I held about 11% of my equities in FNARX. I felt I was too exposed in utilites as I also have about 7% FICDX which has some energy as well. I traded out half of my FNARX into cash reserve. Of course today it was up 1.75% but I still own about 5% which I feel is max for minimum volatilty. Good Move, Bad move on the FNARX?

 TAVFX along with FEMKX (I have about 15% of my equities in FEMKX) have been my worst performers since YTD but while I can excuse FEMKX as it has been stellar before that TAVFX had not done much since I bought it almost a year and a half ago. Knowing that sometimes these funds take time I'm willing to hang on to it. It is about 8% of my equities.

Maybe it's time to look at my whole portfolio and maybe reshuffle.

 thanks

gary

I lightened up a lot on TAVFX when it loaded up on MBIA.

FNARX... realancing when oil is at a record high is probably a good idea.

SC is the weak asset category for the past year and a half... don't give up on it now (at a low)... will come back.

erryl

FNARX... realancing when oil is at a record high is probably a good idea.

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Do you think an energy fund should be traded according to prevailing conditions, or held long-term to overweight the sector?

I bought VGENX last August, one of the smartest moves I ever made.   (Unfortunately it only goes part-way toward offsetting my more bone-headed moves.)   My feeling has been that energy crises are going to be with us for a very long, long time:

• Dwindling discoveries of new fossil fuel reserves
• Increasing consumption, especially growing economies (BRIC etc.)
• Little chance of serious conservation efforts in the US
• Minimal short-term impact of alternatyive/renewable energy development
• Nuclear unlikely to move quickly in the USA
• Existing oil exporters (Iran, Saudi, Venezuela, Iraq, Russia, Nigeria) are either unstable or unfriendly

Hence I haven't given any thought to trading the fund.

I have gotten over weighted in energy (close to 10% of my portfolio), because I inherited a portfolio from my father that was 100% invested in energy stocks. I had the impression that this poster was questioning whether or not it was a good time to take some profits and return to a more normal AA.

If you have gotten over weighted in energy for whatever reason, I think that it might be a good time to rebalance back to what you are willing to hold long term.  I normally don't hold more than 5% in sector funds (or individual stocks) in any single sector... I currently have sector holdings in health care, real estate, commodities/gold, and energy.  Energy may very well be like tech was in the 90's, and it will eventually end in much the same way.  It could be in a few months or it could be in a decade.

I am going to try to use T/A to pick a good time to sell some of my energy holdings until I get back to 5%.  If you (the figurative "you") don't feel comfortable using T/A, we are currently at very high oil prices.  We may go to $200/brl oil, but that is not the most likely outcome in the near future.  If you are going to rebalance, do it while oil prices are (still) high.

erryl

Chang, as you may know, I am currently overweight in energy myself.  I am closer to around 15% overweight probably.  My reason for doing this is for my own protection.  I am concerned that energy prices may continue to climb in future years, and that obviously impacts my pocketbook (for the reasons you mentioned yourself). 

My goal is not to make a killing in energy stocks, because even if I do, that probably means that I have gained money on the one hand, but am losing it out of my wallet on the other side anyway.  As it currently stands, I am less concerned about losing market value on my energy investments than I am with energy prices continuing to go up (if it happens I benefit from lower prices in my everyday life).  Essentially I am matching my investments in this area as a hedge against my everyday expenses.

Although I am not adding to my holdings at these levels, and in fact am reinvesting my dividends outside of the sector, I also don't think it's necessarily time to sell.  I would definitely continue to monitor things to see if we enter a speculative bubble where the pricing of energy companies raises to absolutely outrageous levels (or oil rises to a truly unsupportable price), but I don't think we're there yet.  At the point where everyone is praising energy stocks and proclaiming that they are the only thing to invest in, then I will start to get concerned. 

Also, I think it helps to keep in mind how much you're actually holding.  Even if you were holding as much as 20% in the energy sector and it dropped in half, you'd only lose 10% of your portfolio.  That is a bad loss, but not insurmountable.  With only 5% that concern is even less pressing. 

Chang, as you may know, I am currently overweight slightly in energy.  My reasoning behind this is that it is for my own protection.  I am concerned that energy prices may continue to climb in future years, and that obviously impacts my pocketbook (for the reasons you mentioned yourself). 

[/quote]

Your hedging is an interesting and innovative way to use investments as part of your overall income and expense picture.    Interestingly enough I just relocated to Dubai where the price of gas is cheap.   I only picked up my rental car a few days ago and haven't filled the tank yet, but I understand it's around $1.00-1.50 a gallon.   That's actually much more expensive than in neighboring Saudi, where it's around $0.35 a gallon.

Gary, I thought your three-combo was not bad! and thought you would stick with them. Well, investing is a personal thing. According to M*, energy is about 12-13% in S&P. One could buy sector funds (FNARX, FSENX, PRPFX, etc)  to participate in energy or or could buy energy heavyer funds  (FLVCX, FDFFX, FLATX, CGMFX, etc) or both. I am rather heavy in energy and material, and they are becoming my longest hold funds these days and I expect to stay as such for many years. I firmly believe NR is the base of economy but I expect to move up/down 7-10% within a week or month. I noticed that complementing NR funds with some glod funds would reduce volatility somewhat viewing  from 50,000 feet above. Thus PNRxX like funds offer more smoother ride than pure energy and NR funds do, IMHO.

If one has decided to trim a fund, it seems the best time to do is when its RSI value is very very close to 70. FWIW. KM

I don't see anything wrong with 5% either... that is my long term goal allocation for the energy sector.  I would tend to ride a winning sector as well, but if your holdings get way over your long term allocation, keep your finger on the trigger.  Remember tech in 2000... and be wary of "it is different this time" arguments (they always sound credible and they always end the same way).

There is going to be tremendous political pressure by incumbants to not upset the masses with very large price hikes.  Long term, I think that high prices of oil are here to stay and that is probably a good thing.  Reduced reliance on oil is needed for multiple reasons, including trade deficits, air pollution and global, and the limited nature of the resource (eventually, we run out of oil no matter what we do).  Shorter term, oil could get relatively cheap again.

erryl

Gary, I thought your three-combo was not bad! and thought you would stick with them. Well, investing is a personal thing. According to M*, energy is about 12-13% in S&P. One could buy sector funds (FNARX, FSENX, PRPFX, etc)  to participate in energy or or could buy energy heavyer funds  (FLVCX, FDFFX, FLATX, CGMFX, etc) or both. I am rather heavy in energy and material, and they are becoming my longest hold funds these days and I expect to stay as such for many years. I firmly believe NR is the base of economy but I expect to move up/down 7-10% within a week or month. I noticed that complementing NR funds with some glod funds would reduce volatility somewhat viewing  from 50,000 feet above. Thus PNRxX like funds offer more smoother ride than pure energy and NR funds do, IMHO.

If one has decided to trim a fund, it seems the best time to do is when its RSI value is very very close to 70. FWIW. KM

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Well FEMKX, FNARX and FICDX are 35% of my equities (and 27% of my whole portfolio) so I was getting a little concerned that I'm in a ticking time bomb so to speak. And boy have they performed. One year totals were FEMKX-25%, FICDX-21%, and FNARX-33%. I'm actually thinking about putting the money I just took out of FNARX back into it. It's been a wash the last couple of days so trading wouldn't hurt too much. I guess I like living on the edge. Myabe I let my stomach guide me not my brain. Maybe I'm greedy right now.

I heard one analyst that says that oil should be about $85 a barrel but because so many people are buying commodities that that alone is pushing the price up.

I just don't know. I should just do what I did this spring and that is set it and forget it.

Gary

I think it's worth being prepared for oil to potentially drop to $85 or maybe a little further than that.  That is not out of the question, in my opinion.  I'm actually a bit surprised by how oil has performed this year, despite being overweight energy myself.  Ever since oil breeched $100 it seems like it has just kept on going up relentlessly. 

I wouldn't be surprised if we're due for a substantial pull back, but who really knows.  I don't invest for the short term, so I'm not that concerned about what happens.  It's worth keeping in mind though if you have a shorter term mindset that you may want to follow different rules. 

After erryl analyzed my portfolio I am slightly overstocked stocked on oil so I will stand pat for the moment. I think it is in the 23% range and he recommends along with others that 20% would be an absolute limit. Even then I have to be wary that it is not the tech stocks of 2000. However being in technology I never understood back then what people were buying into as the internet was not a new paradigm. The internet would help businesses sell stuff and that is how Google makes it money but it really was and is just a communication tool. It is just an electronic replacement for other systems.

But oil is real and as long as buying is not speculative (and now it probably is somewhat speculative) it should be all right.

 Gary

M* says my equities are about 18.5% energy, and I think that I am temporarily over-weight energy.  The S&P500 is about 13% energy. 

Oil was big... I mean really big in the 80's... remember the lines at the gas pump?  Oil and gas were lousy investments in the 90's... and I mean really lousy!  What do you think happened?  You think we solved the energy problem in the 90's and it somehow came back?  Heck no... we increased our dependence on unreliable foreign sources of oil (purchased by the oil majors instead of looking for it here) throughout the 90's setting ourselves up for the 00's.

To think that oil and gas can never go down is just a pipe dream... it ain't any different now.  For quite awhile, I think that companies were being priced at $45 oil long after it approached $100.  These companies are not being priced at $45 oil anymore.  The higher they go, the higher the risk to investors.  You lose what Buffett and before him Ben Graham called investment margin.

If there really were a worldwide recession, expect all commodities to tank (do you really think that copper and corn and maybe oil are correctly priced long term?)... do I think it will happen (soon)? No, but it can and probably will someday.  The problem with the oil market is that it is highly inelastic... increases in demand cannot be easly met with additional supply... the inelasticity can work the other way, small decreases in demand may cause a big drop in prices.  There is also a concern that speculators are driving prices... if that is the case, lemmings always move on and leave wreckage in their wake.

I have energy holdings... KWK (US nat gas driller) is down about 4% today... I bought a little more today.  Be careful out there!!!!! 

erryl

A couple of days after I sold out half my FNARX (see my original post) I bought it right back. Gooood move. So my trio of FNARX, FEMKX, and FICDX are back in the party again. FEMKX is still down a couple per cent for the year but I still have to figure out when the party is going to end on the oil stocks so I'm not on the bottom of the bubble. And what can we say about Fido's Canada? What is making that thing tick, it can't be just energy and Blackberry.

Just makes it more interesting. It's only money.

 Gary

Gary,

So you "violated" erryl's 20% absolute max? IMHO, 23% in NR isn't that out of way overweight.

If you are interested in NR funds at Fidelity but less volatile than FNARX kind sector funds, then you may want to keep for example FLVCX and FDFFX in your watch list. Run X-ray on each of them and see what they have, for example. FWIW. KM

KM

I don't really mind the volatility as I have over 6 years to retirement and am not counting on 401k etc. to live on. I also don't want to get too far out of whack but I don't see oil coming down for a long time and I cite some dumb reasons of my own.

1. Oil companies know Americans are getting stimulus packages so have more money in their pockets.

2. Summer is coming and people are still going to drive more.

3. It doesn't seem to bother the market right now that it is expensive.

4. That along with countries needing more oil and the fact that refinery capacity takes a while to increase.

5. I've been in FNARX for a year so I don't feel like I'm performance chasing.

 Well just my 2 cents worth.

Gary

erryl doesn't believe in a 20% absolute max... I do think that 23% in energy (from the portfolio analyzer) is a little over-weighted in energy.

I also do not recommend a long term holding of more than 5% in any single sector
fund(s)/stocks.

My concerns with too much of a portfolio in sector oriented investments comes from lessons learned in 2000.

If you are going to over-weight a sector like tech or energy, then you had better be a trader... because you need to be prepared to bale out fast.  I am over-weight energy right now, myself... but I have a "hair trigger" to sell some of these holdings.

erryl

I don't mind jumping out. I did that with real estate last year in the first quarter. I lost $500 and jumped right into FNARX etc. I got chastised by the ones that have their own site now that I would not get that $500 back. Well I got that $500 back many times over. So if FNARX drops over my comfort level I will bail out like I did the other day with it and then got back in. My 457 plan does not charge for trading out FNARX as long as I hold it 29 days. Half of it I have held for a year so I can trade out half wihout a penalty. Actually the penalty is .075%.

 erryl, let us know when you are bailing out so that we can all take a look.

thanks

Gary

People who buy sector funds at Fidelity may tend to "trade" sector funds due to its 30 day holding period. There was a newsletter for sector fund trade, I tried and gave up. It kept me too busy. Furthermore, I noticed many times that I ended up buying and selling same sector funds within a year, and felt that kind of "not right" for me. So today, I buy funds for the hope of long term hold and try to look at it from 5000 feet above rather than 100 feet above (I can't do 50000 feet high observation, however).

Today, my largest holding is NR/PM, and have three funds one of which is FNARX. Two others are non-Fido funds and am keeping for long term. As a matter of fact, having non-Fido funds sort of "discourages" me to do trading and it offers some "benefit" for me. Due to some flexibility in trading Fido sector funds, someday I could rotate FNARX but I prefer not to. I have "17% drop bound" on a fund NAV and then may trigger "sell". Once a fund drops 17%, it would take 20% gain to get back to where it was. I also trade/rotate same kinds when the I am holding become less favarable.

In any case, according to S&P, NR related is about 26%, a half in energy and a half in material. I am overweight in NR today. And most of my funds are "real", except one fund in financial/exchange. 

Happy invesing. Last week was a great week for those who were in the market. FWIW  KM 

I don't think that there is anything wrong with letting a winner run.  My advice is to take some profits when it stops winning.  You may not have enough conviction that the run is over to sell all of the position, but it is time to stop being over-weight.

When I first bought a gold fund... it has to have been 3 years (or so) ago... I thought it would be a trade (I hadn't owned a gold fund for a decade)... and I am sure that some traders have traded in and out of it many times since I first bought it.  I have been holding through a remarkable secular bull market.

Energy will probably be the same thing.  It could be a sector that stays hot for a year or two, but it could also be the best sector investment for a decade... it has to beat out REIT's and gold, though. 

In the late 90's, I was over-weighted tech... but not nearly like the Janus folks - the best fund family according to some for half a decade.  I own very little today.  A few years ago, I let my REIT holdings get over-weight... it too had a great run for 3-5 years.  Today, I still have some - about 4%, but less than half what I had at the peak.

Today, I am over-weight in energy.  Given the fundamentals, I will be over-weight for at least a few years, it could be longer!

Gary, I probably won't be the first one at the exit door.  I have tried to stay fairly passive in my sector bets and not be constantly trading them.  I do believe, though, that you need to be able to walk away from over-weight sector positions.  If you tend to fall in love with your investments or look at your portfolio once a year (or less), then this is no place for you (the figurative "you") to have an over-weight position.  Sectors have to be traded... the frequency of the trades is one of investment style.  If you are not a trader, limit your pure sector bets to 5% of your portfolio and enforce that limit. 

I always talk about major changes in my portfolio, but I don't make many specific buy/sell recommendations based on my personal portfolio.  I really do try to customize my advice to the requestor, and not just advise everyone to do what I do.  That would be pretty poor advice imho.  If I post "Is it over for energy?", then you want to pay attention.  For example, my personal portfolio has changed in the last year (a lot).  I have begun buying individual stocks and sector ETF's/CEF's quite a bit... I have reduced my reliance on mutual funds.  I've talked about what I see as being the weaknesses of mutual funds.  You haven't heard me talk about the specifics much.  It would be wrong for anyone to go out and just buy the stocks I discuss here. Would if I sell it and forget to tell everyone...

erryl

I'm a market watching junkie. I check the markets and corresponding etf's all day long. I don't trade too often. My main reason is if I wanted to use boring I would buy Life cycle funds and be done with it. The corresponding life cycle fund (Vanguard 2025) is down about a half point this year but I am ahead 1 per cent all due to FNARX and FICDX. As long as I stay ahead of the life cycle fund that has about the same bond/equity then I will continue to be active.

I appreciate your clarification on sector funds but if I do hear erryl say dump energy....

 Gary

"...  For example, my personal portfolio has changed in the last year (a lot).  I have begun buying individual stocks and sector ETF's/CEF's quite a bit... I have reduced my reliance on mutual funds."

Erryl - I have been having a similar change in perspective - so it's good to hear others of the same mindset. What appealed to me about ETF's is the relative ease of getting in and out of them, and the growing diverisity of options. Also, because of the difference in the transaction, one can enter a stop loss at the time of purchase with no penalties other than a commission should the fund underperform. And, of course, where performance is good, one can 'reset' the stop loss higher as the value increases. Performance wise, I'm seeing very good results being turned in by ETF's as well.

Never having been one to like index funds, I am not extremely fond of ETF's... but I like them for sector investments or trades.  I own some GLD and I think that GLD/SLV are great ways to own the metals.  I have no problems with an ETF like TIP... there is little room for a manager if you want to buy a "commodity" like TIPs.

I still think that a manager can add value for many long term investments... for example, I own value funds and gold managed funds instead of GDX. 

erryl

Again FEMKX and FNARX up above the rest of the market. Well tomorrow may be a different matter.

 Gary