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Old 09-01-2016, 12:11 PM   #21
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The question should really be if this is an appropriate strategy for OP. Based on his story, increasing risk to chase a little more return is absolutely NOT the proper course of action, IMO.

Whether the instructor is correct or not is really immaterial. I just hope OP sees that.
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Are Index Funds like VTI and BND really a comprehensive diverse portfolio?
Old 09-01-2016, 08:55 PM   #22
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Are Index Funds like VTI and BND really a comprehensive diverse portfolio?

I like a portfolio of BND and VTI. However, I like a portfolio with a large chunk of VYM and BLV even better. I find that to really reduce volatility, one needs to trim the overall stock % down substantially, considering as low as 30%. But bonds, treasuries or corporate, are both yielding ridiculously low rates. So, I've opted for a strategy that goes higher in stocks, 48% at the moment, but also includes a healthy amount of long term bonds of both corporate and us treasuries. When stocks climb the long bonds go down a bit. When stocks drop, long bonds go up.

This recipe is working great for me. I don't buy into the doomsday discussions about the great and up and coming interest rate hikes. Too slow and our economy is too weak.



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Old 09-03-2016, 04:03 PM   #23
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Personally I am :

SPY 28%
SCHB 21%
SCHD 17%
SCHA 10%
PWZ 3%
USATX 3%

Cash - whooping 18% currently BUT sold Puts, took in $$s but left myself tentatively owning:

2% BAC expiry 11/18/16 - doubt I'd get it as it would need to hit $11
2% T expiry 12/ - want it, should probably buy anyway

I need to find 5-10 stocks
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Old 09-04-2016, 07:39 AM   #24
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Cap weighted indexes are dominated by the largest companies. Very little deviation between the S&P 500 and VTI usually. Is that a problem? No, it's by design.

The whole point is that you shouldn't worry about what part of the market underperforms, overperforms or what not. Parts will always outperform the whole.

What a cap weighted index mathematically guarantees is you'll get the average market results at rock bottom costs. This in turns guarantees that you'll outperform >70% of investors (up to >95%). That's as close to a free lunch as you can get. Doing something else than this has a very high chance of being a net negative, especially as a hobbyist. You are competing with full time career professionals. Some of them are idiots, many of them are not.

So set market exposure %, forget it, rebalance on a fixed date. As to VTI vs. VT (or VXUS), I'd apply the same logic. Just buy the whole thing (VT or equal parts VTI and VXUS).

Unless you have a solid logic that outwits >70% of investing folks, you'll be best off that way.

I get the lure btw, am doing some personal investing myself. I try not to fool myself though, and am tracking whether that's indeed a net negative. If it turns out that way, I promised myself I'd quit doing it.

So it's not about diversity (within equities), but about buying _everything_ and accepting you can't pick winners reliably.
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Old 09-04-2016, 01:24 PM   #25
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Quote:
local Community College and the Instructor
Did your instructor indicate what investment firm he was associated with? I have noticed locally that Continuing Education and Community College instructors in the financial field are usually brokers or agents moonlighting as academics. A pretty good way to get a prospect list.


He will eventually present his business card to each class member.
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Old 09-04-2016, 05:51 PM   #26
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VTI does have about 15% midcaps and 9% small caps. So not entirely large capsImageUploadedByEarly Retirement Forum1473029466.198625.jpg


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