AMCAP versus VG Total Stock Market Index

[Art G]

In a properly constructed portfolio with asset allocation and rebalancing, the rebalancing does just that -- it will take some of the money that was allocated to cash and/or bonds and buy stocks at distressed prices.

Note also that rebalancing led to a somewhat reduced concentration of stocks just before everything started blowing up.

Ziggy, if you're buying index funds, you're fully invested. You are much more likely to see mass withdrawals than you are an influx of new cash. It doesn't matter if they're allocated if they're all unmanaged portfolios. They will be forced to liquidate. Yesterday's market was a great example in small part what a mass liquidation can look like.

 

[Art G]

Yes. Dont waste your money on underperforming American Funds.



Neither are American Funds, and they charge a lot more than that!



But it makes more sense to put money in funds that on average lose even more money? I guess once its gone you no longer have to worry about it anymore.

And with those actively managed funds, you've got a fund manager ready, willing and able to lock in the losses rather than just be able to wait for a rebound.

Do you even think about this stuff for a couple of minutes or do the fingers type it out all by themselves?

Sure, you've convinced all your do it yourself buddies not to take money out. Perhaps you can wrestle Cramer for control of the airwaves?
Even when the market tanks and you are losing your money, you maintain that air that you know what you're talking about. You must be a thrill at parties. I'm sure you're happy with the thought that at least you didn't lose quite as much as your neighbor. Don't be proactive though.

 

[ziggy29]

Ziggy, if you're buying index funds, you're fully invested.

In the stock market? Not if you are using an asset allocation model that also includes bond funds and perhaps cash (money markets).

 

[Art G]

In the stock market? Not if you are using an asset allocation model that also includes bond funds and perhaps cash (money markets).

Bond funds get killed just like stock funds. Now if you're talking about individual bonds you've got a chance, but then again, we've seen how useful those bond rating services were. As to cash, it's great to live on, but history has shown that people sitting on cash, will miss the best returns days by being on the sidelines. It's a tough strategy at best.

 

[ziggy29]

Bond funds get killed just like stock funds.

Ridiculous.

Maybe *junk* bonds will get killed along with stocks in a bear market induced by a fears of a terrible economy, and maybe to a *small* degree corporate bonds will lose a little bit of value in a panicked environment where people are afraid of mass business failures, but when the market is down 30% from its peak as this one is, there's no way bonds lose anywhere near that. And in many bear market environments, bond funds *rise*.

My bond funds were up in 2001 and 2002, and they're down about 4% this year (which beats the hell out of being down 20% like my stocks). As a result, I was able to sell bonds and buy more stocks when I rebalanced in 2002, which wound up increasing my returns for the next four years.

 

[cute fuzzy bunny]

Ridiculous.

I have some better words. Maybe Art can continue posting in the joke thread.

How about this for hilarity?

Anyone seeing an advantage yet to a mutual fund currently holding cash? Just wondering.

As to cash, it's great to live on, but history has shown that people sitting on cash, will miss the best returns days by being on the sidelines. It's a tough strategy at best.

I think we've just identified one of the reasons why American Funds underperform an index, even without factoring in the 5.75% front end load.

 

[Art G]

Ziggy, I'm curious as to your funds?
Corporate bond funds are down for two reasons, the quality of the company and the ratings agencies. Muni bonds are down because of the ratings agencies, it's the reason muni bonds are a buy right now.
Again, I have some GMAC bonds currently valued at $28! GMAC was not a junk bond when I bought it.
I've had some of my biggest losses ever in short term bond funds. I'd much rather own individual bonds. JMO

 

[Art G]

I have some better words. Maybe Art can continue posting in the joke thread.

How about this for hilarity?





I think we've just identified one of the reasons why American Funds underperform an index, even without factoring in the 5.75% front end load.

Geez! How many times you gonna post that front end fee? I can move around within their portfolio at no cost, I can get out and back in within 60 days with no cost.
However, I'd much prefer to trust them with the extra cash than to trust you. At least it's obvious to everyone that you're very emotionally reactive with your money.
I'm pretty much bored with you. You keep stating the same things again and again, you manipulate the numbers to suit your needs, and apparently you can't grasp a point.
So, is there anyone else out there that wishes your mutual funds were currently holding cash?

 

[ziggy29]

Ziggy, I'm curious as to your funds?

ETFs, actually -- half in AGG and half in TIP. AGG has been fairly bad recently with increasing panic about anything but government-backed debt, but it still has way outperformed my stocks and significantly reduced my losses YTD.

I think the short term bond funds that are seriously melting down are the ones which had a lot of MBS paper and thus saw their NAV killed by mark-to-market rules on illiquid securities that no one wanted, even if they were performing. Google "Schwab Yield Plus" for more.

 

[cute fuzzy bunny]

Definitely belongs in the joke thread.

 

[Art G]

Ziggy, I never compared the results to stock funds. I just stated they were all down. I'm sure the bond funds haven't dropped as far recently. However, being diversified between the two still adds up to loss.
Look, I'm not trying to get into an argument, but apparently bunny is going to beat the dead horse. I'm looking for the best way to move forward, was hoping to get a discussion as to how best to do that.
BTW, at least living in the hill country, you've missed the real estate bust for the most part. I'm going to be down there this weekend.

 

[Art G]

Definitely belongs in the joke thread.

Oh good! More posts of yours to report.

 

[cute fuzzy bunny]

So let me get this straight...you resurrect an old argument thread with a taunt, make claims that are proven wrong using charts produced by MSN finance (which you then say are manipulated), then you make self contradictory statements, demonstrate a weak understanding of investment principles, and this is worthy of reporting to the moderators?

Let me know how that works out for you.

 

[Art G]

Figures that's how you'd see it.
I re-opened a thread by asking if people wished their funds had cash available. You took it from there. Did anyone hold a gun to your head and demand you respond sarcastically?

 

[cute fuzzy bunny]

Eh, it was pretty much mandatory.

Your comment at best would make people feel bad about their recent losses. At worst it was a lame attempt to claim that the funds you sell to people at exorbitant prices might demonstrate an advantage by holding cash.

Which wasnt born out by the data.

So given that you were somewhere [moderator edit] and asking for trouble...you're right, I shouldnt have clicked on 'view post'. Neither should anyone else who has you on ignore.

 

[Art G]

Whoa! It's like you're in my head! You just know exactly what I meant!
Pretty impressive responses considering you've claimed to have me on ignore.
Orrrr, perhaps I was just asking people if they wished their funds had more cash?

BTW, yet another post to report. Keep em comin'!