AyG
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Post by AyG on Jul 3, 2022 10:12:17 GMT 7
I believe the article refers to the average investor rather than the experienced one I think you're reading into this something that isn't there. The article stated "Individual investors don’t typically have access to alternative". Note: "don't have access". Whether they have the interest or ability to track them down is not the point here. I believe the author is thinking only of private hedge funds which have very large minimum investments (US$1 million is fairly typical) and is overlooking the exchange-listed ones. This would exclude most investors - particularly because it's commonly recommended that one diversify across 10 hedge funds using different strategies*. And then, hedge funds should probably be a smallish part of one's overall portfolio. * Hedge funds implode with alarming frequency. Notable failures include SAC Capital, Long-Term Capital Management, Galleon Group, Amaranth, Tiger Funds, Aman Capital, Marin Capital, and very recently, Three Arrows Capital.
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chiangmai
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Post by chiangmai on Jul 3, 2022 11:01:28 GMT 7
I believe the article refers to the average investor rather than the experienced one I think you're reading into this something that isn't there. The article stated "Individual investors don’t typically have access to alternative". Note: "don't have access". Whether they have the interest or ability to track them down is not the point here. I believe the author is thinking only of private hedge funds which have very large minimum investments (US$1 million is fairly typical) and is overlooking the exchange-listed ones. This would exclude most investors - particularly because it's commonly recommended that one diversify across 10 hedge funds using different strategies*. And then, hedge funds should probably be a smallish part of one's overall portfolio. * Hedge funds implode with alarming frequency. Notable failures include SAC Capital, Long-Term Capital Management, Galleon Group, Amaranth, Tiger Funds, Aman Capital, Marin Capital, and very recently, Three Arrows Capital. You're arguing semantics AyG, the average high street Joe investor may have access from a technical perspective but from a practical viewpoint that's a waste of time since he doesn't know what they are, where they are or how to use them, I certainly wouldn't and I've been reading up on investing frequently for many years.
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AyG
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Post by AyG on Jul 3, 2022 11:44:58 GMT 7
^^^ No. I'm pointing out what the author actually wrote and actually meant, not arguing semantics.
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chiangmai
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Post by chiangmai on Jul 3, 2022 14:51:48 GMT 7
No. I'm pointing out what the author actually wrote and what I think he actually meant, not arguing semantics.
There, I fixed that for you.
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chiangmai
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Post by chiangmai on Jul 5, 2022 6:39:29 GMT 7
Some more information on wealth preservation funds: www.ii.co.uk/analysis-commentary/which-wealth-preservation-trust-has-protected-investors-best-ii523895"One way they are profiting from rising rates is its investment bucket called “illiquid strategies and options”, making up 13% of the portfolio. Here, it can use financial derivatives to bet that rates will rise. Gold has been the secret sauce for Personal Assets this year. At 9.2% of the portfolio, it boosted the fund when Russia invaded Ukraine". Yet another strategy that paid off handsomely was pocket lint and shoelace ends, both of which have fared far better than most BG funds, he said. "It also has an 11% allocation to hedge funds, as well as 18% in “absolute return & credit”, which in theory perform well when markets fall".
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chiangmai
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Post by chiangmai on Jul 25, 2022 16:47:21 GMT 7
Part of an article that appeared in Bloomberg but is behind a paywall hence is copied here from a secondary site: "Sheets acknowledged that recent losses raised a question over whether the 60/40 strategy was broken in an era of tighter policy. While previous large drawdowns “left investors wishing they had held more fixed income, this year has left investors wishing they didn’t own anything,” he said. However, the strategist argued that even if stocks and bonds are now positively correlated, there are still plenty of days when the two asset classes don’t move together. He also considers that bonds remain good diversifiers, even if less so than before". mintgenie.livemint.com/news/personal-finance/the-60-40-strategy-will-make-a-comeback-morgan-stanley-says-151658740009957
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Post by rgs2001uk on Jul 25, 2022 21:32:57 GMT 7
I have no idea who Sheets is, but in all my years of investing not one person has ever advised me to have a 60/40 portfolio, why not a 70/30, or a 50/50?
Sheets doesnt speak for me, wonder what Warren Buffet has to say about it all.
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chiangmai
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Post by chiangmai on Jul 26, 2022 0:44:44 GMT 7
I have no idea who Sheets is, but in all my years of investing not one person has ever advised me to have a 60/40 portfolio, why not a 70/30, or a 50/50? Sheets doesnt speak for me, wonder what Warren Buffet has to say about it all. That's because you didn't click on the link and read the article, had you done so you'd know.....you give 'em books to read and they eat the covers! Mr Sheets was not advising you to buy 60/40 or anything else. As Chief Strategist for Morgan Stanley he was making an observation that he shared publicly. But you ask, why 60/40, why not 70/30 or 50/50. My goodness rgs you really haven't been paying attention lately, have you! The term, "60/40 is shorthand for the broader theme of investment diversification". It can indeed be 70/30 for those who are willing to take more risk or 50/50 for those want to assume less risk. But you say that nobody has ever advised you to include bonds or other asset classes inside your portfolio and I find that hard to imagine, your broker must surely have suggested something other than 100% TNT, at some point? Finally, Warren was busy and couldn't come to the phone but his 90/10 strategy is quite famous. Not only does Warren recommend bonds he also recommends trackers, hows about that sports fans: "Such was the case with Warren Buffett’s 2013 letter to Berkshire Hathaway investors, which seemed to challenge one of the longstanding axioms about retirement planning. Buffett noted that, upon his passing, the trustee of his wife’s inheritance was instructed to put 90% of her money into a very low-fee stock index fund and 10% into short-term government bonds. For investors regularly told to steer away from stocks as they age, this was pretty shocking stuff. A well-worn adage is to maintain a percentage of stocks equal to 100 minus one’s age, at least as a rule of thumb. So when you hit the age of, say, 70, most of your investment assets would be high-quality bonds that generally don’t take as big a hit during market downturns'. This is what is called the "90/10 investing strategy." www.investopedia.com/articles/personal-finance/121815/buffetts-9010-asset-allocation-sound.asp
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chiangmai
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Post by chiangmai on Jul 26, 2022 5:33:39 GMT 7
Talking of Warren, an interesting tidbit here:
How much does Warren Buffet hold in cash?
But the key change during the quarter was that Berkshire's mountain of cash shrank to $106 billion from $147 billion at the beginning of the year as it invested $51 billion in equities. Buffett also spent $3.2 billion repurchasing Berkshire stock.Apr 30, 2565 BE
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chiangmai
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Post by chiangmai on Jul 26, 2022 8:53:04 GMT 7
I'm currently only 38% in equities but I'm 40% in cash and 22% in bonds and others, these numbers are a little bit different from before because I've recently updated the holdings of each fund.
I've laid the groundwork to scale up my holdings, I plan for equities and bonds to scale up proportionately and to reduce my cash pile, eventually. Equities will increase to 49% and bonds/others to 33% whilst cash will reduce to 18%. So what to buy?
I'm going to increase my Baillie Gifford International holdings to a 7% allocation, it's a well-diversified fund that covers much of the globe but is volatile at times.
I'm also planning on Fundsmith for large caps but only 5%, many large caps look cheap.
RICA is my large buy at 12%, I was going to make this purchase a week ago but decided to wait. Given the nature of the fund I doubt it matters too much when the purchase is made and will be determined by NAV.
And FSSA Asia Focus gets a small tweak, just to keep the geographic spread looking the way I want.
Where all this leaves me is with 18% at Risk Level 6 & 7, 13% at Level 5 and 51% at Level 3.......plus 18% in cash.
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chiangmai
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Post by chiangmai on Jul 26, 2022 11:44:26 GMT 7
Last one then I'll stop trying to explain and undo some of the nonsense to date: Some posters would have us think that 60/40 is a specific product, that’s why you don’t understand why you’ve never been offered one. IT ISN’T, 60/40 is slang speak or shorthand for mixed asset funds that contain variable amounts of equities, bonds and other things. 60/40 was the original concept, today there are other options but the original name has stuck (with some). 60/40 is a part of a spectrum where the first number is be a variable amount of equities ranging from 10% to 90% and the second number makes up the balance with bonds AND/OR other things, the two numbers vary based on the investors appetite for risk. Using the 60/40 description, the 40% can be bonds, fixed income, gold, options and when it becomes valuable, pocket lint. Nowhere is it written or even implied that it must be only one thing. Warren recommended 90/10 for his wife, I’m 38/22 (plus 40% my cash), Vanguard operates a range of these things, typically seen as 20%, 30%,…… 80% equities funds. PNL, CGT and RICA are each between 40% and 46% equities. 60/40 is the slang name that has stuck and is intended to mean ALL of them, not just one fund. I doubt very much that you’ll read it but the following explains matters quite well. Don’t be tempted to cherry pick just one or two key phrases or quotes, if you do read it, read the whole thing in context. fortitudefinancial.co.nz/news-and-views/the-death-of-60-40#:~:text=Developed%20in%201952%20by%20Nobel,of%20the%2060%2F40%20portfolio. Things have moved on since the 1950’s, sadly some investors views have not kept pace and that's very dangerous.
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Post by rgs2001uk on Jul 26, 2022 20:41:23 GMT 7
I have no idea who Sheets is, but in all my years of investing not one person has ever advised me to have a 60/40 portfolio, why not a 70/30, or a 50/50? Sheets doesnt speak for me, wonder what Warren Buffet has to say about it all. That's because you didn't click on the link and read the article, had you done so you'd know.....you give 'em books to read and they eat the covers! Mr Sheets was not advising you to buy 60/40 or anything else. As Chief Strategist for Morgan Stanley he was making an observation that he shared publicly. But you ask, why 60/40, why not 70/30 or 50/50. My goodness rgs you really haven't been paying attention lately, have you! The term, "60/40 is shorthand for the broader theme of investment diversification". It can indeed be 70/30 for those who are willing to take more risk or 50/50 for those want to assume less risk. But you say that nobody has ever advised you to include bonds or other asset classes inside your portfolio and I find that hard to imagine, your broker must surely have suggested something other than 100% TNT, at some point? Finally, Warren was busy and couldn't come to the phone but his 90/10 strategy is quite famous. Not only does Warren recommend bonds he also recommends trackers, hows about that sports fans: "Such was the case with Warren Buffett’s 2013 letter to Berkshire Hathaway investors, which seemed to challenge one of the longstanding axioms about retirement planning. Buffett noted that, upon his passing, the trustee of his wife’s inheritance was instructed to put 90% of her money into a very low-fee stock index fund and 10% into short-term government bonds. For investors regularly told to steer away from stocks as they age, this was pretty shocking stuff. A well-worn adage is to maintain a percentage of stocks equal to 100 minus one’s age, at least as a rule of thumb. So when you hit the age of, say, 70, most of your investment assets would be high-quality bonds that generally don’t take as big a hit during market downturns'. This is what is called the "90/10 investing strategy." www.investopedia.com/articles/personal-finance/121815/buffetts-9010-asset-allocation-sound.aspNever, that includes going back to pre KYC days. Products may change, current flavour of the month may change, anyone for endowment policies or annuities, but the basics of investing never change. You either want wealth generation, wealth protection or regular income, in my case wealth generation.
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Post by rgs2001uk on Jul 26, 2022 20:43:36 GMT 7
Last one then I'll stop trying to explain and undo some of the nonsense to date: Some posters would have us think that 60/40 is a specific product, that’s why you don’t understand why you’ve never been offered one. IT ISN’T, 60/40 is slang speak or shorthand for mixed asset funds that contain variable amounts of equities, bonds and other things. 60/40 was the original concept, today there are other options but the original name has stuck (with some). 60/40 is a part of a spectrum where the first number is be a variable amount of equities ranging from 10% to 90% and the second number makes up the balance with bonds AND/OR other things, the two numbers vary based on the investors appetite for risk. Using the 60/40 description, the 40% can be bonds, fixed income, gold, options and when it becomes valuable, pocket lint. Nowhere is it written or even implied that it must be only one thing. Warren recommended 90/10 for his wife, I’m 38/22 (plus 40% my cash), Vanguard operates a range of these things, typically seen as 20%, 30%,…… 80% equities funds. PNL, CGT and RICA are each between 40% and 46% equities. 60/40 is the slang name that has stuck and is intended to mean ALL of them, not just one fund. I doubt very much that you’ll read it but the following explains matters quite well. Don’t be tempted to cherry pick just one or two key phrases or quotes, if you do read it, read the whole thing in context. fortitudefinancial.co.nz/news-and-views/the-death-of-60-40#:~:text=Developed%20in%201952%20by%20Nobel,of%20the%2060%2F40%20portfolio. Things have moved on since the 1950’s, sadly some investors views have not kept pace and that's very dangerous. Personally I think Warren is missing a trick, I think now is the ideal time for anyone with time on their hands and a long term view to pick up some excellent stocks, if I had any spare cash thats exactly what I would be doing.
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chiangmai
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Post by chiangmai on Jul 27, 2022 2:09:30 GMT 7
Last one then I'll stop trying to explain and undo some of the nonsense to date: Some posters would have us think that 60/40 is a specific product, that’s why you don’t understand why you’ve never been offered one. IT ISN’T, 60/40 is slang speak or shorthand for mixed asset funds that contain variable amounts of equities, bonds and other things. 60/40 was the original concept, today there are other options but the original name has stuck (with some). 60/40 is a part of a spectrum where the first number is be a variable amount of equities ranging from 10% to 90% and the second number makes up the balance with bonds AND/OR other things, the two numbers vary based on the investors appetite for risk. Using the 60/40 description, the 40% can be bonds, fixed income, gold, options and when it becomes valuable, pocket lint. Nowhere is it written or even implied that it must be only one thing. Warren recommended 90/10 for his wife, I’m 38/22 (plus 40% my cash), Vanguard operates a range of these things, typically seen as 20%, 30%,…… 80% equities funds. PNL, CGT and RICA are each between 40% and 46% equities. 60/40 is the slang name that has stuck and is intended to mean ALL of them, not just one fund. I doubt very much that you’ll read it but the following explains matters quite well. Don’t be tempted to cherry pick just one or two key phrases or quotes, if you do read it, read the whole thing in context. fortitudefinancial.co.nz/news-and-views/the-death-of-60-40#:~:text=Developed%20in%201952%20by%20Nobel,of%20the%2060%2F40%20portfolio. Things have moved on since the 1950’s, sadly some investors views have not kept pace and that's very dangerous. Personally I think Warren is missing a trick, I think now is the ideal time for anyone with time on their hands and a long term view to pick up some excellent stocks, if I had any spare cash thats exactly what I would be doing. Which is what I am planning on doing. But no doubt that will be construed as trying to time the market, which can't be done!
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chiangmai
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Post by chiangmai on Jul 27, 2022 5:23:47 GMT 7
That's because you didn't click on the link and read the article, had you done so you'd know.....you give 'em books to read and they eat the covers! Mr Sheets was not advising you to buy 60/40 or anything else. As Chief Strategist for Morgan Stanley he was making an observation that he shared publicly. But you ask, why 60/40, why not 70/30 or 50/50. My goodness rgs you really haven't been paying attention lately, have you! The term, "60/40 is shorthand for the broader theme of investment diversification". It can indeed be 70/30 for those who are willing to take more risk or 50/50 for those want to assume less risk. But you say that nobody has ever advised you to include bonds or other asset classes inside your portfolio and I find that hard to imagine, your broker must surely have suggested something other than 100% TNT, at some point? Finally, Warren was busy and couldn't come to the phone but his 90/10 strategy is quite famous. Not only does Warren recommend bonds he also recommends trackers, hows about that sports fans: "Such was the case with Warren Buffett’s 2013 letter to Berkshire Hathaway investors, which seemed to challenge one of the longstanding axioms about retirement planning. Buffett noted that, upon his passing, the trustee of his wife’s inheritance was instructed to put 90% of her money into a very low-fee stock index fund and 10% into short-term government bonds. For investors regularly told to steer away from stocks as they age, this was pretty shocking stuff. A well-worn adage is to maintain a percentage of stocks equal to 100 minus one’s age, at least as a rule of thumb. So when you hit the age of, say, 70, most of your investment assets would be high-quality bonds that generally don’t take as big a hit during market downturns'. This is what is called the "90/10 investing strategy." www.investopedia.com/articles/personal-finance/121815/buffetts-9010-asset-allocation-sound.aspNever, that includes going back to pre KYC days. Products may change, current flavour of the month may change, anyone for endowment policies or annuities, but the basics of investing never change. You either want wealth generation, wealth protection or regular income, in my case wealth generation.What you've described are objectives, this is not about those objectives, it's about how you achieve them and how much risk you are willing to accept in reaching those objectives. If you say up front that it doesn't matter one jot if you lose your entire investment and that you want to generate the largest fastest returns possible, you're saying you have a super high tolerance for risk. In that case you'll probably end up with a handful of risk level 6 or 7, 100% equities funds, pretty much like you have....yours is 100/0. When times are good you'll see brilliant returns, when times are bad you'll see/have seen falls up to 50%, really high volatility, exactly where you end up remains to be seen. But if for example you were to sell say BG European or similar and invest that 10% into a fixed income fund (or similar), you'd could be said to holding a 90/10 portfolio and your volatility (the range of price changes over time) would decrease somewhat as a result. The trade off of course is that whilst you'll see less volatility overall during the bad times, you'll also see lower levels of gain in the good time. I don't know how you feel but if I was in drawdown, the last thing I want is 50% swings in the value of my holdings! If on the other hand you say you are risk averse, you're getting on in years and you'd prefer not to take on anything more than average risk, you'll end up with a mix of mostly level 3 & 4 equities funds and a "handful of other things", pretty much like I have. Mine is 38/22 +40% cash. In between our two approaches, which are pretty much at opposite ends of the spectrum, exists a number of other options that tilt towards my preference or toward yours. FWIW my overall portfolio volatility during the falls this year was around 7%. Note: endowment policies and annuities are way outside of this discussion, they are other financial services products unrelated to investing in the context of our discussions. Some of the things that are in scope are items such as gilts, government bonds, corporate bonds, gold, REITS, fixed income funds, those are some of the things in the 40 component of a 60/40 investment portfolio.
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