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15 comments:
Good post Roger. You comments apply even more to folks younger than 40. Many of them don't have nearly enough risk exposure to reach their retirement goals.
Models this week:
Timing Model = 5.0
100% long
Global allocation of long positions:
MSCI EAFE Index 30%
MCCI Emerging Markets Index 30%
Russell 3000 Index - U.S. 40%
U.s. Sector ranks
U.S. Semiconductor 4.5
Composite Internet 4.0
U.S. Oil & Gas 4.0
U.S. Technology 4.0
U.S. Oil Equipment, Services & Distribution 4.0
Precious Metals 3.5
U.S. Basic Materials 3.0
U.S. Biotechnology 3.0
Top Intl. ETFs
FTSE/Xinhua China 25 Index Fund 3
MSCI South Korea Index Fund 3
MSCI Brazil Index Fund 3
MSCI Emerging Markets Index Fund 3
MSCI Hong Kong Index Fund 3
MSCI Pacific ex-Japan Index Fund 3
S&P Latin America 40 Index Fund 3
MSCI Australia Index Fund 3
MSCI Singapore Index Fund 3
MSCI Canada Index Fund 3
Strategy 3
EAFE 12.5%
Emerging Markets 12.5%
Money Market 12.5%
Industrial Materials 12.5%
Agriculture 12.5%
Precious Metals 12.5%
U.S. Large Cap 12.5%
U.S. Small Cap 12.5%
U.S. Long Bonds 0.0%
U.S. REITs 0.0%
In past articles you have noted that fast downward movements often correct quickly or snap back. It seems the over the last few weeks we have had the opposite-- fast exceleration. Does the same maxium hold--can we expect a rapid decline snap back? Thanks
thank you Tom
to anon. short answer no it is different.
longer answer anything is possible but the idea here is the emotion of panic is more powerful than greed.
the market goes up the vast majority of the time. the effect seems to be the market is chugging a long something causes a swift decline down and then it goes back to the trend line of whatever was going before the fast decline. 9/11 is a good exmple of whooshing down and then snapping back to a much shallower decline.
obviously big moves up can correct, this has happened plenty of times too but the fast decline followed by a snapback seems more predictable.
I am the one asking about 60% question. One clarification- when I say my portfolio is 60% as risky as the S&P 500, I really mean that during a stretch of market down days my portfolio loss hopefully will be only 60% of the S&P 500. I use risk allocation instead of equity allocation because the latter does not give me a clear idea of how much I can lose when bad thing happens.
What kind of returns can you get from a 60% risk portfolio? My own results track pretty close to a good balanced fund such as OAKBX and FGBLX but slightly lag a good world fund(MDISX).
anon 4:47--I appreciate your question because I'm in exactly the same situation.
My financial advisor, like Roger, counsels the need for some growth in my portfolio, even though the conventional wisdom says I should be an "income" investor. I'm settling for the somewhat vague objective of "total return," but with a very specific percentage return goal.
Another poster here suggested riskgrades.com, which I've found to be helpful in assessing the risk in my portfolio. If you're not familiar with it, I think it's worth a look. You can run hypothetical "what if" situations for different asset allocations there.
I'm also a fan of trendfollowing strategies using the 200 dma. Studies show they can significantly reduce volatility and drawdown in a diversified (key word) portfolio without hurting your return too much. I also harvest profits frequently in more volatile sectors since losing money at my age hurts psychologically a lot more than it did when I was 25!
If you're tracking the results of the funds that you mention in your post, maybe you've already answered your own question about return?
Good luck and please keep posting.
One other thought, anon 4:47. You might want to check out ifa.com. They have endless graphs and return tables for various index portfolios. Sorry, Roger, I don't mean to keep sending your readers away!
Isn't America a great place?
A guy with minimal financial knowledge can make home videos in his basement, and pass himself off as some sort of expert.
Nice.
lmao, that is a good heckle.
To Anonymous 7:10AM:
Very few homes in central Arizona have basements because most are built on granite. Get your facts straight and get a life. :)
A bit O/T, but what the heck:
To anon posting about home vids shot in the basement. You remind me a LOT of of a guy that regularly posts to Ritzholzer's (sic) blog, ALWAYS to castigate Barry for not having any original thoughts, and merely regurgitating conventional wisdom, culled from other, mainstream media.
WHY would someone keep reading ANY blog if they found it so "unhelpful", "distasteful", or (insert your negative adjective here)? I'm guessing you're the same "anon" who keeps kvetching about Rog's position in SDS?
Personally, I read a number of blogs, and don't run out and make investment decisions based on the day's posts. I try to glean what I can from each, and apply to my own investment process.
Rog...sorry for venting, *G*.
Jan
"I am the one asking about 60% question. One clarification- when I say my portfolio is 60% as risky as the S&P 500, I really mean that during a stretch of market down days my portfolio loss hopefully will be only 60% of the S&P 500. I use risk allocation instead of equity allocation because the latter does not give me a clear idea of how much I can lose when bad thing happens.
What kind of returns can you get from a 60% risk portfolio? My own results track pretty close to a good balanced fund such as OAKBX and FGBLX but slightly lag a good world fund(MDISX)."
Both of these funds are beating the market by a few percentage points. I do not believe when the S&P goes down 1% then your portfolio only decline .6%. If this was the case then you would lag the market when it goes up 1% anyway. You cannot have it both ways. Some days it may outperform but it will also lag by just as much.
Roger, I came across your etf suggested diversified portfolio only intended as an "academic" exercise. Hey, on the surface it looks pretty darn good. Global. I'd be real curious to know performance which would be easy enough if I could use spread sheets better. Any chance that you could revisit and, perhaps, critique to keep it all interesting. Seriously, looks good to me as a lazy port.
i would be glad to revisit it but I have done a couple and so am not sure which one you mean.
the one that comes to mind first has a lot of ETFs in it such that i wouldn't think too many would call it lazy.
can you leave the date of the post you are referring too?
please let me know.
Tuesday, June 27, 2006
Financials
StateStreet Bank (KBE) 8%
iShares Australia (EWA) 3%
iShares UK (EWU) 3%
StateStreet Capital Market (KCE) 2%
Tech
iShares Global Tech (IXN) 8%
PowerShares Semiconductor (PSI) 2%
iShares Taiwan (EWT) 2%
Health
iShares Global Health (IXJ) 10%
iShares Medical Device (IHI) 2%
StateStreet Biotech (XBI) 2%
Staples
iShares Consumer (IYK) 8%
PowerShares Food (PBJ) 5%
Discretionary
PowerShares Leisure (PEJ) 5%
Industrials
Industrial Sector SPDR (XLI) 5%
PowerShares Water (PHO) 2%
iShares Defense (ITA) 3%
iShares Transportation (IYT) 1%
Energy
iShares Global Energy (IXC) 5%
PowerShares Alt Energy (PBW) 1%
PowerShares E&P (PXE) 2%
PowerShares China (PGJ) 2%
Materials
Gold (GLD) 3%
iShares Brazil EWZ (2%)
StateStreet Miners (XME) 2%
Utilities
Vanguard Utilities (VPU) 4%
Telecom
Vanguard Telecom (VOX) 3%
Emerging Market Telecom (ETF) 2% this is a closed end fund
REITs
StateStreet REIT (RWR) 3%
yes...not lazy...but diversified if looking for an all equity exposure...has the performance been superior to the typical lazy port as the benchmark?
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