Today was a good day to be diversified

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HEDGEFUNDIE
Posts: 1239
Joined: Sun Oct 22, 2017 2:06 pm

Today was a good day to be diversified

Post by HEDGEFUNDIE » Tue Dec 04, 2018 4:08 pm

Today’s performance:

VTI: -3.3% (Total US Stock)
VXUS: -2.4% (Total Int Stock)
VWO: -1.9% (Emerging Markets)
VWOB: +0.1% (EM Bonds)
BND: +0.2% (Total US Bonds)
VGLT: +1.6% (Long Term Treasuries)
EDV: +2.6% (Extended Duration Treasuries)

MotoTrojan
Posts: 2643
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Re: Today was a good day to be diversified

Post by MotoTrojan » Tue Dec 04, 2018 4:17 pm

HEDGEFUNDIE wrote:
Tue Dec 04, 2018 4:08 pm
Today’s performance:

VTI: -3.3% (Total US Stock)
VXUS: -2.4% (Total Int Stock)
VWO: -1.9% (Emerging Markets)
VWOB: +0.1% (EM Bonds)
BND: +0.2% (Total US Bonds)
VGLT: +1.6% (Long Term Treasuries)
EDV: +2.6% (Extended Duration Treasuries)
Wow. I don't follow them at all (let alone regularly) but I am surprised to see such larger swings in a bond fund. The 10 year plot of EDV is wild.

S&P600 took a -4.5% beating too... I hold SCV via that index.

HEDGEFUNDIE
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Re: Today was a good day to be diversified

Post by HEDGEFUNDIE » Tue Dec 04, 2018 4:23 pm

MotoTrojan wrote:
Tue Dec 04, 2018 4:17 pm
HEDGEFUNDIE wrote:
Tue Dec 04, 2018 4:08 pm
Today’s performance:

VTI: -3.3% (Total US Stock)
VXUS: -2.4% (Total Int Stock)
VWO: -1.9% (Emerging Markets)
VWOB: +0.1% (EM Bonds)
BND: +0.2% (Total US Bonds)
VGLT: +1.6% (Long Term Treasuries)
EDV: +2.6% (Extended Duration Treasuries)
Wow. I don't follow them at all (let alone regularly) but I am surprised to see such larger swings in a bond fund. The 10 year plot of EDV is wild.

S&P600 took a -4.5% beating too... I hold SCV via that index.
I own a lot of EDV but even more IJR :oops:

WhiteMaxima
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Re: Today was a good day to be diversified

Post by WhiteMaxima » Tue Dec 04, 2018 4:40 pm

It's not just today, it's always good to be diversified. :happy

pdavi21
Posts: 219
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Re: Today was a good day to be diversified

Post by pdavi21 » Tue Dec 04, 2018 4:44 pm

HEDGEFUNDIE wrote:
Tue Dec 04, 2018 4:08 pm
Today’s performance:

VTI: -3.3% (Total US Stock)
VXUS: -2.4% (Total Int Stock)
VWO: -1.9% (Emerging Markets)
VWOB: +0.1% (EM Bonds)
BND: +0.2% (Total US Bonds)
VGLT: +1.6% (Long Term Treasuries)
EDV: +2.6% (Extended Duration Treasuries)
I like your porfolio. The emphasis on long term treasuries is something I do too.

cherijoh
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Location: Charlotte NC

Re: Today was a good day to be diversified

Post by cherijoh » Tue Dec 04, 2018 4:49 pm

HEDGEFUNDIE wrote:
Tue Dec 04, 2018 4:08 pm
Today’s performance:

VTI: -3.3% (Total US Stock)
VXUS: -2.4% (Total Int Stock)
VWO: -1.9% (Emerging Markets)
VWOB: +0.1% (EM Bonds)
BND: +0.2% (Total US Bonds)
VGLT: +1.6% (Long Term Treasuries)
EDV: +2.6% (Extended Duration Treasuries)
VTI is almost identical to where it closed on Jan 2nd. And it has been lower on several occasions this year.

BF2011
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Re: Today was a good day to be diversified

Post by BF2011 » Tue Dec 04, 2018 4:54 pm

I wonder what your blended YTD return looks like, and if this diversification is indeed better than holding just VTI if you look at YTD

HEDGEFUNDIE
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Joined: Sun Oct 22, 2017 2:06 pm

Re: Today was a good day to be diversified

Post by HEDGEFUNDIE » Tue Dec 04, 2018 4:56 pm

To be clear, this is not my portfolio, it is just a diversified list of assets that have uncorrelated performance. I do subscribe to the diversification ratio philosophy of diversification, so I hold EDV instead of Total Bond and overweight EM and ex-US small cap.

FWIW, my 80/20 portfolio is down 1% today, not too shabby.
Last edited by HEDGEFUNDIE on Tue Dec 04, 2018 5:08 pm, edited 1 time in total.

HEDGEFUNDIE
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Re: Today was a good day to be diversified

Post by HEDGEFUNDIE » Tue Dec 04, 2018 5:04 pm

BF2011 wrote:
Tue Dec 04, 2018 4:54 pm
I wonder what your blended YTD return looks like, and if this diversification is indeed better than holding just VTI if you look at YTD
This is close to what I actually hold:

https://www.portfoliovisualizer.com/bac ... tion6_2=25

Take note of the StdDev and Max Drawdown metrics between the two portfolios.
Last edited by HEDGEFUNDIE on Wed Dec 05, 2018 9:08 am, edited 1 time in total.

robertmcd
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Re: Today was a good day to be diversified

Post by robertmcd » Tue Dec 04, 2018 5:21 pm

Very nice. I starting buying EDV when 30 yr yields crossed the 3.35 mark, and loved buying it when they hit 3.46.

Yields are going to go lower across the board.

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SeeMoe
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Location: Near Philly..

Re: Today was a good day to be diversified

Post by SeeMoe » Tue Dec 04, 2018 7:23 pm

It was a smart day to have an Asset Allocation plan that can take heavy hits and still stand tall! Diversification is the other leg. Our retiree 43s/51b/6mm did well today. Or at least it rolled with the heavy blows well....

SeeMoe.. :shock:
"By gnawing through a dike, even a Rat can destroy a nation ." {Edmund Burke}

columbia
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Re: Today was a good day to be diversified

Post by columbia » Tue Dec 04, 2018 7:59 pm

HEDGEFUNDIE wrote:
Tue Dec 04, 2018 4:08 pm
Today’s performance:

VTI: -3.3% (Total US Stock)
VXUS: -2.4% (Total Int Stock)
VWO: -1.9% (Emerging Markets)
VWOB: +0.1% (EM Bonds)
BND: +0.2% (Total US Bonds)
VGLT: +1.6% (Long Term Treasuries)
EDV: +2.6% (Extended Duration Treasuries)
VNQ: -1.48% (REIT)
QREARX: -0.07% (TIAA Real Estate)

My TIAA Traditional stayed the course, with no loss. ;)

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Phineas J. Whoopee
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Re: Today was a good day to be diversified

Post by Phineas J. Whoopee » Tue Dec 04, 2018 10:26 pm

Will Friday (markets are closed tomorrow on Wednesday due to current events so I can't sell out until Thursday) be a good day to be diversified? If you don't know then of what use is this information?
PJW

HEDGEFUNDIE
Posts: 1239
Joined: Sun Oct 22, 2017 2:06 pm

Re: Today was a good day to be diversified

Post by HEDGEFUNDIE » Tue Dec 04, 2018 10:29 pm

Phineas J. Whoopee wrote:
Tue Dec 04, 2018 10:26 pm
Will Friday (markets are closed tomorrow on Wednesday due to current events so I can't sell out until Thursday) be a good day to be diversified? If you don't know then of what use is this information?
PJW
Every day is a good day to be diversified, today was just a particularly glaring example for those who cling to their no-Intl or no-LT Treasuries stances.

harvestbook
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Re: Today was a good day to be diversified

Post by harvestbook » Wed Dec 05, 2018 8:10 am

HEDGEFUNDIE wrote:
Tue Dec 04, 2018 5:04 pm
BF2011 wrote:
Tue Dec 04, 2018 4:54 pm
I wonder what your blended YTD return looks like, and if this diversification is indeed better than holding just VTI if you look at YTD
This is close to what I actually hold:

https://www.portfoliovisualizer.com/bac ... tion6_2=25

Take note of the StdDev and Max Drawdown metrics between the two portfolios.
Have you actually held this or a close proximity of it since 1985? I'm not challenging your thesis, which seems sound enough, I'm just curious.
I'm not smart enough to know, and I can't afford to guess.

HEDGEFUNDIE
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Joined: Sun Oct 22, 2017 2:06 pm

Re: Today was a good day to be diversified

Post by HEDGEFUNDIE » Wed Dec 05, 2018 8:29 am

harvestbook wrote:
Wed Dec 05, 2018 8:10 am
HEDGEFUNDIE wrote:
Tue Dec 04, 2018 5:04 pm
BF2011 wrote:
Tue Dec 04, 2018 4:54 pm
I wonder what your blended YTD return looks like, and if this diversification is indeed better than holding just VTI if you look at YTD
This is close to what I actually hold:

https://www.portfoliovisualizer.com/bac ... tion6_2=25

Take note of the StdDev and Max Drawdown metrics between the two portfolios.
Have you actually held this or a close proximity of it since 1985? I'm not challenging your thesis, which seems sound enough, I'm just curious.
Well I was born in 1986, so no. But I intend to hold it for the next 15 or so years while I’m still in accumulation mode.

TheOscarGuy
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Location: Where I wanna be.

Re: Today was a good day to be diversified

Post by TheOscarGuy » Wed Dec 05, 2018 8:48 am

HEDGEFUNDIE wrote:
Tue Dec 04, 2018 4:08 pm
Today’s performance:

VTI: -3.3% (Total US Stock)
VXUS: -2.4% (Total Int Stock)
VWO: -1.9% (Emerging Markets)
VWOB: +0.1% (EM Bonds)
BND: +0.2% (Total US Bonds)
VGLT: +1.6% (Long Term Treasuries)
EDV: +2.6% (Extended Duration Treasuries)
So is tomorrow not a good day to be diversified? :D

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vineviz
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Re: Today was a good day to be diversified

Post by vineviz » Wed Dec 05, 2018 9:01 am

Phineas J. Whoopee wrote:
Tue Dec 04, 2018 10:26 pm
Will Friday (markets are closed tomorrow on Wednesday due to current events so I can't sell out until Thursday) be a good day to be diversified?
Yes, Friday will be a good day to be diversified.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

Crisium
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Joined: Thu Dec 22, 2016 9:52 am

Re: Today was a good day to be diversified

Post by Crisium » Wed Dec 05, 2018 9:48 am

International markets didn't has as much time to react yesterday, since most of them close earlier. Check them out today.

Long term treasuries really are a diversified like few other things, but the volatility isn't for me.

Elysium
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Re: Today was a good day to be diversified

Post by Elysium » Wed Dec 05, 2018 10:14 am

When the market value gets cut in half, as it did from Oct 2007 to Feb 2009, that is when you know whether you still feel good about what you hold. Notice I said value not percentage, when you are down hundreds of thousands of dollars you will not be coming up and talking about diversification benefts, you'll be hanging on to the precious little you have and hope things turn around. Just ask those who lost their jobs, home value in half, and portfolio value in half, all at same time. IIRC, very few people on this forum held LT Treasuries going into 2007, the talk was all Small Cap Value, REIT, Short Term Bonds, and Commodity Futures (CCF) as the best diversifiers.

There is a tendency for people, even those who are well versed in financial theory, to depend on the last thing that worked well, but future down markets are seldom like past down markets and expose new risks.

The only thing that works is to stay the course no matter what, hopefully having an AA plan that works for you. Whether some of your assets are up or down on a daily basis or even on a yearly basis is irrelevant. If you have a reasonable plan and can stay the course, you will likely come out well in the long run.

HEDGEFUNDIE
Posts: 1239
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Re: Today was a good day to be diversified

Post by HEDGEFUNDIE » Wed Dec 05, 2018 11:39 am

Crisium wrote:
Wed Dec 05, 2018 9:48 am
International markets didn't has as much time to react yesterday, since most of them close earlier. Check them out today.

Long term treasuries really are a diversified like few other things, but the volatility isn't for me.
The international funds I listed trade on US exchanges, so their performance yesterday is as reflective of market conditions as any other US stock fund.

And I hear a lot that long treasuries are “too volatile”. It’s true they are volatile but they are generally volatile in the opposite direction from stocks, that’s what makes them powerful diversifiers. The point of holding long treasuries is to reduce the volatility of one’s overall portfolio, which yesterday (and the past 10 years) has shown to be the case.

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Phineas J. Whoopee
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Re: Today was a good day to be diversified

Post by Phineas J. Whoopee » Wed Dec 05, 2018 8:42 pm

Elysium wrote:
Wed Dec 05, 2018 10:14 am
When the market value gets cut in half, as it did from Oct 2007 to Feb 2009, that is when you know whether you still feel good about what you hold. Notice I said value not percentage, when you are down hundreds of thousands of dollars you will not be coming up and talking about diversification benefts, you'll be hanging on to the precious little you have and hope things turn around. ...
I will?

PJW

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