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09-01-2016, 11:11 AM
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#21
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Thinks s/he gets paid by the post
Join Date: Jun 2013
Location: Bonita (San Diego)
Posts: 1,795
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The question should really be if this is an appropriate strategy for OP. Based on his story, increasing risk to chase a little more return is absolutely NOT the proper course of action, IMO.
Whether the instructor is correct or not is really immaterial. I just hope OP sees that.
__________________
"So we beat to our own drummer in the sun;
We ask for nobody's permission to run.
I just wanna live in a world like that;
Now I'm gonna live in a world like that!" - World Like That, O.A.R.
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Are Index Funds like VTI and BND really a comprehensive diverse portfolio?
09-01-2016, 07:55 PM
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#22
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Recycles dryer sheets
Join Date: Mar 2010
Location: Poway, CA
Posts: 441
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Are Index Funds like VTI and BND really a comprehensive diverse portfolio?
I like a portfolio of BND and VTI. However, I like a portfolio with a large chunk of VYM and BLV even better. I find that to really reduce volatility, one needs to trim the overall stock % down substantially, considering as low as 30%. But bonds, treasuries or corporate, are both yielding ridiculously low rates. So, I've opted for a strategy that goes higher in stocks, 48% at the moment, but also includes a healthy amount of long term bonds of both corporate and us treasuries. When stocks climb the long bonds go down a bit. When stocks drop, long bonds go up.
This recipe is working great for me. I don't buy into the doomsday discussions about the great and up and coming interest rate hikes. Too slow and our economy is too weak.
Sent from my iPhone using Early Retirement Forum
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09-03-2016, 03:03 PM
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#23
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Thinks s/he gets paid by the post
Join Date: Jun 2004
Location: Diablo Valley (SF Bay Area)
Posts: 2,705
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Personally I am :
SPY 28%
SCHB 21%
SCHD 17%
SCHA 10%
PWZ 3%
USATX 3%
Cash - whooping 18% currently BUT sold Puts, took in $$s but left myself tentatively owning:
2% BAC expiry 11/18/16 - doubt I'd get it as it would need to hit $11
2% T expiry 12/ - want it, should probably buy anyway
I need to find 5-10 stocks
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09-04-2016, 06:39 AM
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#24
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Thinks s/he gets paid by the post
Join Date: May 2014
Location: Utrecht
Posts: 2,650
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Cap weighted indexes are dominated by the largest companies. Very little deviation between the S&P 500 and VTI usually. Is that a problem? No, it's by design.
The whole point is that you shouldn't worry about what part of the market underperforms, overperforms or what not. Parts will always outperform the whole.
What a cap weighted index mathematically guarantees is you'll get the average market results at rock bottom costs. This in turns guarantees that you'll outperform >70% of investors (up to >95%). That's as close to a free lunch as you can get. Doing something else than this has a very high chance of being a net negative, especially as a hobbyist. You are competing with full time career professionals. Some of them are idiots, many of them are not.
So set market exposure %, forget it, rebalance on a fixed date. As to VTI vs. VT (or VXUS), I'd apply the same logic. Just buy the whole thing (VT or equal parts VTI and VXUS).
Unless you have a solid logic that outwits >70% of investing folks, you'll be best off that way.
I get the lure btw, am doing some personal investing myself. I try not to fool myself though, and am tracking whether that's indeed a net negative. If it turns out that way, I promised myself I'd quit doing it.
So it's not about diversity (within equities), but about buying _everything_ and accepting you can't pick winners reliably.
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09-04-2016, 12:24 PM
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#25
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2004
Location: South Texas~29N/98W Just West of Woman Hollering Creek
Posts: 6,671
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Quote:
local Community College and the Instructor
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Did your instructor indicate what investment firm he was associated with? I have noticed locally that Continuing Education and Community College instructors in the financial field are usually brokers or agents moonlighting as academics. A pretty good way to get a prospect list.
He will eventually present his business card to each class member.
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