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Post by FD1000 on Oct 29, 2023 13:48:01 GMT
Hmmm. I've now been retired 30 years. Some how I don't recall it being all that easy! For starters, going back 30 years, the majority of investors were individual stock pickers...big chances for failure. And market timing same individual stocks, meant many did not achieve good returns. Decisions were not straight forward. Like, when I retired, the guru's were urging using 6.5% inflation rate in computer models. (My model had to get 40 years to age 88!). I chose to use 4.5%, enabling me to retire. Actual inflation was less...at least gvt numbers were less. 30 years ago... 1993. That was just after Markowitz won a Nobel Price for his Modern Portfolio Theory (1990) and before William Bengen published his first paper (1994). Advisors had not yet fully grasped the importance of risk/diversification and were using average returns to calculate initial withdrawals (which were catastrophic if a sequence of return failure occurred). Bengen conducted his research and published his paper because he thought that was the wrong approach.
I retired from the military in 1996 and went to work as the CFO of a manufacturing company. One of my duties was overseeing the company's 401k program. Myself and our fiduciary advisor picked the plan's possible investments. We never picked individual stocks. All alternatives were mutual funds ranging from aggressive stock funds to bond funds.
You are correct. Decisions were not simple but we tried to make them as simple as possible. Our employees were salesmen, truck drivers, and factory workers with little to no experience in investing. Our plan's advisor talked with each employee and based on age and tolerance for risk steered him or her into an appropriate balanced portfolio. Those with college degrees tended to be more aggressive. I was still young enough back then (retirement still 20 year ahead0 to go with an 80/20 portfolio of various funds. I think it was 12. Our advisor steered older employees into more conservative, simpler portfolios. Often when an employee retired they were steered to an annuity. It was the best way to get maximum income for an individual with a modest portfolio. I transferred my 401k into a traditional IRA and continued teaching.
I am reasonably certain most companies with 401k plans did the same for their employees. Most employees are not stock pickers or market timers.
Last 30 years Previous 30 years
May 2023 $33,303 April 1993 $7,527
May 1993 7,527 April 1963 7,242 up 342% up 3.9%
Low point: April 2009 $11,786 April 1982 $2,751
The last 30 years saw a fall from a peak of $20,518 in October 2007 that didn't recover until June 2013 (5 years, 8 months) and the lowest point never fell below the starting value. That is nothing compared to the previous period. The previous 30 years saw a fall from a peak of $9,155 in May 1966 that didn't recover until September 1995 (29 years, 4 months) and the low point was only 40% of the starting dollar value.
Yes, if someone didn't make money during the last 30 years they were doing something very wrong. An investor could make money by accident. Pretty much all they had to do is pick good a fund and leave it alone. My foggy crystal ball says the future will not be that rosy.
I suspected that this link was not accurate... and it is not. It probably does not include the distributions. I looked at DIA performance at Yahoo. finance.yahoo.com/quote/DIA/performance?p=DIASo, when the numbers are not accurate the statement "peak of $20,518 in October 2007 that didn't recover until June 2013 (5 years, 8 months)" isn't either. Using this chart( schrts.co/KVSJwgAH) shows it was very close to get even 05/2011 but you had to wait until 02/2012 The main point is still correct. Losing a big % in retirement, especially at the beginning can be detrimental...and why I pay so much attention to lose as little as I can but still have a good performance. Attachments:
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Post by Mustang on Oct 29, 2023 17:51:55 GMT
Here is a quote from Macrotrends: "Historical data is inflation-adjusted using the headline CPI and each data point represents the month-end closing value." Maybe it was the inflation adjustment that was the difference between the charts. A real gain of 342% is significantly higher than 3.9%. The last 30 years have been truly kind to investors. I noticed that you didn't do a 30-year to 30-year comparison. Since you had different data I was wondering what that might have shown. The point I was trying to make is during the last 30 years stocks had unusually high returns while bonds had unusually low returns. Stock market investors could make money almost by accident and that successful techniques then might not be so successful in the future. There is an old saying, "A plan is only good until first contact with the enemy. After that its adapt and improvise." My gut feeling is that inflation has not been conquered. Workers are demanding higher wages to offset inflation. (UAW just negotiated an immediate 11% raise that will increase to 25% in five years. Other unions in all market segments are doing the same. There are shortages of truck drivers, machinists, etc. Small business cannot get workers unless they raise wages.) Higher wages will continue to stimulate the demand side and most likely cause some spiraling inflation. Prices will go higher. And there will be more Fed rate hikes. I don't know how there cannot be. Bond yields will go up. Maybe not to 11-12% but but they are most likely to continue rising. Since there will be a viable alternative to the stock market, P/E ratios will have to go down (they are already too high) by one of two ways: either earnings goes up or stock prices goes down. Most likely it will be both. Inflation driven consumer prices will make it appear that earnings have taken off. But that doesn't mean companies are selling any more product. Bonds will gain favor. Stocks will lose. Perhaps I remember the 1970s too well so I might be too cautious. I test my asset allocation using two 30-year retirement periods: one starting in 1971 and one starting in 1990. In the 70s a portfolio with a heavier bond allocation (Wellesley) outperformed one with a heavier stock allocation (Wellington). Starting with a 4% withdrawal in 1971 and adjusting it for inflation.,Wellesley finished the 30 year period with more than twice the ending balance than Wellington. For the 1990 retirement Wellington's ending balance was 44% higher than Wellesley's. The last 30 years were kind to stocks.
A 70s economy may or may not repeat in one form or another. But its either plan for a change or else be ready to adapt and improvise on the run. If a repeat comes experience gained over the last 30 years may be insufficient to meet new challenges.
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Post by FD1000 on Oct 30, 2023 3:43:32 GMT
Mustang , as usual, great narrative. Generally I agree with you. You said "Bond yields will go up. Maybe not to 11-12% but but they are most likely to continue rising." If this is correct Wellesley is going to be in trouble, as it was since early 2022. In 2013 it's even worse relatively...YTD=(-3.3%). For 3 years VWIAX total performance is less than 1%. If bond yields are going from now, about 5%, to 6-8%. Wellesley and most bond funds will continue not to do well. This should encourage you to look for funds with flexible mandate, especially the bond portion. Usually, the best bond category in rising rates is Bank Loans. YTD this category is at 8-11%. Another option is to sell some of you allocation funds and buy instead stock fund + bond fund. The best investing idea IMO is flexibility, which means, sometimes it's correct to change course for a couple of years when it's clear what is going on. It was clear to me from early 2022 that bond rates are going up because inflation went wild and the Fed promised to fight it.
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Post by johntaylor on Oct 30, 2023 13:39:22 GMT
The TSP's C Fund (S&P tracker) opened circa 1988. Think Bogle was developing index funds in the mid-1970s and wasn't the first?
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Post by yogibearbull on Oct 30, 2023 14:08:55 GMT
The TSP's C Fund (S&P tracker) opened circa 1988. Think Bogle was developing index funds in the mid-1970s and wasn't the first? Vanguard VFINX goes back to 08/1976. That was the 1st publicly available SP500 index fund. Private index funds and some within pension plans existed even earlier. TSP C Fund with ER of 5.9 bps was among those with lowest ERs, but now there are many others with lower ERs. en.wikipedia.org/wiki/Index_fund
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Post by Mustang on Oct 30, 2023 16:35:22 GMT
If this is correct Wellesley is going to be in trouble, as it was since early 2022. In 2013 it's even worse relatively...YTD=(-3.3%). For 3 years VWIAX total performance is less than 1%. If bond yields are going from now, about 5%, to 6-8%. Wellesley and most bond funds will continue not to do well. True. It's disappointing but not disastrous. I'm not really concerned. I'm buying using dollar-cost-averaging not selling. Besides the -3.3% is a moving number and it doesn't include the big end of year distributions so we'll have to wait to see what the 2023 numbers show. The 1 year number is basically breakeven. I am moving toward a three fund portfolio in preparation for withdrawals but I'm not there yet. Overall my portfolio's 1 year return is 5%.
Even if I were 100% invested in Wellesley I see no reason to panic. It has a long history of good management. It has only lost money two years in a row once since its inception (1973 & 1974). Total loss was around 10%. Returns for 1975 and 1976 were around 40%. It lost roughly 2% in 1987 and made 34% the following two years. It lost just over 4% in 1994 then made 38% the following two years. It lost 4% in 1999 then made 23% the next two years. It lost almost 10% in 2008 then made 37% the following two years. In 2018 it lost nearly 3% then made almost 28% the next two years. I see a pattern. Well managed funds recover nicely.
Wellesley's 2022 & 2023 performance is starting to look a lot like 1973 & 1974. The combined loss should be somewhere around 10%. When the recovery comes I will have purchased a lot of shares at a lower price.
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hondo
Commander
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Post by hondo on Oct 31, 2023 15:14:06 GMT
Wellesley's 2022 & 2023 performance is starting to look a lot like 1973 & 1974. The combined loss should be somewhere around 10%. When the recovery comes I will have purchased a lot of shares at a lower price.
Hope you are right.
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Post by Mustang on Oct 31, 2023 17:23:21 GMT
Wellesley's 2022 & 2023 performance is starting to look a lot like 1973 & 1974. The combined loss should be somewhere around 10%. When the recovery comes I will have purchased a lot of shares at a lower price.
Hope you are right. Me too.
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Post by FD1000 on Nov 1, 2023 4:08:44 GMT
VWIAX: To be honest 2% in 3 years, and 4% since 01-01-2020( schrts.co/neGiiMcI) = 4 years minus 2 months...is pretty bad since cash made more money.
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Post by Norbert on Nov 1, 2023 6:51:55 GMT
VWIAX: To be honest 2% in 3 years, and 4% since 01-01-2020( schrts.co/neGiiMcI) = 4 years minus 2 months...is pretty bad since cash made more money. Hindsight is a wonderful thing. Do you have any foresight? Or insight?
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Post by Mustang on Nov 1, 2023 8:25:30 GMT
VWIAX: To be honest 2% in 3 years, and 4% since 01-01-2020( schrts.co/neGiiMcI) = 4 years minus 2 months...is pretty bad since cash made more money. Yes, that is what happens during a downturn.
Let's look at Morningstar's 3-yr return: VMFXX +1.89%, VWINX+ 0.81%. That is disappointing. And, the last three months have been particularly unkind to VWINX: -6.46%.
Using your chart lets look back three months: VWINX was almost at 12% while VMFXX was around 5%. Then you can see VWINX's fall. Hindsight is a wonderful thing. Looking back everyone has 20/20 vision. But, three months ago VWINX looked pretty good.
Since I'm a buy and hold investor I like to look at a longer time period. Morningstar shows that $10,000 invested in VMFXX 10 years ago is valued at $11,179 today, $10,000 invested in VWINX 10 years ago is valued at $16,766. And that includes the disappointing performance of the last two years. Disappointing but not devastating. VWINX's management team has a proven track record of long term performance. And, even though its short term performance has been disappointing it is still in the upper half of all conservative-allocation funds.
Predicting the future is difficult. It is a moving target. Eventually the Fed will get inflation under control. It will start reducing rates. Current trends will reverse themselves. That may be next year, or the year after. I don't know. But, I'm not selling. I'm buying. And, I can wait it out.
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Post by yogibearbull on Nov 1, 2023 14:25:49 GMT
50-50 hybrid VTMFX may have a better rebound potential than VWINX/VWIAX. Also good for TLH swap.
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Post by mozart522 on Nov 1, 2023 16:18:53 GMT
Mustang, But 1981 was the last high inflation year. After that, the holder of a 10 year treasury was making money in real dollars. And if one was smart enough to buy a 30 year treasury, they were really making money for a long time. I remember I had a zero coupon bond in 1983 that was over 11%.
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Post by anitya on Nov 1, 2023 17:15:30 GMT
yogibearbull, I have not been following this thread. Please elaborate on the first sentence in your post.
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Post by yogibearbull on Nov 1, 2023 17:30:00 GMT
anitya , it's a long thread that has covered many retirement related topics. I suppose you meant my last post. That was regarding the most recent discussions on VWINX/VWIAX and whether to stick with it or do something else. In general, I like hybrids and VWINX/VWIAX is an important member. The category has a bad 3-yr stretch now. But people holding it in taxable accounts may consider 50-50 hybrid VTMFX for its tax advantages, better rebound potential (with equity growth tilt and muni bonds), and possibly taking advantage of tax-loss harvesting (TLH).
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Post by Mustang on Nov 1, 2023 18:57:07 GMT
50-50 hybrid VTMFX may have a better rebound potential than VWINX/VWIAX. Also good for TLH swap. I took a look at VTMFX. definitely a good 50/50 fund.
Current asset allocation: Wellington and Wellesley (W+W) 50.7% stock, 49.3% bonds. VTMFX 47.2% stock, 52.8% bonds.
10 year growth of $10,000: W+W grew to $19,921, VTMFX to $20,800. 2022 loss: W+W 11.7%, VTMFX 12.7%
Last rebound: WVELX WVINX W+W VTMFX 2008 -22.2% -9.8% -16.0% -18.3% 2009 +22.3% +16.0% +19.2% +19.1% 2010 +11.0% +10.7% +10.9% +9.2%
It looks to me like it is too close to call especially when trying to forecast into the future. The thing that is the tie breaker is withdrawals. . According to Darrow Kirkpatrick's research (“These are the Best Withdrawal Strategies”, Money, no date) the worst type of withdrawal strategy is to re-balance every year. I believe his best strategy (CAPE Median) is a little complicated for my wife to follow. I tested his other two withdrawal strategies (Equal Withdrawals from Funds and Withdrawals from the Best Preforming Fund). Using a $500,000 starting investment, a 4% initial withdrawal and a 30 year payout period. Even though his research gave a slight edge to Equal Withdrawals, I liked Best Performing Fund strategy the best.
1971 Retirement (Stagflation years) Cash withdrawals using the 50/50 method (half the withdrawal from Wellington and half from Wellesley) until one fund runs out then use the remaining fund. Neither fund ran out of money. Combined ending balance was $2,213,538.
1971 Retirement (Stagflation years). Cash is taken from the fund with the highest previous End of Year (EOY) balance. The portfolio typically automatically re-balances after two or three years. Combined ending balance was $2,354,865 .
1990 Retirement (Boom years). Cash withdrawals using the 50/50 method (half the withdrawal from Wellington and half from Wellesley) until one fund runs out then use the remaining fund. Neither fund ran out. Combined ending balance was $3,187,877.
1990 Retirement (Boom years). Cash is taken from the fund with the highest previous End of Year (EOY) balance. The portfolio typically automatically re-balances after two or three years. Combined ending balance was $3,178,987.
If we assume that a 50/50 withdrawal would be the same as taking the total withdrawal from VTMFX then it again is too close to call. It comes down to preference. Kirkpatrick wrote, “An old Wall Street adage advises it’s best to buy assets when they are out of favor. And it’s best to sell them when they’re in favor.” This to me means we should sell from the fund with the highest previous EOY balance. We can't do that with only one fund.
For someone looking for maximum simplicity taking the total withdrawal from a single fund (VTMFX) is about as simple as it gets. I like that but my gut tells me not to put all the eggs in one basket.
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Post by gman57 on Nov 1, 2023 20:48:13 GMT
50-50 hybrid VTMFX may have a better rebound potential than VWINX/VWIAX. Also good for TLH swap.
For someone looking for maximum simplicity taking the total withdrawal from a single fund (VTMFX) is about as simple as it gets. I like that but my gut tells me not to put all the eggs in one basket.
I often hear that... "not to put all the eggs in one basket" but I don't think that applies in many instances. I have my equity allocation all in VOO. One basket, I think not, maybe 500 baskets? If I had all my money in say JNJ that would be one basket. IMHO ADD: I guess that applies mostly to index funds. An active fund could be considered one basket (the fund manager).
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Post by FD1000 on Nov 1, 2023 22:54:58 GMT
Why I'm so hard on VWIAX? after all, it it one of the 3-4 funds I recommended my wife to hold if I'm gone. When I retired I had several goals and one of them was to beat VWIAX. It's not even close as my grandson says.
Was I the only one that saw and posted that bonds are going to crash in 2022? Did you listen to the Fed? Even in 2023, we had hundreds of posts about MM/CD/Treasuries, why? Because bonds have not been working since very early of 2022 and sometimes it is very clear.
The beauty of being your own investor is that you don't have to do stuff, especially not a retiree that has enough.
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Post by Mustang on Nov 2, 2023 1:00:17 GMT
It's not hard to beat VWIAX. My other funds beat it all the time. Here's one example: VWIAX' 10 year return is 4.6%. VWELX's is 7.4%. If you are in the accumulation phase seeking high returns then VWIAX is not the fund you want. It is a fund you want during the withdrawal phase. It has less volatility. Using 2008 as an example its better to withdraw money for living expenses from a fund that loses 9.8% than to withdraw it from one that loses 38.5%. But I suspect you already know that.
You were not the only one posting about it and yes, I was listening to the Fed. I just didn't worry about it. I expected devaluations, I just underestimated a little how much they would be. I had hoped it would be like 2008 when SP500 was down 38.5%, Wellington down 22.3% and Wellesley down 9.8%. Wellington lost 58% of the SP500's loss and Wellesley lost 25% of it.
That was hopeful thinking. I thought the worst case would be 65% of the SP500's loss for Wellington and 40% for Wellesley. Pretty much the ratio of stock to bonds in each fund. But in 2022 the SP500 dropped 19.4%, Wellington dropped 14.3% and Wellesley 9.1%. Wellington loss was73% of the SP500's and Wellesley's was 47%. I was disappointed that diversification didn’t take more of the volatility out but it’s not a disaster.
In the end 2022 and now 2023 have turned out to be opportunities. I've been buying a little each month. I'm positioning my portfolio for the recovery.
P.S. If the recovery doesn't come then none of this matters anyway.
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Post by FD1000 on Nov 2, 2023 3:32:09 GMT
Mustang, My long term is to be 80-90% in bonds and beat 50/50 and never lose 3% from any last top. Since retirement in 2018, my portfolio performance came from 90+% of bond OEFs and I easily beat VWIAX, actually it beat the SP500 too. I have been saying for at least 15 years that diversification doesn't help you much in a meltdown, investors sell everything. 2022 proved that even bonds didn't do well in a meltdown. If you were diversified you made much less. In 2000-2010 SPY lost money. In 2010-21, SPY/QQQ were the best.
The only constant in investing is the change. The meltdown of 2001-2, 2008-9, 2020, 2022 were all different.
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hondo
Commander
Posts: 145
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Post by hondo on Nov 2, 2023 17:05:27 GMT
50-50 hybrid VTMFX may have a better rebound potential than VWINX/VWIAX. Also good for TLH swap. I took a look at VTMFX. definitely a good 50/50 fund.
Current asset allocation: Wellington and Wellesley (W+W) 50.7% stock, 49.3% bonds. VTMFX 47.2% stock, 52.8% bonds.
10 year growth of $10,000: W+W grew to $19,921, VTMFX to $20,800. 2022 loss: W+W 11.7%, VTMFX 12.7%
Last rebound: WVELX WVINX W+W VTMFX 2008 -22.2% -9.8% -16.0% -18.3% 2009 +22.3% +16.0% +19.2% +19.1% 2010 +11.0% +10.7% +10.9% +9.2%
It looks to me like it is too close to call especially when trying to forecast into the future. The thing that is the tie breaker is withdrawals. . According to Darrow Kirkpatrick's research (“These are the Best Withdrawal Strategies”, Money, no date) the worst type of withdrawal strategy is to re-balance every year. I believe his best strategy (CAPE Median) is a little complicated for my wife to follow. I tested his other two withdrawal strategies (Equal Withdrawals from Funds and Withdrawals from the Best Preforming Fund). Using a $500,000 starting investment, a 4% initial withdrawal and a 30 year payout period. Even though his research gave a slight edge to Equal Withdrawals, I liked Best Performing Fund strategy the best.
1971 Retirement (Stagflation years) Cash withdrawals using the 50/50 method (half the withdrawal from Wellington and half from Wellesley) until one fund runs out then use the remaining fund. Neither fund ran out of money. Combined ending balance was $2,213,538.
1971 Retirement (Stagflation years). Cash is taken from the fund with the highest previous End of Year (EOY) balance. The portfolio typically automatically re-balances after two or three years. Combined ending balance was $2,354,865 .
1990 Retirement (Boom years). Cash withdrawals using the 50/50 method (half the withdrawal from Wellington and half from Wellesley) until one fund runs out then use the remaining fund. Neither fund ran out. Combined ending balance was $3,187,877.
1990 Retirement (Boom years). Cash is taken from the fund with the highest previous End of Year (EOY) balance. The portfolio typically automatically re-balances after two or three years. Combined ending balance was $3,178,987.
If we assume that a 50/50 withdrawal would be the same as taking the total withdrawal from VTMFX then it again is too close to call. It comes down to preference. Kirkpatrick wrote, “An old Wall Street adage advises it’s best to buy assets when they are out of favor. And it’s best to sell them when they’re in favor.” This to me means we should sell from the fund with the highest previous EOY balance. We can't do that with only one fund.
For someone looking for maximum simplicity taking the total withdrawal from a single fund (VTMFX) is about as simple as it gets. I like that but my gut tells me not to put all the eggs in one basket.
Mustang: Notice that YBB was talking about "taxable accounts". That could make the difference, because of the "tax exempt" bonds in VTMFX.
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Post by retiredat48 on Nov 2, 2023 19:57:45 GMT
Why I'm so hard on VWIAX? after all, it it one of the 3-4 funds I recommended my wife to hold if I'm gone. When I retired I had several goals and one of them was to beat VWIAX. Was I the only one that saw and posted that bonds are going to crash in 2022? Did you listen to the Fed? Even in 2023, we had hundreds of posts about MM/CD/Treasuries, why? Because bonds have not been working since very early of 2022 and sometimes it is very clear. The beauty of being your own investor is that you don't have to do stuff, especially not a retiree that has enough. FD1000,(my bold added above). Are you kidding. I was the lonesome poster on M* being negative on bonds and balanced funds with high fixed income percentages...such as VWINX Wellesley Fund. I took a lot of heat for this position. I was a little early, but those who exited saved a bundle of money. And if one exited and bought growth stock funds, you are way ahead! Disclosure: FSPTX High Tech sector fund is my largest holding. R48
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Post by FD1000 on Nov 2, 2023 20:20:13 GMT
Why I'm so hard on VWIAX? after all, it it one of the 3-4 funds I recommended my wife to hold if I'm gone. When I retired I had several goals and one of them was to beat VWIAX. Was I the only one that saw and posted that bonds are going to crash in 2022? Did you listen to the Fed? Even in 2023, we had hundreds of posts about MM/CD/Treasuries, why? Because bonds have not been working since very early of 2022 and sometimes it is very clear. The beauty of being your own investor is that you don't have to do stuff, especially not a retiree that has enough. FD1000 ,(my bold added above). Are you kidding. I was the lonesome poster on M* being negative on bonds and balanced funds with high fixed income percentages...such as VWINX Wellesley Fund. I took a lot of heat for this position. I was a little early, but those who exited saved a bundle of money. And if one exited and bought growth stock funds, you are way ahead! Disclosure: FSPTX High Tech sector fund is my largest holding. R48 This is not your first time claiming this. You claimed in 2013 that bonds and VWIAX will no do well in the next several years...but they did fine...until 01/01/2022. This is 9 years. VWIAX made in 9 years about 91%, while VWENX made 160%. The chart below is as of 11/1/2023 See results as of 10/31/2023 at ( www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=6sQBO24shicd65Mofa48uu) for VWIAX,VWENX,SPY. VWIAX did exactly what it supposed to do, lower performance, lower SD, usually better Sharpe ratio. When we talk about stocks only LC growth did great, if you were DIVERSIFIED and have value, SC, EM, CEFs you made much less. YTD is another great example...QQQ=37%...XLV=-5.5...XLE=2.8...SCHD -5.3%..RSP(equal weight SP500)=0%...VTV(value)+EEM=0.2%. So, a trader can do whatever, as I did too, we are talking about a typical diversified portfolio. If you don't mind, what % do you have in FSPTX? Attachments:
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Post by Mustang on Nov 2, 2023 22:10:33 GMT
The differences in that chart isn't hard to explain and its not all bonds. Wellington had 65% stocks and Wellesley Income had 40%. Adjusting for that would put Wellesley Income at 146% compared to Wellington's 160. Then Wellington's stocks were blended with both growth and value. Wellesley's were more value. I have read that value is going to make a comeback. I hope so. You guys weren't the only ones talking about what would happen if rates went up. There were writers and commentators talking about it. You are correct, Wellesley Income was doing what it is suppose to do. You can visually see that on the chart. Wellington's Aptil 2021 correction went from 102 to 51, Wellesley from 66 to 38. During this 3 year period I increased my shares of Wellington 76% and Wellesley 176%. And while I wait for the recovery in 2025 I will buy a little more each month. (That might sound like a lot but they are not a large part of my portfolio yet.) I personally think FSPTX is too volatile for a retiree withdrawing living expenses. It fell 71.24% from 2000 through 2003. Three years of negative returns. It fell 51.1% in 2008. It fell 36.9% in 2022. It may have averaged 17.8% over the last 10 years but its volatility would make it very hard to live with. Something would have to even that our. Maybe VWINX? . finance.yahoo.com/quote/FSPTX/performance/
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Post by retiredat48 on Nov 2, 2023 23:08:53 GMT
I personally think FSPTX is too volatile for a retiree withdrawing living expenses. It fell 71.24% from 2000 through 2003. Three years of negative returns. It fell 51.1% in 2008. It fell 36.9% in 2022. It may have averaged 17.8% over the last 10 years but its volatility would make it very hard to live with. Something would have to even that our. Maybe VWINX? . R48 reply: You're absolutely correct...FSPTX is too volatile and likely should be only a small percentage of any retiree portfolio.
Unless...unless, one may have owned it from inception many decades ago, never sold any, and it has grown into a $million plus. Then, who cares about volatility? What if it goes to $1,250,000, then falls to $900,000...so what? A good investment space is just that. Capturing some growth due to artificial intelligence aspects for next decade, may be the best investment. Then, leave it to heirs...or charities, or spend it if desired. For monies one projects as not needed for living, they should be invested in the best spaces. This generally means stocks over bonds, as well.
R48
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Post by Mustang on Nov 3, 2023 2:22:44 GMT
I personally think FSPTX is too volatile for a retiree withdrawing living expenses. It fell 71.24% from 2000 through 2003. Three years of negative returns. It fell 51.1% in 2008. It fell 36.9% in 2022. It may have averaged 17.8% over the last 10 years but its volatility would make it very hard to live with. Something would have to even that our. Maybe VWINX? . R48 reply: You're absolutely correct...FSPTX is too volatile and likely should be only a small percentage of any retiree portfolio.
Unless...unless, one may have owned it from inception many decades ago, never sold any, and it has grown into a $million plus. Then, who cares about volatility? What if it goes to $1,250,000, then falls to $900,000...so what? A good investment space is just that. Capturing some growth due to artificial intelligence aspects for next decade, may be the best investment. Then, leave it to heirs...or charities, or spend it if desired. For monies one projects as not needed for living, they should be invested in the best spaces. This generally means stocks over bonds, as well.
R48I'm glad that we agree. Decades ago when I was young I didn't care much about volatility either. I just didn't have the money to risk.
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Post by FD1000 on Nov 3, 2023 3:54:55 GMT
Several points: 1)The great things about W+W are: low ER, stable LT team management, conservative stay the course way. On the other hand, that's also the weakness. If management sure their high-rated bonds are going to crush, and who didn't know about it in early 2022, they will not make any significant change even if they know it would be a disaster.
2) Many times when I read that someone is a LT holder and wants to take less risk, the facts show that SPY beats most stock funds and/or the stocks portion of allocation funds. The reason for that is its simple and correct implementation. The SPY keeps evolving based on price which is the ultimate indicator. Price does care what managers think, the price is what millions of investors decided to trade, regardless of anybody opinion. In one year investors decided that Tesla can go up 700%, or they decided that Apple is the best company. This is why it's hard to beat the SPY. Valuation, predictions and manager selection can be off for years.
3) Other investors use 25-30 funds, that means no fund has any meaningful effect on the portfolio. Suppose I held 1%(or even 3%) in a fund, especially VWIAX, in the last 30 years, what does it matter? Suppose I'm a trader and decided to increase one fund to 7% but my other funds, such as CEFs+value+international lagged, this portfolio would not do better than just SPY since 2010. So, most investors should just stick with KISS portfolio and hardly trade.
The following is what I gave my wife "I set up a written plan for her to invest in only 3 funds for LT hold. I only trust 2 choices indexes + Vanguard funds managed by Wellington. Wellington Management is the oldest, it's conservative, team style, and not one dominant manager, with a very cheap expense ratio. Since our money isn't with Vanguard, we would have to own the more expensive funds(not Admiral), but it's still cheap. For a younger age, until age 75 and still having a taxable account...45% VWINX...25% VWAHX(HY Muni)...30% VSMGX(60/40 invested in 2 US + 2 international indexes). Since HY Muni bonds are hybrid, this portfolio is more like 40/60 Older than 70-75 or taxable account is gone: 40% VWINX(40/60)...30% VWEHX(HY Corp)...30% VSMGX(60/40). Since HY Corp bonds are hybrid, this portfolio is more like 45/55. Why increase the risk at age 75? because an older retiree has fewer years to live and can take a bit more risk".
As long as I'm managing the portfolio, I will be using my style. I'm teaching my wife in the last several months what and how to implement my system. She can select what to do later.
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Post by chang on Nov 3, 2023 8:32:18 GMT
3) Other investors use 25-30 funds, that means no fund has any meaningful effect on the portfolio. Suppose I held 1%(or even 3%) in a fund, especially VWIAX, in the last 30 years, what does it matter? I agree with not owning 30 funds, but I disagree with the reason. You can't say that a 1% position "doesn't matter". If you own 100 funds with $100,000 in each, then you have a $10 million portfolio. If none of them matter, then the whole portfolio doesn't matter -- which clearly isn't true. You just have a complex portfolio.
30 funds with 20 stocks each has a maximum combined portfolio of 600 companies, but probably much less due to overlap. VTI owns 3,824 companies. VT owns 9,705 companies. Those are much more diverse. The price action of any one company certainly "doesn't matter". There are some other reasons not to own 30 funds, but the one given doesn't seem logical to me.
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Post by flipperxxx on Nov 3, 2023 11:38:48 GMT
I personally think FSPTX is too volatile for a retiree withdrawing living expenses. It fell 71.24% from 2000 through 2003. Three years of negative returns. It fell 51.1% in 2008. It fell 36.9% in 2022. It may have averaged 17.8% over the last 10 years but its volatility would make it very hard to live with. Something would have to even that our. Maybe VWINX? . R48 reply: You're absolutely correct...FSPTX is too volatile and likely should be only a small percentage of any retiree portfolio.
Unless...unless, one may have owned it from inception many decades ago, never sold any, and it has grown into a $million plus. Then, who cares about volatility? What if it goes to $1,250,000, then falls to $900,000...so what? A good investment space is just that. Capturing some growth due to artificial intelligence aspects for next decade, may be the best investment. Then, leave it to heirs...or charities, or spend it if desired. For monies one projects as not needed for living, they should be invested in the best spaces. This generally means stocks over bonds, as well.
again, since you say this is your largest holding, it only makes sense to also say what % of your total pie that amount is. another thing: your underlined use of the word 'unless' suggests, perhaps, that you're one of the few to have owned FSPTX since inception. if that's the case, lucky (and/or smart) you!
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Post by mozart522 on Nov 3, 2023 12:41:54 GMT
retiredat48 , You Said: " FD1000,(my bold added above). Are you kidding. I was the lonesome poster on M* being negative on bonds and balanced funds with high fixed income percentages...such as VWINX Wellesley Fund. I took a lot of heat for this position. I was a little early, but those who exited saved a bundle of money. And if one exited and bought growth stock funds, you are way ahead!" How did they save a bundle of money by exiting? Since your call in late 2011 IIRC, VWIAX has a CAGR of 5.38 and an SD of 6.55. Not so bad in my book for a very conservative balanced fund. Of course one could always make more in any number of funds, but generally at a much higher SD than 6.5.
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