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Portfolio Makeover - Sold 2/3 on Friday, May 3
Old 05-04-2013, 11:58 AM   #1
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Portfolio Makeover - Sold 2/3 on Friday, May 3

I just sold 1.683M of various MFs from all accounts(Brokerage/IRA/Roth IRA) yesterday. Why? I just want to start fresh.....I'm going through portfolio makeover(first time ever in my life) and don't know why but I just felt yesterday to sell most of them. Was it a good(lucky) move? Who knows? Only time(coming couple of weeks) will tell. I've been carrying 500K loss from .com years and just realized 110K of capital gain which I'll be offsetting with selling 110K loss in near future.
With the help of FA, I'll be investing this cash into DFA funds he suggests. I'm 48 and DW is 43. I'm thinking of starting with 65/35 mix and rebalance gradually to 60/40 in five years when I decide whether to fire or not.
What do you all think about my asset allocation plan and the sell I made yesterday? I've made many dumb moves in past and I hope this one is not one of them. I still have 627K invested mostly in FCNTX and about 100K in few Fidelity/Vanguard index funds which I'll sell and re-invest when my FA recommends which MFs to buy.
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Old 05-04-2013, 12:04 PM   #2
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I just sold 1.683M of various MFs from all accounts(Brokerage/IRA/Roth IRA) yesterday. Why? I just want to start fresh.....I'm going through portfolio makeover(first time ever in my life) and don't know why but I just felt yesterday to sell most of them. Was it a good(lucky) move? Only time(new couple of weeks) will tell. I've been carrying 500K loss from .com years and just realized 110K of capital gain which I'll be offsetting with selling 110K loss in near future.
With the help of FA, I'll be investing this cash into DFA funds he suggests. I'm 48 and DW is 43. I'm thinking of starting with 65/35 mix and rebalance to 60/40 in five years when I decide whether to fire or not.
What do you all think about my asset allocation plan and the sell I made yesterday? I've made many dumb moves in past and I hope this one is not one of them. I still have 627K invested mostly in FCNTX and about 100K in few Fidelity/Vanguard index funds which when my FA recommends which MF to buy.
Hard to argue with selling high! Now that you are fresh with cash, keep a close eye on the fund expenses and buy mainly index or ETF funds. Your best move might be to just buy the Vanguard Willshire 5000 index and the Vanguard Total Bond funds at 65/35. Then its super easy to readjust AA.
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Old 05-04-2013, 12:17 PM   #3
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If it cost you nothing in taxes and you will re-invest the money into your asset allocation plan right away, I see nothing wrong with this at all. Many folks do this kind of thing when rolling over a 401(k) or IRA: They have to go to cash quite often to do the transfer, but they get it invested right away if they have the guts.

But equities could really take off again ... or drop. Who knows? Do you remember all those years when the S&P500 was up more than 20% in row (1995-1999, 5 years in a row!!!)?

S&P 500 - Wikipedia, the free encyclopedia
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Old 05-04-2013, 12:53 PM   #4
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If it cost you nothing in taxes and you will re-invest the money into your asset allocation plan right away, I see nothing wrong with this at all. Many folks do this kind of thing when rolling over a 401(k) or IRA: They have to go to cash quite often to do the transfer, but they get it invested right away if they have the guts.

But equities could really take off again ... or drop. Who knows? Do you remember all those years when the S&P500 was up more than 20% in row (1995-1999, 5 years in a row!!!)?

S&P 500 - Wikipedia, the free encyclopedia
Yep..I remember late 90s. But as you rightly said, Who knows? That's why I said, I'll find out in couple of weeks. While I wait to re-invest, if market goes down then just plain luck otherwise bad luck - but I've to take that chance to be in the game. That 500K carryover loss really made my decision much easier to sell yesterday.
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Old 05-04-2013, 12:54 PM   #5
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Hey, welcome aboard and good luck! Only time will tell and that is the key. The strategy you want is not one that will necessarily only be an upward trend....up and down, keep expenses and taxes low, keep you asset allocation right and history says over time you will be better off. I did something similar a few years back and there have been brief moments when the dives on the market had my value approaching no gain...but no panic, kept the faith and the market is taking care of the rest. I am retiring later this year, 3-7 years ahead of schedule thanks to the gains and my confidence about what to expect even in bad times.
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Old 05-04-2013, 01:16 PM   #6
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Thanks urn2bfree. So far, I never panicked and sold and hope to carry the same attitude in future. One positive in my case is time - I've seven years to see through if my plan works. And hey...if it does not, simple - just keep working until it does. All the best to you!
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Old 05-06-2013, 12:20 PM   #7
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I'll sell other 500K or so today. This'll make about 2.2M in cash for now which'll get back into 65/35 allocation in couple of weeks.
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Old 05-06-2013, 12:27 PM   #8
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Old 05-06-2013, 12:30 PM   #9
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I just sold 1.683M of various MFs from all accounts(Brokerage/IRA/Roth IRA) yesterday. Why? I just want to start fresh.....I'm going through portfolio makeover(first time ever in my life) and don't know why but I just felt yesterday to sell most of them. Was it a good(lucky) move? Who knows? Only time(coming couple of weeks) will tell. I've been carrying 500K loss from .com years and just realized 110K of capital gain which I'll be offsetting with selling 110K loss in near future.
With the help of FA, I'll be investing this cash into DFA funds he suggests. I'm 48 and DW is 43. I'm thinking of starting with 65/35 mix and rebalance gradually to 60/40 in five years when I decide whether to fire or not.
What do you all think about my asset allocation plan and the sell I made yesterday? I've made many dumb moves in past and I hope this one is not one of them. I still have 627K invested mostly in FCNTX and about 100K in few Fidelity/Vanguard index funds which I'll sell and re-invest when my FA recommends which MFs to buy.
What was your AA before you decided to "start fresh"? Did you already have an FA? You should get a nice birthday present from him/her!

We were dumb lucky timing wise when we did the same thing a few years ago, rolling DH's much-smaller 401K into a Vanguard IRA. I hope it works out well for you too.
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Old 05-06-2013, 12:51 PM   #10
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I never had/spoken to FA before. My portfolio was all mess - was invested into 80 diff MFs(Most I had no idea - just randomly picked and never looked at underlying fee, just looked at morning star rating..dumb move on my side)over the years and had no idea about index funds until I joined this form.
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Old 05-06-2013, 07:13 PM   #11
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Way to go, you sold high! Now, make sure you save a good chuck of cash. After all, you have to money at the bottom to buy at the bottom.
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Old 05-07-2013, 06:44 AM   #12
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Old 05-07-2013, 07:28 AM   #13
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I sincerely wish you the best of luck in your move to cash, but in all honesty this doesn't strike me as a good way to arrive at your new asset allocation. The mutual funds you've just sold will probably be up or down a percent or two while you are on the sidelines, just through normal market fluctuations. That means you are unnecessarily gambling tens of thousands of dollars on what is essentially a flip of the coin. You may win, or you may lose, but what you're doing is gambling, not investing.

You may have done all this selling without consulting your financial advisor, but if he/she knows about it (and approves), it also strikes me that your FA is being quite lazy and not earning the fee you're paying. A good financial plan should analyze your current investment compared to your target and offer a coherent plan to get to your goal without exposing yourself to the kind of unnecessary risk you're currently taking. How hard is it to analyze the holdings of FCNTX and coordinate selling it while simultaneously buying comparable DFA funds?

On the positive side, DFA has a sterling reputation, so by hiring this FA you are getting access to some of the best mutual funds in the market. Good luck and I hope it all works out for you and your DW.
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Old 05-07-2013, 07:50 AM   #14
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Yep..I remember late 90s. But as you rightly said, Who knows? That's why I said, I'll find out in couple of weeks. While I wait to re-invest, if market goes down then just plain luck otherwise bad luck - but I've to take that chance to be in the game. That 500K carryover loss really made my decision much easier to sell yesterday.
What's up with the "couple of weeks" deadline? Don't be be afraid to sit there in cash for quite awhile waiting on the right time to get back in. What good does it do to get out then jump right back in? Buffett recently made the comment at the Berkshire Meeting (in general terms) that now is not the time to buy an index fund.

Be patient. Wait.....
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Old 05-07-2013, 07:50 AM   #15
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I sincerely wish you the best of luck in your move to cash, but in all honesty this doesn't strike me as a good way to arrive at your new asset allocation. The mutual funds you've just sold will probably be up or down a percent or two while you are on the sidelines, just through normal market fluctuations. That means you are unnecessarily gambling tens of thousands of dollars on what is essentially a flip of the coin. You may win, or you may lose, but what you're doing is gambling, not investing.

You may have done all this selling without consulting your financial advisor, but if he/she knows about it (and approves), it also strikes me that your FA is being quite lazy and not earning the fee you're paying. A good financial plan should analyze your current investment compared to your target and offer a coherent plan to get to your goal without exposing yourself to the kind of unnecessary risk you're currently taking. How hard is it to analyze the holdings of FCNTX and coordinate selling it while simultaneously buying comparable DFA funds?

On the positive side, DFA has a sterling reputation, so by hiring this FA you are getting access to some of the best mutual funds in the market. Good luck and I hope it all works out for you and your DW.
gamble? No. I thought about it hard and long but my portfolio was a mess(80 some MFs) and there was no way my FA would've been able to incorporate that into new allocation. He's not even aware that I've sold almost everything - I just spoke with him first time on last Thursday and had mentioned to him that I'll be selling most of them shortly to start fresh. He should come back to me with new allocation assuming it all cash sometimes this week and we'll review and invest back into market in couple of weeks. FCNTX was not tax efficient(dividend/capital gain of about 20K per year) in my taxable account. Meanwhile, market may go up/down...who knows and who has the crystal ball? I'm just happy that I sold on high and offset 180K capital gain with 180K of capital loss.
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Old 05-07-2013, 07:57 AM   #16
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What's up with the "couple of weeks" deadline? Don't be be afraid to sit there in cash for quite awhile waiting on the right time to get back in. What good does it do to get out then jump right back in? Buffett recently made the comment at the Berkshire Meeting (in general terms) that now is not the time to buy an index fund.

Be patient. Wait.....
No such hard deadlines...just my thoughts. Will discuss the option with FA and see what he recommends.
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Old 05-07-2013, 08:07 AM   #17
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http://www.cnbc.com/id/100709849


Here is a link to what Buffett said. Actually didnt say sticks were "high" but reasonably priced, but his inference (IMO) is it would be wise to wait until thy are cheaper.

I would definitely DCF into these funds and not do this in one fell swoop. Also, since you are starting fresh, have you given any thought to just doing this yourself ? You could use this time to read up on good investment books and just DCF into index funds yourself, saving the FA fee.
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Old 05-07-2013, 08:43 AM   #18
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Because....?
The commissions you're generating are putting their kids through college.
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Old 05-07-2013, 08:47 AM   #19
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The commissions you're generating are putting their kids through college.
Why do you assume that way? I'm paying FA 625/quarter or 2500/year - which'll give me advice, second pair of eyes looking after my investment and access to DFA funds.
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Old 05-07-2013, 08:50 AM   #20
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I just sold 1.683M of various MFs from all accounts(Brokerage/IRA/Roth IRA) yesterday. Why? I just want to start fresh.....I'm going through portfolio makeover(first time ever in my life) and don't know why but I just felt yesterday to sell most of them. Was it a good(lucky) move? Who knows? Only time(coming couple of weeks) will tell. I've been carrying 500K loss from .com years and just realized 110K of capital gain which I'll be offsetting with selling 110K loss in near future.
With the help of FA, I'll be investing this cash into DFA funds he suggests. I'm 48 and DW is 43. I'm thinking of starting with 65/35 mix and rebalance gradually to 60/40 in five years when I decide whether to fire or not.
What do you all think about my asset allocation plan and the sell I made yesterday? I've made many dumb moves in past and I hope this one is not one of them. I still have 627K invested mostly in FCNTX and about 100K in few Fidelity/Vanguard index funds which I'll sell and re-invest when my FA recommends which MFs to buy.
We have sold a lot too.
We are at our lowest equity position.
Bought a lot during the crash (hard to do)
and sold as it went up.
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