Sad time for investors

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interesting - good info.

First off, you didn't include emerging markets, which have been a huge home run. (16% per year for 10 yrs vs your cited fund that is up just 10% per year) Vanguard Intl Growth is mostly Europe. So that might add a half percent or so.

Second, you put together a portfolio with just 15% in bonds. I would have had more. That might had added another half percent.

Third, I don't use the russell 2000 - crappy index. Vanguard uses a better small cap index that has beaten the r2k by over 100 bps per yr. check out NAESX vs IWM.

So your numbers would easily turn into the 7% to 8% I mentioned.

Remember that I am not opposed to trend following - I use the 200 day moving average as a sell point for some money. So we might not disagree as much as you think.

But I stand by saying that it is incorrect to look at 13 year returns of the spx and say that those poor returns show b/h has failed. A properly diversified 60/40 50/50 portfolio would have returned in the 7%-8% range.

And the numbers you put up by guessing at my portfolio are off enough that your result severely underestimated my returns.

And I do challenge your assertion that following trend strategies is less work than managing an etf portfolio.

Let's say you put my portfolio into place and don't touch it for 13 yrs. You're still ok.

But if you make one major goof with a trend following strategy...you lose huge. You neglect to buy back stocks in May 2009, you are dead. You neglect to sell in August 2007, you are dead. That's a lot of precision work for people, with huge consequences.

Whereas setting up an ETF portfolio - sure rebalancing can theoretically help...but it's not really necessary.

Joined this party late, not a whole lot to add. Historically I have kept about half in the PIMCO funds (PAAIX) and half in Vanguard index (VIIIX) for my 401k due to limited options. I have recently liquidated the (VIIIX) and plan to dump it back in following an 8-10% correction which I believe is coming.

For the money I have more flexibility with, I use a combination of large American companies, REITs (TWO), financial asset (SLRC), utilities(UTG), tax free muni bonds (SMTFX) as a few examples. I firmly believe in diversification, but not as wide as buying an index fund. Instead of buying the spyders, I would much rather do my research and put 5% of that same money into 20 great companies in the spyder.

Two current disappointments in my portfolio. Although I've made a lot of money buying and selling AAPL, my current BEP is about $550. I'm torn over whether I'll see $400 or $700 first. Also purchased a large amount of SD at about $7.70 before I learned how poorly the company was run by Tom Ward. Lesson learned, don't trust anybody without doing your own research. In the long term I expect a board replacement or outright sale of the company, and expect to make a lot of money, but it's been a very emotional roller coaster.

Flagpole wrote:

I'm not sure why he's harping on the S&P 500. It made 13% in 2012 which was a good year. I was up EXACTLY 18% in 2012. Pretty typical for me, to do better than the S&P 500 and I just invest mostly in the most common funds in Vanguard and Fidelity plus one with American Funds. It's not rocket science.

what did you hold for 2012?

BRM:

FYI try this out

www.FundLogik.com

agip wrote:

And I do challenge your assertion that following trend strategies is less work than managing an etf portfolio.

Let's say you put my portfolio into place and don't touch it for 13 yrs. You're still ok.

But if you make one major goof with a trend following strategy...you lose huge. You neglect to buy back stocks in May 2009, you are dead. You neglect to sell in August 2007, you are dead. That's a lot of precision work for people, with huge consequences.

Whereas setting up an ETF portfolio - sure rebalancing can theoretically help...but it's not really necessary.

Total garbage. I have slightly different parameters than Blowing Rock Master, which come from optimizing with TradeStation, and I do annual optimization based on the previous five year's data.

I did NOT sell in August 2007. I sold and shorted in January 2008, at 1401 (SP500). I did not buy in May 2009. I bought at the end of August at 998. With 2 S&P contracts, I cleared ~$200,000 on the trade, then went long and am still long.

Now tell me, how much did YOU make between August 2007 and May 2009.

Major tops and bottoms may take as much as 1 year to develop. I may sit on a signal for WEEKS to make up my mind if I wanted to take the trade. I'm still LOL at Sagarin for calling me "weak" for not taking the trade to short on the Tea Party spoiled children debt crisis thing in the summer of 2011...but I sat there for weeks deciding whether the signal should be considered real (it wasn't, due to political influence, not economic reality).

My position isn't that trend following is the only way to go (although most people will double their returns even if they don't short). My position IS that there is no such thing as a single optimal method. There used to be an ad in Barrons which had an image of a city where every house was a mansion, with a caption that said, "If the majority was right, the majority would be RICH." It doesn't work that way, obviously. And by extension, you CANNOT become rich by just owning low load diversified index funds--you can't beat the average by owning the average. You have to do some REAL INVESTING, and not just throw a lot of darts and hope the economy/market will bail you out.

Many people here may not LIKE my message, because it means you have to do some learning and do some work, but it is true. Yes, you can be lazy, but your returns will be mediocre at best. It's just like doing only what Lydiard said, and then trying to beat Bekele or Salazar's or Canova's people. As Salazar said, if you just do same old, same old all the time, you get the same old (mediocre) results.

There will come a time--someday--when buy and hold will produce outlier results. But that likely will not happen until we have a massacre like we did in 73-74 and 1981. And if you include the massacre 12 years from 1969 to 1981, those results will be decidedly different from what the mutual fund buy and hold crowd thinks they are.

I have never actually seen someone become a part of the 1% by buying and holding no-load index funds. Back before I retired from a Fortune 100 technology firm, the people I saw investing in mutual funds were outperformed by Guaranteed Investment Contracts from insurance companies.

And the data I see from the large number of people who have pulled investments from stock funds in the last 4 years shows me that the majority (or a significant minority) have figured this out.

well we are talking in different universes here - we probably won't get anywhere taking jabs on a message board.

but

Joining the 1% by making 8-10% in indexed funds is completely possible. Compound interest over decades is a beautiful thing. Indexing is too new for it to have worked for many people, but it will.

You can't disagree with this - decades of compounding will make anyone who saves and makes a decent salary very rich.

You take me too literally on dates. I meant that if you sold too late or you neglected to buy back in at the bottom, you would suffered mightily. I know several people who sold in 2008/9 and are still waiting for Dow 8000 again before they get back in. 100% later. That's the problem with regular people market timing.

Major tops and bottoms may take a year? well sure they may. But a year after March 2000 - the value line index had risen 65%! I would hate to miss that! (The SPX only climbed mid 20% 1 yr after the 2002 bottom.) I don't think it is fair to say that you have months and months and months to get back in.

On the other side, the market fell what...30% in 3 months in 2008-9? Sort of guessing...but that is a lot someone could miss in a market timing strategy. Most people aren't that interested in being on top of the market.

For most people, buying and holding a 60% stock 40% bond portfolio gets them out of major misteps like selling low and buying high. And it gets them the 7-9% that will indeed make them rich.

Are you seriously saying that the smart money is selling stock funds? Clearly you havent' seen the billions flowing away from traditional mutual funds into ETFs, which are almost all indexed. Over $1 trillion now. More to come.

But this is two different universes - you, coach, are happy to do all this selling and buying. You seriously think John Q Investor is going to do a good job at it? That's why I say we are living in two universes.

You're not wrong for yourself, but you are wrong for the masses.

(should say: that a year after March 2002 - the value line had risen 65%)

instead of Flagpole, why not listen to someone who has actually made money with a track record. http://fundamentalstockinvestor.wordpress.com/

ryan foreman wrote:

Flagpole. Try reading your own advice. You have been saying that most people SHOULD be out of the market. So why the sarcastic, smart alec post? Especially when you know the stock market is being artificially propped up at the expense of wage earners and people who rightfully should have their savings in checking and savings accounts. Tell me what you think the outlook for the stock market would be if the target interest rate by the Fed was an entire 3 percentage points higher as it should be (which would still be relatively low) and we had gone over the fiscal cliff.

Not following you, brother. Where or how did I say most people should be out of the market? I think everyone should be in...they need to do something first like get debt free but for a house, but they can do that and then invest. Also, I've made lots of posts in this thread, and none of them smart alec, so I don't know to which one you are referring. Finally, I can only look at the situation that IS. Just because The Fed is part of the equation doesn't mean I ignore it. There are tons of things that effect the stock market. The Fed doesn't have a monopoly on that.

Lots of different mutual funds with Vanguard and Fidelity and American Funds...large cap, small cap, mid cap, international, dividend growth, bond index and on and on.

Curious investor wrote:

Flagpole wrote:

I'm not sure why he's harping on the S&P 500. It made 13% in 2012 which was a good year. I was up EXACTLY 18% in 2012. Pretty typical for me, to do better than the S&P 500 and I just invest mostly in the most common funds in Vanguard and Fidelity plus one with American Funds. It's not rocket science.

what did you hold for 2012?

stocks wrote:

instead of Flagpole, why not listen to someone who has actually made money with a track record.

http://fundamentalstockinvestor.wordpress.com/

Ok...not sure why you dis me to listen to that guy, but while he beat me in 2012, I beat him in 2011. Also, I've done better against the "market" year over year than he has. Still, he is doing well enough to make money and set himself up for a nice retirement, and going forward another 23 years, he and I could flip where he does better than I do.

Really though, the facts are crystal clear...you can make money in the market just investing in mutual funds and putting money in like clockwork and not chasing tops and bottoms. You CAN make a big score chasing tops and bottoms, but the odds are against you, and I never want to work that hard, so I do this:

1) Stay out of debt other than my mortgage.

2) 15% or more (in my case more) into retirement accounts.

3) Plan to have house paid for before retiring.

4) Be well-diversified in the funds you buy.

5) Always put a set amount in twice a month no matter what and put in extra if you have it and if you think stocks might be "on sale"...that is NOT timing the market, because there is no plan to take that money out until retirement, and you are always putting money in, not waiting for the market to drop a certain amount before putting the money in.

Flagpole wrote:

Lots of different mutual funds with Vanguard and Fidelity and American Funds...large cap, small cap, mid cap, international, dividend growth, bond index and on and on.

Can you give us specific weightings? I am curious as to how you made 18% this year. Perhaps I can learn something.

Ha! No way brother. You don't plan to learn anything; you just want to find a way that I got lucky or some other such thing. Besides, I have a TON of funds, and for ME, diversification is the key...I don't try to cherry pick the best funds each year; I simply stay crazily diversified. I'm not interested in spending the time it would take to look up each individual fund and give you not only the percentage of my holdings but also how much that one made in 2012. There are people who did worse than I did. I also post on a financial website, and most of the people there did worse than I did in 2012 (though to be fair, most of them are older than me and are invested more conservatively), but several did BETTER even with a similar investing strategy.

Off the Grid wrote:

Flagpole wrote:

Lots of different mutual funds with Vanguard and Fidelity and American Funds...large cap, small cap, mid cap, international, dividend growth, bond index and on and on.

Can you give us specific weightings? I am curious as to how you made 18% this year. Perhaps I can learn something.

You have my permission to sell.

Flagpole wrote:

Ha! No way brother. You don't plan to learn anything; you just want to find a way that I got lucky or some other such thing. Besides, I have a TON of funds, and for ME, diversification is the key...I don't try to cherry pick the best funds each year; I simply stay crazily diversified. I'm not interested in spending the time it would take to look up each individual fund and give you not only the percentage of my holdings but also how much that one made in 2012.

so you have lots of funds (so some duds in there too), you won't say how you made 18%, and yet you insist that you do in fact outperform all benchmarks every year.

Your 18% and your strategy would imply that all asset markets rose 18% last year....sure....

Off the Grid wrote:

Flagpole wrote:

Ha! No way brother. You don't plan to learn anything; you just want to find a way that I got lucky or some other such thing. Besides, I have a TON of funds, and for ME, diversification is the key...I don't try to cherry pick the best funds each year; I simply stay crazily diversified. I'm not interested in spending the time it would take to look up each individual fund and give you not only the percentage of my holdings but also how much that one made in 2012.

so you have lots of funds (so some duds in there too), you won't say how you made 18%, and yet you insist that you do in fact outperform all benchmarks every year.

Your 18% and your strategy would imply that all asset markets rose 18% last year....sure....

I too question Flagpole's reporting of returns, but fact is, last year many indices were up 17+%.

Vanguard total world index: +17%

VG Total US stock market: +16%

US small caps: +18%

US midcaps: +16%

REITS: +18%

Int'l REITS: +42%

Emerging markets: ++19%

And so on. I can easily see an all stock portfolio making 18% in 2012.

Any bonds would have brought that down significantly of course.

agip wrote:

I too question Flagpole's reporting of returns, but fact is, last year many indices were up 17+%.

Vanguard total world index: +17%

VG Total US stock market: +16%

US small caps: +18%

US midcaps: +16%

REITS: +18%

Int'l REITS: +42%

Emerging markets: ++19%

And so on. I can easily see an all stock portfolio making 18% in 2012.

Any bonds would have brought that down significantly of course.

those were the winners. are you saying he held only the winners? Or had 30% in REITS? By his own admission he holds fixed income funds. so either 1) his portfolio is heavily skewed to a few lucky bets (he denies this) or 2) he is not calculating returns correctly.

He won't post what he held - a pretty simple copy-and-paste exercise - so his claims are suspect.

There were only 2 asset classes that did well last year - mortgage credit and property. So maybe he got it right AGAIN.

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When you say 'last year' are you talking 2012 or 2011? because almost everything was a winner in 2012. 2011, not so much.

You can't mean that in 2012 only mortgage credit and property did well.

Well, I don't think he calculates his returns correctly either, but I don't know what you are talking about.

In 2012, being up 18% is not a crazy assertion, unless you had more than, say, 10% bonds.