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Old 06-05-2014, 04:01 PM   #21
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I dunno. Some will say that covering all bets require you to have a Forex account too.

There are many bets I do not make, because I am not knowledgeable, or because I am chicken, or I just do not think they are necessary.
Let me rephrase that, then:

Two types of portfolios, a W&W portfolio and a Bogleheadish all index fund portfolio, were the most appealing to me. I couldn't make up my mind, so I decided to do both, covering my best two (2) bets.
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Old 06-05-2014, 04:03 PM   #22
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All right! Of course there are bets both of us do not care to make, like at the Forex or going to the race track.

But of course I have many smaller bets going on. More than most, but less than a few posters here. I fancy myself the manager of a tiny MF, picking my own stocks, in charge of my own money. Better than a MF manager, I do not have to make quarterly report, nor explain myself to anybody. I will stop at some point, but not now.
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Old 06-05-2014, 04:05 PM   #23
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We own 100% index funds and sleep very well at night. Our main holdings are the Vanguard Total US Stock Market, Vanguard International Stock Market, and Vanguard Total Bond Market.
That's what I did too. It's not our sole source of income though.

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Reason number 1 to not love index funds: 20-year-old FOREX traders will mock you for being satisfied with mediocrity.
Let them. When they spin crash and burn I'll be gloating.
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Old 06-05-2014, 04:10 PM   #24
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All right! Of course there are bets both of us do not care to make, like the Forex or going to the race track.
You're right. Personally I wouldn't bet a penny on Forex, and I have never bet on horses either.
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Old 06-05-2014, 04:11 PM   #25
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I think you would have a better chance on the horses.....
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Old 06-05-2014, 04:12 PM   #26
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Reason number 1 to not love index funds: 20-year-old FOREX traders will mock you for being satisfied with mediocrity.
LOL. Then I shall be mocked ! I am 90% index funds and I love the low fees and relatively good built in diversification. It also means I don't have to watch as an individual stock falls from 10x to x and sweat when to make sell decisions. With index funds its all in the rebalancing for me.
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Old 06-05-2014, 04:15 PM   #27
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I went to the Greyhound race once in my life. Made a $10 bet, knowing nothing about dog races. Of course I lost it. Did not see any potential for fun there.

I felt the same way at the casino. If I learned to play poker, I guess I might feel differently. But to sit at a slot machine, well, I think there are computer simulations one can run on a PC, which give just as random results. So, why is that fun?
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Old 06-05-2014, 04:21 PM   #28
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How did you folks convert from Index funds to W&W in your taxable account at retirement ? Wouldn't that have led to large cap gains recognition ?
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Old 06-05-2014, 04:26 PM   #29
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How did you folks convert from Index funds to W&W in your taxable account at retirement ?
My conversion was entirely in my 401k/IRA account. I spent most of my taxable savings between retirement and age 59.5.
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Old 06-06-2014, 04:28 AM   #30
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while i do like index funds my managed portfolio has done better than the hypothetical etf mix i track for comparison.

but if there is one thing i don't love about indexing it is there is a good chance it will be a means to its own end.

with only 26% of fund investors it hasn't been an issue yet but the more successful it gets the more over valued those issues will be relative to stocks not in the index. eventually value will be anywhere but in the indexes.

one thing i did notice at fidelity the last few years is large cap funds have been greatly beating their index .

some interesting results have already started to take shape at fidelity, i would imagine other fund families are seeing similiar results.

i only follow fidelity funds so i can only talk about their results.


looking at some of the 2013 results.

out of 26 fidelity large cap funds only 6 failed to beat the s&p 500.

mid caps again saw most of fidelity's funds beat the Russell mid cap index.


looking back to 2012 at fidelity we had 27 large cap funds ,21 beat the s&p 500


2011 saw the s&p beat all but 2 of fidelitys large cap funds


2010 saw out of 27 funds, 21 again beat the s&p 500

that is all i have access to in the archives .

so out of the last 4 years you had the index win once and the managed funds win 3x

i guess the last 4 years we can say managed large cap funds at fidelity have beaten indexing 75% of the time but more important the number of funds beating the index has been near land slide except 1 year..


who knows if the tide is turning and things will now be a stock pickers market but it certainly bares watching to see if indexing and valuations are starting to affect the typical results we are used to which is indexing usually wins.
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Old 06-06-2014, 05:48 AM   #31
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I have a mix b/t index and active funds. I mostly like indexing for US large caps and also for some mid caps, whereas I think some discretion in international, and US small caps can be valuable, especially during market downturns.
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Old 06-06-2014, 05:52 AM   #32
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All I want is money. If it makes me money, I want it. All I love is money.
I hear you. My goal is to have more money at the end of the year than I had at the beginning, and I don't particularly care how I get there. Over the years, I've maintained an ever shifting variety of index funds, actively managed funds, ETFs, MLPs, individual stocks/bonds, foreign currencies, CDs, REITs and other things.
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Old 06-06-2014, 08:40 AM   #33
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You don't have any index funds at all? I know you've mentioned the two W's, but is that it?

Apparently, a W fund is kind of like an index fund, since Jack Bogle recently stated:
In Wellington Fund's case, in the last decade 97% of its return has been determined by the return of the index I put together for them in 1978.


John Bogle: Vanguard Founder Discusses How To Invest - NASDAQ.com

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Old 06-06-2014, 08:57 AM   #34
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who knows if the tide is turning and things will now be a stock pickers market but it certainly bares watching to see if indexing and valuations are starting to affect the typical results we are used to which is indexing usually wins.
Historically, active management can succeed in beating indexing in bull markets. The problem is that when it underperforms (either in a bear or a stagnant market) it REALLY underperforms, and then you're usually paying 1-2% off the top whether it does well or not.

The key is over the long term (decades), indexing wins 80% or more of the time, even before fees and expenses. One three or four-year bull period is not what most indexers are interested in.
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Old 06-06-2014, 09:28 AM   #35
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historically what was, may change as indexing becomes more and more popular which was why I think it may be an end to its own performance.

in fact based on fidelity's recent results maybe it already has started shifting.

time will tell.
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Old 06-06-2014, 09:29 AM   #36
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I started my 401K in 1984 with 2 index funds (total stock market and bond) and (as MegaCorp added additional options) shifted to 4 index funds (Large stock, small/midcap, bond, international) by 1994, and have kept it like that. I just decided I'd be better off matching the market for my 401K since it is a long term thing, and I haven't been disappointed.

Perhaps (just a speculation on my part) index funds work bet in conjunction with consistent dollar cost averaging over the long term. The combination has really boosted my 401K over 30 decades, and with the level of my investment risk tolerance I'm happy hitting "singles" instead of trying to swing for the fences.
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Old 06-06-2014, 09:32 AM   #37
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Historically, active management can succeed in beating indexing in bull markets. The problem is that when it underperforms (either in a bear or a stagnant market) it REALLY underperforms, and then you're usually paying 1-2% off the top whether it does well or not.

The key is over the long term (decades), indexing wins 80% or more of the time, even before fees and expenses. One three or four-year bull period is not what most indexers are interested in.
Yes, the problem with managed funds is that when hot sectors turn cold, the door is suddenly too narrow for them to exit all at once.

As an individual stock holder, I like the more visibility I get into the individual sectors of the market. I can see when people bid up hot stocks, and when they either have enough and decide to bail.

It is interesting to watch individual stocls. But I want to stress that it is not that easy to make money of this. Not at all. One may sell out too soon, then does not know what to do with the money. Or plunk money in a sector that is deserted, and sit there for a few years while the market is rising and leaving you behind.
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Old 06-06-2014, 09:36 AM   #38
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while i do like index funds my managed portfolio has done better than the hypothetical etf mix i track for comparison.

but if there is one thing i don't love about indexing it is there is a good chance it will be a means to its own end.

with only 26% of fund investors it hasn't been an issue yet but the more successful it gets the more over valued those issues will be relative to stocks not in the index. eventually value will be anywhere but in the indexes.

....

who knows if the tide is turning and things will now be a stock pickers market but it certainly bares watching to see if indexing and valuations are starting to affect the typical results we are used to which is indexing usually wins.
Interesting idea, and certainly possible (I guess, but maybe not, due to the size of the market?).

But no doubt we will hear about it if it happens. The bogleheads and other indexers will have plenty of salespeople and 'internet experts' (and maybe a few FOREX traders) loudly pointing out how the indexers are finally wrong, after all these years (we told you!).

If/when that happens, I may be too old to be aware enough to make changes. But maybe the disadvantage would be slight, and not a big deal at that point?

-ERD50
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Old 06-06-2014, 09:36 AM   #39
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historically what was, may change as indexing becomes more and more popular which was why I think it may be an end to its own performance.
The market is a feedback system, so if pricing ever becomes even slightly out of whack because too much money is in indexes, investors will move to take advantage of the anomaly and quickly eliminate it. Given the lengths traders will go to for the *tiniest* gain (or perceived possible gain), I don't think indexing's dominance will ever end.

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in fact based on fidelity's recent results maybe it already has started shifting.
The fidelity results need to be properly normalized against some kind of factor model. Otherwise there's just too much slop in what is a "comparable" fund.
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Old 06-06-2014, 09:37 AM   #40
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I hear you. My goal is to have more money at the end of the year than I had at the beginning, and I don't particularly care how I get there. Over the years, I've maintained an ever shifting variety of index funds, actively managed funds, ETFs, MLPs, individual stocks/bonds, foreign currencies, CDs, REITs and other things.
I do not know what turnover you have, but mine is actually very low. Wellesley looks like a day trader compared to me. I am kicking myself now for bailing out of some sectors too soon earlier this year, and left behind 50-60% gains. I am not as aggressive as I used to be, and that is a good thing, I think.
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