Value fund buy and hold - 10 years later

[Dennis]

Well, after chauffeuring around all the Major Bank and Investment Houses VIP'S for over 30 yrs and having them "In the Back Seat of My Limo"?

Bottom line is? 95% of us Amatures haven't got a Chance Investing and then Managing our own $.. Most do it from being over-confident.. from being successfull doing their own professions, think they can do as well in another..by only needing to spend a few hours reading some Articles, Books, etc.. That most of those are designed to make the Authors &/or their Employers $ and not anyone else..

and Wall Street was Based upon using Insurance Salesman Techniques...
Buy and Hold All depends on What you Buy and Hold..> Warren Buffet..another Insurance Salesman..

It takes a Pro to Defend against other Pro's and to Even Beat other Pro's..
and my favorite? 11 reasons passive investors let Wall Street steal their money - MarketWatch

Until I got enough $ to use a Firm, I owned Balanced Funds..and 50% of my $ has been with a Very Conservative Investment Firm ( Bond Pro's ) and the othr 50% in several Balanced & Bond Funds with a 30/70 Mix ...( Mostly Treas. Last yr )

And trying to Make the Market Make up for your Short Commings of not being able to make enough in your own profession? Is Suicidal. Just like trying to Win in Las Vegas... The Odds are Against you and the House Always Wins..and they prey on your Greed...Dangling the Carrot if you will..

For Beginers? HSTRX and OAKBX and Learn from Them for the next 5-10 yrs... And Don't expect to make more than 7% apy on your $ when figuring out how much you have to save for your Retirement.. This will force you have to Save more and Spend Less..

Something Our Gov't and Wall Street doesn't want you to do..
Our Seniors learned this after the Tech Yrs and then succeeding Bear Yrs of 00-02'
Now this Current Generation (hopefully) will learn from this past Bear Crash..of 08' going forward and will tell their Kids and Grandkids..

[ejman]

I do think that the key to "buy and hold" is re balancing periodically. I keep fairly wide bands (stocks at 50 -60%) because I don't like to re balance constantly. As a result, I tend to re balance a little early in the cycle ( Early 2007 instead of peak in October 07) but it is a simple approach that has kept my ER going since December 02 (no pensions or SS but I'm looking forward to SS at 62 - I hope its still around). Of course just about EVERYTHING is down in this cycle but bonds less so that stocks and cash is still king in a deflationary period.

[Grep]

Yes, rebalancing is a important part of buy-and-hold for many people.

Some would say it is a distraction, and even counterproductive, to review individual funds in isolation. It's your over-all portfolio balance that counts. Indeed, if everything rose and fell together, there would be no benefit to diversification or rebalancing. One actually needs volatility to cause a risk premium and to reap the benefits of diversification and rebalancing.

[Grep]

Dennis,

I'd say Farrell correctly points out the mental errors that many people make (though with an insulting tone rather than a compassionate one). However, he's also right when he says:

"... more Wall Street bankers, brokers and fund managers own more yachts and make 10 to 100 times more than the average clueless investor."

The education required for successful passive investment can be boiled down to a few easy rules. I won't attempt to devise and summarize an appropriate set of rules here, but a starting point would be:

1) Keep x years of living expenses in cash.
2) Invest only for the long term and only what you can afford to lose.
3) Invest in the lowest cost, broadest index funds appropriate for your level of risk tolerance, e.g., an appropriate passively-managed target retirement fund.

That, and the stern admonition "now don't mess with it until you are retired!" will get people 80-90% of the way there.

[haha]

Quote:

Originally Posted by Grep The education required for successful passive investment can be boiled down to a few easy rules. I won't attempt to devise and summarize an appropriate set of rules here, but a starting point would be: 1) Keep x years of living expenses in cash. 2) Invest only for the long term and only what you can afford to lose. 3) Invest in the lowest cost, broadest index funds appropriate for your level of risk tolerance, e.g., an appropriate passively-managed target retirement fund. That, and the stern admonition "now don't mess with it until you are retired!" will get people 80-90% of the way there.

The part of #2 that I have bolded is a cliche that cannot be followed by an ordinary person who has to rely on his portfolio for his retirement.

How many people on this board could "afford to lose" their investments? I would guess only those who have governemnt pensions. And most of them wouldn't like it much.

Ha

[unclemick]

Yep - I would replace #2 with invest as early as you can, as much as you can, as often as you can and keep the faith, stay the course - don't worry about what you can't afford to lose - if you're dead you can't take with you.

Faith, time in the market, and diversification.

Doing nothing is intelligent behavior.

Guess who I'm quoting?

heh heh heh -

85% Target Retirement 2015, 15% Norwegian widow stocks(to keep the hormones happy) Ballpark 4% SEC yield.

[Grep]

Quote:

Originally Posted by haha The part of #2 that I have bolded is a cliche that cannot be followed by an ordinary person who has to rely on his portfolio for his retirement.

Many people have retired, and retired well, without any significant investments in equities. In fact, I'd wager that most people have done so, and will continue to do so. The core of my own savings, which taken alone is fully adequate for early retirement, was made without equities.

Of course people cannot "afford to lose" their (entire?) investments on the eve of retirement. That is why people are advised to gradually reduce risk to the degree that is safe enough not to jeopardize their retirements as they approach that date. The latter is the very intention of the target retirement type funds (I don't use these personally, but people could do worse). Thus, don't risk more than you can afford to lose.

[unclemick]

[quote=Grep;807175
Of course people cannot "afford to lose" their (entire?) investments on the eve of retirement. That is why people are advised to gradually reduce risk to the degree that is safe enough not to jeopardize their retirements as they approach that date. The latter is the very intention of the target retirement type funds (I don't use these personally, but people could do worse). Thus, don't risk more than you can afford to lose.[/quote]

Boy o boy o boy - what part of SEC yield don't people understand. They went thru this long debate over at Boglehead's forum.

If I were 'Curmudgeon for a day' - I would sentence everyone to shut off their computers/and maybe cable tv - dress like 1948 and go stand by the mailbox until the mailman brought their dividend/interest checks - WHICH they wouldn't get unless they could hum a few bars of 'gimme that old time religion' - in Norwegian!

And pssst Wellesley to youse too.

heh heh heh - just think after 15 yrs of ER - I graduate at 66 into crusty ole phartness this year.

Me and my Curmudgeon certificate are gonna have fun and put Missoula behind us. Heck I may even start using scented dryer sheets - generic of course. ok ok 17 on the test on the 'other' thread.

[yakers]

Unclemick, how are you ding with Wellesley, target retirement and your DRIP stocks? We have a pretty similar setup, DW's IRA is in Wellesley and my main IRA is in a target retirement fund. I also have some 'dividend' stocks. DW retired two years ago, I retired March 08, so far we have not drawn from our IRAs, we planned to do that next year. Despite this conservative portfolio we were down 18% last year. I don't know how I would feel if I were drawing down a portfolio that was going down already. Are your dividends enough that you are not selling any shares?

[Grep]

Quote:

Originally Posted by unclemick Boy o boy o boy - what part of SEC yield don't people understand.

Did you have any point to make that was relevant to quoting my post? Or was it just another opportunity to go on about Norwegian Widows and Psst-Wellesley?

By the way, I don't own Wellesley, but I agree it's fine for retirees.

[unclemick]

Quote:

Originally Posted by Grep Did you have any point to make that was relevant to quoting my post? Or was it just another opportunity to go on about Norwegian Widows and Psst-Wellesley? By the way, I don't own Wellesley, but I agree it's fine for retirees.

Yep - you got it right - you don't even need #2. My fear/rant/gripe/etc is that many people don't know what they can afford to lose - they see a large market fluctuation in their portfolio and sell in panic rather than stay the course.

Yakers - I haven't owned Wellesley since the 1980's. It stems from the old CFB days when he mentioned it as an example of a balanced value fund with a long history where SEC yield was a strong consideration.

Alas by quick calculation - my Norwegian widow stocks were -32% at low Mr Market wise and -17% dividend yield wise 2008 vs 2007 - not fun but livable. Target 2015 you can read it and weep on the Vanguard website - maybe -25% down at low Mr Market and my SEC yield climbed but I haven't checked my ding in $. Ballpark I cut expenses in 2007 roughly 25% - not a problem in my case - except I'm not getting any younger and need to keep spending up.

Guilty as charged - I have been known to zip in the Norwegian widow or pssst Wellesley in any thread availible.

It's what I do.

heh heh heh - The utes, food, oil, drug were ok and then there were div crashes - BAC, C, JPM and DOW among others. 33 stocks.

[haha]

Quote:

Originally Posted by unclemick heh heh heh - The utes, food, oil, drug were ok and then there were div crashes - BAC, C, JPM and DOW among others. 33 stocks.

I didn't realize you did so much with individual stocks, since you usually characterize that as testosterone driven.

I guess you are basically soaked in that stuff.

Ha

[HFWR]

Quote:

Originally Posted by haha I didn't realize you did so much with individual stocks, since you usually characterize that as testosterone driven. I guess you are basically soaked in that stuff. Ha

The infamous "filing cabinet"...

[unclemick]

Quote:

Originally Posted by haha I didn't realize you did so much with individual stocks, since you usually characterize that as testosterone driven. I guess you are basically soaked in that stuff. Ha

Hormones. Only 15% of total portfolio.

Besides -sans intervention - I can quit anytime.



heh heh heh - And then there is my obsession with the Saint's - Superbowl next season for sure.

[Grep]

Quote:

Originally Posted by unclemick Yep - you got it right - you don't even need #2.

I'd suggest otherwise; that risk is an important factor that should be taken into account (e.g., reduced) as one's human capital declines. But as I said, I was not attempting to come up with The Rules for one and all.

Cheers.