I'm the guy with the wierd AA consisting of mostly Berkshire Hathaway stock-- 48% of the total portfolio. When I was working I never had a real AA plan-- I just plowed what I made into whatever stocks that looked cheap at the time (mostly Berkshire obviously). I was using the scary/dangerous plan of putting most of my eggs in one basket, but I made sure I watched the basket. Over the years it worked pretty well as I never experienced any actual losses (never sold) and had pretty returns on an average cost basis during some difficult times, although I did make a few big dumb BRK buys early in my investing career before I knew you had to not just buy, but buy at the right price, lol. I did experience quite a bit of volaltility over the years obviously, but since I was a net buyer this actually helped me.
The thing I've been strugging with lately is I just don't think I have the same mental risk profile as I did when I was working. When the market dropped so much recently I sat on my hands (and my cash) and did nothing because I was freaking out. When I was working I would have gone in with both barrels blazing buying on the cheap. I'm wondering if this may be a temporary condition since I've lost a little confidence after shutting down my business and made a big change in my life (retired young), or has my risk profile really changed forever?
If it has changed, I realize I need to do something to put things more on auto pilot so I don't have to agonize daily. The only investments I'm interested in and comfortable with and feel like I have a little bit of an edge when to buy and sell is Berkshire and the two angel investments. The rest of the stuff I have I feel like liquditaing and putting into some sort of safe, fairly mindless mutual fund AA that I would just have to rebalance every year. I never liked or had much luck with funds in a taxable account (see two below), but liked the ability to take gains when I wanted to instead. But, maybe this time it is different.
One thing I do know is I need some kind of written plan. I'm floundering around now and don't like it. Think a combination of Berkshire and a group of funds would work? What would a good group of funds be?. Most of my investments are in taxable accounts. Here is my current allocation:
Tax Rate: Federal -- 25% State of Residence-- TX
Age: 44
Pulling 2.5% of portfolio out of cash for living expenses each year (including mortgage). Wife is working, rental units are all full and paying. If wife quits SWR goes to 2.7% If wife quit and all rentals were vacent we would be at a 3.4% SWR. I don't see all the rentals going to zero, but short term I guess it could happen.
Current portfolio size : mid 7 figure portfolio size
Taxable
16.5% cash--This is about 7.5 year of living expenses if wife keeps working, or about 6.5 years if she quits. Plus, as the "managed deep value POS" liquidates my cash pile will grow.
48.8% Berkshire Hathaway (brka, brkb)
18.3% managed "deep value" account that is being turned into cash as it slowly recovers-- mostly small caps. 1% mgmt fee. Lost confidence in them, style drift problems-- they just blew it basically.
5.4% angel-type investments, locked up for 5 years
2.4% Wellesley (VWINX) .23 exp ratio
1.6% Longleaf Internatonal (LLINX) 1.6 exp ratio, about at break even after 7 years. Geeeze..
1.6% Third Ave Value (TAVLX) 1.11 exp ratio, break even after 7 years as well.
.6% conoco phillips (cop)
.4% Wells Fargo (wfc)
His 401K (soon to be rolled to Vanguard)
2.5% cash
His Vanguard IRA brokerage
1.1% Berkshire, (stupid to be in a tax advantage account, but I was just buying all I could the time)
Her IRA at Vanguard
.8% various stocks (GE, Brkb)
Kids college funds are not included in this AA.
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