Please comment on this portfolio strategy

[ScaredtoQuit]

Ran into this portfolio on MarketWatch. Didn't seem like a bad alternative for someone who can't deal with enormous dips in the market. This will have dips, mind you, but IMO it's unlikely you would see a major decline in one year. A major benefit is that even during declines, the portfolio would continue to generate a reasonable level of dividends and interest.

Anyway, what do you think?

http://www.thestreet.com/_mktwrm/funds/readjust/10345554.html?cm_ven=CBSM&cm_cat=FREE&cm_ite=NA

 

[REWahoo]

Ran into this portfolio on MarketWatch. Didn't seem like a bad alternative for someone who can't deal with enormous dips in the market. This will have dips, mind you, but IMO it's unlikely you would see a major decline in one year. A major benefit is that even during declines, the portfolio would continue to generate a reasonable level of dividends and interest.

Anyway, what do you think?

I think that portfolio looks like something a financial "journalist" would dream up to fill a column and meet a deadline.

I think you should be concerned if the criteria the guy used to pick funds failed to mention cost.

I think you could achieve the same thing at a much lower cost and with much less headache using a combination of two balanced funds such as Wellesley and Wellington.

I think you think too much.

EDIT: I also get very uncomfortable when I see the name "Cramer" repeated numerous times...even if it is only a reference.

 

[Mwsinron]

Why not just do an indexed fund.

 

[LOL!]

My goodness! There was no comparison to the appropriate benchmark. He wrote about a >10% return, but maybe the benchmark returned 15%? Who knows?

Now this was what he did for his Mom, so that has even more religious overtones than if he had set up a portfolio for Jesus Christ (but wait 'til next year).

 

[OKLibrarian]

Just so long as He doesn't short loaves and fishes...

 

[citril]

He says that he is diversified because he holds 20 funds, but based on a quick glance, they almost all seem to hold junk high yield bonds, so diversification is nil.

 

[justin]

Interesting strategy and one that I've considered myself. Buy Closed End Funds (CEF's) that are trading at a steep discount to NAV. Own them as the market price (hopefully) returns to the NAV. Many of the CEF's mentioned in this article are trading at a 10-15% discount to NAV.

I'm looking at UTF (trading at ~15% discount to NAV). I need to find a good utility fund for a work-related purpose, and even though UTF charges 1.3% ER, I figure it might be worth the cost to get some utilities at 15% off, and close to a 5% dividend yield. I know I can get a Utilities index ETF close to NAV from vanguard for .25% ER, but this may not be an option for other work-related reasons (don't ask : ). Thoughts?

I've skimmed through the 2006 shareholder report and there are some issues I'll have to dive into further (leverage structure/interest rate risk, payout ratio income vs dividends, etc.).

 

[wabmester]

The only one in that port that I've looked at closely is Adams Express (ADX.) Nice discount. Nice yield. Low expenses. But the return has lagged the S&P500 for years. Lots of GIANT companies that have underperformed the market. Who knows, the dinosaurs may have their day in the sun again.