Expected returns? Professional Advisors?

[youbet]

Quote:

Originally Posted by OHjosh Well, I guess I am in the other camp.* I am a big fan of getting a professional. I paid a one time fee of $400 five years ago for advice from a nice man at Ameriprise Fianncial (American Express knock off).*

Ameriprise funds are load funds.* ** Does the Ameriprise nice man ever move you in and out of funds for which you pay their 5% load?

Also, Ameriprise was spun off from American Express Financial Services which was originally Investors Diversified Services.* In the IDS days, the reps did semi-annual allocation and advise sessions for free, usually at your kitchen table, with a lot of prep work done in advance.* The $400 charge is a recent innovation!

Anyway........* just make sure you identify and understand any loads you are paying for their funds.

[ladelfina]

Max, about 1/2-1/3 is "random" in the sense that I did not pick it but it was a small account started for me by my dad. He had a broker or two that he listened to. About 1/2 the money was in ORI, FAX, LAQ, TMX, OSTN, FBF (now BAC), AXP, MOT, AU --not more than few hundred or a thousand or 2 in each--along with a couple treasuries and a muni bond.. he was big on treasuries and munis. That was phase I.

Phase II: The AU did nothing but go down so I got rid of it... As the bonds matured and I added my own $, I bought good things (3M, Schlumberger, CAT) and bad (Oracle/IBM--asked DH which tech firms he had the most confidence in.. ok, well ,he was right in that we only lost some instead of almost all when tech plummeted); Pfizer.. enh. The domestic funds (PFIOX formerly SAFQX, SSHFX, and VGHCX) were tips from my sister who was pursuing an MBA at the time (which made her, in my mind, the "big expert"!). The Italian ones (E, LUX, IMI, NTZ) are from my "infatuation with Italy" phase.. the only real dog is NTZ but I had high hopes for it when I saw all the "Natuzzi leather" sofas for sale around Boston. In Italy I also see lots of their sofa outlets, so I think the company is doing fine; whether that translates overseas or whether the underlying structure is sound (impossilbe to know for sure) is another matter. Peter Lynch did not help me out here. This is the phase where I was making money and putting it into retirement accounts when I wasn't spending it on shoes that are now collecting dust.

Phase III: Move to Italy and start worrying about asset allocation and not having so much in just banking and "weird" foreign stocks, so I move a bit towards bigger "normal" American companies and good dividends: MO, ATT, Chevron (inspired by Condi's personal tanker), GM (hey! Schwab gave it an "A" grade.. *), KFT (not sure what I was thinking.. food, I guess--there's no mac&cheese here and I miss it; I should have picked Campbell's--there's no canned soup, either..!).

Phase IV: more intrigued by a serious asset allocation approach hence the ETFs. In the meantime many of the past holdings begat offspring, further complicating the picture.

In all this time I've been buying rather than selling, because I never needed to sell, not being retired and paying zero attention to the portfolio in most years, aside from a few brief, intense periods of "shopping". So expenses are not a word in my vocabulary, aside from what the various funds charge inherently. About 1/2-1/3 have div.s re-invested automatically.

I honest-to-God never have thought of my portfolio as "risky". I don't look at 'beta' or any of those things. When I've bought I've considered p/e ratios, dividend yields and have looked at general price tendencies with charts.. that's it.

When I looked back at the "total return" (inspired by the OP) I found that I had 3 negative years out of 25 (Quicken IRR report '81-'06):
35.60%
1.30%
0.90%
81.30%
317.30%
27.40%
10.50%
9.30%
17.60%
-1.50%
15.40%
1.20%
-12.80%
13.80%
8.20%
24.70%
20.80%
-2.10%
43.70%
25.20%
16.80%
-3.30%
12.50%
43.00%
47.50%
14.20% ytd

What am I to take away from all this? I am not an experienced investor despite 25 years in the mkt., because I understand it only on a very rudimentary level. What I did understand very quickly was that online portfolio-tracking is a complete waste of time since it only tracks price appreciation; nobody tracks total return, which obviously what counts. Quicken for all its faults at least provides a clearer picture in this regard. All I can say with certainty is: "dividends are good; foreign exposure is good; buying and holding is good". Reinvestment is good, because the $ gets whisked away and invested (these days at zero cost) before you have the chance to ever see it as cash and do something stupid with it. The stocks I haven't set up re-investment for are the ones I was less 'convinced' of.. who knows what that cost me. *OTOH, it gave me some cash to diversify, even if it was in my own individual and completely haphazard fashion. * wheee!

I would love to say this is all the product of my brilliance! I infer that it is only dumb luck.

(or should I stick with 'brilliance'?) *8)


I do look back at this and Thank My Lucky Stars that I never turned it over to an advisor.* I am fairly sanguine about the future of this mix especially if I dump 2 or 3 obvious laggards and diversify some into foreign bonds and commodities. If the whole market tumbles, and I tumble 20% with it, I can take that.. I don't know how I would feel if I weren't right around "the number" already. I can find ways to cut back 20% on expenses if I had to, but they are already lower than a 4% SWR if I renounce planning the new kitchen.

Go Ameriprise! (Keep raking in those fees, for meeee!* )

[Spanky]

It's amazing - your annualized return is over 20% for the last 26 years!

[ladelfina]

well, after the few couple days ytd is only around 12% after I updated quotes..

I dunno..* * * This is all big news to me. Previously I'd been on CFB's wavelength: the bottom line gets bigger =>* -- the bottom line gets smaller => ..I shrug and look around and see that "things are going down' all over", so I don't worry too much. I did very little w*rk, and can count all my trades on my fingers & toes.

I have to rack a lot of it up to the early small purchases in what, at the time, were truly "emerging" markets. The TMX/AMX combo is responsible for a lot of the overall gain.. In this case whatever broker suggested this to my dad earned his commission several thousand times over. Maybe I should look him up and send him a fruit basket!

But again, if you look at total return for the last few years for my "regular" S&P500-type companies (in my earlier post), most have been doing extremely well. Now I'm curious to go back and run the IRR report without the foreign stocks..

I get this:
1.40%
1.90%
1.40%
67.80%
197.20%
25.40%
13.30%
4.50%
19.00%
-12.40%
32.80%
16.40%
10.30%
-1.90%
13.60%
18.50%
31.10%
3.60%
35.00%
17.50%
-16.40%
-9.00%
36.50%
18.00%
4.10%
13.90% ytd

wthout any of the foreign funds and ADRs

The negative numbers get bigger; the positive numbers get smaller. An anecdotal case, I guess for splitting your pot between US and foreign (over the past 25 years). Ok, now who will tell me if this is going to keep working?!?* * *I want me that new kitchen!

In hindsight, this is NOT the portfolio I would have picked if I had had ER in mind 25 years ago, or even 10 years ago. Following every 'sane' rule of investing would have gotten me less.. I guess I was blissfully ignorant of my high-wire act! I didn't know when I would stop working or if I would even want to or be able to retire particularly early.. I never made a huge salary: when I started working I made not even $30k, went into my own business where I got about $12k the first year, $24k the second, etc., finishing off at between $60-80k in the last few years (pre-ER in 2003).

I've been squeamish about even posting any of this, because it happened to work out for me with THESE holdings, and I don't want to make out as if people who have planned a more conservative route aren't doing the right thing!! If I were to start over and not allowed to pick any of them in a new mix, I might well be as susceptible as the next person, except for the lessons I noted previously (US-foreign mix; dividends; buy&hold; re-invest).. all big advantages, but nothing new to most folks here.

[unclemick]

Good stuff ladefina

Nothing wrong with doing it the old fashion way. IN A GALAXY FAR FAR AWAY - THE NORWEGIAN WIDOW ONCE HAD A HUSBAND BUY THE STOCKS!

heh heh heh

[cute fuzzy bunny]

Quote:

Originally Posted by ladelfina I'd been on CFB's wavelength: the bottom line gets bigger => -- the bottom line gets smaller =>

Actually, either way its a for me. If its up, yay, we're worth more. If its down, yay, we're buying every month in my wifes 403b and our Roths and getting a better price. Living off of dividends and whats left of my wifes paycheck makes the nav fluctuations a little less critical.

[xprinter]

I just tracked my last 15 months return from 1/05 to 3/31/06 I have averaged 6.5% per annum. I use a financial advisor so this is after fees. I am somewhat disapointed by my returns. I am 100% in equities. He uses covered call options, which I have posted about previously. My spouses 401k is with fidelity and I keep about half in a bond fund, the other half is split between AF European Growth , US TRP small cap, Fidelity equity income, Fid Bal, and Del Trend INST. Last year this produced over 8% and this year I am up 3.7% after a poor week. I think I should give my advisor another 6 months, but then again I am not getting any younger.

[Rich_by_the_Bay]

Not a financial genius here, but I don't think you are getting your money's worth with that guy. Any of the standard portfolios would have done better even with bonds in the mix.

I guess you can't judge an advisor on a single year's performance but I'd put him on probation big time. I compare my advisor NET of fees to a small "experimental" portfolio I manage myself to compare the two methods. So far, I'm at 10.4% and he is at 11.2% annual yield, 70:30 allocation, 14 months worth.

[OHjosh]

Hi all. Using my financial advisor, I am getting returns 138% better than relevant market averages. I don't pay any upfront fees as "we" purchase the B class shares and I hold them long enough not to pay. Mark does not churn my holdings. Perhaps I change a funds a year, or move from mutuals to REITs, always with (for me) a valid explanation of why this is necessary.

I am an accounting guy, not a financial person. Perhaps when I do retire, I will take this over. But I do not have the time, energy or desire at this point to do so. If I pay a little for good advice and my laziness, so be it.

I realize what is right for me may not be right for everyone else.

PS-- On the job/no job front. Aftr reading another thread, I think I need to get another job and hold stll for 5 more years. If I can, I would like to drop down to 3-4 days. I have two possibles out there. And at my current place of work the Executive Director is imploding. The opera ain't over yet!

[LOL!]

Uh-oh, the dreaded B shares. If you hold them even one day, you pay, so I don't understand your assertion "I hold them long enough not to pay."

It is clear that your statement "I am ... not a financial person" is true, but I don't see how you could be "an accounting guy" either.

But whatever. I write this so that others investigate B shares more carefully lest they be duped into thinking they do not pay dearly for B shares.

[d]

Quote:

Originally Posted by OHjosh I don't pay any upfront fees as "we" purchase the B class shares and I hold them long enough not to pay.

I suppose you could pay the "front" load at the back and the "back" load at the front, but a load is a load.