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Please comment on this portfolio strategy
Old 03-22-2007, 08:50 AM   #1
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Please comment on this portfolio strategy

Ran into this portfolio on MarketWatch. Didn't seem like a bad alternative for someone who can't deal with enormous dips in the market. This will have dips, mind you, but IMO it's unlikely you would see a major decline in one year. A major benefit is that even during declines, the portfolio would continue to generate a reasonable level of dividends and interest.

Anyway, what do you think?

http://www.thestreet.com/_mktwrm/fun...FREE&cm_ite=NA

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Re: Please comment on this portfolio strategy
Old 03-22-2007, 09:05 AM   #2
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Re: Please comment on this portfolio strategy

Quote:
Originally Posted by ScaredtoQuit
Ran into this portfolio on MarketWatch. Didn't seem like a bad alternative for someone who can't deal with enormous dips in the market. This will have dips, mind you, but IMO it's unlikely you would see a major decline in one year. A major benefit is that even during declines, the portfolio would continue to generate a reasonable level of dividends and interest.

Anyway, what do you think?
I think that portfolio looks like something a financial "journalist" would dream up to fill a column and meet a deadline.

I think you should be concerned if the criteria the guy used to pick funds failed to mention cost.

I think you could achieve the same thing at a much lower cost and with much less headache using a combination of two balanced funds such as Wellesley and Wellington.

I think you think too much.

EDIT: I also get very uncomfortable when I see the name "Cramer" repeated numerous times...even if it is only a reference.



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Re: Please comment on this portfolio strategy
Old 03-22-2007, 10:24 AM   #3
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Re: Please comment on this portfolio strategy

Why not just do an indexed fund.
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Re: Please comment on this portfolio strategy
Old 03-22-2007, 10:35 AM   #4
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Re: Please comment on this portfolio strategy

My goodness! There was no comparison to the appropriate benchmark. He wrote about a >10% return, but maybe the benchmark returned 15%? Who knows?

Now this was what he did for his Mom, so that has even more religious overtones than if he had set up a portfolio for Jesus Christ (but wait 'til next year).
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Re: Please comment on this portfolio strategy
Old 03-22-2007, 12:24 PM   #5
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Re: Please comment on this portfolio strategy

Just so long as He doesn't short loaves and fishes...
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Re: Please comment on this portfolio strategy
Old 03-22-2007, 01:08 PM   #6
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Re: Please comment on this portfolio strategy

He says that he is diversified because he holds 20 funds, but based on a quick glance, they almost all seem to hold junk high yield bonds, so diversification is nil.
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Re: Please comment on this portfolio strategy
Old 03-22-2007, 01:34 PM   #7
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Re: Please comment on this portfolio strategy

Interesting strategy and one that I've considered myself. Buy Closed End Funds (CEF's) that are trading at a steep discount to NAV. Own them as the market price (hopefully) returns to the NAV. Many of the CEF's mentioned in this article are trading at a 10-15% discount to NAV.

I'm looking at UTF (trading at ~15% discount to NAV). I need to find a good utility fund for a work-related purpose, and even though UTF charges 1.3% ER, I figure it might be worth the cost to get some utilities at 15% off, and close to a 5% dividend yield. I know I can get a Utilities index ETF close to NAV from vanguard for .25% ER, but this may not be an option for other work-related reasons (don't ask : ). Thoughts?

I've skimmed through the 2006 shareholder report and there are some issues I'll have to dive into further (leverage structure/interest rate risk, payout ratio income vs dividends, etc.).
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Re: Please comment on this portfolio strategy
Old 03-22-2007, 01:53 PM   #8
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Re: Please comment on this portfolio strategy

The only one in that port that I've looked at closely is Adams Express (ADX.) Nice discount. Nice yield. Low expenses. But the return has lagged the S&P500 for years. Lots of GIANT companies that have underperformed the market. Who knows, the dinosaurs may have their day in the sun again.
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