How Do You Like My New 'Doo

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nedsaid
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Re: How Do You Like My New 'Doo

Post by nedsaid » Wed Jun 19, 2019 10:40 am

I jokingly put a "buy" on US Large Value, US Mid Value, and US Small Value on June 17, 2019 in another thread. It was half serious as I have been reading Larry Swedroe's recent articles on the valuation gaps between Large and Small and between Growth and Value, we are seeing numbers that remind us of 1999. Larry also noted that profit margins are starting to fall and that stocks without earnings did relatively well recently. Signs that perhaps the Large Growth dynamic that has dominated the US and International Stock Markets might be starting to break. But then again, that is what we thought in 2016.

I started a process of Growth to Value rebalancing, the dollar amounts are relatively small but I am getting the process started. I started with a small purchase of iShares S&P 600 Small Value Index ETF on Monday. I sold a small amount of Fidelity Total Stock Market Index and purchased Fidelity Large Cap Value Index on Tuesday. Also sold some shares that day of American Century Heritage (mid-cap Growth) and purchased American Century Mid-Value. Baby steps to be sure but I want to move funds into Value over time.

I wondered how my individual stocks in my retirement have been doing. Checked with Quicken today and as of 6/18/2019, I had a 15 year performance of 8.16% compared to Vanguard Total Stock Market Index Admiral shares of 9.01%. So I am trailing the bogey by 85 basis points over 15 years. Since my stocks are Value oriented, let's check against Vanguard Value Index Admiral Shares. Okay, Vanguard Value Index has a 15 year performance of 8.25%. So I am in the ballpark.
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nedsaid
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Re: How Do You Like My New 'Doo

Post by nedsaid » Wed Jul 03, 2019 1:06 pm

True to my word, I did some more Growth to Value rebalancing today. I sold a bit more of my Fidelity Total Stock Market Index to buy more Fidelity Large Cap Value Index. Sold another bit of Total Stock Market Index to take to cash, that I will use to purchase a few more shares of the S&P 600 Small-Value Index today on Friday which will be my 60th birthday. Also sold a bit of S&P 500 Index to buy Small-Cap Index. Also, took a bit of Equity Growth at American Century and moved it to Income and Growth (which is a Large Value fund). This continues my program of retilting my portfolio towards Small/Mid-Cap and towards Value, I also did a small move from Total Market Index to Large Value Index on Monday, July 1st.
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CoAndy
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Re: How Do You Like My New 'Doo

Post by CoAndy » Wed Jul 03, 2019 1:34 pm

nedsaid wrote:
Wed Jul 03, 2019 1:06 pm
True to my word, I did some more Growth to Value rebalancing today. I sold a bit more of my Fidelity Total Stock Market Index to buy more Fidelity Large Cap Value Index. Sold another bit of Total Stock Market Index to take to cash, that I will use to purchase a few more shares of the S&P 600 Small-Value Index today on Friday which will be my 60th birthday. Also sold a bit of S&P 500 Index to buy Small-Cap Index. Also, took a bit of Equity Growth at American Century and moved it to Income and Growth (which is a Large Value fund). This continues my program of retilting my portfolio towards Small/Mid-Cap and towards Value, I also did a small move from Total Market Index to Large Value Index on Monday, July 1st.
I have been contemplating selling some of my Fidelity Total Stock Market and buying more T. Rowe Price Growth in my 457 but fear it is probably something I should have done 6 months ago. Oh well....

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nedsaid
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Re: How Do You Like My New 'Doo

Post by nedsaid » Wed Jul 03, 2019 1:44 pm

CoAndy wrote:
Wed Jul 03, 2019 1:34 pm
nedsaid wrote:
Wed Jul 03, 2019 1:06 pm
True to my word, I did some more Growth to Value rebalancing today. I sold a bit more of my Fidelity Total Stock Market Index to buy more Fidelity Large Cap Value Index. Sold another bit of Total Stock Market Index to take to cash, that I will use to purchase a few more shares of the S&P 600 Small-Value Index today on Friday which will be my 60th birthday. Also sold a bit of S&P 500 Index to buy Small-Cap Index. Also, took a bit of Equity Growth at American Century and moved it to Income and Growth (which is a Large Value fund). This continues my program of retilting my portfolio towards Small/Mid-Cap and towards Value, I also did a small move from Total Market Index to Large Value Index on Monday, July 1st.
I have been contemplating selling some of my Fidelity Total Stock Market and buying more T. Rowe Price Growth in my 457 but fear it is probably something I should have done 6 months ago. Oh well....
Well, Fidelity Total Stock Market is rated by Morningstar as a Core Large Cap fund. It is not strictly a Growth fund but the Total Stock Market and the S&P 500 are dominated by the large mega-caps. T. Rowe Price Growth Stock is a good fund, Morningstar rates it as a 4 star fund and it is rated as Large Cap Growth. So your proposed move is the opposite of what I am doing.

T. Rowe Price Growth stock has Amazon, Microsoft, Facebook, Boeing, Visa, Google, MasterCard, United Health, United Health, and Tencent in its top 10 holdings. 3 of the 5 FAANG stocks are here, the very stocks I am trying to underweight. But if you believe the Large Growth trend in the US Stock Market will continue, this is a good choice. My desire is to rebalance from the expensive Growth stocks to the cheaper Value stocks. A difference in philosophy but a defendable one.
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nedsaid
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Re: How Do You Like My New 'Doo

Post by nedsaid » Wed Jul 10, 2019 7:00 pm

A quick update on my portfolio.

Asset Allocation is
46.59% US Stocks
17.77% International Stocks
34.08% Bonds
1.35% Stocks
0.20% Other

Stock Stylebox

23 26 17
05 07 07
06 06 05

Bond Stylebox
10 41 16
00 24 07
02 00 00

65% Intermediate Term Investment Grade
23% Long Term Investment Grade
10% Short Term Investment Grade
2% Short Term High Yield Junk

Expense Ratio of Funds/ETFs 0.42%
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Re: How Do You Like My New 'Doo

Post by spdoublebass » Thu Jul 11, 2019 11:38 am

nedsaid wrote:
Wed Jul 10, 2019 7:00 pm

Bond Stylebox
10 41 16
00 24 07
02 00 00

65% Intermediate Term Investment Grade
23% Long Term Investment Grade
10% Short Term Investment Grade
2% Short Term High Yield Junk

I’m not trying to clutter up your thread, but I am curious. What bond funds do you hold?

I looked through the thread but didn’t see it listed. Unless I missed it.
I did see you hold some TBM, which would explain some of the style box.

I was just curious if your 23% long term investment grade and 10% short term investment grade came from TBM or if you held these separately.

Thanks!
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nedsaid
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Re: How Do You Like My New 'Doo

Post by nedsaid » Thu Jul 11, 2019 3:32 pm

spdoublebass wrote:
Thu Jul 11, 2019 11:38 am
nedsaid wrote:
Wed Jul 10, 2019 7:00 pm

Bond Stylebox
10 41 16
00 24 07
02 00 00

65% Intermediate Term Investment Grade
23% Long Term Investment Grade
10% Short Term Investment Grade
2% Short Term High Yield Junk

I’m not trying to clutter up your thread, but I am curious. What bond funds do you hold?

I looked through the thread but didn’t see it listed. Unless I missed it.
I did see you hold some TBM, which would explain some of the style box.

I was just curious if your 23% long term investment grade and 10% short term investment grade came from TBM or if you held these separately.

Thanks!
I hold the Fidelity US Bond Index and the Vanguard Total Bond Market ETF. I own Fidelity GNMA and American Century GNMA funds, hold TIPS in a Fidelity index and in an American Century fund, and also own a couple of investment grade, intermediate term bond funds. The intermediate term bond funds are American Century Diversified Bond and Bond Fund of America. Keep in mind that my retirement assets are mostly split up by three main providers: Fidelity, LPL Financial, and American Century.
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Re: How Do You Like My New 'Doo

Post by nedsaid » Tue Aug 06, 2019 12:51 am

Today, I did something that I didn't think I would ever do and that is turn over the keys to part of my portfolio. Specifically, this involves my mutual fund IRA at American Century Investments, everything will go into a conservative portfolio except for Fidelity Total Stock Market Index which is held in a Brokerage IRA account. This portfolio is managed in a very similar manner to their One Choice Portfolio: Conservative except they use American Century ETFs in addition to their mutual funds. There are also two Alt funds used, one on the equity side and one on the fixed income side. So this will be my first experience with Alts. They will do this for 0.90% or 90 basis points a year. Essentially the portfolio is 43% stocks, 52% bonds, and 5% alternatives.

Why am I doing this? They are offering comprehensive financial and retirement planning. They also take into consideration investments outside of their firm. It includes an annual review and quarterly check-ups. It also includes such things as withdrawal strategies. The representative told me that they have an expert on Social Security on their team. Pretty much, they will be my financial planner. I also want to test drive a portfolio management service.

Back in 2007-2008, I considered Paul Merriman's firm. They wanted 1% Assets Under Management fee plus the 0.34% embedded expense ratios of the DFA funds they use. So that came to 1.34%. It sounded like they did some extras, they had CPAs on their firm and it looked like they were going to do financial planning also. Then the financial crisis hit and they let go the CPAs. American Century is going to do portfolio management plus comprehensive financial planning for 0.90% a year. To me, that is a smoking hot deal. They are going to do what Merriman was going to do but for quite a bit less. It sounds like they are quite committed to this concept. The cost won't be very much more for me, I was paying not far from the 90 basis points for the American Century funds that I already own.

Drawbacks to this? First, their choice of investments is different from mine. Less TIPS, more Global Bonds. They include High Yield Bonds which I don't have now. Much less International Stocks, one reason I dubbed this the "Old Lady" portfolio. More conservative than what I wanted but I decided to just go with it. After all I am hiring them for advice.

Another thing, American Century is starting up Advantis Investors which will be a mini-Dimensional Funds. They hired a retired DFA executive who served as Co-Chief Executive Officer and also as their Chief Investment Officer. They hired another two other former DFA executives. Hiring is under way and will likely bring other DFA Alumni to the new firm. So they will create the mutual fund and ETF products for those of us who like factor investing. I am hoping that I will be able to get factor tilting with the managed portfolio at some point in the future.

What will happen when my funds move over to the managed portfolio is that my stock allocation for my entire retirement portfolio will drop from about 64%-65% stocks to about 60% stocks. That will be a continuation of my de-risking program. International Stocks will drop from 18% of my overall retirement portfolio to 13%, I will likely do US to International rebalancing in my other accounts. I want about 30% of my stocks to be International. The percentage of International Bonds will go up somewhat.

This is something I have been looking for a long time, maybe 15 years. Signed the paperwork today and implementation is underway.
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marcopolo
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Re: How Do You Like My New 'Doo

Post by marcopolo » Tue Aug 06, 2019 7:55 am

nedsaid wrote:
Tue Aug 06, 2019 12:51 am
Today, I did something that I didn't think I would ever do and that is turn over the keys to part of my portfolio. Specifically, this involves my mutual fund IRA at American Century Investments, everything will go into a conservative portfolio except for Fidelity Total Stock Market Index which is held in a Brokerage IRA account. This portfolio is managed in a very similar manner to their One Choice Portfolio: Conservative except they use American Century ETFs in addition to their mutual funds. There are also two Alt funds used, one on the equity side and one on the fixed income side. So this will be my first experience with Alts. They will do this for 0.90% or 90 basis points a year. Essentially the portfolio is 43% stocks, 52% bonds, and 5% alternatives.

Why am I doing this? They are offering comprehensive financial and retirement planning. They also take into consideration investments outside of their firm. It includes an annual review and quarterly check-ups. It also includes such things as withdrawal strategies. The representative told me that they have an expert on Social Security on their team. Pretty much, they will be my financial planner. I also want to test drive a portfolio management service.

Back in 2007-2008, I considered Paul Merriman's firm. They wanted 1% Assets Under Management fee plus the 0.34% embedded expense ratios of the DFA funds they use. So that came to 1.34%. It sounded like they did some extras, they had CPAs on their firm and it looked like they were going to do financial planning also. Then the financial crisis hit and they let go the CPAs. American Century is going to do portfolio management plus comprehensive financial planning for 0.90% a year. To me, that is a smoking hot deal. They are going to do what Merriman was going to do but for quite a bit less. It sounds like they are quite committed to this concept. The cost won't be very much more for me, I was paying not far from the 90 basis points for the American Century funds that I already own.

Drawbacks to this? First, their choice of investments is different from mine. Less TIPS, more Global Bonds. They include High Yield Bonds which I don't have now. Much less International Stocks, one reason I dubbed this the "Old Lady" portfolio. More conservative than what I wanted but I decided to just go with it. After all I am hiring them for advice.

Another thing, American Century is starting up Advantis Investors which will be a mini-Dimensional Funds. They hired a retired DFA executive who served as Co-Chief Executive Officer and also as their Chief Investment Officer. They hired another two other former DFA executives. Hiring is under way and will likely bring other DFA Alumni to the new firm. So they will create the mutual fund and ETF products for those of us who like factor investing. I am hoping that I will be able to get factor tilting with the managed portfolio at some point in the future.

What will happen when my funds move over to the managed portfolio is that my stock allocation for my entire retirement portfolio will drop from about 64%-65% stocks to about 60% stocks. That will be a continuation of my de-risking program. International Stocks will drop from 18% of my overall retirement portfolio to 13%, I will likely do US to International rebalancing in my other accounts. I want about 30% of my stocks to be International. The percentage of International Bonds will go up somewhat.

This is something I have been looking for a long time, maybe 15 years. Signed the paperwork today and implementation is underway.
Does the 90 basis points include underlying fund fees?
You added that to what Merriman was going to charge you, I don't see that added to what American Century is charging you.

It seems awfully expensive for the financial planning they will be providing, you seem very capable of doing that yourself, probably better.

Anyway, if it works for you, that is all that matters.
Good luck to you.

I hope you will continue to provide your analysis and insights here even after they start doing all your planning for you. I have found it very interesting, and entertaining over the years.
Once in a while you get shown the light, in the strangest of places if you look at it right.

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nedsaid
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Re: How Do You Like My New 'Doo

Post by nedsaid » Tue Aug 06, 2019 9:37 am

marcopolo wrote:
Tue Aug 06, 2019 7:55 am


Does the 90 basis points include underlying fund fees?
You added that to what Merriman was going to charge you, I don't see that added to what American Century is charging you.
90 basis points do include the underlying fund fees. Each quarter, they charge 0.225% up front and then at the end of each quarter rebate the underlying expense ratios of the funds. So it is 0.90% all in costs. They do get float, quarter by quarter, but still a good deal. It was 0.90% at American Century vs. 1.34% at Merriman. Their retail One Choice Moderate Fund has an expense ratio of 0.90% and their One Choice Conservative Fund charges 0.81%. So not much different from the fees charged for their One Choice funds.

A small firm I worked for charged 0.75% annually for Portfolio Management, they used ETFs available for no commission at a discount broker. They let the cash from dividends accumulate, that would pay for the fee and would be also used for quarterly rebalancing. This did not include comprehensive financial planning.

This is a test drive to see how they do. What I am really interested in is the financial planning. Lots of people were asking for this, so the firm responded with this service. I want to see how in depth this really is.

I will continue to provide commentary on this. Keep in mind, I have roughly 2/3 of my retirement invested elsewhere but they take that into account. This thread is the Boglehead's version of reality TV. So much of the discussion here is theoretical and hypothetical, particularly in topics like factors and back testing. Wanted this to be real life, a real person investing real money. Hopefully this will both entertain and inform.

Edit: I did some more analysis on what American Century is doing. For the active funds, they are using Y shares which look 23 to 34 basis points cheaper than their investor class shares. Their One Choice Portfolio Conservative Investor Shares costs 81 basis points and my guess is that with the Y Funds and ETFs that they have driven the costs down to probably 55-60 basis points or 0.55% to 0.60%. They have a couple of expensive Alt funds thrown in the mix too. Still, not a bad deal. So probably 0.60% for the imbedded fund costs and 0.30% for the financial planning. Or a retail investor could buy something very similar for 0.81% without the financial planning.

I am looking at the webpage and they can track cash flow and you can budget. This looks pretty comprehensive to me. My retirement accounts are all linked so they can see what is in there and I noticed that they see transactions in my other accounts. So they will likely want me to link all my financial accounts. But I wanted the comprehensive advice and it looks like that is what I am going to get.

Edit II: I ran the private client portfolio through Morningstar and the expense ratio came through at 60 basis points or 0.60%. So they are charging 60 basis points for managing the assets and 30 basis points for financial planning.
Last edited by nedsaid on Wed Aug 07, 2019 8:09 pm, edited 3 times in total.
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Re: How Do You Like My New 'Doo

Post by nedsaid » Tue Aug 06, 2019 2:53 pm

In anticipation of my American Century IRA funds being moved from a self-managed moderate portfolio to private client group which will change this to a conservative portfolio, I moved some funds today from my Fidelity Total Stock Market Funds to International Index funds. This should put me roughly at 44% US Stocks, 16% International Stocks, and about 40% bonds, cash, and a sliver of alternatives after all the transfers are done. My proportion of Global Bonds will increase, less TIPS, and I will get a slice of High Yield Bonds. So it will be a 60% stock/40% bonds and cash portfolio.

This is a continuation of my de-risking program, back in early 2013 before I started my mild rebalancing/de-risking program I was 69% stocks. So I will have moved down to 60% stocks over the last 6 years or so. My percentage of stocks in International will be 25% and that will be down from close to 30%. Thinking about if I want to move it back closer to 30%.

Again, turning over the keys to part of the portfolio which is a new experience and also will be working with the Private Client Group's financial planners. I have worked with financial planners before at Ameriprise before but never invested with them.
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Re: How Do You Like My New 'Doo

Post by nedsaid » Sat Aug 10, 2019 12:53 pm

Here is an update to my retirement portfolio. Trying to do a few things at once: further de-risking my portfolio as I age, test driving a portfolio management service and getting access to comprehensive financial planning, and mild Growth to Value rebalancing. The Growth to Value rebalance aka "The Swedroe Shuffle" is taking a back seat for now.

The American Century IRA funds that I managed in similar manner to their Moderate IRA Portfolio were moved over to Private Client Group Cautious Portfolio. This portion of my portfolio will be managed for all in costs of 0.90% Assets Under Management and will include comprehensive financial and retirement planning which I strongly believe that I need at this time. Pretty much the shifts were less International Stocks, less TIPS, less REITs, more International Bonds, and a sprinkling of the Liquid Alts. This is what I dubbed "the old Lady portfolio." To compensate for their shifts away from International Stocks in the managed portfolio, did some shifting from Fidelity Total Stock Market Index to the International Indexes in other accounts.

This is a continuation of my de-risking program over time. Since 2013, I have gone from 69% stocks down to 61% today. Not too bad.

Asset Allocation:
US Stocks 45.44% (my individual stocks are 12.92% of my retirement portfolio)
International Stocks 15.54%
Bonds 35.27% (my estimate is that 4.6% of my portfolio are International Bonds)
Cash 3.48%
Other 0.26%

International investments are 25% of my stocks and about 12% of my fixed income.

Note: Liquid Alts are about 1.4% and are included in Stock and Bond percentages. These are Market Neutral Equity and Alternative Income.

Real Estate is 9.39% of my stocks.

My stock style box is as follows:

24 21 20
05 08 05
05 06 04

Geographic Distribution of my stocks:
North America 75.43%
Latin America 0.95%
United Kingdom 3.5%
Developed Europe 7.64%
Emerging Europe 0.35%
Africa/Middle East 0.64%
Japan 4.04%
Australasia 1.15%
Developed Asia 2.92%
Emerging Asia 3.38%

My bond style box is:

22 28 05
04 20 14
04 02 00

Estimated Expense Ratio for Retirement Portfolio 0.42%.

Top 10 individual stocks:
1) Walt Disney Company
2) Microsoft Corporation
3) Boeing Company
4) Weyerhauser Company
5) Johnson & Johnson
6) JP Morgan Chase & Company
7) Exxon Mobil Company
8) US Bancorp
9) Pfizer Incorporated
10) Applied Materials Inc.

Nedsaid's Individual Stocks 15 year performance 8.42%
Vanguard Total Stock Market Admiral 15 year performance 9.49%
Vanguard Value Index 15 year performance 8.49%
DFA Large Cap Value 1 15 year performance 8.69%
American Century Value Investor 15 year performance 7.17%

Stylebox for Nedsaid's Individual stocks

37 24 23
00 11 00
01 05 00

Nedsaid's Individual Stocks forward P/E 18.15
Dividend Yield 2.85%
Price/Book 2.06


Fidelity Rollover IRA Expense Ratio 0.13%
Fidelity Total Stock Market Index. . . . . . . . .7.49%
Fidelity US Bond Index. . . . . . . . . . . . . . . .4.48%
Fidelity International Index. . . . . . . . . . . . .3.41%
Fidelity GNMA. . . . . . . . . . . . . . . . . . . . . .2.89%
Fidelity Freedom Index 2025. . . . . . . . . . . . 2.86%
Fidelity Emerging Markets Index. . . . . . . . . . 2.21%
Fidelity Inflation Protected Bond Index. . . . ..1.76%
Fidelity Real Estate Index. . . . . . . . . . . . . .1.14%
iShares Core International Bond Agg Bond ETF..1.13%
All Other. . . . . . . . . . . . . . . . . . . . . . . . . 4.97%
Total 32.34%

American Century Cautious Portfolio IRA Expense Ratio 0.90%
American Century Diversified Bond Class Y. . . 4.54%
American Century Sustainable Equity Y. . . . . .2.38%
American Century Select Y. . . . . . . . . . . . . .2.03%
American Century Global Bond Y. . . . . . . . . .1.96%
American Century Inflation Adjusted Bond Y. .1.82%
American Century US Gov't Money Market. . . .1.42%
American Century International Bond Y. . . . . 1.40%
American Century Short Dur Inf Prot Bond Y. . .1.33%
American Century Value Y. . . . . . . . . . . . . .1.19%
American Century Dvrs Corp Bond ETF. . . . . . 1.12%
American Century Mid-Cap Value Y. . . . . . . . 1.05%
American Century Heritage Y. . . . . . . . . . . . 1.05%
All Other. . . . . . . . . . . . . . . . . . . . . . . . . 7.16%
Total 28.45%

American Century Brokerage IRA Expense Ratio 0.0375%
Fidelity Total Stock Market Index. . . . . . . . . .2.15%
Fidelity Global ex-US Stock Index. . . . . . . . . .1.09%
Total 3.24%

LPL Financial Brokerage IRA Expense Ratio 0.39%
Vanguard Small Cap Value ETF. . . . . . . . . . . 2.76%
iShares Core S&P Small-Cap ETF. . . . . . . . . .2.41%
Vanguard Total Bond Market ETF. . . . . . . . . .2.16%
Templeton Foreign A. . . . . . . . . . . . . . . . .1.78%
The Walt Disney Company. . . . . . . . . . . . . .1.51%
Microsoft Corporation. . . . . . . . . . . . . . . . 1.51%
Boeing Company. . . . . . . . . . . . . . . . . . . .1.48%
Weyerhauser Company. . . . . . . . . . . . . .. . 1.39%
American Funds Bond Fund of America A. . . 1.36%
Johnson & Johnson. . . . . . . . . . . . . . . . . . 1.09%
All Other. . . . . . . . . . . . . . . . . . . . . . . . . 9.44%
Total 26.89%
Note my individual stocks are here.

LPL Financial ROTH IRA Expense Ratio 0.58%
American Funds Capital Income Builder A . . .1.75%
Total 1.75%

Cash Balance Retirement
Providence Core Retirement. . . . . . . . . . . .4.28%
Total 4.28%

Fidelity Deferred Annuity Expense Ratio 0.38%
Fidelity VIP Bond Index. . . . . . . . . . . . . . .1.52%
Fidelity VIP Total Stock Market Index. . . . . .1.04%
Fidelity VIP International Stock Index. . . . . 0.43%
Total 2.99%

Pers III Pension
Approximately 60% World Stock Index and 40% US Bond Index.
Total 0.50%

The total comes out to 100.44% due to rounding errors but you should get the idea.
Last edited by nedsaid on Sun Aug 11, 2019 1:36 pm, edited 8 times in total.
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Re: How Do You Like My New 'Doo

Post by nedsaid » Sat Aug 10, 2019 2:34 pm

In another thread, I discussed the topics of portfolio diversification and risk. Thought I would re-post and do some editing.
by nedsaid » Sat Jul 27, 2019 12:21 pm

LadyGeek, Nisiprius, jbranx, Vineviz, my fellow Americans, friends, Romans, countrymen, ladies and gentlemen, feel free to take my essential framework and build upon it. Again, it could go something like this:

1) The elements of diversification.
2) Methods Used to achieve diversification.
3) Risks that investors protect against with diversification.

A discussion of John Bogle vs. Academic approaches to these issues. A We Report, You Decide Discussion. Okay to say that Boglehead philosophy favors simplicity, daily liquidity, and skepticism regarding models that promise better than market performance. A further discussion that there are at least three schools of thought here: 1) Straight market cap weighted indexing using Total Stock and Bond Indexes, 2) Factor/Sector Tilting, 3) Factor tilting using Alternatives. Also variations of these 3 schools of thought. Okay to say Boglehead philosophy favors school of thought number 1. School of thought number two is controversial but within the accepted bounds of the Boglehead philosophy and School of Thought 3 is even more controversial and very hotly debated.
Here is a framework I would recommend to discuss diversification:

Note: This section deals with the elements of diversification. The more traditional Bogleheads focus upon elements 1-4. Those who like to factor tilt also incorporate 5 and 6.

1) Diversification across thousands of securities as in the Total Stock and Total Bond Indexes as opposed to hundreds of securities in more focused portfolios. Wide diversification vs. Narrow diversification.
2) Diversification across the basic asset classes: stocks, bonds, cash. These are financial assets.
3) Diversification across Geography: US only vs. International.
4) Time Diversification. Lump Sum vs. Dollar Cost Average.
5) Diversification across sub-asset classes. REITs and other industry sector funds would be sub-asset classes within stocks. Diversification across industry groups for both stocks and bonds is included in this category. Treasuries, TIPS, Agency Bonds, Corporates, Munis, and High Yield would be sub-asset classes within bonds. This is a tilting strategy. In the case of bonds, an investor could add TIPS and High Yield which are not in the Total Bond Index.
6) Diversification across factors: Market Beta, Size, Value, Momentum, Profitability, Quality, Low Volatility, and Illiquidity. This is a tilting strategy.


Note: The section below fits more with diversification techniques.

1) Portfolio Insurance, use of asset classes with very little or no real returns over time but which have very low correlation to stocks: Commodities, Currencies, Gold and Precious Metals, Precious Metals Stocks.
2) Alternative Investments. Funds that use leverage, futures, options, shorting techniques such as long/short funds, style premia funds, and market neutral funds. So called interval funds that offer limited liquidity. More illiquid investments like non-traded REITs, Private Equity. These can include the portfolio insurance discussed above.
3) Derivative instruments such as swaps, options, futures. These could be used as portfolio insurance as described above in 1. Also used in the Liquid Alts funds that use leverage, futures, options, and shorting.
4) Hard assets vs. Financial assets. Hard assets are things like directly owned real estate, coins, collectibles, art. Hard assets are tangible items and financial assets are mostly intangible save for physical cash. Hard assets can fall in categories 1, 5, and 6.
5) Assets that are valued on the basis of generated cash flows vs. assets that do not generate cash flows. Assets without cash flows can be more speculative in nature.
6) Assets with daily liquidity vs. Assets with limited liquidity or are illiquid. Boglehead philosophy favors assets with daily liquidity.
7) Use of glidepaths to compensate for decreasing human capital. That is stock heavy portfolios when young and more bond heavy portfolios when you are old.

I would also discuss active vs. passive strategies. Note the continuum between passive, more passive factor strategies, more active factor strategies (momentum), and active. Discuss that passive most often follows an index or uses low turnover/patient trading strategies.

I would also discuss sources of risk. In other words, what are you trying to protect yourself from with diversification.
1) Volatility risk from price movement.
2) Loss of purchasing power risk from inflation.
3) Fundamental risk including such things as leverage, volatility of earnings, liquidation value, competitive advantage (moat).
4) Pricing risk. An asset might be too expensive relative to future potential cash flows.
5) Interest rate risk. Related to fundamental risk.
6) Default risk. Related to fundamental risk.
7) Political risk.
8) Currency risk.
9) Risk of decreasing human capital over time.
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Re: How Do You Like My New 'Doo

Post by nedsaid » Sun Sep 29, 2019 1:19 pm

I thought I would take time here to post on the Nedsaid model portfolio. I have had a rough model sketched out in my mind as I make portfolio recommendations to others. The philosophy here is that I would use simpler and more conservative portfolios to recommend to others than what I would adopt for myself. Here it is:

Asset allocation
Ages 0 -25 90% stocks/10% bonds and cash
Ages 25-40 80% stocks/20% bonds and cash
Ages 40-55 70% stocks/30% bonds and cash
Ages 55-65 60% stocks/40% bonds and cash
In Retirement 60/40 aggressive
In Retirement 50/50 moderate
In Retirement 40/60 conservative
In Retirement 30/70 very conservative
In Retirement 20/80 ultra conservative

A big factor in how aggressive you want to be in retirement depends largely upon the percentage of your living expenses in retirement that are covered by guaranteed sources of income like Pensions, Social Security, and annuities. The higher of the percentage of expenses covered in retirement by guaranteed income, the more aggressive you can invest as a retiree.

As far as stocks, I favor an International allocation of anywhere between 20% to 50% of a stock portfolio being allocated to International Stocks. 30% seems to be the "sweet spot" and Vanguard recommends 40%. Personally, I have about 25% of my stocks in International. Notice, that there is no recommendation for individual stocks though I own them myself. I believe there are more efficient ways to invest money now.

On the fixed income side, I am fine with 100% in Investment Grade Intermediate Term Bonds. A US Total Bond Market Index would fit the bill with 100% of the fixed income portfolio. I do believe in putting inflation protection on the fixed income side of my portfolio, so I add a slice of TIPS here. Right now, TIPS are optional in my opinion as inflation hasn't been a problem for a decade now. I have decided to own them as I remember the inflationary 1970's and even a benign 2% inflation rate can eat away 22% of the purchasing power of the dollar in a decade. Since inflation expectations are built into bond prices already, TIPS protect you against UNEXPECTED inflation. We saw inflation spikes in 1973-74 with the oil crisis.

There is a school of thought that you take ALL of your risk on the equity side of the portfolio but I am willing to take a bit of risk on the fixed income side as well. So I have a small slice of High Yield (Junk) bonds, and a small slice of Emerging Markets debt. Folks like Larry Swedroe and Paul Merriman would put the entire bond portfolio in nominal US Treasuries and in TIPS.

I do not recommend individual bonds with the exception of US Treasury bonds or individual TIPS bonds. A case could be made for buying individual Municipal Bonds if they were general obligation bonds of your state. I would not go beyond that. Reason being is that bonds are actually very complex instruments and since many bonds are pretty thinly traded, you run into the issue of relatively wide bid/ask costs. I have posted on this extensively in the past but won't repeat that here. Pretty much, once you go beyond US Treasury debt or General Obligation Bonds of your state, you become your own credit analyst once you buy them. Let a big fund company do all of this for you.

I believe that International Bonds are entirely optional for individual investors. If you own a US Total Bond Market Index, about 5% of that index are foreign bonds denominated in US Dollars. Lots of US diversified Bond funds have a sliver of International Bonds. Not easy to escape International Bonds entirely. I have probably 12% of my bonds in International Bonds, Vanguard recommends 30%.

For older investors, I would recommend that they put a portion of their Bonds in shorter term Bonds with maturities of 1-2 years. The reason is that Short Term Bonds are less volatile than Intermediate Term Bonds and also you are less likely to be reinvesting the interest payments. Lots of folks like to draw upon dividends and interest income first from their portfolio before liquidating shares of stock and bond funds.

As far as cash, I follow John Bogle's recommendation that cash is for shorter term savings and that bonds are for investment.

So if I had to come up with a model 60% stock/40% bond portfolio, it would look something like this:

42% US Stock Index
18% International Stock Index
25% US Bond Index
10% TIPS
5% International Bond Index

So this would be my simple model portfolio and of course the percentages would vary according to age. Pretty much I would put 30% of stocks in International. The fixed income portion would be about 10% International Bonds, 25% TIPS, and 65% in the US Bond Index.

Notice here that I have not addressed portfolio insurance, items that you put into your portfolio to guard against rare but severe market events. For example, add commodities to guard against a 1973-1974 inflation spike. Problem is that commodities have a -1% annual rate of return over many, many years and hopefully will not correlate with stocks and hopefully do well when you most need them to. Most of the time commodities are a drag on returns. It used to be that managed Commodity Futures would have stock-like returns but too much money poured into this strategy and it hasn't worked in a while. Add such things as Market Neutral funds or Liquid Alt funds that use leverage and shorting to provide a source of return uncorrelated to the stock market, in theory these types of funds benefit during times of market volatility. Gold is a similar type of investment with a ZERO rate of return above inflation over very long time periods but is uncorrelated to stocks and seems to provide diversification benefits to a portfolio. People also use Precious Metals Funds as portfolio insurance.

Problem with portfolio insurance is that these types of investments rarely outperform or provide a better diversification benefit than plain old boring investment grade bonds. Long Term US Treasuries are probably the best, they tend to do great when the US Stock Market crashes, the exception being the Stagflation years of the 1970's, a period of tepid economic growth and higher inflation. Inflation spikes are very hard on bonds and in the shorter run, very hard for stocks. But most of the time Long US Treasuries are a very good diversifier against bear markets and stock market crashes. These are also a great hedge against deflation. Nothing is perfect. I have chosen not to own US Long Treasuries because they can be quite volatile.

My take is that portfolio insurance is often just a drag on returns, there is a diversification benefit if these kind of investments perform well when you need them to, that is in really bad markets. My belief is that most investors are better off just outwaiting the volatility, prices eventually recover from a crisis. Also, portfolio insurance doesn't always work, the 2008-2009 financial crisis is a great example. Good old boring US Treasuries did the best during that financial crisis.

Notice also that I haven't mentioned factor investing. Not that I don't believe in factors, it is just that all of this takes time to explain to a new investor. I am about to the point where I would not recommend factor investing to novice investors. I would provide factor portfolios to those who had interest, the problem being that I have mostly just eyeballed things and used approximate numbers. Pretty hard to optimize factors in a portfolio. I would probably limit so-called factor funds, such as Small/Value Funds and Momentum Funds to 50% of a stock portfolio.

There is also the issue of valuations, I would not recommend REITs or US Minimum Volatility Funds to new investors at this time. REITs are very expensive now and the Low Volatility stocks have tended to be bid up in price, partly because investors are aware that over long time periods that Low Volatility strategies outperform the market and also because these type of stocks tend to have higher dividend yields. The strategies are great but the timing is lousy. I would recommend REITs only to those investors paranoid about inflation.
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Re: How Do You Like My New 'Doo

Post by DaftInvestor » Mon Sep 30, 2019 12:45 pm

^ Thanks for taking the time to share all the above.
The HY-Bonds seems to be one of the controversial areas here on Bogleheads. Sorry if I may have missed your views in another thread - but can you explain a bit more on what buying HY Bonds is getting you? The argument here always seems to be if you want the upside that HY gives - you should simply buy more on the equity side.

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Re: How Do You Like My New 'Doo

Post by nedsaid » Mon Sep 30, 2019 9:30 pm

DaftInvestor wrote:
Mon Sep 30, 2019 12:45 pm
^ Thanks for taking the time to share all the above.
The HY-Bonds seems to be one of the controversial areas here on Bogleheads. Sorry if I may have missed your views in another thread - but can you explain a bit more on what buying HY Bonds is getting you? The argument here always seems to be if you want the upside that HY gives - you should simply buy more on the equity side.
I am not against High Yield Bonds. I call them stocks in drag or fake stocks because these bonds have a lot of equity risk. They tend to do well coming out of a recession, prices are depressed because of the increased default risk from slower times. As the economy improves and default risk lessens, these bonds will do well. Less return than stocks and maybe a bit less volatile. One could say this, why buy fake stocks when you can buy the real thing? Conversely, High Yield does poorly when the market anticipates recession and craters during bad recessions.

During the 2008-2009 financial crisis, these type of bonds fell by probably 20%-30%, compared to 50% for stocks. They did however rebound rather smartly as the threat of depression eased and as confidence returned to the bond market. Just compared the 15 year performance for Vanguard High Yield Corporate vs. Vanguard Total Stock Market Index, High Yield returned 6.24% vs. 9.21% for Total Stock Market. For comparison, Vanguard Total Bond Market Index returned 4.18%. Just looking at the performance numbers, you could say that High Yield Bonds are really sort of a stock/bond hybrid.

Pretty much, it wouldn't hurt to have a small portion of your bonds in High Yield but I would go too far. People chase these like crazy for the yield not always realizing the risks they are taking. They probably add a mild diversification benefit to a portfolio. High Yield is entirely optional for an investor. I want the great majority of my bonds to be Intermediate Term and Investment Grade. I am willing to take a bit of risk on the fixed income side of the portfolio.

Two schools of thought with fixed income. Larry Swedroe and Paul Merriman would say that one should take risk on the equity side of the portfolio and that bonds are for safety. These advisors would limit bond holdings to nominal US Treasuries and TIPS. Rick Ferri actually likes High Yield bonds in a fixed income portfolio but he doesn't go overboard on them, most of his bonds are in quality stuff. Rick is in the camp of being willing to take a bit of risk but not too much on the fixed income side of the portfolio. Again, I think High Yield Bonds are a worthwhile asset class but as they say moderation in all things. These are pretty high octane bonds.
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Re: How Do You Like My New 'Doo

Post by nedsaid » Sat Oct 05, 2019 6:33 pm

A quick update on the retirement portfolio.

US Stocks 45.18%
Foreign Stocks 15.89%
Bonds 35.30%
Cash 3.33%
Other 0.30%

Stock Style Box

24.92 23.27 20.29
05.22 06.07 04.62
05.85 05.77 03.99

Forward P/E 15.80
Price/Book 1.94
Project EPS Growth 8.99%
Yield 2.28%

Bond Stylebox
22 32 05
04 20 11
04 02 00

Individual Stocks Stylebox

37 34 24
00 00 00
04 02 00

Forward P/E 16.11
Price/Book 2.09
Project EPS Growth 7.05%
Yield 2.80%
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Re: How Do You Like My New 'Doo

Post by fortyofforty » Sun Oct 06, 2019 7:07 am

A few random thoughts:

It's much more involved buying and selling individual stocks than mutual funds or ETFs. You have to research and decide what and when to buy, and how much. Then, you have to either continually track that individual company and its stock several times a year, or just stick it away, forget about it, and hope. As you track it, you must decide at each point whether your funds would be better invested elsewhere. At some point, either you or your heirs must decide when to sell, and why. I've seen enormous portfolios built by a single stock investment, and also by a few stocks that merged and morphed and split but grew and grew over time. Great that you have a broker you can trust to give you ideas that fit with your overall philosophy, doesn't need your commissions, and knows you have supreme patience. :)

With holding periods of 16 years, or 27 years, or 40 years, or 100 years, almost any stock can advance to the point at which you want to sell. The question is not whether the stock went up, but whether the stock went up more than a simple index fund. It's an unfair comparison, though, because we generally don't say "the S&P 500 doubled over the past year, so I'm selling". We hold the index generally without trying to time buy and sell decisions.

With a well-chosen portfolio of individual stocks, it is possible to beat the overall market quite handily. Most noteworthy stock fortunes, the ones we all hear about at parties or read about in the financial press, are made because of a concentrated portfolio of just a few stocks. More likely, though, is an endless series of poorly timed buy and sell decisions, leading to frustration and serious underperformance compared to buy and hold index investors. The industry needs to encourage buying and selling, since that sells advertising and supports brokerage firms.

Is it possible to "beat the market"? Yes. Probable? No. Absolutely not.

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Re: How Do You Like My New 'Doo

Post by nedsaid » Sun Oct 06, 2019 10:52 am

fortyofforty wrote:
Sun Oct 06, 2019 7:07 am
A few random thoughts:

It's much more involved buying and selling individual stocks than mutual funds or ETFs. You have to research and decide what and when to buy, and how much. Then, you have to either continually track that individual company and its stock several times a year, or just stick it away, forget about it, and hope. As you track it, you must decide at each point whether your funds would be better invested elsewhere. At some point, either you or your heirs must decide when to sell, and why. I've seen enormous portfolios built by a single stock investment, and also by a few stocks that merged and morphed and split but grew and grew over time. Great that you have a broker you can trust to give you ideas that fit with your overall philosophy, doesn't need your commissions, and knows you have supreme patience. :)

Nedsaid: I have a Morningstar subscription, so I can see the Star ratings and the analyst reports on each stock that I own. Wish I could say I do detailed research on each company all the time, I just simply monitor and only sell if it is clear that business conditions going forward have deteriorated and are likely not to improve. Pretty much you have a story behind each stock and as long as the story holds, I keep the stock. Right now, I am reinvesting dividends on all my stocks. Pretty much, I am sticking them away.

Also wanted to respond to your comment about large portfolios being built upon just a few stocks. At an earlier time, Plum Creek made up about 8% of my retirement portfolio, it may have gotten as high as 12%. That is a lot in just one stock. I worked hard to reduce that, my largest stock holding now, even if you combine it with holdings in my funds, is less than 2%. Earlier, I did post the stock intersection of my portfolio (provided by Morningstar( and found a couple of Chinese stocks in my top 25. The point is that early on my portfolio was very heavily concentrated in just a few stocks and over time I have solved that problem. Still taking single stock risk but much, much less than before.

As far as my broker, I have asked him about my low turnover and have mentioned that I am not terribly profitable for him. I also only call him once a month and try not to be a time waster for him. He just has said that he treats all his clients the same. Otherwise, I would have just taken that account to a discount brokerage, probably at Fidelity or American Century.


With holding periods of 16 years, or 27 years, or 40 years, or 100 years, almost any stock can advance to the point at which you want to sell. The question is not whether the stock went up, but whether the stock went up more than a simple index fund. It's an unfair comparison, though, because we generally don't say "the S&P 500 doubled over the past year, so I'm selling". We hold the index generally without trying to time buy and sell decisions.

Nedsaid: My holding periods are pretty long but I have found that time doesn't always heal all wounds. I own 22 stocks, four of them I have losses on. Don't know if that is typical for those with individual stock portfolios but my ratio of winners and losers is pretty good. I was a member of the National Association of Investment Clubs and they taught us how to pick stocks, most of what I learned was from my brokers, the Peter Lynch books, and the NAIC. The NAIC said that if you carefully pick five stocks, one will wildly exceed your expectations, three will perform about as expected, and one will disappoint. At least for me, that seems to have held true.

With a well-chosen portfolio of individual stocks, it is possible to beat the overall market quite handily. Most noteworthy stock fortunes, the ones we all hear about at parties or read about in the financial press, are made because of a concentrated portfolio of just a few stocks. More likely, though, is an endless series of poorly timed buy and sell decisions, leading to frustration and serious underperformance compared to buy and hold index investors. The industry needs to encourage buying and selling, since that sells advertising and supports brokerage firms.

Nedsaid: Pretty much, I have about tracked the Vanguard Value Index and have been trailing the Broad US Stock Indexes by about 1% a year over the last 15 years. Seeing that my stocks are value oriented, the performance is about what one would expect. I suspect what I have really done is sample the S&P 500 with my 22 stocks and the sample is big enough that I have tracked the Value Index. I have had a few big winners over the years, StanCorp was one. Fannie Mae was another which I sold at the right time. Plum Creek was another big winner for me. A bunch of stocks that performed about as expected and a few that disappointed, hence the "Four Horsemen of Underperformance."

Investing is one of the few things in life where laziness might be a virtue, I mostly stick with what I have and don't try to "improve" the portfolio. Also I don't listen to the noise. I have seen Jim Cramer be pessimistic on a stock and two weeks later be all enthused about it, my time horizon is longer than that. I want to be a participant in capitalism through the markets and thus receive its fruits, I want the mentality of an owner and not a trader.


Is it possible to "beat the market"? Yes. Probable? No. Absolutely not.

Nedsaid: I have not beaten the market with my portfolio of individual stocks but I have come close.
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Re: How Do You Like My New 'Doo

Post by nedsaid » Sat Nov 02, 2019 3:37 pm

In another thread, there was a post from another thread by CRTR that was so outstanding that I wanted to repost it here as this is the place where I centralize my thoughts on portfolio management and the progress of my own portfolio.
by CRTR » Wed Oct 30, 2019 5:34 pm

Thought I'd share this with you guys. I posed the above question via email to a long time friend who worked in the "index" industry. She worked for DFA right out of school. She went on to Charles Schwab and helped set up their suite of "Fundamental Index" funds. She's "retired" from the industry now and has a boutique financial planning business for HNW women. Here's what she said:

"Your friend's advisor is correct. There has yet to be a 20+ year period where the TSM has out-performed the Mid Cap segment of the market (CRSP 3-5). Of note, since 1929, CRSP deciles 3-9 all have very similar performance with relatively small differences in volatility. In other words, it wouldn't have mattered which deciles you invested in as long as it wasn't CRSP 1 & 2. Having said that, there have been a fair number of shorter intervals (i.e. 10 year rolling) where the TSM and Large Caps have done better than Mid Caps. Because of this, I do not necessarily agree with all of the advisor's decisions, including portfolio choices for your friend's retirement/spending phase.

I'll elaborate briefly: for a person in the accrual phase, with a long time horizon until the spending phase (>20 years), it makes little to no mathematical sense to have large positions in the so-called "mega cap" segment of the market (i.e. Vanguard Cap-weighted indexes that include CRSP 1-2: TSM, Large Cap, SP 500, etc.). Unless there is something unique or never-before-seen in our future economy and market returns, cap weighted indexes that exclude CRSP 1-2 will outperform those that include it. That is why I like the advisor's choices.

Let me pause to emphasize something: the above applies to persons early in their accrual phase. It does not apply to someone as they get close to or are already retired. The reason is that for shorter intervals, CRSP 1-2 may do better than the other segments of the market. If a person is drawing down their savings during this period, they might be better served with some Mega Cap exposure and added diversification. The past 5 years are a perfect example of this concept. CRSP 1-2 CAGR has averaged ~2% better than CRSP 3-5.

Getting back to your friend's advisor selections, if I wanted to split hairs I easily could make the argument that her portfolio would be better served with some added size diversification. I wouldn't go with a TSM fund but instead Mega, Mid and Small cap funds. Of course, that also would depend on the income strategy employed. In defense of the advisor's selections, sometimes I make choices that are not the best mathematical selections but are best for the client, her psyche and situation."
nedsaid » Wed Oct 30, 2019 8:13 pm

So pretty much, you go with Mid/Small/Micro Cap when you are young and transition to the Mega/Large Caps as you get older. Sort of an "age in Mega-Caps" rule of thumb applied towards stock portfolios. Hmmm. I ought to patent that. But all kidding aside, this is a great idea and I really like what your friend said in her message. But this is almost heresy on the forum as we have been taught here to focus on US Total Market and S&P 500, it is almost like we are saying that St. Jack was well, you know, wrong. I have always had a fondness for Value and early on in my investing career started liking Mid/Small Cap stocks. I guess Nedsaid wasn't so dumb after all.

Hmmm. "Age in Mega-Caps" for a stock portfolio sounds like a pretty darned good rule of thumb to me. Almost as good as "Age in Bonds." I can hardly believe my insight here. Not sure that I will ever be right about anything here ever again, I got this one so very right.
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Re: How Do You Like My New 'Doo

Post by nedsaid » Sat Nov 02, 2019 4:03 pm

Pretty much steady as she goes with my retirement portfolio, it has hit a new all-time high and I have been very pleased.

As posted above, most of my investments at American Century are in a Private Client Group Cautious Portfolio which is managed in similar fashion to that fund group's Target Risk Conservative Allocation fund. They manage not quite 30% of my retirement portfolio and I have other retirement investments elsewhere.

I wanted to have the experience of a managed portfolio, I am test driving both the portfolio management service and the retirement planning that goes along with it. Thinking hard about how I want my investments handled as I get older. 60 isn't old but somehow age 80 or even 90 doesn't seem very far away.

I noticed a couple of portfolio changes by the managers, they dumped the Small Company Fund, which is a quantitative fund which is supposed to "improve" upon the Small Cap Index with fewer and "better" stocks. I call this index optimization. The fund has been awful in recent years and the managers replaced it with the Small Cap Value and the Small Cap Growth fund, both of which are good funds, Small Cap Growth has a Morningstar 4 star rating and Small Cap Value has a 5 star rating. In the process, the managers lightened up on Small Caps a bit. They also dumped their Market Neutral Fund for their Disciplined Long Short Fund which is a long/short equity portfolio. The funds taken out of Small Caps went into the Disciplined Long Short Fund. Market Neutral is pretty much return neutral in my opinion and while the Disciplined Long Short Fund has better returns, the long/short strategy still trails the S&P 500 Index. The managers kept the Alternatives Income Fund which also uses long/short with roughly 18% stocks, 77% bonds and 5% other. The long/short methodology doesn't seem to have beat the averages on the income side of the equation either. The Alts are about 1.5% of my retirement portfolio and about 5% of the Private Client Group Cautious portfolio.

So pretty much, just watching what the managers are doing and trying to figure out why they are doing it. I did hire them to run this part of my retirement portfolio so I am along for the ride. Nothing really wild here, they use algorithms to determine the "right" mix of these funds and I was told from the beginning that the managers would make occasional changes. It appears that the Private Client group uses a more dynamic strategy than their retail One Choice Target Risk funds.

My reaction to the Alternative funds is that Long/Short strategies did not enhance returns. The Equity Version underperformed the S&P 500 and the Income Version underperformed the Morningstar benchmark of Conservative Allocation Funds. The hope is that such funds will benefit from market volatility whenever it arrives. Also seems to be a big thumbs down on their Quantitative Funds that use index optimization techniques, the "new and improved" indexes have trailed the plain old boring index funds. John Bogle in his book on Mutual Funds did predict this. Their retail Target Risk and Target Date funds still use the Quantitative "Index Optimization" funds but the Private Client Group managers have passed on them and use the newer and cheaper American Century ETF products instead.

In the rest of my portfolio, I am pretty much just reinvesting dividends at this point. I am thinking of continuing the Growth to Value rebalance in my portfolio which I dubbed the "Swedroe Shuffle". Still thinking about it.

Edit: I noticed that both the Market Neutral Fund that the Private Client Group managers sold me out of and the Disciplined Long Short Fund they bought to replace will be liquidated on January 24, 2020. It seems odd that they would do this, selling a fund that will be discontinued in order to buy another fund that will be discontinued. Not too pleased with this. I thought they would maybe put the proceeds into the Core Equity Plus fund, which also uses a long/short portfolio strategy and this fund will be liquidated on December 12, 2019. They are keeping the AC Alternatives Market Neutral Value Fund and the AC Alternatives Income Fund.

They are also closing their two adaptive funds which emphasized price momentum and secondly earnings momentum and their All Cap Growth Fund. Also closing their All Cap Growth fund and their International Core Equity Fund (index optimization). So it looks like they are culling the herd.

Part of the reason for this, I think, is their new emphasis on the ETF market.

Edit II on 11/17/2019: The private client group just sold me out of the Disciplined Long Short Fund and replaced it with a Market Neutral Value fund. American Century will soon be down to just two Liquid Alt funds after January 24th, 2020, and I will be invested in both of them. It sounds like the company is exiting the Alt business, they had five Alt and a 130/30 Long Short funds, they will soon be down to two. Doesn't sound like a big commitment to the Alts to me, wonder why the private client group is still committed. A question I will be asking next quarter.
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Re: How Do You Like My New 'Doo

Post by nedsaid » Thu Nov 28, 2019 12:52 pm

Here I am using the Morningstar Stock Intersection tool to see what my retirement accounts own in the top 25 stocks and then compare to the SPDR Portfolio MSCI Global Stock Market ETF. Pretty much seeing how my stocks compare to the MSCI Global Stock Index. The percentages for my portfolio are expressed as a percentage of my stock portfolio.

Nedsaid. . . . . . . . . . . . . . . . . . . . . . . MSCI Global Stock Index
1. Microsoft 3.62%. . . . . . . . . . . . . . . 1. Apple Inc. 2.24%
2. The Walt Disney Company 2.82%. . . . 2. Microsoft Corporation 2.12%
3. Boeing Company 2.63%. . . . . . . . . . 3. Amazon.Com Inc. 1.49%
4. Weyerhauser Company 2.63%. . . . . . 4. JP Morgan Chase & Company 0.87%
5. JP Morgan Chase & Co 2.26%. . . . . . 5. Alphabet Class C 0.84%
6. Johnson & Johnson 2.07%. . . . . . . . 6. Alphabet Class A 0.83%
7. ExxonMobil 1.65%. . . . . . . . . . . . . .7. Visa Inc Class A 0.78%
8. Pfizer Inc 1.39%. . . . . . . . . . . . . . .8. Bank of America Corp 0.71%
9. US Bancorp 1.34%. . . . . . . . . . . .. . 9. The Walt Disney Company 0.71%
10. Applied Materials 1.06% . . . . . . . . 10. Facebook A 0.69%
11. Apple Inc. 1.02%. . . . . . . . . . . . . 11. United Health Group 0.64%
12. Amazon.Com Inc 0.77% . . . . . . . . .12. Adobe Inc. 0.60%
13. Coca Cola Co 0.74%. . . . . . . . . . . 13. The Home Depot Group 0.58%
14. American National Ins Co 0.59%. . . 14. Taiwan Semiconductor 0.56%
15. Gilead Sciences Inc 0.58%. . . . . . . 15. Intel Corporation 0.55%
16. Comtech Communications 0.50%. . . 16. AT&T Inc 0.53%
17. Facebook Inc A 0.46% . . . . . . . . . . 17. Wells Fargo & Co 0.53%
18. Alphabet Inc Class C 0.46%. . . . . . . 18. Johnson & Johnson 0.52%
19. Raytheon Co 0.43% . . . . . . . . . . . .19. Thermo Fisher Scientific 0.52%
20. MasterCard Inc A 0.42% . . . . . . . . . 20. Tencent Holdings Ltd 0.51%
21. Alphabet Inc A 0.42%. . . . . . . . . . . 21. Cisco Systems Inc. 0.51%
22. Proctor & Gamble Co 0.40%. . . . . . .22. Nestle SA 0.50%
23. The Home Depot Inc. 0.37%. . . . . . .23. Alibaba Group 0.50%
24. Samsung Electronics 0.35%. . . . . . ..24. Medtronic PLC 0.50%
25. Verizon Communications 0.35%. . . . 25. Pfizer Inc. 0.48%

The bolded and italicized companies are owned individually as well as in my funds. Something that stuck out immediately is how the large US Mega-Caps dominate the All-World Stock Index.
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Re: How Do You Like My New 'Doo

Post by nedsaid » Thu Nov 28, 2019 1:15 pm

I also want to share my thoughts about financial advisors. There is no 100% right answer to the question of whether a person should seek out an advisor or not. My first experience was with a friend who went into the investment business as a stockbroker, I took my FDIC Insured Bank Certificate of Deposit IRA over to him. He lasted about a year but he got me started with individual stocks and it was off to the races. Since then, I moved on to Broker #2, Broker #3, Broker #4, Broker #4 at Firm #2, and Broker #4 at Firm #3. Going to a stockbroker at a Full Service Brokerage is not what I would recommend but that is what I did.

I also have received a free portfolio review from my insurance company, which oddly enough was the best. They used Morningstar software to X-Ray my portfolio and gave me a Morningstar report for each investment that I owned. Also gave me retirement projections and met with an Estate Attorney employed by the insurance company. I was quite surprised and impressed. The big takeaway was that I had very little in Small-Cap stocks which I rectified by buying the S&P Small Cap 600 Index ETF.

Also had American Century, Fidelity, Merriman, and my Independent Broker (Broker #4) do portfolio analysis for me. I also paid Ameriprise for comprehensive financial planning and portfolio review. I learned how the process worked and I learned something each time. The Merriman folks introduced me to the Academic Research and Small/Value tilting. I went to two Merriman seminars in my area. Ameriprise put on seminars for their clients and I went to a couple of those. I also met with a Fidelity Advisor for an hour and found that informative.

As I have posted above, I am also test driving American Century's Private Client Group. I have posted a lot about that above and won't expand on it here other than I am getting about what was expected.

The reason that I am interested in seeking advice is that I know that I don't know everything and that I have my own blind spots. Another set of eyes on my finances is also helpful. One issue is that the issues regarding retirement planning can be quite complex and it is a good idea to seek advice before making what could be irreversible decisions. Also there is the issue of cognitive decline as one gets older. Also have seen a recent case of elder abuse and where an Advisor stood his ground and refused to release funds to family members without the client's consent. Seeing this gave me pause.

I think that personal finance and investing can be a do-it-yourself project and many here do just that. I have chosen a hybrid approach, mostly doing it myself but also seeking advice. It seems the best way to get advice is to pay for it by the hour. An Assets Under Management arrangement could also be considered but you don't want to overpay. Even the 0.30% charged by the Vanguard Personal Advisory Service really adds up over time. So I am test driving an Portfolio Advisory Service and also checking out other avenues for advice.
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Re: How Do You Like My New 'Doo

Post by nedsaid » Thu Nov 28, 2019 3:22 pm

This is a good time to look at how various investments within my portfolio are doing to get a sense of what is happening in the world markets in 2019. The figures are all Year To Date.

Fidelity Total Stock Market Index +27.80%
Fidelity Large Cap Value Index +23.68%
American Century Value Y +23.60%
Nedsaid's Individual Stocks +29.46%
American Century Select Y +33.13% (Large Growth)
Fidelity Real Estate Index +24.85%
American Century Heritage Y +34.87% (Mid-Cap Growth)
American Century Mid-Cap Value Y +26.79%
Vanguard Small-Cap Value Index ETF +20.38%
iShares S&P 600 Small Cap Value Index ETF +21.56%
iShares Core S&P Small Cap ETF +20.01%
Fidelity Small Cap Index +22.88%
iShares Micro Cap ETF +15.80%

Fidelity International Index +19.14% (Developed Markets)
Templeton Foreign A +8.53% (Foreign Large Value)
Fidelity Emerging Markets Index +11.43%
Templeton Developing Markets A +18.62%
Fidelity International Small-Cap +16.21%
SPDR International Small Cap ETF +13.90%
Wisdom Tree International Small Cap Dividend ETF +16.71 (Int'l Small Value)

Vanguard Total Bond Market ETF +8.92%
Fidelity US Bond Index +8.67%
American Century Diversified Bond Y +8.87%
Fidelity GNMA Fund +5.55%
Fidelity Inflation Protected Bond Index +8.20% (TIPS)
Fidelity Short Term Bond Index +4.69%
American Century High Yield Y +11.94%
American Century Global Bond Y +8.84%
American Century Emerging Markets Debt Y +11.54%
iShares Core International Aggregate Bond ETF +8.52% ( Currency Hedged)

Fidelity Freedom Index 2025 Investor +17.96%
American Funds Capital Income Builder A +14.84%
Franklin Income Fund A +12.79%

It looks like 2019 is a blockbuster year for investors. US Large Growth is still leading as it has for the last decade. US Large, Mid, Small Value are all doing well but still trail Large Growth. International doing well but still trailing the United States. US Growth over US Value and US over International trends are still in force. A very good year for bonds as well. I have died and gone to investment heaven.

Just out of curiosity, I checked the 15 year performance of my individual stocks. I am at 7.98% a year compared to 8.25% for Vanguard Value Index Admiral and 9.17% for the Vanguard Total Stock Market Index Admiral.
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Re: How Do You Like My New 'Doo

Post by garlandwhizzer » Thu Nov 28, 2019 6:24 pm

Nedsaid, you are an intelligent, savvy, and experienced investor in my opinion. This, however is a very complicated portfolio that has 33 moving parts. I'm sure you have reasons for holding each one, but when you reach the withdrawal phase, will you sell tiny amounts of 33 different things to generate your monthly or annual income needs? Withdrawal strategy in this situation could get complicated.

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Re: How Do You Like My New 'Doo

Post by Trader Joe » Thu Nov 28, 2019 6:37 pm

nedsaid wrote:
Wed Jun 19, 2019 10:40 am
I jokingly put a "buy" on US Large Value, US Mid Value, and US Small Value on June 17, 2019 in another thread. It was half serious as I have been reading Larry Swedroe's recent articles on the valuation gaps between Large and Small and between Growth and Value, we are seeing numbers that remind us of 1999. Larry also noted that profit margins are starting to fall and that stocks without earnings did relatively well recently. Signs that perhaps the Large Growth dynamic that has dominated the US and International Stock Markets might be starting to break. But then again, that is what we thought in 2016.

I started a process of Growth to Value rebalancing, the dollar amounts are relatively small but I am getting the process started. I started with a small purchase of iShares S&P 600 Small Value Index ETF on Monday. I sold a small amount of Fidelity Total Stock Market Index and purchased Fidelity Large Cap Value Index on Tuesday. Also sold some shares that day of American Century Heritage (mid-cap Growth) and purchased American Century Mid-Value. Baby steps to be sure but I want to move funds into Value over time.

I wondered how my individual stocks in my retirement have been doing. Checked with Quicken today and as of 6/18/2019, I had a 15 year performance of 8.16% compared to Vanguard Total Stock Market Index Admiral shares of 9.01%. So I am trailing the bogey by 85 basis points over 15 years. Since my stocks are Value oriented, let's check against Vanguard Value Index Admiral Shares. Okay, Vanguard Value Index has a 15 year performance of 8.25%. So I am in the ballpark.
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Re: How Do You Like My New 'Doo

Post by nedsaid » Thu Nov 28, 2019 6:48 pm

garlandwhizzer wrote:
Thu Nov 28, 2019 6:24 pm
Nedsaid, you are an intelligent, savvy, and experienced investor in my opinion. This, however is a very complicated portfolio that has 33 moving parts. I'm sure you have reasons for holding each one, but when you reach the withdrawal phase, will you sell tiny amounts of 33 different things to generate your monthly or annual income needs? Withdrawal strategy in this situation could get complicated.

Garland Whizzer
Yes, I have too much complexity. I have cut the number of accounts and providers, the next project will be to consolidate positions. The goal is to get things simpler, I have a small defined benefit pension, a small cash balance pension, and a variable annuity all of which I will likely annuitize when I retire.

I have most everything at 3 providers. So you will see for example a Small Value investment at each place. Have TIPS funds in 2 places and Core Bond funds in all three. So it looks more complex than it really is.

Most of my American Century funds went into a managed account which is managed like their One Choice Conservative Portfolio, so many funds listed are really one portfolio. The goal was simplification but they actually chose more funds than what I had as a self-managed Moderate Portfolio. Test driving with a portion of my portfolio to see if I like having someone else manage it.

I have an IRA at Fidelity, might turn that over to the robots to manage at some point.

Work with an independent broker at LPL and I will probably work with him on that until he decides to retire himself, he is about my age. I have 18 individual stocks which are Large Value/Large Core and I might at some point swap them all for something like Vanguard High Dividend or a Large Value Index. That alone would greatly simplify things. If he ever retires, I would probably move this to Fidelity and consolidate.

Pretty much experimenting with different things, I find that I like the ETFs very much. If I had this to do all over again, my portfolio would probably be maybe a dozen ETFs which would cover the bases as I would want to factor tilt and slice and dice a bit.

Actually the reason I posted the performance numbers of the various funds is to give investors a sense of what is going on in the markets. Pretty much everything is doing fairly well but you can see that the Large Growth trend is continuing to lead the US Stock Market and that US Stocks are still doing better than International Stocks. You can also see what is going on within the bond market. It is useful to see market internals.
Last edited by nedsaid on Thu Nov 28, 2019 7:19 pm, edited 2 times in total.
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Re: How Do You Like My New 'Doo

Post by nedsaid » Thu Nov 28, 2019 6:59 pm

Trader Joe wrote:
Thu Nov 28, 2019 6:37 pm
nedsaid wrote:
Wed Jun 19, 2019 10:40 am
I jokingly put a "buy" on US Large Value, US Mid Value, and US Small Value on June 17, 2019 in another thread. It was half serious as I have been reading Larry Swedroe's recent articles on the valuation gaps between Large and Small and between Growth and Value, we are seeing numbers that remind us of 1999. Larry also noted that profit margins are starting to fall and that stocks without earnings did relatively well recently. Signs that perhaps the Large Growth dynamic that has dominated the US and International Stock Markets might be starting to break. But then again, that is what we thought in 2016.

I started a process of Growth to Value rebalancing, the dollar amounts are relatively small but I am getting the process started. I started with a small purchase of iShares S&P 600 Small Value Index ETF on Monday. I sold a small amount of Fidelity Total Stock Market Index and purchased Fidelity Large Cap Value Index on Tuesday. Also sold some shares that day of American Century Heritage (mid-cap Growth) and purchased American Century Mid-Value. Baby steps to be sure but I want to move funds into Value over time.

I wondered how my individual stocks in my retirement have been doing. Checked with Quicken today and as of 6/18/2019, I had a 15 year performance of 8.16% compared to Vanguard Total Stock Market Index Admiral shares of 9.01%. So I am trailing the bogey by 85 basis points over 15 years. Since my stocks are Value oriented, let's check against Vanguard Value Index Admiral Shares. Okay, Vanguard Value Index has a 15 year performance of 8.25%. So I am in the ballpark.
Well, you asked. I do not like it. I think you are making a mistake here.
What I want to do is rotate from more expensive stocks to cheaper stocks over time. Part of this is cutting price risk and also trying to boost future expected returns. So far what I have been doing as far as Growth to Value rebalancing has been modest, the very most I would do is trade 30% of my Total Stock Market Index for Value Indexes. So it isn't like I am abandoning the Large Growth stocks, just de-emphasizing them. Also keep in mind that my Value tilted portfolio mostly untilted because of the big run that the Large Growth stocks have had. Much of this is restoring the tilts that I had before. This is not a huge dramatic change but smaller changes over time. Seems prudent as the valuation gap between Growth and Value resembles 1999.
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Re: How Do You Like My New 'Doo

Post by nedsaid » Mon Dec 23, 2019 12:58 am

We are getting towards the end of 2019 and the end of a decade. Hard to believe that the turn of the millennium and the Y2K scare was 20 years ago. Hard to believe that I will soon be 60 1/2 years old. Wanted to share some thoughts.

First, this thread was supposed to be sort of a Boglehead version of a reality show. Secretly, this might have just been a vanity project but this thread showed my shortcomings as an investor. The mighty Nedsaid was in reality a pretty average investor despite my fantasies of being the next Peter Lynch. Nedsaid is in reality the man behind the curtain pulling on levers and bellowing into a microphone. I am much less scary than the big image projected on the screen with the booming voice and the pillars of fire shooting up. It seems that Toto has pulled back the curtain or maybe I unwittingly pulled it back myself.

I did get a kick out of Garland Whizzer. I had a previous post in which I posted the performance of various investments that I own. The point was to show the Year To Date performance of various parts of the market to see which sectors of the stock and bond market had the best relative performance. Instead, he counted the number of investments I had listed and wondered if my portfolio was overly complex. Oh well, the point I tried to make was different than the point received.

Also my test drive of American Century Private Client Group is proceeding about as expected. No surprises there. My first try at having someone else manage a part of my portfolio. As posted above, they are managing this somewhat differently than I would but presumably they know more than me. So far, as far as financial planning I have gotten retirement projections and the results of Monte Carlo testing. The financial planning is a work in process and I will see how comprehensive it will really be. Pretty much not saying too much and letting them drive. I want to be a good client and not a backseat driver.

The year is going to be a gangbuster year for the markets. Both stocks and bonds are performing pretty strongly. Haven't seen a year like this for a long time, US Stocks are up over 30% this year, sort of reminds me of the last half of the 1990's. A reminder that a rising tide lifts all boats but yet a lot of us will feel utterly brilliant this year.

I have started a part time job working for a Financial Advisor who has been in the business for over 30 years. It will be a few hours a week to start and I will be a gloried Administrative Assistant. But it will be an outlet for my interests in financial planning and investing and an opportunity to learn more about the business. I will still be doing taxes full-time, not part of the career plan but the way things happened. We will see if this works into something or not but this will be a way of exploring something new. Pretty much getting tired of the job search process and will probably set aside my Accounting career for now.

When year end comes, I will post my investment results for 2019 and hopefully I won't be crying in my root beer float this year. It will certainly be a much better year than 2018. I will do a bit of analysis but probably not get too detailed. What I am seeing is that International and Value are doing well this year but are still trailing US Growth. I keep predicting the comeback of Value, particularly Large Value but the market doesn't obey my wishes. Still, I am doing a Growth to Value rebalance of my portfolio, the "Swedroe Shuffle", and doing it over time. My biggest tilt is Large Value, I also have 15% Small Cap vs 6% for the US Total Stock Market.
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Re: How Do You Like My New 'Doo

Post by Random Musings » Mon Dec 23, 2019 10:17 pm

Over time I have consolidated my portfolio and utilize less funds, easier to track and rebalance. Definitely agree with GW on that thought. With respect to the advisor, seems like a good number of portfolio moves over a short time frame. I would keep an eye on that. With respect to a shift towards a little more value tilt, don't see anything wrong with that, as long as you stay the course.

Best of luck.

Regards,

RM
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Re: How Do You Like My New 'Doo

Post by nedsaid » Tue Dec 24, 2019 12:25 am

Random Musings wrote:
Mon Dec 23, 2019 10:17 pm
Over time I have consolidated my portfolio and utilize less funds, easier to track and rebalance. Definitely agree with GW on that thought. With respect to the advisor, seems like a good number of portfolio moves over a short time frame. I would keep an eye on that. With respect to a shift towards a little more value tilt, don't see anything wrong with that, as long as you stay the course.

Best of luck.

Regards,

RM
Yes, the advisory service has done several moves in just a few short months. This Private Client Group portfolio is very similar to their One Choice Conservative Fund, in contrast their One Choice Fund has not made any changes. Their Private Client Group portfolio also has more complexity than the retail One Choice Fund, the main differences are that the use of Liquid Alts and the use of ETFs. They did say up front that the manager would make changes in the portfolio as they saw opportunity. And yes, I am watching what they are doing.

I am continuing the Growth to Value, the US to International, and the Large to Small rebalancing in my portfolio a gradual shift to cheaper and smaller stocks. And yes, I plan to stay the course.

Edit: Another part of my rebalancing was selling a Fidelity S&P 500 Index fund and replacing it with a Fidelity Mid-Cap Index Fund. Part of the Larger stocks to Smaller Stocks rebalance. The S&P 500 fund was less than 1% of my retirement portfolio.
Last edited by nedsaid on Sun Dec 29, 2019 2:27 am, edited 1 time in total.
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Re: How Do You Like My New 'Doo

Post by nedsaid » Sun Dec 29, 2019 1:50 am

Okay, some Year To Date Investment Returns as Calculated by Quicken for 2019. Numbers are as of 12/28/2019.

American Century IRA 18.52% (Went from 58% stocks to 50% stocks in August)
Fidelity Deferred Annuity 17.75% (53% Stocks/47% Bonds)
Fidelity Rollover IRA 19.39% (64% Stocks/36% Bonds)
LPL Financial IRA 22.01% (85% Stocks/15% Bonds)
LPL Financial ROTH IRA 17.71% (70% stocks/30% Bonds)
Cash Balance Retirement 3.42%
PERS 3 Account 18.80% (60% stocks/40% bonds)
Total Retirement Accounts 19.00% (46% US Stocks/17% International Stocks/37% bonds) Calculated by Quicken My manual calculation is 18.75%.

Compare to Vanguard LifeStrategy Moderate Growth 19.66% YTD (36% US Stocks/24% International Stocks/40% Bonds and Cash)
Compare to American Century One Choice Moderate 20.38% YTD (43% US Stocks/19% International Stocks/38% Bonds and Cash)
Compare to Fidelity Freedom Index 2025 20.01% YTD (38% US Stocks/22% International Stocks/40% Bonds and Cash)
Compare to 46% Fidelity Total Stock Market Index 31.22% YTD/17% Fidelity Global ex-US Index 21.79% YTD/37% Fidelity US Bond Index 8.72%YTD. (0.46 x .3122) + (.17 x .2179) + (.37 x .0872) = 21.29% YTD

Individual Stocks 27.64% YTD.
Compare to Vanguard Value Index Admiral 26.01% YTD.

So just eyeballing things, I am getting some Factor drag from my Value and Mid/Small-Cap Tilts. There is some cash in my portfolio, particularly at American Century and that is producing a bit of a cash drag, also my GNMA fund is underperforming Total Bond Market. My annual expenses are probably about 45 basis points, a bit of fee drag as well. It appears that my results are trailing the blend of Fidelity Indexes mainly because of factor tilts.

But again, earlier in this thread I posted Larry Swedroe's comments about resulting. I am not investing like Taylor's 3 fund portfolio so I should not expect the same results. I am deliberately tilting away from the Large Growth stocks that have performed so well over the last decade and this is showing up in my investment results.
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Re: How Do You Like My New 'Doo

Post by nedsaid » Sun Dec 29, 2019 2:20 am

The latest Morningstar Figures on the retirement portfolio.

US Stocks 45.90%
Foreign Stocks 16.73%
Bonds 32.67%
Cash 4.12%
Other 0.58%

Stock Style Box

25.28 25.63 17.18
05.57 06.08 04.89
05.24 06.12 04.00

Forward P/E 16.63
Price/Book 2.00
Project EPS Growth 9.10%
Yield 2.19%

Bond Stylebox
26 24 11
03 17 14
04 02 00

Individual Stocks Stylebox

40 42 12
00 00 00
01 05 00

Forward P/E 18.05
Price/Book 2.31
Project EPS Growth 8.24%
Yield 2.62%
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Re: How Do You Like My New 'Doo

Post by 3funder » Sun Dec 29, 2019 9:36 am

garlandwhizzer wrote:
Thu Nov 28, 2019 6:24 pm
Nedsaid, you are an intelligent, savvy, and experienced investor in my opinion. This, however is a very complicated portfolio that has 33 moving parts. I'm sure you have reasons for holding each one, but when you reach the withdrawal phase, will you sell tiny amounts of 33 different things to generate your monthly or annual income needs? Withdrawal strategy in this situation could get complicated.

Garland Whizzer
+1

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Re: How Do You Like My New 'Doo

Post by goblue100 » Sun Dec 29, 2019 11:30 am

nedsaid wrote:
Mon Dec 23, 2019 12:58 am

First, this thread was supposed to be sort of a Boglehead version of a reality show. Secretly, this might have just been a vanity project but this thread showed my shortcomings as an investor. The mighty Nedsaid was in reality a pretty average investor despite my fantasies of being the next Peter Lynch.
From what I know about from your postings, you and I are a lot alike. At the age we are, investing in individual stocks was pretty much expected during the late 80's and 90's and not the feared monster that many on this board find it. I think I may have figured out my mediocrity as a stock picker a little earlier that you did. :)
I still have 10 individual stocks, but I'm divesting over time and have pledged to myself to buy no more, just for simplicity's sake.
nedsaid wrote:
Mon Dec 23, 2019 12:58 am
I did get a kick out of Garland Whizzer. I had a previous post in which I posted the performance of various investments that I own. The point was to show the Year To Date performance of various parts of the market to see which sectors of the stock and bond market had the best relative performance. Instead, he counted the number of investments I had listed and wondered if my portfolio was overly complex. Oh well, the point I tried to make was different than the point received.
About what my portfolio looks like! I pledge to simplify, but it has been a slow process.
nedsaid wrote:
Mon Dec 23, 2019 12:58 am
Also my test drive of American Century Private Client Group is proceeding about as expected. No surprises there. My first try at having someone else manage a part of my portfolio. As posted above, they are managing this somewhat differently than I would but presumably they know more than me.
I'm not sure I would bet on that.
nedsaid wrote:
Mon Dec 23, 2019 12:58 am
So far, as far as financial planning I have gotten retirement projections and the results of Monte Carlo testing. The financial planning is a work in process and I will see how comprehensive it will really be. Pretty much not saying too much and letting them drive. I want to be a good client and not a backseat driver.
This is the part I am interested in, are they giving you anything beyond portfolio management? I for one would be interested in tax advice and estate planning.
nedsaid wrote:
Mon Dec 23, 2019 12:58 am
The year is going to be a gangbuster year for the markets. Both stocks and bonds are performing pretty strongly. Haven't seen a year like this for a long time, US Stocks are up over 30% this year, sort of reminds me of the last half of the 1990's. A reminder that a rising tide lifts all boats but yet a lot of us will feel utterly brilliant this year.

I have started a part time job working for a Financial Advisor who has been in the business for over 30 years. It will be a few hours a week to start and I will be a gloried Administrative Assistant. But it will be an outlet for my interests in financial planning and investing and an opportunity to learn more about the business. I will still be doing taxes full-time, not part of the career plan but the way things happened. We will see if this works into something or not but this will be a way of exploring something new. Pretty much getting tired of the job search process and will probably set aside my Accounting career for now.

When year end comes, I will post my investment results for 2019 and hopefully I won't be crying in my root beer float this year. It will certainly be a much better year than 2018. I will do a bit of analysis but probably not get too detailed. What I am seeing is that International and Value are doing well this year but are still trailing US Growth. I keep predicting the comeback of Value, particularly Large Value but the market doesn't obey my wishes. Still, I am doing a Growth to Value rebalance of my portfolio, the "Swedroe Shuffle", and doing it over time. My biggest tilt is Large Value, I also have 15% Small Cap vs 6% for the US Total Stock Market.
Yes, been a very nice year. Good to have my brilliance confirmed, though I would be even more brilliant had I refrained from dropping my equity percentage 20 points over the last 5 years. :oops: Oh well, it was the correct decision and I shouldn't be results oriented.
Good luck on your career change. Sounds like you don't need tax advice, as an accountant.
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Re: How Do You Like My New 'Doo

Post by marcopolo » Sun Dec 29, 2019 1:53 pm

nedsaid wrote:
Sun Dec 29, 2019 2:20 am
The latest Morningstar Figures on the retirement portfolio.

US Stocks 45.90%
Foreign Stocks 16.73%
Bonds 32.67%
Cash 4.12%
Other 0.58%

Stock Style Box

25.28 25.63 17.18
05.57 06.08 04.89
05.24 06.12 04.00

Forward P/E 16.63
Price/Book 2.00
Project EPS Growth 9.10%
Yield 2.19%

Bond Stylebox
26 24 11
03 17 14
04 02 00

Individual Stocks Stylebox

40 42 12
00 00 00
01 05 00

Forward P/E 18.05
Price/Book 2.31
Project EPS Growth 8.24%
Yield 2.62%
Thanks for sharing such details.

Is the stock style box above for your entire portfolio, or just one piece of it? i was under the impression you did more Value and SCV tilting, I kind of recall you saying something like 15% I SCV? The style box above does not look that far tilted.
Once in a while you get shown the light, in the strangest of places if you look at it right.

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Re: How Do You Like My New 'Doo

Post by nedsaid » Sun Dec 29, 2019 3:18 pm

goblue100 wrote:
Sun Dec 29, 2019 11:30 am
nedsaid wrote:
Mon Dec 23, 2019 12:58 am

First, this thread was supposed to be sort of a Boglehead version of a reality show. Secretly, this might have just been a vanity project but this thread showed my shortcomings as an investor. The mighty Nedsaid was in reality a pretty average investor despite my fantasies of being the next Peter Lynch.
From what I know about from your postings, you and I are a lot alike. At the age we are, investing in individual stocks was pretty much expected during the late 80's and 90's and not the feared monster that many on this board find it. I think I may have figured out my mediocrity as a stock picker a little earlier that you did. :)
I still have 10 individual stocks, but I'm divesting over time and have pledged to myself to buy no more, just for simplicity's sake.

Nedsaid: As an investor, I like to buy stuff. As Julius Caesar might have sought, "I came, I saw, I purchased." This has been noted by other people on the thread. The other thing is that I like stocks in whatever form. So two things I have had problems with are simplification and de-risking. Hard to get excited about 2% yields on bonds.

As far as my stock picking prowess, I have about tracked the Vanguard Value Index. At some point I will compare my stocks to indexes, I go back 15 years as the long term is really all that is important.
So I am no Peter Lynch or Warren Buffett but not a disaster either.

nedsaid wrote:
Mon Dec 23, 2019 12:58 am
I did get a kick out of Garland Whizzer. I had a previous post in which I posted the performance of various investments that I own. The point was to show the Year To Date performance of various parts of the market to see which sectors of the stock and bond market had the best relative performance. Instead, he counted the number of investments I had listed and wondered if my portfolio was overly complex. Oh well, the point I tried to make was different than the point received.
About what my portfolio looks like! I pledge to simplify, but it has been a slow process.
nedsaid wrote:
Mon Dec 23, 2019 12:58 am
Also my test drive of American Century Private Client Group is proceeding about as expected. No surprises there. My first try at having someone else manage a part of my portfolio. As posted above, they are managing this somewhat differently than I would but presumably they know more than me.
I'm not sure I would bet on that.

Nedsaid: They have portfolio managers who have the quantitative tools to try to optimize their mix of funds and ETFs. They put together a complex portfolio but from what I can see they have done a competent job. I mostly eyeball things as I know that no one knows the future, thus it is impossible to optimize a portfolio. Close enough is close enough and good enough is good enough. Of course, part of what they are doing is using the Private Client Group to help create demand for their new ETF products, they also have me in a couple of liquid Alts. Yes, I could manage this myself but I wanted to test drive the service. It cost me just a bit more and I wanted to see if they could offer good planning services.
nedsaid wrote:
Mon Dec 23, 2019 12:58 am
So far, as far as financial planning I have gotten retirement projections and the results of Monte Carlo testing. The financial planning is a work in process and I will see how comprehensive it will really be. Pretty much not saying too much and letting them drive. I want to be a good client and not a backseat driver.
This is the part I am interested in, are they giving you anything beyond portfolio management? I for one would be interested in tax advice and estate planning.

Nedsaid: Pretty much, I have linked most of my financial accounts and I have provided them with the account information for accounts I couldn't link to. So they can see most everything I am doing. There is also a budgeting tool that I also can use. The advisor mentioned they had an expert on Social Security on their staff. So far, I got Monte Carlo simulations and projections of my likelihood of success in retirement. Not too much so far, but I only set this up in August. They are converting to new planning tools.

In the past, this firm has shown a big commitment to investor education. They had a publishing arm that published books written by the company founder on investing and personal finance. In the past, they had a financial planner who headed up an Investor Guidance department. In the past, they offered Financial Engines to evaluate client investments held at the company and outside the company. Now, if you want a portfolio review, they will use Morningstar software. I have had them do three reviews for me in the past before I signed up for the service.

They also have a department that deals with Estate and Inheritance issues. Not sure how that all fits with the Private Client Group. They do offer Estate Transfer services for funds held at American Century.

So far, not so much, but I am pretty early in the process. Lets see what they can deliver.

nedsaid wrote:
Mon Dec 23, 2019 12:58 am
The year is going to be a gangbuster year for the markets. Both stocks and bonds are performing pretty strongly. Haven't seen a year like this for a long time, US Stocks are up over 30% this year, sort of reminds me of the last half of the 1990's. A reminder that a rising tide lifts all boats but yet a lot of us will feel utterly brilliant this year.

I have started a part time job working for a Financial Advisor who has been in the business for over 30 years. It will be a few hours a week to start and I will be a gloried Administrative Assistant. But it will be an outlet for my interests in financial planning and investing and an opportunity to learn more about the business. I will still be doing taxes full-time, not part of the career plan but the way things happened. We will see if this works into something or not but this will be a way of exploring something new. Pretty much getting tired of the job search process and will probably set aside my Accounting career for now.

When year end comes, I will post my investment results for 2019 and hopefully I won't be crying in my root beer float this year. It will certainly be a much better year than 2018. I will do a bit of analysis but probably not get too detailed. What I am seeing is that International and Value are doing well this year but are still trailing US Growth. I keep predicting the comeback of Value, particularly Large Value but the market doesn't obey my wishes. Still, I am doing a Growth to Value rebalance of my portfolio, the "Swedroe Shuffle", and doing it over time. My biggest tilt is Large Value, I also have 15% Small Cap vs 6% for the US Total Stock Market.
Yes, been a very nice year. Good to have my brilliance confirmed, though I would be even more brilliant had I refrained from dropping my equity percentage 20 points over the last 5 years. :oops: Oh well, it was the correct decision and I shouldn't be results oriented.
Good luck on your career change. Sounds like you don't need tax advice, as an accountant.
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Re: How Do You Like My New 'Doo

Post by nedsaid » Sun Dec 29, 2019 3:28 pm

marcopolo wrote:
Sun Dec 29, 2019 1:53 pm
nedsaid wrote:
Sun Dec 29, 2019 2:20 am
The latest Morningstar Figures on the retirement portfolio.

US Stocks 45.90%
Foreign Stocks 16.73%
Bonds 32.67%
Cash 4.12%
Other 0.58%

Stock Style Box

25.28 25.63 17.18
05.57 06.08 04.89
05.24 06.12 04.00

Forward P/E 16.63
Price/Book 2.00
Project EPS Growth 9.10%
Yield 2.19%

Bond Stylebox
26 24 11
03 17 14
04 02 00

Individual Stocks Stylebox

40 42 12
00 00 00
01 05 00

Forward P/E 18.05
Price/Book 2.31
Project EPS Growth 8.24%
Yield 2.62%
Thanks for sharing such details.

Is the stock style box above for your entire portfolio, or just one piece of it? i was under the impression you did more Value and SCV tilting, I kind of recall you saying something like 15% I SCV? The style box above does not look that far tilted.
I had my Small Value tilt as high as 8% in the past, now it is down to 5%. My largest Value tilt is Large Value as you can see. I have been tilting away from High Tech though that has cost me in performance in recent years. The data provided is for my retirement portfolio which represents the greatest share of my net worth.

Part of what has happened to my tilts is that the Large Growth trend in the US and International Stock Markets have over time reduced my Value tilts. I have been executing a Growth to Value, Large to Small, and US to International rebalance to address this. Another complicating factor is that my mutual fund investments at American Century shifted from a Moderate Risk to a Conservative Risk profile, so that affected my US/International, Large/Small, Growth/Value allocations. It was recommended to me to reduce my risk profile a bit and the shift of my investments at American Century accomplished that. I had to made adjustments to other parts of the portfolio.
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Re: How Do You Like My New 'Doo

Post by nedsaid » Mon Mar 30, 2020 10:59 pm

Thought I would check in as I near the end of the 1st Quarter of 2020. Thought I would post Year To Date results for different asset classes as represented by actual investments that I own.

Here is my portfolio status as of now:

40.65% US Stocks
15.27% International Stocks
39.11% Bonds
04.48% Cash

Stock Stylebox

25.90 23.85 17.51
05.88 07.85 04.97
05.40 04.92 03.71

Americas 74.65% Stocks
Greater Europe 12.61% Stocks
Greater Asia 12.75% Stocks

Drop from Market Peak -17.3%
Estimated drop from Peak to trough of bear market -22%

US Total Stock Market YTD -19.76%
US Large Value YTD -25.36%
US Large Growth YTD -12.60%
US Mid Value YTD -26.71%
US Mid Cap Core YTD -25.65%
US Mid Growth YTD -18.55%
US Small Value YTD -34.11%
US Small Core YTD -32.60%
US Small Growth YTD -19.88%
US Micro-Cap YTD -32.48%
US REITS YTD -27.40%
US Total Bond Market YTD 3.49%
US GNMA YTD 2.14%
US TIPS Index YTD 2.37%
US Corporate Bonds YTD -5.17%
US High Yield Bonds YTD -10.99%
Global Hedged Bonds YTD -3.27%
International Bond Index Hedged YTD 0.52%
Emerging Market Bonds YTD -13.09%
International Developed Stock Market YTD -22.23%
International Emerging Stock Market YTD -24.32%
International Large Value YTD -27.24%
International Mid/Small Cap YTD -28.31%
International Small Value YTD -31.61%
Last edited by nedsaid on Mon Mar 30, 2020 11:19 pm, edited 3 times in total.
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Re: How Do You Like My New 'Doo

Post by theorist » Mon Mar 30, 2020 11:03 pm

nedsaid wrote:
Mon Mar 30, 2020 10:59 pm
Thought I would check in as I near the end of the 1st Quarter of 2020. Thought I would post Year To Date results for different asset classes as represented by actual investments that I own.

Here is my portfolio status as of now:

40.65% US Stocks
15.27% International Stocks
39.11% Bonds
04.48% Cash

Stock Stylebox

25.90 23.85 17.51
05.88 07.85 04.97
05.40 04.92 03.71

Americas 74.65% Stocks
Greater Europe 12.61% Stocks
Greater Asia 12.75% Stocks

Drop from Market Peak -17.3%
Estimated drop from Peak to trough of bear market -22%

US Total Stock Market YTD -19.76%
US Large Value YTD -25.36%
US Large Growth YTD -12.60%
US Mid Value YTD -26.71%
US Mid Cap Core YTD -25.65%
US Mid Growth YTD -18.55%
US Small Value YTD -34.11%
US Small Core YTD -32.60%
US Small Growth YTD -19.88%
US Micro-Cap YTD -32.48%
US REITS YTD -27.40%
US Total Bond Market YTD 3.49%
GNMA YTD 2.14%
TIPS Index YTD 2.37%
US Corporate Bonds YTD -5.17%
Global Hedged Bonds YTD -3.27%
International Developed Stock Market YTD -22.23%
International Emerging Stock Market YTD -24.32%
International Large Value YTD -27.24%
International Mid/Small Cap YTD
Wow! Someone on bogleheads who slices even more than me. :-).

Out of curiosity: what fund do you use for small growth, and what do you use for international mid/small cap? And, why do you hold small growth, given the lore (backtesting) suggesting it is the “black hole of investing”? (I’ve been tempted myself, which is partially why I ask.)

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Re: How Do You Like My New 'Doo

Post by nedsaid » Mon Mar 30, 2020 11:17 pm

theorist wrote:
Mon Mar 30, 2020 11:03 pm


Wow! Someone on bogleheads who slices even more than me. :-).

Out of curiosity: what fund do you use for small growth, and what do you use for international mid/small cap? And, why do you hold small growth, given the lore (backtesting) suggesting it is the “black hole of investing”? (I’ve been tempted myself, which is partially why I ask.)
My portfolio is less complex than appears. First, there are a lot of holdings in a Conservative Managed Portfolio at American Century. It would really be like a Conservative LifeStrategy Fund. Second, I have three major vendors for my retirement investments: Fidelity, American Century, and LPL Financial. Third, I hold individual stocks in an IRA Brokerage and I consider that as a Growth & Income Portfolio.

Small Growth is American Century Small Cap Growth. It uses earnings and price momentum, a pretty aggressive "Tiger in the Tank" investment. Small Growth isn't bad if you sort out the lottery stocks. I use three investments for International Small Cap: American Century International Opportunities, SPDR S&P International Small Cap ETF, and Fidelity International Small-Cap.

I wanted to show what the different segments of the investment markets have year to date, at a glance you can see the internals of the world stock and bond markets.
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Re: How Do You Like My New 'Doo

Post by nedsaid » Mon Mar 30, 2020 11:24 pm

A quick report on the two liquid Alts that I own in small quantities.

American Century Market Neutral Value YTD 1.04% Great performance considering that Value has
been doing poorly.

American Century Alternatives Income YTD -18.52% Awful performance, what bets were they taking? Whatever they did, it blew up the fund. My humble forecast is that this fund will be taken to the Vet and put to sleep and buried in an unmarked grave.

These are small positions within a Conservative managed portfolio, so they won't make very much of a difference one way or the other. Not too impressive to say the least. Well, at least I have a bit of investing experience with these.
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Re: How Do You Like My New 'Doo

Post by nedsaid » Sun Jun 21, 2020 12:00 am

I thought that I would check in seeing that we are nearing the end of the second quarter. Another approaching milestone is that I will be reaching my 61st birthday in a couple of weeks. I have weathered the recent bear market fairly well, my portfolio has mostly recovered though it is still down about 7.5% from the February market highs. I have done almost nothing: almost all of my investments are on Capital Gains and Dividend reinvestment, the 29% of my portfolio that is managed by American Century as a Conservative portfolio has rebalanced back and forth, otherwise I have done almost nothing. I started a 401(k) plan in February and have invested those monies in the Vanguard 2025 Target Date Retirement Fund. Recently, American Century sold a slice of bonds to purchase Global Real Estate, not sure what they are seeing here, perhaps a pickup in inflation.

Cash 4.76%
U.S. Stocks 44.23%
Foreign Stocks 16.31%
Bonds 34.27%
Other 0.44%

My stocks have a 27% International weighting and about 11.7% of my bonds are International. Liquid Alts are 1.18% of my portfolio. Expense ratio of my portfolio is 0.38%.

My Morningstar Stock Stylebox:

..........Value....Core....Growth
Large...19.29%..17.28%..14.67%
Mid......05.93%..06.36%..05.62%
Small. ..05.63%..05.39%..04.21%

You can see that I have a Large Value tilt to my portfolio, the Small Value tilt is relatively small. I also have a Mid/Small-Cap tilt.

..............................Portfolio.....S&P 500
Cyclical...................35.99....... 28.78
Basic Materials...............3.13.........2.19
Consumer Cyclical...........8.43........10.30
Financial Services..........14.94........13.45
Real Estate...................9.49..........2.84

Sensitive.................40.65........45.02
Communication Services.. 8.09........10.98
Energy........................ 3.89.........2.92
Industrials ..................11.14.........8.44
Technology..................17.54.......22.68

Defensive...................23.36.......26.19
Consumer Defensive.......6.26.........7.56
Healthcare.................14.46.......15.39
Utilities......................2.65.........3.24

You can see here that I still maintain a tilt towards REITs.

North America 73.93%
Latin America 0.65%
United Kingdom 3.31%
Europe Developed 8.14%
Europe Emerging 0.36%
Africa/Middle East 0.55%
Japan 4.99%
Australasia 1.13%
Asia Developed 3.12%
Asia Emerging 3.82%
Not Classified 0.00%

My Morningstar Bond Stylebox:

..................Short......Mid......Long
High Quality....25.83%..31.47%..05.97%
Mid Quality.....00.00%..19.02%..12.48%
Low Quality....03.32%...01.90%..00.00%

As much as I like TIPS, they are actually only 12.7% of my bonds and cash. I read a Kiplinger's article that said Alan Roth recommended that 25% of bonds be in TIPS, years ago standard Boglehead advice was 50% Bond Index/50% TIPS for a bond portfolio.

Stock Intersection (listed as Percentage of Portfolio)

Microsoft 3.00%
Johnson & Johnson 1.45%
Weyerhauser 1.32%
Walt Disney 1.25%
JP Morgan Chase 1.13%
Pfizer Inc 0.84%
Boeing Co. 0.83%
Apple Inc 0.80%
Exxon Mobil 0.75%
Applied Materials 0.69%
Amazon.Com 0.65%
U.S. Bancorp 0.55%
Gilead Sciences 0.44%
Coca-Cola Co 0.41%
Alphabet Class A (Google) 0.32%
Facebook Inc Class A 0.31%
Alphabet Inc Class C (Google) 0.28%
MasterCard Inc Class A 0.25%
American National Insurance Co 0.25%
Prologis Inc 0.25%

You can see that my portfolio is tilted away from High Tech and the FAANG stocks (Facebook, Apple, Amazon, Netflix, and Google. The bolded companies are owned individually.
Last edited by nedsaid on Sun Jun 21, 2020 1:45 pm, edited 3 times in total.
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Re: How Do You Like My New 'Doo

Post by nedsaid » Sun Jun 21, 2020 12:22 am

Where do I go from here? The main thing that I am considering is shifting a slice of bonds to Short Term TIPS bonds. With all of the fiscal and monetary stimulus hitting the economy to fight the economic effects of the Covid-19 pandemic, there could be a bump up in inflation as well as an economy that roars back. I listened to a recent podcast by Jeremy Siegel, he says the 38 year bull market in bonds is over and interest rates have seen their lows. He expects that all this stimulus will be paid for by inflation, which is an invisible tax. So if this scenario holds, it won't be good for bonds. Siegel pretty much said that a 75% stock/25% bond portfolio is the new 60% stock/40% bond balanced portfolio. As for me, I don't plan to increase stock allocation but I might shift some of my bonds to Short Term TIPS.

As far as my portfolio tilts, I will maintain what I have, no plans to increase Value tilts.

My Target Asset Allocation is 60% stocks and 40% bonds and cash. Right now, I am almost exactly there. I might allow the stock allocation to drift as high as 62% but that is about as high as I would go. On the other hand, I am not to enthusiastic about bonds now, particularly if yields are below inflation rates. A negative yield after inflation won't be good for bonds.

I also wanted to comment upon the 29% of my portfolio that American Century Investments is managing through their Private Client Group. This is in their Cautious Portfolio which is modeled after their American Century One Choice Conservative fund. The portfolios are much the same except that Private Client Group uses four American Century ETFs and a couple of Liquid Alt funds, otherwise the portfolios are very similar. The retail version of this fund has a 4 star rating with Morningstar, so its performance relative to other such funds has been good. So far, so good. Continuing to test drive this service.
Last edited by nedsaid on Sun Jun 21, 2020 9:48 am, edited 2 times in total.
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Re: How Do You Like My New 'Doo

Post by nedsaid » Sun Jun 21, 2020 1:08 am

Let's take a look at how my individual stocks have done. The individual stocks are 11.8% of my retirement portfolio.

15 Years
Nedsaid's Individual Stocks 7.18% IRR calculated by Quicken.
Vanguard Value Index Adm 6.85%. From Morningstar.
Vanguard Total Stock Market Adm 8.75%

10 years
Nedsaid's Individual Stocks 10.38% IRR calculated by Quicken.
Vanguard Value Index Adm 10.48%. From Morningstar.
Vanguard Total Stock Market Adm 12.78%

Not bad, not bad at all. You can see, however, that Large Value has been trailing Total Stock Market. Not surprising as we have been in a Large Growth stock market since 2009.

Top 10 individual stocks
1. Microsoft
2. Weyerhauser
3. Walt Disney
4. Johnson & Johnson
5.JP Morgan & Chase
6. Boeing
7. Applied Materials
8. Pfizer
9. Exxon Mobil
10. U.S. Bancorp

The Morningstar Stylebox on my individual stocks is:

49 16 18
01 11 00
03 01 00

Dividend yield is 3.31%
Forward P/E is 22.57 (this is meaningless since earnings have temporarily dropped because of the quarantine.)

You can see that Boeing and Exxon Mobil were hit hard in the bear market. Microsoft and Applied Materials are up through all the market turbulence. The financial stocks were hit too. Disney held up well despite its theme parks being closed because it has such a large media presence.
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Re: How Do You Like My New 'Doo

Post by garlandwhizzer » Sun Jun 21, 2020 2:04 pm

Nedsaid, I have great respect for you as a knowledgeable and experienced investor. The question I have is how do you keep up with such a complex portfolio with so many moving parts? Perhaps it's fun to tinker with, but is it worth the trouble? Do you foresee a time in the future when you may simplify the portfolio to make it easier to manage?

Garland Whizzer

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Re: How Do You Like My New 'Doo

Post by nedsaid » Sun Jun 21, 2020 4:31 pm

garlandwhizzer wrote:
Sun Jun 21, 2020 2:04 pm
Nedsaid, I have great respect for you as a knowledgeable and experienced investor. The question I have is how do you keep up with such a complex portfolio with so many moving parts? Perhaps it's fun to tinker with, but is it worth the trouble? Do you foresee a time in the future when you may simplify the portfolio to make it easier to manage?

Garland Whizzer
Hi Garland, the portfolio really isn't as complex as it appears. Part of the reason it appears complex is that I have most all of my retirement assets with three providers: Fidelity, American Century, and LPL Financial.

I also have to admit that there are a few things that I am not ready to let go of. One of which are individual stocks. Another thing I have not let go of are people that I have invested with for years. Relationships built over many years are hard to let go of. Part of it is that this is one of the few ways that I can express any sort of creativity or uniqueness in life. In the work world, so much emphasis on efficiency and standardization, you pretty much copy what successful people do, not much room anymore for individuality or creativity. You are sort of a cog in the wheel of progress. In modern culture, lots of pressure to conform to norms. Don't see so much of the colorful characters that I remember from the past, everyone is standardized now, an every man or an every woman. Nowadays, if you have a contrary opinion, you are just an oddball.

At American Century, I have really only three funds:

Private Client Group Cautious Portfolio (similar to One Choice Conservative) The cautious portfolio has a number of funds and ETFs but I don't control how this is invested or managed.
Fidelity Total Stock Market
Fidelity ex-US Stock Index

At Fidelity, I have a Paul Merriman type of Portfolio in mostly low-cost Index funds and ETFs. It was all in mutual funds when it was a workplace savings plan but was able to buy ETFs here once I rolled it over into a rollover IRA. If I was starting out today, this is probably how I would invest all of my retirement money.

I have a left over Variable Annuity which is now at Fidelity, it is invested in a Taylor Larimore 3 fund portfolio. Also have a smaller leftover PERS Portfolio that is a 2 fund portfolio, a World Stock Index and a US Bond Index. Also have a left over Cash Balance Retirement fund. I am considering annuitizing the Variable Annuity, the Cash Balance Pension, and perhaps the small PERS account upon retirement. Still entertaining the idea of rolling funds into PERS for a lifetime annuity, probably would get a better rate here than with a commercial annuity, one reason I haven't rolled this over.

At LPL Financial, my Brokerage IRA is over 80% stocks, this is where my Individual Stocks reside. Most of the complexity is here. The individual stocks really are a Growth and Income portfolio and they have roughly matched the Vanguard Value Index over the last 15 years. I have a few mutual funds here and a few ETFs. The ETFs here were purchased to further diversify my overall portfolio with Small Value, Real Estate, Micro-Cap, and International Mid/Small-Cap. I purchased things here that were really not accessible in other accounts. This portfolio is more of a mish-mash in itself but has things here to balance out the other accounts. I could sell a bunch of stuff here and boil it down to maybe 8 or so ETFs. I could liquidate the legacy mutual funds that I hold here.

I have a one-fund ROTH IRA portfolio with LPL Financial.

I could simplify by selling my individual stocks and buying a Value Index or Vanguard's High Dividend Index. These indexes contain the types of stocks that I like to own anyway.

Pretty much, I am invested this way because that is the way I like it. I have a lot of interests and this shows in my selection of investments. Lots of moving parts but I have had no trouble keeping track of it. I don't mind spending the time doing this. I am down to three main providers and a couple of minor ones. This has been enjoyable exercise for me but at whatever point I don't want to do this anymore maybe turning this over to a portfolio service or a Target Risk fund. Been doing this for years, it doesn't bug me a bit. The record keeping in Quicken is what has taken the time. I suppose you could say that I have a lot of lab experiments in my portfolio.

So I know that I have gotten criticism for this. One of the dangers of putting it all out there for folks to see. On the other hand, I have gained a lot of knowledge from having a variety of investments. I know what works and what doesn't.

If I was starting now, I probably would just have it all at Vanguard if I wanted a simpler portfolio or go to a discount brokerage to set up a factor tilted portfolio. But I started back in a different era. Yes, I do see a time where I will simplify all of this. Don't know when. I have been looking for someone to partner with to manage this for me in the future.
Last edited by nedsaid on Sun Jun 21, 2020 5:20 pm, edited 5 times in total.
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Re: How Do You Like My New 'Doo

Post by nedsaid » Sun Jun 21, 2020 4:57 pm

Let's review why I started this thread in the first place.

1) Since I give lots of advice here, it is only fair that people see what I am doing myself. It provides transparency.

2) It is for me as much as it is for others. I put a lot of thought and effort into this analysis and it helps clarify my own thinking by putting it into writing. You can see the thought process by which I invest.

3) I want to educate people about the various tools, particularly at Morningstar, that help people evaluate their own portfolio construction and their own investment performance. This thread has taught people how to calculate their own returns. There is a calculator online that calculates Compound Annual Growth rate, Quicken calculates Internal Rate of Return, Triceratop provided a worksheet to help calculate investment returns. I have manually calculated Growth of $10,000 and CAGR on an Excel spreadsheet. Morningstar has lots of tools including Portfolio X-Ray. I lot of what I do here is teaching people how to use the tools. There are other tools out there including Portfolio Visualizer.

4) This thread has been a place where I can gather my best thoughts regarding investor. Here I have posted my Investment Policy Statement, the Nedsaid model portfolio, my thoughts regarding Advisors, Larry Swedroe's thoughts on measuring portfolios vs benchmarks and the dangers of resulting. Sort of a place I can put everything in one place. If for some reason that someone wants to know how I feel about investment topics, they could find it all here.

5) I wanted this to be sort of a real life investing laboratory or sort of a reality show. Real money invested by a real person posting his real investing results. What I have posted hasn't always put me in the best light, it has showed that I am very human with my set of foibles. Hopefully people can learn from this even if it might be an example of what not to do.

Even if no one ever reads this thread again or ever comments on anything I say here, putting my thoughts in this thread has been a big help to me. It has really clarified some issues for me. Shoot, it might be just a vanity project. If this does good for someone then it is worth the effort.
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