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Old 01-29-2013, 09:09 PM   #21
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Emerging markets will go into the tank whenever US markets go into the tank. The reason is pretty obvious: If US consumers aren't buying, then EM corps can't be selling.

So there is no where to hide as far as equities are concerned, so a normal "total US" and "total int'l" will do as well as anything else.

If you don't like bonds, then you need to get some CDs. You might like I-bonds though.
If you read the op, you would have seen that my major concern is a massive inflationary episode with stagnant economics.
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Old 01-29-2013, 09:12 PM   #22
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...And in a real mad max world, I have spent probably $1500 on keeping a solid 90 day supply of food/water/fuel. This gets rotated, so I don't really have costs going forward to maintain this particular option. But this is highly unlikely and taking quite a tangent.
In that case, when everyone calms down and stops panicking (any year now), go out and buy some ammo even if you do not own a firearm. .22 target ammo is selling for 3 to 4X what it was going for 3 months ago.
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Old 01-29-2013, 09:15 PM   #23
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If you read the op, you would have seen that my major concern is a massive inflationary episode with stagnant economics.
With those conditions, what makes you think equities will perform well?
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Old 01-29-2013, 09:21 PM   #24
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If you read the op, you would have seen that my major concern is a massive inflationary episode with stagnant economics.
I don't think you should design your portfolio around one hypothetical scenario that may or may not happen. Smarter men than you or I have tried predict the future of the markets and have failed. A more prudent mindset is to accept that you can't predict the future movements of the markets and design a diversified low cost portfolio that can weather any number of future scenarios.
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Old 01-29-2013, 09:25 PM   #25
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I think a lot of people are misunderstanding my desire for this portfolio. I don't want this to be an end all be all. I don't believe this portfolio will "save me". What I want it to do is to hopefully outperform the rest of the market (should a high inflationary environment ensue), while at the same time allowing me to stay the course and participating in gains if normal market times occur into the future. I am ok with risk and completely understand that certain parts of my portfolio could fall 70% (emerging markets). I am a bogelhead believer who is trying to tweak things to my outlook on the future. that is it. Not trying to create money out of thin air or anything magical like that.

edit: this portfolio idea would utilize low cost index funds and involve no trading, just rebalancing.
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Old 01-29-2013, 09:50 PM   #26
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What I want it to do is to hopefully outperform the rest of the market (should a high inflationary environment ensue), while at the same time allowing me to stay the course and participating in gains if normal market times occur into the future.
I am not as experienced as others here, but doesn't everyone want to outperform the market? Hasn't it been demonstrated that there is no likely or certain way to do this?

I'm not seeing a connection between the fund types you picked and high performance during periods of stagflation.

I say this not to be unhelpful, but just to say I don't get it.

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Old 01-29-2013, 10:06 PM   #27
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I am not as experienced as others here, but doesn't everyone want to outperform the market? Hasn't it been demonstrated that there is no likely or certain way to do this?

I'm not seeing a connection between the fund types you picked and high performance during periods of stagflation.

I say this not to be unhelpful, but just to say I don't get it.

SIS
here was my justification: High inflation leads to high natural resource prices which are highly correlated to emerging markets. High inflation also causes people to cut back and purchase more necessary items, hence the dividend staples fund through vanguards div appreciation fund. The middle third is just a diversified grouping of all developed markets (foreign/domestic).

This is a buy and hold strategy. I am a little perplexed why everyone is so bothered by this? I see this portfolio as a couch potato portfolio with some slight tweaks given my long term outlook. I am not looking to make a quick buck or outperform next year. Also I am keeping it very simple at basically 4-5 funds.

In this thread, I just wanted decent feedback on whether the funds I chose would be appropriate given my view of the future. I don't want to debate this view. If you think that a certain type of broad based fund will be more appropriate to achieving my goals I lade out, then I would like to hear about it.
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Old 01-29-2013, 10:15 PM   #28
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Emerging markets will go into the tank whenever US markets go into the tank. The reason is pretty obvious: If US consumers aren't buying, then EM corps can't be selling...
I am betting that eventually China and the other emerging markets will discover that they can trade between themselves without the US "helping" by consuming much of what they produce.

So far, the Chinese are such savers that they make the Japanese look like spendthrifts. Well, I might be too early, but I may still live another couple of decades to see how history unfolds.
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Old 01-29-2013, 10:20 PM   #29
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Regarding dividends, I would throw IDV into the mix. Large foreign companies with nice yields.
How would you compare this to the vanguard div appreciation fund? It seems riskier. Any ultra conservative dividend funds in the international space that would complement VDAIX?
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Old 01-29-2013, 10:31 PM   #30
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One of many articles on the poor performance of stocks during periods of high inflation:
History Shows Stocks Are A Poor Inflation Hedge - Seeking Alpha

Although a case could be made that the starting valuations matter - at the begining of the 1970s inflationary period stock valuations were very high (Nifty Fifty) and the inflation adjusted returns were terrible. If the valuations are low enough when the period of higher inflation begins, you might well get a different result. Ditto if inflation remains low.

On gold, it's worth remembering that (i) it has been confiscated before (although at a time when Amercia was on the gold standard and and (ii) the US Treasury is still holding the contents of safe deposit boxes that were never claimed by the owners when the banks at which they were held went down in the 1930s. If the bank is closed, it is unlikely that you will be given access just because your father knows someone at the bank. Executive Order 6102 - Wikipedia, the free encyclopedia

+ 1 to the idea of a fixed long term mortgage.
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Old 01-29-2013, 10:43 PM   #31
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I give up. This thread was in no way shape or form supposed to be about picking strategies,timing, or anything of that matter.

All I proposed was a broad based fairly diversified portfolio, that I felt would outperform the market during a scenario (which would occur over years) that I personally believe has a fairly high likelihood in the medium term. Out performance does not imply huge real gains as you all know.

I just wanted some input on this "doomer portfolio" to see if my investment choices (made in a context of broad based diversification as far as stocks go for my age), matched my inkling about the longer term future.

Surely I am not the only one who has ever done this?
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Old 01-29-2013, 10:51 PM   #32
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I give up. This thread was in no way shape or form supposed to be about picking strategies,timing, or anything of that matter.

All I proposed was a broad based fairly diversified portfolio, that I felt would outperform the market during a scenario (which would occur over years) that I personally believe has a fairly high likelihood in the medium term. Out performance does not imply huge real gains as you all know.

I just wanted some input on this "doomer portfolio" to see if my investment choices (made in a context of broad based diversification as far as stocks go for my age), matched my inkling about the longer term future.

Surely I am not the only one who has ever done this?
I give up too. This thread is going nowhere fast. Good luck with the doomer portfolio.
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Old 01-29-2013, 11:21 PM   #33
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How would you compare this to the vanguard div appreciation fund? It seems riskier. Any ultra conservative dividend funds in the international space that would complement VDAIX?
Well IDV holds the largest international stocks, while Vanguard has large US corps. Also, the IDV yield is about double the other.
So, I would want them both to get dividend coverage across a wider spectrum.
I do this with IDV and DVY instead of Vanguard, but VDAIX is fine. VIG is yet another choice if you want an ETF that looks like VDAIX.
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Old 01-29-2013, 11:27 PM   #34
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Well IDV holds the largest international stocks, while Vanguard has large US corps. Also, the IDV yield is about double the other.
So, I would want them both to get dividend coverage across a wider spectrum.
I do this with IDV and DVY instead of Vanguard, but VDAIX is fine. VIG is yet another choice if you want an ETF that looks like VDAIX.
Yeah, that is probably not a bad idea. The yield is a lot nicer for sure. How would you suggest % allocation for us/foreign for holding both of these funds? With very large cap dividend payers, it is kind of hard to think of what a logical % allocation is. Do you think 50/50 will do?
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Old 01-30-2013, 05:51 AM   #35
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Did you go back and look to see what investments were good during the late 70's and early 80's when inflation was rampant?
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Old 01-30-2013, 07:47 AM   #36
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The web site is currently offline (server shift?) but early retirement extreme forums have some good discussion along the "doomer" portfolio lines, as well as some good overall discussion of the worries you have. Jacob used to work on a peak-oil website/non-profit, so there is some pretty well-thought out discussion there, regardless if you agree with the conclusions.

I don't personally know enough to recommend specific funds, but depending on where you live and how much you are working with, there are some things outside equities that might fit. I believe that WI (and probably some other states) has a program of property tax forbearance for land used in tree production where you place it in a program to raise trees for a pre-determined number of years (10, 20, 30 etc) and grow, harvest, sell the tree crops, and so long as you fulfill the pledge, you don't owe any property taxes for those years (but trigger back taxes if you change your mine before the agreed date). It serves to both encourage trees (it was an environmentally driven law) but really lets farmers and investors land-bank at low cost and without having just barren land. I think that people generally end up making a little (but not much) profit on it, but for a doomer scenario, it's not a bad way to set up a fall back and have some investment in farmland becoming more valuable WTSHTF.
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Old 01-30-2013, 07:55 AM   #37
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Yeah, that is probably not a bad idea. The yield is a lot nicer for sure. How would you suggest % allocation for us/foreign for holding both of these funds? With very large cap dividend payers, it is kind of hard to think of what a logical % allocation is. Do you think 50/50 will do?
I'd be inclined to go more like 65 (US) 35 (foreign)
If you plan to add a bunch of EM you'll have plenty of other foreign exposure.
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Old 01-30-2013, 08:59 AM   #38
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A doomer that will not consider TIPS? Best to focus on commodiities as an alternative if you so distrust the government.
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Old 01-30-2013, 02:20 PM   #39
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Also, from reading and learning about personal finance over the last couple years, it seems that the ones that succeed are the ones that stay the course.
This is even more true if they have picked the right course to stay.
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Old 01-30-2013, 09:55 PM   #40
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At 22 you have a nice long investment horizon. While no one could predict the future, I'll bet your AA would turn out just fine over next 40yrs.
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