How Do You Like My New 'Doo

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WanderingDoc
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Re: How Do You Like My New 'Doo

Post by WanderingDoc » Thu Jul 12, 2018 10:00 pm

snarlyjack wrote:
Sun Dec 31, 2017 10:39 pm
Nedsaid,

Being a fellow value investor & dividend investor.

Every retired person I know (Mother, Aunts, Uncles, Grandparents)
are all concerned about income. Social Security (monthly income) &
dividends (quartely income) keep the income coming in.

If you have ($300,000.) & put that into VHDYX at 3%
dividend that would be an extra $9000. a year +
social security. Especially if you could do it in a IRA.

In my mind your coming to the point in life that your migrating
from a growth portfolio to a income portfolio. Actually a
income portfolio is very exciting.

When I think of Warren Buffett, Kevin O'Leary, Ronald Read & others,
I think of huge income dividend paying funds.
Everyone of these investors are millionaires or billionaires.
In my fund VHDYX I received dividends plus still made 16.37% this year.
You can't live on $9000 per year.

Take that same $300K and buy a $1.2M 24-unit building, now your 'dividend' is a cool $110K per year (that you legally paid zero taxes on after deducting expenses and depreciation).
I'm not looking to get rich quick (stocks), I'm not looking to get rich slow (indexing), I'm looking to get rich, for sure (real estate) | Don't wait to buy real estate. Buy real estate.. and wait.

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nedsaid
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Re: How Do You Like My New 'Doo

Post by nedsaid » Fri Jul 13, 2018 9:42 am

WanderingDoc wrote:
Thu Jul 12, 2018 10:00 pm


You can't live on $9000 per year.

Take that same $300K and buy a $1.2M 24-unit building, now your 'dividend' is a cool $110K per year (that you legally paid zero taxes on after deducting expenses and depreciation).
My understanding is that a landlord's cash return on real estate is about 6% a year. There is also the use of leverage which boosts returns too, that is if real estate prices keep going up. Getting $110K tax free per year from a $1.2 million building seems pretty optimistic to me. Not saying it isn't possible but I have family members who have done real estate investment with varying degrees of success. In the case of a couple that were successful with it, there was an awful lot of "sweat equity" and one spouse did all the recordkeeping. Real estate is not without risk. It also helps a lot if you can buy in at favorable prices. I have also seen leverage go the other way, investors who got caught in the 2008-2009 financial crisis that had to declare bankruptcy. You have to give yourself margin for error and a cash reserve really helps.

You do make a good point that retirees will need a total return approach to their portfolios, harvesting both income and capital gains to live of off. I suspect that most Boglehead portfolios yield about 2% or so, hardly the stuff of caviar dreams and champagne wishes. Most will need to harvest capital gains too.
A fool and his money are good for business.

WanderingDoc
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Re: How Do You Like My New 'Doo

Post by WanderingDoc » Fri Jul 13, 2018 11:54 am

nedsaid wrote:
Fri Jul 13, 2018 9:42 am
WanderingDoc wrote:
Thu Jul 12, 2018 10:00 pm


You can't live on $9000 per year.

Take that same $300K and buy a $1.2M 24-unit building, now your 'dividend' is a cool $110K per year (that you legally paid zero taxes on after deducting expenses and depreciation).
My understanding is that a landlord's cash return on real estate is about 6% a year. There is also the use of leverage which boosts returns too, that is if real estate prices keep going up. Getting $110K tax free per year from a $1.2 million building seems pretty optimistic to me. Not saying it isn't possible but I have family members who have done real estate investment with varying degrees of success. In the case of a couple that were successful with it, there was an awful lot of "sweat equity" and one spouse did all the recordkeeping. Real estate is not without risk. It also helps a lot if you can buy in at favorable prices. I have also seen leverage go the other way, investors who got caught in the 2008-2009 financial crisis that had to declare bankruptcy. You have to give yourself margin for error and a cash reserve really helps.

You do make a good point that retirees will need a total return approach to their portfolios, harvesting both income and capital gains to live of off. I suspect that most Boglehead portfolios yield about 2% or so, hardly the stuff of caviar dreams and champagne wishes. Most will need to harvest capital gains too.
Institutional quality deals yield 6%. They are also in Class A locations and appreciate quite a bit. A decent deal that's well positioned would yield 15%+ on cash all day.

Your last paragraph made me crack up! Totally agree.
I'm not looking to get rich quick (stocks), I'm not looking to get rich slow (indexing), I'm looking to get rich, for sure (real estate) | Don't wait to buy real estate. Buy real estate.. and wait.

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nedsaid
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Re: How Do You Like My New 'Doo

Post by nedsaid » Sun Aug 05, 2018 4:51 pm

A new project on my portfolio. I want to take a look at holding periods. As you can see, I have held some of these for a long time. American Century Heritage and International Growth since November 1992. These are my top 21 investments

1. Fidelity® Total Market Index Premium. . . .March 1999.
2. American Century Diversified Bond Inv. . . . November 2001.
3. Vanguard Total Bond Market Idx . . . . . . . . ETF July 2015 Fund December 2012
4. Providence Core Retire. . . . . . . . . . . . . . March 1999.
5. American Century Inflation Adjs Bond Inv. . August 2003.
6. Vanguard Small-Cap Value ETF. . . . . . . . . October 2008.
7. American Century International Gr Inv. . . . November 1992.
8. Fidelity® GNMA. . . . . . . . . . . . . . . . . . . March 1999.
9. Vanguard Inst Target Date 2023. . . . . . . . July 2018 (replaced Fidelity 2025 fund)
10. iShares Core S&P Small-Cap ETF. . . . . . . September 2004
11. Fidelity® International Index Instl. . . . . . December 2011
12. Templeton Foreign A. . . . . . . . . . . . . . .December 1995
13. Weyerhaeuser Co. . . . . . . . . . . . . . . . . February 2002 Plum Creek Shares 1989
14. American Century International Opps Inv. .April 2015
15. American Funds Capital Income Bldr A. . . .February 2007
16. Fidelity® Inflation-Prot Bd Idx Prem. . . . . February 2017 (replaced Vanguard TIPS fund)
17. Fidelity® Emerging Markets Idx Premium. .February 2017 (replaced Wells Fargo EM)
18. American Funds Europacific Growth R5. . .June 2016 Replaced Fidelity Div International
19. Boeing Co. . . . . . . . . . . . . . . . . . . . . . August 2009
20. American Century Heritage Inv. . . . . . . . November 1992
21. American Century International Bond Inv. October 2006

Top 10 stocks individually held

1. Weyerhaeuser Co. . . . . . .February 2002 Plum Creek Shares 1989
2. Boeing Co. . . . . . . . . . . .August 2009
3. Walt Disney Co. . . . . . . . October 2001
4. Microsoft Corp. . . . . . . . March 2006
5. Exxon Mobil Corp. . . . . . November 1999
6. Johnson & Johnson. . . . . September 2004
7. JPMorgan Chase & Co. . . July 2015
8. Pfizer Inc. . . . . . . . . . .January 2003
9. US Bancorp. . . . . . . . . .May 1999
10. Applied Materials Inc. . .August 2012

Big winners I have in the stock portfolio are Weyerhauser/Plum Creek, Boeing,
Walt Disney, Microsoft, Exxon Mobil, and Applied Materials.

AIG, Pfizer, and our Lady of Perpetual Disappointment General Electric, and now Ford are
the Four Horsemen of Underperformance. Microsoft was kicked out of the "anti-index" as it has
had recent great performance. Comtech was an addition but also has performed better lately so it in turn has been replaced by Ford. So it is AIG, Ford, GE, and Pfizer. I owned Ford about the time with its problems with the Explorer or nicknamed Exploder and later sold. Now it is back. So it has earned its place in the anti-index.

My former workplace savings plan replaced the Fidelity Freedom 2025 fund with the Vanguard version. I am pleased with the switch though Fidelity Freedom did a good job.
A fool and his money are good for business.

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nedsaid
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Re: How Do You Like My New 'Doo

Post by nedsaid » Thu Sep 20, 2018 8:43 pm

On September 18th, I did another round of mild portfolio rebalancing from stocks to bonds, a bit over 1% of my portfolio.

Right now, I have the following asset allocation in my portfolio:

US Stocks 47.19%
International Stocks 18.37%
Bonds 30.17%
Cash 3.56%
Other 0.16%

This is a continuation of my program of mild rebalancing from stocks to bonds since July 2013. So I have gone from 69% stocks to 65.56% today. Had I done nothing, my guess is that I would be at about 76% stocks now.
A fool and his money are good for business.

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nedsaid
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Re: How Do You Like My New 'Doo

Post by nedsaid » Tue Oct 02, 2018 12:24 am

Today was a busy day for me. I am following my Independent Broker to his new firm, so I signed a couple of rollover forms today.

I checked my former workplace savings plan and found they were starting to charge maintenance and bookkeeping fees on my account, so I started the process of rolling that workplace savings plan and yet another smaller one to a rollover IRA. Pretty much staying with the same firm, the savings plans were at Fidelity and just rolling to a Fidelity IRA.

I intend to make use of Fidelity's wide choices, mostly all Fidelity index funds and a couple of ETFs that I can purchase with no fees. After the rollover, I should be able to drive down my expense ratios even lower.

Next project is to roll another small workplace savings plan, a cash balance pension, and a variable annuity to Fidelity.

I want to consolidate to three vendors: my independent broker, Fidelity, and American Century. Time to gather scattered accounts and consolidate. I was going to wait until January to do this but
I thought it would be good to consolidate now.

What got me motivated was that my old workplace savings plan kept changing investment choices, and kept changing share classes. Seeing fees charged to my account for bookkeeping and account fees was the last straw. I want a more stable portfolio, got fed up with having to make changes and having to move stuff to the brokerage window to keep in asset classes I wanted.

Fidelity is investment heaven, lots of good stuff you can buy with no fees. Excellent funds and ETFs. I am just amazed. When I called them today, I found their service to be excellent.
A fool and his money are good for business.

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nedsaid
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Re: How Do You Like My New 'Doo

Post by nedsaid » Wed Oct 03, 2018 5:31 pm

Did some shifting as I consolidated a couple of workplace savings plans at Fidelity into a
Fidelity Rollover IRA. So Vanguard funds that were part of the workplace savings plans
got sold and Fidelity Index Funds purchased to replace.

EuroPacific Growth went, I was unwilling to repurchase as a higher expense F-1 class. So I added to Fidelity International Index as well as adding to Fidelity Emerging Markets Index. I replaced Templeton Global Bond with iShares Core International Aggregate Bond Index ETF. I purchased iShares S&P Small-Cap 600 Value ETF as a replacement for Allianz NFJ Small-Cap Value. Tomorrow, I will purchase Wisdom Tree International Small-Cap Dividend to give me some International Small-Cap Value exposure.

I replaced Vanguard Total Bond Market Index Institutional Plus with Fidelity US Bond Index Institutional.

The Vanguard 2025 Retirement Target Date fund was replaced by the Fidelity Freedom Index 2025 version.

So pretty much, my retirement portfolio is becoming much more a Fidelity portfolio.

1. Fidelity® Total Market Index Premium. . . . 12.17%
2. American Century Diversified Bond Inv. . . . 6.56%
3. Providence Core Retire. . . . . . . . . . . . . . 4.22%
4. Fidelity US Bond Index Institutional. . . . . . 4.12%
5. American Century Inflation Adjs Bond Inv. . 3.95%
6. Vanguard Small-Cap Value ETF. . . . . . . . . 3.00%
7. Fidelity® International Index Instl. . . . . . . 2.89%
8. Fidelity Freedom Index 2025 Investor. . . . . 2.78%
9. American Century International Gr Inv. . . . 2.77%
10. Fidelity® GNMA. . . . . . . . . . . . . . . . . . . 2.73%
11. iShares Core S&P Small-Cap ETF. . . . . . . 2.70%
12. Templeton Foreign A. . . . . . . . . . . . . . . 2.05%
13. Vanguard Total Bond Market Index ETF. . . 1.99%
14. Fidelity® Emerging Markets Idx Premium. . 1.93%
15. American Century International Opps Inv. . 1.74%
16. Boeing Co. . . . . . . . . . . . . . . . . . . . . . . 1.71%
15. American Funds Capital Income Bldr A. . . . 1.69%
16. Weyerhaeuser Co. . . . . . . . . . . . . . . . . 1.69%
17. Fidelity® Inflation-Prot Bd Idx Prem. . . . . 1.65%
18. American Century Value Investor. . . . . . . 1.33%
19. American Century Heritage Inv. . . . . . . . 1.33%
20. American Century International Bond Inv. 1.32%

The percentages are the holding's percentage of the total retirement portfolio.

So some shifting around going on. I was happy with what I had before but my former workplace
savings plan kept changing investment options, share classes, and started charging fees. I got fed up with the lack of stability and rolled that savings plan and a much smaller one into the rollover IRA.
A fool and his money are good for business.

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linenfort
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Re: How Do You Like My New 'Doo

Post by linenfort » Tue Oct 23, 2018 3:25 pm

Just curious: any McDonald's shares?

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nedsaid
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Re: How Do You Like My New 'Doo

Post by nedsaid » Tue Oct 23, 2018 11:31 pm

linenfort wrote:
Tue Oct 23, 2018 3:25 pm
Just curious: any McDonald's shares?
Yes, I hold McDonald's shares in a DRIP plan and they have done well. Reinvesting the dividends. I saw on the Nightly Business Report that MCD did well today with good earnings from overseas. I hold 18 stocks in my Brokerage IRA and 4 stocks in DRIP plans.
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linenfort
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Re: How Do You Like My New 'Doo

Post by linenfort » Wed Oct 24, 2018 7:33 am

Thank you. I remember being very excited about DRIPs when I first heard about them.

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nedsaid
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Re: How Do You Like My New 'Doo

Post by nedsaid » Wed Oct 24, 2018 11:51 pm

linenfort wrote:
Wed Oct 24, 2018 7:33 am
Thank you. I remember being very excited about DRIPs when I first heard about them.
The problem with DRIPs, at least until the Feds required brokers to track tax basis, was the recordkeeping. Keeping track of those reinvested dividends. Not a bad way to invest.
A fool and his money are good for business.

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nedsaid
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Re: How Do You Like My New 'Doo

Post by nedsaid » Mon Dec 31, 2018 1:12 pm

Thought I would update this as of 12/31/2018. Updated my recordkeeping yesterday in Quicken, adding in all the capital gains and dividend reinvestments into the program. It was a big task. The portfolio really hasn't changed since the last time I posted here in detail except that the markets have had a tough year. It appears that the retirement portfolio losses will be 8% to 9% instead of the 6% to 7% that I hoped for. My individual stocks were a drag, it appears they will lose about 16% this year from the January highs. Value had another bad year.

My broker switched companies, and by accident he set all of my stocks and ETFs on automatic reinvestment. I was disappointed when I saw that but decided it was okay.

At some point, I will post final numbers for 2018 but won't do all the analysis I did in 2017. I will just shortcut all of that and blame he factors. :wink:

Asset allocation is 44% US Stocks, 17% International Stocks, 36% Bonds, and 3% cash. So the market has de-risked for me, my stock allocation has fallen from 65%-66% down to 61%. International Stocks are almost 28% of my stocks. International Bonds are 5.6% of my bonds and cash.

Stock Stylebox is as follows:

22 24 20
06 06 06
05 05 05

My Value tilts have pretty much gone away.

Average expense ratio for mutual funds and ETFs are about 0.42%.

I have noticed that the order of my top 10 individual stocks has changed.

1. Boeing Company.
2. Weyerhauser Company.
3. Walt Disney Company.
4. Microsoft Corporation.
5. Johnson & Johnson.
6. Exxon Mobil Corporation.
7. JP Morgan and Chase Company.
8. Pfizer Incorporated.
9. US Bancorp.
10. American National Life Insurance Company.

Applied Materials dropped out of the top 10 and is now number 11.
Last edited by nedsaid on Tue Jan 01, 2019 11:19 pm, edited 1 time in total.
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nedsaid
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Re: How Do You Like My New 'Doo

Post by nedsaid » Tue Jan 01, 2019 4:51 pm

Okay, here are my performance numbers for 2018.

Looking at my performance numbers from Quicken, my performance for 2018 was -6.35%. Not as bad as I had feared. As you can see from my last post, my Value tilts went away, so I can't blame that.


So let's benchmark this. I had 47% US Stocks, 18% International Stocks, 35% Bonds and cash before the correction/mini-bear market. Fidelity Total Stock Market Index was down -5.28%. Fidelity US Bond Index was up 0.01%. Vanguard Total International Index was down -14.42%.

0.47 x -5.28=-2.482% US Stocks

0.18 x -14.42=-2.596% International Stocks

0.35 x .01=0.003% US Bonds

Blended Return=-5.075%

Fidelity Freedom Index 2025 returned -4.51%. Vanguard LifeStrategy Moderate Growth came in at -4.91%. American Century One Choice Moderate did -6.66%.

Ouch, I trailed the bogey again in 2018.

Quick analysis here. Individual stocks in my retirement accounts were down -7.28% vs. the US Total Stock Market Index at -5.28%. A big part of the underperformance was Weyerhauser which was down -34.26. That was a drag. Large and Mid-Value were down more than US Total Stock Market. US Small Value was a drag VBR down -12.22. International Mid/Small-Cap was a drag GWX down -19.11. US Small-Cap was a drag IJR down -8.43%. Also had International Bonds and that was a drag as well.

I noticed that American Century Diversified Bond was down -1.46% compared to up 0.01% for Fidelity US Bond Index. Somebody guessed wrong here. American Century has Inflation Adjusted Bond which was down -2.51% vs -1.37% for Fidelity Inflation Protected Bond Index. Somebody guessed wrong here too. My guess there was a goof picking maturities. American Century International Bond down -3.97%. Mostly currency. Uncharacteristic for American Century, they have been very good fixed income managers. So active bond drag here too.

By account, American Century IRA down -7.26%. Fidelity Rollover IRA is down -5.49%, Brokerage IRA down -8.26%. Keep in mind Brokerage IRA is my most stock heavy account probably 82% to 86% range during the year.

So I don't know. Just blame the factors and the fixed income guys at American Century and be done with it.
A fool and his money are good for business.

Fishing50
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Re: How Do You Like My New 'Doo

Post by Fishing50 » Wed Jan 02, 2019 6:44 am

Nedsaid-
Your detailed analysis has inspired active consolidation from individual stocks to broad index funds. I track our portfolio in Quicken and Morningstar also, and reading your post over the years has satiated my desire to do my own detailed personal performance analysis. My 2004 bet on Altria Group obviously paid off, but it was certainly a performance drag in 2018. I'm not sure I wan't to know how bad some decisions were...

In 2016 we tax gain harvested, spin off positions in Kraft, Mondelez, Broadridge Financial, and CDK Global.
In 2017 we tax gain harvested / tax loss harvested 2 horsemen of under performance Microsoft and GE with 18 yr holding periods. I sold Microsoft early in the year, so we missed some out performance against the index. I got out of GE about even including reinvested dividends, before it totally collapsed. GE trailing performance in 2018 would have consumed any MSFT over performance in 2017, so we're happy with those decisions.
In 2018 we sold Exxon Mobile about even including reinvested dividends after a decade of holding it which it was clobbered by the index.

Now 8% of our portfolio consists of:
Automatic Data Processing/+12.5 YTD
Walmart/-5.2% YTD
Phillip Morris/-31.5 YTD (down 3 spots, from what I expected was an insurmountable lead)
Coca Cola/+6.6% YTD
Altria/-27% YTD

I've kept 5% Emerging Markets allocation in our Roth IRA at T. Rowe Price Emerging Markets Stock (PRMSX) over Vanguard Emerging Markets Stock Index (VEMAX). I like the overweight in China/Asia which Morningstar Xray warns me against each year.
In 2018 PRSMX trailed by 1.5%, but in 2017 it bested by 11.2% and bested again in 2016 by .2%
Trade war be damned, we're holding PRMSX...China a large domestic population.

I'm adding Vanguard Small Cap Index (VSMAX) in Roth IRA in addition to S Fund in TSP to counter the complicating effects of individual stocks.

Thanks for your post, you've helped us transition into retirement from 100% equities in 2015. We're 2 years from Fishing at 50yrs old after military retirement, so our taxable account will provide additional income prior to Roth IRA or TSP availability. Our most recent pay raise has us solidly in the 22% tax bracket, so there will be no more tax gain harvesting opportunities.

There just might be the start of my own portfolio post from here... :sharebeer
It's perfectly legal, go ask the IRS, they'll say the same thing. I actually feel stupid telling you this, I'm sure you would've investigated the matter yourself. Andy Dufresne

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nedsaid
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Re: How Do You Like My New 'Doo

Post by nedsaid » Wed Jan 02, 2019 11:01 am

Fishing50, thanks for your response. This project is an unusual one, it is a way of providing transparency to anyone who wonders if I know what I am talking about. After all, I have dispensed a lot of advice here. I also saw it as a way of clarifying my own thinking about my own investments. Also wanted this to be a place where people could learn from my mistakes. I also try to help people understand how to monitor their own portfolio and to perform their own analysis. Financial advisors don't always do this for their clients, though they should.

Often I wondered if this was just a vanity project. Something to boost my own ego, but judging from my investment results in 2017 and 2018, actually left me feeling pretty humble. My portfolio tilts did not seem to help at all as we have been in a Large Growth stage of the stock market for a decade now. Good to know that this thread has helped to inspire at least one person to make changes in their portfolio and to help plan for their upcoming retirement. Anyway, thanks for reading. I might make detailed comments about your post later on.
A fool and his money are good for business.

gtwhitegold
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Re: How Do You Like My New 'Doo

Post by gtwhitegold » Wed Jan 02, 2019 6:12 pm

I personally have appreciated your detailed reviews of your own portfolio as well Nedsaid. I also am a believer in quantitative methods, specifically quality and value like you have tried to target with your portfolio. I have taken a different view from some other readers though. I still believe that quantitative methods will win out over time.


I also commend you on your patience and success in stock selection overall. I would probably lose interest after a while or other things would happen to demand my attention.

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nedsaid
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Re: How Do You Like My New 'Doo

Post by nedsaid » Wed Jan 02, 2019 9:40 pm

gtwhitegold wrote:
Wed Jan 02, 2019 6:12 pm
I personally have appreciated your detailed reviews of your own portfolio as well Nedsaid. I also am a believer in quantitative methods, specifically quality and value like you have tried to target with your portfolio. I have taken a different view from some other readers though. I still believe that quantitative methods will win out over time.


I also commend you on your patience and success in stock selection overall. I would probably lose interest after a while or other things would happen to demand my attention.
I remember meeting with the Ameriprise advisor and him reviewing my investments. He really liked what I was doing particularly with my accounts at American Century Investments. Those accounts hit the NW Quadrant of the Efficient Frontier which meant I was getting above benchmark returns with less risk, the sweet spot of investing. American Century also got an award for being the best large investment company. Anywho, I looked incredibly brilliant. I was the man.

Here I am 11 or so years later analyzing my results for 2017 and 2018 and I feel like a chump. It has been very hard to beat the simple 3 fund portfolio. So I have gone from thinking that I really was great at investing to wondering what the heck I was thinking. But it has taught me humility and that is a good thing. Not like back in 2007 when Value and International were both beating the pants off the S&P 500. The tilted portfolios haven't been doing so well. American Century did okay in 2017 but just didn't have a good year in 2018 save for a few of their Large Cap Aggressive Growth funds. Not a good year for their flagship bond funds or for their Quantitative Funds (optimized indexing). The fake indexes did worse than the real ones.

Another thing I wonder about is if the Small and Value premiums got so popular that they have pushed Small and Value stocks to the point where they are too expensive compared to historical expectations. In other words, cheap but not as cheap as you think. Conversely, perhaps Large Growth is expensive but not as expensive as everyone thinks. Maybe the ultimate contrarian bet is to just go with the flow and buy and hold those Large Growth stocks. Maybe the Growth Indexes are better values than the Value indexes.

As far as my stock picking, it is pretty much buying good stuff at good prices and being to lazy to sell. I have about matched the market averages when most folks who pick stocks trail the averages by 4% a year. The underperformance comes from chasing hot investments and doing too much trading. So maybe, laziness is a virtue when it comes to owning individual stocks, particularly if they represent solid companies.
A fool and his money are good for business.

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nedsaid
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Re: How Do You Like My New 'Doo

Post by nedsaid » Sun Feb 24, 2019 8:08 pm

Checking back in after the recent correction and recovery in the markets. My retirement portfolio is still about 3% below the highs of January 2018.

US Stocks 46.26%
International Stocks 17.62%
Bonds 33.85%
Cash 2.58%
Other -0.30%

So my International Stocks are about 27.5% of my stocks. A 64% stocks/36% bonds and cash portfolio.
Morningstar stylebox for stocks is:

22 26 17
06 07 07
05 06 05

The Value tilt mostly went away, though I have 36% Mid-Cap/Small-Cap Stocks compared to 24% for Total Market. Still have a Mid/Small-Cap tilt.

15 year performance of my Individual stocks is 7.57% vs. Vanguard Total Stock Market Index Admiral at 8.66%. Vanguard Value Index Admiral returned 8.10%. So I am trailing the broad market by 1.09% and the Value Index by 0.53%. Stylebox for those retirement account stocks is

30 54 10
04 00 00
01 02 00

So these stocks are not too valuey right now. Forward P/E is 16.52 and yield of 2.75%.

Not much change in the portfolio.
A fool and his money are good for business.

HAWK23
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Re: How Do You Like My New 'Doo

Post by HAWK23 » Sun Feb 24, 2019 9:17 pm

nedsaid wrote:
Mon Dec 31, 2018 1:12 pm
Thought I would update this as of 12/31/2018. Updated my recordkeeping yesterday in Quicken, adding in all the capital gains and dividend reinvestments into the program. It was a big task. The portfolio really hasn't changed since the last time I posted here in detail except that the markets have had a tough year. It appears that the retirement portfolio losses will be 8% to 9% instead of the 6% to 7% that I hoped for. My individual stocks were a drag, it appears they will lose about 16% this year from the January highs. Value had another bad year.

My broker switched companies, and by accident he set all of my stocks and ETFs on automatic reinvestment. I was disappointed when I saw that but decided it was okay.

At some point, I will post final numbers for 2018 but won't do all the analysis I did in 2017. I will just shortcut all of that and blame he factors. :wink:

Asset allocation is 44% US Stocks, 17% International Stocks, 36% Bonds, and 3% cash. So the market has de-risked for me, my stock allocation has fallen from 65%-66% down to 61%. International Stocks are almost 28% of my stocks. International Bonds are 5.6% of my bonds and cash.

Stock Stylebox is as follows:

22 24 20
06 06 06
05 05 05

My Value tilts have pretty much gone away.

Average expense ratio for mutual funds and ETFs are about 0.42%.

I have noticed that the order of my top 10 individual stocks has changed.

1. Boeing Company.
2. Weyerhauser Company.
3. Walt Disney Company.
4. Microsoft Corporation.
5. Johnson & Johnson.
6. Exxon Mobil Corporation.
7. JP Morgan and Chase Company.
8. Pfizer Incorporated.
9. US Bancorp.
10. American National Life Insurance Company.

Applied Materials dropped out of the top 10 and is now number 11.
Ned - I appreciate your posts and comments as well. I know we've talked a bit before on PM since you hold some individual stocks. Always interesting comparing/contrasting. 2-3 years ago I was almost 100% individual stocks. After finding this place I've managed to bring it down to ~25% individual stocks. I'm aiming to get it down to about 10% of my portfolio in the next 2 years or so. In the meantime, my individual stock portfolio has done pretty well. I just recently sold off my MMM and JPM. Here are my updated individual holdings from my last PM discussion with you:

Apple (AAPL)................. Technology...... 2.56%
Johnson & Johnson (JNJ).... Healthcare....... 2.53%
United Health Group (UNH)... Healthcare....... 2.47%
Microsoft (MSFT)............ Technology...... 2.47%
Boeing (BA).................. Industrials...... 2.36%
Pepsi (PEP)................... Consumer Def..... 2.16%
Visa (V)....................... Financials....... 2.16%
Google (GOOGL)............. Technology...... 2.07%
Berkshire Hathaway (BRK-B) Financials....... 1.87%
Home Depot (HD)........... Consumer Cyc.... 1.78%
Disney (DIS).................. Consumer Cyc... 1.71%
Exxon Mobile (XOM)......... Energy........... 1.45%
Verizon (VZ).................. Communications... 1.05%

Boeing and Home Depot have been on a tear as of late!

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Re: How Do You Like My New 'Doo

Post by nedsaid » Sun Feb 24, 2019 11:26 pm

HAWK23 wrote:
Sun Feb 24, 2019 9:17 pm

Ned - I appreciate your posts and comments as well. I know we've talked a bit before on PM since you hold some individual stocks. Always interesting comparing/contrasting. 2-3 years ago I was almost 100% individual stocks. After finding this place I've managed to bring it down to ~25% individual stocks. I'm aiming to get it down to about 10% of my portfolio in the next 2 years or so. In the meantime, my individual stock portfolio has done pretty well. I just recently sold off my MMM and JPM. Here are my updated individual holdings from my last PM discussion with you:

Apple (AAPL)................. Technology...... 2.56%
Johnson & Johnson (JNJ).... Healthcare....... 2.53%
United Health Group (UNH)... Healthcare....... 2.47%
Microsoft (MSFT)............ Technology...... 2.47%
Boeing (BA).................. Industrials...... 2.36%
Pepsi (PEP)................... Consumer Def..... 2.16%
Visa (V)....................... Financials....... 2.16%
Google (GOOGL)............. Technology...... 2.07%
Berkshire Hathaway (BRK-B) Financials....... 1.87%
Home Depot (HD)........... Consumer Cyc.... 1.78%
Disney (DIS).................. Consumer Cyc... 1.71%
Exxon Mobile (XOM)......... Energy........... 1.45%
Verizon (VZ).................. Communications... 1.05%

Boeing and Home Depot have been on a tear as of late!
See some things in common with you. We share Johnson & Johnson, Microsoft, Boeing, Disney, and Exxon-Mobil in common. I still own JP Morgan. I am just a guy who doesn't chase hot stocks, hence my weightings of the FAANG stocks (Facebook, Apple, Amazon, Netflix, and Google) are below market weights. Probably this has weighted down my portfolio returns. I like the steady as she goes type of stocks with a bit higher than average dividend yields.

At one time, individual stocks were 45% of my portfolio (early 2000) but worked that down to 12-13% today. I certainly get indexing, I have been indexing more and more of my money. I also have driven down the average expense ratio of my funds, going from 0.78% down to 0.42% today.

I had a lot of fun with individual stocks but have been a bit of a drag on portfolio performance. I have alternatively trailed and beat the US Total Stock Market index over 15 year periods. Two of my long term favorites, Weyerhauser and Exxon-Mobil, haven't done so well recently and that has been a drag.
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Re: How Do You Like My New 'Doo

Post by Randtor » Mon Feb 25, 2019 11:04 am

Nedsaid, I have seen your name pop up in several threads since I found this forum just a few weeks ago. I am moving from Ameriprise (mostly tax deferred retirement portfolio) to Vanguard, with additional holdings in Fidelity (100% stock equities, only about 15% of my overall total holdings). I have found this thread extremely interesting, informative and educational. I commend you on your desire to keep this going for so long already! It certainly has been helpful to me.
I have been hesitant to get out of the individual stocks I hold in Fidelity because they have done well over the years I have held them. Most have been long term (15-20 years) holds, one just within the past year or so. My current mix is around 40/60 [stocks/bonds] in my portfolio transferring to VG. With my Fidelity holdings it brings it closer to 50/50. Seeing as how I will be 68 next month and considering full retirement within the next 6 months I feel I still need to do some work and have enlisted VG PAS to transition me over and set everything in motion. Even though it has a cost, I will still be saving money as I drop all the fees I was paying to Ameriprise.
Anyway, I have had mixed emotions about transitioning to a more conservative portfolio, and moving from individual stocks to a stock index fund.
BUT... seeing the time and effort you put into your funds, with the excellent knowledge you have in regards to investing, certainly makes it much easier on my thinking! I don't have the knowledge to do what you have done, and figure everything out so well. I am a financial dummy (proven over the past 4 decades of self investing, then professional advisors) so now to VG with some direction provided, will allow me to relax and know I will be ok with 3-6 Index funds as suggested by the VG advisor.
Keep the info flowing here, like me, I am sure there have been a lot of folks reading this thread, but not necessarily commenting. Again, I applaud your continued efforts, and good luck to you as you go down this road!
"Whats done is done, and can't be undone"

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Re: How Do You Like My New 'Doo

Post by nedsaid » Mon Feb 25, 2019 3:25 pm

Randtor wrote:
Mon Feb 25, 2019 11:04 am
Nedsaid, I have seen your name pop up in several threads since I found this forum just a few weeks ago. I am moving from Ameriprise (mostly tax deferred retirement portfolio) to Vanguard, with additional holdings in Fidelity (100% stock equities, only about 15% of my overall total holdings). I have found this thread extremely interesting, informative and educational. I commend you on your desire to keep this going for so long already! It certainly has been helpful to me.

Nedsaid: Congratulations upon leaving Ameriprise. This shows that you have the confidence to make your own financial decisions and not have to rely on an advisor that has conflicts of interest. They offered me pretty decent financial planning and portfolio allocation advice but their products were very expensive, so I did not invest with them. I am about 2/3 self-directed and about 1/3 working with an independent broker. But even with the broker, I make the decisions myself and I keep portfolio turnover low. I also have taken advantage of free retirement projections and portfolio reviews and I learned something each time. My broker doesn't make very much off of me and surprised he hasn't kicked me off, but he is a very nice fellow and says he treats all his clients the same. He has told me that clients who leave their portfolios alone tend to do better than those who constantly tinker. He has evolved from being a stock broker and an American Funds guy to being a fan of ETFs. He still picks stocks but he puts less emphasis on it.


I have been hesitant to get out of the individual stocks I hold in Fidelity because they have done well over the years I have held them. Most have been long term (15-20 years) holds, one just within the past year or so. My current mix is around 40/60 [stocks/bonds] in my portfolio transferring to VG. With my Fidelity holdings it brings it closer to 50/50. Seeing as how I will be 68 next month and considering full retirement within the next 6 months I feel I still need to do some work and have enlisted VG PAS to transition me over and set everything in motion. Even though it has a cost, I will still be saving money as I drop all the fees I was paying to Ameriprise.

Nedsaid: I certainly am not anti-advisor. Vanguard will provide basic and solid advice, ultimately transitioning you to a 4-6 fund portfolio. You can either use VPAS as training wheels and take control of your portfolio at some point or maintain the arrangement. For one thing, it is a guard against cognitive decline and also will be a help if you have a spouse that is clueless about financial matters. I would use this opportunity to learn everything you can from Vanguard and from your advisor there.


Anyway, I have had mixed emotions about transitioning to a more conservative portfolio, and moving from individual stocks to a stock index fund.

Nedsaid: I am a stock guy. Love stocks. But on the other hand, I started investing in 1984, just as one of the biggest bull markets in history was just getting started. So my formative years as an investor were in a rip roaring bull market. That certainly has colored my perspective as an investor.

I have to bow to reality, the reality that I am getting older. I am 59 now and will turn 60 in July. As they say, denial is not a river in Egypt. So kicking and screaming, I have slowly de-risked my portfolio. I am now down to 64% stocks. I probably should be down to 58% or so but I am not enthusiastic about 2% and 3% bond yields. But de-risk I must.


BUT... seeing the time and effort you put into your funds, with the excellent knowledge you have in regards to investing, certainly makes it much easier on my thinking! I don't have the knowledge to do what you have done, and figure everything out so well. I am a financial dummy (proven over the past 4 decades of self investing, then professional advisors) so now to VG with some direction provided, will allow me to relax and know I will be ok with 3-6 Index funds as suggested by the VG advisor.

Nedsaid: I think you will be happier with a simpler portfolio, I have also started a program of simplification. The thing is, you have to please you, and not anonymous avatars on the forum. If you want to keep some individual stocks, feel free, particularly if they have done well. The thing is, it isn't the most efficient way to invest. I have alternately beating the indexes by a hair or trailed them by as much as 1% or so. You need a way to track your returns, your individual stocks might not be doing as well as you think.

I would also caution you to keep the stocks down to a number that you can reasonably follow. 25 is probably the maximum, maybe you can stretch it to 30. I own 22 and use my Morningstar subscription to help me keep up. One person told me he had more than 40 and I wondered aloud about the back strain from carrying all the annual reports to the recycle bin. Not overpaying for your stocks, long holding periods, buying quality (hopefully) at a discount, and patience are keys for relative success. I say relative because doing this you will fare better than most individuals doing this but will likely still trail the indexes a bit. Constant trading is what kills a portfolio because the odds are 2:1 or even 3:1 that what you sell will outperform what you buy to replace. That is the dreaded "Nedsaid effect", and that just kills portfolios.


Keep the info flowing here, like me, I am sure there have been a lot of folks reading this thread, but not necessarily commenting. Again, I applaud your continued efforts, and good luck to you as you go down this road!

Nedsaid: I am thrilled that somebody reads this. Good to know that someone has learned something. If you had talked to me in 2007, I was the man! My various portfolio tilts had worked brilliantly and I prided myself as a very good investor. The last 11 years or so have been humbling, Value has trailed the market and I have trailed a simple Taylor Larimore 3 fund portfolio. Results have been good but less than a simpler approach. But I have stuck to my guns and hopefully my various bets will pay off again. But I have been eating some humble pie around here.

This thread is sort of a real life case study of a real life investor investing real life money. I have reported my investment results the best I could. So hopefully an investor can learn a lot from this thread: start by writing an investment policy statement, learning how to allocate a portfolio, use analysis tools available on the internet, learn how to calculate returns, and what he or she should expect from an advisor.
Last edited by nedsaid on Mon Feb 25, 2019 3:55 pm, edited 3 times in total.
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Re: How Do You Like My New 'Doo

Post by SGM » Mon Feb 25, 2019 3:43 pm

I am very much into indexing and my mutual funds have very low expenses. Once I was 100% in individual stocks. I won't sell all of them because of the large capital gains, but I have cut back so that no individual stock is too large a part of my portfolio. I still own several of the individual stocks mentioned in the prior posts. When I first had Vanguard analyze my portfolio I think my total ER averaged 0.01 as reflected by the large amount of individual stock. Interestingly Vanguard did not suggest selling all my individual stock.


I have to be mindful of taxes on capital gains even 9 years after discovering Bogleheads. I sell a little bit from taxable each year, but have cut back from that as I don't think having some individual stock in my portfolio is going to harm me financially as much as greatly increasing my capital gains tax will.

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Re: How Do You Like My New 'Doo

Post by nedsaid » Mon Feb 25, 2019 4:17 pm

SGM wrote:
Mon Feb 25, 2019 3:43 pm
I am very much into indexing and my mutual funds have very low expenses. Once I was 100% in individual stocks. I won't sell all of them because of the large capital gains, but I have cut back so that no individual stock is too large a part of my portfolio. I still own several of the individual stocks mentioned in the prior posts. When I first had Vanguard analyze my portfolio I think my total ER averaged 0.01 as reflected by the large amount of individual stock. Interestingly Vanguard did not suggest selling all my individual stock.

Nedsaid: I am a big fan of index funds and the low cost ETFs. Over the last 15 years, I have driven down my expense ratios down from 0.78% down to 0.42%. Too bad I didn't start out with Vanguard or even T. Rowe Price. Instead, I started with 20th Century Investors (now American Century) and Fidelity. American Century was plenty good enough and I was happy to have invested there. I have 4 stocks in a Taxable DRIP plan but all my other individual stocks are in a Brokerage IRA, so not so worried about capital gains.


I have to be mindful of taxes on capital gains even 9 years after discovering Bogleheads. I sell a little bit from taxable each year, but have cut back from that as I don't think having some individual stock in my portfolio is going to harm me financially as much as greatly increasing my capital gains tax will.
A fool and his money are good for business.

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Re: How Do You Like My New 'Doo

Post by Randtor » Tue Feb 26, 2019 5:21 pm

nedsaid wrote:
Mon Feb 25, 2019 3:25 pm

Nedsaid: Congratulations upon leaving Ameriprise. This shows that you have the confidence to make your own financial decisions and not have to rely on an advisor that has conflicts of interest. They offered me pretty decent financial planning and portfolio allocation advice but their products were very expensive, so I did not invest with them.
Exactly. Unfortunately I stayed too long and didn't realize how there fees were so expensive, nor how they really killed us due to loss of compounding


Nedsaid: I certainly am not anti-advisor. Vanguard will provide basic and solid advice, ultimately transitioning you to a 4-6 fund portfolio. You can either use VPAS as training wheels and take control of your portfolio at some point or maintain the arrangement. For one thing, it is a guard against cognitive decline and also will be a help if you have a spouse that is clueless about financial matters. I would use this opportunity to learn everything you can from Vanguard and from your advisor there.

well I don't think I am in decline just yet lol, but my wife is/has been/and always will be clueless about investing. As much as I try to explain, she just sees the "now".


Nedsaid: I am a stock guy. Love stocks. But on the other hand, I started investing in 1984, just as one of the biggest bull markets in history was just getting started. So my formative years as an investor were in a rip roaring bull market. That certainly has colored my perspective as an investor.

I have to bow to reality, the reality that I am getting older. I am 59 now and will turn 60 in July. As they say, denial is not a river in Egypt. So kicking and screaming, I have slowly de-risked my portfolio. I am now down to 64% stocks. I probably should be down to 58% or so but I am not enthusiastic about 2% and 3% bond yields. But de-risk I must.

I invested well in the 80's, went with financial advisors in the mid 90's and gained experience but no money; got smushed in the dot.com bubble burst, turned to a professional advisor in the early 2000's, and now realize I shoulda/woulda/coulda/mighta...

Nedsaid: I think you will be happier with a simpler portfolio, I have also started a program of simplification. The thing is, you have to please you, and not anonymous avatars on the forum. If you want to keep some individual stocks, feel free, particularly if they have done well. The thing is, it isn't the most efficient way to invest. I have alternately beating the indexes by a hair or trailed them by as much as 1% or so. You need a way to track your returns, your individual stocks might not be doing as well as you think.
yes, thats what I was seeing with your thread. My stocks have all been long term holds and are up quite a bit over the years (Ebay, MSFT, PYPL) and now W (initial purchase in 2015, more 10/18) - which just went sky high the past few days (considering selling 50% of my long term shares - but what is better than this?!?)

I would also caution you to keep the stocks down to a number that you can reasonably follow. 25 is probably the maximum, maybe you can stretch it to 30. I own 22 and use my Morningstar subscription to help me keep up. One person told me he had more than 40 and I wondered aloud about the back strain from carrying all the annual reports to the recycle bin.
hahaha!
Not overpaying for your stocks, long holding periods, buying quality (hopefully) at a discount, and patience are keys for relative success. I say relative because doing this you will fare better than most individuals doing this but will likely still trail the indexes a bit. Constant trading is what kills a portfolio because the odds are 2:1 or even 3:1 that what you sell will outperform what you buy to replace. That is the dreaded "Nedsaid effect", and that just kills portfolios.

Yes, I have only 5 in my Fidelity portfolio (100% stocks) and maybe 6-8 in one IRA. Thats more than enough for the present time

Nedsaid: I am thrilled that somebody reads this. Good to know that someone has learned something. If you had talked to me in 2007, I was the man! My various portfolio tilts had worked brilliantly and I prided myself as a very good investor. The last 11 years or so have been humbling, Value has trailed the market and I have trailed a simple Taylor Larimore 3 fund portfolio. Results have been good but less than a simpler approach. But I have stuck to my guns and hopefully my various bets will pay off again. But I have been eating some humble pie around here.

I will be consolidating over the next few weeks as my funds transition to Vanguard, but I will likely keep the stock portfolio at Fidelity, just start investing more into an index fund so with the next downturn I don't get killed
"Whats done is done, and can't be undone"

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Re: How Do You Like My New 'Doo

Post by nedsaid » Tue Feb 26, 2019 10:32 pm

Randtor, none of us does this perfectly. I know I have made a lot of mistakes, some of which are recounted on this thread. The main thing is to learn from your mistakes and not repeat them. I know that I was disappointed with my portfolio performance in 2017 and 2018, lots of crying in my root beer over New Year's Day. But you take your chances and either reap the rewards or suffer the disappointments.

Buy good stuff and keep it. That is my core investing philosophy. My independent broker, whom I have worked with over 20 years, has said that investors that leave their portfolios alone do better than those who constantly tinker. Laziness might actually be a virtue when it comes to investing, buy good investments and keep them.
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Re: How Do You Like My New 'Doo

Post by rick2427 » Tue Feb 26, 2019 11:40 pm

Nedsaid, thank you for starting this thread and updating it on an ongoing basis....I appreciate it!
I also started buying individual stocks in the 1990's, had over 42 stocks at one point but it was very difficult to keep track so I kept selling and moving the funds into index stocks over 5 years ago after opening an account at Vanguard. My individual stocks are all large companies giving 2-3% dividends. I also have AMZN, GOOG, BRKB that do not give any dividends. Due to the large amount of capital gain I am not selling the 13 stocks I still own but now that we are retired, I will start selling them one at a time and move all the funds into 5-6 Index funds as you suggested and simplify my portfolio.
Looking back at the return of the individual stocks over the past 5 years , as a group they have lagged S&P500 by over 1.0% annually. I can't wait to go 100% Index funds.
Once again THANK YOU for all your good work on this site.

Regards,
Rick

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Re: How Do You Like My New 'Doo

Post by nedsaid » Tue Feb 26, 2019 11:53 pm

rick2427 wrote:
Tue Feb 26, 2019 11:40 pm
Nedsaid, thank you for starting this thread and updating it on an ongoing basis....I appreciate it!
I also started buying individual stocks in the 1990's, had over 42 stocks at one point but it was very difficult to keep track so I kept selling and moving the funds into index stocks over 5 years ago after opening an account at Vanguard. My individual stocks are all large companies giving 2-3% dividends. I also have AMZN, GOOG, BRKB that do not give any dividends. Due to the large amount of capital gain I am not selling the 13 stocks I still own but now that we are retired, I will start selling them one at a time and move all the funds into 5-6 Index funds as you suggested and simplify my portfolio.
Looking back at the return of the individual stocks over the past 5 years , as a group they have lagged S&P500 by over 1.0% annually. I can't wait to go 100% Index funds.
Once again THANK YOU for all your good work on this site.

Regards,
Rick
Wow. Maybe this thread is an example of what not to do. If I have inspired people towards more efficient portfolio construction and simplification, this has been a success. I really appreciate that people have read this.

What I found was that I was a legend in my own mind. Recent years, particularly 2017 and 2018 have humbled me. But then again, stuff I was doing worked great from 2000-2007. What I find is that investment strategies start working again once you give up on them in utter disgust. So I am loathe to sell my legacy investments. Been burned by the "Nedsaid effect" so many times.

But again, this is a living laboratory or a case study. Real life person investing real life money, not the phony back testing that we see so often around here. Pretty much the thrill of victory when things go well and the agony of defeat when my strategies underperform. Pretty much, I hedge my bets and frankly my own behavior. I have indexed more and more of my money the older I get.

Perhaps, I have a misguided sense of loyalty. I have been loyal to companies like American Century and Fidelity, I have been loyal to my independent broker whom I call Broker #4, and I have been loyal to particular funds through thick and thin. I find that strategies wax and wane, I am loathe to give up on investments because of temporary difficulties. Also hate to give up on people that I have worked with for years.
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Re: How Do You Like My New 'Doo

Post by nedsaid » Fri Apr 19, 2019 1:49 pm

As of Thursday, Lent is over and I will resume posting. Thought I would update my portfolio. Haven't done much of anything but I notice things shifted around a bit. Bonds seem to have done well. Below are the top 25 holdings for my retirement portfolio listed as a percentage of the entire retirement portfolio.

1. Fidelity® Total Market Index . . . . . . . . . . 13.06%
2. American Century Diversified Bond Inv. . . . 6.76%
3. Fidelity US Bond Index. . . . . . . . .. . . . . . 5.72%
4. Providence Core Retire. . . . . . . . . . . . . . 4.26%
5. American Century Inflation Adjs Bond Inv. . 4.02%
6. Vanguard Small-Cap Value ETF. . . . . . . . . 2.89%
7. Fidelity® International Index . . . . . . . . . . 2.85%
8. Fidelity® GNMA. . . . . . . . . . . . . . . . . . . 2.83%
9. Fidelity Freedom Index 2025 Investor. . . . . 2.82%
10. American Century International Gr Inv. . . . 2.69%
11. iShares Core S&P Small-Cap ETF. . . . . . . 2.49%
12. Vanguard Total Bond Market Index ETF. . . 2.07%
13. Fidelity® Emerging Markets Idx . . . . . . . . 2.05%
14. Templeton Foreign A. . . . . . . . . . . . . . . 1.98%
15. American Funds Capital Income Bldr A. . . . 1.76%
16. Fidelity® Inflation-Prot Bd Idx . . . . . . . . . 1.68%
17. Boeing Co. . . . . . . . . . . . . . . . . . . . . . . 1.67%
18. American Century International Opps Inv. . 1.61%
19. Weyerhaeuser Co. . . . . . . . . . . . . . . . . 1.47%
20. Walt Disney Company. . . . . . . . . . . . . . .1.45%
21. American Century Heritage Inv. . . . . . . . 1.38%
22. Microsoft Corporation. . . . . . . . . . . . . . 1.35%
23. American Century International Bond Inv. . 1.34%
24. American Funds Bond Fund of America. . . .1.31%
25. American Century Value Investor. . . . . . . 1.30%

Asset Allocation:

46.39% US Stocks
17.91% Foreign Stocks
33.83% Bonds
2.27% Cash
(0.40) Other

Stock stylebox is as follows:

20 28 17
05 07 06
05 06 05

My Individual Stocks top 10

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

Individual Stocks are 13.04% of the retirement portfolio. I am reinvesting dividends now and I have purchased shares of Raytheon Corporation. So now I am up to 19 individual stocks in my retirement portfolio. The 15 year performance of my stocks is 7.90% compared to 8.95% for Vanguard Total Stock Market Index Admiral. 10 year performance is 13.91% vs. 15.25% for Vanguard Total Stock Market Index Admiral. The indexes are hard to beat. I am using Internal Rate of Return calculations from Quicken and using Morningstar numbers for Vanguard Total Stock Market Index Admiral for comparison.

The only other thing to report is that I made a minor purchase of iShares Core International Aggregate Bond ETF to add to my existing position.

How are things performing this year?

Fidelity Total Stock Market Index is up 16.89% year to date.
Fidelity Real Estate Index is up 13.84%
Fidelity US Bond Index is up 2.57%.
Fidelity Inflation Protected Bond Index is up 2.87%.
iShares Core International Aggregate Bond Index is up 2.78%
Fidelity International Index is up 13.01%
Fidelity Emerging Markets Index is up 13.63%.

2019 is shaping up to be a good year for investors.
Last edited by nedsaid on Sun Apr 21, 2019 4:30 pm, edited 3 times in total.
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Re: How Do You Like My New 'Doo

Post by nedsaid » Fri Apr 19, 2019 2:15 pm

I have active investments too, mostly at American Century. Let's see how certain American Century funds have fared this year against the Fidelity Index Funds that I own.

American Century Diversified Bond is up 2.71% vs. 2.57% for Fidelity Bond Index. This fund fell off in 2018 as it had about 7% or so in Emerging Markets Bonds, in fact it skipped a month's dividend distribution to cover for losses. I did give feedback to the company that I didn't expect a Core Bond fund to take such risks.

I also have a large position in its Inflation Adjusted Bond fund which is up 2.90% vs. 2.87% for the Fidelity Inflation Protected Bond Index.

Their International Bond fund, which has been dreadful since the 2008-2009 financial crisis is up 1.28% vs the 2.78% return from iShares Core International Aggregate Bond Index. The fund is not currency hedged but the iShares product is. So sort of apples and oranges.

I have owned American Century International Growth since 1992. So far it is up by 15.75% year to date vs. 13.01% for Fidelity International Index.

American Century Emerging Markets has been a good fund, it has returned 13.93% YTD compared to the 13.63% returned by the Fidelity Index.

American Century Heritage, an old favorite, also owned since 1992 is up 22.99% year to date. This is a Mid-Cap Growth fund. Another favorite holding, American Century Value is up 14.81% year to date. Both funds have disappointed over the last few years and I am keeping an eye on them. Income and Growth, another Value offering is up 14.39%. American Century Mid-Value is up 16.71% in 2019. Hard to beat Fidelity Total Stock Market Index which is up 16.89%. This suggests that we are still in a Growth environment, not that Value is doing badly but it is lagging Growth.
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Re: How Do You Like My New 'Doo

Post by nedsaid » Fri Apr 19, 2019 6:32 pm

I thought I would do an update on Larry's article "Taking on the Lies of Active." The article was dated July 1st 2013. He compared American Century's 10 year performance to DFA and Vanguard. He used 10 year data as of May 2013. I will use 15 year data as of 4-19-2019 and see what has changed.

Below is the link to Larry's article.

https://www.etf.com/sections/features/1 ... ctive.html


US Large


American Century All Cap Growth
TWGTX
10.8 (10 year 5/13) 11.10 (15 year as of 4/18/19)
American Century Equity Growth
AMEIX
8.1 (10 year 5/13) 8.37 (15 year as of 4/18/19)
American Century Growth
TWGIX
7.9 (10 year 5/13) 9.62 (15 year as of 4/18/19)
American Century Select
TWSIX
6.0 (10 year 5/13) 8.55 (15 year as of 4/18/19)
American Century Ultra
TWUIX
6.3 (10 year 5/13) 9.14 (15 year as of 4/18/19)

Average American Century US Large
7.8 (10 year 5/13) 9.35 (15 year as of 4/18/19)

DFA US Large Company
DFUSX
7.6 (10 year 5/13) 8.68 (15 year as of 4/18/19)

Vanguard 500 Index
VFISX replaced with VINIX Vanguard Institutional Index Institutional
7.5 (10 year 5/13) 8.69 (15 year as of 4/18/19)

Vanguard Growth Index Admiral (not in Larry's original analysis).
VIGAX 9.51 (15 year as of 4/18/19)




US Large Value



American Century Capital Value
ACPIX
6.7 (10 year 5/13) 6.62 (15 year as of 4/18/19)
American Century Equity Income
ACIIX
7.9 (10 year 5/13) 8.16(15 year as of 4/18/19)
American Century Income & Growth
AMGIX
7.3 (10 year 5/13) 7.68 (15 year as of 4/18/19)
American Century Large Co Value
ALVSX
7.0 (10 year 5/13) 6.85 (15 year as of 4/18/19)
American Century Value
AVLIX
8.0 (10 year 5/13) 7.45 (15 year as of 4/18/19)

Average American Century US Large Value
7.4 (10 year 5/13) 7.35 (15 year as of 4/18/19)

DFA US Large Cap Value III
DFUVX
9.5 (10 year 5/13) 8.65 (15 year as of 4/18/19)

Vanguard Value Index
VVIAX
7.9 (10 year 5/13) 8.31 (15 year as of 4/18/19)

US Mid-Cap Growth (added, not part of Larry's original analysis)

American Heritage Institutional
ATHIX
11.35 (15 year as of 4/18/19)


Vanguard Mid-Cap Growth Investor
VMGRX
9.75 (15 year as of 4/18/19)

US Small


American Century New Opps
TWNOX
8.7 (10 year 5/13) note: combined into American Century Small Cap Growth
American Century Small Cap Growth
ANOIX
10.8 (10 year 5/13) 9.06 (15 year as of 4/18/19)
American Century Small Company
ASCQX
9.2 (10 year 5/13) 6.59 (15 year as of 4/18/19)

Average American Century US Small
9.6 (10 year 5/13) 7.82 (15 year as of 4/18/19)

DFA US Small Cap I
DFSTX
10.9 (10 year 5/13) 8.68 (15 year as of 4/18/19)

Vanguard Small Cap Index
VSCIX
11.3 (10 year 5/13) 9.50 (15 year as of 4/18/19)



US Small Value


American Century Small Cap Value
ACVIX
11.1 (10 year 5/13) 9.17 (15 year as of 4/18/19)

DFA US Small Cap Value I
DFSVX
11.7 (10 year 5/13) 7.80 (15 year as of 4/18/19)

Vanguard Small Cap Value Index
VISVX
10.5 (10 year 5/13) 8.81 (15 year as of 4/18/19)



Real Estate


American Century Real Estate
REAIX
10.8 (10 year 5/13) 8.75 (15 year as of 4/18/19)

DFA Real Estate Securities I
DFREX
11.1(10 year 5/13) 9.38 (15 year as of 4/18/19)

Vanguard REIT Index
VGSLX
11.4(10 year 5/13) 9.30 (15 year as of 4/18/19)


US Bonds (added not part of Larry's original analysis).

American Century Diversified Bond Institutional
ACBPX
4.10 (15 year as of 4/18/19)

American Century Ginnie Mae Investor
BGNMX
3.47 (15 year as of 4/18/19)

American Century Inflation Protected Bond Institutional (now R5)
AIANX
3.65 (15 year as of 4/18/19)


Vanguard Total Bond Market Index Admiral
VBTLX
3.96 (15 year as of 4/18/19)

Vanguard GNMA Admiral
VFIJX
4.06 (15 year as of 4/18/19)

Vanguard Inflation Protected Securities Investor
VIPSX
3.61 (15 year as of 4/18/19)



International Large



American Century Intl Growth
TGRIX
8.5 (10 year 5/13) 6.00 (15 year as of 4/18/19)

DFA Large Cap International I
DFALX
8.3 (10 year 5/13) 5.40 (15 year as of 4/18/19)

Vanguard Developed Markets Index
VDMIX replaced by VTMGX Vanguard Developed Markets Index Admiral
8.3 (10 year 5/13) 5.53 (15 year as of 4/18/19)



International Large Value


American Century Intl Value
MEQAX
8.1 (10 year 5/13) 4.26 (15 year as of 4/18/19)

DFA Intl Value III
DFVIX
9.9 (10 year 5/13) 5.77 (15 year as of 4/18/19)



International Small



American Century Intl Discovery
TIDIX
10.9 (10 year 5/13) recently merged into Intl Opps

American Century Intl Opps
ACIOX
15.2 (10 year 5/13) 8.71 (15 years as of 4/18/19)

Average American Century International Small
13.1 (10 year 5/13) 8.71 (15 years as of 4/18/19)

DFA Intl Small Company
DFISX
11.6 (10 year 5/13) 7.50 (15 years as of 4/18/19)



Emerging Markets



American Century Emerging Markets
AMKIX
14.2 (10 year 5/13) 7.90 (15 year as of 4/18/19)

DFA Emerging Markets
DFEMX
15.0 (10 year 5/13) 8.51 (15 year as of 4/18/19)

Vanguard Emerging Markets
VEMAX replaced by VEIEX (Investor shares)
14.7 (10 year 5/13) 7.67 (15 year as of 4/18/19)

Some take aways for me. American Century has done a good job but have fallen off in
US Large Value. US Small was drug down by the American Century Small Company fund which has been dreadful. The relative performance of American Century US Small compared to DFA and Vanguard did not change much.

I added Mid-Cap Growth to Larry's analysis as American Century Heritage has been a favorite of mine for many years. Its performance vs. indexes has fallen off in recent years but it beat Vanguard's Mid-Cap Growth Fund over 15 years pretty handily. The Mid-Cap Growth Index funds from Vanguard do not have history going back 15 years.

I have high regard for their US Value team but they have hit a rough patch compared to DFA and Vanguard. Capital Value and Large Company Value are very similar funds and their performance hurt the average. Equity Income was competitive with Vanguard but even their Value fund sputtered.

Their US Large and US Small Value have done well and beaten both DFA and Vanguard.

The impressive performance by the AC US Large Growth team is impressive but looks less so when compared to the Vanguard Growth Index. You can see how dramatic the performance of Large Growth has been since the 2008-2009 financial crisis, the Vanguard Large Growth Index returned 16.32% over 10 years compared to 15.19% for the S&P 500 Index and 14.16% for the Vanguard Value Index. Large Growth has been beating Large Value by 2.16% a year for a decade.

The smaller number of investable REITs and the higher American Century fees almost guarantee that AC will trail both Vanguard and DFA in the Real Estate area.

American Century is very competitive with International Stocks beating Vanguard in International Large and Emerging Markets. American Century beat DFA in the International Small arena though all of DFAs products were competitive. I have long felt that the American Century International Growth fund has been underrated and unheralded, this fund has done a good job for many years.

I also have had a high regard for the fixed income team at American Century. They have continued the fine tradition of the fixed income team that came over from the Benham Funds. 2018 wasn't a good year for this team, interest rate bets and Emerging Market bonds contributed to disappointing performance. Their Diversified Bond Fund fell to a 2 star rating with Morningstar. Their International Bond Fund has been dreadful since the 2008-2009 financial crisis, it had really good performance before then.

This is of interest to me as I have substantial investments at American Century.
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Re: How Do You Like My New 'Doo

Post by james22 » Wed May 08, 2019 7:36 am

nedsaid wrote:
Sun Mar 13, 2016 8:36 pm
I have given a fair amount of advice on this forum and it is only fair for others to see where I am coming from. I am telling the story of my portfolio.
I'm always curious to see other's portfolios, but I confess I struggle to understand where you are coming from. Unless it is it simply a bet on diversification?

Otherwise why so very many positions? Why any position under 5%? Why SV tilt if only to 6%? Why the balanced funds?


Mind sharing the account distribution?

X% 401k (are your options limited here?)
X% IRA
X% Roth IRA
X% Annuity
X% Taxable


Mind sharing by class?

X% Stocks

X% US

13% Fidelity Total Market Index
3% Vanguard Small-Cap Value ETF
2% iShares Core S&P Small-Cap ETF
1% American Century Value Investor
1% American Century Heritage Inv

2% Boeing Co
1% Weyerhaeuser Co
1% Walt Disney Company
1% Microsoft Corporation
1% Johnson & Johnson.
1% Exxon Mobil Corporation.
1% JP Morgan and Chase Company.
1% Pfizer Incorporated.
1% US Bancorp.
1% Applied Materials Inc.
1% x
1% x
13%

X% International

3% Fidelity International Index
3% American Century International Gr Inv
2% Fidelity Emerging Markets Idx
2% Templeton Foreign A
2% American Century International Opps Inv

X% Balanced Funds

4% Providence Core Retire
3% Fidelity Freedom Index 2025 Investor
2% American Funds Capital Income Bldr A

X% Bonds/Cash

7% American Century Diversified Bond Inv
6% Fidelity US Bond Index
2% Vanguard Total Bond Market Index ETF
1% American Funds Bond Fund of America

3% Fidelity GNMA

4% American Century Inflation Adjs Bond Inv
2% Fidelity Inflation-Prot Bd Idx

1% American Century International Bond Inv


Mind sharing how they relate? Are all your bonds in your 401k, for example? Or do you have multiple 401ks that have different options (why not consolidate)?

I just don't understand why you'd hold more than one nominal and one inflation-adjusted bond fund, etc.

Maybe I've just underestimated your fourth Investing Rule: When in doubt, go with broad diversification over narrow diversification:happy

Thanks.
25% BRK l 25% BAM l 8% SV (VSIAX) l 8% EM (VEMAX) l 4% FNMA/FMCC l 4% FNMAS/FMCKJ l 25% Stable Value

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Re: How Do You Like My New 'Doo

Post by TheTimeLord » Wed May 08, 2019 7:42 am

nedsaid wrote:
Sun Mar 13, 2016 8:36 pm
I have given a fair amount of advice on this forum and it is only fair for others to see where I am coming from. I am telling the story of my portfolio. People can see what I have actually been investing in and they can see if I have been practicing what I preach.
Excellent.
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Re: How Do You Like My New 'Doo

Post by nedsaid » Wed May 08, 2019 9:16 am

james22 wrote:
Wed May 08, 2019 7:36 am
nedsaid wrote:
Sun Mar 13, 2016 8:36 pm
I have given a fair amount of advice on this forum and it is only fair for others to see where I am coming from. I am telling the story of my portfolio.
I'm always curious to see other's portfolios, but I confess I struggle to understand where you are coming from. Unless it is it simply a bet on diversification?

Nedsaid: Wow. You have taken time to review my portfolio and that is impressive. Pretty much what happened is that I started with individual stocks and active mutual funds. Over time, I have reduced my individual stocks from 45% of my retirement portfolio in early 2000 to about 13% today. Also I have over time been indexing more and more of my portfolio. In 2007, I started buying Small-Cap Value. So I have been gradually turning the ship over time.

Pretty much, I have a Fidelity Rollover IRA portfolio and an American Century IRA portfolio that are invested in similar fashion except Fidelity is mostly indexed and American Century is mostly active. A few ETFs are in the Fidelity portfolio, where I wanted an asset class but wasn't pleased with my mutual fund choices. The Fidelity Rollover IRA comes from a couple of workplace savings plans with former employers. The American Century IRA comes from a Traditional IRA and an old workplace savings plan.

The Brokerage IRA Accounts contain the individual stocks, load funds, and ETFs. This account was my original IRA account, it was a rollover from an IRA invested in Certificates of Deposit at a bank. Later on, this account was used to purchase things that I couldn't get elsewhere. I also have a smaller ROTH IRA as well.

So the accounts are like this:

Fidelity Rollover IRA
American Century Traditional IRA
LPL Financial Brokerage IRA
LPL Financial ROTH IRA
Fidelity Variable Annuity
Frozen Cash Balance Pension
Pers III Pension

I pretty much have three main providers: Fidelity, American Century, and LPL. I have a Cash Balance Pension and a small PERS 3 pension. So that accounts for most of the complexity.


Otherwise why so very many positions? Why any position under 5%? Why SV tilt if only to 6%? Why the balanced funds?

Nedsaid: Three main IRA accounts, that accounts for most of the positions. My tilts are relatively modest. 5% Small Value vs. 2% for Total Stock Market Index. I have 16% in Small-Caps vs. 6% for the US Total Stock Market Index. I have about a market weight in Mid-Caps.

Mind sharing the account distribution?

Nedsaid: Roughly most all of the retirement is split 3 ways.

X% 401k (are your options limited here?)
Nedsaid: At this time, I do not have a 401(k) or similar workplace plan. Everything from those plans have been rolled over.
X% IRA
Nedsaid: Most of my retirement are in Traditional IRAs. About 90% of retirement.
X% Roth IRA
Nedsaid: Not quite 2% of retirement.
X% Annuity
Nedsaid: Not quite 3% of my retirement.
X% Cash Balance Pension Nedsaid: About 4%.

X% Taxable Nedsaid: I will just say that the great bulk of my net worth are in my retirement accounts. I have 4 DRIP stocks and my first ever mutual fund in Taxable Accounts. Emergency funds there too. But pretty much, now that I am over age 59 1/2, in effect everything is retirement now, just most is tax deferred and the smaller part is in taxable.

Mind sharing by class?

X% Stocks
Nedsaid: I have shared this elsewhere in the thread. Now about 65%.
X% US
Nedsaid: US about 72%, International about 28% of stock portfolio.

13% Fidelity Total Market Index
3% Vanguard Small-Cap Value ETF
2% iShares Core S&P Small-Cap ETF
1% American Century Value Investor
1% American Century Heritage Inv

2% Boeing Co
1% Weyerhaeuser Co
1% Walt Disney Company
1% Microsoft Corporation
1% Johnson & Johnson.
1% Exxon Mobil Corporation.
1% JP Morgan and Chase Company.
1% Pfizer Incorporated.
1% US Bancorp.
1% Applied Materials Inc.
1% x
1% x
13%
Nedsaid: The individual stocks have been fun. Last I looked my stocks have trailed the US Total Stock Market Index by about 1% a year over the last 15 years. There have been times that I have beaten the Index slightly but by very little. These are higher dividend paying companies, the yield is something like 2.75% or so. I like the idea of a dividend stream that is likely to grow faster than inflation. This is how I started, I guess I am old fashioned. Have toyed with the idea of replacing this with a Vanguard High Dividend ETF but not ready to do that.

X% International

3% Fidelity International Index
3% American Century International Gr Inv
2% Fidelity Emerging Markets Idx
2% Templeton Foreign A
2% American Century International Opps Inv

X% Balanced Funds

4% Providence Core Retire Nedsaid: This is a Cash Balance pension.
3% Fidelity Freedom Index 2025 Investor Nedsaid: Rollover from 401(a). It represents contributions made in lieu of cash balance pension contributions. I will probably consolidate this.
2% American Funds Capital Income Bldr A Nedsaid: This is the ROTH IRA.

X% Bonds/Cash

7% American Century Diversified Bond Inv
6% Fidelity US Bond Index
2% Vanguard Total Bond Market Index ETF
1% American Funds Bond Fund of America

3% Fidelity GNMA

4% American Century Inflation Adjs Bond Inv
2% Fidelity Inflation-Prot Bd Idx

1% American Century International Bond Inv


Mind sharing how they relate? Are all your bonds in your 401k, for example? Or do you have multiple 401ks that have different options (why not consolidate)?

Nedsaid: No 401(k) or 403(b) anymore, these have been rolled over. Most everything (92%) is at the top 3 providers: Fidelity, American Century, and LPL Financial.

I just don't understand why you'd hold more than one nominal and one inflation-adjusted bond fund, etc.

Nedsaid: These are different funds held at different providers.

Maybe I've just underestimated your fourth Investing Rule: When in doubt, go with broad diversification over narrow diversification:happy

Nedsaid: Your comments are timely as I will be having a Portfolio review this morning. Certainly, I am going to do some simplification. Lot of this stuff I have owned for a long time, not prepared to let it go. Have toyed with the idea of selling all the stocks and buying Vanguard High Dividend ETF in their place, a lot of my individual stocks are in the Vanguard High Dividend product. A lot of it is buying things that I liked, I have collected asset classes and investments over time.

Thanks.
Last edited by nedsaid on Wed May 08, 2019 10:00 am, edited 3 times in total.
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Re: How Do You Like My New 'Doo

Post by nedsaid » Wed May 08, 2019 9:52 am

TheTimeLord wrote:
Wed May 08, 2019 7:42 am
nedsaid wrote:
Sun Mar 13, 2016 8:36 pm
I have given a fair amount of advice on this forum and it is only fair for others to see where I am coming from. I am telling the story of my portfolio. People can see what I have actually been investing in and they can see if I have been practicing what I preach.
Excellent.
I knew that when I started this thread that I would get some criticism, but that is okay. A lot of analysis has gone into this thread and it has helped clarify my thinking. Anywho, thanks for looking at this and hopefully some folks can learn something from all of this. As you can see, I have tried an awful lot of stuff and that gives me a lot to write about. But simplification is in order, did some consolidating last year.
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Re: How Do You Like My New 'Doo

Post by TheTimeLord » Wed May 08, 2019 9:58 am

nedsaid wrote:
Wed May 08, 2019 9:52 am
TheTimeLord wrote:
Wed May 08, 2019 7:42 am
nedsaid wrote:
Sun Mar 13, 2016 8:36 pm
I have given a fair amount of advice on this forum and it is only fair for others to see where I am coming from. I am telling the story of my portfolio. People can see what I have actually been investing in and they can see if I have been practicing what I preach.
Excellent.
I knew that when I started this thread that I would get some criticism, but that is okay. A lot of analysis has gone into this thread and it has helped clarify my thinking. Anywho, thanks for looking at this and hopefully some folks can learn something from all of this. As you can see, I have tried an awful lot of stuff and that gives me a lot to write about. But simplification is in order, did some consolidating last year.
I think it is valuable to know if people are giving advice from an academic perspective or if they are putting their money where their mouth is. It is very easy to overlook or minimize the behavioral aspects if you don't have a practical understanding of the situation.
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Re: How Do You Like My New 'Doo

Post by nedsaid » Wed May 08, 2019 10:06 am

TheTimeLord wrote:
Wed May 08, 2019 9:58 am
nedsaid wrote:
Wed May 08, 2019 9:52 am
TheTimeLord wrote:
Wed May 08, 2019 7:42 am
nedsaid wrote:
Sun Mar 13, 2016 8:36 pm
I have given a fair amount of advice on this forum and it is only fair for others to see where I am coming from. I am telling the story of my portfolio. People can see what I have actually been investing in and they can see if I have been practicing what I preach.
Excellent.
I knew that when I started this thread that I would get some criticism, but that is okay. A lot of analysis has gone into this thread and it has helped clarify my thinking. Anywho, thanks for looking at this and hopefully some folks can learn something from all of this. As you can see, I have tried an awful lot of stuff and that gives me a lot to write about. But simplification is in order, did some consolidating last year.
I think it is valuable to know if people are giving advice from an academic perspective or if they are putting their money where their mouth is. It is very easy to overlook or minimize the behavioral aspects if you don't have a practical understanding of the situation.
Well, I have been able to write about a lot of things because I have done a lot of things. The academic perspective is valuable but I am most interested in people's real life situations and experience. What you find is that the academics, folks that should know better, do some very interesting things with their own money. You also find their investing approach is less scientific than one would think. I have been like a scratch cook, a bit of this and a bit of that. A lot to criticize in what I have done but I have had a lot of fun. Much better to tinker with investments than to do some of the real stupid stuff men do during mid-life crisis.
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Re: How Do You Like My New 'Doo

Post by TheTimeLord » Wed May 08, 2019 10:11 am

nedsaid wrote:
Wed May 08, 2019 10:06 am
TheTimeLord wrote:
Wed May 08, 2019 9:58 am
nedsaid wrote:
Wed May 08, 2019 9:52 am
TheTimeLord wrote:
Wed May 08, 2019 7:42 am
nedsaid wrote:
Sun Mar 13, 2016 8:36 pm
I have given a fair amount of advice on this forum and it is only fair for others to see where I am coming from. I am telling the story of my portfolio. People can see what I have actually been investing in and they can see if I have been practicing what I preach.
Excellent.
I knew that when I started this thread that I would get some criticism, but that is okay. A lot of analysis has gone into this thread and it has helped clarify my thinking. Anywho, thanks for looking at this and hopefully some folks can learn something from all of this. As you can see, I have tried an awful lot of stuff and that gives me a lot to write about. But simplification is in order, did some consolidating last year.
I think it is valuable to know if people are giving advice from an academic perspective or if they are putting their money where their mouth is. It is very easy to overlook or minimize the behavioral aspects if you don't have a practical understanding of the situation.
Well, I have been able to write about a lot of things because I have done a lot of things. The academic perspective is valuable but I am most interested in people's real life situations and experience. What you find is that the academics, folks that should know better, do some very interesting things with their own money. You also find their investing approach is less scientific than one would think. I have been like a scratch cook, a bit of this and a bit of that. A lot to criticize in what I have done but I have had a lot of fun. Much better to tinker with investments than to do some of the real stupid stuff men do during mid-life crisis.
Personally, I have decided to start experimenting with what I am calling opportunistic investing (using a very small amount of my portfolio). My first foray is my purchases of iShare China Large Cap (FXI) this week. Basically betting the outcome will be better than what was price in. So I will be looking for pullbacks in indexes and sectors to make temporary investments. Will it work, I don't know but for some reason it seems logical to try it to me.
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Re: How Do You Like My New 'Doo

Post by nedsaid » Wed May 08, 2019 3:08 pm

I did have American Century do a review of my entire portfolio. They also did a proposal a managed account, where my funds with them would be managed in a Conservative Portfolio which is pretty similar to their One Choice Target Risk Conservative fund. Their retail version of this fund is 34% US Stocks, 11% International Stocks, and 55% fixed income. The difference is that the managed account has 5% alternatives, they take 2% from International Stocks and 3% from Fixed Income to achieve that. Right now, I am invested about 60% stocks/40% fixed income with them. The managed account would be 0.90% a year but they provide ongoing financial planning along with that. It was the financial planning aspect that has me interested.

I can have one of these done a year, I think they have done three of these in prior years. One year they used Financial Engines and another they used Morningstar's software for financial planners. Hadn't had a review from them for years.

They did an efficient frontier on what I have right now, they projected that my returns would be 5.7% with a Standard Deviation of 9.7%. It appears that their projection of future returns is cautious, which is good. A take away was that what I was doing was pretty good, their recommendation would cut returns to 5.6% and bring Standard Deviation down to 9.3%. So I was right in the ballpark.

Pretty much, they think I up my US Stock Allocations slightly and cut my International Stock Allocation by about 30%. More International Bonds than what I have now. Less TIPS and more Cash. A dab of High Yield bonds. Add a bit of alternatives. Over all, my stock percentage would drop from 64% down to 61%, considering my other retirement accounts.

So some things to think about. Pretty much, do I want them to do my financial planning for me or not? Do I want a managed account?

What I find is that I like to do my own asset allocation. I probably will do nothing for right now.
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Re: How Do You Like My New 'Doo

Post by james22 » Thu May 09, 2019 12:40 am

nedsaid wrote:
Wed May 08, 2019 9:16 am
… So I have been gradually turning the ship over time. …

The individual stocks have been fun. … Have toyed with the idea of replacing this with a Vanguard High Dividend ETF but not ready to do that. …

Certainly, I am going to do some simplification. Lot of this stuff I have owned for a long time, not prepared to let it go. … A lot of it is buying things that I liked, I have collected asset classes and investments over time.
Got it. (I'd thought maybe you had some reason for the diversification, not trusting a single provider or something.)

But if you were to put together a portfolio today, it wouldn't look anything like this, yeah?

Just think it would be much easier to manage if were all held at a single provider and much easier to think about if held only a single fund per class. Something like:

65/35

35% TSM
5% SV
10% TIM
15% Individual stocks

30% Nominal Bonds
5% Inflation-adjusted Bonds

Could then focus on class decisions - worth holding SV? Worth adding IS? Worth splitting TIM into Developed and Emerging? Etc.

I do appreciate the difficulty letting go, but we've only so much bandwidth.

Nothing wrong with keeping the individual stocks though, if entertaining. Grouped they do not distract, and they shouldn't perform so very differently then a dividend fund.

As to paying for financial planning? Why? You've always Target Date Funds to compare to.
25% BRK l 25% BAM l 8% SV (VSIAX) l 8% EM (VEMAX) l 4% FNMA/FMCC l 4% FNMAS/FMCKJ l 25% Stable Value

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Re: How Do You Like My New 'Doo

Post by HEDGEFUNDIE » Thu May 09, 2019 12:45 am

TheTimeLord wrote:
Wed May 08, 2019 10:11 am
nedsaid wrote:
Wed May 08, 2019 10:06 am
TheTimeLord wrote:
Wed May 08, 2019 9:58 am
nedsaid wrote:
Wed May 08, 2019 9:52 am
TheTimeLord wrote:
Wed May 08, 2019 7:42 am


Excellent.
I knew that when I started this thread that I would get some criticism, but that is okay. A lot of analysis has gone into this thread and it has helped clarify my thinking. Anywho, thanks for looking at this and hopefully some folks can learn something from all of this. As you can see, I have tried an awful lot of stuff and that gives me a lot to write about. But simplification is in order, did some consolidating last year.
I think it is valuable to know if people are giving advice from an academic perspective or if they are putting their money where their mouth is. It is very easy to overlook or minimize the behavioral aspects if you don't have a practical understanding of the situation.
Well, I have been able to write about a lot of things because I have done a lot of things. The academic perspective is valuable but I am most interested in people's real life situations and experience. What you find is that the academics, folks that should know better, do some very interesting things with their own money. You also find their investing approach is less scientific than one would think. I have been like a scratch cook, a bit of this and a bit of that. A lot to criticize in what I have done but I have had a lot of fun. Much better to tinker with investments than to do some of the real stupid stuff men do during mid-life crisis.
Personally, I have decided to start experimenting with what I am calling opportunistic investing (using a very small amount of my portfolio). My first foray is my purchases of iShare China Large Cap (FXI) this week. Basically betting the outcome will be better than what was price in. So I will be looking for pullbacks in indexes and sectors to make temporary investments. Will it work, I don't know but for some reason it seems logical to try it to me.
Too bad you weren’t around when I called the bottom:

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Re: How Do You Like My New 'Doo

Post by james22 » Thu May 09, 2019 12:49 am

Nothing wrong with carving out 5% for a Fun Money class either.
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Re: How Do You Like My New 'Doo

Post by nedsaid » Thu May 09, 2019 1:13 am

james22 wrote:
Thu May 09, 2019 12:40 am
nedsaid wrote:
Wed May 08, 2019 9:16 am
… So I have been gradually turning the ship over time. …

The individual stocks have been fun. … Have toyed with the idea of replacing this with a Vanguard High Dividend ETF but not ready to do that. …

Certainly, I am going to do some simplification. Lot of this stuff I have owned for a long time, not prepared to let it go. … A lot of it is buying things that I liked, I have collected asset classes and investments over time.
Got it. (I'd thought maybe you had some reason for the diversification, not trusting a single provider or something.)

Nedsaid: Well actually, I think it is prudent to have more than one provider. I want to get it boiled down to three. Yes, that was part of my thinking. You seem to know me better than I know myself.

But if you were to put together a portfolio today, it wouldn't look anything like this, yeah?

Nedsaid: Hard to say, the Taylor Larimore 3 fund portfolio looks pretty hard to beat, doesn't it? I would probably do five, adding International Bonds and probably TIPS.

I also like the Academic research, Small/Value tilting and such. Bill Shultheis and the Coffeehouse Portfolio is the simpler way to do it, Paul Merriman has a more complex version.

Problem is, I read about something, it makes sense, I want to try it out. As Julius Caesar might have said, "I came, I saw, and I purchased." I couldn't help but try to improve the portfolio.

Also quirky in that I tend to be loyal. My first mutual fund investment was Twentieth Century Select. The fund company had two things going for it in 1984, first it had a very good performance record and second it had no minimum investment. For someone with little money, no minimum investment sounded pretty good to me. I grew with them over the years, they went from a little shop with 5 funds to a larger firm with probably over 60 funds now. They believed in investor
education and I learned a lot.

I had a money market account with Fidelity since 1984. Started a workplace savings plan with them in 1999 and now they are my largest provider. Rolled everything into a rollover IRA and I had so many choices available at no commission, I thought I died and went to investment heaven.

And of course Broker #4, I have been with him for over 22 years now. I am not one of his bigger clients but yet I got Royal treatment from him.

So staying loyal to good folks is another reason for quirkiness.


Just think it would be much easier to manage if were all held at a single provider and much easier to think about if held only a single fund per class. Something like:

65/35

35% TSM
5% SV
10% TIM
15% Individual stocks

30% Nominal Bonds
5% Inflation-adjusted Bonds

Could then focus on class decisions - worth holding SV? Worth adding IS? Worth splitting TIM into Developed and Emerging? Etc.

Nedsaid: Wow. You start out simple and then do what I did. What if I did thus and so? What if I bought that? Having one provider would greatly simplify things as would selling the individual stocks.

I do appreciate the difficulty letting go, but we've only so much bandwidth.

Nedsaid: Interesting. I had American Century do a proposal for managing my funds there. Turned out what they proposed was more complex than what I had already. As far as the bandwidth thing, that is a good point. Believe me, I have given all of this a lot of thought.

Nothing wrong with keeping the individual stocks though, if entertaining. Grouped they do not distract, and they shouldn't perform so very differently then a dividend fund.

Nedsaid: I have enjoyed owning them but it adds complexity. I have a friend, he actually was my first broker, his entire investment portfolio are individual stocks. Not me. The idea of replacing all that with Vanguard High Dividend has a lot of appeal.

As to paying for financial planning? Why? You've always Target Date Funds to compare to.

Nedsaid: I do use Target Date and Target Risk funds for comparison. But portfolio management is only one aspect of Financial Planning. I have been looking for help as there are a number of irreversible decisions regarding retirement. I haven't made up my mind but I am still giving this a lot of thought. Haven't yet bought Larry Swedroe's new book on retirement.
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Re: How Do You Like My New 'Doo

Post by james22 » Thu May 09, 2019 2:41 am

nedsaid wrote:
Thu May 09, 2019 1:13 am
Problem is, I read about something, it makes sense, I want to try it out. As Julius Caesar might have said, "I came, I saw, and I purchased." I couldn't help but try to improve the portfolio.
Maybe that's where we differ. I cannot help but try to improve my portfolio too, but the decision-making is all before buying.

And a simplified portfolio (for clarity) and a 5% minimum slice (for effect) would help me decide if something new might really improve the portfolio.

I'm considering Vanguard's Commodity Strategy fund, for example. If I add (because it makes sense), I'll commit to it for some time - there'll be no sense of "trying it out." Only if it fails to act as the reasoning expects would I reconsider.

While your portfolio more reflects "thinking out loud"? Interesting.
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Re: How Do You Like My New 'Doo

Post by nedsaid » Thu May 09, 2019 12:53 pm

james22 wrote:
Thu May 09, 2019 2:41 am
nedsaid wrote:
Thu May 09, 2019 1:13 am
Problem is, I read about something, it makes sense, I want to try it out. As Julius Caesar might have said, "I came, I saw, and I purchased." I couldn't help but try to improve the portfolio.
Maybe that's where we differ. I cannot help but try to improve my portfolio too, but the decision-making is all before buying.

And a simplified portfolio (for clarity) and a 5% minimum slice (for effect) would help me decide if something new might really improve the portfolio.

I'm considering Vanguard's Commodity Strategy fund, for example. If I add (because it makes sense), I'll commit to it for some time - there'll be no sense of "trying it out." Only if it fails to act as the reasoning expects would I reconsider.

While your portfolio more reflects "thinking out loud"? Interesting.
Well, actually I don't just willy nilly buy things for the portfolio. There is a lot of thought before making changes. I was an early adopter when REITs came available and also when the TIPS funds came out. These were ideas that made sense and after consideration made my purchases. In other places, I discussed three strategic allocation moves I made during the decade of the 2000's. Each time, there was a lot of thought behind what I did. I would await a good opportunity to execute the moves, a couple of times I considered the moves for a couple of years before actually making the change.

I also have everything on Morningstar and I make extensive use of the tools, particularly the Portfolio X-Ray.

I want a Value tilt to the portfolio and also a tilt towards the Mid/Small-Cap stocks. I don't chase performance, tend to underweight such stuff as the FAANG (Facebook, Apple, Amazon, Netflix, Google) stocks. Didn't chase the high tech bubble during the 1990's but I did own Lucent and Hewlett-Packard. Certainly had representation in Tech but didn't get caught up in the mania.

So a lot of what I have done reflects a certain caution as well.
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Re: How Do You Like My New 'Doo

Post by james22 » Thu May 09, 2019 1:33 pm

nedsaid wrote:
Thu May 09, 2019 12:53 pm
Well, actually I don't just willy nilly buy things for the portfolio.
Sorry, I didn't mean to suggest you did. And this isn't intended as criticism, of course.

But if you mean to share your portfolio for others to see where you are coming from when giving advice, it's important to highlight the differences from Boglehead assumptions, yes?

Those being first the admitted quirk of holding on to positions because of loyalty. If you posted the portfolio for Laura's review in the Personal Investments forum, it'd not be thought a good enough reason.

And secondly, the many positions sized less than 5% that you "try out." If you post that you've bought something, most would assume it meet the higher bar of 5% and that you intend to hold, and so might give your opinion on that something more weight than they otherwise would.

That's all.
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Re: How Do You Like My New 'Doo

Post by nedsaid » Thu May 09, 2019 1:57 pm

james22 wrote:
Thu May 09, 2019 1:33 pm
nedsaid wrote:
Thu May 09, 2019 12:53 pm
Well, actually I don't just willy nilly buy things for the portfolio.
Sorry, I didn't mean to suggest you did. And this isn't intended as criticism, of course.

But if you mean to share your portfolio for others to see where you are coming from when giving advice, it's important to highlight the differences from Boglehead assumptions, yes?

Those being first the admitted quirk of holding on to positions because of loyalty. If you posted the portfolio for Laura's review in the Personal Investments forum, it'd not be thought a good enough reason.

And secondly, the many positions sized less than 5% that you "try out." If you post that you've bought something, most would assume it meet the higher bar of 5% and that you intend to hold, and so might give your opinion on that something more weight than they otherwise would.

That's all.
I do appreciate your time to review my portfolio and obviously you have read a number of my posts as you seem familiar with my thought processes. Your comments are welcome and believe me I have been thinking many of the same things myself. I guess I am pretty open and honest about my foibles.

And yes, I have mentioned how what I am doing is different from what Jack Bogle has taught us. Don't recommend stock picking but I have done it myself. I have done tactical asset allocation or overbalancing though that is not recommended here either. Also don't recommend that folks rush off to full-service brokerages.

As far as what Laura might say in reviewing my portfolio, I just have to admit that I just am not that ruthless of a person. Will just say that I am not a 100% rational being. As I have posted many times before, my portfolio represents compromises that I have made with myself. A compromise between legacy investments that I like vs. newer and more efficient ways to invest. A compromise between my rational self and my emotional self. A compromise between the part of me that likes to take risk and a part of me that is cautious. And yes, a compromise between the part of myself that is ruthless and the part of me that keeps sentimental ties.

So pretty much, someone can look at all of this and see my shortcomings as an investor. Hopefully see some strengths in there as well. Folks here have read this thread and decided to simplify their portfolio. Real life experiences and observations by myself will hopefully provide something that others can learn from, even if they think I am doing it all wrong.

I have been able to comment about a lot of things because I have tried a lot of things. As the late, great American philosopher Yogi Berra once said, "You can observe a lot by watching." I have learned a lot simply from watching how the various portfolio components act under different market conditions. It hardly makes for optimal portfolio construction but it has been an education. It has been fun for Larry Swedroe to tell me that I am wrong about things, things that I learned from watching. That puts me in good company as he told the Boglemeister himself that he was wrong about factor premiums. Interesting how personal experience is dismissed as anecdotal. I respond that when you add the anecdotes up, you might have something.

But again, all of this does not tend to optimal portfolio construction. I think another big factor is that I have seen the phenomenon of the investments that I have sold outperforming what I bought to replace. Incorrect sell/buy decisions seem to outweigh the correct sell/buy decisions by a ratio of 2:1 or even 3:1, at least in the shorter term. This is what I have called the "Nedsaid effect." It has happened to me enough times that I don't like to sell, even to just rebalance my portfolio. Pretty sure my stocks would all zoom right after I sold them. I have made good sell decisions and I have also made the mistake of holding onto an investment too long. But generally speaking, most often the best investments are the ones that you already own. So I have made changes slowly and over time.

And I have been honest enough to post my investment results for 2017 and 2018, even though they didn't put me in the best light.

As far as asset class weighting, 5% or even 10% are good rules of thumb. It is sort of a go big or go home argument. Pretty much, the pizza tastes the same no matter how many slices you cut it. There gets to be a point where "slice and dice" has diminishing returns, the slices get so small that no one slice makes a meaningful difference. I also don't think there is anything wrong with having a smaller portion of your portfolio used as a laboratory for portfolio experiments.

Investing experience is important. There are such things as shorts, options, the factor funds that use leverage and shorts that I have no experience with. I can comment on such things but don't offer advice as I just don't have the practical knowledge that comes from owning certain investments or executing certain strategies.

My overriding strategy is that I want to be an owner with a long term perspective. Trading just doesn't appeal to me. So I can participate in business, real estate, and lending by owning securities. Don't view the markets as a casino where I make short term bets. I want to be a participant in the economy and thus reap its rewards.
Last edited by nedsaid on Sun May 12, 2019 10:39 am, edited 1 time in total.
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Re: How Do You Like My New 'Doo

Post by james22 » Sun May 12, 2019 1:48 am

Thanks for sharing, nedsaid.
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Re: How Do You Like My New 'Doo

Post by nedsaid » Fri Jun 14, 2019 3:45 pm

In another thread, I told Larry Swedroe that I was benchmarking my portfolio vs. the Taylor Larimore 3 fund portfolio as well as comparing results to moderate risk portfolios like Vanguard Life Strategy Moderate Growth and certain "Lazy Portfolios." I thought I would get positive comments from him about what I was doing, but he warned me about resulting.

So here I am reposting Larry's comments and showing my responses. Larry's warnings about resulting should be heeded by all investors and he pointed out flaws in my methods of analysis. Larry's comments are in full. My responses are edited, I didn't want to recreate the thread but to give the general sense of our discussion. Hopefully this will be of value to those who are interested in reading this.

By the way, I am almost 100% certain Larry has not read this New 'Doo thread. This discussion occurred in the Larry Swedroe: The Re-Death of Value thread. Thought I would post the discussion here as a very important point was raised here. Thought that this discussion should appear in the same thread where I spent so much time and effort calculating my investment returns and comparing them to the Taylor Larimore 3 fund portfolio. Also want to say that I don't know Larry personally except from whatever interaction we have had on this forum. We also had very limited e-mail exchanges. Don't want to imply that we know each other, we do not.

Larry's first comments were in the context of comments I had made earlier in the thread that the superior performance of the Taylor Larimore 3 fund portfolio compared to factor tilted portfolios was mostly due to the High Tech/Internet sector of the market, particularly the FAANG stocks (Facebook, Apple, Amazon, Netflix, Google). I have posted quite often that I see a lot of parallels between 1999 and right now.
by larryswedroe » Thu Jun 06, 2019 3:21 pm

nedsaid, every dog has its day (:-) This is LIKELY just another repeat of late 90s. But doesn't matter, one should never judge a strategy by outcome, called resulting, but only by its prudence before you know the outcome. And as Saint Jack said, relativity has no place in investing. So whether you are a TSMer (which is fine as long as you know the risks) or a tilter, you should never care how someone else's portfolio has done relative to yours. Only is yours the right one for you given the facts you know. BTW, ask Buffett if he would rather own TSM or value stocks? And he has underperformed not only S&P 500 for 10 years but also DFLVX for 10 years. Do you think he cares about relative performance and tracking error and going to change his strategy because of that?

Best wishes
Larry
Larry, I do track things, after all I was an accountant by trade. Pretty much I compare my performance against the 3 fund portfolio, lazy portfolios on MarketWatch, and Moderate Allocation Funds. I pretty accurately know my returns but benchmarking isn't so easy because my asset allocation has fluctuated, I very rarely rebalanced until July 2013. Lazy portfolios and Moderate Allocation portfolios have pretty static asset allocations. A lot of eyeballing. I want to see whether or not I am in the ballpark. I have an entire thread devoted to it.

What I find is that I have been underperforming the 3 fund portfolio but have tracked favorably with Vanguard Moderate Growth though I am invested a tad bit more aggressively. Not bad. I am in the ballpark. Probably on New Years Day I will do comparisons again. It is a lot of work.
by larryswedroe » Thu Jun 06, 2019 5:10 pm

nedsaid, the question to ask yourself is what is the value of doing that comparison? If it is favorable you do nothing. If not do you change because of recency, or better what in the logic has caused you to change your opinion about the prudent strategy? Just asking because if nothing has changed why even bother? Can only cause angst and doubt which leads to bad decisions.
I'd say the same for TSMers, once you decide on strategy unless your assumptions change should not change the strategy--again, as Bogle said Relativism has no place in investing!!!! And if Jack said it it must be true (:-))
Larry
What is the value of doing comparisons? Well, it certainly isn't competing against other Bogleheads. It is a matter of knowing that what I am doing is based upon sound principles. It is also a matter of knowing if my results are within the range of acceptable performance. Also want to know how I can improve and refine my approach. Hard to do without some kind of benchmarking.

If I am taking moderate risk, I want to have some idea of how I am doing compared to other moderate portfolios. Sort of like getting your vital signs checked. Fortunately I have been in the ballpark. So I should be satisfied with how I have done.

Larry and Dave, I don't think investors should obsess over comparisons. But at some point an evaluation has to be made. Seeing that I am doing most of this on my own, I have to act as my own fiduciary. This isn't a matter of proving to anyone here that I am a better investor than somebody else. Just have to be the best me that I can be.

by larryswedroe » Fri Jun 07, 2019 4:56 pm

nedsaid, FWIW, if you are an active investor then you should compare to passive benchmarks to see if the activity was adding value, If you are a passive investor, deciding on an AA and adhering to it using structured portfolios that you believe had the right AA for you and the funds follow that systematic approach to implement your strategy, what is the purpose of some comparison? If you are comparing to some other AA benchmark, like TSM, then you should have used that in first place. And vice versa. Otherwise you are likely to be guilty of resulting and end up being a performance chaser. For passive investors their own portfolios should be their own benchmarks, or other funds with the same loadings on factors. Now you can measure using attribution analysis the individual performance of each fund to determine if it was doing what it should be doing. As long as that is the case there should be no reason to change your portfolio unless some of your underlying assumptions have changed, in which case you should change.
Best wishes
larry
Larry, I benchmark my portfolio vs. the Taylor Larimore 3 fund portfolio. So lets say my asset class mix is 47% US Stocks, 18% International Stocks, and 35% Bonds; I will calculate the returns of my portfolio vs. the blended return of the 3 fund. This tells me whether I am getting any premium above a 3 fund portfolio. Get an idea of whether my tilts are working or not.

I benchmark the active stuff with real life passive index funds and I look at the factors by comparing my factor index funds with the broad indexes. So for example, how did my Small Value Index ETF perform compared to Total Stock Market. So lots of eyeballing. My math is not particularly sophisticated, my eyes glazed over even in college when I took stats, trig, and calculus. I did get to understand algebra pretty well which helped me with Excel spreadsheets. But a quant I am not.

So my analysis is pretty good but lots of eyeballing and trying not to be exact with this. What I want is a sense if I am in the ballpark or not. Not sophisticated enough to do factor attribution and I am not even sure what regressions are, if a math geek could explain it to me that would be great. I have an idea of what factor loadings are but don't really know what the numbers mean. I know that factor loadings measure how efficiently one captures factor characteristics. For example, DFA historically has done a better job of capturing factors than Vanguard. From what I am reading Vanguard is coming up with good factor products too. Another thing Larry, is that I think in narrative form, telling a story, rather than getting too buried in the math. I certainly use math in my analysis but report the results in a story form
by larryswedroe » Sat Jun 08, 2019 5:23 am

nedsaid, so what is the point of that 3 fund benchmark? Either you believe that the 3 fund portfolio is better choice for you or not. The problem is since all risk assets can underperform for very long time how long would you wait to decide to switch, since 10 years clearly not enough is 20? And for TSMers if waited say 10 years there would be many times, in fact most times, when it would have underperformed the tilted portfolio. What should cause a switch is only a change in your assumptions since both are "passive" strategies (no stock picking or market timing). BTW, small value has outperformed internationally last 15 years by even more vs VTGMX, which Taylor (who posts about the underperformance of US small value never mentioned, nor have other 3 fund fanatics (:-))
At 15 years it outperformed 7.17 vs 5.38 and same for EM
DFEVX 9.31 vs 7.85

So basically about offsetting underperformance in US for diversified portfolio, and this is one of the worst periods for US small value.

Do you think Buffett is comparing?
Larry

Larry, isn't the point of factor tilting to beat the 3 fund portfolio? How will I know if my strategy is working if I don't do some comparisons? How do I know how well I am doing? To say that my investments are their own benchmarks is a cop-out frankly. I do similar comparisons that you do in your articles, comparing my investments to DFA, Vanguard Indexes, and sometimes to Vanguard factor products. Being a student of the markets, these comparisons give me a sense of what is going on within those markets. I can get a sense of how the factors are performing.

I am almost 60 years old now and I have been investing for 35 years. Not going to change my approach now. I have a good sense of market history and believe that my choices will be vindicated. The point is that I have a long term view.

My investments have a Mid-Small Cap tilt and I have a Value tilt as well. I am not shocked that my portfolio has underperformed the 3 fund seeing that I deliberately underweight the High Tech sector and particularly the FAANG stocks. We have been in a Large Growth stock market for a decade now. This is the big reason that I do multiple comparisons. So in light of how my portfolio is constructed, the performance is not surprising.

As far as Buffett, from what I read his two main concerns are the intrinsic value and the cash flows generated by Berkshire-Hathaway. He knows that the markets will eventually correctly value his company but certainly in the back of his mind he is thinking about his stock's performance versus the S&P 500. Buffett certainly benchmarks B-H but he has a very long-term view. Not like Jack Welch who was obsessed with stock price and with managing earnings growth which might have eventually led to GE's downfall. Buffett has long term confidence in what he is doing, been at it a long time, I doubt he is going to change his stripes.

My problem, Larry is that I read too many of your articles, I do the same type of analysis that you do and now I am being chided for it. :wink:
by DaufuskieNate » Sat Jun 08, 2019 8:55 am

The ultimate benchmark is whether your portfolio is earning the real rate of return over the long term that is required in your financial plan and is doing so in a way that allows you stay the course . A second benchmark is whether the specific funds you use are tracking with their stated objectives over the long term. Judging a portfolio against a totally different portfolio is like judging an apple on the basis of whether or not it tastes like an orange.
Top
This is a very good answer. Larry made a good point about resulting. I am not changing course. The analysis of my performance went beyond just saying that I underperformed the 3 fund and therefore I am a bad investor. I went beyond that and analyzed factor by factor. Again, we have been in a Large Growth market so it should be no surprise that a 3 fund would outperform. The question is given what I have invested in, am I getting the results I should expect? The answer is Yes.
by larryswedroe » Sat Jun 08, 2019 9:18 am

nedsaid
First, Dafuskie gave you the answer. Seriously what you are doing IMO is "resulting", either the strategy is right or wrong before you know the outcome.

Second, re this
Larry, isn't the point of factor tilting to beat the 3 fund portfolio?
No it is not. It is to diversify the sources of risk and cut tail (and sequence risk) giving you greater chance of achieving your goals. Now if the factor tilt is used to outperform yes, then you simply took more risk and the risks showed up and you did not get it. What if you compare stocks to five year treasuries from 66 -84 I think and they underperform for almost 20 years do you now believe your strategy is wrong and switch? And for 40 years US large growth and small growth underperform long term Treasuries, that's 40 years (69-08) do you abandon your strategy? Seriously, it's not a cop out. It's avoiding the mistake of resulting. Now active managers should be judged against passive benchmarks, and similar passive funds with same exposures, but not in your case. I would not compare TSM to a tilted portfolio either if I decided TSM was best for me, that would be the same mistake of resulting. Only time to compare is if your assumptions have changed and I cannot think of anything that would logically lead me to conclude that risky assets should have similar risk-adjusted returns so the right strategy is to diversify across as many as I can find. Now luckily in the zoo of 600 only need a few. And only a few other risk assets worth considering as available at reasonable fees. So don't need "complexity" but IMO can do better than just simple 3 fund portfolio in terms of reducing risks and having better chance of achieving goals, especially well at reducing this risk when in periods of high equity valuations.

Best wishes
Larry
The point is that I benchmark my portfolio vs. the 3 fund portfolio but I also do other comparisons. I am moderate risk investor so I look at other moderate risk portfolios. I also do comparisons with factor indexes and factor products. The objective is to get a sense of whether I am performing well enough taking into account how I am invested. It is just that the 3 fund comparison is the easiest. I also do other comparisons. Even I know that if I don't invest like the 3 fund portfolio, that I shouldn't expect to perform like a 3 fund portfolio. But I have got to compare against something. I did compare with 3 main asset classes: US Stocks, US Bonds, International Stocks.

Again, my point is that you have to have some expectations of the relative performance of your portfolio compared to other approaches and you need some way to measure if you are doing well or not. And yes, you need an apples to apples comparison. What I was doing was apples to oranges and more detailed apples to apples comparison.

I realize that shorter term analysis has limited value and long term is what matters. But the short term can tell you a lot if your investments are behaving like one would expect. For example, if the Vanguard Small Value Index is up 5%, DFA Small Value is up 6%, and your Small Value product is down 2%, something is wrong. If you expect QSPIX to buffer down markets, if markets are down 20% and QSPIX is down 30%, there is a clink in the works. Doesn't mean necessarily something is wrong with QSPIX but it is a sign that maybe you need to do some checking.

There was a bond fund that I owned that was down 1.46% in 2018 when the US Bond Index was up 0.1%. Did some checking and found the fund had 7% in Emerging Markets of which 1.5% was in Hungarian Gov't bonds, 3% in Mexican Gov't bonds, and 2.1% in South African Gov't bonds. I was not pleased by this and gave feedback to the company. This was supposed to be a Core Bond fund but they were straying from their discipline. A few months later, those bonds I mentioned were mostly gone, wasn't because of my feedback, the managers realized they made a losing bet.

So this is what I mean by looking under the hood. I mostly do this myself so I have to be my own fiduciary.

Here I am responding to Random Walker on a point he raised. I made comments about Dave's portfolio which has about 24% alternatives. I opined that Dave's portfolio should be compared to a 50% stock/50% bond portfolio.

I am old fashioned, as they say the proof of the pudding is in the eating. It may look good, it may smell good, but does it taste good?

My point is that if you compare your portfolio to let's say a 50% stock/50% bond portfolio, you ought to see from the numbers that by adding the alts that you indeed have less beta risk than a standard portfolio. You ought to see evidence that the risks of extreme outcomes have been cut. You should see from the behavior of the components of the portfolio that you are getting the expected performance and the diversification benefits. I am certain your advisor has done this for you.

Saying that the comparisons are flawed but it doesn't mean they are meaningless. That is really what I am trying to say. I don't expect this calculated out to the 25th decimal point but I do expect that you would have a good sense that your investments are doing what they are supposed to be doing.

If steam is pouring out of the hood of my car and my heat indicator is stuck on cold, I will assume that my instrument is broken. I will stop the car, pull up the hood to check what is going on, and if need be call AAA. I don't just blindly just drive on trying to see through all that steam. Lots of Bogleheads would say press on regardless until their engine block cracked. For heaven's sake, do a bit of double checking.

The thing is, the checking under the hood that I am talking about isn't difficult. Even I can do it. Larry in his numerous articles has shown us how.
by larryswedroe » Sat Jun 08, 2019 4:27 pm

nedsaid
FWIW, there's nothing wrong with doing some comparison, but you have to ask what is the purpose of doing so? And we know such comparisons can easily lead to resulting
I get your warnings about resulting. Not saying people should change strategies whenever they are disappointed with comparisons. I learned a lot doing analysis on my portfolio and I am glad that I did it. There are limitations to about anything. What I did was do some analysis and let it go wherever the evidence would lead even if I didn't like the results. I didn't. What I am trying to say is that we shouldn't make the opposite error of resulting and that is just ignoring contrary evidence.
Last edited by nedsaid on Fri Jun 14, 2019 4:49 pm, edited 1 time in total.
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Re: How Do You Like My New 'Doo

Post by nedsaid » Fri Jun 14, 2019 4:45 pm

My retirement portfolio really has not changed, I did recently redeploy most of the cash in my Rollover IRA at Fidelity. A round of mild rebalancing from stocks several months ago had created this pool of cash. Most of it went into a very cheap Fidelity Short-Term Bond Index. The FDIC Insured Deposits that represented cash were not generating very much interest. I also added to the iShares Aggregate International Bond ETF, which is US Dollar hedged. I left a few hundred dollars in the FDIC Insured bank deposits.
A fool and his money are good for business.

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