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Post by Admin/YBB on Dec 21, 2020 18:34:28 GMT -6
#PortfolioAllocation should be appropriate for personal situation and current market conditions. A RULE OF THUMB is that younger people can have 70-100% effective equity [see an earlier post], middle career people 50-70%, and older people and retirees 30-50%. Sometimes higher equity #assetallocation may be fine in the accumulation phase [whatever the age] and lower equity allocation in the decumulation [#PortfolioIncome ] phase. Use effective equity instead of nominal equity [those can mislead] for this purpose. Stock markets can have unexpected declines – a decline up to 10% may be referred as pullback, 10-20% decline as correction, 20% or more decline as #bearmarket. It is a good idea for #DIYinvestor to review portfolios periodically and make appropriate adjustments. Some what-if scenarios should also be considered, e.g. what would be the expected decline in portfolio value if the market drops by, say 30%, and effective equity is, say, 65% [apply 0.65 x 30% or 19.5% decline to the current portfolio value]. As portfolios grow in value, many people are emotionally more affected by the absolute amount of loss instead of %loss. #PersonalFinance . 11/20/20 AM
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Post by Admin/YBB on Aug 26, 2021 10:49:17 GMT -6
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Post by Admin/YBB on May 2, 2022 6:08:47 GMT -6
www.mutualfundobserver.com/discuss/discussion/59541/allocation-balanced-funds-past-future-mfo-5-1-22Allocation/Balanced Funds, Past & Future - MFO 5/1/22
yogibearbull 7:03AM in Fund Discussions Flag A lot has been written on allocation/balanced portfolios/funds. They have been declared dead and/or born again. This year has been especially difficult as both stocks and bonds have suffered (some bonds have suffered more than some stocks). If you have held them, options include tax-swaps in taxable accounts (for recent purchases) and/or adding to them little bit knowing that the worst may not be over. A recent development is the multi-asset funds that add some alternatives into the mix, so they become stock-bond-alternatives funds (example FMSDX, etc); the stocks are more aggressive, bonds have more HYs and/or EMs, and alternatives may include commodities and/or hedge-fund like strategies. Well, @devo (MFO) has done a deep dive into the history of typical 60-40 portfolios and has some future ideas on them in MFO 5/1/22. There are several interesting tables but they are not images that can be linked here with the Image-tool, so you will have to check them out in the link blow. www.mutualfundobserver.com/2022/05/to-win-today-embrace-powerlessness-and-dive-deep-into-the-portfolio/Good compilation again, @david_Snowball (MFO). www.mutualfundobserver.com/issue/may-2022/
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Post by Admin/YBB on Jul 3, 2022 12:35:58 GMT -6
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Post by Admin/YBB on Aug 20, 2022 12:53:44 GMT -6
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Post by Admin/YBB on Sept 2, 2022 8:40:22 GMT -6
Global Bond Bear
The drawdown for the global bond index was recently at -20.4% for the first time in its history (1990- ). Based on the interest rate history over 5,000 years, this may be the first time ever for the global bond market. The US bond index (1976- ) had a record drawdown of -14.3% in mid-June, recent (only) -12.7%. Twitter LINKNone of this would make you feel better. But if you hold bonds in any form, including within allocation/balanced funds, you know that it has been painful. Of course, some category of bonds (HYs, EMs) and some types of bond funds (CEFs) have had even worse drawdowns. Twitter Chart1, Global Bond Index pbs.twimg.com/media/FbpXRzBWAAE4PEb?format=png&name=mediumTwitter Chart2, US Bond Index pbs.twimg.com/media/FbpX43rWIAEYBSa?format=png&name=mediumTwitter Chart3, 5,000 Yr Rate History pbs.twimg.com/media/FbpYQ5dWYAUjXh9?format=jpg&name=medium
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Post by Admin/YBB on Sept 26, 2022 17:54:50 GMT -6
King Dollarwww.mutualfundobserver.com/discuss/discussion/60076/king-dollarDollar’s relentless rise to 20+ yr high (secondary peaks 2001-02; peak 1995) is now becoming a global problem. Dollar ETF UUP is attracting huge inflows. Dollar may be the single most factor (besides several other factors) contributing to the declines in currencies, commodities (energy, ag, metals, gold, silver), stocks (US, foreign, EMs), bonds (investment-grade, HY, foreign). Its daily % moves (ROC(1)) are simply amazing for global reserve currency. At $114+ today, 9/26/22, dollar was 3*SD above its 50-dMA, also very unusual. The StockCharts link below shows $USD (EOD; updates few hours after the market close) with 50-dMA & 200-dMA, Bollinger Bands BB(20.2)* – one can see it far above the upper-BB, Bollinger Band Width BBW (20,2) - high, RSI (14) - high. Yahoo has live chart for DX-Y.NYB but it isn’t linkable and screenshot isn’t the same thing. * 20-dMA & 20-dSD. BBW is 4*20-dSD as % of 20-dMA. stockcharts.com/h-sc/ui?s=$USD&p=D&yr=1&mn=0&dy=0&id=p01513801242Twitter LINK
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Post by Admin/YBB on Oct 3, 2022 16:12:18 GMT -6
Stock and Bond Bears of 2022In 2022, both stocks and bonds had bear markets simultaneously. This caused heavy losses in allocation/balanced portfolios as well as risk-parity portfolios. Bonds failed to moderate declines due to stocks and, instead, contributed significantly to portfolio losses. Reasons were many - rapid Fed tightening, strong dollar, high inflation, post-pandemic fragile economies, recession fears, Russia-Ukraine war, supply-chain disruptions, chaos in oil/gas markets, etc. Purpose here is to record how bad things were by 2022/Q3. Allocation/balanced portfolios were the 2nd worst with -21% 2022YTD (the record was -27.3% for full 1931). Other bad (full) years with double-digit % declines were 1930 (-13.3%), 1974 (-14.7%) and 2008 (-13.9%). Table below is from Twitter LINK1Risk-parity portfolio performance was among the worst in history. These portfolios try to equalize volatilities of stock and bond portions and then use leverage. Twitter LINK2There is growing appreciation for multi-asset funds that include stocks-bonds-alternatives. Prominent examples of these are FMSDX, VPGDX. These have to be battle-tested in future, but by 2022/Q3, their performance was FMSDX -16.80%, VPGDX -16.12% and that compared well with traditional moderate-allocation index fund VBINX -20.85% (active moderate-allocation funds were around this). It was bad, but far from the worst year for SP500. Twitter LINK3Image with 60-40 Table pbs.twimg.com/media/FeJ8OKuXwAMqguu?format=png&name=smallEdit/Add: Full table 1928-2022/Q3 with records of SP500 and 10-Yr Treasury. Twitter LINKpbs.twimg.com/media/FeVdI86XECEGezl?format=png&name=medium
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Post by Admin/YBB on Dec 1, 2022 9:52:31 GMT -6
M* Target-Risk SeriesThis 1st article of a series reviews the history of target-risk funds (conservative/ moderate/ aggressive allocations) - how they evolved in the 1970s from traditional 60-40 balanced funds. Starting in 1990s, the target-date funds (TDFs) have become more popular due to their favorable regulatory treatment in the workplace retirement accounts. (Robo-advisors, since late-2000, are also a variation, although not mentioned in this article). Twitter LINKM* Link (highlight & copy-paste or use "Go to...") www.morningstar.com/articles/1127917/the-diversification-strategy-thats-older-than-target-date-funds
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Post by Admin/YBB on Dec 31, 2022 10:39:02 GMT -6
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Post by Admin/YBB on Feb 15, 2023 13:02:02 GMT -6
Multi-Asset Funds UpdateMulti-asset funds (FMSDX, BAICX, VPGDX - soon to be merged away; ETFs IYLD, PCEF; etc) have gained in popularity as extensions of traditional allocation/balanced funds (stocks-bonds) that include stocks-bonds-alternatives. Alternatives may include nontraditional credit, convertibles, real estate, natural resources, etc. The historic bond bear market of 2022 has caused some firms to boost such efforts, but also for some other firms to give up such efforts because the pace of asset growth has been slower than what they expected. Vanguard's multi-asset entry, via VPGDX (AUM $1.2 billion), had a short life, from 05/2020-05/2023. It had a previous unsuccessful life as managed-payout fund from 2008-2021, mimicking the endowment model for retail investors; Fidelity and Vanguard gave up on this, but Schwab is still continuing. VPGDX was reformulated as multi-asset fund in 05/2020 with stocks-bonds-alternatives and that form will end too in 05/2023 when it will be merged away into much larger VG LifeStrategy Moderate VSMGX (AUM $17.9 billion), a traditional target-risk fund-of-index-funds. Holders of VPGDX who don't do anything may be hit with merger-related CG distributions of around 6% by this otherwise "tax-free" event. MFO www.mutualfundobserver.com/discuss/discussion/60666/vanguard-managed-allocation-fund-to-be-reorganizedVanguard Press Release corporate.vanguard.com/content/corporatesite/us/en/corp/who-we-are/pressroom/press-release-vanguard-to-streamline-fund-lineup-with-planned-merger-and-liquidation-021423.htmlSEC/EDgar www.sec.gov/Archives/edgar/data/889519/000168386323000714/f24283d1.htmInvestmentNews www.investmentnews.com/vanguard-goes-against-the-grain-by-shuttering-alternatives-fund-234057
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Post by Admin/YBB on Oct 20, 2023 6:29:54 GMT -6
Rolling Return Smooth the Data & Reveal TrendsM* JR compares rolling returns (5- , 10-, 20- yr) and annual returns for 01/1926-09/2023. An obvious conclusion is that longer rolling-return periods smooth the returns and reveal the underlying trends. Historical data (for almost 97 years!) are also notable. At one time, M* Charts used to provide rolling return option. May be that should be restored. Edit/Add, 10/21/23. Portfolio Visualizer (PV) has a Rolling Return tab that has built-in 3- and 5- year Rolling Returns. It isn't customizable. StockCharts can be fooled into providing Rolling Returns using the ROC (n) feature. It gives %change over n periods, so, in Daily charts, use 780 days for 3-yr and 1,300 for 5-yr. Edit/Add, 10/22/23. Re StockCharts Rolling Returns with ROC(n), the free version has a limit of n = 600. So, in Daily display, that is 2.31 yrs max and in Weekly display, 11.53 yrs max. So, one should switch to Weekly display and use n = 156 for 3 yrs, 260 for 5 yrs, 520 for 10 yrs. www.morningstar.com/stocks/how-time-horizon-affects-odds-equity-investingImage Address morningstar-morningstar-prod.web.arc-cdn.net/resizer/XrwUSXKDl_yCwUNrSR7MlcHoI2c=/960x0/filters:no_upscale():quality(80)/cloudfront-us-east-1.images.arcpublishing.com/morningstar/NIVD6M2SIJGUXLYPFULD4PFKNI.png
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Post by Admin/YBB on Oct 27, 2023 6:52:05 GMT -6
M* on 60-40 Funds (Again)YBB Personal Finance ( Twitter LINK) @ybb_Finance M* own studies have shown that "Personal/Investor Returns" for #Alloc6040 have lower gaps than other categories. This is because investors are able to hold these funds through thick or thin. So, these articles about #Alloc6040 being dead, or back, are only amusing. @jasonkephart www.morningstar.com/portfolios/is-6040-portfolio-good-investment-nowMore from M*, 12/27/23M* On Allocation/Balanced Fundswww.mutualfundobserver.com/discuss/discussion/61833/m-on-allocation-balanced-fundsyogibearbull 12/27/23 December 2023 in Fund Discussions Flag Covered are the US (up to 10% foreign), diversified (11-39% foreign), and global ( >= 40% foreign) moderate/global allocation/balanced funds. Excluded are Multi-Asset funds (M* calls them "supporting"; it's not a M* Category yet) and the TDFs (with glide-path allocations). www.morningstar.com/funds/best-balanced-funds"After suffering one of their worst downfalls on record in 2022, balanced funds bounced back in 2023. The Morningstar US Moderate Target Allocation Index, which resembles a typical diversified balanced fund, gained more than 15% for the year to date through mid-December, and despite continued pessimism from some market observers, the outlook isn’t as grim as some soothsayers say....." More from M*, 1/10/24YBB Personal Finance ( Twitter LINK) @ybb_Finance 1/10/24 Well, some naysayers were at M* 😎. Naysayers Were Wrong About the 60/40 Portfolio. Here’s Why.www.morningstar.com/portfolios/why-naysayers-were-wrong-6040-portfolio
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Post by Admin/YBB on Feb 5, 2024 14:34:10 GMT -6
MFO on 60-40, Re @lynnbolin2021, 60-40 was never dead. It was just dormant or in hibernation for a while. The entire fund universe has an allocation (the ICI data posted on MFO monthly), OEFs & ETFs: Stocks 59.11%, Hybrids 4.72%, Bonds 18.57%, M-Mkt 17.60%, So, for many, 60-40, or some variation (including alternatives), is fine. But others use DIY and that is fine too. Surprisingly, I have seen some pieces with stock-bond-Bitcoin mix - had to happen after the reluctant approval by the SEC (under a court threat) of several Bitcoin ETFs. www.mutualfundobserver.com/discuss/discussion/61968/february-mfo-is-livewww.mutualfundobserver.com/issue/february-2024/
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