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Article about MF Industry Outflows
Old 12-12-2008, 07:32 AM   #1
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Article about MF Industry Outflows

more evidence of the mass exodus in panic mode...
Vanguard Bucks the Trend on Outflows in November - Morningstar Fund Spy

i own 2 American funds (AWSHX, ANWPX) and 4 D&C funds (DODGX, DODFX, DODBX, DODIX). the rest of my funds are all VG.
i am not adding any more new money to the American or D&C funds, i.e. just letting them ride for the next 10+ years. i hate to follow the crowd and exchange them. i especially do not want to put all my portfolio in only 1 fund company.
i am really sitting the fence on doing more TLH or just taking the cap gains hit. argh!!!!
any and all advice is welcome.
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Old 12-12-2008, 08:53 AM   #2
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Originally Posted by freebird5825 View Post
more evidence of the mass exodus in panic mode...
Vanguard Bucks the Trend on Outflows in November - Morningstar Fund Spy

i own 2 American funds (AWSHX, ANWPX) and 4 D&C funds (DODGX, DODFX, DODBX, DODIX). the rest of my funds are all VG.
i am not adding any more new money to the American or D&C funds, i.e. just letting them ride for the next 10+ years. i hate to follow the crowd and exchange them. i especially do not want to put all my portfolio in only 1 fund company.
i am really sitting the fence on doing more TLH or just taking the cap gains hit. argh!!!!
any and all advice is welcome.
Unfortunately my financial advice only consists of doing another shot.

Sorry
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Old 12-12-2008, 09:07 AM   #3
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All our MF's are in Fidelity, VG and Schwab(401k). I plan to roll the 401(k) to VG when I RE in 14 months to VG, Wellington, for simplicity. My 401(k) is divided among a few funds to give a 65/35 mix similar to Wellington.

I don't have worries about keeping our money in only a couple of institutions.
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Old 12-12-2008, 09:19 AM   #4
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Originally Posted by freebird5825 View Post
more evidence of the mass exodus in panic mode...
Vanguard Bucks the Trend on Outflows in November - Morningstar Fund Spy

i own 2 American funds (AWSHX, ANWPX) and 4 D&C funds (DODGX, DODFX, DODBX, DODIX). the rest of my funds are all VG.
i am not adding any more new money to the American or D&C funds, i.e. just letting them ride for the next 10+ years. i hate to follow the crowd and exchange them. i especially do not want to put all my portfolio in only 1 fund company.
i am really sitting the fence on doing more TLH or just taking the cap gains hit. argh!!!!
any and all advice is welcome.
If you don't need the money, why do all that tax loss harvesting? If the market rebounds in a couple years, you'll be kicking yourself for selling out in a panic. Dodge anfd Cox, American Funds, and VG are NOT going anywhere.........
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Old 12-12-2008, 09:51 AM   #5
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If you don't need the money, why do all that tax loss harvesting? If the market rebounds in a couple years, you'll be kicking yourself for selling out in a panic. Dodge anfd Cox, American Funds, and VG are NOT going anywhere.........
Actually, if it's just tax loss harvesting, they can get back in after 31 days -- so the only "kicking" they'd need to do is if the market rallied strongly in the next month.
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Old 12-12-2008, 10:11 AM   #6
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Actually, if it's just tax loss harvesting, they can get back in after 31 days -- so the only "kicking" they'd need to do is if the market rallied strongly in the next month.
The point is, TLH is a personal decision. If freebird does not need the money for a number of years, why TLH? If she wants out of the market, I guess go for it. Taking capital gains you don't have to based on an article on fund outflows? Not my cup of tea, but freebird is a maverick so its up to her. If I or anyone else KNEW what the market was going to do, Warren Buffet would be calling........
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Old 12-12-2008, 01:28 PM   #7
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If freebird does not need the money for a number of years, why TLH?
true
If she wants out of the market, I guess go for it.
not true - staying the course. me and my imaginary ostrich are just hanging out.
Taking capital gains you don't have to based on an article on fund outflows?
actually i thought the cap gain distributions at year end, due to the mass exodus (pandemonium) going on at most of the fund companies, were beyond my control. and would put me in the position of paying taxes on said distributions, not mine but due to the panic selling of the other fund shareholders.
steer me right here, please.
Not my cup of tea, but freebird is a maverick so its up to her.
guilty as charged TY for the compliment.
If I or anyone else KNEW what the market was going to do, Warren Buffet would be calling........
darnit , i thought your tea leaves were better than mine.

i'm just a dumb enjineer trying to make lojical cents of all this finanshull stuff.

seriously, though, i was looking for informed feedback and i thank you for that.
bottom line - i do NOT want to sell and lock in losses. these funds and the managing fund families are well worth hanging onto.
however, i do NOT want to get zinged for cap gains distributions and have to write the IRS a check for something i had no part in (the panic selling). i've been nailed like this before because i held onto funds that had massive redemptions.
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Old 12-12-2008, 03:54 PM   #8
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If you are in a taxable account and you are showing a loss in your account, selling the fund and repurchasing the fund 31 days later (or purchasing a similar fund right away) allows you to offset up to $3000 of income on your taxes (this year alone). Why you would not want to do this is a mystery to me. You would then also have a lower cost basis for when you might sell the newly purchased shares in the future. If you could avoid a distribution this would also be a benefit to you by reducing a "phantom" capital gain you would be paying taxes on as well.

Mind you, I am not a financial adviser, so I can't really make my mind think like one . . . that would take some real practice.
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Old 12-12-2008, 07:42 PM   #9
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If you are in a taxable account and you are showing a loss in your account, selling the fund and repurchasing the fund 31 days later (or purchasing a similar fund right away) allows you to offset up to $3000 of income on your taxes (this year alone). Why you would not want to do this is a mystery to me. You would then also have a lower cost basis for when you might sell the newly purchased shares in the future. If you could avoid a distribution this would also be a benefit to you by reducing a "phantom" capital gain you would be paying taxes on as well.

Mind you, I am not a financial adviser, so I can't really make my mind think like one . . . that would take some real practice.
yes, all of the described funds are in taxable accounts. and of course all are showing YTD losses. all D&C funds are owned for just over 4 years, AWSHX and ANWPX are owned for 11 yrs. some were inherited, so MY cost basis is tough to pin down exactly.
my reasons why NOT to TLH...pick 'em apart if you see an error. i don't get defensive. i ask questions because it helps me decide between options i have already formulated in me own little enjineer's brain...
- i do not like to churn my retirement portfolio as a general rule. there have to be darn good reasons for me to exchange funds.
i will list my personal investing rules...
1st place - buy and hold (don't panic).
2nd place - achieve a lower expense ratio when it makes sense to exchange for reasons of rebalancing AA, unsolved & prolonged fund perf problems, etc.
3rd place - legally avoiding taxes (munis, Roths, TLH)
- i already did a $3K TLH in November before year end dist. i gained a lower exp ratio (JAOSX => VEURX) and achieved my 2008 harvest.
- in the case of the 2 American funds, i already paid the front load way back in 1997-99. so i don't want to repeat that. AWSHX is a keeper fund, ANWPX is for fun.
- D&C funds are my non-VG funds for the simple reason of owning different fund families, not just one. they are good core funds and i intend to keep them for the very long term.

the only reason i am considering this is to avoid the tax man if i can, legally of course.
just juggling variables here...
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Old 12-12-2008, 08:22 PM   #10
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yes, all of the described funds are in taxable accounts. and of course all are showing YTD losses. all D&C funds are owned for just over 4 years, AWSHX and ANWPX are owned for 11 yrs. some were inherited, so MY cost basis is tough to pin down exactly.
my reasons why NOT to TLH...pick 'em apart if you see an error. i don't get defensive. i ask questions because it helps me decide between options i have already formulated in me own little enjineer's brain...
- i do not like to churn my retirement portfolio as a general rule. there have to be darn good reasons for me to exchange funds.
i will list my personal investing rules...
1st place - buy and hold (don't panic).
2nd place - achieve a lower expense ratio when it makes sense to exchange for reasons of rebalancing AA, unsolved & prolonged fund perf problems, etc.
3rd place - legally avoiding taxes (munis, Roths, TLH)
- i already did a $3K TLH in November before year end dist. i gained a lower exp ratio (JAOSX => VEURX) and achieved my 2008 harvest.
- in the case of the 2 American funds, i already paid the front load way back in 1997-99. so i don't want to repeat that. AWSHX is a keeper fund, ANWPX is for fun.
- D&C funds are my non-VG funds for the simple reason of owning different fund families, not just one. they are good core funds and i intend to keep them for the very long term.

the only reason i am considering this is to avoid the tax man if i can, legally of course.
just juggling variables here...
You can only harvest $3000 in losses each year net.
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Old 12-12-2008, 08:30 PM   #11
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Freebird, I'm very sorry. I like you, but I can't help but comment: Please do your readers a favor and reach for the shift key when appropriate. It doesn't take much effort at all, and it makes your words so much easier to read. Capitals such as "I" were invented for a reason. Plus, you want to be taken seriously, don't you? That is, you don't want to be mistaken for a 9 year old, right? Thank you!
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Old 12-12-2008, 08:31 PM   #12
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You can only harvest $3000 in losses each year net.
yes, indeed.
you really help me eliminate the variables that i am unsure of.
i sincerely hope it amuses to watch a rocket scientist try to use logic
(if p, then q) and "what if" in investing. i do try to keep my decision process unemotional. but is that not the investor's best safeguard - to eliminate emotion from influencing one's decisions?
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Old 12-12-2008, 08:36 PM   #13
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You would then also have a lower cost basis for when you might sell the newly purchased shares in the future.
Why is that a good thing? You might actually be better served to keep the higher basis for the future than TLHing now. It all depends on a given person's specific situation but it's something to consider.
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Old 12-12-2008, 08:37 PM   #14
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Freebird, I'm very sorry. I like you, but I can't help but comment: Please do your readers a favor and reach for the shift key when appropriate. It doesn't take much effort at all, and it makes your words so much easier to read. Capitals such as "I" were invented for a reason. Plus, you want to be taken seriously, don't you? That is, you don't want to be mistaken for a 9 year old, right? Thank you!
No offense taken.
But being serious is not always in my nature, eh?
I have bilateral carpal tunnel (10% permanent partial disability per hand) and use a touch sensitive keyboard to type. I tend to minimize the keystrokes if my hands hurt. Therefore I don't always reach for the shift key.
I can't promise I will always do so, but I will certainly try.
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Old 12-12-2008, 08:39 PM   #15
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Freebird,

I didn't know. Thank you very much for trying when it doesn't hurt to do so.
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Old 12-12-2008, 08:40 PM   #16
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Freebird,

I didn't know. Thank you very much for trying when it doesn't hurt to do so.
no problemo. all is well.
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Old 12-13-2008, 04:14 AM   #17
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You can only harvest $3000 in losses each year net.
With the caveat that you should make sure you have 3,000 in losses take this year I doubt it matter too much when you tax loss harvest. Still, as long as you pretty much switch between two similar but not identical funds, I think it is marginal better to take most of your losses now.

The tax law certainly could change in the next year or so, and I think having a funds with variety of tax basis (some big losses, other small losses, a few with a gain) would give you the maximum flexibility in the coming years.

What is the disadvantage of selling now and reinvesting in the market?
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Old 12-13-2008, 07:42 AM   #18
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I recently tax loss harvested about $60,000 in losses. I'm covered for the next 20 years unless the tax laws change. Of course, I'm now totally bullet proof against any capital gains distributions from my funds or will be greatly insulated from capital gains from my current investments.

I sold SPY and IWD and consolidated into VTI. It gives my a broader market exposure although with a lower yield. In late December when my 31 days are up, I might go back into SPY but probably not.

FWIW, I've gotten about 1/3 of my realized loss back in the form of unrealized gains in VTI. It feels much better to see "green" when I look at my Etrade Account screen even though I know the true story.
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Old 12-13-2008, 08:02 AM   #19
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Why is that a good thing? You might actually be better served to keep the higher basis for the future than TLHing now. It all depends on a given person's specific situation but it's something to consider.
You are right, it becomes a trade off between taxes on income and taxes on capital gains.

I personally would lock in my losses (which is a known and I can accumulate in excess of $3000 for future years to offset income) vs banking on capital gains (which are unknown and may not be achieved). Also an assumption I made was that there was no front end load.
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Old 12-15-2008, 11:58 AM   #20
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Thank you all for your inputs and comments, which truly helped me in my decision process.
I have decided to completely stay the course and do no more exchanges for TLH before year end. Right or wrong, it is what my gut tells me to do. That gut feel is to sit tight on the American and D&C funds. And hope the taxman doesn't bite me too hard.
This is my first year of predictable income and will be used as my baseline for years to come. I'll get my ice packs at the ready.
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