retired at 48 - All Comments

Re: Re: Q&A for retired at 48's R48 Young Aggressive portfolio

Burnsey — Mon, 24 Jan 2011 19:38:06 GMT

YinYang,

He must have missed your post. My suggestion would be to post the same question on the Portfolio/Design Management Forum.

Brad

Re: Q&A for retired at 48's R48 Young Aggressive portfolio

Burnsey — Thu, 20 Jan 2011 13:23:43 GMT

R48, thanks for providing the young aggressive portfolio for review. I am new to investing and still learning how to build the right portfolio for me but prefer an aggressive plan. Will probably come back in the near future and see what your thoughts are once I am farther along with deciding upon the funds to pick. Thanks again.

Brad

Re: Q&A for retired at 48's R48 Young Aggressive portfolio

YinYang — Thu, 20 Jan 2011 14:52:25 GMT

Hi R48

Thank you for the post.

I do have some basic questions that I would like to ask.

· Why do you choose ETF over active managed funds?

· When referring to Young Investor what age or

time frame are you referring versus your Early Retirement?

·You are a strong proponent of VDE why PBW. VDE is the one fund you hold forever.

· Why KRE versus XLF or KBE

· Why such a big holding in BRF and not more of a

World Allocation (INOIX)

· How oft en do you review and re-allocate

I appreciate your time and honor your response.

Re: Q&A for retired at 48's R48 Young Aggressive portfolio

Burnsey — Thu, 20 Jan 2011 17:32:01 GMT

One question R48, are there links or books that you recommend describing the Pyramid Up strategy? I see pyramidinvesting.com has a bunch of information but I am not sure if it is the same thing.

Re: Q&A for retired at 48's R48 Young Aggressive portfolio

retired at 48 — Thu, 20 Jan 2011 17:35:42 GMT

Burnsey:

R48, thanks for providing the young aggressive portfolio for review. I am new to investing and still learning how to build the right portfolio for me but prefer an aggressive plan. Will probably come back in the near future and see what your thoughts are once I am farther along with deciding upon the funds to pick. Thanks again.

Brad

Hi Brad.

For you and all readers.

First, M* periodically puts poster's portfolios up for questioning...it is an automatic process.

Second, you can view my two portfolios (the second for an "Early Retiree), at any time, by clicking on the suitcase icon next to my name...then cl on desired portfolios.

I document all trades/exchanges for these portfolios on a continuous running thread titled: R48, Norbert's and Chins Investment Challenge on the Portfolio Design/Management Forum. Thus, one can follow all this stuff, real time. These portfolio changes represent what I am doing with my personal portfolio.

BTW M* is struggling with its info tech and the shared chart does not reflect the full performance of the portfolio. Started in 2008 in the throes of the bear market, as $40,000, all cash, the portfolio value is now $55,000. Young Investor quite happy!

Come hang around the Forums and learn...

Good luck.

R48

Re: Q&A for retired at 48's R48 Young Aggressive portfolio

retired at 48 — Mon, 24 Jan 2011 20:31:37 GMT

Burnsey:

YinYang,

He must have missed your post. My suggestion would be to post the same question on the Portfolio/Design Management Forum.

Brad

NO...I'm just catching up. Will reply shortly, here.

Hope YY still around.

Re: Q&A for retired at 48's R48 Young Aggressive portfolio

retired at 48 — Mon, 24 Jan 2011 20:55:01 GMT

YinYang:

Hi R48

Thank you for the post.

I do have some basic questions that I would like to ask.

· Why do you choose ETF over active managed funds?

By CURRENT MOMENTUM.

If I am going to invest in an asset class, for instance, I go to investment info sources like M* and Yahoo Finance, and get the top down performance rankings for past 30 days/3 months/6 months, etc. (Clicking on columns relists the data for that time period...computers are wonderful). then with some due diligence I select from the best performers. This can include actively managed funds.

That has been ETFs quite often since the March 09 bottom. But no real surprise here, as ETFs are 100% invested in stocks at market bottoms, while funds have cash reserves to meet redemptions. So ETFs rebound the best.

· When referring to Young Investor what age or

time frame are you referring versus your Early Retirement?

Anyone outside of ten years of retirement...that's when the strategy begins to shift.

I started IRAs for my kids at age 12...they also qualified as Young Investors:-)

·You are a strong proponent of VDE why PBW. VDE is the one fund you hold forever.

I felt PBW could get a huge run off the market bottom in 2009. It didn't. So I didn't buy more. I bought more of the better moving funds, such as FXI. This has paid off.

· Why KRE versus XLF or KBE

I felt Regional Banks would not have problems the same as big banks. Turns out they did. But regionals to me may have better long term growth in NAV potential. For my personal portfolio I hold both KBE and KRE. I wanted pure bank play, so XLF was not selected. Any three work about similarly, though.

· Why such a big holding in BRF and not more of a

World Allocation (INOIX)

Because BRF is the top performer! And it picks up small cap, a space I like. I like INOIX and would encourage those who want to invest by giving their money to a fund manager who can almost go anywhere, do anything, then this fund is a good choice. In fact, it is on my watch list for Early Retiree Portfolio.

Besides, my Young Aggressive Investor is a female, and she wants to visit Brazil. We are going for the Olympics, if the portfolio doubles by then:-)

· How oft en do you review and re-allocate

Daily...but that's because I'm addicted and on the forum a lot.

My model portfolios are setup for those folks who are working, with limited time, who cannot follow the market during the day. It is eminently do-able, in my opinion, by others. For instance, if I were asked to select a balanced fund for a portfolio, I could have my selection in about one hour of effort. Period. Fund selection is where many active investors spend many, many hours, at the detriment of far more important things such as asset allocations.

But I don't reallocate a lot...perhaps four sales in last three years. A lot of Pyramid Up bucket buying, though.

I appreciate your time and honor your response.

And I am honored you feel this way, YY...R48

YY

Re: Q&A for retired at 48's R48 Young Aggressive portfolio

retired at 48 — Mon, 24 Jan 2011 21:01:31 GMT

Burnsey:

One question R48, are there links or books that you recommend describing the Pyramid Up strategy? I see pyramid investing.com has a bunch of information but I am not sure if it is the same thing.

Pyramid Up is not a mainstream financial term...rather, it is the name I gave to my investment purchasing strategy.

No books exist.

The shorter version is this:

Pyramid Up is not a term in the general financial literature. Rather it is a name I gave to an investing method I adapted for buying mutual funds...a name I brought to the forums. And the technique has been adapted by some, and sure gaining wider usage.

Mostly for my own use, and partly in response to Buffett's Rule #1 (Not lose money), I adapted a technique popular among certain guru stock buyers in the 1950's called Pyramid Up. The mantra was to always average up...never down, to mitigate the single stock risk (think Enron).

In its simplest form, you buy a small amount into a mutual fund, and do not buy more unless it goes up. Then buy more...and more, repeating the process only if the fund goes up. An investor selects a percent increase upwards, to making new buys, ranging from 3% to a very conservative 10%.

An investor also selects the amount of each purchase, in terms of "buckets" of the targeted amount designated towards a fund. For example, a five bucket approach and $15,000 to invest in a fund means $3000 per purchase.

By the mathematics, Pyramiding Up generally keeps one in a positive gain position, enabling one to think properly. It primarily limits one's actual money losses to very small amounts. And the amounts lost on any given fund are usually offset by gains in another, so that the portfolio is not losing.

Pyramid Up can be employed in both accumulator and retiree portfolios, and indeed was fully employed in the two model portfolios seen by clicking on the suitcase icon next to my name. Of importance is that both portfolios were started in 2008 before the brunt of the bear market, each only had a marginal drawdown (due to M* inability to handle MM funds/cash in sample portfolios) and are now up handsomely, and well positioned.

Here's an example of Pyramid Up buying:

Early Retiree $400,000 Portfolio, Vanguard's VUG Growth ETF: Bought in 2009 as follows:

7/15    $43.66/share
7/23      45.87
7/30      46.71
8/03      47.04
9/15      49.11
11/16    $52.29/share
Today    $56.66/share, 13% of portfolio by weight.

If that initial buy had gone down, no more buying would have followed. Now I have a very comfortable cushion that a decline could ensue before I would experience an actual loss.

I further complement Pyr Up buying with what I call 200 day Moving Average controls. This forces me to take some monies off the table if the trends reverse to downward, and eroding gains could approach losses. The threshold value must prevail. Further drops continuing below 200 day MAs require further selling. I would call this tactical asset reallocating.

I don't necessarily like to seemingly "push" something I do, but I see no other way to coming to grips with risks than what I actually do. Retiring very early meant risk mitigation was top priority. I sacrifice some upside gains to ensure the portfolio declines are minimal.

Enjoy...

R48

Re: Q&A for retired at 48's R48 Early Retiree portfolio

suncitybill — Wed, 24 Nov 2010 20:54:44 GMT

Hi R48,

I'm glad to see your portfolios are back.

Does your personal portfolio differ from the Early Retiree one and if so would you mind sharing the differences?

Thanks,

Bill

Re: Q&A for retired at 48's R48 Early Retiree portfolio

retired at 48 — Wed, 24 Nov 2010 21:16:58 GMT

Hi suncitybill.

Welcome to posting...

Yes, M* just reestablished my two shared portfolios, along with the charts.

I have an unresolved issue that the charts ARE LAGGING ACTUAL PERFORMANCE...that is, the actual funds are performing better than shown. Trying to resolve.

Also, I see by this thread I lost the previous comments/answers regarding these portfolios. I will try to resurrect that as well.

To your question, yes, it does very closely follow my actual portfolios, which includes three adult daughter IRAs started when they were each age 12 (long story).

The Early Retiree Portfolio is 100% correlated to my own; for the Young Aggressive Investor Portfolio, only the etf, EHC (Chile) is different. But my portfolio may contain some other things...things that due to capital gains taxes I will likely never sell. The Early Retiree portfolio was started as a $400,000 CASH ROLLOVER FROM a 401.K TO AN IRA, in 2008. (Now stands at about $487,000).

The TIMING GENERALLY FOLLOWS PRECISELY WHEN I AM EITHER BUYING OR SELLING THINGS.. . The timing IS ALWAYS POSTED ON THE PD/M Thread titled: R48, Norbert's and Chin's Investment Challenge. But the Young Aggressive Investor portfolio has had some occasional Pyramid Up buying per rule, whereas my current portfolios may be fully weighted in the asset class or sector.

Now that portfolios are back again, I need to update a couple transactions, but small stuff.

The bottom line is any investor can sink or swim with me, for I post everything. But caution, I did not take swimming lessons (my Dad just threw me in the pool...those are called the good old days!). And we had diving boards, so one could get killed.

Good luck suncity...now which sun city is that? I have been to many.

R48

Re: Q&A for retired at 48's R48 Early Retiree portfolio

suncitybill — Wed, 24 Nov 2010 21:45:43 GMT

R48,

Thanks for all the info on your portfolios. I will be following your buys and sells and possibly working them into my portfolio.

I have been lurking around here off and on for a couple of years and appreciate your helpfullness and kindness that you show for everyone.

I live 50 miles northwest of Chicago in Sun City Huntley. This time of year they should call it Cold City Huntley.

Thanks again,

Bill

Re: Q&A for retired at 48's R48 Early Retiree portfolio

retired at 48 — Thu, 25 Nov 2010 00:40:16 GMT

suncitybill:

R48,

Thanks for all the info on your portfolios. I will be following your buys and sells and possibly working them into my portfolio.

Great!

I have been lurking around here off and on for a couple of years and appreciate your helpfulness and kindness that you show for everyone.

Thanks.

I live 50 miles northwest of Chicago in Sun City Huntley. This time of year they should call it Cold City Huntley.

I was unaware Sun City's were built that far North. I haven't seen snow in 17 years, so count me out..

R48

Thanks again,

Bill

Re: Q&A for retired at 48's R48 Early Retiree portfolio

Eman50 — Thu, 25 Nov 2010 04:07:44 GMT

R48,

Your guidance and perspective are very much appreciated.

How would you split your portfolio between taxable and tax deferred accounts.

Thanks

Re: Q&A for retired at 48's R48 Early Retiree portfolio

retired at 48 — Thu, 25 Nov 2010 05:20:08 GMT

Eman50:

R48,

Your guidance and perspective are very much appreciated.

How would you split your portfolio between taxable and tax deferred accounts.

Thanks

Thanks for your kind words, Eman.

I have just the answer for you...but it's late.

Stay tuned for a reply tomorrow...bump up post if I forget, or have too much turkey.

R48

Re: Q&A for retired at 48's R48 Early Retiree portfolio

retired at 48 — Sat, 27 Nov 2010 01:00:02 GMT

tar42:

R48, Regarding your retiree portfolio, would you attempt to increase yield to meet RMD requirements or sell off shares?

I'm nearing RMD and hope my portfolio's yield will cover the minimum of RMD so as to not sell shares. Obviously I'll have some MM funds that could be used before selling shares.

Tim

I wouldn't let RMD requirements be the determinant; rather, the spending needs determine the portfolio makeup. It is ones NEED, WILLINGNESS AND ABILITY TO TAKE RISKS.

So, for MANY RETIREES, they have to count on withdrawing some assets, since the total income (supplementing any pension or social security) is often not enough. Having income meet the full RMD amount is a nicety, but often not practical without excessive risk. For instance, one could invest in all junk bond funds to achieve this, but at much greater risk.

So RMDs should not be the driver. Furthermore, if you have a large RMD, then this does not mean you have to spend it all. You simply make the RMD, moving it into taxable, and then take what you need for spending. Whether the RMD came from income, or not, is irrelevant.

Lastly, don't get hung up on never drawing down a portfolio in retirement...otherwise you are just making your heirs/beneficiaries smile.

I hope this explains this viewpoint.

R48