Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Diversity in your portfolio
Old 06-05-2006, 09:25 PM   #1
Moderator Emeritus
Rich_by_the_Bay's Avatar
 
Join Date: Feb 2006
Location: San Francisco
Posts: 8,827
Diversity in your portfolio

Is it good enough to diversify your domestic holdings into small growth, large growth, small value, large value, and REITs? (Let's assume you have internationals and bonds allocated in separate funds.)

Recent posts here and elsewhere suggest that these sectors are seen by some as acting less and less independently, and gaining more and more correlation among themselves in recent years.

Whaddya think? Still a good mix, or are you branching out seeking better diversification? ESRBob likes microcaps, others like commodities. Are my hopes for a simple stock portfolio just a fading dream -- hard to find a hybrid fund that meets the need?
__________________

__________________
Rich
San Francisco Area
ESR'd March 2010. FIRE'd January 2011.

As if you didn't know..If the above message contains medical content, it's NOT intended as advice, and may not be accurate, applicable or sufficient. Don't rely on it for any purpose. Consult your own doctor for all medical advice.
Rich_by_the_Bay is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: Diversity in your portfolio
Old 06-05-2006, 10:08 PM   #2
Full time employment: Posting here.
 
Join Date: Feb 2004
Location: Okanagan Valley
Posts: 805
Re: Diversity in your portfolio

From my perspective, I do not need home runs to enjoy a comfortable retirement. On that basis, base hits are good enough and thus I would not worry about slice and dicing very much. Nor do I see a need to actively manage my own portfolio.

If you are in a similar situation, a US Total Market Index ETF, together with some REIT, will do just fine for domestic equity component and an MSCI EAFE ETF would do just fine for International equity component.

If you don't like the market cap weighting of Total Market (some suggestion that large caps will continue to underperform), then split the domestic component equally between large cap, mid-cap and small-cap ETFs to counterbalance market cap, and forget about picking value over growth or vice versa.

It is my view that boutique ETFs are starting to emulate mutual funds slicing and dicing the market 15 different ways to promote sales.
__________________

__________________
AltaRed is offline   Reply With Quote
Re: Diversity in your portfolio
Old 06-06-2006, 02:10 AM   #3
Recycles dryer sheets
 
Join Date: Feb 2006
Posts: 403
Re: Diversity in your portfolio

A lot of folks around here are heavily invested in real estate. I'd be interested in a discussion on what other investments correlate least to the residential real estate markets. Maybe interest rate futures (since lower rates = increased RE prices). I'm not sure what else would count...
__________________
macdaddy is offline   Reply With Quote
Re: Diversity in your portfolio
Old 06-06-2006, 06:28 AM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Re: Diversity in your portfolio

Rich, I think you still get some diversification benefit from the different "flavors" of US equity, just not as much as before. That goes for international stocks and commodities, too. The reality is that barriers to capital flows keep dropping, so things tend to move more in sync with each other. Not much you can do about it.

FWIW, firecalc, the Trinity study, etc. are all based on a far less diversified portfolio (usually S&P500 and bonds) than most of us have, so at least in thory, you should be "safer" than the studies and calculators indicate despite the fact the correlations have risen.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Re: Diversity in your portfolio
Old 06-06-2006, 08:25 AM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2003
Location: Kansas City
Posts: 7,408
Re: Diversity in your portfolio

Alas - correlations have a nasty habit of changing over time.

heh heh heh heh
__________________
unclemick is offline   Reply With Quote
Re: Diversity in your portfolio
Old 06-06-2006, 09:39 AM   #6
Thinks s/he gets paid by the post
 
Join Date: Apr 2006
Posts: 1,487
Re: Diversity in your portfolio

cash is uncorrelated ...
__________________
d is offline   Reply With Quote
Re: Diversity in your portfolio
Old 06-06-2006, 09:49 AM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2003
Location: Kansas City
Posts: 7,408
Re: Diversity in your portfolio

Cash means one thing to Unclemick2 sitting in Missouri - another to say Ben in Thailand. aka 'da provincial' American vs the non American expat.

I poo poo slice and dice all the time - BUT were I to relocate overseas - I'd be singing a different tune - diversification wise.

And depending on location - I tend to think my portfolio would adjust accordingly.

heh heh heh
__________________
unclemick is offline   Reply With Quote
Re: Diversity in your portfolio
Old 06-06-2006, 10:36 AM   #8
Thinks s/he gets paid by the post
 
Join Date: Apr 2006
Posts: 1,487
Re: Diversity in your portfolio

Quote:
were I to relocate overseas - I'd be singing a different tune
so true ... but isn't Rich_in_Tampa in Tampa?
__________________

__________________
d is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
SWR - Amortize your portfolio RgrGd FIRE and Money 5 03-28-2007 11:29 AM
High Dividend Portfolio vs Portfolio Diversified Across Asset Classes ScaredtoQuit FIRE and Money 36 01-12-2007 01:24 PM
Another perspective on a high-equity portfolio Nords FIRE and Money 98 02-13-2006 12:37 PM
Conservative distribution phase portfolio peteyperson FIRE and Money 13 03-22-2005 07:48 AM
Volatility in your Portfolio ESRBob FIRE and Money 5 03-03-2005 10:09 AM

 

 
All times are GMT -6. The time now is 10:54 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.