Which is the best buy?

[veritasophia]

If you had to choose to buy one of the 3 vanguard funds below today, which would it be? Why?

Energy Fund (VGENX)
REIT Index Fund (VGSIX)
Emerging Markets Stock Index Fund (VEIEX)

 

[brewer12345]

I pick door #1.

 

[laurence]

I can't help it, I can't suggest any because I don't know in what context are you buying this? Further diversifying portfolio? What percentage of your NW will be tied up in it? Or are you just asking us to bet on a horse?

 

[cute fuzzy bunny]

I pick door #1.

I'd take the box that Carol is holding.

If I was forced to buy one, i'm probably with brewer. I think i'd sit around a little while longer if I had that choice. Talk about "I'll take hideously overvalued asset classes for $500, Alex?"

 

[LOL!]

If you force me to buy, I pick VGENX because it is the worst performer over the last year and below its highs. I'm allowed to sell it whenever I want, right?

 

[wabmester]

If you force me to buy, I pick VGENX because it is the worst performer over the last year and below its highs. I'm allowed to sell it whenever I want, right?

As long as you're willing to eat the 1% early-redemption penalty.

 

[veritasophia]

I can't help it, I can't suggest any because I don't know in what context are you buying this? Further diversifying portfolio? What percentage of your NW will be tied up in it? Or are you just asking us to bet on a horse?

Diversification. About 10% of our non-retirement portfolio will be tied up in it. The reason I asked is because all 3 seem to be "hideously overvalued asset classes." Maybe I should wait?

 

[laurence]

I'm not much of a slice and dicer, VG S&P index, a small cap, an international, Wellington, Vanguard Value Fund (VTV). That's all she wrote for me.

 

[cute fuzzy bunny]

Personally I'd wait, unless you'd like that 10% to turn into 7% or 5%, thereby being far less concerning.

But one of them might go up another 35% this year. For no obvious reason.

 

[lswswein]

VGENX - The Energy fund. Lower P/E & P/B ratios compared to the others.

-h

 

[wildcat]

Ya got 25k for diversification into VGENX? Might narrow your choices down to 2

 

[Spanky]

If you had to choose to buy one of the 3 vanguard funds below today, which would it be? Why?

Energy Fund (VGENX)
REIT Index Fund (VGSIX)
Emerging Markets Stock Index Fund (VEIEX)

I pick EM because of its potential growth. Energy had its run and REITs are steaming.

 

[cute fuzzy bunny]

Look at a performance chart of each of them.

Looks more like a launch trail than a growth curve.

 

[Spanky]

But one of them might go up another 35% this year. For no obvious reason.

It could be REIT. It's already up by 9%.

 

[maddythebeagle]

And the envelope sez…submerging markets

 

[cute fuzzy bunny]

For one year, reits are up the most, energy the least but not by much.

For three years, energy is up the most, the other two neck and neck.

For five years, its almost a dead heat with energy leading by a nose.

For ten years, its energy, then reits and then emerging markets, with energy's run-up (with reinvested dividends) 2x what emerging markets...reits locked almost halfway between energy and emerging markets.

Energy's low PE/PB vs the other two may be a red herring...energy stocks have always been 'value' stocks with low PE's...the current incarnations seem cheap vs the total market but are pretty expensive compared to historic results...coupled with record earnings that probably wont last...

So based on this, I suppose the "value pick" among these ballistic offerings might be EM.

This stuff is definitely smelling like irrational exuberance...

 

[ScaredtoQuit]

I heard last night on "Hard Ball" that Chinese Oil usage would equal ours by 2013. That suggests the run-up in oil prices is far from over.

 

[laurence]

Maybe, but it costs Iran about $18/barrel to pump their oil, and the Suadis only $6. A lot of things like the oil tar sands in Canada become economically viable somewhere between $40-$50 a barrel, so while I don't see $20/barrel oil in our future, a whole lot of new sources come on line at even today's prices. My crystal ball is broken, though, so can't say for sure.

 

[cute fuzzy bunny]

Ding! Ding! Ding!

Theres definitely a point where supply runs thin and the prices surge...but I imagine theres plenty of subterfuge around how much is still in each reserve. Then theres the moron that claims oil is not from prehistoric matter but is produced somewhere underground and has an endless supply.

Then theres the question as to when a fund like vgenx starts dropping oil companies and starts loading up on solar, fuel cells and other energy companies. That should be good for some impressive capital gains.

I'm guessing none of this is significant for at least 10 years.

 

[BUM]

I'll take VGENX for a thousand, Alex!

Its the only one of the three I don't own. So it must be the best bet


ps. I dumped the REIT a few months ago. Thats how smart I am.

 

[Gone4Good]

The Energy fund doesn't sound like a good choice for diversification. Although I don't know how your portfolio is constructed, I'd wager you already have plenty of energy exposure. The S&P 500 has a 10% concentration to energy. Many managed funds have more.

You might also check your other international holdings before plunging 10% into Emerging Markets - you might have more exposure here then you realize, too. If you don't already have international exposure, I'd diversify into developed economies first.

I think REITS make sense as a diversifier, but they aren't exactly cheap. I'd be hesitant to put 10% of my portfolio into them now.

 

[Gone4Good]

I heard last night on "Hard Ball" that Chinese Oil usage would equal ours by 2013. That suggests the run-up in oil prices is far from over.

Did they also talk about how the Chinese government is massively subsidizing the price of oil for industry and consumers because $50-$70 oil would derail the economy? That can't last.

 

[wstu32]

None...

missed the boat on all. i dont think i would invest in any at this time.

btw...i am conservative investor. my opinion only

 

[renferme]

One of the funds in my V. IRA is the REIT fund - up 9% this year, and I wish I had more money in it. I worry that as soon as I move more into it, it will tank.

 

[Gone4Good]

I worry that as soon as I move more into it, it will tank.

That is the perfect reason to maintain asset allocation discipline. If you originally allocated 5%, or 10%, or whatever to REITS, in all likelihood you'd need to be a net seller of REITS over the past few years to maintain your asset allocation. The exact opposite of chasing performance.