Shhhhh...Wellington closes to new investors...

[foxfirev5]

Any bet that Wellesley will be closing next?

Personally I doubt Wellesley will close soon, but who knows. It's heavy weighting of bonds is currently less attractive than the dividend/dividend growth stock weighting of Wellington.

 

[oldtrig]

My take on retirement after being retired for 18 months is this. There is no way I can stop working. I do not answer to anyone other than my wife but I still work. That is my way of investing. I then put what I make in the bank and save it.

I stay away from horse tracks and any thing to do with gambling including the stock market. I know some do not want to hear this. that's Putting your hard earned money in something you cannot control is not for me.

I have done well in my life and never invested a dime in the market. Working keeps me young. I work for myself and I can go when I please. I look forward to getting going in the morning. I just hope my health holds out. Going on a vacation has never been my style. I tried it last year and got bored the first day so I went back home where I could relax.

I have had people ask me where to invest money. I tell them to learn a trade while still at your desk job. Then when you retire use that trade to make extra money. It has worked for me anyway. I feel sorry for people who retire and then get bored. I planned for this for many years and like I said it has worked for me. Maybe I did not offend anyone. oldtrig

 

[REWahoo]

.

 

[F4mandolin]

Doomsayers are interesting to me.....do they go through life predicting the end of everything? Or is there some positive feelings in there somewhere? I hope the market goes down a little bit....then I can buy......and then it "should" go back up......unless it doesn't, and that will really piss me off.

 

[NW-Bound]

I hope the market goes down a little bit....then I can buy......and then it "should" go back up......unless it doesn't, and that will really piss me off.

Yeah. It's the worrying about getting pissed off that always kept me from going all in.

 

[Gatordoc50]

How Often Do Market Corrections Happen? | The Investment Fiduciary

Magnitude of market decline	Frequency of occurrence
>5%	Every Year
>10%	Every two years
>20%	Every five years
>30%	Every ten years
>40%	Every twenty-five years
>50%	Every fifty years

I make no representation as to the accuracy...

A 50 percent loss every fifty years? We had a few 50% losses in a span of eight years. But since the losses extended over 12 months, it doesn't show up in these stats.

 

[HFWR]

A 50 percent loss every fifty years? We had a few 50% losses in a span of eight years. But since the losses extended over 12 months, it doesn't show up in these stats.

And I believe the data was prefaced with "on average".

 

[NW-Bound]

So, for reversion to the mean, does that mean we won't see another 50% drop in the next century?

I hope this points out the peril of using long-term statistics for something with a short history like the US stock market.

Again, see The Retirement Calculator from Hell, Part III.

 

[Gatordoc50]

And I believe the data was prefaced with "on average".

I understand. But according to those stats we are overdue for a 50% loss. Dang!!

 

[NW-Bound]

Get your cash ready!

When that happens, buy, buy, buy!

 

[HFWR]

Get your cash ready!

When that happens, buy, buy, buy!

Bye bye?

 

[Pjman]

Historically, the market will return you 8% and bonds about 5%.

You should only put money into the market that you don't need for 5-10 years.

Slowly pull the money out as you reach that 5 years from needing it and put it in CDs.

 

[gozer]

I do not know about Wellington bond holdings, but regarding its equity portion, it's not indexed. The latest data shows that relative to the S&P 500, it overweights in financial services (banking) and the health care sector, and underweights in technology.

I think the above has always been true with conservative funds, including the ones outside of Vanguard. They tend to stick with dividend-paying stocks, and shy away from growth stocks. Not to say that's good or bad, but that's just their philosophy. Avoidance of growth stocks (read technology) saved them from the crash of 2000-2003.

Note that the overweight in financial sectors hurt many royally in the 2008-2009 market rout. There's no free lunch.

Disclosure: I have owned Dodge & Cox Balanced for a long time (one that got hurt bad in 2008-2009 due to banking stocks), and added Wellington and Wellesley on the rebound of the Great Recession.

My reason for stating its equity portion is like an index stock fund is not because it is one, but rather because it's starting to look more like one in its composition and performance. It has 75 billion under management and can't jump around easily. Comparing this funds composition historically seems to show the same trend other giant funds have followed. But as with all Vanguard funds this one has a reasonable expense ratio, and it has been dropping. It was .35 in 2009, today it has dropped to .25 (or .17 for admiral shares). It will be interesting to see how long they can beat the indexes. Even if they can't, I imagine they will have the expense ratio at a price point where it doesn't matter. Too me the best thing about this fund is that it can alter the stock vs bond ratio. It is currently leaning heavily toward stock due to low performance of bonds.

Morningstar tracks the fund against a benchmark they call "Morningstar Moderately Aggr Target Risk". Against this benchmark the fund is very close to the norms. i.e. its almost an exact match. Very light on "Consumer Cyclical" and very heavy on "Healthcare" are the only significant differences from the benchmark. Both Financial Services and Technology are right on the money with this benchmark.

If you change that default benchmark to the more generic "S&P 500" and then look at the stock allocations they are still pretty close to the index. Closer than they were 10 years ago. But you still see the differences you mentioned.

 

[NW-Bound]

Wellington is a large MF at $75B, but it is not so large that its manager has to be a "closet indexer" if he does not want to. Even though a large fund like this cannot invest successfully in small and mid caps, it is not so big that it cannot pick among the large caps. For example, Walmart has a market cap of $470B, while IBM, J & J, Microsoft, Wells Fargo, etc... all have market cap of greater than $200B, and a mutual fund usually has no more than 2-3% of its NAV in any single stock.

However, as big value MFs have to chose among the big caps, their performance do not deviate too far from the S&P index, nor do they want to. But while staying within the large caps, they can still pick and chose, in an attempt to beat the index by a few percentage points. For example, during the financial meltdown of 2008-2009, a fund owning Wells Fargo would do a lot better than owning B of A or Merrill for example. Or among tech stocks, they may chose IBM over Microsoft.

I happened to spot this following interview of the manager of Wellington. It tickled me pink when he said that he was moving away from dividend-paying consumer staples stocks, as these were becoming overvalued due to investors flocking there in the last few years for the perceived safety. I have sold off some individual staples stocks myself for the same reason. However, I was early by about 3-6 months, and left too much money on the table. Oh well...

https://personal.vanguard.com/us/funds/snapshot?FundId=0021&FundIntExt=INT

 

[bUU]

I'm hoping Wellington stays open for a few more weeks at least. My spouse and I are both in Wellington through former employer 401k plans, and they just started charging fees for "Tier 4" funds like Vanguard funds, so I figure that's my cue to do rollovers, my 401k into an IRA at Vanguard, itself, and my spouse into her current-employer 401k which offers Vanguard funds (without fee). However, it'll be at least two weeks before the checks get to the respective new custodians. (We'll be out of the market for those two weeks, as well, so I'm hoping we don't miss a big run-up. Ah, the joys^h^h^h^hstresses of personal finance.)

 

[gozer]

I'm hoping Wellington stays open for a few more weeks at least. My spouse and I are both in Wellington through former employer 401k plans, and they just started charging fees for "Tier 4" funds like Vanguard funds, so I figure that's my cue to do rollovers, my 401k into an IRA at Vanguard, itself, and my spouse into her current-employer 401k which offers Vanguard funds (without fee). However, it'll be at least two weeks before the checks get to the respective new custodians. (We'll be out of the market for those two weeks, as well, so I'm hoping we don't miss a big run-up. Ah, the joys^h^h^h^hstresses of personal finance.)

Hey maybe you will get lucky and instead of a big run up, the market will totally tank while your money is in cash-like limbo mode. Then you buy back in and bypass a drop.

<rant mode on>
I hate the way most investment companies move money in a rollover. Passing paper checks around like it's 1913 instead of 2013. We just rolled my wife's 401k to an IRA. It only took 1 week, but it involved a very large check sitting on my front porch for a couple of hours. After 9/11 the "check 21 act" was enacted by congress to allow digital substitution for paper checks in financial transactions. Planes being grounded, and that being the means by which most checks moved at that time, is what prompted this action. So now apparently, the vast majority of checks move electronically. So why do so many investment firms still insist on cutting a paper check? And many (not all) insist on sending you that check so that you can forward it on instead of directly sending it straight to its final destination.
<rant mode off>

 

[NW-Bound]

Personally I doubt Wellesley will close soon, but who knows. It's heavy weighting of bonds is currently less attractive than the dividend/dividend growth stock weighting of Wellington.

Yes. Wellesley has been trailing many other funds, not just Wellington, so I doubt if it has much money inflow. And not just its bond portion, but I suspect its stock component also trails the S&P.

I am a contrarian, and like to buy beaten down stuff, but I would say it is not yet time. The bond run has been going on for a few years, and the correction won't be done for a while. Of course, that is just my opinion.

I do not have a lot in either funds, so I do not bother to trade them. I watch them with an interest of seeing how it works out.

 

[MRG]

<rant mode on>
I hate the way most investment companies move money in a rollover. Passing paper checks around like it's 1913 instead of 2013. We just rolled my wife's 401k to an IRA. It only took 1 week, but it involved a very large check sitting on my front porch for a couple of hours. After 9/11 the "check 21 act" was enacted by congress to allow digital substitution for paper checks in financial transactions. Planes being grounded, and that being the means by which most checks moved at that time, is what prompted this action. So now apparently, the vast majority of checks move electronically. So why do so many investment firms still insist on cutting a paper check? And many (not all) insist on sending you that check so that you can forward it on instead of directly sending it straight to its final destination.
<rant mode off>

It called 'the float', each of the parties get the interest maybe just overnight. Even with our current low interest, it adds up to major amounts of money, all 100% legal.

MRG

 

[Steelart99]

I have a Vanguard account, mostly in the LifeStrategy Moderate Growth fund. I like the performance of Wellington ... but I tend to be "dumb" about when to move to another fund. Would now be a good time to move into Wellington, or should I wait?

 

[REWahoo]

I have a Vanguard account, mostly in the LifeStrategy Moderate Growth fund. I like the performance of Wellington ... but I tend to be "dumb" about when to move to another fund. Would now be a good time to move into Wellington, or should I wait?

Why do you want to move from LifeStrategy Moderate Growth to Wellington?

 

[Steelart99]

I guess I don't necessarily except that Wellington seems to perform at about 2% better (historical).

 

[rbmrtn]

So, for reversion to the mean, does that mean we won't see another 50% drop in the next century?

Looking at reversion to mean, it seems the general market might have to go down. Chart from Doug Shorts.

Regression to Trend: A Perspective on Long-Term Market Performance

 

[NW-Bound]

I just now realized that I was too obtuse.

How Often Do Market Corrections Happen? | The Investment Fiduciary

Magnitude of market decline	Frequency of occurrence
>5%	Every Year
>10%	Every two years
>20%	Every five years
>30%	Every ten years
>40%	Every twenty-five years
>50%	Every fifty years

I make no representation as to the accuracy...

A 50 percent loss every fifty years? We had a few 50% losses in a span of eight years. But since the losses extended over 12 months, it doesn't show up in these stats.

So, for reversion to the mean, does that mean we won't see another 50% drop in the next century?

I hope this points out the peril of using long-term statistics for something with a short history like the US stock market.

Again, see The Retirement Calculator from Hell, Part III.

I was teasing about the statistics that a huge decline only occurs once in 50 years. Because we had the most 2 recent ones within 10 years, for the stats to hold we would need the next one to be way out in the future to make up for the past occurrences.

I know very little about baseball, but would venture that talking about 50 years statistics with the US stock market is like talking about batting average of a rookie.

 

[foxfirev5]

I've lived through several 500 year floods in the last 50 years. Does that mean that I'm good for the rest of my life?

 

[Major Tom]

I've lived through several 500 year floods in the last 50 years. Does that mean that I'm good for the rest of my life?

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