Hi all,
I am in the process of deciding whether to stick with a more active “slice and dice” investing style or pick an “easy to manage” small (4-6) fund / etf collection and stick with it. I am a “heady” investor, meaning I’m constantly reading and wondering …. Is this the best strategy? Oh, here’s a new one that makes sense, is this it? Every new “style” or strategy makes me want to try it out … but I’m also not a “workaholic” and I don’t enjoy hours of fundamental analysis other than using screens. I enjoy the IDEA of complex strategies but I tend not to stick with them. But my greatest fear is getting 20 years down the road and finding that either A.) all the hours I spent screwing around with spreadsheets made me an extra 1% a year (or lost!) OR … by following strategy “B” instead of “A” I could’ve earned 9% points more per year!
I think my personality is best suited for a regular, simple strategy using 4-6 funds. An “ivy league” tactical asset allocation type of deal, perhaps, or even a Gerald Appel “beat the market 3 months at a time” type of strategy. (Sam Stoval’s “There’s always a bull market somewhere” strategy runs a close second) Based on what I know about my personality, I need JUST a little “hands on” to keep me involved and interested. Too much and I’ll probably lose interest and get sloppy. Too little and I’ll be chomping at the bit to do something …. And any action that springs from “bit chomping” tends to be impulsive and counter productive. (in my experience)
I know the “Boglehead” type of strategy does well enough, in fact beating most other strategies. BUT … I have seen tremendous back tested results with some of the tactical asset models, which usually revolve around selecting a few asset classes and moving in and out of them when they cross their 10 month moving averages. This doesn’t beat the market by a huge margin but greatly reduces drawdown.
I should mention we have 49 rental apartments that we manage ourselves. I should probably consider this our “income” and therefore stay more heavily invested in stocks, but I pay attention to some of these indicators (websites like dshort.com that follow the ivy league type investing strategies) that are currently indicating an upcoming downturn in stocks. I don’t think market timing works in general, but it does appear that valuation and momentum indicators do hold some merit. They may not be perfect but they appear to alert you when “stuff is expensive” (or cheap) (valuation) and people are starting to figure out that stuff is expensive (or cheap) (momentum).
One important fact about my current "collection" - I don't tend to track it's performance very well. It's hard to see the forest for the trees...
My current mix is below. I THINK I have too many eggs!! My “ALT” (alternative) are things like merger and arbitrage funds, private equity, timber (CUT), broad based commodities fund, and small bets now and then like RRPIX, DIG, DUG, etc. (bets on interest rates or price of oil). I also have a good portion in lending club and prosper (peer to peer lending) where we’ve had a 7.75-9.25% total return over 3 years. So even though my “ALT” is 29%, it’s a pretty conservative ALT
[FONT="]TOTAL US STOCK[/FONT]
And the actual holdings, all 1-3% of my portfolio, roughly (all are either in my SIMPLE plan or ROTH)
US Bond / Income
GNMA Fund Investor Shares
Short-Term Investment-Grade Fund Investor Shares
Inflation-Protected Securities Fund Investor Shares
AMERICAN CAP AGY CORP COM
PIMCO INCOME STRATEGY FD II
International Bond
ISHARES TR JPMORGAN USD EMERGING MKTS BD FD
WISDOMTREE TR GLOBAL EX US UTILITY FUND
US Stock
Windsor Fund Investor Shares
Dividend Growth Fund
Total Stock Market Index Fund Investor Shares
Strategic Small-Cap Equity Fund
Small-Cap Value Index Fund
ROYCE VALUE TR INC
SIRIUS XM RADIO INC COM
International Stock
International Value Fund
Total International Stock Index Fund Investor Shares
FTSE All-World ex-US Small-Cap Index Fund Investor Shares
ISHARES INC MSCI JAPAN INDEX FD
ISHARES INC MSCI MALAYSIA FREE INDEX FD
JAPAN SMALLER CAPITALIZATION FD INC
Real Estate
REIT Index Fund Investor Shares
Global ex-U.S. Real Estate Index Fund Investor Shares
Alternative
ARBITRAGE FUND CLASS R
GUGGENHM TIMBER ETF
ADVISORSHARES TR ACTIVE BEAR ETF
LINN ENERGY LLC UNIT REPSTG LTD LIABILITY CO INTS
MERGER FUND
POWERSHARES EXCHANGE TRADED FDS TST LISTED PRIVATE EQUITY PO
SVENSK EXPORTKREDIT AKTIEBOLAGET ETN ELEMENTS (ROGERS INTL T
PROSHARES TR SHORT 20+ YR TREASURY
MARKET VECTORS ETF TR VIETNAM ETF
I am in the process of deciding whether to stick with a more active “slice and dice” investing style or pick an “easy to manage” small (4-6) fund / etf collection and stick with it. I am a “heady” investor, meaning I’m constantly reading and wondering …. Is this the best strategy? Oh, here’s a new one that makes sense, is this it? Every new “style” or strategy makes me want to try it out … but I’m also not a “workaholic” and I don’t enjoy hours of fundamental analysis other than using screens. I enjoy the IDEA of complex strategies but I tend not to stick with them. But my greatest fear is getting 20 years down the road and finding that either A.) all the hours I spent screwing around with spreadsheets made me an extra 1% a year (or lost!) OR … by following strategy “B” instead of “A” I could’ve earned 9% points more per year!
I think my personality is best suited for a regular, simple strategy using 4-6 funds. An “ivy league” tactical asset allocation type of deal, perhaps, or even a Gerald Appel “beat the market 3 months at a time” type of strategy. (Sam Stoval’s “There’s always a bull market somewhere” strategy runs a close second) Based on what I know about my personality, I need JUST a little “hands on” to keep me involved and interested. Too much and I’ll probably lose interest and get sloppy. Too little and I’ll be chomping at the bit to do something …. And any action that springs from “bit chomping” tends to be impulsive and counter productive. (in my experience)
I know the “Boglehead” type of strategy does well enough, in fact beating most other strategies. BUT … I have seen tremendous back tested results with some of the tactical asset models, which usually revolve around selecting a few asset classes and moving in and out of them when they cross their 10 month moving averages. This doesn’t beat the market by a huge margin but greatly reduces drawdown.
I should mention we have 49 rental apartments that we manage ourselves. I should probably consider this our “income” and therefore stay more heavily invested in stocks, but I pay attention to some of these indicators (websites like dshort.com that follow the ivy league type investing strategies) that are currently indicating an upcoming downturn in stocks. I don’t think market timing works in general, but it does appear that valuation and momentum indicators do hold some merit. They may not be perfect but they appear to alert you when “stuff is expensive” (or cheap) (valuation) and people are starting to figure out that stuff is expensive (or cheap) (momentum).
One important fact about my current "collection" - I don't tend to track it's performance very well. It's hard to see the forest for the trees...
My current mix is below. I THINK I have too many eggs!! My “ALT” (alternative) are things like merger and arbitrage funds, private equity, timber (CUT), broad based commodities fund, and small bets now and then like RRPIX, DIG, DUG, etc. (bets on interest rates or price of oil). I also have a good portion in lending club and prosper (peer to peer lending) where we’ve had a 7.75-9.25% total return over 3 years. So even though my “ALT” is 29%, it’s a pretty conservative ALT
[FONT="]TOTAL US STOCK[/FONT]
[FONT="]23%[/FONT]
[FONT="]TOTAL INT STOCK[/FONT][FONT="]18%[/FONT]
[FONT="]TOTAL US BOND[/FONT][FONT="]23%[/FONT]
[FONT="]TOTAL INT BOND[/FONT][FONT="]1%[/FONT]
[FONT="]TOTAL REIT[/FONT][FONT="]4%[/FONT]
[FONT="]TOTAL ALT[/FONT][FONT="]29%[/FONT]
[FONT="] CASH[/FONT][FONT="]2%[/FONT]
[FONT="] TOTAL[/FONT][FONT="]100%[/FONT]
And the actual holdings, all 1-3% of my portfolio, roughly (all are either in my SIMPLE plan or ROTH)
US Bond / Income
GNMA Fund Investor Shares
Short-Term Investment-Grade Fund Investor Shares
Inflation-Protected Securities Fund Investor Shares
AMERICAN CAP AGY CORP COM
PIMCO INCOME STRATEGY FD II
International Bond
ISHARES TR JPMORGAN USD EMERGING MKTS BD FD
WISDOMTREE TR GLOBAL EX US UTILITY FUND
US Stock
Windsor Fund Investor Shares
Dividend Growth Fund
Total Stock Market Index Fund Investor Shares
Strategic Small-Cap Equity Fund
Small-Cap Value Index Fund
ROYCE VALUE TR INC
SIRIUS XM RADIO INC COM
International Stock
International Value Fund
Total International Stock Index Fund Investor Shares
FTSE All-World ex-US Small-Cap Index Fund Investor Shares
ISHARES INC MSCI JAPAN INDEX FD
ISHARES INC MSCI MALAYSIA FREE INDEX FD
JAPAN SMALLER CAPITALIZATION FD INC
Real Estate
REIT Index Fund Investor Shares
Global ex-U.S. Real Estate Index Fund Investor Shares
Alternative
ARBITRAGE FUND CLASS R
GUGGENHM TIMBER ETF
ADVISORSHARES TR ACTIVE BEAR ETF
LINN ENERGY LLC UNIT REPSTG LTD LIABILITY CO INTS
MERGER FUND
POWERSHARES EXCHANGE TRADED FDS TST LISTED PRIVATE EQUITY PO
SVENSK EXPORTKREDIT AKTIEBOLAGET ETN ELEMENTS (ROGERS INTL T
PROSHARES TR SHORT 20+ YR TREASURY
MARKET VECTORS ETF TR VIETNAM ETF