4 ms·

The comments so far are espousing passive investment strategy and good asset allocation, which I agree with, but I was looking for something a little more concr

The comments so far are espousing passive investment strategy and good asset allocation, which I agree with, but I was looking for something a little more concrete. So in effort to engender some discussion with hard %s, the following is where I am right now (excluding equity in primary residence). The accuracy (beyond decimal point) is certainly irrelevant, but it came right off a spreadsheet and I left it in because it sums to 100. US Large Cap: 21.87% US Mid Cap: 8.35% US Small Cap: 3.03% Commodities: 8.47% Real Estate: 6.26% International Equities: 7.55% Emerging Market Equities: 4.63% Cash: 12.71% Bonds: 27.13% The Bonds are in a 10 year ladder. The Cash is in FDIC insured money market accounts. All the rest is in index vehicles. I'm very interested in any feedback and also what your numbers are.

Retric 19y ago
That looks insanely conservative. I would basically drop Large Cap, Cash, and bond from any long term investment strategy. I would bump Emerging Mark's and US Small cap stocks to 25% each and spread the rest over Mid Cap, Commodities, Real Estate, and International Equities.
- epi0Bauqu 19y ago
  Does your advice depend on how much money you are investing, i.e. 100K vs 1M vs 10M? In my case, the bonds and cash are mainly for capital preservation. I set aside an amount for that, and invested the rest in the various asset classes.
  - Retric 19y ago
    Not for long term investing, but if you are living off of your savings then having some stocks and bonds to avoid pulling more money out of the market when it's down is useful. The investment paradox is all about leverage. If you have 10+ million then who cares if spending 40 hours a month could give you a 1% better ROI you don't really need the money or the stress. If you have under 1/2 million then a 1% better ROI probably not worth the time it takes to get that extra return. (.01 * 500k) is only 5k which is probably not worth all that much of your time. At in the 1-3 million range your close enough to just retiring that your risk's are probably not worth it. Note: I am getting around 12.5% ROI/year over the last 5 years and I spend about 8 hours a year looking at my investments why bother with more than that? Well sometimes you want to play with the market which can be fun. EX: After VISA’s IPO they are up 40% how cool is that. Just don't bet the farm and you will probably make some money.
byrneseyeview 19y ago
Depends on the stocks. Unlike many modern investors, I'm extremely uncomfortable with the idea of trading something as an asset class rather than as part ownership of a business. You end up doing things like investing in oil companies and investing directly in commodities, which is redundant -- the oil companies are basically a portfolio of call options on oil, where the strike price is the cost of extraction. Think about it: if you told Andrew Carnegie you were putting "21.87%" of your money into "US Large Cap," he'd laugh his ass off. He'd ask why you knew, to four figures, what kind of stocks you were investing in, but didn't bother to talk about what they made, who ran them, or how much money they earned. He'd ask why you would prefer buying $100 million of cash flow for $2 billion rather than $1 billion, as an allocation based on market cap would have you do. Carnegie is a great example, because for a while he was purely an investor -- he had a diversified portfolio of stocks in companies whose management he knew personally, and he paid careful attention to their business performance and the dividends they paid, not their market price. Don't do anything Carnegie, Morgan, or Rockefeller wouldn't recognize as an investment, and you should be okay.
- epi0Bauqu 19y ago
  I said specifically The accuracy (beyond decimal point) is certainly irrelevant, but it came right off a spreadsheet and I left it in because it sums to 100. As for indexes vs individual stocks, I don't want to spend that much time worrying about (or tweaking) my investment portfolio. So, for you, it depends on the stocks. But if you work backwards, where does that come out on an asset class basis? Are you buying no international equities? No commodities? No REITs? What are the actual %s?
vzn 19y ago
If it was 1928 year now, would this portfolio have survived Great Depression? Almost all positions are paper actives. What do happen with the paper actives in case of huge world economical slowdown and depression? I prefer something more reliable than paper (gold, land, real estate, cash flow from the business)
- epi0Bauqu 19y ago
  I believe it should, but am interested in your speculation as to how you think it would hold up. About half of it is not in equities (cash, bonds, commodities, real estate). And I did not include actual land holdings in the %s (including our personal residence), which brings it up to a majority. Also, some of the equities are international, and we are in a much more global environment now as compared to 1928. Over 40% of large cap earnings are from abroad. Are you saying that you hold 100% of your assets in gold and land? "Cash flow from the business" was specifically excluded from the question, i.e. income does not enter into it.

Retric 19y ago

That looks insanely conservative. I would basically drop Large Cap, Cash, and bond from any long term investment strategy. I would bump Emerging Mark's and US Small cap stocks to 25% each and spread the rest over Mid Cap, Commodities, Real Estate, and International Equities.

epi0Bauqu 19y ago
Does your advice depend on how much money you are investing, i.e. 100K vs 1M vs 10M? In my case, the bonds and cash are mainly for capital preservation. I set aside an amount for that, and invested the rest in the various asset classes.
- Retric 19y ago
  Not for long term investing, but if you are living off of your savings then having some stocks and bonds to avoid pulling more money out of the market when it's down is useful. The investment paradox is all about leverage. If you have 10+ million then who cares if spending 40 hours a month could give you a 1% better ROI you don't really need the money or the stress. If you have under 1/2 million then a 1% better ROI probably not worth the time it takes to get that extra return. (.01 * 500k) is only 5k which is probably not worth all that much of your time. At in the 1-3 million range your close enough to just retiring that your risk's are probably not worth it. Note: I am getting around 12.5% ROI/year over the last 5 years and I spend about 8 hours a year looking at my investments why bother with more than that? Well sometimes you want to play with the market which can be fun. EX: After VISA’s IPO they are up 40% how cool is that. Just don't bet the farm and you will probably make some money.

byrneseyeview 19y ago

Depends on the stocks. Unlike many modern investors, I'm extremely uncomfortable with the idea of trading something as an asset class rather than as part ownership of a business. You end up doing things like investing in oil companies and investing directly in commodities, which is redundant -- the oil companies are basically a portfolio of call options on oil, where the strike price is the cost of extraction. Think about it: if you told Andrew Carnegie you were putting "21.87%" of your money into "US Large Cap," he'd laugh his ass off. He'd ask why you knew, to four figures, what kind of stocks you were investing in, but didn't bother to talk about what they made, who ran them, or how much money they earned. He'd ask why you would prefer buying $100 million of cash flow for $2 billion rather than $1 billion, as an allocation based on market cap would have you do. Carnegie is a great example, because for a while he was purely an investor -- he had a diversified portfolio of stocks in companies whose management he knew personally, and he paid careful attention to their business performance and the dividends they paid, not their market price. Don't do anything Carnegie, Morgan, or Rockefeller wouldn't recognize as an investment, and you should be okay.

epi0Bauqu 19y ago
I said specifically The accuracy (beyond decimal point) is certainly irrelevant, but it came right off a spreadsheet and I left it in because it sums to 100. As for indexes vs individual stocks, I don't want to spend that much time worrying about (or tweaking) my investment portfolio. So, for you, it depends on the stocks. But if you work backwards, where does that come out on an asset class basis? Are you buying no international equities? No commodities? No REITs? What are the actual %s?

vzn 19y ago

If it was 1928 year now, would this portfolio have survived Great Depression? Almost all positions are paper actives. What do happen with the paper actives in case of huge world economical slowdown and depression? I prefer something more reliable than paper (gold, land, real estate, cash flow from the business)

epi0Bauqu 19y ago
I believe it should, but am interested in your speculation as to how you think it would hold up. About half of it is not in equities (cash, bonds, commodities, real estate). And I did not include actual land holdings in the %s (including our personal residence), which brings it up to a majority. Also, some of the equities are international, and we are in a much more global environment now as compared to 1928. Over 40% of large cap earnings are from abroad. Are you saying that you hold 100% of your assets in gold and land? "Cash flow from the business" was specifically excluded from the question, i.e. income does not enter into it.