion with QQQ (Nasdaq 100) and watch the money pile up. Also remember, this advice is worth what you paid for it.

Personally, I'm 83% S&P 500 with the rest in individual stocks for kicks. I like the S&P 500 because it seems like one of the more steadier indices. It's not too hot and not too cold.

I've toyed with the idea of moving money to QQQ, but haven't done it yet due to inertia (to my detriment).
I mean, that's the other option - pile onto the already-expensive things that have done well recently. Buy high, sell low as they say :shock:
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe
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McGilicutty
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Re: Poor performing portfolio

Post by McGilicutty »

Noobvestor wrote: Fri Aug 28, 2020 3:56 am
McGilicutty wrote: Fri Aug 28, 2020 3:44 am Replace the International portion with QQQ (Nasdaq 100) and watch the money pile up. Also remember, this advice is worth what you paid for it.

Personally, I'm 83% S&P 500 with the rest in individual stocks for kicks. I like the S&P 500 because it seems like one of the more steadier indices. It's not too hot and not too cold.

I've toyed with the idea of moving money to QQQ, but haven't done it yet due to inertia (to my detriment).
I mean, that's the other option - pile onto the already-expensive things that have done well recently. Buy high, sell low as they say :shock:
More times than not, you'll be buying a well-performing index near its high. That's the way well-performing indices work.

Alternatively, you can stay in International for 10 years and make next to no money.
Life Is Good
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Re: Poor performing portfolio

Post by Life Is Good »

stocknoob4111 wrote: Thu Aug 27, 2020 10:52 pm Can anyone provide feedback on what is wrong with this portfolio and if this will recover on a long term basis, i.e. what is the prognosis if I hold these positions for the next 10 years and continue pouring money into it?
Nothing wrong with it. Small caps have struggled this year. They'll come back eventually. I'm not sure I'd change a thing. I tilt slightly to small caps myself. Very often they outperform the 500, this year they aren't. Oh well.

Since it's a taxable account, are there any losses you can harvest? It might help simplify things a bit.

What's the prognosis? If anyone knew that... :moneybag
dbr
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Re: Poor performing portfolio

Post by dbr »

What you are doing wrong is thinking that portfolios won't do what yours is doing. Returns on investments vary all over the place all the time and returns on different investments vary differently all over the place all the time. You should probably relax and shrug your shoulders over it all.

If you want the prognosis for ten years it is that you will end up with an amount of wealth that will be one outcome out of a highly unpredictable range of possibilities. That range include that you could even have less then than when you started. If you want to see some examples of what happens in real portfolios go run FireCalc and look at the chart of how the values of portfolios started at different times end up all over the map after some time:

https://firecalc.com/firecalcresults.php

Another interesting chart is this one:

https://www.callan.com/wp-content/uploa ... -Table.pdf

If you want to view the problem from a more statistical point of view put your portfolio into Portfolio Visualizer and take a look at the two measures CAGR and Stdev to get a sense of the average expectationa and a sense of how far the outcome can vary from the average:

https://www.portfoliovisualizer.com/bac ... sisResults

Portfolio Visualizer also has an output in the Monte Carlo simulation section that shows the ranges of possible outcomes on a chart:

https://www.portfoliovisualizer.com/mon ... sisResults

Whether or not you master the technical details of a statistical understanding of investment performance, it is still necessary to appreciate the underlying nature of uncertainty in investing.
7eight9
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Re: Poor performing portfolio

Post by 7eight9 »

Noobvestor wrote: Fri Aug 28, 2020 3:52 am The market crashed this year, and you're back up close to even, and you consider that ... poor performance? I'm not really sure what to say. You held in, which was good. You did better than people who bailed, which is good. You were diversified, which was good. In a year with a lot of volatility and uncertainty, you've managed to do alright. Not every every year will yield positive returns. If this spooks you, maybe your allocation is too risky and you should shift more assets into fixed income? Or just count your blessing that the recovery was fairly quick? Or pick a set-and-forget target date fund?

To be really, very, extra clear: this year was not a 'bull market' year - globally, stocks have broken about even YTD. Your performance is par. Nothing is 'wrong' with your portfolio if you continue to stay the course. In fact, you're quite well-diversified. The only reason I can imagine you think you're doing poorly is if you're benchmarking off of the best-performing asset classes of the year (hint: no one knows what those are in advance).
I can certainly appreciate why the OP is less than pleased with their performance over the past eight months. They don't have to benchmark themselves against best performing asset classes to be disgusted. Even a risk-free high yield savings account has smoked their portfolio's performance with no gut-wrenching drop in March.
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Re: Poor performing portfolio

Post by Anon9001 »

Noobvestor wrote: Fri Aug 28, 2020 3:56 am
McGilicutty wrote: Fri Aug 28, 2020 3:44 am Replace the International portion with QQQ (Nasdaq 100) and watch the money pile up. Also remember, this advice is worth what you paid for it.

Personally, I'm 83% S&P 500 with the rest in individual stocks for kicks. I like the S&P 500 because it seems like one of the more steadier indices. It's not too hot and not too cold.

I've toyed with the idea of moving money to QQQ, but haven't done it yet due to inertia (to my detriment).
I mean, that's the other option - pile onto the already-expensive things that have done well recently. Buy high, sell low as they say :shock:
Momentum is quite powerful phenomenon. Although it requires frequent re-balancing. Not suitable if you are planning to buy and hold.
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Kenkat
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Re: Poor performing portfolio

Post by Kenkat »

stocknoob4111 wrote: Fri Aug 28, 2020 12:40 am
Independent George wrote: Thu Aug 27, 2020 11:34 pm The nine month window you are observing is basically meaningless for a long-term portfolio. Sooner or later, every slice of your portfolio will under-perform the others; if nine months is causing you this much worry, you have way too much equity and way too much factor exposure.
as I said it isn't under performance, I understand that some asset classes under perform from time to time. However, it isn't normal for one equity class of the same country to set new daily records while the other equity class is registering it's worst performance in it's entire history. The S&P 600 Small Caps which have historically performed within a range of the Large Caps is now at it's greatest divergence in history. Also, the S&P 600 has never still been in a bear market 24 months later - this is the first time in history it's done that, at least since 1995.

I do know the reason - it's because there are only 5 tech stocks in the S&P 500 driving that whole index which is absent in any other index... but is that sustainable? So which index do you trust as a better representation of the economy as a whole and what is going to happen in the future? A lot of analysts think that ultimately those 5 tech stocks get hit hard with reality as well.
You’re right, it isn’t normal.

No, it’s not sustainable.

My portfolio 70/30, with international, small and value is -0.16% YTD.

The bad news is you’ve only made $100 this year. The good news is that you still have a half mil.

Times will change at some point - it’s hard, but I’d suggest continued patience.
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Noobvestor
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Re: Poor performing portfolio

Post by Noobvestor »

McGilicutty wrote: Fri Aug 28, 2020 4:26 am
Noobvestor wrote: Fri Aug 28, 2020 3:56 am
McGilicutty wrote: Fri Aug 28, 2020 3:44 am Replace the International portion with QQQ (Nasdaq 100) and watch the money pile up. Also remember, this advice is worth what you paid for it.

Personally, I'm 83% S&P 500 with the rest in individual stocks for kicks. I like the S&P 500 because it seems like one of the more steadier indices. It's not too hot and not too cold.

I've toyed with the idea of moving money to QQQ, but haven't done it yet due to inertia (to my detriment).
I mean, that's the other option - pile onto the already-expensive things that have done well recently. Buy high, sell low as they say :shock:
More times than not, you'll be buying a well-performing index near its high. That's the way well-performing indices work.

Alternatively, you can stay in International for 10 years and make next to no money.
Much like US-only investing for the ten years before that (between 2000 and 2010) made less than no money after inflation? :oops:

Anyway, back to the point: some years you'll be up, other years down. For most portfolios, you can expect down years every few years. A flat year (to date) is certainly not a bad outcome, and not a reason to go changing around a long-term plan. Stay the course.

P.S. Check out the 'years with a loss' data next to various allocations here: https://personal.vanguard.com/us/insigh ... llocations
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Noobvestor
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Re: Poor performing portfolio

Post by Noobvestor »

7eight9 wrote: Fri Aug 28, 2020 10:20 am I can certainly appreciate why the OP is less than pleased with their performance over the past eight months. They don't have to benchmark themselves against best performing asset classes to be disgusted. Even a risk-free high yield savings account has smoked their portfolio's performance with no gut-wrenching drop in March.
As I linked above, an investor should be aware that even a fairly conservative 60/40 stock/bond portfolio has a down year on average about once every four years. If this isn't something OP was aware of, I believe they should be. This needs to be factored into one's risk tolerance. As for savings as an alternative: long-term, we know that tends to lose to a balanced stock/bond portfolio. No sense in fretting the periodic downturns in between.
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe
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ruralavalon
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Re: Poor performing portfolio

Post by ruralavalon »

stocknoob4111 wrote: Thu Aug 27, 2020 10:52 pm Was just looking at my taxable account and noticed that my Year To Date gains are currently just $100. LOL! I kid you not. This is on a close to half million dollar position. Clearly I am doing something terribly wrong.

Positions :

VOO (S&P 500) - 14.14%
VFWAX (Total International) - 23.31%
VBILX (Intermediate Bond) - 15.70%
VTMSX (S&P 600) - 31.86%
VTSAX (Total Stock) - 6.58%
Cash Reserves - 8.40%

2020 beginning balance: $456,426, new money invested: $20,700, current balance as of today: $477,230, net gain: $104

I understand that I have Small and non-US and this is a 75/25 portfolio but still I was expecting at least more than a $100 gain on a half million dollar portfolio on what is supposed to be a bull market? :oops:

Can anyone provide feedback on what is wrong with this portfolio and if this will recover on a long term basis, i.e. what is the prognosis if I hold these positions for the next 10 years and continue pouring money into it?
You are not clearly doing something terribly wrong. (In my opinion you have too much over market weight in U.S. small-cap.)

Vanguard Tax-Managed Small-Cap Fund Admiral Shares (VTMSX) and Vanguard FTSE All-World ex-US Index Fund Admiral Shares (VFWAX) have held you back in returns year to date.

There is no way to reliably predict what funds will be best over the next 10 years. Those funds may be better in the future, or not.
Last edited by ruralavalon on Fri Aug 28, 2020 6:36 pm, edited 1 time in total.
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Actin
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Re: Poor performing portfolio

Post by Actin »

Why do many redundant and inferior funds? Sell all of that and just buy VTSAX. The fact that someone can have so little in gains, while the fed is destroying the dollar to keep stock prices on an election year, seems impossible to me.
TropikThunder
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Re: Poor performing portfolio

Post by TropikThunder »

stocknoob4111 wrote: Fri Aug 28, 2020 12:40 am I do know the reason - it's because there are only 5 tech stocks in the S&P 500 driving that whole index which is absent in any other index... but is that sustainable? So which index do you trust as a better representation of the economy as a whole and what is going to happen in the future? A lot of analysts think that ultimately those 5 tech stocks get hit hard with reality as well.
I think this post is a better indication of what's going on currently: the entire US stock market is struggling due to pandemic-related economic shocks with the vary narrow exception of the high-flying Large Cap Growth tech stocks. It's not really a question of why are small caps struggling when large caps aren't because MOST large caps aren't doing that great either.
typical.investor
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Re: Poor performing portfolio

Post by typical.investor »

Actin wrote: Fri Aug 28, 2020 6:35 pm Why do many redundant and inferior funds? Sell all of that and just buy VTSAX. The fact that someone can have so little in gains, while the fed is destroying the dollar to keep stock prices on an election year, seems impossible to me.
The fed is not destroying the dollar to keep stock prices up in an election year. Sorry.

More importantly though, it's not good practice to sell holdings after underperformance and buy the ones that have outperformed.
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stocknoob4111
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Re: Poor performing portfolio

Post by stocknoob4111 »

Reaching $1M in net worth has been incredibly difficult due to the largest part of my portfolio having essentially zero returns. I thought when I hit $500k my portfolio will start compounding at a much faster rate. Unfortunately due to my large investments in Small Caps and International - both essentially with zero or negative returns this hasn't come to fruition.

My 15% allocation in bonds have performed extremely well for what they are (an ultra low risk asset class) - but even good returns for bonds are still low relatively speaking so that hasn't been enough to move the needle.

I am counting on a Small Cap rebound... if history is a guide the S&P 600 usually skyrockets to the moon once the recovery starts so I have my fingers crossed that this will be the case this time around as well. The index as a TON of catching up to do, it's still almost in a bear market even though the S&P 500 sets new daily records.

Small Caps outperform after recessions:
https://www.cnbc.com/2020/05/26/small-c ... nager.html
KlangFool
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Re: Poor performing portfolio

Post by KlangFool »

stocknoob4111 wrote: Thu Aug 27, 2020 10:52 pm Was just looking at my taxable account and noticed that my Year To Date gains are currently just $100. LOL! I kid you not. This is on a close to half million dollar position. Clearly I am doing something terribly wrong.

Positions :

VOO (S&P 500) - 14.14%
VFWAX (Total International) - 23.31%
VBILX (Intermediate Bond) - 15.70%
VTMSX (S&P 600) - 31.86%
VTSAX (Total Stock) - 6.58%
Cash Reserves - 8.40%

2020 beginning balance: $456,426, new money invested: $20,700, current balance as of today: $477,230, net gain: $104

I understand that I have Small and non-US and this is a 75/25 portfolio but still I was expecting at least more than a $100 gain on a half million dollar portfolio on what is supposed to be a bull market? :oops:

Can anyone provide feedback on what is wrong with this portfolio and if this will recover on a long term basis, i.e. what is the prognosis if I hold these positions for the next 10 years and continue pouring money into it?

Did you rebalance in March? If you do, you will be making very good gains now.


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Re: Poor performing portfolio

Post by KlangFool »

stocknoob4111 wrote: Wed Sep 02, 2020 8:45 pm Reaching $1M in net worth has been incredibly difficult due to the largest part of my portfolio having essentially zero returns. I thought when I hit $500k my portfolio will start compounding at a much faster rate. Unfortunately due to my large investments in Small Caps and International - both essentially with zero or negative returns this hasn't come to fruition.

My 15% allocation in bonds have performed extremely well for what they are (an ultra low risk asset class) - but even good returns for bonds are still low relatively speaking so that hasn't been enough to move the needle.

I am counting on a Small Cap rebound... if history is a guide the S&P 600 usually skyrockets to the moon once the recovery starts so I have my fingers crossed that this will be the case this time around as well. The index as a TON of catching up to do, it's still almost in a bear market even though the S&P 500 sets new daily records.

Small Caps outperform after recessions:
https://www.cnbc.com/2020/05/26/small-c ... nager.html
stocknoob4111,

You did not have enough bond (25% or more) to enjoy the gain from the March rebalancing. My AA is 60/40. I rebalance in March and a few weeks ago.


In March, I sell the bond to buy the stock. A few weeks ago, I sell the stock to buy the bond.


KlangFool
justglassin
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Re: Poor performing portfolio

Post by justglassin »

stocknoob4111 wrote: Thu Aug 27, 2020 10:52 pm Was just looking at my taxable account and noticed that my Year To Date gains are currently just $100. LOL! I kid you not. This is on a close to half million dollar position. Clearly I am doing something terribly wrong.

Positions :

VOO (S&P 500) - 14.14%
VFWAX (Total International) - 23.31%
VBILX (Intermediate Bond) - 15.70%
VTMSX (S&P 600) - 31.86%
VTSAX (Total Stock) - 6.58%
Cash Reserves - 8.40%

2020 beginning balance: $456,426, new money invested: $20,700, current balance as of today: $477,230, net gain: $104

I understand that I have Small and non-US and this is a 75/25 portfolio but still I was expecting at least more than a $100 gain on a half million dollar portfolio on what is supposed to be a bull market? :oops:

Can anyone provide feedback on what is wrong with this portfolio and if this will recover on a long term basis, i.e. what is the prognosis if I hold these positions for the next 10 years and continue pouring money into it?
I can relate. I had 100% of my Roth in VG Total international (VTIAX) and no international in my TSP because TSP didn't have emerging markets. Trying to be simple and efficient, I suppose. It has gone nowhere for many years. Once it had recovered to where it was pre Covid-crash, I just bit the bullet and moved to VT (Total World) in my Roth which more or less matches the total world mix I now hold in my TSP (albeit without the emerging markets). Live and learn, but I don't recommend anyone go about piecing out accounts like I was advised to do on here in 2012 or 13. Missed a lot of gains had I just picked an equivalent allocation in my Roth and TSP.
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stocknoob4111
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Re: Poor performing portfolio

Post by stocknoob4111 »

KlangFool wrote: Wed Sep 02, 2020 9:02 pm Did you rebalance in March? If you do, you will be making very good gains now.

KlangFool
I did buy some VTSAX at SPX 2700 and then at SPX 2400. Unfortunately I sold both positions at SPX 2800 thinking I bought too early and will buy back on the retrace which never happened :oops:

On the plus side I do have an additional $220K in my 401k which is 100% in the S&P 500 and I have another $30k in my Roth which is 100% VTSAX.

Thankfully, my 401k, even though it's less than half of my taxable account has performed so well it's been enough for my portfolio overall to set all time highs.

I own VBILX (Vanguard Intermediate Bond), the performance has been exceptional so far relatively speaking... I am definitely pleased with the way bonds have performed up until now. Unfortunately I think bonds have given all they can give so the future may not be good. There is no more fuel in the bond tank...
typical.investor
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Re: Poor performing portfolio

Post by typical.investor »

I'd say the taxable account isn't your portfolio which also includes your 401k and ROTH and that you should look at your overall allocation.

In addition, 9 months is too short.

Is there any indication that large US growth companies have been increasingly profitable relative to value and foreign stocks? My understanding was that they are simply more expensive which means future earning are priced in today which means a rise in inflation will discount all of those earnings.

For sure we have seen a lowering of rates and inflation and economic downturn and if you are looking to buy growth now, then it might as well be in the US Tech industry especially if the tail wind of a rising USD is still in place. I don't think the USD will keep rising, and I don't think tech valuations can keep increasing, and I suspect with so much government spending that inflation globally won't stay so low.

Anyway, why look at one segment of your portfolio over a short period of time?
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hagridshut
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Re: Poor performing portfolio

Post by hagridshut »

stocknoob4111 wrote: Thu Aug 27, 2020 10:52 pm Was just looking at my taxable account and noticed that my Year To Date gains are currently just $100. LOL! I kid you not. This is on a close to half million dollar position. Clearly I am doing something terribly wrong.

Positions :

VOO (S&P 500) - 14.14%
VFWAX (Total International) - 23.31%
VBILX (Intermediate Bond) - 15.70%
VTMSX (S&P 600) - 31.86%
VTSAX (Total Stock) - 6.58%
Cash Reserves - 8.40%

Can anyone provide feedback on what is wrong with this portfolio and if this will recover on a long term basis, i.e. what is the prognosis if I hold these positions for the next 10 years and continue pouring money into it?
I think this portfolio is too complicated.

There is no reason to simultaneously hold VOO (S&P 500), VTMSX (S&P 600), and VTSAX (Total Stock). VTSAX (Total Stock) would get you total coverage of the U.S. market.

Likewise, I see no reason to hold Cash Reserves in a taxable investment account. Typically, there is no FDIC insurance, and yields on such funds are so low that there is nothing to justify the miniscule risk of a money market fund "breaking the buck". Cash belongs in the bank, unless you intend to invest it soon.

Ideally, you may want to consolidate to just 3 funds:

VTSAX (Total Stock)
VFWAX (Total International)
VBILX (Intermediate Bond)

However, since this is in a taxable account, you may owe $ to the government if you consolidate. I recommend figuring out what allocations you want, and then determining the most tax efficient way to get there.

what is the prognosis if I hold these positions for the next 10 years and continue pouring money into it?
I don't think anyone here will be able to give you a prognosis. Nobody knows exactly what will happen in the next decade.
First Principles: (1) Diversify (2) Low Cost (3) Stay the Course | 3-Fund Index Portfolio
stimulacra
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Re: Poor performing portfolio

Post by stimulacra »

Your largest position is in a category that's been less able to weather the storm of the pandemic since March. Second largest position (International) has been ho-hum for 2020. I think those two explains the underperformance.

Also it looks like you have some odd overlapping holdings. You could use Morningstar's X-ray to get a better handle of your portfolio. I would just do VTSAX and whatever tilt you want for Small Cap or do VOO/VTMSX in whatever ratio you like.

Do you have a logic or thought process why you're so overweight in Small Caps? Most tilt portfolios I've seen has something along the lines of 1/4 weighting of Small Cap and Total, that way you're able to capture the overall gains in the broader market with some exposure to riskier assets.

What's your target allocation and rebalance schedule?
MotoTrojan
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Re: Poor performing portfolio

Post by MotoTrojan »

stocknoob4111 wrote: Thu Aug 27, 2020 11:19 pm
TheTimeLord wrote: Thu Aug 27, 2020 11:13 pm On the bright side, futures for the Russell 2000 are implying an open of up about 1.3% right now, so maybe tomorrow you make some money.
The S&P 600 seemed like it was recovering but then it tanked badly again. I have most of my S&P 500 in my 401k which has been setting new records every day. I'm just perplexed as to why this taxable account where I have most of my Small and International is performing so miserably. I understand under-performance but this is way more than under-performance, it is essentially non-performance.

International seemed to be recovering nicely as well but lately it's started tanking again. Anything that is not US Large cap seems to be struggling to make any meaningful rebound.
You need to research markets a lot more. You seem to have gotten complacent with the past few years of steady gains; that is not normal.
Call_Me_Op
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Re: Poor performing portfolio

Post by Call_Me_Op »

bigfry wrote: Thu Aug 27, 2020 11:29 pm
CardioMD wrote: Thu Aug 27, 2020 11:08 pm I personally don’t see the point of holding anything other than the S&P 500. VOO (I choose FXAIX) is already a low-cost, well-diversified fund with large companies that do business throughout the world. The key, in my humble opinion, is to grow wealth in order to sustain a comfortable retirement and, maybe, leave a legacy for the next generation. Complicating a portfolio in order to squeeze a little extra doesn’t make sense to me. To each his own I guess.
Very much agree with this.
I wonder if you guys would feel the same way had the S&P500 not consisted of one of the top-performing asset categories recently.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein
MotoTrojan
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Re: Poor performing portfolio

Post by MotoTrojan »

Call_Me_Op wrote: Thu Sep 03, 2020 7:23 am
bigfry wrote: Thu Aug 27, 2020 11:29 pm
CardioMD wrote: Thu Aug 27, 2020 11:08 pm I personally don’t see the point of holding anything other than the S&P 500. VOO (I choose FXAIX) is already a low-cost, well-diversified fund with large companies that do business throughout the world. The key, in my humble opinion, is to grow wealth in order to sustain a comfortable retirement and, maybe, leave a legacy for the next generation. Complicating a portfolio in order to squeeze a little extra doesn’t make sense to me. To each his own I guess.
Very much agree with this.
I wonder if you guys would feel the same way had the S&P500 not consisted of one of the top-performing asset categories recently.
Amen. I love how people toss out the "do business throughout the world" bit, externally (and likely internally too) covering for the real truth that they have recency bias and are performance chasing.
KlangFool
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Re: Poor performing portfolio

Post by KlangFool »

stocknoob4111 wrote: Wed Sep 02, 2020 11:34 pm
KlangFool wrote: Wed Sep 02, 2020 9:02 pm Did you rebalance in March? If you do, you will be making very good gains now.

KlangFool
I did buy some VTSAX at SPX 2700 and then at SPX 2400. Unfortunately I sold both positions at SPX 2800 thinking I bought too early and will buy back on the retrace which never happened :oops:

stocknoob4111,

In summary, you did "market timing". You did not "Buy, Hold, and Rebalance". Or else, you would be making good gains.


My 60/40 portfolio is doing well year-to-date. No market timing is needed.

KlangFool
GoldenGoose
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Re: Poor performing portfolio

Post by GoldenGoose »

MotoTrojan wrote: Thu Sep 03, 2020 7:13 am
stocknoob4111 wrote: Thu Aug 27, 2020 11:19 pm
TheTimeLord wrote: Thu Aug 27, 2020 11:13 pm On the bright side, futures for the Russell 2000 are implying an open of up about 1.3% right now, so maybe tomorrow you make some money.
The S&P 600 seemed like it was recovering but then it tanked badly again. I have most of my S&P 500 in my 401k which has been setting new records every day. I'm just perplexed as to why this taxable account where I have most of my Small and International is performing so miserably. I understand under-performance but this is way more than under-performance, it is essentially non-performance.

International seemed to be recovering nicely as well but lately it's started tanking again. Anything that is not US Large cap seems to be struggling to make any meaningful rebound.
You need to research markets a lot more. You seem to have gotten complacent with the past few years of steady gains; that is not normal.
Hmm, interesting. Who would have thought. Yeah, a $100 gain YTD on a $500k account is like having your money in a saving account, even worse. Looking at OP's account, even tho the distributions are not balanced, but how diversified is that? Who would have foreseen that one fund to badly damage the whole account? So by your statement here, OP should have been actively managed his account, research the markets and make appropriate adjustments as necessary to avoid this poor performance. Is that right? Isn't this market timing?
whereskyle
Posts: 1248
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Re: Poor performing portfolio

Post by whereskyle »

stocknoob4111 wrote: Wed Sep 02, 2020 11:34 pm
KlangFool wrote: Wed Sep 02, 2020 9:02 pm Did you rebalance in March? If you do, you will be making very good gains now.

KlangFool
I did buy some VTSAX at SPX 2700 and then at SPX 2400. Unfortunately I sold both positions at SPX 2800 thinking I bought too early and will buy back on the retrace which never happened :oops:

On the plus side I do have an additional $220K in my 401k which is 100% in the S&P 500 and I have another $30k in my Roth which is 100% VTSAX.

Thankfully, my 401k, even though it's less than half of my taxable account has performed so well it's been enough for my portfolio overall to set all time highs.

I own VBILX (Vanguard Intermediate Bond), the performance has been exceptional so far relatively speaking... I am definitely pleased with the way bonds have performed up until now. Unfortunately I think bonds have given all they can give so the future may not be good. There is no more fuel in the bond tank...
You need to stop doing stuff.

Your portfolio is too complicated. It is constantly prompting you to buy, sell, and do stuff. You should be doing nothing but buying. Maybe you should also rebalance.
But I don't even do that. Why? Because it's too complicated. I may or may not want to do it when the time comes, so it introduces behavioral risk.

You are suffering from the behavioral risks your complicated portfolio creates.

I think you should sell your excess funds and go all in with one of these stock funds:

VTI/VTSAX (Vanguard Total US Stock Market)
VOO/VFIAX (Vanguard SP 500)
VT/VTWAX (Vanguard Total World Stock Market)

You can keep your bond fund if you want to protect that capital.

I honestly think that any fund apart from these (including a pure ex-us fund like VTIAX/VXUS) introduces unacceptable behavioral risks that will drag down returns in real-life as investors struggle to accept the volatility and divergent performance of the portfolio's underlying funds.

You need to simplify. Reduce behavioral risks and increase the return you actually capture.
"I am better off than he is – for he knows nothing and thinks that he knows. I neither know nor think that I know." - Socrates. "Nobody knows nothing." - Jack Bogle
MotoTrojan
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Re: Poor performing portfolio

Post by MotoTrojan »

GoldenGoose wrote: Thu Sep 03, 2020 7:33 am
MotoTrojan wrote: Thu Sep 03, 2020 7:13 am
stocknoob4111 wrote: Thu Aug 27, 2020 11:19 pm
TheTimeLord wrote: Thu Aug 27, 2020 11:13 pm On the bright side, futures for the Russell 2000 are implying an open of up about 1.3% right now, so maybe tomorrow you make some money.
The S&P 600 seemed like it was recovering but then it tanked badly again. I have most of my S&P 500 in my 401k which has been setting new records every day. I'm just perplexed as to why this taxable account where I have most of my Small and International is performing so miserably. I understand under-performance but this is way more than under-performance, it is essentially non-performance.

International seemed to be recovering nicely as well but lately it's started tanking again. Anything that is not US Large cap seems to be struggling to make any meaningful rebound.
You need to research markets a lot more. You seem to have gotten complacent with the past few years of steady gains; that is not normal.
Hmm, interesting. Who would have thought. Yeah, a $100 gain YTD on a $500k account is like having your money in a saving account, even worse. Looking at OP's account, even tho the distributions are not balanced, but how diversified is that? Who would have foreseen that one fund to badly damage the whole account? So by your statement here, OP should have been actively managed his account, research the markets and make appropriate adjustments as necessary to avoid this poor performance. Is that right? Isn't this market timing?
I said they need to research markets to understand that they aren't elevators, I never suggested the OP market time or vary their allocation.

You obviously have a deeply flawed view of markets as well if you think a $100 gain YTD on a $500k account means it was a flawed portfolio. What if it was a $200K loss YTD on that same $500K starting portfolio? That would've beat someone using a 0% savings account; does that mean it was a bad portfolio?

Frankly I actually quite like the OPs portfolio and it isn't far off from mine. My biggest critique would be to use small-value rather than value, and consider a bit more International. But that isn't my point about researching the markets; both of you expecting slow and steady gains that always beat a bank account is deeply flawed.
Call_Me_Op
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Location: Milky Way

Re: Poor performing portfolio

Post by Call_Me_Op »

GoldenGoose wrote: Thu Sep 03, 2020 7:33 am
MotoTrojan wrote: Thu Sep 03, 2020 7:13 am
stocknoob4111 wrote: Thu Aug 27, 2020 11:19 pm
TheTimeLord wrote: Thu Aug 27, 2020 11:13 pm On the bright side, futures for the Russell 2000 are implying an open of up about 1.3% right now, so maybe tomorrow you make some money.
The S&P 600 seemed like it was recovering but then it tanked badly again. I have most of my S&P 500 in my 401k which has been setting new records every day. I'm just perplexed as to why this taxable account where I have most of my Small and International is performing so miserably. I understand under-performance but this is way more than under-performance, it is essentially non-performance.

International seemed to be recovering nicely as well but lately it's started tanking again. Anything that is not US Large cap seems to be struggling to make any meaningful rebound.
You need to research markets a lot more. You seem to have gotten complacent with the past few years of steady gains; that is not normal.
Hmm, interesting. Who would have thought. Yeah, a $100 gain YTD on a $500k account is like having your money in a saving account, even worse. Looking at OP's account, even tho the distributions are not balanced, but how diversified is that? Who would have foreseen that one fund to badly damage the whole account? So by your statement here, OP should have been actively managed his account, research the markets and make appropriate adjustments as necessary to avoid this poor performance. Is that right? Isn't this market timing?
Problem here is the OP is evaluating his portfolio over a time period much too short to be meaningful.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein
MotoTrojan
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Re: Poor performing portfolio

Post by MotoTrojan »

Call_Me_Op wrote: Thu Sep 03, 2020 7:40 am
Problem here is the OP is evaluating his portfolio over a time period much too short to be meaningful.
But but I was able to make 15% in one day with Tesla! Shouldn't I be making 1536%/month?!?!?!?!
KlangFool
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Re: Poor performing portfolio

Post by KlangFool »

Call_Me_Op wrote: Thu Sep 03, 2020 7:40 am

Problem here is the OP is evaluating his portfolio over a time period much too short to be meaningful.

Call_Me_Op,


That is not the reason. If OP simply "buy, hold, and rebalance", he would had made more money.

From OP,

<<I did buy some VTSAX at SPX 2700 and then at SPX 2400. Unfortunately I sold both positions at SPX 2800 thinking I bought too early and will buy back on the retrace which never happened :oops:>>


$100 over 500K is 0.02%. It takes effort to do so badly.

From OP,

<<Was just looking at my taxable account and noticed that my Year To Date gains are currently just $100. LOL! I kid you not. This is on a close to half million dollar position. Clearly I am doing something terribly wrong.>>


KlangFool
dknightd
Posts: 2320
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Re: Poor performing portfolio

Post by dknightd »

stocknoob4111 wrote: Thu Aug 27, 2020 10:52 pm Was just looking at my taxable account and noticed that my Year To Date gains are currently just $100. LOL! I kid you not. This is on a close to half million dollar position. Clearly I am doing something terribly wrong.

Positions :

VOO (S&P 500) - 14.14%
VFWAX (Total International) - 23.31%
VBILX (Intermediate Bond) - 15.70%
VTMSX (S&P 600) - 31.86%
VTSAX (Total Stock) - 6.58%
Cash Reserves - 8.40%

2020 beginning balance: $456,426, new money invested: $20,700, current balance as of today: $477,230, net gain: $104

I understand that I have Small and non-US and this is a 75/25 portfolio but still I was expecting at least more than a $100 gain on a half million dollar portfolio on what is supposed to be a bull market? :oops:

Can anyone provide feedback on what is wrong with this portfolio and if this will recover on a long term basis, i.e. what is the prognosis if I hold these positions for the next 10 years and continue pouring money into it?
This portion (the taxable account) of your portfolio has a heavy weighting to international and small cap. Neither has done well this year. At least you did no loose money in this account (yet). As others have mentioned, you need to look at all of your investments. You also need to consider what "market" do you want to track. The allocation in your 401k is probably doing much better than the allocation in your taxable. So overall I'm guessing you are up more than $100 this year. You have to look at the total picture, not just the parts that are doing well, or the parts that are not doing as well as you would like. You also have to look at more than 9 months, especially the last 9 months, nobody can predict what will happen over the next 9 years. And if you are considering retirement savings, even 9 years is too short.

You do have a potential tax loss harvesting opportunity. You could sell some of the losers in your taxable account, then buy them in your 401k. That would keep your apparently desired tilt intact, and shelter the potential gains from taxes (at least for now, eventually you will have to pay the tax man on deferred accounts). But that only works if your 401 has similar investment options.

I have a small tilt toward developing markets and small cap value. I plan to eliminate that tilt eventually. But not till they catch up. I do not like to sell low. I do not know if they will ever catch up. Or when that may, or may not occur. Whatever change I make will be slow, and may never occur.
If you value a bird in the hand, pay off the loan. If you are willing to risk getting two birds (or none) from the market, invest the funds.
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ruralavalon
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Re: Poor performing portfolio

Post by ruralavalon »

stocknoob4111 wrote: Thu Aug 27, 2020 11:19 pm
TheTimeLord wrote: Thu Aug 27, 2020 11:13 pm On the bright side, futures for the Russell 2000 are implying an open of up about 1.3% right now, so maybe tomorrow you make some money.
The S&P 600 seemed like it was recovering but then it tanked badly again. I have most of my S&P 500 in my 401k which has been setting new records every day. I'm just perplexed as to why this taxable account where I have most of my Small and International is performing so miserably. I understand under-performance but this is way more than under-performance, it is essentially non-performance.

International seemed to be recovering nicely as well but lately it's started tanking again. Anything that is not US Large cap seems to be struggling to make any meaningful rebound.
(1) First, your need to look at all accounts together as a single unified portfolio. You said that you have "most of [your] S&P 500 in [your] 401k". Total return of Vanguard 500 Index Fund is up 12.26% year to date.

(I don't even know how our individual accounts perform, I don't keep track. But our overall portfolio is doing fine.)

You said "I'm just perplexed as to why this taxable account where I have most of my Small and International is performing so miserably." It is unreasonable to expect that all of your funds will do well at the same time.

(2) In my opinion your second problem is the large allocation to small-cap (32% of the taxable account). That is pretty risky, and the risk has materialized. It is not guaranteed that small-cap will do better. Stop paying attention to predictions of money managers on TV. In my opinion you have too much over market weight in U.S. small-cap.

On a different matter, why do you have a bond fund in your taxable account?
Last edited by ruralavalon on Thu Sep 03, 2020 9:52 am, edited 1 time in total.
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pkcrafter
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Re: Poor performing portfolio

Post by pkcrafter »

stocknoob, you have a very radical portfolio which contains a very large overweight of small caps. Small is notoriously hit and miss. You can go for very long periods where it misses. You also have a lot of international compared to your U.S. broad market holdings.

Sometimes when you mess with the bull, you just end up getting the horn.


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.
Valuethinker
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Re: Poor performing portfolio

Post by Valuethinker »

stocknoob4111 wrote: Thu Aug 27, 2020 10:52 pm Was just looking at my taxable account and noticed that my Year To Date gains are currently just $100. LOL! I kid you not. This is on a close to half million dollar position. Clearly I am doing something terribly wrong.

Positions :

VOO (S&P 500) - 14.14%
VFWAX (Total International) - 23.31%
VBILX (Intermediate Bond) - 15.70%
VTMSX (S&P 600) - 31.86%
VTSAX (Total Stock) - 6.58%
Cash Reserves - 8.40%

2020 beginning balance: $456,426, new money invested: $20,700, current balance as of today: $477,230, net gain: $104

I understand that I have Small and non-US and this is a 75/25 portfolio but still I was expecting at least more than a $100 gain on a half million dollar portfolio on what is supposed to be a bull market? :oops:

Can anyone provide feedback on what is wrong with this portfolio and if this will recover on a long term basis, i.e. what is the prognosis if I hold these positions for the next 10 years and continue pouring money into it?
Fear Of Missing Out. FOMO

You have way off index weights. Your risk of tracking error is much greater.

You are now experiencing tracking error. Underperformance v an equivalent equity benchmark.

Cut your international equities to say 30% of your total portfolio?

Move your US equities to Vanguard Total Stock market or equivalent weightings?
wannalearn
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Re: Poor performing portfolio

Post by wannalearn »

Not easy to "rebalance" a taxable account for obvious reasons (mainly triggering a taxable event)

As someone mentioned on here, this isn't your entire portfolio... So, I suspect you hold your bonds in your tax-sheltered accounts, which is suppose to be where you're suppose to hold them. I am sure they are showing a nice gain there.

Thank you for sharing your portfolio though... Cuz... My portfolio is suppose to look similar to yours in the near future... which is to say, equities in my taxable and bonds in my tax-sheltered accounts.

I am 45yo, 1MM+ in taxable accounts... typically, growing up, we accumulate our equity holding (volatile) in our tax sheltered accounts, and savings (non-volatile) in taxable accounts. Which is essentially where I am now. I have all my equities (volatile) in my tax sheltered accounts, and all my savings (non-volatile) in my taxable account. So, my portfolio looks typically like... total stock market index's in my IRAs and mainly of bonds in my taxable account. I just haven't come to terms with using my taxable account as a vehicle for investing into equities even though I have been convinced it is the right thing to do by the kind folks here.

FWIW from a beginner boglehead... I too think your portfolio is too complex for no reason... but again, that maybe because "rebalancing" there triggers taxable events.
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stocknoob4111
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Re: Poor performing portfolio

Post by stocknoob4111 »

I calculated that my portfolio would've been $100K higher if I had not diversified into International and Small Caps. I did so as a long range diversification strategy based on readings of Paul Merriman and the likes

To be fair VTMSX and the S&P600 as a whole has a rock solid record in the past 20+ years. It has never ever performed so poorly relative to Large. I guess now we are really seeing the meaning of "past performance isn't a guarantee blah blah"
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