Why not 100% PSLDX?

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Lee_WSP
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Re: Why not 100% PSLDX?

Post by Lee_WSP »

jibantik wrote: Thu Jul 09, 2020 9:15 am And yes, investing in only s&p500 is speculating in a subset of the market and not recommended. It's not as bad as speculating in only FAANG, for instance, but it is still speculating.
Incorrect.

Bogle himself advocated the S&P 500 and a bond fund.

VTSMX was only created in 1992.

The CRSP total stock market index was only created in 2011. The S&P was only created in 2010.

Total stock market is a relatively new phenomenon.
jibantik
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Re: Why not 100% PSLDX?

Post by jibantik »

Lee_WSP wrote: Thu Jul 09, 2020 9:59 am
jibantik wrote: Thu Jul 09, 2020 9:15 am And yes, investing in only s&p500 is speculating in a subset of the market and not recommended. It's not as bad as speculating in only FAANG, for instance, but it is still speculating.
Incorrect.

Bogle himself advocated the S&P 500 and a bond fund.

VTSMX was only created in 1992.

The CRSP total stock market index was only created in 2011. The S&P was only created in 2010.

Total stock market is a relatively new phenomenon.
It does not matter what Bogle of Buffet or anyone else has said or suggested. Speculation is speculation. If you overweight ANY part of the market you ARE speculating, period. S&P 500 is speculating LESS than if you just bought Apple, but it is still speculation. Clearly, there are mutual funds that are more speculation-neutral than the S&P500.
Lee_WSP wrote: Thu Jul 09, 2020 9:54 am
jibantik wrote: Thu Jul 09, 2020 9:15 am No alternatives? There are thousands of alternatives... no one is forcing you to buy it. So, that tenet is NOT satisfied. The low-cost tenet is not "low costs unless you can get a fund that does exactly what PSLDX does".
Incorrect. Unlevered alternatives are not fungible. Other levered funds actually cost more.
I can point you to thousands of other mutual funds you can pick from, many with low fees. A high fee is a high fee, no matter how much you stomp your feet otherwise. A fee that cuts away over 30% of your lifetime earnings is a HIGH fee. There are plenty of mutual funds with lower fees, for instance, VTWAX at 0.10%.
columbia
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Re: Why not 100% PSLDX?

Post by columbia »

jibantik wrote: Wed Jul 08, 2020 8:54 pm
Lee_WSP wrote: Wed Jul 08, 2020 12:23 pm Please explain which BH principal(s) it violates and why.
Let's see, an active management, leveraged fund, with high ER, that speculates on the futures of a subset of the market.
“Subset of the market”

Owning this fund hardly precludes one from also owning an international fund; in fact, PIMCO offers an EAFE version...

Unless you’re saying that having S&P500 exposure instead of TSM is speculating?
RocketShipTech
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Re: Why not 100% PSLDX?

Post by RocketShipTech »

columbia wrote: Thu Jul 09, 2020 11:37 am
jibantik wrote: Wed Jul 08, 2020 8:54 pm
Lee_WSP wrote: Wed Jul 08, 2020 12:23 pm Please explain which BH principal(s) it violates and why.
Let's see, an active management, leveraged fund, with high ER, that speculates on the futures of a subset of the market.
“Subset of the market”

Owning this fund hardly precludes one from also owning an international fund; in fact, PIMCO offers an EAFE version...

Unless you’re saying that having S&P500 exposure instead of TSM is speculating?
That is exactly what they're saying, and it's ludicrous.

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Lee_WSP
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Re: Why not 100% PSLDX?

Post by Lee_WSP »

jibantik wrote: Thu Jul 09, 2020 11:12 am
It does not matter what Bogle of Buffet or anyone else has said or suggested. Speculation is speculation. If you overweight ANY part of the market you ARE speculating, period. S&P 500 is speculating LESS than if you just bought Apple, but it is still speculation. Clearly, there are mutual funds that are more speculation-neutral than the S&P500.
That is ludicrous and is NOT a Boglehead tenet. You are just making things up now.
jibantik wrote: Thu Jul 09, 2020 11:12 am
I can point you to thousands of other mutual funds you can pick from, many with low fees. A high fee is a high fee, no matter how much you stomp your feet otherwise. A fee that cuts away over 30% of your lifetime earnings is a HIGH fee. There are plenty of mutual funds with lower fees, for instance, VTWAX at 0.10%.
That is not the tenet. The tenet is to keep costs low. It is also not an absolute command.

If you have a better way to get 100% stocks & 100% bonds exposure at a lower cost, please share it.

Obviously you have a personal problem with the idea of leverage and you are trying to fit your crusade into BH philosophy, but it is not against the tents. Please just stop saying it's against the BH philosophy and just say you have a personal problem with it. I have no problem if you have a personal issue with a fund, that is your own personal opinion.
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Ramjet
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Re: Why not 100% PSLDX?

Post by Ramjet »

Curious, for those of you who have bought PSLDX, about what % of your portfolio does it make up? I personally purchase as much as possible in my IRAs and use total market funds for employer plans
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Ramjet
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Re: Why not 100% PSLDX?

Post by Ramjet »

RocketShipTech wrote: Thu Jul 09, 2020 12:06 pm
columbia wrote: Thu Jul 09, 2020 11:37 am
jibantik wrote: Wed Jul 08, 2020 8:54 pm
Lee_WSP wrote: Wed Jul 08, 2020 12:23 pm Please explain which BH principal(s) it violates and why.
Let's see, an active management, leveraged fund, with high ER, that speculates on the futures of a subset of the market.
“Subset of the market”

Owning this fund hardly precludes one from also owning an international fund; in fact, PIMCO offers an EAFE version...

Unless you’re saying that having S&P500 exposure instead of TSM is speculating?
That is exactly what they're saying, and it's ludicrous.
Market weight AA sure seems to be getting rammed down everybody's throats lately
Lee_WSP
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Re: Why not 100% PSLDX?

Post by Lee_WSP »

Ramjet wrote: Thu Jul 09, 2020 12:17 pm Curious, for those of you who have bought PSLDX, about what % of your portfolio does it make up? I personally purchase as much as possible in my IRAs and use total market funds for employer plans
Most of my Roth. But the purchase fee almost forces you to lump sum into it once a year to keep the costs low.

It's not easy to purchase like SSO or UPRO.
Ramjet wrote: Thu Jul 09, 2020 12:23 pm Market weight AA sure seems to be getting rammed down everybody's throats lately
Agreed.

Times are tough, people retreat into corners. That's the best explanation I can come up with.
Semantics
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Re: Why not 100% PSLDX?

Post by Semantics »

jibantik wrote: Thu Jul 09, 2020 11:12 am
Lee_WSP wrote: Thu Jul 09, 2020 9:59 am
jibantik wrote: Thu Jul 09, 2020 9:15 am And yes, investing in only s&p500 is speculating in a subset of the market and not recommended. It's not as bad as speculating in only FAANG, for instance, but it is still speculating.
Incorrect.

Bogle himself advocated the S&P 500 and a bond fund.

VTSMX was only created in 1992.

The CRSP total stock market index was only created in 2011. The S&P was only created in 2010.

Total stock market is a relatively new phenomenon.
It does not matter what Bogle of Buffet or anyone else has said or suggested. Speculation is speculation. If you overweight ANY part of the market you ARE speculating, period. S&P 500 is speculating LESS than if you just bought Apple, but it is still speculation. Clearly, there are mutual funds that are more speculation-neutral than the S&P500.
Lee_WSP wrote: Thu Jul 09, 2020 9:54 am
jibantik wrote: Thu Jul 09, 2020 9:15 am No alternatives? There are thousands of alternatives... no one is forcing you to buy it. So, that tenet is NOT satisfied. The low-cost tenet is not "low costs unless you can get a fund that does exactly what PSLDX does".
Incorrect. Unlevered alternatives are not fungible. Other levered funds actually cost more.
I can point you to thousands of other mutual funds you can pick from, many with low fees. A high fee is a high fee, no matter how much you stomp your feet otherwise. A fee that cuts away over 30% of your lifetime earnings is a HIGH fee. There are plenty of mutual funds with lower fees, for instance, VTWAX at 0.10%.
Sounds like I should quit my well-paying job and take a minimum wage job. That way I wouldn't be subject to taxes that cut away over 30% of my lifetime earnings.
AZAttorney11
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Re: Why not 100% PSLDX?

Post by AZAttorney11 »

The intolerance and fervent opposition to what is essentially a slightly leveraged S&P 500 index fund are comical. There appears to be a handful of posters who are total market zealots and summarily reject any thinking to the contrary. It's baffling.
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cos
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Re: Why not 100% PSLDX?

Post by cos »

jibantik wrote: Thu Jul 09, 2020 11:12 am I can point you to thousands of other mutual funds you can pick from, many with low fees. A high fee is a high fee, no matter how much you stomp your feet otherwise. A fee that cuts away over 30% of your lifetime earnings is a HIGH fee. There are plenty of mutual funds with lower fees, for instance, VTWAX at 0.10%.
PSLDX is the lowest cost fund I can find that gives me a minimum of 2x leveraged access to a fairly diversified portfolio of stocks and bonds. VTWAX does not provide any leverage whatsoever. Please point me to a fund with lower costs than PSLDX that provides, at a minimum, 2x leverage.
Lee_WSP
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Re: Why not 100% PSLDX?

Post by Lee_WSP »

AZAttorney11 wrote: Thu Jul 09, 2020 12:59 pm The intolerance and fervent opposition to what is essentially a slightly leveraged S&P 500 index fund are comical. There appears to be a handful of posters who are total market zealots and summarily reject any thinking to the contrary. It's baffling.
Not really. How many people scream about constitutional rights they don't have? None of them ever bothered to read the Constitution either.

It's severely disappointing though.
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firebirdparts
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Re: Why not 100% PSLDX?

Post by firebirdparts »

Ramjet wrote: Thu Jul 09, 2020 12:17 pm Curious, for those of you who have bought PSLDX, about what % of your portfolio does it make up? I personally purchase as much as possible in my IRAs and use total market funds for employer plans
I think this was asked earlier if you can find it. For me it’s 25% but I am only 50% stocks. So half the stocks. Based on its volatility I think of it as an SP 500 index fund.
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jibantik
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Re: Why not 100% PSLDX?

Post by jibantik »

cos wrote: Thu Jul 09, 2020 1:02 pm
jibantik wrote: Thu Jul 09, 2020 11:12 am I can point you to thousands of other mutual funds you can pick from, many with low fees. A high fee is a high fee, no matter how much you stomp your feet otherwise. A fee that cuts away over 30% of your lifetime earnings is a HIGH fee. There are plenty of mutual funds with lower fees, for instance, VTWAX at 0.10%.
PSLDX is the lowest cost fund I can find that gives me a minimum of 2x leveraged access to a fairly diversified portfolio of stocks and bonds. VTWAX does not provide any leverage whatsoever. Please point me to a fund with lower costs than PSLDX that provides, at a minimum, 2x leverage.
I'm not going to research funds for you, it's irrelevant to the point. Someone asked how this didn't follow boglehead principles, and I referenced the high cost (among several other reasons). It does NOT matter if this is THE lowest cost 2x leveraged fund you can find if it STILL has a high cost. The lowest cost does not imply a LOW cost when you restrict your universe to an arbitrary subset of funds.

Feel free to invest in it if you want, just don't pretend like it jives with boglehead principles.
SVT
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Re: Why not 100% PSLDX?

Post by SVT »

Ramjet wrote: Thu Jul 09, 2020 12:17 pm Curious, for those of you who have bought PSLDX, about what % of your portfolio does it make up? I personally purchase as much as possible in my IRAs and use total market funds for employer plans
This is about 15% of my net worth (slightly higher for % of portfolio, like 17%). My entire Roth is in UPRO/TMF and that is currently about 16% of my net worth.
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willthrill81
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Re: Why not 100% PSLDX?

Post by willthrill81 »

jibantik wrote: Thu Jul 09, 2020 5:28 pm
cos wrote: Thu Jul 09, 2020 1:02 pm
jibantik wrote: Thu Jul 09, 2020 11:12 am I can point you to thousands of other mutual funds you can pick from, many with low fees. A high fee is a high fee, no matter how much you stomp your feet otherwise. A fee that cuts away over 30% of your lifetime earnings is a HIGH fee. There are plenty of mutual funds with lower fees, for instance, VTWAX at 0.10%.
PSLDX is the lowest cost fund I can find that gives me a minimum of 2x leveraged access to a fairly diversified portfolio of stocks and bonds. VTWAX does not provide any leverage whatsoever. Please point me to a fund with lower costs than PSLDX that provides, at a minimum, 2x leverage.
I'm not going to research funds for you, it's irrelevant to the point. Someone asked how this didn't follow boglehead principles, and I referenced the high cost (among several other reasons). It does NOT matter if this is THE lowest cost 2x leveraged fund you can find if it STILL has a high cost. The lowest cost does not imply a LOW cost when you restrict your universe to an arbitrary subset of funds.

Feel free to invest in it if you want, just don't pretend like it jives with boglehead principles.
"High cost" is relative. If you're talking about "high" relative to the universe of all available funds, then I agree with you. You can pay nothing at all with a fund like FZROX.

But in reality, PSLDX is not like FZROX. It's a fund that employs leverage, and you have to pay something for leverage. That's not blatantly 'anti-Boglehead philosophy'.

The real question is whether the leverage is worth the added cost.
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jibantik
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Re: Why not 100% PSLDX?

Post by jibantik »

willthrill81 wrote: Thu Jul 09, 2020 5:34 pm
jibantik wrote: Thu Jul 09, 2020 5:28 pm I'm not going to research funds for you, it's irrelevant to the point. Someone asked how this didn't follow boglehead principles, and I referenced the high cost (among several other reasons). It does NOT matter if this is THE lowest cost 2x leveraged fund you can find if it STILL has a high cost. The lowest cost does not imply a LOW cost when you restrict your universe to an arbitrary subset of funds.

Feel free to invest in it if you want, just don't pretend like it jives with boglehead principles.
"High cost" is relative. If you're talking about "high" relative to the universe of all available funds, then I agree with you. You can pay nothing at all with a fund like FZROX.

But in reality, PSLDX is not like FZROX. It's a fund that employs leverage, and you have to pay something for leverage. That's not blatantly 'anti-Boglehead philosophy'.

The real question is whether the leverage is worth the added cost.
Sure, it CAN be relative for your own personal decisions. But, in terms of boglehead principles it is NOT relative. The principle is LOW COST, not "LOW COST relative to leveraged funds".

Yes, those advocating this strategy have a tough burden of proof of whether the leverage is worth it. I expect many are just greedy based on past performance, which is of course a terrible way of deciding what funds to invest in.
Lee_WSP
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Re: Why not 100% PSLDX?

Post by Lee_WSP »

jibantik wrote: Thu Jul 09, 2020 5:49 pm
willthrill81 wrote: Thu Jul 09, 2020 5:34 pm
jibantik wrote: Thu Jul 09, 2020 5:28 pm I'm not going to research funds for you, it's irrelevant to the point. Someone asked how this didn't follow boglehead principles, and I referenced the high cost (among several other reasons). It does NOT matter if this is THE lowest cost 2x leveraged fund you can find if it STILL has a high cost. The lowest cost does not imply a LOW cost when you restrict your universe to an arbitrary subset of funds.

Feel free to invest in it if you want, just don't pretend like it jives with boglehead principles.
"High cost" is relative. If you're talking about "high" relative to the universe of all available funds, then I agree with you. You can pay nothing at all with a fund like FZROX.

But in reality, PSLDX is not like FZROX. It's a fund that employs leverage, and you have to pay something for leverage. That's not blatantly 'anti-Boglehead philosophy'.

The real question is whether the leverage is worth the added cost.
Sure, it CAN be relative for your own personal decisions. But, in terms of boglehead principles it is NOT relative. The principle is LOW COST, not "LOW COST relative to leveraged funds".

Yes, those advocating this strategy have a tough burden of proof of whether the leverage is worth it. I expect many are just greedy based on past performance, which is of course a terrible way of deciding what funds to invest in.
Cost is the only tenet you can stand on and your position there is highly debatable and not at all universally held.
rgs92
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Re: Why not 100% PSLDX?

Post by rgs92 »

Just looking at at the blue line in the chart posted in this thread on Page 5, June 13 (9:29am) by ChrisBenn seems to imply that putting a large part of your portfolio in this fund is prohibitive.

That looked like a 70% drop to me. That' seems too much for anyone's portfolio. Especially where a Total Stock Market that only dropped 35%. (And bonds went up.)

What kind of standard deviation level does that represent? There just seems to be too much risk on the face of it.

I mean, if I knew nothing about this fund other than that chart, wouldn't that performance alone make it inappropriate for your life savings?
Aren't you supposed to have some sort of ballast in your complete portfolio when that portfolio is meant for income?

It looks like if you were using this fund for income and you had a situation like in March with a modest U-shaped recovery instead of a quick V-shaped one you could be wiped out in a few months.

Sorry for all the rhetorical questions here; 'just curious.
Last edited by rgs92 on Thu Jul 09, 2020 6:54 pm, edited 8 times in total.
Semantics
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Re: Why not 100% PSLDX?

Post by Semantics »

jibantik wrote: Thu Jul 09, 2020 5:28 pm
cos wrote: Thu Jul 09, 2020 1:02 pm
jibantik wrote: Thu Jul 09, 2020 11:12 am I can point you to thousands of other mutual funds you can pick from, many with low fees. A high fee is a high fee, no matter how much you stomp your feet otherwise. A fee that cuts away over 30% of your lifetime earnings is a HIGH fee. There are plenty of mutual funds with lower fees, for instance, VTWAX at 0.10%.
PSLDX is the lowest cost fund I can find that gives me a minimum of 2x leveraged access to a fairly diversified portfolio of stocks and bonds. VTWAX does not provide any leverage whatsoever. Please point me to a fund with lower costs than PSLDX that provides, at a minimum, 2x leverage.
I'm not going to research funds for you, it's irrelevant to the point. Someone asked how this didn't follow boglehead principles, and I referenced the high cost (among several other reasons). It does NOT matter if this is THE lowest cost 2x leveraged fund you can find if it STILL has a high cost. The lowest cost does not imply a LOW cost when you restrict your universe to an arbitrary subset of funds.

Feel free to invest in it if you want, just don't pretend like it jives with boglehead principles.
The Bogleheads principle is "keep costs low". You are correct, it is not low relative cost, but it is ALSO not "low absolute cost". Nor is it "keep costs as close to zero as possible".

Again, to illustrate the absurdist dogma at work here, if the keeping ER as absolutely low as possible were an overriding principle then we should all just keep our holdings in cash where the ER is 0% and those of us who are employed should also quit our jobs to avoid paying taxes.

If you have a mortgage then you are already most likely paying higher costs for your investments than I am with PSLDX.
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firebirdparts
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Re: Why not 100% PSLDX?

Post by firebirdparts »

rgs92 wrote: Thu Jul 09, 2020 6:40 pm Just looking at at the blue line in the chart posted in this thread on Page 5, June 13 (9:29am) by ChrisBenn seems to imply that putting a large part of your portfolio in this fund is prohibitive.

That looked like a 70% drop to me. That' seems too much for anyone's portfolio. Especially where a Total Stock Market that only dropped 35%. (And bonds went up.)

What kind of standard deviation level does that represent? There just seems to be too much risk on the face of it.

I mean, if I knew nothing about this fund other than that chart, wouldn't that performance alone make it inappropriate for your life savings?
Aren't you supposed to have some sort of ballast in your complete portfolio when that portfolio is meant for income?

It looks like if you were using this fund for income and you had a situation like in March with a modest U-shaped recovery instead of a quick V-shaped one you could be wiped out in a few months.

Sorry for all the rhetorical questions here; 'just curious.
No, that’s not how it does at all. That scale on that chart is just hard to read; they scaled the starting point at zero. You know The same zero we typically think of as $10,000. Look at it somewhere else That’s more plain. In fact PV will give you month to month drawdown.
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Re: Why not 100% PSLDX?

Post by TXGator »

For those that do have it, how often do you buy shares given the purchase fees whether its vanguard or schwab?
RocketShipTech
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Re: Why not 100% PSLDX?

Post by RocketShipTech »

TXGator wrote: Thu Jul 09, 2020 8:08 pm For those that do have it, how often do you buy shares given the purchase fees whether its vanguard or schwab?
Should really only be once per year because it should only be held in IRA and you only contribute to those once per year.
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Re: Why not 100% PSLDX?

Post by MindBogler »

Ramjet wrote: Thu Jul 09, 2020 12:17 pm Curious, for those of you who have bought PSLDX, about what % of your portfolio does it make up? I personally purchase as much as possible in my IRAs and use total market funds for employer plans
My Roth IRA is 100% in PSLDX and accounts for about 10% of the total portfolio. I made the purchase in a single transaction and can no longer contribute to the Roth. Everything else is run of the mill index / bond funds.
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Re: Why not 100% PSLDX

Post by ChrisBenn »

rgs92 wrote: Thu Jul 09, 2020 6:40 pm Just looking at at the blue line in the chart posted in this thread on Page 5, June 13 (9:29am) by ChrisBenn seems to imply that putting a large part of your portfolio in this fund is prohibitive.

That looked like a 70% drop to me. That' seems too much for anyone's portfolio. Especially where a Total Stock Market that only dropped 35%. (And bonds went up.)

What kind of standard deviation level does that represent? There just seems to be too much risk on the face of it.

I mean, if I knew nothing about this fund other than that chart, wouldn't that performance alone make it inappropriate for your life savings?
Aren't you supposed to have some sort of ballast in your complete portfolio when that portfolio is meant for income?

It looks like if you were using this fund for income and you had a situation like in March with a modest U-shaped recovery instead of a quick V-shaped one you could be wiped out in a few months.

Sorry for all the rhetorical questions here; 'just curious.
Had to reply since I was mentioned!

First, here is the chart in question:
Image

This chart shows 10k invested on jan 1, 2018, and how it fared in the following years.
* 2 years is a short time for any equity heavy fund, and if you needed your principal absolutely in 2 years a cd would be a better choice
* Note that the at the lowest point the PSLDX investor was still up 18%; the 60/40 investor was down a few percent (due to the outsized gains the prev year).

Now to your concern, lets assume we put in 10k on feb 19th - the all time s&p high point
https://stockcharts.com/h-perf/ui?s=VBI ... 5125636123 Image
VBINX = 60/40
VASGX = 80/20
VOO = 100/0

As of today PSLDX would have recovered and be about a percent in the green; the rest are still in the red.

I'm not saying this portfolio is risk free or unqualifiedly better; it's not. But it's certainly not as crazy as you made it sound. It's (as of now) pretty close to a 2.5x 40/60. previously it was closer to a 2x 50/50.

Also, you mention "hold for income" - which to me means decumulation. I believe most people here are considering it for their accumulation phase - where the volatility isn't an issue (and is a bonus if it is compensated with return)

-----

Personally I think the original points brought up are absolutely fair - but as warning flags. Not "against" the bogglehead credo, but rather things that immediately mean "there better be a good reason, or this is just another junk fund". I think in this case the fund does pass scrutiny though - so I disagree with your final opinion.

disclaimer: I'm not invested in this as i've gone the lifecycle route, and don't need the bond exposure - but if I did I would consider this fund (I prefer the non daily reset leverage in the long run, as compared to an EA analogue)
Last edited by ChrisBenn on Thu Jul 09, 2020 9:01 pm, edited 1 time in total.
Lee_WSP
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Re: Why not 100% PSLDX?

Post by Lee_WSP »

TXGator wrote: Thu Jul 09, 2020 8:08 pm For those that do have it, how often do you buy shares given the purchase fees whether its vanguard or schwab?
I'm considering every other year. But once a year is also acceptable.
RocketShipTech
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Re: Why not 100% PSLDX?

Post by RocketShipTech »

This fund is the only one worth making non-deductible IRA contributions for (that are not subsequently converted to Backdoor Roth).

Here is the scenario:

1. You are in a high tax bracket.
2. You have old pre-tax 401ks that you roll into Traditional IRAs in order to buy PSLDX.
3. You are therefore not able to do Backdoor Roth.
4. Instead you just make $6k (x2) non-deductible contributions to the tIRA to buy more PSLDX.
5. The significant PSLDX distributions are tax-deferred in the tIRA.
penumbra
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Re: Why not 100% PSLDX?

Post by penumbra »

Just thought I would let the forum know the following: I have most accounts at Fidelity, but because of the high minimum for this fund, I transferred my Roth IRA to Vanguard and purchased it there (about $300K). Recently confirmed with Fidelity that I could transfer the account back to them and continue to hold PSLDX. In fact, I can continue to buy it, although they want to charge a $50 fee per transaction. I usually can get this fee waived by my Private Client rep, who has been very helpful in this regard in the past. So there is a workaround for Fidelity, if interested. The account transfer in each direction was extremely easy, especially going back to Fidelity. Just a wonderful brokerage, in my opinion.

All the best.
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Re: Why not 100% PSLDX?

Post by Lee_WSP »

RocketShipTech wrote: Thu Jul 09, 2020 10:32 pm This fund is the only one worth making non-deductible IRA contributions for (that are not subsequently converted to Backdoor Roth).
Or any tax advantaged account.
SVT
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Re: Why not 100% PSLDX?

Post by SVT »

RocketShipTech wrote: Thu Jul 09, 2020 10:32 pm This fund is the only one worth making non-deductible IRA contributions for (that are not subsequently converted to Backdoor Roth).

Here is the scenario:

1. You are in a high tax bracket.
2. You have old pre-tax 401ks that you roll into Traditional IRAs in order to buy PSLDX.
3. You are therefore not able to do Backdoor Roth.
4. Instead you just make $6k (x2) non-deductible contributions to the tIRA to buy more PSLDX.
5. The significant PSLDX distributions are tax-deferred in the tIRA.
Hmm, didn't think about that. I haven't done a Backdoor Roth in a couple of years now. I have a large Traditional IRA (now at Ally for PSLDX) and a SEP IRA with my current employer, so I can't do the conversion and I've never bothered with making non deductible contributions and just doing the conversion at some point later on down the road (which could be years later as I don't see leaving my current employer anytime soon). Are you saying it's not a bad idea to do the non-deductible contributions into a Trad IRA to put more in PSLDX in this situation? Maybe I should try to make a quick contribution for 2019 tax year before the July 15th deadline?

ETA: I'm in the 43% fed/state tax bracket
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UpsetRaptor
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Re: Why not 100% PSLDX?

Post by UpsetRaptor »

Man, anything other than vanilla 3-fund global cap sure brings out the zealots. It's sad when being a Boglehead is almost viewed as a type of religious test, without openness to any other ideas or philosophies. If a new idea comes up, it should be posted, analyzed/discussed objectively by the (very intelligent) crowd here, and whether it passes muster or not should play out on its own accord.
Ramjet wrote: Thu Jul 09, 2020 12:17 pm Curious, for those of you who have bought PSLDX, about what % of your portfolio does it make up? I personally purchase as much as possible in my IRAs and use total market funds for employer plans
~25% of my portfolio is PSLDX, all of my Roth IRA space. Edit: May be worth mentioning that I'm young-ish, dual-income, both incomes stable, either income in of itself would cover us, and we have a pension ahead. I.E. very high risk tolerance.
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jason2459
Posts: 616
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Re: Why not 100% PSLDX?

Post by jason2459 »

penumbra wrote: Thu Jul 09, 2020 11:00 pm Just thought I would let the forum know the following: I have most accounts at Fidelity, but because of the high minimum for this fund, I transferred my Roth IRA to Vanguard and purchased it there (about $300K). Recently confirmed with Fidelity that I could transfer the account back to them and continue to hold PSLDX. In fact, I can continue to buy it, although they want to charge a $50 fee per transaction. I usually can get this fee waived by my Private Client rep, who has been very helpful in this regard in the past. So there is a workaround for Fidelity, if interested. The account transfer in each direction was extremely easy, especially going back to Fidelity. Just a wonderful brokerage, in my opinion.

All the best.

FYI, there's 0 minimum and only a $19.99 transaction fee for this at E-Trade.
RocketShipTech
Posts: 679
Joined: Sat Jun 13, 2020 10:08 pm

Re: Why not 100% PSLDX?

Post by RocketShipTech »

SVT wrote: Thu Jul 09, 2020 11:21 pm
RocketShipTech wrote: Thu Jul 09, 2020 10:32 pm This fund is the only one worth making non-deductible IRA contributions for (that are not subsequently converted to Backdoor Roth).

Here is the scenario:

1. You are in a high tax bracket.
2. You have old pre-tax 401ks that you roll into Traditional IRAs in order to buy PSLDX.
3. You are therefore not able to do Backdoor Roth.
4. Instead you just make $6k (x2) non-deductible contributions to the tIRA to buy more PSLDX.
5. The significant PSLDX distributions are tax-deferred in the tIRA.
Hmm, didn't think about that. I haven't done a Backdoor Roth in a couple of years now. I have a large Traditional IRA (now at Ally for PSLDX) and a SEP IRA with my current employer, so I can't do the conversion and I've never bothered with making non deductible contributions and just doing the conversion at some point later on down the road (which could be years later as I don't see leaving my current employer anytime soon). Are you saying it's not a bad idea to do the non-deductible contributions into a Trad IRA to put more in PSLDX in this situation? Maybe I should try to make a quick contribution for 2019 tax year before the July 15th deadline?

ETA: I'm in the 43% fed/state tax bracket
Yes! Get that 2019 contribution in!
columbia
Posts: 2992
Joined: Tue Aug 27, 2013 5:30 am

Re: Why not 100% PSLDX?

Post by columbia »

The best/most reasonable approximation I’ve seen for this is:

100% VOO
100% BLV
-100% cash

Now is 0.59% too much for that? Opinions clearly differ.
TXGator
Posts: 67
Joined: Mon Sep 26, 2016 1:38 pm

Re: Why not 100% PSLDX?

Post by TXGator »

RocketShipTech wrote: Thu Jul 09, 2020 10:32 pm This fund is the only one worth making non-deductible IRA contributions for (that are not subsequently converted to Backdoor Roth).

Here is the scenario:

1. You are in a high tax bracket.
2. You have old pre-tax 401ks that you roll into Traditional IRAs in order to buy PSLDX.
3. You are therefore not able to do Backdoor Roth.
4. Instead you just make $6k (x2) non-deductible contributions to the tIRA to buy more PSLDX.
5. The significant PSLDX distributions are tax-deferred in the tIRA.
When you say you just make $6k (x2) non-deductible contributions are you talking about grouping contribution years together? like 2019/2020 and then 2021/2022 at the beginning of 2022?
RocketShipTech
Posts: 679
Joined: Sat Jun 13, 2020 10:08 pm

Re: Why not 100% PSLDX?

Post by RocketShipTech »

TXGator wrote: Fri Jul 10, 2020 9:06 am
RocketShipTech wrote: Thu Jul 09, 2020 10:32 pm This fund is the only one worth making non-deductible IRA contributions for (that are not subsequently converted to Backdoor Roth).

Here is the scenario:

1. You are in a high tax bracket.
2. You have old pre-tax 401ks that you roll into Traditional IRAs in order to buy PSLDX.
3. You are therefore not able to do Backdoor Roth.
4. Instead you just make $6k (x2) non-deductible contributions to the tIRA to buy more PSLDX.
5. The significant PSLDX distributions are tax-deferred in the tIRA.
When you say you just make $6k (x2) non-deductible contributions are you talking about grouping contribution years together? like 2019/2020 and then 2021/2022 at the beginning of 2022?
+ spouse
TXGator
Posts: 67
Joined: Mon Sep 26, 2016 1:38 pm

Re: Why not 100% PSLDX?

Post by TXGator »

Got it - thought you were trying to cut the purchase fee by 50% with grouping!
Topic Author
TeeDee
Posts: 91
Joined: Thu Oct 04, 2018 10:21 am

Re: Why not 100% PSLDX?

Post by TeeDee »

I’ve been accumulating and transferring my PSLDX at Firstrade.

No commission and $500 initial minimum. $100 min subsequently
isubrama
Posts: 31
Joined: Sun Apr 12, 2020 12:27 pm

Re: Why not 100% PSLDX?

Post by isubrama »

TeeDee wrote: Fri Jul 10, 2020 10:44 am I’ve been accumulating and transferring my PSLDX at Firstrade.

No commission and $500 initial minimum. $100 min subsequently
PSLDX is not listed on the list,
https://www.firstrade.com/content/en-us ... mutualfund

How are you buying ?
User avatar
firebirdparts
Posts: 1882
Joined: Thu Jun 13, 2019 4:21 pm

Re: Why not 100% PSLDX?

Post by firebirdparts »

columbia wrote: Fri Jul 10, 2020 6:21 am The best/most reasonable approximation I’ve seen for this is:

100% VOO
100% BLV
-100% cash

Now is 0.59% too much for that? Opinions clearly differ.
It's also not clear if this would be seem superior to you personally to something like UPRO/TMF/Cash in thirds. The ER for that is .65 not counting 1/3 in cash.

It kind of begs the question of what properties of bonds would you rather speculate in.
A fool and your money are soon partners
Topic Author
TeeDee
Posts: 91
Joined: Thu Oct 04, 2018 10:21 am

Re: Why not 100% PSLDX?

Post by TeeDee »

isubrama wrote: Fri Jul 10, 2020 11:04 am
TeeDee wrote: Fri Jul 10, 2020 10:44 am I’ve been accumulating and transferring my PSLDX at Firstrade.

No commission and $500 initial minimum. $100 min subsequently
PSLDX is not listed on the list,
https://www.firstrade.com/content/en-us ... mutualfund

How are you buying ?
Just type in PSLDX and it gives you option to buy. That mutual fund list must be an old one that hasn’t been updated in their system
muffins14
Posts: 380
Joined: Wed Oct 26, 2016 4:14 am

Re: Why not 100% PSLDX?

Post by muffins14 »

Just off the phone with Fidelity re: PSLDX. The broker cited that the $1M threshold exists for IRA and 401k (brokeragelink), but mentioned that there appears to be no fee and no minimum for additional investments.

If that's the case, it seems I could open the position @ Ally bank, and then transfer it in kind back to Fidelity and continue investing there.

Has anyone had experience with that, so that I could confirm it?
SVT
Posts: 359
Joined: Mon Oct 13, 2008 8:56 am

Re: Why not 100% PSLDX?

Post by SVT »

muffins14 wrote: Fri Jul 10, 2020 12:05 pm Just off the phone with Fidelity re: PSLDX. The broker cited that the $1M threshold exists for IRA and 401k (brokeragelink), but mentioned that there appears to be no fee and no minimum for additional investments.

If that's the case, it seems I could open the position @ Ally bank, and then transfer it in kind back to Fidelity and continue investing there.

Has anyone had experience with that, so that I could confirm it?
A few posts up this page:
penumbra wrote: Thu Jul 09, 2020 11:00 pm Just thought I would let the forum know the following: I have most accounts at Fidelity, but because of the high minimum for this fund, I transferred my Roth IRA to Vanguard and purchased it there (about $300K). Recently confirmed with Fidelity that I could transfer the account back to them and continue to hold PSLDX. In fact, I can continue to buy it, although they want to charge a $50 fee per transaction. I usually can get this fee waived by my Private Client rep, who has been very helpful in this regard in the past. So there is a workaround for Fidelity, if interested. The account transfer in each direction was extremely easy, especially going back to Fidelity. Just a wonderful brokerage, in my opinion.

All the best.
muffins14
Posts: 380
Joined: Wed Oct 26, 2016 4:14 am

Re: Why not 100% PSLDX?

Post by muffins14 »

Thanks. I had seen that and was hoping for some confirmation of the no-fee route, though if I can convince my private client rep to give it to me for free, I suppose that gives the same outcome.
User avatar
firebirdparts
Posts: 1882
Joined: Thu Jun 13, 2019 4:21 pm

Re: Why not 100% PSLDX?

Post by firebirdparts »

muffins14 wrote: Fri Jul 10, 2020 12:05 pm Just off the phone with Fidelity re: PSLDX. The broker cited that the $1M threshold exists for IRA and 401k (brokeragelink), but mentioned that there appears to be no fee and no minimum for additional investments.

If that's the case, it seems I could open the position @ Ally bank, and then transfer it in kind back to Fidelity and continue investing there.

Has anyone had experience with that, so that I could confirm it?
Last time I tried, I could buy it in small amounts. I hold it in Fido 401k Brokeragelink. I seem to have slipped in the door during a brief time of more liberal rules.
A fool and your money are soon partners
get_g0ing
Posts: 724
Joined: Sat Dec 09, 2017 11:09 am

Re: Why not 100% PSLDX?

Post by get_g0ing »

Semantics wrote: Thu Jul 09, 2020 6:44 pm If you have a mortgage then you are already most likely paying higher costs for your investments than I am with PSLDX.
Could someone elaborate this please? I didn't really follow ...
kevinf
Posts: 215
Joined: Mon Aug 05, 2019 11:35 pm

Re: Why not 100% PSLDX?

Post by kevinf »

If you are holding a mortgage while having investments, you are leveraged. You are betting that you will make more money by investing and not paying off the mortgage (than the interest of the mortgage will cost you.)

Roughly equivalent to taking out a 3% loan to invest into the market, or whatever your mortgage rate is.

The costs of the leverage in PSLDX is less than you could get a mortgage for. So PSLDX is cheaper leverage than a mortgage.
jibantik
Posts: 456
Joined: Fri Nov 24, 2017 1:05 pm

Re: Why not 100% PSLDX?

Post by jibantik »

kevinf wrote: Fri Jul 10, 2020 10:14 pm If you are holding a mortgage while having investments, you are leveraged. You are betting that you will make more money by investing and not paying off the mortgage (than the interest of the mortgage will cost you.)

Roughly equivalent to taking out a 3% loan to invest into the market, or whatever your mortgage rate is.

The costs of the leverage in PSLDX is less than you could get a mortgage for. So PSLDX is cheaper leverage than a mortgage.
Two words: volatility decay.
columbia
Posts: 2992
Joined: Tue Aug 27, 2013 5:30 am

Re: Why not 100% PSLDX?

Post by columbia »

In terms of the original question: risk.

Why not consider 30% PSLDX, 20% large cap fund of choice and the rest in treasuries. That already seems like a fair amount of risk and has a pretty decent expected return.

(One could play around with the 30 vs 20 and mix and match with those relative percentages and certainly consider the EAFE version for the other fund - lots of options available.)
get_g0ing
Posts: 724
Joined: Sat Dec 09, 2017 11:09 am

Re: Why not 100% PSLDX?

Post by get_g0ing »

Questions for those doing both the Excellent Adventure and PSLDX:

1. Why are you doing both? I mean what's your thinking behind doing both. I read somewhere that HEDGEFUNDIE himself does both, but I don't know the reason for doing so that way.

2. How are you deciding the allocation %s between the two?

Would appreciate any explanations.
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