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Old 03-08-2011, 09:13 AM   #41
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Each state has a board for CPA's that can be contacted to check for good standing of the persons and firm. Both funds I am in have been in high visibility TV CNBC and FOX Business. I know it is a dog eat dog world out there so DD is a must. I did have
acces to my accountant who helped checking things out for me to include IRS filings
of the funds themself. How Madof got away with using a one/two man accounting firm for a multi billion dollar fund is amazing, how could they not catch it. Of course he did have high level SEC position before to hide behind.

Brewer I thought you had mentioned before you was in the brokerage business.
If a person is qualified as accredited investor they should be smart enough to check out hedge funds even if they do not use them they should be aware of what is available. Performance is where hedge funds make their money and they do have a majority of their own money in the fund along with family money with smaller funds,
at least mine do. That is one of the first things I asked.
I'm a "hedgefundphobe" as I don't like the fees, the initial funding requirements, the lack of transparency and I just can't forget LTCM. Also being on TV isn't a reason to invest in something. For me even closed end funds that use leverage are out of bounds. Call me conservative, but a sensible plan for ER should not include anything with the volatility of your hedge funds. Of course this is a personal choice, but one that I would never recommend to a friend....an enemy, maybe.

My question would be what is your plan for ER, why do you need volatile investments like Modern Capital and Cap Pig?
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Old 03-08-2011, 09:25 AM   #42
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I am in a similar situation, cash from a real estate deal, though not of the same magnitude (dollar amount), coming in soon.

How does this cash fit into your entire financial scheme? For me, it is outside of my big picture financial plan, so I am really torn as to what to do with it, about 40k.

I am considering putting 15k into muni bonds, because overall me exposure there is low, and the other 25k....
- buying a small business franchise that my wife would run (high risk, but much control
- what I know best, agriculture/timber (low risk, but delayed returns, first sign of any dividends at about 5 to 6 years.
- more bonds/munis
I'll be coming into some money so I'll have to figure out what to do with the cash. For me it's simple. 50% will go to pay down my 4.5% mortgage. This is a guaranteed return and brings ER closer. The rest will go into equity index funds and I'll up my bond allocation in my IRA to bring me back to a 50/50 AA.
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Old 03-08-2011, 10:35 AM   #43
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jerome: were do you find the long term munis paying 6 or 7 percent after taxes and what do you mean by short term losses?
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Old 03-08-2011, 12:34 PM   #44
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I like to lay freshly minted bills out on the bed and roll around, squealing like a little girl!

I'm in the money....
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Old 03-08-2011, 12:52 PM   #45
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jerome: were do you find the long term munis paying 6 or 7 percent after taxes and what do you mean by short term losses?
Frank,
I can help with the long term munis, go to fidelity's website:
Fidelity Investments:

then select option, Over 20,000 individual bonds, then under Municipal - New Issue or Secondary. Here's one cusip w/after tax over 7% - 612221T27 (Montclair Township, NJ), there's a couple more. I've seen aft tax over 8% recently for CA munis. I've only bought new issues so far, but these offerings are time sensitive, so they come and go quickly at times. To buy New Issues, you have to be qualified to buy them, minimum asset levels and/or minimum # of trades/year.
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Old 03-08-2011, 01:06 PM   #46
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jerome: were do you find the long term munis paying 6 or 7 percent after taxes and what do you mean by short term losses?
I'm big in Vanguard funds, both in and outside of California.
Vanguard TE LT bond fund (VWLTX) currently pays 4.23% interest. Since I'm in a combined 40% federal and state tax bracket, that's about the same as 7% on a before tax basis. Past 10 years the fund has earned me an average return of 4.23%......far better than the return on the S&P 500 stock funds.

Our Vanguard California fund (VCITX) pays 4,52%, and in California my tax rate is a combined 45%.

As interest rates increase, bond funds go down in price. Since I'm in it for the long haul I don't worry about interest rate spikes/downturns. I just look at the past 10 years, glad that I was diversified in muni bond funds since they did so much better than stocks. No one knows, however, what the next 10 years will bring so I remain diversified in stocks, REITS and bonds, very happy with that position. Hope this helps.
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Old 03-08-2011, 03:12 PM   #47
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I might be stating the obvious but if I had a lot of cash I'd pay off debt. Even a 4.5% mortgage looks good in this interest rate environment. I mean an investment with zero risk and a return of 4.5% beats other guaranteed investments like CDs. If you have absolutely no debt then the previous posts become more applicable.
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Old 03-08-2011, 03:29 PM   #48
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I can understand your phobia of hedge funds and you get what you pay for.
At least they do not get a life time pension for running a hedge fund for a couple years like Mutual and CEF's get ( I believe this is correct, read it in prospectus before, maybe it doesn't apply for all though). I like my managers to have the options of being in bonds, stocks (short or long), margin when appropriate or all cash.
Modern Capital ( value based Style) closed in Oct 2009 (up 16% if I remember right). I found a new fund to replace it, high flyer as I have enough in other fund you mentioned (capitalistpig) which has waived the performance fees every year that I have been in it which is several ( more than 5 less than 10).

I like the best bang for the buck and why do you think the big guys use hedge funds
and high wealth mangers do also ( JP Morgan, Goldman sachs and the rest). I could use a push mower but might as well use a riding one if the amount is enough. I believe I have good funds with results that prove it for the most part and that is what counts.

I am retired sitting in Philippines now visiting brother who I bought a little apartment for last year. I have been in 7 countries since last July Thailand where I use to own a house for a few months. I have a condo in Costa Rica on the pacific, Jaco Beach I am not a surfer so will sell it soon. Company I use to work for is asking me do I want to work again for a couple years so think I might do it, a bit bored of travel now, not a must but I always enjoyed work anyways.
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Old 03-08-2011, 03:35 PM   #49
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For the record, I use a push mower at home.
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Old 03-08-2011, 03:48 PM   #50
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For the record, I use a push mower at home.
Me too. A push mower gets the job done and I don't have the added cost of gasoline and risk of oil prices going through the roof.

wvc56 does your "best bang for the buck" philosophy take risk or a budget into account. If CapitalistPig did a LTCM how would you be set?
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Old 03-08-2011, 04:08 PM   #51
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Mutual funds shut down because of poor performance as much as Hedge funds.
Why put shackles on your money managers if they are so good. How is being able take advantage of market conditions like being all cash more risk than a mutual or bond fund. I use to use Ivy funds and a high wealth manager with a large investment firm, no cheaper than a hedge fund. Just because a fund says the fees are 1% does not mean they do not have added expense they charge to the fund.....
I have not had a loan since 1984 which was $1K and paid cash for the 4 residences I have owned. I hate debt seen it destroy to many wiser than me people in the past.
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Old 03-08-2011, 04:27 PM   #52
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I am invested in a oil/gas well partnership , is this to high risk also.
We only have about 80 operational wells at this time and drilling more come summer.
Maybe another Horizon huh, I guess I could rock to much in my rocking chair and tip over so I should stick to chairs with 4 legs only.
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Old 03-08-2011, 04:42 PM   #53
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Mutual funds shut down because of poor performance as much as Hedge funds..
I don't mean poor performance I mean insolvency caused by taking too much risk? Can you give me any major retail mutual funds that have collapsed? I can think of five hedge fund collapses without going to the web.

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Why put shackles on your money managers if they are so good. How is being able take advantage of market conditions like being all cash more risk than a mutual or bond fund. I use to use Ivy funds and a high wealth manager with a large investment firm, no cheaper than a hedge fund. Just because a fund says the fees are 1% does not mean they do not have added expense they charge to the fund.....
Can you tell us more about you evaluation of risk and income requirements. Do you have a plan or any analysis of your risk vs income requirements.....not getting much from you on that topic. FYI 1% fee is enormous.

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I have not had a loan since 1984 which was $1K and paid cash for the 4 residences I have owned. I hate debt seen it destroy to many wiser than me people in the past
slightly baffled by this last bit
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Old 03-08-2011, 04:45 PM   #54
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Oil, hedge funds.... They are definity a change from the 60/40 mutual fund portfolio which is too often quoted here
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Old 03-08-2011, 08:57 PM   #55
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Oil/gas well partnerships are not hedge funds and same is required be an accredited investor. Many of them out there, getting into the right one is the key. They can provide long term income 15 to 20 years but carry larger non liquid risk.

As I stated before the performance of my hedge funds cappig up 400% since inception Aug 2000, down years two 2008 -4.5% and 2009 -1%.

Other one inception Sept 2006 up 727% no down years YET,,,, up 28% so far in 2011.
Best year 2007 up 168%. Down market 2008 +80%.

Mutual funds that do poor normally sell off to another fund and intergrate so you don't hear of them as being failures but I am sure there is some info out there if you want to research. I have been in a few of them long time ago and several appear when really big hits to the markets happen. Check past dot.boom times of past and see how many mergers arise from them.

Tell me how your mutual funds that can only invest in a certain area a certain way is and must stay at least 80% invested at all times is not shackled. Anyways just pay your 4.5% mortgage off when you get the cash, I am going to make money and talk about the results.
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Old 03-08-2011, 09:20 PM   #56
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I pretty much keep cash that will last me a year or two but this down turn had me helping out about 5 people so cut me short. This is kind of the second time I retired since April 08. I can withdrawl from my funds with 90 day notice or work again.
I played KOG and NOG last July/Aug with my money market fund and made enough
to pay my last 6 months travel (up 70%) which I rarely do any of my own investing anymore.

Read the prospectus on mutual and CEF's to get the real cost of the funds operations
and not only the fee's charged for managing it. You might find a massaged cost of paying insurance, pension and other operational cost for employees asscoiated with the fund. How much do they charge the fund to buy and sell positions in it? Think there is
any commissions on them?
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Old 03-08-2011, 10:54 PM   #57
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Mutual funds that do poor normally sell off to another fund and intergrate so you don't hear of them as being failures but I am sure there is some info out there if you want to research. I have been in a few of them long time ago and several appear when really big hits to the markets happen. Check past dot.boom times of past and see how many mergers arise from them.

Tell me how your mutual funds that can only invest in a certain area a certain way is and must stay at least 80% invested at all times is not shackled. Anyways just pay your 4.5% mortgage off when you get the cash, I am going to make money and talk about the results.
Your methods are not my cup of tea, as they are high risk and high return, so you must need a lot of income, but I wish you well. You've described your impressive gains several times, but not much about how you evaluate risk and the returns you actually require to fund your retirement. Do you have a plan above "best bang for the buck"? I don't think there will be many takers for your approach, but we are a catholic group so your input will be welcome.

I don't know of any ER folks who have only one mutual fund, unless it is some retirement income fund of funds, and particular asset allocations and investments types are usually in a portfolio to give the desired income with the lowest risk. I don't need to generate the returns you get to retire as a 2% withdrawal rate will cover my expenses so low risk investments are all I need.

I'd really like some specifics on the mutual fund failures/mergers, and as you first mentioned them I think it's up to you to do the research and present some examples. Hedge funds that have failed include LTCM, Madoff, Marin and I believe a few hundred go under every year.

As far as mutual fund fees are concerned I am an index fund investor which by their nature have low costs. As long as the index fund value plus the expenses matches the index then there are no hidden costs.
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Old 03-09-2011, 03:40 AM   #58
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Beta .11
Sharpe ratio of my fund 1.08
S&P 500 .3556
U.S. markets total .40625

Higher the better.
S&P 500 return from 2000 thru 2010 12% accumulative ( that is a hum dinger)
mine is already stated.

Mutual fund failure info website
http://www.investopedia.com/articles/02/013002.asp
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Old 03-09-2011, 06:41 AM   #59
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Beta .11
Sharpe ratio of my fund 1.08
S&P 500 .3556
U.S. markets total .40625

Higher the better.
S&P 500 return from 2000 thru 2010 12% accumulative ( that is a hum dinger)
mine is already stated.

Mutual fund failure info website
Published Mutual Fund Returns Not Always What They Appear
Once again you don't connect the risk and return to your need for income and your link underlines the advantages of index funds which are very popular here.

"John Bogle, founder and former chairman of the Vanguard Group, often cited the survivor bias phenomenon as one of the reasons for favoring index funds, which don't play the survivorship game. Bogle is quoted as saying that "what we are really looking at here are "juiced" managed fund performance numbers, which create a misleading picture that actively managed funds are competitive with indexing."

I feel that you are making some basic investing mistakes, but you seem to have hit on a strategy that you are comfortable with and I applaud you for that. However, a little more exposition about how your strategy relates to your retirement plan would be useful, rather than just pasting numbers.
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Old 03-09-2011, 06:47 AM   #60
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MMND, is that you?
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