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Annual check in
Old 06-05-2019, 05:19 AM   #1
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Annual check in

Good morning!
I like to check in every so often to run my investment strategy up the flagpole and get critiques. Here's a summation:

I've always struggled between a set it and relance it strategy using 5-7 index funds vs. doing that with a chunk, then picking a diversified self-chosen collection to supplement. That is what I'm doing now. I do NOT measure the exact performance of my portfolio mostly due to laziness, honestly, but I know that I am more or less in line with a 60/40 approach.

I've also decided to use tactical asset allocation, at least on the stock portion of my index funds, because A.) Historically TAA has resulted in a MUCH lower drawdown while providing close to the same return, often higher, but rarely too much lower. B.) TAA has gotten clobbered since roughly 2009 due to the fact that we've been in a secular bull market and generally B&H beats timing models when we're in a strong bull market. Hence, my voice is nagging me that TAA's time has "come round". My technique is to sell the asset to cash when the moving average of the asset falls below the 200 day exponential moving average. I check and do the trade monthly, last trading day of month.

Here's my portfolio: Target is 40% stock (25% US / 15% INT, and the INT is both large & emerging market, like 50/50) 40% bond (including some preferreds CEF's and Lending Club / Prosper, then 20% alternative. My alternative is overweight right now and I will be moving some from there to stock soon. Here's what it looks like. I'd love some feedback. Again, part of me wants to just pick a nice diversified index portfolio and be done with it, and that's where about 65% of my funds are, but I like to dabble a bit and usually do OK. (bitcoin, 2200% return, ROKU, 150% return, etc.)

US BONDS / INCOME (40%, 35% US, 5% emerging markets)
Vanguard Total Bond VBMFX
Vanguard GNMA VFIIX
Vanguard ST invst grade VFSUX
iShares US Preferred Stock* PFF
Pimco Floating Rate PFN
Pimco Dynamic credit PCI
Nuveen Pfd & Inc Fund JPS
Farmland Partners PFD FPIPRB
Oxford Lane Capital OXLC
Sachem (HML) SACH
Peer to Peer lending LC/PSPR
Vanguard Tips VTIPX
FOREIGN BONDS / INCOME
Emerging Markets Bonds EMB

Stock (40%) (70% of my stock holdings are in Vanguard total stock market, and small cap value, then the rest are fairly evenly distributed)
US STOCK

Vanguard Total Stock Market VTSMX
Roku ROKU
ATT T
Dividend & Income Fund DNI
Vanguard Energy Fund VGENX


U.S. Small Cap

Vanguard Small Cap Value VISVX
Rite Aid RAD
Royce Value Trust (SCV) RVT (in cash right now due to signal)

INTERNATIONAL STOCK
Int Lg Cap

Vanguard International Stock VGTSX

Emerging Market
Greek 20 GREK
Vanguard Emerging MKT VEIEX
Russian Small Cap ETF RSXJ

Alternative (majority of "alternatives" is 7% REIT & 7% Private equity/BDCs, then 3% PM)
GDX Gold Miners GDX
PM (physical G&S) ***
Saratoga Investment SAR
Powershares Private Equity PSP
McQuarrie Infrastructure MIC
Apollo Investment Group BDC AINV
MLPA MLPA
Aries Capital (Private Equity) ARCC
REIT mREIT MORT
REIT US GLP
REIT US VNQ
REIT INT VNQI
iStar STAR
Washington Prime Group WPG
Commodities RJI (in cash due to signal)
Crypto (all 5 cryptos avail. at coinbase)
Wine & Collectibles (note: wine, crytpo and collectibles only account for .04% of my portfolio)
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Lazy? I'll show you lazy!
Old 06-05-2019, 10:31 AM   #2
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Mdlerth's Avatar
 
Join Date: Oct 2016
Location: The Shire
Posts: 1,112
Lazy? I'll show you lazy!

Quote:
Originally Posted by hotwired View Post
Good morning!
I like to check in every so often to run my investment strategy up the flagpole and get critiques.
Whew! There's an awful lot of individual bits in your list. Which brings me to my critique:

Quote:
I do NOT measure the exact performance of my portfolio mostly due to laziness, honestly,
The above statement doesn't really fit with a portfolio containing that many moving parts. Diversification is good, but wouldn't you already get diversification in an index fund or three? Keeping track of dozens of positions is NOT laziness.

I have a friend who makes 20 option trades every day, selected from a group of some 200 stocks he follows. Even with software packages and custom spreadsheets it takes him 5 hours to sift through. It's been profitable for him, but it's obvious he simply enjoys "the chase". I wonder whether the same applies to you.

Quote:
Crypto (all 5 cryptos avail. at coinbase)
Wine & Collectibles (note: wine, crytpo and collectibles only account for .04% of my portfolio)
I don't see any harm in a little speculation. For the same reason I buy an occasional $2 lottery ticket: I get my money's worth in entertainment value.

I guess I'd summarize my comments as, "You indicate that you employ an allocation strategy, which is what you should do. OTOH, your portfolio is way more complicated than I would be interested in managing. I couldn't begin to dissect it. But if you're happy immersing yourself in detail, then carry on."
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Old 06-05-2019, 01:38 PM   #3
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Location: west bloomfield MI
Posts: 2,160
Quote:
Originally Posted by hotwired View Post
Good morning!
I like to check in every so often to run my investment strategy up the flagpole and get critiques. Here's a summation:

I've always struggled between a set it and relance it strategy using 5-7 index funds vs. doing that with a chunk, then picking a diversified self-chosen collection to supplement. That is what I'm doing now. I do NOT measure the exact performance of my portfolio mostly due to laziness, honestly, but I know that I am more or less in line with a 60/40 approach.

I've also decided to use tactical asset allocation, at least on the stock portion of my index funds, because A.) Historically TAA has resulted in a MUCH lower drawdown while providing close to the same return, often higher, but rarely too much lower. B.) TAA has gotten clobbered since roughly 2009 due to the fact that we've been in a secular bull market and generally B&H beats timing models when we're in a strong bull market. Hence, my voice is nagging me that TAA's time has "come round". My technique is to sell the asset to cash when the moving average of the asset falls below the 200 day exponential moving average. I check and do the trade monthly, last trading day of month.

Here's my portfolio: Target is 40% stock (25% US / 15% INT, and the INT is both large & emerging market, like 50/50) 40% bond (including some preferreds CEF's and Lending Club / Prosper, then 20% alternative. My alternative is overweight right now and I will be moving some from there to stock soon. Here's what it looks like. I'd love some feedback. Again, part of me wants to just pick a nice diversified index portfolio and be done with it, and that's where about 65% of my funds are, but I like to dabble a bit and usually do OK. (bitcoin, 2200% return, ROKU, 150% return, etc.)

US BONDS / INCOME (40%, 35% US, 5% emerging markets)
Vanguard Total Bond VBMFX
Vanguard GNMA VFIIX
Vanguard ST invst grade VFSUX
iShares US Preferred Stock* PFF
Pimco Floating Rate PFN
Pimco Dynamic credit PCI
Nuveen Pfd & Inc Fund JPS
Farmland Partners PFD FPIPRB
Oxford Lane Capital OXLC
Sachem (HML) SACH
Peer to Peer lending LC/PSPR
Vanguard Tips VTIPX
FOREIGN BONDS / INCOME
Emerging Markets Bonds EMB

Stock (40%) (70% of my stock holdings are in Vanguard total stock market, and small cap value, then the rest are fairly evenly distributed)
US STOCK

Vanguard Total Stock Market VTSMX
Roku ROKU
ATT T
Dividend & Income Fund DNI
Vanguard Energy Fund VGENX


U.S. Small Cap

Vanguard Small Cap Value VISVX
Rite Aid RAD
Royce Value Trust (SCV) RVT (in cash right now due to signal)

INTERNATIONAL STOCK
Int Lg Cap

Vanguard International Stock VGTSX

Emerging Market
Greek 20 GREK
Vanguard Emerging MKT VEIEX
Russian Small Cap ETF RSXJ

Alternative (majority of "alternatives" is 7% REIT & 7% Private equity/BDCs, then 3% PM)
GDX Gold Miners GDX
PM (physical G&S) ***
Saratoga Investment SAR
Powershares Private Equity PSP
McQuarrie Infrastructure MIC
Apollo Investment Group BDC AINV
MLPA MLPA
Aries Capital (Private Equity) ARCC
REIT mREIT MORT
REIT US GLP
REIT US VNQ
REIT INT VNQI
iStar STAR
Washington Prime Group WPG
Commodities RJI (in cash due to signal)
Crypto (all 5 cryptos avail. at coinbase)
Wine & Collectibles (note: wine, crytpo and collectibles only account for .04% of my portfolio)
I would break this down differently to even begin discussion (and I agree with other poster, I wouldn't dive into detail unless this was better organized/presented).

Overall asset allocation
I think you said 60-40 was the target?

Account 1
IRA
% stocks, % bonds, specific holdings in % of this account

Account 2
taxable
% stocks % bonds, specific holdings in % of this account

Accounts 3,4,5... same

Then list amounts in each account


I think you hold too many

I hold a few positions (I have a sector ETF for each of the sectors in the S&P 500), and I track my weighting relative to the S&P (50% of my holdings track the the S&P, with other 50% I buy the under performing sectors of the previous year or what has been hit hard this year)
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Old 06-05-2019, 02:05 PM   #4
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Location: Atlanta Suburb
Posts: 1,304
I count 43 separate investments! On another thread we are debating if 3 funds is adequate. The consensus seems to be that somewhere between 3 to 7 funds covers most folks needs. Even if you wanted to include some alternative investments, you should be able to get down to 7-12 investments. Unlike other human endeavours, increasing investment activity tends to decrease returns. IOW, less may be more. And, with fewer investments, you could track your performance against a reasonable benchmark.
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Old 06-06-2019, 02:35 PM   #5
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Posts: 737
hotwired,

Some other CEFs you might want to check out:
DSL = doubleline managed (Jeffrey Gundlach) junk bonds
HTD = tax managed 50/50 in utilities and preferred stocks, all qualified divs
UTG = mostly utilities, tax efficient
UTF = mostly utilities
FOF = fund of fund of CEFs
STK = focused on IT and growth stocks, covered calls
QQQX = covered calls on nasdaq, tax efficient
SPXX = covered calls on s&p 500, tax efficient
ECC = IMHO, a better CLO fund than OXLC which you have

For municipal bond CEFs you might want to check out the ETF of muni CEFs ticker XMPT. Also Vanguard's tax managed balanced fund is a good one for munis. Its tax managed half US stock index and half munis.

You might want to also add in some Business Development Companies with BIZD. Some Master Limited Partnerships with MLPX and MLPA. I think you already had mortgage REITs but if not REM is a good one.

You might want to also add in some div growth focused like: VYM, VYMI, NOBL

You can get access to Vanguard managed hedge funds with fund VPGDX for only $25k. Its the only way I know how to get access to Vanguard's Alternative Strategies fund VASFX provides access to a new asset class not correlated to stocks/bonds with equity like returns.

Vanguard's got a new commodity fund coming out this month for a min entrace of $50k. If we get stagflation it will probably outperform both stocks and bonds for the next economic cycle.

...

In my own portfolio I am using Vanguard High Div Yield index in taxable, Vanguard Managed Payout in Roth IRA, and in 401k I have it in a state managed endowment fund, same as used for the state pension system. Also 17 years and counting in state pension plan.

In taxable I have $417k in VHYAX. Dividend income for 2019 should be around $14k-$15k. I want to get that up to $18k and then I will focus on adding other assets if I don't early retire first.

Whenever I retire early, withdrawal strategy for pre-60s is to only spend the dividends from VHYAX which should be growing around 8% per year. On a total return basis withdrawal rate will be around 3%. At 60+ my pension will be enough to live off of. Everything else is just gravy from then on.

With pension, 401k, and Roth IRA I have access to same options as the big endowment funds. In taxable, keep it simple. Best bang for the buck IMHO is VHYAX. Withdrawal strategy is solid and reliable, i.e. just spend the dividends. Very conservative 3% on total return basis and on a "widows and orphans" basis. Total return on VHYAX is comparable to S&P 500. Taxes are 100% qualified dividends and expense ratio on VHYAX is only .08% and will probably continue to decline.

I'm 43. I may early retire at 45. For slow traveling expat I just need $1,500 a month to start with. Start out in Mexico, Thailand, etc. By the time I am 60 I'll have more than enough money to start traveling in the most expensive countries. Start out at $18k a year from VHYAX dividend income. That will grow around 7%-8% a year. Every year I will have more money to spend. By 52 should have around $30k in divs. At 60+ I will be making more money in retirement than I ever did while working. Pension is worth around $600k currently I guesstimate and I currently have $417 in VHYAX and another $100k in 401k/Roth IRA which will double by the time I'm 60.
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Old 06-06-2019, 03:54 PM   #6
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Woah. A very diverse portfolio, but it seems unnecessarily complicated. Are you actively managing your investments within the portfolio, or are you a long-term investor? If it's the prior (active management), I can perhaps see the point in this mix. But it seems somewhat chaotic, hard to manage, and hard to evaluate actual AA, and overlap in MFs. I can't see the need for 14 bond funds.

Have you looked at the fees for each of your investments, and compared the returns, after taxes and fees? How do you track your performance to know if this complicated mix is doing better, than, say, the S&P500?
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