Those who trade funds may view now as a good time to take a profit.  Those who set a target allocation for funds may discover that the current value of their natural resources fund accounts are above the target allocation.

I started investing in PRNEX about 10 years ago.  Recently,  I have redeemed shares to bring the account back to within the 4% to 6% asset allocation range that I have for it.

invest4,

Only you know your own risk tolerance, but your 11% allocation is kind of high, IMHO.  I think many people would agree with Pat Morgan's previously mentioned range of 4 - 6% for sector funds.  There still could be a lot more run on the up side with Oil/Gas/Natural Resources, but I wouldn't think they will rise forever.  The Global Growth story could perpetuate that rise.  But every time I hear those words "This Time It's Different", I begin to throw up warning flags.

Coy 

invest4,

Put me in the camp with the others recommending 5%. I would look at it in relationship to the rest of your portfolio, and in addition to your roughly 25% in EM it makes for a lot of volatility and big stakes in some areas of the global growth story that have burned blue flame hot in recent years and could very well take a turn for the worse in tandem.

I saw in another post that you were thinking of maybe upping your 5% position in PRWCX. I think that would be a good move at this point. I see a fund like PRWCX as a hard core holding. I'm not sure if only 5% will have much impact on your overall portfolio. I like to build a base with the likes of PRWCX, FAIRX and OAKBX paired with global funds, further diversify with bonds, TRREX, and maybe look to add some extra EM and maybe NR/PM/commodities so as to have as many non correlated assets as possible. I guess that all sounds pretty text book like, but it makes sense for me. 

But then again, as Coy said, only you can determine your risk tolerance. So if you are willing to ride the ups and downs, and trust me there will be some major turbulence, you just very well may wind up with great returns in the long run.

migues

I'd like to think I'm fairly sturdy as it relates to risk. However, I didn't invest in tech stocks in the 90s and so didn't really feel worst of the pain after 2000.  Also, I haven't been investing long enough to have seen the 70s or 80s...so my actual experiences are quite limited (relatively speaking).  My portfolio as of right now (rounded):

DODGX - 14%

PRMSX - 14%

PRNEX - 11%

PIEQX - 10%

PRSVX - 8%

PRFDX - 8%

TRMCX - 6%

PRGFX - 6%

PRLAX - 6%

PRHSX - 5%

PRWCX - 5%

RGAEX - 4% 

TRAMX - 2%

I'm currently adding to RGAEX regularly and will eventually replace PRGFX with it (waiting for it to come back a bit).  Historically, I have probably about 15% in PRWCX on average.  Perhaps along with the 5% I'm planning in the next month or so, I would also target to move the funds currently in PRGFX into there as well.  This would put me back around 15-17% in PRWCX and provide some counterweight to the spicier stuff?  I really appreciate the feedback (and sharing of prior experiences).  Additional thoughts are welcome / appreciated.

 

invest4,

I think switching out of PRGFX for PRWCX is an excellent idea. I don't see much in the way of bonds in your mix so adding more PRWCX would give your portfolio some ballast. One of the main goals of PRWCX is preservation of capital. Preservation of capital is important for any investor, but I think it's even more important as one's portfolio matures. The larger the portfolio the more vulnerable it is. Something like PRWCX allows your rambunctious funds in EM and NR to go out and raise hell on the weekends with the knowledge that someone's home holding down the fort.

Something else to consider is that we tend to build our portfolios gradually over time via disciplined, regular dca contributions to 401k, IRA, taxable acct, etc. It sounds as if you are off to an excellent start for someone still in his 30's. Before you know it you may find yourself with a huge sum of money to not only grow, but preserve. Volatile funds tend to make their gains in bunches so we better be in them at the right time or be willing to hold them for the long haul. What's that old adage? Something like "It takes the stairs up and the elevator down."

Don't get me wrong, I hold some pretty racy funds myself, but I use them in moderation. Volatile funds are like streak shooters in basketball; they're great when they're hot, but when they cool off it's nice to have a PRWCX and or OAKBX in the trenches, always ready and willing to play defense and rebound, two things that if you don't do enough of in the long run you will probably lose more than you win.

migues

Thanks Migues.  I think I will do just that.  I also like utilizing PRWCX as somewhat like a holding tank to be allocated elsewhere when the opportunity arises (ex: like the recent downturn).  In regard to bonds, I've tried some things of its ilk (ex: PRHYX and the Intl Bond fund), but decided that at my stage in life, to forego them (but am very open to opposing views on this topic).   I appreciate the sentiment about being off to a good start. However, when you consider that 50% of workers have saved less than $25,000 for retirement and most of the country seems to be up to their eyeballs in debt, the bar doesn't seem to be a high one. My investing story is pretty boring:

Boy gets job

Boy meets 401(k)

Boy eventually maxes out 401(k) contributions

Roth IRA catches eye of Boy

Boy engages in lifelong dream of threesome with 401(k) and Roth IRA

Boy maxes out both

I don't really have any taxable accounts other than cash.  I have struggled with the whole question of when I would feel a more urgent need to preserve.  Given that it seems like it will take $4M in inflated dollars (ex: 2030s) to live a comfortable retirement, creating a substantial portfolio seems oh so far away.  However, I absolutely agree that you need an anchor like PRWCX to keep things even.  As you suggested, the swings get a little bit nastier as it grows.  Although I don't really consider a house an investment as such, I also have a decent amount of home equity and consider that also in my total allocation of investable assets (basically look at it as cash).  Do you look at your "portfolio" in a similar fashion?

invest4,

You are wise beyond your years.

 However, when you consider that 50% of workers have saved less than $25,000 for retirement and most of the country seems to be up to their eyeballs in debt, the bar doesn't seem to be a high one. My investing story is pretty boring:"

The lack of saving and the amount of debt out there is sad isn't it? It's as if everyone is following the government's lead when it comes to managing money. My investing story is pretty boring as well. In fact, the longer I'm in this game the more I like boring investments.

"In regard to bonds, I've tried some things of its ilk (ex: PRHYX and the Intl Bond fund), but decided that at my stage in life, to forego them (but am very open to opposing views on this topic).   I appreciate the sentiment about being off to a good start. However, when you."

I have been investing since 1983 and I have never been less than 70/30 stocks to bonds. At this point, at 49 years of age, I am 60/40.  I am sure you have seen the research that concludes that 80/20 is just about a free lunch. Some of the reasons why I will always have some bonds in my portfolio:

1. There have been long periods where bonds have outperformed stocks. Just look at the last ten years for example. Let's use Vanguard's Total Stock Market Index and its Total Bond Index as benchmarks. VTSMX 3.89% and VBMFX 5.78%.

2. I have a bunch of CDS that pay between 5.25%-6%. I consider them as part of my 40% in fixed income. Have had them for years. I smile every time I receive an interest payment.

3. Just looking at this year alone and the bond funds I hold. PRCIX up 2.14%, ACITX up 3.74% with PRIPX not far behind, RPIBX up 7.52%, MERKX up 7.98% and LSBRX up .04%. All up better than the average equity fund. They have done what I have asked of them, protection in a down market and a lack of correlation with stocks.

4. My wife is ultraconservative and I firmly believe that we should honor our partner's wishes in all aspects of life, and especially when it comes to something as important as investing.

Although I don't really consider a house an investment as such, I also have a decent amount of home equity and consider that also in my total allocation of investable assets (basically look at it as cash).  Do you look at your "portfolio" in a similar fashion?

I don't look at my house as an investment; it's where I live, and if I didn't live in my house I would have to live somewhere else, no? Anyway, what's the historical return on residential real estate, something like 4-5%? It's another asset you better time right or be willing to hold for a long time, and even then . . . I don't have the patience for rental properties either. My wife and I help her parents manage their rental properties and it's more trouble than it's worth.

Thanks for asking such great questions. I don't know if I've helped you even a little bit, but I do appreciate the opportunity to think out loud; it's one of the many ways that this forum can make you a better investor.

migues

IMO? You gots too many cards on the table , my friend..

Total them all up and do the math and your not doing much better to even less than owing 50% of those..

As for > " I didn't invest in tech stocks in the 90s and so didn't really feel worst of the pain after 2000. " ?

You missed out on one of the Greatest Rallies in History.. One does not Invest in Small Sectors like Techs,Health, Oil/energy,  Gold for Long Term, Int'l, EM's  and thus they are short term investments and having a Target price to reduce/sell is mandatory requirement..  I an many others Made a Bundle on Techs, but we knew it wasn't a LT Investment.. never has , nor never will be..

A College Buddy of mine , bet baby's shoes on tech's, but he alreaady had over 10 yrs experience playing that game... He Made so much $? He ened up Quiting his Job, Sold the House and moved and bought a Franchise business> Starbucks in Cal. and now owns 5 of them and he has more than enough invested in a Retirement Port he doesn't need any $ from his Businesses to worry about Retirement...Although He never plans to retire...

Just remember> "He who takes no Chance, HAS Not Chance..."

Just like now, Fortunes have and are still being made in Energy.. Eg: POT/XTO stocks

You'd probably been far better off just going 80% in PRWCX and use the other 20% in those sectors, such as PRLAX and some Stocks( Like from the Top 5 list of stocks in some of the best M.Funds ) .. and broaden your Experience in owing some Stocks and Short term Sector Funds..

And unless you can end up with extra $ when you retire? You only get 1 shot at doing this stuff while your still working ...

It worked for me

Ha! Don't get me started on the whole debt thing (we've got to get our act together). 

1) Bonds - Food for thought.

2) CDs - Interestingly, I actually have some CDs for the first time that I can remember.  I opened them up right before and the morning of the 3/4 rate cut (I RAN to the bank).  They are at 5.5%...and yes, it's nice.  Although not typical, it just so happens that the amount is a fairly significant chunk of my investable funds (25% or so). It's earmarked for an eventual home purchase.  This is why I mentioned the home equity bit.  In my view, the amount of equity you have in your home is essentially "cash" with a very modest return (the effective interest you don't pay).  Granted, it's not entirely liquid and has proven risky for some (overheated markets)...but you get the idea.  Do you have an opposing view?

3)  I hear ya.  Heh, I have historically considered PRWCX my proxy bond fund.  I've seen various articles on 80/20 and volatility, etc.  Although my initial impulse is to say "bah", I'm sticking with 100%...I will sincerely give this some more thought.

4) My wife helps me to remember to live a little now instead of always focusing on the future.   As far as investing is concerned, I think her primary risk criteria is that I don't screw it up too badly.

I agree with you that I do not consider the home an investment as such.  However, I do think the manner in which you make the purchase has a financial impact and risks to your overall "portfolio" and should be considered as I indicated in point # 2 above.  For example, the decision to make a significant down payment on your home is quite different than if you choose to invest it in equities.  Generally, I consider the first option to be low risk with a relatively certain minimum return.  The latter likely entails more risk with the potential for a higher return.  Essentially, it's another option / vehicle for the investable dollars I have available.  Make sense or is my age showing?

I very much appreciate the responses. As you suggested, the idea is to become a better investor (or at least perhaps a bit better informed).