Chips off the table...

[audreyh1]

Meanwhile, FSICX has outperformed over both 10 and 5 year periods. But it's not really a FX fund. "The fund uses a neutral mix of approximately 40% high yield, 30% U.S. Government and investment-grade, 15% emerging markets, and 15% foreign developed markets."

Yes, this is true. I know it is a multi-sector bond fund. Nevertheless I have owned it for many years and it seems to often "behave" like an emerging debt bond fund even though it is a relatively small percent of the allocation. Can't explain it - other than EM debt is super volatile.

Perhaps its outperformance over long periods has to do with regular rebalancing between the different bond asset classes?

Audrey

 

[IndependentlyPoor]

One thing I noticed in both the Loomis Global Bond fund (which I own) and T. Rowe Price's international bond fund is that they haven't generated excess returns due to the declining dollar over the last 10 years. While their volatility tracks with that of the dollar, their long-run returns are very similar to a plain old bond index. Neither one hedges currency exposure.

I've looked at this several times and always end up wondering if all you get with a foreign bond fund is added volatility.

I owned BWX since its inception, and always felt that its movements made sense. It has done a little better than the others.

It is poorly correlated to everything else in my portfolio, and I was happy with it until it inexplicably stopped paying dividends. I couldn't abide a bond fund that quit paying dividends, so I sold it in July and have been trying to figure out what to do with the proceeds ever since.

 

[audreyh1]

Be aware that the Yahoo charts often don't include dividends - at least that is my understanding. Better use M* for long term charts.

 

[megacorp-firee]

I too am not optimistic about the next several years (nothing to do with politics). I always said if I could get my portfolio back close to where it was at the end of 2007, I would reallocate my assets. Well I got there recently so on Monday morning I cashed out of apple and google with plans of increasing the bond side of my portfolio.

Wouldn't you know it? Apple and Google went on a tear this week and as of closing today, I left about 50K on the table.

I am doing the same. Being retired, the last few years have been a wake up call for me. I (erroneously) thought I had a conservative, well balanced portfolio, based upon MPT. As everyone knows that was not an adequate defense. Therefore, I have been selling into strength to keep my equity exposure at 38% following Bogle with my age (62%) in fixed income. I will continue to re-balance on every significant move forward. Monthly if necessary.

We are also retired. We have discovered that DW risk tolerence is not where we thought it was. At the start of this 'correction', we were 60/40 AA
To keep peace (or at least to avoid a repeat of the tirades), I am thinking, as we get back to where we were (still down 17%), we would go to a 25/75 AA, with the new FI portion in T-Bonds ladders. However, the interest rates are dismally low. A kneejerk reaction? Yes, but ...

What are you all planning on using as your investment vehicles for the fixed portion of your portfolio?

Anyone else have any thoughts on this?

I assume if you patiently wait, the guvmnt will help by raising rates as inflation starts to crawl out of its hole. ...but that will lead to a different set of issues.

Thanks.

 

[HFWR]

What are you all planning on using as your investment vehicles for the fixed portion of your portfolio?

Two reasons I added more bonds:

• being 55, I decided to follow Bogle's and others' advice, and get nearer the 100-age in stocks;
• reduce volatility and/or risk

My current bond holdings:

• HYG, a high-yield bond fund, 10% of portfolio; bought this early this year at ~$70/share. Figured it was priced for the most dismal of outcomes, and was glad to earn 12% while waiting for some semblence of sanity. Currently $85 and change. Might trim this position to 5%, or not.
• TIP, which I had sold a couple of years ago, now 15% of port; bought around $90, currently $101. Bought for the cap gain, and the inflation "protection"...
• SHV, a short-term fund, 10% of port; bought the short end for all the reasons on buys the short end.
• Also have an in-house total-bond market fund, 5% of port. It's the smallest position currently, because, at the time, I was still leary of the mortgage-backed stuff in it. But the ER is 0.08%, so it's a cheap way to hold a total market index.

It's been nice to get some cap gains, and some interest every month, during these tumultuous times...

 

[novaman]

....as of today, it looks like pulling all my chips off the table in mid September has been a good move....

 

[Notmuchlonger]

....as of today, it looks like pulling all my chips off the table in mid September has been a good move....

Im curious. Have you ever been wrong?

 

[brewer12345]

Im curious. Have you ever been wrong?

Of course not (that he can recall...)

 

[NW-Bound]

This thread came alive at around mid September. I look back to see that as of today, I am down roughly 3% relative to that 9/15. Also a bit concerned about the state of the economy, but I will not be selling anything.

 

[novaman]

Im curious. Have you ever been wrong?

Oh yeah! I posted in this thread my all time worst move.

http://www.early-retirement.org/forums/f28/stupid-money-mistakes-46353.html

I've made a few bad financial decisions in my life but the story I put in this thread takes the prize.

 

[Repairmanjack]

Thanks for all the replies!

As for the dollar, March to September 2009, the dollar's value fell 14.9% against the euro. The U.S. debt is rising to over $12 trillion. Remember, one of the ways a country gets out from under its debt burden is to devalue. (Note how Washington is quiet on the devaluation of the dollar.) But I don't think it will work now. We need that capital.

Many foreign central banks are rethinking the dollar’s status as the world’s premier reserve currency.

Historically speaking, the dollar is down 81% over the past 38 years and down 58% from 2001-2008.

I think foreign currency (and I'm thinking New Zealand, Australia, maybe Canada, and possibly a couple other countries) is a less risky place to hold money than the US Dollar.

Also, although TIPS does not reflect actual inflation numbers, I'm thinking 5 - 10% there.

Indpendentlypoor, thanks for a great post on politics. I have no interest in arguing politics here but I cannot ignore the impact Washington has on my money.