Soda Cracker Portfolio

[Rich_by_the_Bay]

I just read through Bob Clyatt's interesting and well-balanced book. He uses an example of a "soda cracker" approach to approximate his rational investing portfolio. Vanguard Life Strategy Moderate is cited as one reasonable choice.

I looked into DGSIX or DGEIX (managing the fixed income part myself), but would prefer to deal direct (no investment person) and would like a little longer track record before putting my whole treasure chest in one fund.

Sure sounds nice to have one fund to accomplish the goal. Surely there must be others out there.

 

[Maximillion]

If Warren Buffet is the best money manager out there, why not let Warren manage your money, Buy BRK.??

 

[samclem]

Lots of folks do--IIRC, Nords has a big % of Berkshire Hathaway.

Of course, some folks worry: Buffet isn't exactly a kid anymore. By all accounts, he's done a good job of planning for his successor, but it won't be Buffet. And, if you want a fund/stock/company managed by somebody other than Buffet, there are lots of other choices.

 

[Nords]

Lots of folks do--IIRC, Nords has a big % of Berkshire Hathaway.

29% of the retirement portfolio and 45% of the kid's college fund.

Although both those numbers might be a tad higher after today's post-meeting euphoria...

 

[Rich_by_the_Bay]

So what is the rough allocation of the BH shares, Nords?

 

[Nords]

So what is the rough allocation of the BH shares, Nords?

I'm not sure that I'm interpreting the question correctly, but they're all "B" shares. While we might sell a "B" share or two someday, we don't need the tax hit that'd come from selling off an "A" share! Is that what you're asking?

 

[Rich_by_the_Bay]

I'm not sure that I'm interpreting the question correctly, but they're all "B" shares. While we might sell a "B" share or two someday, we don't need the tax hit that'd come from selling off an "A" share! Is that what you're asking?

No - I meant as in small cap, large cap, commodities, large value, etc. Sorry.

 

[ats5g]

Hi Rich,

See Morningstar's The 33 Stocks in the Buffett Portfolio.

Are you looking for a one fund for your entire portfolio, like Vanguard LifeStrategy Moderate Growth, or Vanguard STAR?

- Alec

 

[Rich_by_the_Bay]

See Morningstar's The 33 Stocks in the Buffett Portfolio.

Are you looking for a one fund for your entire portfolio, like Vanguard LifeStrategy Moderate Growth, or Vanguard STAR?

- Alec

Thanks for the link.

I'm parked in LifeStrategy Moderate Growth for some of my equities. I will probably slice and dice a bit more down the road, but as a working stiff I like the ability of just letting it ride. I'd probably add an additional 10-15% international but otherwise I like the allocation.

 

[HFWR]

BH = Berkshire Hathaway??

 

[ats5g]

Hi Rich,

A potential problem with balanced funds is that iff you are going to hold the fund in a taxable account, they usually contain fully taxable bonds, which may not be all that desirable if you're still working and in a high tax bracket.

- Alec

 

[Rich_by_the_Bay]

A potential problem with balanced funds is that iff you are going to hold the fund in a taxable account, they usually contain fully taxable bonds, which may not be all that desirable if you're still working and in a high tax bracket.

Good point - another reason to slice and dice. Maybe I shouldn't be so lazy but that's what 12 hour days do to you.

 

[Nords]

No - I meant as in small cap, large cap, commodities, large value, etc. Sorry.

I don't know if Buffett even looks at them in that manner.

Although ats5g's link shows what stocks he's holding last year, most of Berkshire Hathaway is companies now: http://www.berkshirehathaway.com/subs/sublinks.html

Ironically if he was running a mutual fund it'd be classified as large-cap growth, although he professes to look for value stocks/companies.

 

[audreyh1]

Maybe I shouldn't be so lazy but that's what 12 hour days do to you.

Lordy - I never thought I'd see the words "lazy" and working "12 hour days" in the same sentence!

What drives you doctors anyway!?! We noticed that my MIL's surgeon almost seems to "float" above the floor like a little hover craft he is so rev'd up. He was totally patient, engaged, and answered all questions, but I couldn't help feel like he was all wound up and the next instant would blast down the hall with a tremendous burst of energy.

Audrey

 

[Martha]

What a delightful mental picture Audrey!

 

[Rich_by_the_Bay]

Lordy - I never thought I'd see the words "lazy" and working "12 hour days" in the same sentence!

I laughed out loud when I re-read my post and your reaction to it. You're right - it certainly sounded oxymoronic. So... substitute the phrase "out of steam" for "lazy" and maybe that's what I really meant. Wonderful career, but I don't buy in to the 12 hour day part any more; it just comes with the current territory.

The funny part is that by all reports (including my own), I am described as very calm, non-reactive and generally am the "zen master" of my peers. Pretty peaceful, I'm told. Don't even know how to "hover." 8)

 

[ESRBob]

Rich,
Glad you liked the book. If you or anyone here comes up with some other favorite 'Soda Cracker" portfolios, post them here and I'll mention them in the next edition of the book (after the necessary diligence and opinionated review, of course!).

Just spent the day with a bunch of retired physicians, (friends of my in-laws). The common theme seems to be that their kids are early retiring, but they themselves worked into their 70s. Rich, it sound like you are not going to let that happen to you, but I put it out there as fair warning. I guess it's nice having fulfilling work, just would be nice to have it in reasonable doses...

 

[Rich_by_the_Bay]

Just spent the day with a bunch of retired physicians, (friends of my in-laws). The common theme seems to be that their kids are early retiring, but they themselves worked into their 70s. Rich, it sound like you are not going to let that happen to you, but I put it out there as fair warning. I guess it's nice having fulfilling work, just would be nice to have it in reasonable doses...

Point taken. You're right, I am ready to rebalance - not just my investments but my time and pursuits, as well. Fortunately, we've been better savers than many of my colleagues but are still not quite there (unless the DW agrees to a substantial downsizing). So, a few more years should do it and I am already making some changes at work to reduce the hours and on-call duties. It should all come together nicely barring any catastrophes.

Intriguing semi-retirement possibility: there is a review organization that offers half-time reimbursement (really more like 25% of my current salary) plus health insurance for 10 days a month availability for international travel to various large hospitals. So, travel to South America for a week - maybe extend it a few days, then come home to 2 or 3 weeks off, repeat. I'll send you an anecdote or two if that should come to pass.

 

[thefed]

Thanks for the link.

I'm parked in LifeStrategy Moderate Growth for some of my equities. I will probably slice and dice a bit more down the road, but as a working stiff I like the ability of just letting it ride. I'd probably add an additional 10-15% international but otherwise I like the allocation.

is that a johnhancock fund? we have jh at work for our 401k, and they suck! its lifesomethijng....lifestrategy maybe?

 

[Rich_by_the_Bay]

is that a johnhancock fund? we have jh at work for our 401k, and they suck! its lifesomethijng....lifestrategy maybe?

No - Vanguard. Sorry.

Don't know why all these 401K "families of funds" limit you to lousy funds, but it's pretty commonplace.

 

[ESRBob]

Intriguing semi-retirement possibility: there is a review organization that offers half-time reimbursement (really more like 25% of my current salary) plus health insurance for 10 days a month availability for international travel to various large hospitals. So, travel to South America for a week - maybe extend it a few days, then come home to 2 or 3 weeks off, repeat. I'll send you an anecdote or two if that should come to pass.

Rich,
That sounds like an awesome opportunity. Always seemed that as a physician you should be able to 'write your own ticket' literally to some place interesting and on a schedule that makes sense, once you get past the financial side of things. Pls let us know if you ever go that route, or meet any other docs who are doing that now.

 

[Rich_by_the_Bay]

Always seemed that as a physician you should be able to 'write your own ticket' literally to some place interesting and on a schedule that makes sense, once you get past the financial side of things.

You'd think so, but current circumstances don't favor such opportunities: you have full-time malpractice premiums to be covered (even if you are part-time), serious "productivity" expectations under ever-shrinking reimbursement scenarios, and nights and weekends to negotiate.

I'm not complaining at all, having saved a bit. But the more relaxed, flexible semi-retirement opportunities are few and far between. Then again, all I need is one and I am already working a few angles well in advance... .

 

[ats5g]

Hi again Rich,

Have you looked at Vanguard's Tax Managed Balanced fund. It's roughly 50% stock / 50 % muni bonds. No int'l though. 

- Alec

 

[Rich_by_the_Bay]

Have you looked at Vanguard's Tax Managed Balanced fund. It's roughly 50% stock / 50 % muni bonds. No int'l though.

Thanks, Alec. Might be a good choice for the post-tax portion.

 

[cute fuzzy bunny]

Excellent choice if you're in a very high tax bracket. Do note the penalty if you sell shares less than 5 years.

If you live in a state like CA or FL (I'm assuming you're in FL?), you could "roll your own" with the vanguard state specific muni fund, and one of the tax managed equity funds like growth and income. You'd have to do your own rebalancing every year or two, but you'd gain a little bit more tax efficiency on the bond side, and the equity dividends being taxed at 15% or less would make a nice piece of your withdrawal simple...