Asset allocation tutorial?

[kyounge1956]

(snip)
Easy homework: Post the percentage of fixed income (taxable bond funds, the bond portion of balanced and TR funds) that you have in taxable accounts. Could you put that same amount in a bond fund in your tax-deferred accounts and replace the fixed income in your taxable account with a tax-efficient asset class? If you have tax-exempt bonds, would you come out ahead by using taxable bonds in a tax-deferred account or a Roth or a 529 plan?

My answer to the homework: I have about 30% fixed income in my asset allocation and 0% of that fixed income is found in my taxable accounts.

This is the easiest assignment so far. I don't have a taxable account, so the percentage is zero.

 

[kyounge1956]

(snip)
One might say there are 3 general ways of rebalancing which are really based on the "when" of rebalancing:
1. Rebalance with every new addition to the portfolio.
2. Rebalance at a set time every year: your birthday, January, etc.
3. Rebalance when certain percentage trigger points are reached, such as Larry Swedroe's 5/25 rule.
(snip)

Back to 'when' to rebalance:
If one contributes to their portfolio every paycheck or monthly or quarterly, then one can check their asset allocation and put the new money to work in the asset class that is underweighted from their written asset allocation plan. (snip)

Homework: Present here on this thread, the last act of rebalancing that you did.

I was all set to rebalance my 457 account, which is way off the asset allocation I selected in a previous homework assignment, but I've run into a snag. The choices on that plan are pretty limited; there is only one fund (PTTRX) that calls itself a bond fund, but on reading the information sheet I discovered it was holding 80% cash and almost all the rest FNMA bonds.

There are two other funds that have some bonds in them (55-65%), but if I change my new contributions to those I will also be increasing the amount of stock in the portfolio, which I have too much of already. I also did a rough estimate and even if the "bond" fund had actually been all bonds, just switching my new contributions and the existing amount in "Stable Value" to that would only have gotten me to about 60/40 by the end of next year. I don't want to trade any of the existing stock funds because they're down so much at the moment. It's a puzzlement.

 

[LOL!]

I use the "stable value" fund in my 401(k) as a cross between "cash" and short term bond fund. As you found out, it is not unusual to see that one's bond fund has a lot of cash in it.

I don't want to trade any of the existing stock funds because they're down so much at the moment. It's a puzzlement.

I think you should try to overcome the behavioral finance trap of loss aversion. If you sell low and immediately buy something else that is fairly equivalent at a low price, then you have no net change. See the "tax loss harvesting" posts earlier in this thread.

For example, suppose you have available a "balanced" fund consisting of 50% S&P500 index and 50% bond index. You now own $10K worth of a bond fund and $10K worth of a S&P500 fund both with huge losses in them. If you sell your two funds and buy the balanced fund, you will still own $10K worth of bonds and $10K worth of the S&P500 index stocks.

 

[kyounge1956]

I use the "stable value" fund in my 401(k) as a cross between "cash" and short term bond fund. As you found out, it is not unusual to see that one's bond fund has a lot of cash in it.

I don't think I need to have any part of my retirement account in cash at this time. When I eventually do leave my job I will be selling my house and devoting a portion of the proceeds to my nest egg, and can fill up a cash "bucket" at that time.

I think you should try to overcome the behavioral finance trap of loss aversion. If you sell low and immediately buy something else that is fairly equivalent at a low price, then you have no net change. See the "tax loss harvesting" posts earlier in this thread.

I didn't think there is any such thing as "tax loss harvesting" in a 457 account. It's tax deferred already. Have I misunderstood something?

For example, suppose you have available a "balanced" fund consisting of 50% S&P500 index and 50% bond index. You now own $10K worth of a bond fund and $10K worth of a S&P500 fund both with huge losses in them. If you sell your two funds and buy the balanced fund, you will still own $10K worth of bonds and $10K worth of the S&P500 index stocks.

I was looking all around trying to find a graph for any kind of bond market index to see if bonds are also way down over the last few months. I was worried I would be selling stocks cheap to buy bonds high. I thought I'd rather be too high on my stock allocation for a while than do that. But I could not find such a graph and wasn't sure where the bond market is at the moment. I don't have any aversion to selling stocks cheap to buy bonds cheap.

I will look at the holdings again for the blended stock + bond funds. I don't think I will be able to keep to my target allocation of 30% stocks split evenly between US and foreign, though. The blended funds only have a small percentage of foreign stocks and the only avenue I have open to buy bonds without cash is to use them. If it's really impossible to hit my target with the funds available in my plan I will have to rethink my target.

 

[LOL!]

I didn't think there is any such thing as "tax loss harvesting" in a 457 account. It's tax deferred already. Have I misunderstood something?

There is no TLH in a tax-deferred account, but you can still have "loss aversion". I understood that you could sell some stable value fund and some stock fund to buy a fund with "some bonds in it", but you didn't want to because your stock funds were down.

 

[kyounge1956]

There is no TLH in a tax-deferred account, but you can still have "loss aversion". I understood that you could sell some stable value fund and some stock fund to buy a fund with "some bonds in it", but you didn't want to because your stock funds were down.

You understood correctly, I am loss-averse. That's why my target allocation is so conservative. I will need to tinker with the portfolio Xray tonight and see if it's possible to get down to 30% stocks even if I sell everything I have now and put it into the fund with the highest percentage of bonds, and direct all future contributions to that fund, plus put my entire Roth IRA in a bond fund when I get that switched over. In the quick spreadsheet I did the other night it didn't look like I could possibly get to the target by the end of next year, and that was when I still thought the "bond" fund was all bonds.

So, I thought, since I'm not retired yet, the cost of selling all that stuff at such a low point in the stock market would be to "lock in" my losses, possibly delaying retirement, but the only negative aspect of having too much stock in my asset mix at this time is some extra volatility. If I were actually living off the portfolio I would want to get rid of the volatility as rapidly as possible, but since I'm still working, I think I'd rather put up with the volatility than have to work longer. I've got at least 4 years to get to the target allocation, and at retirement should have a reasonably large sum of money from sale of my house that I can use to adjust the it further if redirecting my contributions hasn't quite gotten me to the target percentages by that time. Also, after I retire I will have access to a greater variety of funds than I do in my 457, so getting to the target should be a great deal simpler. I'm just glad I came across this thread. I really needed to think about this stuff and get my ducks in a row.

Am I making sense?

 

[bamsphd]

I was looking all around trying to find a graph for any kind of bond market index to see if bonds are also way down over the last few months. I was worried I would be selling stocks cheap to buy bonds high. I thought I'd rather be too high on my stock allocation for a while than do that. But I could not find such a graph and wasn't sure where the bond market is at the moment.

Try this link
VBMFX: Summary for VANGUARD BOND INDEX FD TOTAL BO - Yahoo! Finance

Basically, just go to Yahoo, plug in the Vanguard total bond market mutual fund ticker, and compare it with the S&P500 using the Yahoo "compare" button.

Put some different dates in the "From" box near the lower right corner lay before you make any decisions based on the graph. A start date of June 4th, 1990 will look very different from a start date of June 4th 1999.

I don't have any aversion to selling stocks cheap to buy bonds cheap.

Despite the significant drops in muni and corporate bonds, compared to stocks, bonds in general have hardly budged. That is why we like to have some in our portfolios.

 

[kyounge1956]

I played around with the T Rowe Price tools and portfolio Xray, and I think I can get pretty close to my target, even with the limited selection of funds available in my plan. The end result has less bonds overall, a small amount of cash (which the target didn't) and the quantities of US and foreign stocks are not quite equal. Is there anywhere in those tools I can check whether the resulting "pretty close" portfolio will have about the same return and standard deviation as my target allocation? If not can anyone suggest someplace I can plug in the ticker symbols of the funds and find out what the return and volatility would be?

 

[kyounge1956]

I'm still flailing around here! I found the data and formulas in a book at the library to calculate estimated returns and standard deviations. My problem now is the numbers are all telling me I need to add a big slug of bonds to the mix, and contrary to what I thought in my previous post, it doesn't appear possible to get an asset mix with the characteristics I want using the funds available through my 457 plan.

Originally I was planning to use the same allocation in both my 457 plan and Roth IRA, but it looks like my only option to get the overall allocation I want is to put most or all of the Roth money in bonds and the other assets in the tax-deferred plan. Can anyone suggest a thread or book on the most likely consequences of doing so? thx

 

[LOL!]

You should probably go visit the bogleheads forum and get free personalized asset allocation advice: Bogleheads :: View Forum - Investing - Help with Personal Investments

Basically, don't treat your accounts as separate portfolios. Treat all your accounts as one big portfolio. In my IRA nowadays, I have one fund: Vanguard TIPS and that's it. In my 401(k) I have almost all fixed income. In my 403(b) I have fixed income and a real estate investment. Think about it: I have not listed any of the equity investments. I have almost no equity investments in my retirement accounts. The reason is that there is no room in my tax-advantaged accounts. So I have my equities in tax-efficient ETFs and index funds located in my taxable accounts.

Get thee over to Bogleheads. I will look for you over there.

 

[kyounge1956]

You should probably go visit the bogleheads forum and get free personalized asset allocation advice: Bogleheads :: View Forum - Investing - Help with Personal Investments

Basically, don't treat your accounts as separate portfolios. Treat all your accounts as one big portfolio. In my IRA nowadays, I have one fund: Vanguard TIPS and that's it. In my 401(k) I have almost all fixed income. In my 403(b) I have fixed income and a real estate investment. Think about it: I have not listed any of the equity investments. I have almost no equity investments in my retirement accounts. The reason is that there is no room in my tax-advantaged accounts. So I have my equities in tax-efficient ETFs and index funds located in my taxable accounts.

Get thee over to Bogleheads. I will look for you over there.

I probably won't join the boglehead forum--I spend altogether too much time online as it is and I kind of feel like I shouldn't join any more forums without quitting one of the ones I belong to already. I will go look around in the archives there and see what I see on the subject.

If it isn't some sort of Asset Allocation faux pas to put different asset mixes in the two kinds of accounts, then I'm probably good to go. I can get a fund with some bonds in it from my 457 and put the rest of the bonds in my Roth. It's at Scottrade and I haven't checked out what funds they have available but hopefully one of them is "all bonds, all the time" or maybe I can buy individual TIPs in that account. I had heard it makes a difference which assets go in a taxable account and which go in a tax deferred plan, but didn't know if important what goes into a tax deferred plan vs an after-tax account. (I don't have a taxable account except bank savings acc't and the occasional CD.)

Thanks.

 

[jIMOh]

I probably won't join the boglehead forum--I spend altogether too much time online as it is and I kind of feel like I shouldn't join any more forums without quitting one of the ones I belong to already. I will go look around in the archives there and see what I see on the subject.

If it isn't some sort of Asset Allocation faux pas to put different asset mixes in the two kinds of accounts, then I'm probably good to go. I can get a fund with some bonds in it from my 457 and put the rest of the bonds in my Roth. It's at Scottrade and I haven't checked out what funds they have available but hopefully one of them is "all bonds, all the time" or maybe I can buy individual TIPs in that account. I had heard it makes a difference which assets go in a taxable account and which go in a tax deferred plan, but didn't know if important what goes into a tax deferred plan vs an after-tax account. (I don't have a taxable account except bank savings acc't and the occasional CD.)

Thanks.

There are more schools than just "all accounts are one asset allocation". I have found doing this to be a bigger headache than the benefit.

I might have posted that much earlier in this thread... but this thread is real old, so I forget what I have posted where...

In my case I have a 401k, rollover and Roth which are allocated the same (in general) and my wife has a 401k with identical allocation and a Roth which is similar:

95% stock, 5% bonds/cash
70% domestic equity, 25% foreign equity, 5% bonds*
40% large cap, 15% mid cap, 15% small cap, 15% foreign large, 10% foreign small.

Logic for each account: The 401ks at one point had close to 80% of the balance. With job changes and rollovers, in the last 11 years we have had:
4 401ks for me
3 401ks for wife
1 rollover for me (2 contributions)
1 rollover for wife (1 contribution)
Roth for each of us

I have had same job for nearly 12 years. Yet we keep getting bought off, sold, re-acquired then sold off and similar. Each of these transactions gives us the option:
a) cash out 401k
b) roll the 401k into the new 401k
c) roll the 401k into a rollover IRA

I have chosen c) twice
wife has done a) once, b) once and c) once.

With each new job or rollover, treating all accounts as one allocation would have required doing the detailed analysis you did each time (do xray before, do xray after, find a fund which fits the missing portion etc...).

A more efficient use of time:

Allocate each account in full- I can guarantee all our accounts are close to 70% domestic and 25% foreign and 5% bonds/cash. In addition I can come close to 40% large cap and 30% mid/small.
We do not put bonds in a Roth, so that is only exception to above allocation. Only bonds in 401ks and rollovers.

When the recent rollovers we completed I might habe spent 5 minutes on the allocation (I just put the % of the funds it needed to purchase and was done). This would not effect the other 5 accounts.

If you are missing a piece in one account (like 457 is missing fund X) find an equivalent. In wife's 401k there is not a good small cap fund, so she holds 30% mid cap. In my 401k there is no mid cap and I hold 30% small cap. The high level percentages fit into allocation. The percentages into small or percentages into mid will have low impact on return (will 15% mid and 15% small return better or worse than 30% mid or 30% small?). As long as the 30% is not allocated to large cap, foreign or bonds, not a problem.

In addition the Roths are the only place we found a foreign small cap fund- so the 401ks have 25% to foreign large cap. Again will 15% foreign large and 10% foreign small return better or worse than 25% foreign large? Because of currency risk, I doubt the differences will be significant.

Tough to see if your questions on AA were answered... I remember a similar discussion on a thread you started somewhere else here... so hopefully this post helped some- there is more than one way to do something right.

 

[LOL!]

What jIMOh is doing is OK for him partly because all the accounts he is using are tax-advantaged IRAs or 401ks. If I did what he did, I would get killed on taxes.

And sometimes one of your plans has a fund to avoid. For example, in my spouse's 401(k) plan all the bond funds have an expense ratio of about 2.25% while in my 401(k) the expense ratio is "only" 1.1%. Do you think I want to use a bond fund in my spouse's plan or the one in my own plan?

And I know what you mean about too many forums. I do the same deal with pieces of technology: If I get a new piece of hardware, I must give up an old one. That's one reasons I don't own any watches. But I would ditch this forum before I ditched the bogleheads forum.

 

[kyounge1956]

What jIMOh is doing is OK for him partly because all the accounts he is using are tax-advantaged IRAs or 401ks. If I did what he did, I would get killed on taxes.

If I did it I'd be flailing around even more than I am already. All I have is one tax deferred plan at work, a Roth and a traditional IRA at Scottrade (the trad-IRA is going to get rolled into the Roth as soon as I get my act together) and a Roth IRA at Ameriprise (which is just going to sit until either the surrender charge comes down some more, or I understand the post on here that explained how and when it might be better to bite the bullet and pay the charge rather than leaving the VA in place). So I have four accounts which will soon be three, then later only two, and after I "downshift", three again because I will have some house proceeds (I hope!!!) and I won't be able to put them in either tax advantaged account.

(snip) And I know what you mean about too many forums. I do the same deal with pieces of technology: If I get a new piece of hardware, I must give up an old one. That's one reasons I don't own any watches. But I would ditch this forum before I ditched the bogleheads forum.

So many forums (fora??), so little time. If the time ever comes when I feel like I really, really, REALLY need to join the Bogleheads, I'd probably shed one of my yahoogroups rather than this one. I am in four that are rather similar and lots of the same people are in more than one of the four.

 

[kyounge1956]

We do not put bonds in a Roth, so that is only exception to above allocation. Only bonds in 401ks and rollovers.(snip)
If you are missing a piece in one account (like 457 is missing fund X) find an equivalent. In wife's 401k there is not a good small cap fund, so she holds 30% mid cap. In my 401k there is no mid cap and I hold 30% small cap. The high level percentages fit into allocation. The percentages into small or percentages into mid will have low impact on return (will 15% mid and 15% small return better or worse than 30% mid or 30% small?). As long as the 30% is not allocated to large cap, foreign or bonds, not a problem.

Why no bonds in a Roth? Because this is what I was about to do. The problem is that my tax deferred account at work has only one quote unquote bond fund, and when I look at the fact sheet it says this fund is 84% allocated to cash! Because of the limited choice of funds there is no way to add bonds without also adding either a lot of cash along with them or using a blended fund which adds stocks along with the bonds, but not in the proportion I was shooting for.

(snip)Tough to see if your questions on AA were answered... I remember a similar discussion on a thread you started somewhere else here... so hopefully this post helped some- there is more than one way to do something right.

Yes, they are being answered. I was asking (here and on that other thread) how to calculate an estimated return and standard deviation for a given asset allocation once I knew the historic rates of return, the standard deviation, and the correlations of the assets with one another. I found the formula in a book at the library (Quantitative Methods for Financial Analysis, 2nd Edition, edited by Stephen J. Brown, PhD and Mark P. Kritzman, CFA, in case anyone else is looking for it—see chapter 6, "Quantitative Methods in Asset Allocation". I got the returns, standard deviation, and correlations from the SBBI yearbook, also in the library.) It has taken me two weekends to cook up a spreadsheet that does all the math so I can play with different allocations, and it seems pretty obvious from the spreadsheet results that using only the pre-selected funds in my 457 plan, I'm not going to get the return and risk that I used when I did all my Monte Carlo models. After this year I certainly don't want to go with a higher standard deviation and I also don't want to have to work several years longer than what I had figured on based on the Monte Carlos due to lower returns.

What with reading and asking questions here (and sneaking a peek at the Bogleheads) I think I am gradually getting closer to being able to say, "this is the asset allocation I have chosen; I chose it because I estimated it would generate x% return with no more than y% volatility, which is the return and risk I need in order to be able to downshift at my target date by setting aside $z from each paycheck", and being able to back up that statement with some historic data that gives me grounds for expecting to get the return/risk I expect and eventually also some data on my own portfolio that shows that I really did get it.

 

[kyounge1956]

I devoted considerable time during my recent [-]ER test drive[/-] vacation to deciding what asset allocation I want to aim at. My target was to replicate the 7.5% return/7.1% standard deviation I used for all my Monte Carlo models. This was described on the Monte Carlo site as a "below average risk" portfolio, which is appropriate for me by age (about to turn 53), temperament (nervous Nellie) and timeframe until I want to semi-retire (shooting at 4 years from now).

Based on the data for several historic periods, the asset allocation I have chosen is 70% Intermediate-term Government bonds, and split the remainder between Large-Cap stocks and REITs. For simplicity, I would split the non-bond portion evenly between Large-Cap and REIT, but the historic data suggest that these two asset classes could drift far from an even split without much affecting the overall return or standard deviation.

Over most of the periods for which I had data, this three-way combination would meet both the risk and return targets. Between 1980 and 1999 this mix would have met the return target but somewhat exceeded the volatility target, but I re-ran my Monte Carlos and even if the standard deviation stayed as high as 10% (much higher than during the actual historic period) for two decades, it did not cause the portfolio to fail.

I also used projected returns for the next 30 years from All About Asset Allocation by Richard Ferri. These are considerably lower than market performance over the last several decades (and I have read elsewhere that market returns are likely to be lower in the future than over the last several decades) but the proposed allocation still met the target using these lower returns. So, if everything goes according to plan, if I continue to maximize my contributions to 457 and Roth for the next four years I'll be able to semi-retire at that time and fully retire at age 70.

Now I need to find some funds that will enable me to carry out this asset allocation. I don't anticipate any difficulty in my Roth IRA but the 457 plan could present some problems. I recently discovered that there is a "self-directed brokerage" option with my 457 plans that will give me access to a great many more funds than the twenty or so pre-selected options. But there is an annual fee and transaction fees for every transfer and at most I could put half of my 457 into that option; the rest has to stay in my "core" account with the limited choices available there. I am going to investigate what I have to do to get some more choices added. There is no bond index fund—the only so-called bond fund is >80% in cash. As far as I am able to there are no stock index funds, so there's no way to choose an AA and carry it out, and be reasonably certain the manager won't change the AA and throw my target allocations all out of whack.

I don't think I should have to pay extra fees to have access to asset class index funds.

So that's where it sits at the moment.

 

[Dennis]

Well, I went thru several and most have all failed over the yrs... I just stuck with Boggles % in bonds equals to your Yrs and for retirement? You shuold have whatver your Need to supplement your Income comming all from bonds... not Equities..

EG; For every $1,000 yr you need by 6% apy = you need at least $16,667 saved in Bonds..

has worked out very well for me since Retiring..In the Last Bear of 00-02' and surely this last 08' yr as well, to say the least...

And since I converted to being a Very Passive and Real Lazy Investor now?
I just put the rest in A couple of Balanced Funds and let them take care of it..

Which I had done those Balanced funds A long time ago... I'd been able to retire alot sooner than at age 55..

J. Burton came out with an article saying something like a 50/50 Port has done as well as any other In Higher % in Equities for the past 20 yrs.. and I've seen a 40/60 do only 1% less APY than a 80/20 for the past 10 yrs...

maybe Those outfits that advocate A higher % in equities also stand to gain from you doing so.. M* and others surely do.. They'd go Out of business if they told everyone to Own mostly Bonds, wouldn't they? and surely alot of those FP's and Invesstment houses managing peoples $... most use a 60/40 mix.. at the most.. Gee, wonder why? The one's i've asked for their opinions on what kind of Port I should have, really got Defensive when I reversed their % allocations into Bonds...

They aren't responding to me these Past 9 yrs now and especially after last yr...
LOL

 

[LOL!]

With more than 20,000 views, this thread has moved into the top 5 most-viewed of the FIRE and Money forum. Thanks everybody.

I noticed that another sample portfolio with a very low cost asset allocation has been posted here: Is it Christian if you give more of your money to a financial advisor than to the Church? I actually own 7 of the 8 funds in the mix (I use GWX (small cap int'l) instead of Bridgeway Ultra Small cap).

The asset allocation and Morningstar style box for the portfolio in the link is:
40% US stocks
20% foreign stocks
40% fixed_income
9-box style grid:
21 22 18
7 7 5
7 7 5
average market cap $11.1 billion.

Anyways, just another model portfolio to take a look at if you are looking for an asset allocation to copy.

 

[sunshine]

That link doesn't work...so what are the funds in this simple portfolio?

 

[sunshine]

$1 Million Retiree Portfolio Using Low-cost Index FundsAllocation
($)Ticker
SymbolFund NameExpense
Ratio
(%)Annual
Fee
($)$200,000VFSUXVanguard Short-Term Bond Admiral Shares0.10%$200$200,000VAIPXVanguard Inflation-Protected Securities Fund-Admiral Shares0.11%$220$250,000VTIVanguard Total Stock Market ETF0.07%$175$50,000BRSIXBridgeway Ultra-Small Company Market Fund0.66%$333$50,000VBRVanguard Small-Cap Value ETF0.11%$55$150,000VEUVanguard FTSE All-World ex-US ETF 0.25%$375$50,000VWOVanguard Emerging Markets ETF 0.25%$125$50,000VNQVanguard REIT ETF 0.10%$50-------. --------------$1,000,000= Total PortfolioTotal Portfolio Expense = 0.15%$1,533
OOPS, found it.

 

[DblDoc]

$1 Million Retiree Portfolio Using Low-cost Index FundsAllocation
($)Ticker
SymbolFund NameExpense
Ratio
(%)Annual
Fee
($)$200,000VFSUXVanguard Short-Term Bond Admiral Shares0.10%$200$200,000VAIPXVanguard Inflation-Protected Securities Fund-Admiral Shares0.11%$220$250,000VTIVanguard Total Stock Market ETF0.07%$175$50,000BRSIXBridgeway Ultra-Small Company Market Fund0.66%$333$50,000VBRVanguard Small-Cap Value ETF0.11%$55$150,000VEUVanguard FTSE All-World ex-US ETF 0.25%$375$50,000VWOVanguard Emerging Markets ETF 0.25%$125$50,000VNQVanguard REIT ETF 0.10%$50-------. --------------$1,000,000= Total PortfolioTotal Portfolio Expense = 0.15%$1,533
OOPS, found it.

VEU contains emerging markets. If you don't want overlap with VWO swap VEU with VEA. I'd also use VFISX over VFSUX.

DD

 

[LOL!]

VEU contains emerging markets. If you don't want overlap with VWO swap VEU with VEA. I'd also use VFISX over VFSUX.

That's the beauty of your asset allocation. You can tune it to your desires and wishes.

You can overweight emerging markets by using both VEU and VWO or you can avoid corporate bonds by using a Treasury fund (VFISX) instead of VFSUX. There is no one-size fits all in this regard, but its useful to know what's inside each of your funds so that you can make a knowledgeable decision.

 

[LOL!]

For those of you interested in current and timely asset allocation articles, the NYTimes seems to have a URL that just lists all the articles on AA that the newspaper publishes starting with the most recent. So you can bookmark this URL and check for new articles from time to time:

Asset Allocation - Your Money Guides - NYTimes.com

There are 4 new articles so far this May.

 

[Dennis]

sorry, but I found just because they maybe Lower cost, they also ended being lower performers as well. An the way the Indexes are not true indexes anymore and how Devious Traders, Hedge Funds and many others have figured out ways to Circumvent and Manipulate them? Add to the fact that ( according to Jack Boggle ) Institutions control 80% of the money being invested now and less than 20% from private investors, when it used to be the otherway around...

"Investing in the future is going to be far more challenging than in the past..that most average and even above ave. investors will have problems & be taken advantage of..and disappointed, unless regulations are both enforced and changed.."

Show me the Money... Looking @ A per $10k invested Cost basis..
FYI- A Typical self managed 60/40 port of index's lost over -20% in 08 and now has only about $300 in tot. value per every $10,000 Invested after the past 10 yrs..most other mixes have a ave of less than 4% apy for the past 10 yrs or just barely enough to stay ahead of Inflation.. From 5/99- 5/09' = 10 yrs...Of Active Bal. Index Ports, VWINX ( 40/60 ) shows having the best Tot. Rtn and Tot value for the Same period with about $16,216 = + $6,216 for every $10k invested..not much better than Owning All Bonds.. And it only took 1 yr of loosing -10% for it to end up like this..and 9 yrs of gains.. While It's 60/40 Active Mge fund of VWELX shows about $15,141

Not bashing Indexes, just bashing Equities.. making 50-60% after 10 yrs isn't my idea of making my $ make the most and working for me in a Risk Enviorment as in equties..

Will we have another -20% melt down in the next 10 yrs? You can bet on it and maybe even more than just 1 with all the devious methods being created in just the past 5 yrs..from being able to Short it by a margin of 3-1 to Leverage it to Hedge it, a Hedge fund with just a $100 Mil. can destroy a Decent Co. in a Day..Now.. as they did in 08'...and nothing is on the books to stop this from happening again.. Yet.. Yet alone to force regulators to Enforce those Regulations..

All Methods of investing in the past did not have these kinds of Devious methods back then and thus do not work as well now , nor going into the future..

Wherever there is $, there will be Theives to try to steal it and After they do and even if they get caught, the damage has been done and Investors will end up not getting that $ back and Be the looser, Only the Lawyers and the Gov't will get it back into their hands.. Either Ban Hedge Funds or require them to be Mutual Funds and have them meet those Regulations and Regulate Short Selling..on margins of 2 & 3-1 leveraging..with Derivitives.. Until then? We Average investors haven't got a chance anymore..investing in equities...

 

[JanetCK]

I'm interested. Count me in.