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Old 04-03-2017, 09:01 AM   #161
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...I just use the brokerage's reporting on returns. Too lazy to add in the cash not held there.
Perhaps they might have included your cash already.

I have always included everything in my investable accounts, and I use the bottom line in my Quicken screen, the number that says "Net Worth". And I entered in every account that we hold, even the ones that Quicken cannot download and I have to do manual entry, such as Treasury Direct.

This allows me to see my total AA at a glance. I have always have some spare cash sloshing around in each account, and I need to know my "buying power" if/when the market crash. Of course that cash drags down on my return during bull markets, and I would be wrong to not include the effects of that "insurance".

I also do not trust Quicken's calculated returns, and do my own. Quicken has shown some silly numbers that I caught.

PS. I do not have any RE entered into Quicken. It is not applicable to my tracking of investable asset performance.
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Old 04-03-2017, 09:03 AM   #162
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+1 I don't even look at the AA of individual accounts... just the whole nestegg... anything other than that is just fooling yourself.
Fooling yourself how? Why does the AA of the entire nest egg matter? I only really look at the AA of the portion of my investable assets that I rebalance. I don't rebalance my entire net worth (less real assets). I know some people do, but that's not how I choose to manage our investable assets.
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Old 04-03-2017, 09:08 AM   #163
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My cash is supposed to be spent. But actually, I don't have time nor interest to calculate every minute thing for accuracy. I'm focusing on other stuff. Frankly I don't have a clue what we have exactly.
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Old 04-03-2017, 09:09 AM   #164
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So, I closed the first trimester of 2017 with a gain of 5.49%, calculated over every account, including the last penny in the checking account.
...
It may just evaporate next week, but so far so good.
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YTD (March 31, 2017) returns for a collection of 'close-to' 60/40 funds (from Morningstar.com):

4.35% VSMGX Vg LifeStrategy Moderate Growth (60/40)
4.10% VTWNX Vg Target Retirement 2020 (57/43)
3.82% VBIAX Vg Balanced Index (60/40)
3.84% DGSIX DFA Global 60/40 I
3.45% VWENX Vg Wellington (66/34)
4.59% VTTVX Vg Target Retirement 2025 (65/35)
I have kept an eye on Wellington, but not the other MFs. Neither Wellington or myself are indexers. Last year, they beat me. This year, I am doing better so far (knock on wood).
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Old 04-03-2017, 09:37 AM   #165
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Fooling yourself how? Why does the AA of the entire nest egg matter? I only really look at the AA of the portion of my investable assets that I rebalance. I don't rebalance my entire net worth (less real assets). I know some people do, but that's not how I choose to manage our investable assets.
Let's say that you have $1 million in your IRA that is is $600k in stocks and $400k in bonds and that you also have $250k in CDs outside your IRA and that the IRA earns 5% and the CDs earn 1%.

The way I do it (and I think many others) would be that the AA of that person's total portfolio is 48/52 ($600/$1,250 and $650/$1,250) and the return is 4.2% ($1m@5% + $250k@1%... or $52.5k/$1,250k).

If that person thinks that their portfolio earns 5% because they look at their brokerage statement and it says 5% then IMO they are fooling themselves because they are conveniently ignoring that they have a substantial investment in lower performing assets.

So when it comes time to rebalance I would rebalance to a 48/52 AA across both accounts.

I don't include our homes or cars or anything like that in the portfolio... like you say... just investable assets.... but would include any financial assets that we have the we plan to or could be used in retirement so taxable accounts, tax-deferred accounts (tIRAs, 401ks 403bs, etc) and tax-free accounts (Roth IRAs, HSA's, etc.) but excludes our local bank accounts that we use to pay our bills that typically have de minimus balances so have no significant impact, homes, cars, boats, etc. In some situations I can see where college funds might be carved out and viewed separately, but I chose not to.
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Old 04-03-2017, 09:48 AM   #166
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If I count my taxable account I would be earning a lot more than 5%. But the things about stocks, it's all paper gain. Don't get too worked up about it.
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Old 04-03-2017, 09:49 AM   #167
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I have kept an eye on Wellington, but not the other MFs. Neither Wellington or myself are indexers. Last year, they beat me. This year, I am doing better so far (knock on wood).
I'm surprised that Wellington doesn't do as well as the Target fund with similar AA. How come target funds have such a bad rep.
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Old 04-03-2017, 10:45 AM   #168
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Old 04-03-2017, 10:56 AM   #169
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Old 04-03-2017, 10:59 AM   #170
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Old 04-03-2017, 11:02 AM   #171
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Old 04-03-2017, 11:25 AM   #172
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+1 I don't even look at the AA of individual accounts... just the whole nestegg... anything other than that is just fooling yourself.
Different tools for different measurements. Actually, dollar-weighted return rather than time-weighted return is probably the right measuring tool for a total portfolio. (Assuming your "whole nestegg" includes the fixed income stuff)

Re AA among the individual accounts I don't worry about that either. I measure my total equity portfolio separately from cash & fixed income. It's all passive investments so I look at the full ACWI and at the Russell 3000. If you don't look at the equities separately, how do you know if your investment performance is acceptable?

If I were a trader, I would measure my trading activity separately against an appropriate measuring stick. BTDT; passive is statistically better.

I also have some special tranches for experimentation. See post #139 & @LOL!'s views on that.
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Old 04-03-2017, 12:07 PM   #173
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....If you don't look at the equities separately, how do you know if your investment performance is acceptable? ....
It doesn't matter since I am only interested in total portfolio return. I compare my actual portfolio return which has a 60/35/5 AA target (and that I keep close to target) to benchmark returns of similar 60/40 balanced funds and also to a calculation of the return for a portfolio of core funds that are consistent with my AA.

So for example, if my AA was a simple 60% domestic equities and 40% intermediate corporate bonds my custom benchmark would be 60% of the total return of Vanguard Total Stock (Admiral) and 40% of the total return of Vanguard Intermediate-Term Corporate Bond Index fund. In reality mine is more complex than that since I slice and dice and my AA has 8 different asset classes and a representative core fund for each asset class. Since most of my holdings are index funds, they don't usually vary much from the benchmark return for that asset class.
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Old 04-03-2017, 12:31 PM   #174
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Got it. That probably works OK with passive investments. The issue I see is that someone with active management could easily have equity investments underperforming and the bond portfolio overperforming and, looking only at a total, he would not realize that.

Re your benchmark I prefer to measure against things like ACWI and Russell 3000 rather than against another fund. Again, much more important if the portfolio is actively managed and hence has risk of falling out of bed. Also, the type of benchmark you describe tests whether you are doing the thing right rather than whether you are doing the right thing. In other words, if you measure yourself only against your own AA then you will never know whether that is the right AA or not.
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Old 04-03-2017, 12:55 PM   #175
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I'm surprised that Wellington doesn't do as well as the Target fund with similar AA. How come target funds have such a bad rep.
I don't know about target funds, nor follow them. I know that Wellington and Wellesley always have a conservative stance and have more defensive stocks.. If and when the market turns south, they will beat me soundly.

Of course, if my crystal ball is good, I would bail to cash and keep my gain. Easier said than done, of course.
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Old 04-03-2017, 01:02 PM   #176
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I don't know about target funds, nor follow them. I know that Wellington and Wellesley always have a conservative stance and have more defensive stocks.. If and when the market turns south, they will beat me soundly.

Of course, if my crystal ball is good, I would bail to cash and keep my gain. Easier said than done, of course.
The target fund from LOL's post, Target 2025, 65/35, 4.59 vs 3.45 for Wellington(66/34). I have a lot of cash already. No need to panic. I just hope to earn more than CD rates.
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Old 04-03-2017, 01:19 PM   #177
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....Also, the type of benchmark you describe tests whether you are doing the thing right rather than whether you are doing the right thing. In other words, if you measure yourself only against your own AA then you will never know whether that is the right AA or not.
Huh? You said the same thing twice and put rather in between... doesn't make sense. Also, how does one "know" whether an AA is right or not?
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Old 04-03-2017, 01:24 PM   #178
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The target fund from LOL's post, Target 2025, 65/35, 4.59 vs 3.45 for Wellington(66/34). I have a lot of cash already. No need to panic. I just hope to earn more than CD rates.
Yes, I saw the various funds that LOL listed. As mentioned, I do not follow any of them other than Wellington. Most balanced or target funds probably index for both stocks and bonds, and do not deviate too far from it.

Wellington manager stresses that he does not do index, hence I watch him more.

About panicking or not, I do not know what anybody else has. I was talking about my own stocks, which beat the S&P on the way up, but will also go down faster than the index on the way down. So, I need to pay attention. My victory against the conservative Wellington can be short-lived.
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Old 04-03-2017, 01:38 PM   #179
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Yes, I saw the various funds that LOL listed. As mentioned, I do not follow any of them other than Wellington. Most balanced or target funds probably index for both stocks and bonds, and do not deviate too far from it.

Wellington manager stresses that he does not do index, hence I watch him more.

About panicking or not, I do not know what anybody else has. I was talking about my own stocks, which beat the S&P on the way up, but will also go down faster than the index on the way down. So, I need to pay attention. My victory against the conservative Wellington can be short-lived.
Isn't that how it's supposed to be. If it goes up fast, it will come down fast. I worry about stocks that don't go up fast but go down faster.
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Old 04-03-2017, 04:03 PM   #180
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The target fund from LOL's post, Target 2025, 65/35, 4.59 vs 3.45 for Wellington(66/34). I have a lot of cash already. No need to panic. I just hope to earn more than CD rates.
I think Wellington was great in 2016, up 3.5% more than the VTTVX TR fund and 2% more than DGSIX. This just shows that just looking at the stock:bond ratio is not the whole story. Wellington lacks small-caps and has limited foreign holdings. The bonds it holds have a longer average effective maturity than some other funds.

So if US large cap value stocks outperform other asset classes, then Wellington moves to the head of the class. But if they don't, then Wellington lags. Also, if bonds are hurt by rising interest rates, then Wellington suffers more than some other funds.

And Target Retirement funds should not get a bad rap. The low expense ratio ones can be very difficult to keep up with --- if one has them in tax-advantaged accounts. At least they take away the emotions of rebalancing.
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