8-10% equity returns are not realistic, "we are building a vast reservoir of inflation" perhaps 10% in a few years, 20 years ago he thought 15% was good for foreign exposure now it is more like 40%, "it's better to invest in companies that are more commodity-based" and he doesn't think about bonds in terms of the age rule of thumb but then said that is a good rule of thumb--don't quite get that last one.
I have also been in much of the same camp in terms of portfolio construction and expectations.
Also addressed in the article was Schwab's entry into the ETF space. They have started the process and offering some funds seems inevitable but I have to say I do not know what to make of Schwab, or for that matter Pimco, issuing ETFs. On one hand I can't see how the world needs more broad based domestic equity or US treasury funds. The odds that an index of the largest 500 stocks will perform differently than an index of the 1000 largest stocks for any length of time. So why buy an ETF that offers the same exposure but has fewer assets and trades less?
On the other side of the argument; apparently there are 140 OEFs tracking the S&P 500 and the world seems no worse for wear. If ETFs are going to continue to be more mainstream then funds covering the same indexes will proliferate. It would be easy to see firms like Schwab creating portfolio services (kind of like Amerivest) where all the ETFs used are proprietary (not sure if there are rules about collecting expense ratios and asset management fees but they'll work that out).If things do pan out this way, fine, but I think more important will be the specialized funds that iShares and PowerShares seem to be so committed to issuing lately. I obviously prefer small positions in many narrow based funds to build a portfolio. Other folks will go core with broad based funds and explore with the specialized. While I think either of those approaches would be better than any sort of Amerivest-like solution those will likely start to pop up all over in the next few years.
Well the sun is setting on our Oregon adventure. We saw a little of the state, ate some good food, bought some
3 comments:
ROger: Hypothetically speaking, how do u handle all of these 200 day MA whipsaws? example: 2 days above it you buy, then 2 days below it you sell what you bought?? then 2 days above it you buy again etc...I guess I am not alone in scratching my head...
written about this plenty, it is why I easy in or out with small tweaks. the dancing around is common and trading every one of these is not as important as the discipline to start getting defensive or re-equitizing.
the goal is avoiding down a lot not down a little.
Roger,
SQM is such a great company, how do you go about finding such companies. When you find such a fine company how do you decide at what price to get in. I am beggining to compile a list of desirable companies. I am still all into cash, except for some profits and that I have turned into stocks. Such stocks include US and Italian. The stock portfolio represent less than 10% of the total. So the list of disirable companies will be key for me getting into stocks. The cash has been a great tool to getting in and out tradable position. However I am relizing that it will come a time that being into stocks will be more desirable than trading in/out.
Thanks Roger,
Jeff from Milan Italy
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