bruno
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Post by bruno on Dec 14, 2023 19:58:41 GMT
Vanguard Wellesley doesnt seem its done that well untill the last few months. I am thinking about selling my 50k of VWIAX and waiting for a pull back and reinvest in something a little better. Thanks for any input from the VWIAX people.
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Post by yogibearbull on Dec 14, 2023 20:48:17 GMT
Not yet.
In the past, a combo of 38% VYM + 62% VCIT has been suggested.
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Post by retiredat48 on Dec 14, 2023 23:09:24 GMT
Vanguard Wellesley doesnt seem its done that well untill the last few months. I am thinking about selling my 50k of VWIAX and waiting for a pull back and reinvest in something a little better. Thanks for any input from the VWIAX people. bruno,: It is (pick your word): ....heresy....a sin.....shameful....ill-advised....dumb....against-the-odds.... for forum members to even consider selling Wellesley, VWIAX! ..........according to, your words: VWIAX people. R48
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Post by rhythmmethod on Dec 14, 2023 23:30:09 GMT
bruno, I think if you sell VWIAX now, you are potentially selling just when its components are poised to perform. I am not arguing if there is a better way to replicate it, as yogibearbull indicated. I hold some and keeping and may add. Unless your reasoning has changed from when you first purchased it, I'd hold. Good luck.
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bruno
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Posts: 57
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Post by bruno on Dec 14, 2023 23:57:58 GMT
bruno , I think if you sell VWIAX now, you are potentially selling just when its components are poised to perform. I am not arguing if there is a better way to replicate it, as yogibearbull indicated. I hold some and keeping and may add. Unless your reasoning has changed from when you first purchased it, I'd hold. Good luck. Yes I agree they way its looked the last few months. BUT in the last 10 years I am now just above water. With CG coming I was thinking sell B4 the drop and look at going a diffent way. I have put a LOT in Tbills and with 5% interest seems to have changed the way I think. Thanks for your comments!!
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Post by mozart522 on Dec 15, 2023 0:01:13 GMT
bruno, Because the market seems to believe that rates are coming down over the next couple of years, dividend stocks and bonds will likely do well, a rotation if you will. Either Wellesley or the VYM/VCIT combo should be about equal. I am currently using VCIT and SCHD, which is also picking up steam.
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bruno
Lieutenant
Posts: 57
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Post by bruno on Dec 15, 2023 0:42:07 GMT
Vanguard Wellesley doesnt seem its done that well untill the last few months. I am thinking about selling my 50k of VWIAX and waiting for a pull back and reinvest in something a little better. Thanks for any input from the VWIAX people. bruno ,: It is (pick your word): ....heresy....a sin.....shameful....ill-advised....dumb....against-the-odds.... for forum members to even consider selling Wellesley, VWIAX! ..........according to, your words: VWIAX people. R48 R48 I guess I just dont know where you are coming from most of the time. I am FOR sure NOT some master trader like you just trying to get a little HELP from people that deal with VWIAX.
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Post by richardsok on Dec 15, 2023 2:32:00 GMT
bruno ,: It is (pick your word): ....heresy....a sin.....shameful....ill-advised....dumb....against-the-odds.... for forum members to even consider selling Wellesley, VWIAX! ..........according to, your words: VWIAX people. R48 R48 I guess I just dont know where you are coming from most of the time. I am FOR sure NOT some master trader like you just trying to get a little HELP from people that deal with VWIAX. I see what you mean from your earlier post, bruno. I was surprised to see VWIAX four year chart. Vanguard usually does better. Even after the last couple of bullish weeks, Vwiax hasn't netted a dime since 2019, and is only now POSSIBLY climbing out of its lows. Those of us who trade on technical signals would certainly have gotten out of it in early 2022 when the "gettin' was good". But life is full of missed opportunities. (You're not alone!) Your question is, "NOW what?" Since you say you're learning, perhaps you'll forgive a brief rant on some basics. Let's suppose all this time you have been depositing money regularly into this fund. If so, you have been dollar-cost-averaging your way in .... i.e. you have added and added as the fund went lower and lower. It's not what I'd have done -- but it's not all bad. If you have been continually investing in VWIAX every month all this time, it won't have to regain its former highs for you to net positive overall. So I would partially agree with R48. IF you have been continually investing, you stand a good chance of at least partially recovering some losses. As for the future, you just don't know. Will VWIAX soar upward from here? If it does, you will feel like a fool for selling it now. OTOH, will it languish at roughly its present levels, or even drop? Then you will regret NOT selling it. What we DO know is the market anticipates a gradual lowering of interest rates over time, which, in theory should be good for your VWIAX, so you might think now isn't the optimum time to sell. Later? Maybe. So let's look forward & let me give you Rule #1 (and you might regard your past losses with VWIAX as the tuition you paid to become a better investor.). Tat it on your wrist: NEVER hold an asset, ANY asset, when it is in a long, bearish trajectory. Realize small losses when they occur, but never allow a deteriorating fund to drift so low that it can really hurt you. The old timers used to say, " Dump your losers but let your winners run."For a more thorough discussion, read my book. Good luck.
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Post by Mustang on Dec 15, 2023 4:11:06 GMT
Why did you buy it? What do you expect from it? Is it part of your core assets, or your explore assets? (R48's comment in another thread) It isn't a surprise that it hasn't done as well as some other funds during the last four years. Everything was against it. It's full name is Wellesley Income. It is 40% equity and 60% fixed income. Starting in 2020 our government pumped trillions of dollars of stimulus into our economy. With interest rates nearly zero, investors had already been putting money into the stock market instead of bonds. With the stimulus is was mostly growth stocks, not value. This caused inflation. To fight inflation the Fed raised rates causing bond values to go down. Wellesley Income struggled. But, as rate increases subsided it has recovered a little. According to Morningstar the YTD return is 5.45%. VWIAX was never meant to compete with stock funds. That is not its role in a portfolio. It's role is to provide income and stabilize the volatility. It is not a growth fund but a rainy day fund. From 2000-2001, SPY lost 9.7%, 11.8%, and 21.6%. VWINX (Investor shares) made 16.2%, 7.4%, and 4.6%. In 2008, SPY lost 36.8%. VWINX lost 9.8%. Even in 2022 with everything working against it when SPY lost 18.2% VWINX only lost 9.0%. Even though its asset-allocation and value tilt has recently held it back, according to Morningstar, it has beat it category and index over the last 10 years (average return of 5.4%). It is doing its job as a rainy day fund. This fund typically excels when others falter. This is especially important during the withdrawal phase where sequence-of returns make a difference between success and failure (see big-bang-investors.proboards.com/thread/2894/horse-race ) I am holding it for the above reasons. I have been buying it continuously using dollar-cost-averaging. And, since I fully expect a turnaround in Fed policies after a recession in 2024, I think a rainy day fund might be needed. So, why did you buy it? What do you expect from it? The last four years were an anomaly. I doubt our government can keep the stimulus flowing. People are running out of money and many are predicting a recession. IF VWIAX meets your goals then keep it. If not then sell it. Only you know the answer. Edit: richardsok , "Vwiax hasn't netted a dime since 2019, and is only now POSSIBLY climbing out of its lows."
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Post by richardsok on Dec 15, 2023 5:40:21 GMT
I stand corrected. Five years ago you could have been buying it around 63 (often higher), now it's around 60. That's a $3 loss compensated by about $10 in total dividends, netting you a total $7 over a five year stretch, which works out to about $1.40 total return/yr. (Or 2.2% annually.) And, if you were in a DCA policy, I'm not counting the 2020-22 spell where you were buying shares higher, often MUCH higher.
I would say the lost opportunity costs of not heeding technical indicators was substantial.
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Post by retiredat48 on Dec 15, 2023 5:50:41 GMT
bruno ,: It is (pick your word): ....heresy....a sin.....shameful....ill-advised....dumb....against-the-odds.... for forum members to even consider selling Wellesley, VWIAX! ..........according to, your words: VWIAX people. R48 R48 I guess I just dont know where you are coming from most of the time. I am FOR sure NOT some master trader like you just trying to get a little HELP from people that deal with VWIAX. bruno ,...OK, my post was meant to be a joke (I use imoji's to indicate that)...so I apologize. Dilemma is posters have new moniker names from their past participation on Morningstar, and I thought you may have been around in the past. You see, I have been stating many concerns with Wellesley Fund for years. Perhaps too early. But it has now come to pass in last couple years people are posting "What's wrong with Wellesley" threads. I took considerable heat from posters for my early positions. To me, it was like religion...one could not say anything bad about Wellesley, or the attack dogs came out. (Not many of these same people came to this BB forum). BTW I am not some "master trader." I seldom "trade." R48
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Post by mnfish on Dec 15, 2023 13:24:34 GMT
For an “Income” fund it’s been better in the last 5 years than PDI which has been quite popular since then. Just how many “technical signals” have either one had in 5 years and what were the results of those buy/sells?
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Post by mozart522 on Dec 15, 2023 13:53:34 GMT
I don't understand "concerns" about Wellesley. Since 2011 when we were warned against it, it has a 6.23 CAGR, with a 6.7 SD. Wellington has a 52% high CAGR and a 52% higher SD. But Wellington has 80% higher level of stocks, so in my mind, Wellington is actually underperforming on a risk adjusted basis. People tend to hold Wellesley for income; its in the name. 10K invested in 2011 with divs and cgs reinvested distributed $2500 in 2021 and $1480 in 2022. It will be less this year as it works off 2022 losses. Every once in a while both dividend stocks and bonds will be down and this is what happened in 2022. But it still only lost less than 10%.
Is this a great fund for those who want/need high stock levels and accompanying higher risk and reward; nope. But it has and continues to serve many well since its inception. BTW, I don't own it.
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Post by Mustang on Dec 15, 2023 13:56:58 GMT
I stand corrected. Five years ago you could have been buying it around 63 (often higher), now it's around 60. That's a $3 loss compensated by about $10 in total dividends, netting you a total $7 over a five year stretch, which works out to about $1.40 total return/yr. (Or 2.2% annually.) And, if you were in a DCA policy, I'm not counting the 2020-22 spell where you were buying shares higher, often MUCH higher. I would say the lost opportunity costs of not heeding technical indicators was substantial. I still don't understand your numbers. Morningstar has YTD at 6.54% and five year return at 5.72%. Yahoo has the five year return at 5,72%. The Wall Street Journal has the 5 year return at 5.72%. On January 1, 2019 price was $61.09 and its current price is $61.53. Those returns come from income. Its not a growth stock fund but an income fund. I have have it paired with Wellington for a little growth. Wellington's January 1, 2019 price was $66.94, current price $73.71. It's YTD is 13.03% and 5-year 9.03%. According to Morningstar they both beat their categories and are in the top quartile.
I've been thinking of changing our future withdrawal method to income instead of the 4% Rule. I chose a $1M portfolio to test with 50/50 each. Here is the income produced from dividends/capital gains to the 4% Rule.
Div/Cap Gns 4% Rule 2012 $44,447 $40,000 2013 $67,817 $41,200 2014 $64,425 $42,436 2015 $65,007 $43,709 2016 $47,565 $45,020 2017 $63,718 $46,371 2018 $92,079 $47,762 2019 $53,169 $49,194 2020 $78,224 $50,670 2021 $100,062 $52,191 2022 $87,016 $53,757
Average annual income over the last five years: $82,110. I've not changed yet but its tempting.
Why did you buy it? What do you expect from it? Is it part of your core assets, or your explore assets?
Note: I didn't break out Wellesley Income separately because I didn't save the information that way.
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Post by richardsok on Dec 15, 2023 14:36:02 GMT
OK, 'stang, I'll try once more.
Say your buys were around 2017-18 and averaged about $63/share.
The fund today is at about $60. So . . .
Over five years you lost $3.00, but received 20 distributions of 50cents ea or $10 total....so ...
Over five years you lost $3 but gained $10, so you netted $7 over a five year period.
A $7 return on a $63 investment = 11%
11% spread out over five years is 2.2% / year: far under inflation.
But it gets worse. If you were steadily buying the fund every month 2018 to present, a great many of your buys were far above $63. So you probably have net losses today. (That is the sense I got from bruno.)
OTOH if bruno was making all his buys any time between 2002 and 2015, (or if he just started his buys a few weeks ago) he is well ahead today. But that's probably not the case. If it was, what is he complaining about?
To conclude, VWIAX has been roaring back like a champ the past few weeks. I think we're all pretty much agreed the probabilities favor holding instead of selling at this point.
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Post by yogibearbull on Dec 15, 2023 15:30:30 GMT
There shouldn't be controversy over something as basic like TR. It's "Big Bang! Investors" after all. But there is vagueness in "5 years" in that it can be from sometime in 2018 to sometime in 2023. And both 2018 and 2023 were/are active/volatile years.
So, looking at the PV data on 60-month (5-yr) rolling-returns for all 2018 monthly starts,
VWINX 3.74-5.09%, now 4.57% VWELX 5.94-7.75%, now 7.67%
If we leave out the periods around dot.com bubble and GFC crashes, then the worst 5-yr rolling-returns were in 09/2022, VWINX 3.24%, VWELX 5.36%.
The Bond Rule is often mentioned. It says that holding periods of duration would produce TR that is approximately the initial/purchase yield. It may be applied to bonds, bond funds, income funds. But one must HOLD and keep REINVESTING during the entire period. Trading in/out, or additions/withdrawals, would not let the Bond Rule work properly. Anyway, trading with or without TA is inconsistent with the Bond Rule.
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bruno
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Post by bruno on Dec 15, 2023 16:07:31 GMT
Why did you buy it? What do you expect from it? Is it part of your core assets, or your explore assets? (R48's comment in another thread) VWIAX was never meant to compete with stock funds. That is not its role in a portfolio. It's role is to provide income and stabilize the volatility. It is not a growth fund but a rainy day fund. I am holding it for the above reasons. I have been buying it continuously using dollar-cost-averaging. And, since I fully expect a turnaround in Fed policies after a recession in 2024, I think a rainy day fund might be needed. So, why did you buy it? What do you expect from it? The last four years were an anomaly. I doubt our government can keep the stimulus flowing. People are running out of money and many are predicting a recession. IF VWIAX meets your goals then keep it. If not then sell it. Only you know the answer. Edit: richardsok , "Vwiax hasn't netted a dime since 2019, and is only now POSSIBLY climbing out of its lows."
I dont mind to admit i was doing the buffet 90% S&P plan and have done very well. Then i retired and had more time to read that I was all screwed up in how to invest. WHY did I buy it? I was reading years ago that a 50/50 VWENX VWIAX was a GREAT way to make some money and NOT lose much. My CB on vwiax is $63. and vwenx is $72. I decided to move my VG to Schwab in 23 and saw this was combo was not doing much. So sold some vwiax and bought more vwenx and 50k of vwnex. vwnex has done very well and vwenx is in the green with vwiax about to break even. The last year i have been buying Tbills 1/3 in fixed assets and and just got to thinking do I really need to keep vwiax. Most of my investing comes from seeing what others are doing that works. I come from the oil field and try to the best i can. I have been retired 5 years and not pulled from my IRA.
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bruno
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Post by bruno on Dec 15, 2023 16:43:27 GMT
For an “Income” fund it’s been better in the last 5 years than PDI which has been quite popular since then. Just how many “technical signals” have either one had in 5 years and what were the results of those buy/sells? Yes i have learned my lesson on PDI the cats meow..
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Post by retiredat48 on Dec 15, 2023 18:35:32 GMT
mozart522 ,...posted: "I don't understand "concerns" about Wellesley."Well, in the old Morningstar days there were many posting that Wellesley was much better than Wellington for a retiree portfolio; some were promoting Wellesley as the only fund you need, over many other combinations. One poster had a moniker name of 100%Wellesley. Some will remember I wrote and posted a "Story" on the concerns with 100% Wellesley back then, and was highly ridiculed. Well, we now have results. As a minimum here is what Yogi posted above: (looking at the PV data on 60-month (5-yr) rolling-returns for all 2018 monthly starts), VWINX 3.74-5.09%, now 4.57% VWELX 5.94-7.75%, now 7.67% ------------------------------ So VWELX (disclosure I have owned since 1953) handily beat Wellesley. And posters who also diversified into other equity investments fared even better. Like FSPTX Fidelity Tech Sector Fund, my largest holding, clobbered these returns last decade. And of course Wellesley went through the two year bond debacle (a predicted concern) of going from zero percent rates to 5%, negatively affecting returns. Yes, if you use Wellesley in certain ways it is OK; but the extremists were wrong...and now they are mostly gone from posting. R48
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bruno
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Post by bruno on Dec 15, 2023 19:09:33 GMT
Thanks to all for you input. I have decided to sell all VWIAX before the CP hit and drag it down $3-4. This is a small chunk so not that big of a deal. I was thinking my buy more VWNEX after its CP gain drop but not sure if that posible at Schwab. Thanks again Bruno
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Post by Mustang on Dec 15, 2023 19:18:23 GMT
Why did you buy it? What do you expect from it? Is it part of your core assets, or your explore assets? (R48's comment in another thread) VWIAX was never meant to compete with stock funds. That is not its role in a portfolio. It's role is to provide income and stabilize the volatility. It is not a growth fund but a rainy day fund. I am holding it for the above reasons. I have been buying it continuously using dollar-cost-averaging. And, since I fully expect a turnaround in Fed policies after a recession in 2024, I think a rainy day fund might be needed. So, why did you buy it? What do you expect from it? The last four years were an anomaly. I doubt our government can keep the stimulus flowing. People are running out of money and many are predicting a recession. IF VWIAX meets your goals then keep it. If not then sell it. Only you know the answer. Edit: richardsok , "Vwiax hasn't netted a dime since 2019, and is only now POSSIBLY climbing out of its lows."
I dont mind to admit i was doing the buffet 90% S&P plan and have done very well. Then i retired and had more time to read that I was all screwed up in how to invest. WHY did I buy it? I was reading years ago that a 50/50 VWENX VWIAX was a GREAT way to make some money and NOT lose much. My CB on vwiax is $63. and vwenx is $72. I decided to move my VG to Schwab in 23 and saw this was combo was not doing much. So sold some vwiax and bought more vwenx and 50k of vwnex. vwnex has done very well and vwenx is in the green with vwiax about to break even. The last year i have been buying Tbills 1/3 in fixed assets and and just got to thinking do I really need to keep vwiax. Most of my investing comes from seeing what others are doing that works. I come from the oil field and try to the best i can. I have been retired 5 years and not pulled from my IRA. You have retired. Are you withdrawing from your portfolio?
Different asset allocations are needed for the withdrawal phase. There are lot of theories on what that should be but one of the biggest risks a retiree faces is the sequence-of-return risk which is the primary cause of poor portfolio performance. Researchers generally believe that the asset allocation at the start of retirement should have a much lower proportion of stocks. Equity is highly volatile. Fixed income is needed so withdrawals can be made when equity crashes. The exact proportion varies. Some say the stock portion should be 110 minus your age. At 65 that would make the stocks 45% and bonds 55%. For those using the 4% Rule for withdrawals, history has shown that the portfolio should be between 50-75% stock. Recently, Morningstar analysts suggested that the stock portion should be between 20-40%/
What has been proven is that returns during the first 10 years of retirement have the greatest impact on portfolio longevity because of compounding. Withdrawing when the portfolio is down leaves less to build upon when the recovery happens. Because the compounding period is shorter a bad series of returns has less affect later which led to the theory that the equity portion should be lowest at retirement then slowly get larger. A chart of the equity portion would look more like a U. High when young and building a portfolio, at minimum when retirement starts, then increasing later in life.
It is a judgement call on how far down the equity portion should go and it really depends on risk tolerance. I think 20% is way too low and I would be uncomfortable with 75%. I want something in the middle, 50-60%. Which is why I like a 50/50 Wellington/Wellesley pairing for part of my portfolio.
As others have pointed out selling right now may not have been optimal. The last few years are an anomaly and what is happening in the market is a return to normal. There is disagreement on whether equity will continue its run. In its forecast, Morningstar lowered its equity forecast and raised it fixed income forecast for the second year in a row. No one can see the future. The only thing we can do is try to prepare for both contingencies, good and bad.
P.S. You might want to read the Horse Race thread. Some of the stress tests show the impact of sequence-of-returns.
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Post by mozart522 on Dec 15, 2023 19:32:20 GMT
retiredat48 , I can't say an investor who uses even up to 100% Wellesley is "wrong". as I said above, since 2011, Wellington had 52% more returns with 80% higher equity stake. I do not understand your point. I'm not sure anyone would have said that Wellesley would have higher returns than Wellington given the stock holdings of each. Your point seems to be that Wellesley won't do as well as Wellington overall. No argument. But Wellington won't do as well as VOO, and VOO won't likely do as well as QQQ. It is all about risk and reward. And for me, it is hard to argue that Wellesley hasn't provided very good returns over its entire life for the risk one takes. I would likely opt for VYM and VCIT combo myself if I was in the market for that type of allocation. Anyway, I doubt most who hold Wellesley hold it at anywhere close to 100% unless they just want to take the income. Since 1985, a 10K investment if taking all distributions would have produced at least an average of $1000 in income every year. So 1M in Wellesley would produce 100K on average each year while the principal grew to a very modest $1,800,000 somewhat less than inflation, but no danger of running out of money.
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bruno
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Post by bruno on Dec 15, 2023 20:05:33 GMT
You have retired. Are you withdrawing from your portfolio?
P.S. You might want to read the Horse Race thread.
NO, I have not taken anything out of my brokerage, IRA or roth since retiring 5 + yrs ago. I bought 2 MYGA annuity with cash and now at the end of my 60 payments from first one. It will help with my daughter graduating tommorow with her RN degree. I can use cash if needed till July 2024 when the second MYGA kicks in if I decide to annuitize it, it has $76k of interest that i have not decided whats the best way out. My health is not good had heart valve and double bypass and going in for a lung procedure on Tue. My wife is RN and still working and her salary has tied my hands with her income doing roth conversions and ect. I will read the Horse Race thread.
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Post by fred495 on Dec 15, 2023 20:39:50 GMT
Thanks to all for you input. I have decided to sell all VWIAX before the CP hit and drag it down $3-4. This is a small chunk so not that big of a deal. I was thinking my buy more VWNEX after its CP gain drop but not sure if that posible at Schwab. Thanks again Bruno FYI, David Giroux has just opened a new moderately conservative allocation fund (PRCFX) that, as a conservative and retired investor, I have added to my watch list for possible future consideration. Here is a brief description of the new fund: "The investment seeks total return through a combination of income and capital appreciation. The fund normally invests 50-70% of its net assets in fixed income and other debt instruments, including corporate and government bonds, mortgage- and asset-backed securities, convertible bonds, and bank loans (which represent an interest in amounts owed by a borrower to a syndicate of lenders). It normally invests 30-50% of its net assets in common and preferred stocks."
While the overall stock/bond allocation is very similar to Vanguard's Wellesley Income Fund (VWINX/VWIAX), I expect Giroux to be a more active trader in the bond portion of the fund. Of course, his excellent stock selection in the closed PRWCX fund has been noted and talked about for years. There is also an article about the new PRCFX fund in December's issue of MFO by David Snowball. Here is his bottom line: "All investing involves risk. The risks here are the unknowns created by adding the quant overlay to a long-established strategy and the greater reliance on a fixed-income sleeve of the portfolio. Given all that we know about the strategy and the team, it seems like a risk well worth considering for conservative investors who would benefit from additional income, both for its own sake and for the sake of the stability it might add to the fund’s day-to-day performance."Good luck, Fred
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Post by yakers on Dec 15, 2023 23:40:14 GMT
Why did you buy it? What do you expect from it? Is it part of your core assets, or your explore assets? (R48's comment in another thread) VWIAX was never meant to compete with stock funds. That is not its role in a portfolio. It's role is to provide income and stabilize the volatility. It is not a growth fund but a rainy day fund. I am holding it for the above reasons. I have been buying it continuously using dollar-cost-averaging. And, since I fully expect a turnaround in Fed policies after a recession in 2024, I think a rainy day fund might be needed. So, why did you buy it? What do you expect from it? The last four years were an anomaly. I doubt our government can keep the stimulus flowing. People are running out of money and many are predicting a recession. IF VWIAX meets your goals then keep it. If not then sell it. Only you know the answer. Edit: richardsok , "Vwiax hasn't netted a dime since 2019, and is only now POSSIBLY climbing out of its lows."
I dont mind to admit i was doing the buffet 90% S&P plan and have done very well. Then i retired and had more time to read that I was all screwed up in how to invest. WHY did I buy it? I was reading years ago that a 50/50 VWENX VWIAX was a GREAT way to make some money and NOT lose much. My CB on vwiax is $63. and vwenx is $72. I decided to move my VG to Schwab in 23 and saw this was combo was not doing much. So sold some vwiax and bought more vwenx and 50k of vwnex. vwnex has done very well and vwenx is in the green with vwiax about to break even. The last year i have been buying Tbills 1/3 in fixed assets and and just got to thinking do I really need to keep vwiax. Most of my investing comes from seeing what others are doing that works. I come from the oil field and try to the best i can. I have been retired 5 years and not pulled from my IRA. Nothing wrong IMHO with 50/50 VWENX VWIAX, i regularly think about VWIAX in tax favored and VWENX in taxable as a smiplifed portfolio for my wife should I pass on. No doubt something will prove a better result and many worse. But its a reasonable return/risk proposition and the easy to manage for my wife or as I age is another valuable aspect.
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bruno
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Posts: 57
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Post by bruno on Dec 16, 2023 2:15:03 GMT
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sgra
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Post by sgra on Dec 16, 2023 2:36:27 GMT
Consuelo Mack interviews David Giroux on her website wealthtrack.com/recent-programs/. Presumably, he will discuss the three funds he runs. I own his original Capital Appreciation mutual fund (TRAIX) in IRA and now his EFT TCAF in taxable account. Aside from the funds' stock/bond allocation, I reason that the equity sleeves are largely (but not entirely) similar. He and TRP are really capitalizing on his name brand.
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Post by Norbert on Dec 17, 2023 8:05:09 GMT
retiredat48 , I can't say an investor who uses even up to 100% Wellesley is "wrong". as I said above, since 2011, Wellington had 52% more returns with 80% higher equity stake. I do not understand your point. I'm not sure anyone would have said that Wellesley would have higher returns than Wellington given the stock holdings of each. Your point seems to be that Wellesley won't do as well as Wellington overall. No argument. But Wellington won't do as well as VOO, and VOO won't likely do as well as QQQ. It is all about risk and reward. And for me, it is hard to argue that Wellesley hasn't provided very good returns over its entire life for the risk one takes. I would likely opt for VYM and VCIT combo myself if I was in the market for that type of allocation. Anyway, I doubt most who hold Wellesley hold it at anywhere close to 100% unless they just want to take the income. Since 1985, a 10K investment if taking all distributions would have produced at least an average of $1000 in income every year. So 1M in Wellesley would produce 100K on average each year while the principal grew to a very modest $1,800,000 somewhat less than inflation, but no danger of running out of money. Wellesley has Indeed been a very good vehicle for retirees seeking regular income. It protected capital very effectively during the dot.com correction early 2000s and subprime meltdown 2007-09 by containing against portfolio downdrafts. Although stocks win over the long term, the events mentioned above posed a serious risk for retirees with a stock-heavy portfolio. Sequence of returns matters. One accepts lower average returns to avoid the risk of massive portfolio losses, which can be a disaster for a retiree. R48 was correct in anticipating the impact of low / zero interest rates on high bond holdings per Wellesley, though he was a decade too early. A comparison of Wellesley (blue) versus a 100% VFINX stock portfolio (red). $1,000,000 starting capital, $40,000 annual withdrawal (inflation adjusted) is charted below. Although the S&P 500 had higher average annual returns over the past 23 years, Wellesley protected capital better during major market crashes and so worked far better in this situation. The S&P 500 portfolio could never really recover from the combination of the subprime crash combined with continued $40,000 (inflation adjusted) annual withdrawals. (Click to enlarge)
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Post by yogibearbull on Dec 17, 2023 12:45:08 GMT
The nearby " Horse Race" thread has lots of good stuff on stress-testing withdrawals. Moderate-allocation and SP500 were used for most examples, but some used VWINX. The essence of Norbert 's chart above is also captured with the following data: PV Run, 01/2000-12/2022 (a tough stress-test period with dot.com bubble, GFC crash, pandemic disaster) SWRMVWINX 4.60% VWELX 4.82% W&W 4.78% VFINX 2.40% SWRM, calculated from PV data, is the max initial withdrawal rate w/COLA that will also leave inflation-adjusted original balance at the end. So, despite its tough times recently, conservative-allocation VWINX did well to address the SOR risks. It did MUCH better than all-stock VFINX/SP500, and only slightly worse than moderate-allocation VWELX. So, if withdrawals were what one needed, VWINX did its job well. If straight accumulation was the goal, then VWELX did the best. If short-term sprint was what one was after, then VFINX was the best among this group, but QQQ and Magnificent 7 MAGS (didn't exist for full YTD) were even better. A corollary to the above table is that if 4% initial withdrawal w/COLA (Bengen's Rule) is used, the end-balance will be the highest for VWELX, in the middle for VWINX (but still much higher than the original principal), and terrible for VFINX/SP500 (way below the original principal). There is a lesson in all this - TR is great for accumulators, but the SOR risks are more important for decumulators. Edit/Add. 50-50 W&W (rebalanced annually) added. As expected, it is between VWINX and VWELX.
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Post by mnfish on Dec 17, 2023 14:00:46 GMT
The nearby " Horse Race" thread has lots of good stuff on stress-testing withdrawals. Moderate-allocation and SP500 were used for most examples, but some used VWINX. The essence of Norbert 's chart above is also captured with the following data: PV Run, 01/2000-12/2022 (a tough stress-test period with dot.com bubble, GFC crash, pandemic disaster) SWRMVWINX 4.60% VWELX 4.82% VFINX 2.40% SWRM, calculated from PV data, is the max initial withdrawal rate w/COLA that will also leave inflation-adjusted original balance at the end. So, despite its tough times recently, conservative-allocation VWINX did well to address the SOR risks. It did MUCH better than all-stock VFINX/SP500, and only slightly worse than moderate-allocation VWELX. So, if withdrawals were what one needed, VWINX did its job well. If straight accumulation was the goal, then VWELX did the best. If short-term sprint was what one was after, then VFINX was the best among this group, but QQQ and Magnificent 7 MAGS (didn't exist for full YTD) were even better. A corollary to the above table is that if 4% initial withdrawal w/COLA (Bengen's Rule) is used, the end-balance will be the highest for VWELX, in the middle for VWINX (but still much higher than the original principal), and terrible for VFINX/SP500 (way below the original principal). There is a lesson in all this - TR is great for accumulators, but the SOR risks are more important for decumulators. Since most of us were probably accumulators in 2000 I used those 3 funds in 2 different PV runs. First was contributing an inflation adjusted $10k annually until 2013. VFINX = $306k VWINX = $305k VWELX = $323k Secondly, I used $300k starting in 2014 thru 2023YTD with an inflation adjusted withdrawal of $12k (4%). VFINX = $672k VWINX = $343k VWELX = $497k (Note - I ran another using $323k for VWELX to give credit for the extra in the first period) For a little more color I went to FRED and averaged out the Fed Funds rate since 2000 and it was about 1.5%. So now, in the supposedly "higher for longer" age, will the higher rates for the bond portions do better the next 22 years?
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