I choked

[lawman]

I'm old and I can't afford another lost decade. Just sold half of my equity positions. Looking at a graph of the last 10 years I realized that I've done well enough. I don't want to lose ground over the course of a decade. I can't see me ever buying more equities on any significant scale..Now I need to figure out what to do with the money. I'm looking for something with less risk than the stock market but more risk than C. D.'s or treasuries. I do have one fund (BLNDX) that has been very good but even though it has been pretty steady I still wonder how safe it is..It's an all weather fund that trades in equities, currencies, commodities, and bonds.. On it's face it looks to me to be very high risk but they market it as an all weather fund that one might use to replace a bond fund..Anyone here have an opinion on BLNDX or other possibilities?

 

[REWahoo]

Curious, what % of your portfolio was in equities prior to you selling half of them?

 

[OldShooter]

... an all weather fund that trades in equities, currencies, commodities, and bonds..

What could possibly go wrong?

... they market it as an all weather fund that one might use to replace a bond fund. ...

Of course they do.

Remember, if these people actually knew how to make money in the market, they would not be out hustling their fund to you.

 

[lawman]

Curious, what % of your portfolio was in equities prior to you selling half of them?

It's hard to know really but excluding my sizeable portion that I have in BLNDX it is was somewhere around 38%

 

[lawman]

Remember, if these people actually knew how to make money in the market, they would not be out hustling their fund to you.

I don't follow you..They've done pretty well..Using that line of reasoning none of the mutual fund and ETF managers know how to make money..

 

[target2019]

It's hard to know really but excluding my sizeable portion that I have in BLNDX it is was somewhere around 38%

Did you look at any historical information with regard to 20/80 vs. 40/60 through very long periods?

Just a thought, as that would be a big concern of mine. I won't live for 25 more years, but my spouse could definitely get to 95 meaning 30 more years based on her parents' longevity.

 

[OldShooter]

... Using that line of reasoning none of the mutual fund and ETF managers know how to make money..

Ba da ding! You win the giant virtual stuffed teddy bear.

There is over a half century of data that says that, over the long term, no traders know how to make money (except by charging fees). Think about it --- if you had a reliable system would you be out hustling investors or would you be sitting by the pool on your megayacht drinking from a glass garnished with an orchid?

The availability if inexpensive computing power and data bases (CRSP) began to grow in the 1960s. One of the earliest results of this was Michael Jensen's 1967 paper: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=244153 where he concluded: "The evidence on mutual fund performance (aka professional speculators) indicates not only that these 115 mutual funds were on average not able to predict security prices well enough to outperform a buy-the-market-and-hold policy, but also that there is very little evidence that any individual fund was able to do significantly better than that which we expected from mere random chance." Jensen went on to win a Nobel prize.

More recently, every six months the S&P SPIVA and Manager Persistence reports drive more nails into the coffin of trading. The reports are all the same, varying only slightly in percentages. You can find a few with a search.

The best current book, IMO, is the most recent (May 2021) edition of "Winning the Loser's Game" by Charles Ellis https://www.amazon.com/Winning-Losers-Game-Strategies-Successful-dp-1264258461/dp/1264258461 You should read it.

Finally, a short video by guru Dr. Ken French on identifying superior managers: https://famafrench.dimensional.com/videos/identifying-superior-managers.aspx

Of course, the industry's goal is to hide and obfuscate these facts and (sadly) they are very good at it.

 

[lawman]

Did you look at any historical information with regard to 20/80 vs. 40/60 through very long periods?

Just a thought, as that would be a big concern of mine. I won't live for 25 more years, but my spouse could definitely get to 95 meaning 30 more years based on her parents' longevity.

Good point.. The old risk/reward conundrum. In the end I'm one of those who do not have much tolerance for risk. At this point in my life I've decided I really do not want more in the stock market than I can afford to lose..That probably is not the best move statistically but I just don't have the stomach for it..

 

[Sunset]

OP - Buy I-bonds of course as the rate is ~9% and guaranteed no-loss.

Limit is $10K for you, $10K for your Spouse, $10K for your trust (if any), etc...
Plus your spouse and you can buy now, a $10K I-bond for each other.

We bought this year's $10K allotment , plus bought $10K gifts for each other for the next 3 years. A total of $80K put into I-bonds this year.
We also did the $5K income tax refund to I-bond but it's too late to do for this year.

 

[lawman]

OP - Buy I-bonds of course as the rate is ~9% and guaranteed no-loss.

Limit is $10K for you, $10K for your Spouse, $10K for your trust (if any), etc...
Plus your spouse and you can buy now, a $10K I-bond for each other.

We bought this year's $10K allotment , plus bought $10K gifts for each other for the next 3 years. A total of $80K put into I-bonds this year.
We also did the $5K income tax refund to I-bond but it's too late to do for this year.

I've bought I bonds this year already..Didn't know I could buy more than $10,000.00...I have a sizeable portion of my portfolio in I bonds that I bought 20 years ago..Some are paying around %11.

 

[Sunset]

Good point.. The old risk/reward conundrum. In the end I'm one of those who do not have much tolerance for risk. At this point in my life I've decided I really do not want more in the stock market than I can afford to lose..That probably is not the best move statistically but I just don't have the stomach for it..

You have traded the stock market risk (which is really volatility most of the time and not really risk) for inflation risk, which is not actually a risk at this time but a certainty .

All our cash, is dropping in buying power by 7-8 percent per year, and it's a permanent drop.

 

[lawman]

Ba da ding! You win the giant virtual stuffed teddy bear.

There is over a half century of data that says that, over the long term, no traders know how to make money (except by charging fees). Think about it --- if you had a reliable system would you be out hustling investors or would you be sitting by the pool on your megayacht drinking from a glass garnished with an orchid?

The availability if inexpensive computing power and data bases (CRSP) began to grow in the 1960s. One of the earliest results of this was Michael Jensen's 1967 paper: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=244153 where he concluded: "The evidence on mutual fund performance (aka professional speculators) indicates not only that these 115 mutual funds were on average not able to predict security prices well enough to outperform a buy-the-market-and-hold policy, but also that there is very little evidence that any individual fund was able to do significantly better than that which we expected from mere random chance." Jensen went on to win a Nobel prize.

More recently, every six months the S&P SPIVA and Manager Persistence reports drive more nails into the coffin of trading. The reports are all the same, varying only slightly in percentages. You can find a few with a search.

The best current book, IMO, is the most recent (May 2021) edition of "Winning the Loser's Game" by Charles Ellis https://www.amazon.com/Winning-Losers-Game-Strategies-Successful-dp-1264258461/dp/1264258461 You should read it.

Finally, a short video by guru Dr. Ken French on identifying superior managers: https://famafrench.dimensional.com/videos/identifying-superior-managers.aspx

Of course, the industry's goal is to hide and obfuscate these facts and (sadly) they are very good at it.

If you don't mind me asking what do you invest in?

 

[OldShooter]

If you don't mind me asking what do you invest in?

TIPS on the fixed side and VTWAX (almost 100%) on the equity side. Total is very serious seven figures.

 

[Koolau]

I guess my question is whether, just taking a snap shot of your finances AND your spending: Do you have enough? If your time frame is short and you have more than enough, it probably doesn't matter much what (safer) thing you put your money in. In today's high inflation, putting it in CDs (very safe) is a loser but do you care?

I'm 75 and I don't expect to live to my FIRECalc final age of 99. Therefore, my options are pretty open because I have more than I need - assuming nothing very unexpected happens (Long Term Care would be my #1 fear and truly runaway inflation would be #2). Barring those, I'm OK even if I stick my money under a mattress (not recommended)

So, if you've got plenty, don't need to increase it through equities, want safety, I'd consider just going with "safe" stuff (safe as in it won't default on you - not "safe" as in it will necessarily keep up with inflation.)

So, I-bonds were mentioned. You can't put much there, but they're good as, well, gold - better really.

TIPs if you can figure how to buy them.

MYGAs - sort of like CDs but held by insurance companies - their interest rates are trending up now with inflation. Big disadvantage in my opinion is they are structured to keep your money IN not letting it back out - be sure to understand their rules for withdrawal.

CDs - are finally increasing interest rates - a little bit. Banks still seem to have all the money they need to loan out so CDs are kinda pathetic, though you can always bust them open for a 90 day loss of interest.

GIF - Guaranteed Income Funds are available within some 401(k)s. Mine doesn't pay enough interest to keep up but it's steady (and increasing) and it's safe - as any privately held fund is.

Bonds - especially treasury bonds. They pay very little - so a guaranteed loser - but they're as safe as your bank or more so because the Feds have an endless supply of cash to cover them.


Still, biggest question is whether you can sit by and watch the value of your cash drain away to inflation - even if you still have enough. I keep about 35% in equities hoping to still have some growth as other things lose value though not nominal dollars.

This subject is always hard. Everything is hard when markets are tanking. Everything is hard when inflation is raging. Now, we have both, so it's a crap shoot. Blessed is the person who has enough that some losses (either to equities going down or inflation) still has enough to see him/her to the end. I THINK I'm there. Hope you are too though YMMV.

 

[lawman]

TIPS on the fixed side and VTWAX (almost 100%) on the equity side. Total is very serious seven figures.

I wish I knew more about TIPS..My inflation protection is primarily my large I Bond account..I would be interested in TIPS funds if I knew exactly when and how they make and lose money..

 

[jazz4cash]

Using that line of reasoning none of the mutual fund and ETF managers know how to make money..

Now you’re getting it !

 

[lawman]

Blessed is the person who has enough that some losses (either to equities going down or inflation) still has enough to see him/her to the end. I THINK I'm there. Hope you are too though YMMV.

Amen! Thanks for the reminder..

 

[jazz4cash]

I wish I knew more about TIPS....

So do I, but this is a good place to learn. I do know that TIPS adjust for inflation by increasing your principal. Your large ibond account should help you SWAN (sleep well at night). I only just started buying ibonds and I suspect we’ve missed out on the best time for TIPS but it’s never too late.

 

[Sunset]

I've bought I bonds this year already..Didn't know I could buy more than $10,000.00...I have a sizeable portion of my portfolio in I bonds that I bought 20 years ago..Some are paying around %11.

Now the limit is 10K , previously it was higher.

You can do the gifting to get around the $10K limit, but it has an issue, in that one can only actually give 1 (initial value 10K bond) per year to spouse. So for us since we did 3 years ($30K) worth of gifts in the gift box for each other, it will take 3 years to unwind it. Meanwhile it earns the rate of inflation which is a LOT higher than any interest, and it is State income tax free too, which saves us 5%.

If you don't have a spouse, gifting is much harder, as who do you trust.

If you can set up a free trust, the trust can buy for you $10K per year, but not gift.

If there was not limit on I-bonds, I'd put ALL my cash accounts, in I-bonds at this time.

 

[Koolau]

Now the limit is 10K , previously it was higher.

You can do the gifting to get around the $10K limit, but it has an issue, in that one can only actually give 1 (initial value 10K bond) per year to spouse. So for us since we did 3 years ($30K) worth of gifts in the gift box for each other, it will take 3 years to unwind it. Meanwhile it earns the rate of inflation which is a LOT higher than any interest, and it is State income tax free too, which saves us 5%.

If you don't have a spouse, gifting is much harder, as who do you trust.

If you can set up a free trust, the trust can buy for you $10K per year, but not gift.

If there was not limit on I-bonds, I'd put ALL my cash accounts, in I-bonds at this time.

Yup. STILL kicking myself for not buying more I-bonds back when they actually payed interest - not just inflation. Too soon old and too late smart but YMMV.

 

[CuriousJoe]

OP - Buy I-bonds of course as the rate is ~9% and guaranteed no-loss.

Limit is $10K for you, $10K for your Spouse, $10K for your trust (if any), etc...
Plus your spouse and you can buy now, a $10K I-bond for each other.

We bought this year's $10K allotment , plus bought $10K gifts for each other for the next 3 years. A total of $80K put into I-bonds this year.
We also did the $5K income tax refund to I-bond but it's too late to do for this year.

Pardon my ignorance. I thought 10k limit is for each tax ID. Say, I login as myself, and buy 10k under my SS and 10k under my wife's SS as a gift to her.

Can my wife login as herself and buy 10k under her SS and 10k under my SS as a gift to me?

 

[Freedom56]

I don't understand the fascination associated with having equities in your portfolio. I haven't any allocation to equities in over 30 years and have done fine with fixed income alone. My father-in-law who is now 86 has done even better with zero fixed income and zero equity allocation but has 94 rental apartment units. He has a great rental income stream and his real estate portfolio is worth a fortune. I know many other people just like him, who only invest in hard assets and are doing extremely well. Our condo in Florida has appreciated 620% since our purchase in 2011. Did equities even come close to that level of performance?

 

[Koolau]

^^^^^^^^^^

I have one stock that rose 300% in 2 1/2 years. Of course, they don't all do that - just like RE.

I'm glad you are doing very well as success stories are very enjoyable to us FIRE veterans.

 

[Turbo29]

I don't follow you..They've done pretty well..Using that line of reasoning none of the mutual fund and ETF managers know how to make money..

I picked 2015 as the start year (only start I tried) through 2022 ytd on Portfolio visualizer. BLNDX outperformed VTI/BND 60/40 as well as VTI 100%. Did pretty well for that time period.


https://www.portfoliovisualizer.com...llocation2_3=100&symbol3=BND&allocation3_2=40

 

[skipro33]

While I'm not happy with the downturn in the market and wish I had pulled some of the profit of the past couple years out into cash, the fact is I don't NEED my investments for income. I have pension and SS more than covering my expenses and desires. I am 90% equity fund matching S&P, the rest in cash. I look at my IRA as something for the rainy day, if I or DW needs expensive long-term care for example. Otherwise, it will go to my children as inheritance. I figure I will live another 10 years, wife another 10 after that. Then the rest is the kids. Along with the house, they'll do well. They also have spouses who will inherit pretty good sums as well.
I guess the question is; if you are relying on your investments as stable income, equity funds are not the way to go and you should have baled on them a long time ago unless you needed to take the risk in order to make it to the end. If not, then letting it ride beyond your life expectancy as inheritance is going to pan out sooner or later.