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Old 03-01-2004, 09:10 AM   #1
 
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Re: Decided on a Portfolio
Old 03-01-2004, 09:18 AM   #2
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Re: Decided on a Portfolio

It looks good to me. Post it on the FundAlarm discussion board where you can get substantive feedback.

http://www.fundalarm.com/wwwboard/wwwboard.html
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Re: Decided on a Portfolio
Old 03-01-2004, 09:28 AM   #3
 
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Re: Decided on a Portfolio

Don't require feedback, but here is my current
allocation:

Real estate 50%
Bond funds 20%
Corporate bonds 20%
Money market/cash 10%

Pretty simple. I like it that way.

John Galt
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Re: Decided on a Portfolio
Old 03-01-2004, 09:33 AM   #4
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Re: Decided on a Portfolio

I like cut-throats, but 60/40 is a little too high for me.
For myself, I'd go with 33/67 or 40/60 or somewhere in between. But I like the investments.

John, what is your Real Estate consist of ? any REITS ?
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Re: Decided on a Portfolio
Old 03-01-2004, 09:47 AM   #5
 
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Re: Decided on a Portfolio

Hello bennevis and all.

Real estate consists of our home (waterfront), a
ranchette in Texas, and a condo also in Texas.
No REITs. I am land poor now, so something will
need to get sold. I have a tendency to fall in love with
my property, but you can't hang onto everything
unless you are in the Donald Trump league, which I
most assuredly am not.

John Galt
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Re: Decided on a Portfolio
Old 03-01-2004, 09:49 AM   #6
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Re: Decided on a Portfolio

...and even he couldn't...
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Re: Decided on a Portfolio
Old 03-01-2004, 10:13 AM   #7
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Re: Decided on a Portfolio

You're going to miss the huge run-up in mid-caps and growth stocks, but other than that it looks fine

Now, I know the MPT guys don't like sector funds because they believe *all* stocks are fairly valued, so sectors *cannot* outperform. However, I've been in the health and leisure sectors forever and have been pleased with the results. I added energy and commodities a year or so ago, and that's worked out well so far.

Your buddy Swedroe recommends some commodity exposure (but not commodity-sensitive stocks).
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Re: Decided on a Portfolio
Old 03-01-2004, 10:33 AM   #8
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Re: Decided on a Portfolio

Looks good to me, Cut-throat. It is very similar to what I will have, except your allocation is tilted toward value and your stock allocation is a little higher than I have. It looks completely rational and sensible to me.
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Re: Decided on a Portfolio
Old 03-01-2004, 12:33 PM   #9
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Re: Decided on a Portfolio

My portfolio is not yours - but low expense, broadly diversified, don't trade - looks good to me.

Small cap growth as a class sucks - ala Bernstein(I accept his data). The irritating paradox is that's where the next generation Microsoft, Dell, Oracle, etc. will leap out from the pack. A good crystall ball would come in handy.
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Re: Decided on a Portfolio
Old 03-01-2004, 12:50 PM   #10
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Re: Decided on a Portfolio

You're not far from my split.

I have less small cap and more reit exposure, and instead of the s&p 500/large value and your bond package, I have the wellesley fund which is 35/65 stock/bond, with the 35% mostly large value and the 65 half short/inter corp and the other half short/inter financial bonds. In comparing those two lumps I'm a little more value weighted in large caps and you have shorter bonds and the inflation protection...not necessarily bad things. The real net difference is I'm getting somewhat higher yields with the large cap value, the extra reit and longer bonds, and you're getting lower risk in the bond area and a shot at higher long term returns in the small caps.

Looks like good picks. I with vanguard offered a "target early retirement" set of funds that had the broader asset classes. Maybe they looked at it a while and decided that the simple 3-4 buckets they already use in the TR funds produces the same returns at the same risks with less aggravation...
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Re: Decided on a Portfolio
Old 03-01-2004, 12:58 PM   #11
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Re: Decided on a Portfolio

Looks good to me, especially since many of the investments are similar to my portfolio which you were nice enuf to provide feedback on a little while ago.

International seems a little redundant to have the total mkt along with the individual region funds, but I suppose you are doing that to get some benefit of rebal and less allocation based on capitalization?

On the mid-cap subject, I have used the Total Stock Market Index rather than 500 for large cap blend in order to get some mid-cap exposure.
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Re: Decided on a Portfolio
Old 03-01-2004, 01:04 PM   #12
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Re: Decided on a Portfolio

Another website that provides good feedback on portfolios is

http://www.brill.com/wwwboard/index.html
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Re: Decided on a Portfolio
Old 03-01-2004, 01:38 PM   #13
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Re: Decided on a Portfolio

Cut-Throat, I am a "lumper' rather than a "splitter'
but I like your choices. I use Target Retirement 2025
which has a 60/40 split with 12% foreign exposure.
I also use Short Term Corporate in my IRA to balance
Total Stock Market in a taxable account. I suspect
our total returns will match closely. I used to be a
splitter but got tired of the emotional hassle of
rebalancing.

Good luck to you (and me),

Charlie

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Re: Decided on a Portfolio
Old 03-01-2004, 02:03 PM   #14
 
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Re: Decided on a Portfolio

Charlie,

I liked the laid back approach of the 'Lumper', but since Bernstein sided with the 'Splitters', I decided to go that route. I only plan on rebalancing every 2 years or so - Or when and if things get really out of whack.

Yes - And good luck to both of us!

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Re: Decided on a Portfolio
Old 03-01-2004, 02:38 PM   #15
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Re: Decided on a Portfolio

re: mid caps. As I mentioned before, an analysis of the vanguard execs portfolios revealed heavy investment in the windsor mid cap value fund...it does have excellent returns.
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Re: Decided on a Portfolio
Old 03-01-2004, 02:53 PM   #16
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Re: Decided on a Portfolio

I like Boglehead (ala Parrothead) better than 'lumper'. Or the really high class 'total balanced index'.

Windsor is a good fund - but with total - it's in there. The idea of splitting asset classes among other things is to capture the long term growth of that class and by selective weighting boost overall portfolio growth long term. Hence the 4X25 and other types.

At any entry point in time with extra cash - I would lean toward TH's trying to find what's cheap (value) - my retro mind (before MPT) and then rebalance in the stretch if things got too (10% ?) out hack.
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Vanguard's Windsor
Old 03-01-2004, 05:40 PM   #17
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Vanguard's Windsor

It is not a pure mid cap value fund. According to M*, its best fit index is the Russell 1000 Value index. That's also what Vanguard has as its benchmark, and Windsor's long term returns have been almost exactly the same as the R 1000 Value. So, my [rather uneducated] guess is that it's something like 1/2 mid, 1/2 large. Windsor is actually closer in market cap and p/b ratio (e.g. measure value) to DFA's large cap value fund than Vanguard's Large Cap Value index is.

So, if I were trying to match the DFA slice and dice portfolio (like Swedroe's), I might just use TSM, Windsor (or IWD, or IJJ), and small value (which is not as valuey as DFA's small value fund) for domestic stocks. This would also solve the mid cap "problem". But this is probably more of a minor point, and probably won't affect the returns of the portfolio that much. So, whichever you're comfortable with.

Regarding assigning some value to your Pension and SS. One can certainly do this (using the PV value function in Excel). Unfortunately, it's hard to tell where to stop in turning positive streams of income (Pensions/SS) and negative streams of income (groceries, medical bills, mortgage payments) into present values. I think it is much easier to match liabilities. Meaning first you offset your expenses with known monthly income from pensions/SS. Then you again match the rest of your liabilities (over and above pensions/SS) with your investment portfolio.

Just because you have large fixed streams of income (like from pensions and SS), doesn't necessarily mean that you should allocate a whole lot to stocks in your investments. If you need to reach for the higher returns of stocks, then a pension and SS certainly make it psyhcologically easier to do so. But if you don't need to reach for the higher returns of stocks, I don't see much of a reason to. I wouldn't do it just because my pension represents "a lot of bonds".

As I said before, you should certainly recognize pensions and SS as part of retirement income, and could tilt/construct porfolio to hedge risks that pension income does not. For example, if I've got a large fixed pension, I'd probably use a lot of TIPS, ST bonds, REITS, and value tilting in my investments.

- Alec
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Re: Decided on a Portfolio
Old 03-05-2004, 05:35 AM   #18
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Re: Decided on a Portfolio

CT
No glaring problems that I can see. Nice balance. Any likely comments would only be OFT (opinionated fine tuning). For example I would like a few points less on small cap and a few more on emerg mkts.

Looks like a winner to me. good job

BUM
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