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Re: please nitpick my Asset Allocation
Old 01-31-2007, 02:21 PM   #21
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Re: please nitpick my Asset Allocation

Quote:
Originally Posted by brewer12345
Actually, Schwab rolled out a Long-Short equity fund last year with a large expense ratio and slick marketing. Not sure how it has done.

You'll have to take up the hedge fund thing with the SEC. Only qualified investors need apply, as things stand.
Well, a single hedge fund would be nuts. Maybe a fund of hedge funds and a fund of VC investments might not be so nutty.

In any case, the Yale philosophy is an interesting application of MPT: look for a very diverse mix of very volatile investments, and you'll probably come out ahead in the long run.
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Re: please nitpick my Asset Allocation
Old 01-31-2007, 02:53 PM   #22
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Re: please nitpick my Asset Allocation

I am not in a position to determine if Japan is at/below/above full value today. I was reflecting on what happened in years past, they have worked through that now. Take a long look at VPL's holdings. Japan has a lot of large cap mature manufacturing companies - the nature of geographic index

I like financials, real estate, resource, and smaller manufacturers. Just me. Differences are what makes the world go round.
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Re: please nitpick my Asset Allocation
Old 01-31-2007, 03:33 PM   #23
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Re: please nitpick my Asset Allocation

Quote:
Originally Posted by Brat
I am not in a position to determine if Japan is at/below/above full value today. I was reflecting on what happened in years past, they have worked through that now. Take a long look at VPL's holdings. Japan has a lot of large cap mature manufacturing companies - the nature of geographic index

I like financials, real estate, resource, and smaller manufacturers. Just me. Differences are what makes the world go round.
Ok, cool. Thanks for clarifying.
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Re: please nitpick my Asset Allocation
Old 01-31-2007, 09:01 PM   #24
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Re: please nitpick my Asset Allocation

Ok, I read up more on AGG and think I will probably go with that in my 401k. The fees are .24%.

Just to check, are a treasury ladder and a CD ladder considered pretty much the same asset class? Seems like a nobrainer to just pick the highest yield (accounting for taxes), unless I'm missing something. Looking at my tax situation, it does seem like those would benefit from being in a tax-deferred account, but are there reasons to put them in taxable?

Actually writing all this out is turning out to be more involved than I expected! :P
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Re: please nitpick my Asset Allocation
Old 01-31-2007, 09:40 PM   #25
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Re: please nitpick my Asset Allocation

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Brewer, if you built it, they will come. I already allocate about 1% to my brewer fund, and I'm considering upping that number.
The ER is reasonable too
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Re: please nitpick my Asset Allocation
Old 02-01-2007, 07:34 AM   #26
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Re: please nitpick my Asset Allocation

Quote:
Originally Posted by figner
Just to check, are a treasury ladder and a CD ladder considered pretty much the same asset class? Seems like a nobrainer to just pick the highest yield (accounting for taxes), unless I'm missing something. Looking at my tax situation, it does seem like those would benefit from being in a tax-deferred account, but are there reasons to put them in taxable?
Main differences:

- Taxes: treasuries are exempt from all state & local income taxes. CDs are fully taxable.

- Trade-ability: Most CDs aren't tradeable, while treasuries are. That means that it is feasible to capture cap gains from a treasury, but you cannot do so with a CD.
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Re: please nitpick my Asset Allocation
Old 02-01-2007, 09:22 AM   #27
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Re: please nitpick my Asset Allocation

Figner: I agree that non-USD Bond allocation with a high ER is something to think about before jumping.
You have to take into account the fact that you could "potentially" get a similar diversification effect on your portfolio if you split the non-USD Bond fund allocation into your Intl Equity allocation(the non-USD part) and USD Bond(the Bond part). Both the alternatives have very low ER's. I know the equity allocation in Intl is not the same but you could potentailly play with the % spilt into Intl Equity & US Bond and be a good approximation. Something to think about.

Another thing I wanted to comment on was the range of variation of your asset classes. You should think and establish the range after which you will rebalance your asset classes. Example: if your allocation to US Small Cap is 15% establish a range like +-10% and if the asset class goes over the range your will rebalance. make sure your range is not too small otherwise you rebalance too often and lose some momentum effect returns but the discipline you get is very useful.

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Re: please nitpick my Asset Allocation
Old 02-02-2007, 12:03 AM   #28
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Re: please nitpick my Asset Allocation

figner

now that i look again, your foreign stock allocation at 20% overall and 25% of equities is a little low, at least less than optimal (although it is definitely sufficient). Also, you own same amount of Pac and Euro. The market cap weightings are more like 68/32. So I would own in the ratio of about 2/1 Euro/Pac. I have owned in about 65/35 ratio for years. Don't try to time Japan or anything else. No one knows. Everything, including demographics and current market conditions, is already priced in.

I do not think foreign bonds are worth the expense, we are talking over 25% of the real return going to extra expenses (> 0.5%). Foreign currency exposure is zero sum game in the long run but good because it increases your diversification. But right now, 20% of your total allocation is denominated in foreign currency (foreign stocks). If you are retiring in the US, the main reason to own foreign currency is for future liabilities related to level of dollar. This will mainly be for imported goods, higher costs for imported labor (immigrants), and money you spend in other countries. This is probably less than 20% of your future liabilities. Most of what you spend is for things produced in this country and domestic labor. Also, a weaker or stronger dollar tend to have secondary effects that lessen the effect of the change on your liability. Also, the purpose of bonds is stability and to anchor your portfolio -- take risk in equities.

On the DJP vs. PCRIX issue, there is a current thread on Vanguard diehards (and you can search for more): http://tinyurl.com/yr9kh6

Hope that helps. typing fast so hope i covered everything

Kramer

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Re: please nitpick my Asset Allocation
Old 02-09-2007, 09:47 PM   #29
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Re: please nitpick my Asset Allocation

Thanks for all the replies - I found I was getting analysis paralysis and had to step away for a bit. Now that I'm looking at it again, it's pretty clear I won't be able to implement the AA I posted initially. There's just not enough room in tax-deferred accounts to do as much of a value tilt as I'd like. My revised (hopefully realistic) thoughts are:

In taxable accounts:
30% Large Market (VTI/VFINX)
15% Small/Mid Market (VB/VTI, individual stocks to be phased out)
10% International Europe (VGK)
5% International Pacific (VPL)
5% Emerging Markets (VWO)
5% Random self-picked stocks (play money)

In tax-deferred/nontaxable:
5% International Value (EFV)
5% Small Value (VBR)
20% Lehman Agg Bond Fund

These changes reflect the following considerations:
1) Better not to have large value in taxable.
2) More market-weighted Europe/Pacific ratio
3) Limited choice of funds in 401k

My plan is to rebalance with new money throughout the year - I'm currently adding about 10% of the total portfolio value annually, so it'll take a couple years to get up to the full international allocation.

Any thoughts on which of EFV and VBR to put in a Roth vs a regular IRA?

Getting comments on this has been most helpful, and I think I'll feel comfortable pulling the trigger on this in another couple weeks or so. Additional input is of course always welcome! You guys rock.


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Re: please nitpick my Asset Allocation
Old 02-09-2007, 10:59 PM   #30
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Re: please nitpick my Asset Allocation

FWIW, if I was starting from scratch my portfolio would look almost exactly like your proposed AA I think 25% international is just about right. (I'd have bit higher bond AA since I am 47 and retired.)

International has been on such a tear that last few years, that would feel comfortable doing what you propose namely dollar cost averaging into through new contributions.

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Re: please nitpick my Asset Allocation
Old 02-09-2007, 11:35 PM   #31
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Re: please nitpick my Asset Allocation

I would choose International Value.

Basically, the fund(s) that have the greatest total return.
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