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Old 09-16-2009, 07:41 PM   #41
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I'm right there with you ejman!

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Old 09-16-2009, 07:58 PM   #42
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So you are saying that the US dollar has significantly declined over that time period - 1999 to present - but that those bond funds did not outperform US bond index funds? That is disappointing! I'll have to take a closer look.
Here is the 5-yr returns of the funds I mentioned. The green line is Vanguard's Bond Index, the other 2 are international bond funds.

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Old 09-16-2009, 08:56 PM   #43
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Hmmm - what does the graph say about no dividends or coupons?

Looking at the equivalent in M* it seems like the 5-year return is dominated by the recent "flight to safety" of the US dollar which did indeed undo much of the gain the foreign bonds had made up until then.

Looking at the M* 10 year chart it looks to me as if the Loomis Sayles Global Bond definitely pulled ahead starting in 2003 and has recovered most of its lead in spite of the recent financial crisis that punished foreign currencies. T Rowe Price International, however, doesn't really show any benefit above VBMFX over the 10 year period - it also seems to track pretty closely since 2004.

The US dollar was strong during bear markets 2001 (plus 9-11) and again during the 2008 financial crisis, so you would expect VBMFX to outperform during that time period. Maybe there will be a flight to US safety every 10 years that causes VBMFX to catch up - who knows?

LSGLX - heavy blue line
VBMFX - orange
RPIBX - green
FSICX - yellow


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How soon we forget how we felt in March
Old 09-16-2009, 10:42 PM   #44
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How soon we forget how we felt in March

Here's one "expert" who thinks stocks have no place in a retirement portfolio.

Economist Zvi Bodie debunks standard investment advice - Sep. 16, 2009

Ha
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Old 09-16-2009, 11:50 PM   #45
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Very interesting article. I can't agree with the "expert" though. Seems almost the opposite of putting everything in the market. Guess the article shows that asset allocation is a very subjective decision even for "experts."
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Old 09-17-2009, 12:12 AM   #46
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100% TIPS? Lets see, these financials instruments were created by the government. As such, there is obviously 0% probability of the rules being changed and or future "adjustments" to CPI calculation basis. Talk about all eggs in one basket...
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Old 09-17-2009, 06:07 AM   #47
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We have no confidence that the market will not take a nose dive going forward.
I had these same feelings about US market in late 80's when "Japan was taking over the US". Looking back, you know what happened and it would have been unfortunate to "pull out" back then.

Back then, instead of "pulling out", I diversified heavily internationally - figuring that would give me valuable country and currency diversification. I think it worked (measured by "I slept fine....").

I have those same "America is toast" feelings now. My response is to increase my percentages of international/global stocks and bonds. My stock allocation is over 1/2 global. My "non stock" (bonds and REITs) is about 20% global - and I want to increase this to 30%.

Good luck !
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Old 09-17-2009, 06:38 AM   #48
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100% TIPS? Lets see, these financials instruments were created by the government. As such, there is obviously 0% probability of the rules being changed and or future "adjustments" to CPI calculation basis. Talk about all eggs in one basket...
That was my reaction, as well. Even if we think massive inflation is certain and even if we like TIPS, putting 100% in TIPS seems more than a little rash.

Even before reading about investment I think most people instinctively realize the value of diversification. Putting all one's eggs in one basket can be foolhardy, especially in this case where (deserved or not) the government has a reputation of "fiddling" with the CPI in the past.
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Old 09-17-2009, 06:23 PM   #49
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Hmmm - what does the graph say about no dividends or coupons?
It means if there is an "*" by the security it doesn't have dividend information for that security . . . doesn't apply in this case.

I don't know how the dollar has fared over 10-yrs, but I know that it has depreciated against the Euro by about 20% in the last 5-yrs. One would think that the FX bond funds would have had a considerable advantage over that time period. But I don't see it in their performance.

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."
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Old 09-17-2009, 06:25 PM   #50
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Here's one "expert" who thinks stocks have no place in a retirement portfolio.

Ha
He also seems to think that people shouldn't retire until they are 70 or 80.
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Old 09-17-2009, 06:52 PM   #51
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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?

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Old 09-17-2009, 07:04 PM   #52
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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.
bwx.gif
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.
bwx correlations.gif
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Old 09-17-2009, 08:11 PM   #53
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Be aware that the Yahoo charts often don't include dividends - at least that is my understanding. Better use M* for long term charts.
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Old 09-21-2009, 10:59 PM   #54
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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.
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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.
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Old 09-22-2009, 09:02 AM   #55
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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...
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Old 10-30-2009, 08:50 PM   #56
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....as of today, it looks like pulling all my chips off the table in mid September has been a good move....
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Old 10-30-2009, 09:18 PM   #57
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....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?
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Old 10-30-2009, 09:41 PM   #58
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Im curious. Have you ever been wrong?
Of course not (that he can recall...)
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Old 10-30-2009, 09:44 PM   #59
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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.
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Old 10-30-2009, 09:51 PM   #60
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Im curious. Have you ever been wrong?
Oh yeah! I posted in this thread my all time worst move.

Stupid money mistakes

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