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Index ETF's or single asset?
Old 11-12-2015, 04:02 AM   #1
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Index ETF's or single asset?

I'm not sure if my "title" is accurate but my question is about MLPs and ETFs. I have made and lost alot of money buying single country or single company MLPs and ETFs and am wondering if my ride would be smoother without giving up too much upside by buying multi asset etfs. Examples:

AMLP vs LINE (I made HUGE amount of $ in LINE and did sell off as I went, to rebalance, but still...in the end it went from 35 to 3, and I do not keep up on things well enough to catch these things. I just bought AMLP which has a decent yield and spreads its risks out a bit.

Instead of AGNC (which I own, and although I made alot of money after I bought it, the last year or two has been most hideous...most hideous indeed) - I think there are a couple of multi mReit funds like MORT, etc. that are actually "unbalanced" because they aren't equal weighted, but at least I'd own a few mReits vs 1. Yes, when the category goes down, they all go down, but it would mititgate the risks a bit.

I do have small positions in RSXJ (russian small cap) and GREK (greek 20) for contrarian shots. I should've waited though ... they declined 20% the minute I bought them, even though they'd both gone down 60% BEFORE I bought them. I do see now that everyone's mostly forgotten about them and they're just sitting there now ... now is the time to buy them! But I don't think there's an "index" for buying "long shot troubled countries" so I'll stick with these for now.

Thanks for any feedback.
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Old 11-12-2015, 05:19 AM   #2
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If you made lot of money with your approach then continue....

ETFs like RSXJ with 40 million dollars in assets and 0.68% in fees would not be my cup of tea. Surely broad VXUS ETF with 190 Billion in assets and 0.14% in fees will have more predictable performance.

Not to mention daily volume/spread of something like RSXJ. Looks like as low as 1000 shares a day....
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Old 11-12-2015, 08:26 AM   #3
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Quote:
Originally Posted by hotwired View Post

I do have small positions in RSXJ (russian small cap) and GREK (greek 20) for contrarian shots. I should've waited though ... they declined 20% the minute I bought them, even though they'd both gone down 60% BEFORE I bought them. I do see now that everyone's mostly forgotten about them and they're just sitting there now ... now is the time to buy them! But I don't think there's an "index" for buying "long shot troubled countries" so I'll stick with these for now.

Thanks for any feedback.
Are you taking these gambles because you enjoy the thrill of it, or do you hope that the money you are putting at risk will fund a retirement? If you are after the later, then you probably want to diversify. The investment techniques that allow people to grow fabulously rich are the same ones that leave others broke.
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Old 11-12-2015, 08:37 AM   #4
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Portfolio construction 101:

Take your two model portfolio's and measure standard deviation over their history. Take you expected long term returns for each and voila, you got a sharpe ratio which tells you which is better.


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Old 11-12-2015, 09:28 AM   #5
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Concentrated portfolios will either beat the market or trail it, and will carry a higher risk. That is true whether you buy small bitty companies or large-cap high-tech stocks. I never put much into a single stock, but have in the past concentrated on a certain industry or sector. And sometimes I beat the market, sometimes not.

You pays your money and you takes your chances.
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Old 11-12-2015, 03:38 PM   #6
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Well I'll be honest.

I enjoy investing... But if I look at my long term record I'm not very good.

I try hard to be "objective" so I keep track of how I would have done, holistically, over the years I've been investing vs basic indexing and indexing wins .

Result is I increasingly put my assets into simple etfs and leave them alone. This year has been especially instructive in that regard because of the oil thing . Maybe next year it's different because of the oil thing. Who knows.

But... I'm not retired yet and I have a fairly high savings rate (like most people on this forum have in pre retirement).

As such I'm likely to move all my investments into simple etfs and have an inconsequential amount for fiddling. The problem is when its inconsequential it's way less fun... But in retirement I think I have to follow the objective numbers and they tell me I shouldn't be a stock picker .

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Old 11-14-2015, 04:42 AM   #7
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I'm very well diversified, actually. The bulk of my funds are in Vanguard index funds. My "ROTH" is used as my alternative's fund, comprising approx. 15% of my total portfolio. And within that 15% I have everything from single country funds, mlps, BDC's, and bankloan funds, mReits, foreign utilties, emerging makret bonds, etc. And so within that sector I am taking risks, but I consider them somewhat mitigated. In other words, I'm investing in a couple of the worst performing countries but not the worst performing COMPANY. The latter can go bust, the former, I hope, will turn around and be the best (or near best) performer 2,3, maybe 4 years down the road. Of course time is not on my side. If something doubles after sitting there 10 years....not such a great CAGR!
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Old 11-14-2015, 04:46 AM   #8
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Yes, I'm discovering the same thing about my "skill" -- I have some good ideas but I haven't been willing to develop the skill and systems to track my holdings and know when it's time to sell. I get overwhelmed and revert to "instinct" which is horrible with investing. I've been talking myself into moving into 6-8 index funds and leaving it at that for years now ... getting there! I think I'll do much better managing allocation, rebalancing, tilting, things like that vs. individual micro or macro analysis. Just gotta hold my nose and sell all my "odds and ends" ...
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Old 11-14-2015, 11:00 AM   #9
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I'm long AMLP. Keep in mind its midstream only. So it would not own LINE which is upstream. I'm also thinking of starting an investment in one or more of the Kayne Anderson CEFs to add some active management to my MLP mix as I'm all indexed right now.

One gripe I have about AMLP is that it is MLP focused and I'd rather it be midstream focused. So for example AMLP no longer owns Kinder Morgan because they are no longer an MLP. I would prefer my index own KMI regardless because I am interested in midstream not MLP per-say... after all with AMLP I am giving up much of the MLP tax advantages anyway...

When it comes to investing I use everything: individual holdings, ETFs, mutual funds, and CEFs. My preference is not to use individual holdings unless I have to as I'd rather make sector bets than individual company bets. IMHO its usually safer to go with the sector. There are always eceptions. For example I would not bother buying a telecom sector when I can just buy T and VZ.

Individual stocks have there advantages though. Your dividends are lot more predictable and you can usually get a much higher yield. Your also not paying extra fees for management. The downside is now you have to keep up with your due diligence and follow the market a lot more closely than with a sector bet. With sector bets I don't feel compelled to constantly monitor it.
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