Keystone pipeline, not a simple political picture

[Lsbcal]

Quote:

Originally Posted by Ed_The_Gypsy ...(snip)... S&P is 'doing better' lately? Nuts to that. 10 years from now, I'll bet O&G still outperforms.

I admire your spunk Ed.

[Ed_The_Gypsy]

Just for grins, I dug a little deeper. For some reason Yahoo's record of VFINX (Vanguard's S&P 500 index fund) only goes back to March, 1987. Interesting. Does everyone remember what happened in Oct, 1987?

VGENX (Vanguard's energy index fund) goes back to September, 1987. Good.

VEIEX (Emerging Markets index fund) only goes back to 1995, so I didn't bother with it.

From Oct, 1987, it took both VGENX and VFINX about 18 months to get back to where they started (dividends included). They were pretty much neck-and-neck until about 2000, then they both took off but one did better than the other.

In the 26 years since 1987, VFINX grew 847% (including dividends). VGENX grew 1844%. (Someone please check my numbers.) This is why I have a bias against large caps as a class.

Unless fusion becomes economical or unless the population of the world declines radically (either one I would applaud--unless the decline includes me, of course), I figure oil and gas will perform better than the S&P over time. It is not my only asset class by any means, but it is the biggest. Will my stock picks do as well as VGENX? Maybe. XOM has not done as well as VGENX, so since I don ont own XOM, I am betting against it AND VGENX. Probably not a high probability of success, but I am not betting the farm on O&G and I figure to reduce exposure when I am not in the accumulation phase anymore.

Besides, I can always go back to work. O&G pays REALLY well these days.

[Lsbcal]

Energy seems to have phases. Booming in the 1970's, bust in the early 1980's, etc. What's next? Who knows.

For retirees I would guess most would be well advised not to overweight the energy sector unless they are really wealthy in which case it probably is just play money investing. Doesn't mean one cannot take specific energy investments on, just that one might keep the weighting reasonable.

[meierlde]

Quote:

Originally Posted by Ed_The_Gypsy Just for grins, I dug a little deeper. For some reason Yahoo's record of VFINX (Vanguard's S&P 500 index fund) only goes back to March, 1987. Interesting. Does everyone remember what happened in Oct, 1987? VGENX (Vanguard's energy index fund) goes back to September, 1987. Good. VEIEX (Emerging Markets index fund) only goes back to 1995, so I didn't bother with it. From Oct, 1987, it took both VGENX and VFINX about 18 months to get back to where they started (dividends included). They were pretty much neck-and-neck until about 2000, then they both took off but one did better than the other. In the 26 years since 1987, VFINX grew 847% (including dividends). VGENX grew 1844%. (Someone please check my numbers.) This is why I have a bias against large caps as a class. Unless fusion becomes economical or unless the population of the world declines radically (either one I would applaud--unless the decline includes me, of course), I figure oil and gas will perform better than the S&P over time. It is not my only asset class by any means, but it is the biggest. Will my stock picks do as well as VGENX? Maybe. XOM has not done as well as VGENX, so since I don ont own XOM, I am betting against it AND VGENX. Probably not a high probability of success, but I am not betting the farm on O&G and I figure to reduce exposure when I am not in the accumulation phase anymore. Besides, I can always go back to work. O&G pays REALLY well these days.

Went to Vanguards web site, the 500 index investor class shares came on the market 8/31/1972 and today have a lifetime yield of 10.93%
The energy 5/23/1984 at 12.56%

[NW-Bound]

Quote:

Originally Posted by Lsbcal ... I worked in the electronics industry for 30+ years and lived in Silicon Valley. But I couldn't pick the winners in that industry either although I really didn't have the nerve to try too hard. The picture was always slightly blurry to me. Too bad I didn't believe in Apple.

I have never lived or worked in SV. But between Intel and AMD, I believed in AMD, the David against Goliath. Lost too much money, so I am not taking side anymore.

[Lsbcal]

Quote:

Originally Posted by NW-Bound I have never lived or worked in SV. But between Intel and AMD, I believed in AMD, the David against Goliath. Lost too much money, so I am not taking side anymore.

To me when I invest in very specific companies or even sectors, I feel great when I'm ahead of the market and really bad when my "team" looses. So now I try to own both teams i.e. broad market indexes.

I sort of treat sports like the now too. Who wants to be a looser?

[NW-Bound]

Though I still invest in individual companies, now I tend to spread out among a sector. I can do the same with sector ETFs, which I am also doing now.

However, when peeking inside a sector, it's hard to resist picking up an individual stock that you perceive as undervalued. I keep these positions fairly small though, like less than 1% of portfolio, and usually 0.5%.

[haha]

Quote:

Originally Posted by NW-Bound However, when peeking inside a sector, it's hard to resist picking up an individual stock that you perceive as undervalued. I keep these positions fairly small though, like less than 1% of portfolio, and usually 0.5%.

Why bother? No matter how successful a position like this may be, it won't move the needle. IMO it is not worth the mental and administrative overhead.

Ha

[NW-Bound]

Oh, if only I could be surer of myself...

Yes, smaller bet, smaller risk, smaller potential reward. However, I have many of these smaller bets, not only one, and spread out among different industries. If I am right more often than wrong, then they will add up to a bit of an advantage. About the extra work, well, it's a pastime of mine.

By the way, many MFs have several hundred positions. Yet, depending on the execution, they still add up to either a significant lead or lag to the market.

[clifp]

Quote:

Originally Posted by NW-Bound Though I still invest in individual companies, now I tend to spread out among a sector. I can do the same with sector ETFs, which I am also doing now. However, when peeking inside a sector, it's hard to resist picking up an individual stock that you perceive as undervalued. I keep these positions fairly small though, like less than 1% of portfolio, and usually 0.5%.

I'm sort of the opposite. I buy a fair number of individual issues .5% to 10% (Berkshire) but almost never a bought a sector fund. Especially when I am buying dividend stock I care less about them beating the market or their sector. Pretty much I'm focused is these three questions is dividend adequate ~3+%, is it safe, and will it grow at rate better than inflation..

[NW-Bound]

I personally like sector ETFs (not sector MFs) which allow me to get diversification into an industry that I do not know enough to pick individual stocks.

Or, I would use them to do "sector rotation", or to try to rebalance between them. It's also a lazy way to "slice-and-dice".

[Ed_The_Gypsy]

This thread has prodded me to review my energy holdings. I went back and investigated the different Vanguard energy funds and one iShares ETF, IXC.. They track each other pretty closely (see graph), so a table was built to compare them. I discovered that they duplicate several of my individual stock holdings.



VENAX and VDE are basically the same fund but you don’t have to spend $100,000 to get into VDE.


My original holding was VGENX, about which I was mistaken--it is not an index fund but an actively managed international energy fund.


IXC is ‘global’ with about a 50/50 US/foreign balance, which is my general equity ratio, but it has not done as well as the US-only types. An indication to be more selective internationally—or not at all? (for energy).


I can’t see any reason to buy anything except VDE. I have liquidated my duplicated holdings and bought VDE for the bulk of my energy AA. As it is a US-equity-only fund, I will continue to play with individual international and a few smaller US energy stocks (mostly pipelines). I am also reducing my energy overweight--a little. I still think it is a great sector in the long run.