Portfolio disaster help please

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piq9540
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Portfolio disaster help please

Post by piq9540 »

47 yo self employed male single no kids. Through my own stupidity and greed 16 years ago decided to diversify away from 100 percent vti in my stock allocation to 70 percent vti 15 percent vtmsx and 15 percent vo. In those years small and midcaps have underperformed and now i am stuck with a underperforming portfolio, almost 20 percent less than holding only vti, that also has 30 percent of its dividends not fully tax protected like vti. i am distraught by this horrible lack of judgement. My question is should i just cease the investments in vtmsx and vo and move forward with vti only. Second option is to sell all my vtmsx and vo shares converting to vti and pay a capital gains tax penalty of 450k. im embarrased and ashamed of what has transpired through my own blind greed and stupidity. help please:(
Exchme
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Re: Portfolio disaster help please

Post by Exchme »

Those are not terrible choices, they just haven't worked out, so you got complexity without reward. I have somewhat the same situation in that I had an advisor that put me in tilts to small, value, international, etc. right before US large cap took off. I have since gotten rid of the advisor, but only restored the simplicity of the 3 fund approach in my IRA and Roth, I didn't want to pay taxes to fix it in taxable. Instead, I redirected new investments into VTI and stopped dividend reinvestment. Over time, the tilts should become a less important part of the portfolio. If they continue to underperform, then I know what I will sell first in retirement.
delamer
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Re: Portfolio disaster help please

Post by delamer »

Just a FYI, it’s better to use fund names rather than tickers in your posts. Many of us don’t memorize tickers.

Make sure you aren’t reinvesting dividends for any of your holdings so you can use them in rebalancing.

Would your taxes on your gains be $450K or are your gains themselves $450K? If it’s the latter, then your (federal) taxes will be in the range of $68,000 to $90,000. If that’s the case, then sell the tilts over the next couple of years and put the money into VTI.

Everyone makes mistakes in their investing decisions. You did some things right too, like focusing on low-cost index funds.

And you have to accept that you may change your portfolio and small- & mid-caps might start outperforming the next day.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
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burritoLover
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Re: Portfolio disaster help please

Post by burritoLover »

That portfolio returned 10.8% over that 16 year period - what a disaster! You are just performance chasing.
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retiredjg
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Re: Portfolio disaster help please

Post by retiredjg »

Welcome to the forum. :happy

Apparently 16 years ago you decided to overweight mid and small cap US stocks. That is not a horrible decision, but it is a tilt that has not worked out for you during this time period. That's the gamble you take when you tilt away from the whole market. Sometimes they pay. Sometimes they don't.

Only you can decide if you want to continue to wait or not, but this is certainly not something to be distraught about. Every investment is a gamble in one way or another. You have made money investing in these funds, just less money than if you had invested a different way. That' is how investing always is.

...and pay a capital gains tax penalty of 450k.
Well this caught my attention. If you have to pay out $450k in capital gains tax to get rid of 30% of your taxable account, the account would have to be in the many millions. Probably large enough to not worry about whether you keep the under-performers or sell them.

Is that what you meant? $450k in tax? Or did you mean gains on $450k?
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Tamarind
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Re: Portfolio disaster help please

Post by Tamarind »

For those who don't know the tickers, OP basically did a size tilt. Instead of just Total Stock Market added small and midcap funds.

There are plenty of folks here who are doing similar tilts, despite warnings that the small cap premium might not show up for decades. And it turns out large growth has had a very long run. It could have gone differently and you would have been pleased. If you change course now, it may go differently in the future. There's no way to be sure.

I think there's two parts to figuring out where you go from here:

1) The logical part. Do you still find the argument for small/mid persuasive? Is your actual risk tolerance lower than you thought it was, so that it's no longer worth it? Is the tax cost of the higher dividends heavier than you thought it would be? How does that annual tax drag compare to the capital gains cost of selling?

2) The psychological part. Given your description of the anticipated capital gains (20% of 30% of portfolio = $450k) if your math is correct you have a taxable portfolio in the multiple millions. It seems you may have lost your sense of proportion with regards to money. While greed has caused you to underperform the market, you are still fine. You were not owed outperformance by the universe. You still have enough.

You need to address #2 regardless of what you do with your investments.

I suggest you simply stop adding to your tilts. Put new money into VTI. If the opportunity arises to tax loss harvest from VTMSX and VO, then do so. If you like, sell some of these positions annually, and take a little of the capital gains tax at a time.

Another way to get out of those positions would be to donate the appreciated shares. That way you can skip the capital gains tax and the future dividends. You could do so over the course of several years if you didn't want to all at once. This would not only save you tax, but hopefully help relieve your feelings of embarrassment and shame. Every organization that helps people in need is under strain right now. You could make a profound difference to your local food bank.
pkcrafter
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Re: Portfolio disaster help please

Post by pkcrafter »

Small and mid are known for long periods of underperformance (sometimes 10 or more years) and they won't track the total market. I see recent underperformance, but long term isn't bad.

YTD, both small and total market are down ~8%.
In 2021 TM small gained 27%, TSM did 25%.


Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.
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burritoLover
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Re: Portfolio disaster help please

Post by burritoLover »

The original portfolio in 2006 was an obvious performance chasing tilt right after the dot com bust:
2000-2006 TSM: 1.87% CAGR
2000-2006 mid-caps: 8.23% CAGR
2000-2006 small-caps: 11.16% CAGR

For all we know, the next 10 years might be crap for VTI while small and mid-caps explode. The real question is what the OP will do then? Will they stick with VTI even when it's performing poorly? Or will they adjust their portfolio again to chase what is doing well?
Da5id
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Re: Portfolio disaster help please

Post by Da5id »

Wait, I'm not seeing the disaster. 16 years of your allocation is in the link below unless I mucked something up.

https://www.portfoliovisualizer.com/bac ... tion3_1=15

Can you describe more why you think that is a problem? The results are very similar to 100% VTI.
aristotelian
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Re: Portfolio disaster help please

Post by aristotelian »

How can a position with a 450k gain be a disaster? I would just sit tight, turn off dividend reinvesting, and put new dollars in VTI.
delamer
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Re: Portfolio disaster help please

Post by delamer »

Da5id wrote: Sat Jan 22, 2022 10:29 am Wait, I'm not seeing the disaster. 16 years of your allocation is in the link below unless I mucked something up.

https://www.portfoliovisualizer.com/bac ... tion3_1=15

Can you describe more why you think that is a problem? The results are very similar to 100% VTI.
Very interesting, although the performance could have been significantly different depending on when/where money was added to the portfolio.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
Calc_is_Easier
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Re: Portfolio disaster help please

Post by Calc_is_Easier »

OP, what does your IPS tell you your AA should be?
revhappy
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Re: Portfolio disaster help please

Post by revhappy »

OP sounds like humble bragging.
Last edited by revhappy on Sat Jan 22, 2022 10:40 am, edited 1 time in total.
tvubpwcisla
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Re: Portfolio disaster help please

Post by tvubpwcisla »

It's almost impossible to beat a 100% S&P 500 portfolio. Good luck trying.
invest4
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Re: Portfolio disaster help please

Post by invest4 »

I am probably biased by my own experience, but have a perception that investors in their late 20s/30s experiment quite a bit to create that special mix of portfolio that will outperform (my secret sauce was small cap tilt with significant allocation to Intl including a sprinkle of frontier markets, etc….like 8-10 funds).

As highlighted by others, this is not a disaster, but also not surprising the OP feels bad it didn’t work out. While not as severe, I was also bummed, and eventually found this forum and changed course…which has made me much happier…mainly due to the simplicity of it.

Positively, OP is still in decent shape and now just decides a sustainable way forward…hopefully accompanied by some peace as well.
Eddiecaps1980
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Re: Portfolio disaster help please

Post by Eddiecaps1980 »

revhappy wrote: Sat Jan 22, 2022 10:40 am OP sounds like humble bragging.
Most people on this forum post with humility. Brag depends on the relative poster/reader financial status.
Topic Author
piq9540
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Re: Portfolio disaster help please

Post by piq9540 »

I apologize if i sound whiny i just should have stuck with my original allocation instead of tinkering with it. i didnt know if there was anyway to correct it. Selling the small cap and mid cap funds would generated a hefty tax bill and didnt know if that was worth the price of going back to all in tsm. just feel stupid i knew better.
Hyperchicken
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Re: Portfolio disaster help please

Post by Hyperchicken »

piq9540 wrote: Sat Jan 22, 2022 12:25 pm I apologize if i sound whiny i just should have stuck with my original allocation instead of tinkering with it. i didnt know if there was anyway to correct it. Selling the small cap and mid cap funds would generated a hefty tax bill and didnt know if that was worth the price of going back to all in tsm. just feel stupid i knew better.
Can you quantify how you arrived at "almost 20 percent less than holding only vti"?

The link posted above has 1985 for the starting year. However, plugging in 2006 (link) yields very similar result, with only 0.12% CAGR underperformance.
Da5id
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Re: Portfolio disaster help please

Post by Da5id »

Hyperchicken wrote: Sat Jan 22, 2022 12:50 pm
piq9540 wrote: Sat Jan 22, 2022 12:25 pm I apologize if i sound whiny i just should have stuck with my original allocation instead of tinkering with it. i didnt know if there was anyway to correct it. Selling the small cap and mid cap funds would generated a hefty tax bill and didnt know if that was worth the price of going back to all in tsm. just feel stupid i knew better.
Can you quantify how you arrived at "almost 20 percent less than holding only vti"?

The link posted above has 1985 for the starting year. However, plugging in 2006 (link) yields very similar result, with only 0.12% CAGR underperformance.
Note that my link was just fine. I didn't bother to set the start year as I noticed that due to data availability for VO the range was set to Jan 2005 - Dec 2021 automatically. And yeah, I remain confused about the big losses.
stocknoob4111
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Re: Portfolio disaster help please

Post by stocknoob4111 »

I have a 25% tilt to VTMSX.. it's a great fund. You fo realize that per the latest Yardeni report the S&P600 is hugely undervalued relative to history and the S&P500 is hugely overvalued..

so you want to get rid of the undervalued asset and switch to the overvalued asset? I wouldn't do that if I were you... the future can't he predicted but the data says that it's likely Small will outperform Large in the next decade, you are bailing out after holding just when the asset class is poised to have it's day in the sun
Northern Flicker
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Re: Portfolio disaster help please

Post by Northern Flicker »

Is this the "disaster" you are referring to?

https://www.portfoliovisualizer.com/bac ... tion3_2=15
stocknoob4111
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Re: Portfolio disaster help please

Post by stocknoob4111 »

Forward PE ratios per Yardeni, which asset class looks the most favorable, let's guess... I would HOLD ON to that S&P600 fund... :D Over the very long haul both S&P500 and S&P600 perform about equal in my analysis but they take different paths to get there which is why it gives diversification benefit in my opinion, it also means that if there is a negative divergence for the S&P600 it would mean either the S&P500 is going to drop to close the divergence or the S&P600 is going to outperform to close the gap on the upside, this has always happened if you look at the historical trends.

Image

Also when you say your losses have been a "disaster" consider that a boatload of people invest in Target Date funds, Fidelity 2050 Target FFFHX has underperformed VTI since 2005 by a staggering 60% a lot due to heavy International allocation. So it's been an even bigger disaster for the vast majority of people then :?
wetgear
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Re: Portfolio disaster help please

Post by wetgear »

pkcrafter wrote: Sat Jan 22, 2022 10:21 am Small and mid are known for long periods of underperformance (sometimes 10 or more years) and they won't track the total market. I see recent underperformance, but long term isn't bad.

YTD, both small and total market are down ~8%.
In 2021 TM small gained 27%, TSM did 25%.


Paul
Can you clarify what you mean by TM, TSM is Total Stock Market but what is TM?
Topic Author
piq9540
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Re: Portfolio disaster help please

Post by piq9540 »

well i dont feel comfortable doing the splicing and dicing thing going forward when VTI has all i need. MY question should i sell the small cap and mid cap fund and take the tax hit from the capital gains. or should i just keep them and invest 100 percent vti going forward
Da5id
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Re: Portfolio disaster help please

Post by Da5id »

piq9540 wrote: Mon Jan 24, 2022 4:10 pm well i dont feel comfortable doing the splicing and dicing thing going forward when VTI has all i need. MY question should i sell the small cap and mid cap fund and take the tax hit from the capital gains. or should i just keep them and invest 100 percent vti going forward
Did you look at the graphs of the performance difference of your allocation vs VTI since 2005?

https://www.portfoliovisualizer.com/bac ... tion3_1=15

Again, it isn't that big a deal. I'd personally not pay a tax bill to simplify. Instead, if you like, just redirect all future contributions to VTI. Don't reinvest dividends in the other two funds. If it fits in your charity plans, you could also move some of the appreciated vtmsx or vo to a DAF get out of those positions without paying taxes.
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piq9540
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Re: Portfolio disaster help please

Post by piq9540 »

i dont know what the best option is. im just so embarrassed i overcomplicated something so simple. i hate to pay a massive tax bill going forward but i also fear a sector trailing the broader market
Da5id
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Re: Portfolio disaster help please

Post by Da5id »

piq9540 wrote: Mon Jan 24, 2022 4:33 pm i dont know what the best option is. im just so embarrassed i overcomplicated something so simple. i hate to pay a massive tax bill going forward but i also fear a sector trailing the broader market
OK, your angst feels *way* out of proportion to the scope of problem. People come to bogleheads with much more serious problems in their portfolios, your holdings are low cost index funds that are really really fine. Look at that link, the results aren't all that different than just owning VTI.

My suggestion is:
1) stop reinvesting dividends/cap gains in the two funds you don't want
2) put all future investments in VTI
3) relax about it

I'd really not pay a big tax bill to "fix" this. Paying a huge bill now will likely result in lower returns.

Also I'd suggest not obsessing about the fact that small/mid-cap may trail the market. Sometimes they will do better, sometimes worse. Constantly fussing about some part of your portfolio doing better than others isn't very healthy IMO, some part will always be better/worse if you are diversified. That is the case even if you just own VTI. If you look at the sectors making up VTI, some will be doing better than others. The fact that it is hidden from you by owning one fund doesn't mean it isn't happening.
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Tamarind
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Re: Portfolio disaster help please

Post by Tamarind »

piq9540 wrote: Mon Jan 24, 2022 4:33 pm i dont know what the best option is. im just so embarrassed i overcomplicated something so simple. i hate to pay a massive tax bill going forward but i also fear a sector trailing the broader market
Well, let's start with this:

Are your total unrealized gains on the small and midcap funds $450k?

Or

Are your expected capital gains taxes if you sold all of the small and midcap funds $450k? This would mean your total unrealized gains are ~$2.25M.
Elysium
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Re: Portfolio disaster help please

Post by Elysium »

burritoLover wrote: Sat Jan 22, 2022 10:02 am That portfolio returned 10.8% over that 16 year period - what a disaster! You are just performance chasing.
As opposed to 10.88% for the 100% VTI portfolio. So, OP is crestfallen over 0.08% compounded returns over 16 years. Don't know why this type of post merits any response.
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piq9540
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Re: Portfolio disaster help please

Post by piq9540 »

expected capital gains tax is 450k. The problem with portfolio tinkering is you have to be disciplined im not. VTI keeps people from tinkering. I actually added vtmsx in jan 2017 and in that time it has trailed vti by a large amount. I should never have done this it was stupid and im trying to find the best way to fix this. im over allocated small and mid caps and i dont feel good about it. Vanguard doesnt recommend this and it was stupid to deviate. by selling vtmsx now i will pay a 130k capital gains tax as a penalty
lostdog
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Re: Portfolio disaster help please

Post by lostdog »

Regret bias and then performance chasing.
Stocks-80% || Bonds-20% || Taxable-VTI/VXUS || IRA-VT/BNDW
Jason-Paul
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Re: Portfolio disaster help please

Post by Jason-Paul »

Mid-caps historically perform about one-half percent better than large-caps. Small-caps have certainly lagged, but still performed to the mean average in recent years. I've been in VSMAX since 2013, and with dividends reinvested, it's returned close to 10%. You're in an even better fund for small caps than VSMAX. I'm in VMVAX in my Trad IRA, and that mid-cap value was one of my biggest winners last year.
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piq9540
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Re: Portfolio disaster help please

Post by piq9540 »

So I should just hold tight with these funds and go 100 percent vti from now on with my stock investments? Im just trying to plan my action
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burritoLover
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Re: Portfolio disaster help please

Post by burritoLover »

piq9540 wrote: Mon Jan 24, 2022 5:30 pm So I should just hold tight with these funds and go 100 percent vti from now on with my stock investments? Im just trying to plan my action
Yep and don’t reinvest the dividends from these funds either - buy more VTI - which is really just concentrated in large caps in one country, so yay, but good if it makes you stay the course.
DouroBound
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Re: Portfolio disaster help please

Post by DouroBound »

piq9540 wrote: Sat Jan 22, 2022 7:55 am 47 yo self employed male single no kids. Through my own stupidity and greed 16 years ago decided to diversify away from 100 percent vti in my stock allocation to 70 percent vti 15 percent vtmsx and 15 percent vo. In those years small and midcaps have underperformed and now i am stuck with a underperforming portfolio, almost 20 percent less than holding only vti, that also has 30 percent of its dividends not fully tax protected like vti. i am distraught by this horrible lack of judgement. My question is should i just cease the investments in vtmsx and vo and move forward with vti only. Second option is to sell all my vtmsx and vo shares converting to vti and pay a capital gains tax penalty of 450k. im embarrased and ashamed of what has transpired through my own blind greed and stupidity. help please:(
I think you are being way too hard on yourself. Many people have small tilts. Many of those (myself included) periodically wrestle with whether to maintain them or bite the bullet and simplify. Personally, I’m in a very similar boat to you. I have a small/mid cap tilt that’s larger than I’d like (10% of my equity allocation), and unfortunately it is almost entirely in one position, in a taxable account, with a big unrealized gain. If I had to do it over again, I’d limit my tilt to something between 0 and 5%, but otherwise I’m very happy with how I set things up and realize I avoided a lot of common pitfalls. So I’m just going to leave it alone and maybe put a bit more into VOO instead of VTI going forward. For me at least, taking the tax hit while I’m in a high tax bracket will likely hurt me much more in the long run. As I’ve learned more about investing and my own behavioral patterns, I’ve become more and more convinced that the best approach anytime I’m tempted to fix a past mistake is just to do nothing for a while. In time the mistakes come into perspective and usually don’t seem so significant anymore.
OldSport
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Re: Portfolio disaster help please

Post by OldSport »

piq9540 wrote: Mon Jan 24, 2022 4:33 pm i dont know what the best option is. im just so embarrassed i overcomplicated something so simple. i hate to pay a massive tax bill going forward but i also fear a sector trailing the broader market
I have a very similar portfolio as you except also have a small amount of Intl and EM (10% each) thrown in. I've probably underperformed more than you, but I'm staying the course. Still over $1M with that allocation.

I'm essentially 50% VTI. 10% VIMAX, 10% VSMAX, 10% VTMSX, 10% VXUS, 10% VWO.

Didn't do it to "beat VTI" long term but did it for risk-adjusted diversification (Sharpe/Sortino) that made logical sense when putting it together in mid 2000s. So far simple VTI would have been better, but mostly due to last 5 year domestic US large cap growth Tech outperformance. I'm just staying the course. Hope it won't have a meaningful impact at this point.
smectym
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Re: Portfolio disaster help please

Post by smectym »

Tamarind wrote: Sat Jan 22, 2022 10:16 am For those who don't know the tickers, OP basically did a size tilt. Instead of just Total Stock Market added small and midcap funds.

There are plenty of folks here who are doing similar tilts, despite warnings that the small cap premium might not show up for decades. And it turns out large growth has had a very long run. It could have gone differently and you would have been pleased. If you change course now, it may go differently in the future. There's no way to be sure.

I think there's two parts to figuring out where you go from here:

1) The logical part. Do you still find the argument for small/mid persuasive? Is your actual risk tolerance lower than you thought it was, so that it's no longer worth it? Is the tax cost of the higher dividends heavier than you thought it would be? How does that annual tax drag compare to the capital gains cost of selling?

2) The psychological part. Given your description of the anticipated capital gains (20% of 30% of portfolio = $450k) if your math is correct you have a taxable portfolio in the multiple millions. It seems you may have lost your sense of proportion with regards to money. While greed has caused you to underperform the market, you are still fine. You were not owed outperformance by the universe. You still have enough.

You need to address #2 regardless of what you do with your investments.

I suggest you simply stop adding to your tilts. Put new money into VTI. If the opportunity arises to tax loss harvest from VTMSX and VO, then do so. If you like, sell some of these positions annually, and take a little of the capital gains tax at a time.

Another way to get out of those positions would be to donate the appreciated shares. That way you can skip the capital gains tax and the future dividends. You could do so over the course of several years if you didn't want to all at once. This would not only save you tax, but hopefully help relieve your feelings of embarrassment and shame. Every organization that helps people in need is under strain right now. You could make a profound difference to your local food bank.
A sensible analysis. In fact, investing is mostly about making a series of mistakes (or is that just me). The trick is, to mainly limit your mistakes to the kind that make less money than the unattainable optimal—rather than the type of mistake that trashes the portfolio.

According to that standard, OP has really done rather well.
OldSport
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Re: Portfolio disaster help please

Post by OldSport »

piq9540 wrote: Mon Jan 24, 2022 4:33 pm i dont know what the best option is. im just so embarrassed i overcomplicated something so simple. i hate to pay a massive tax bill going forward but i also fear a sector trailing the broader market
Embarrassed?? Look at my post. You're much closer to 100% VTI than me. Im OK with what I did. I cannot predict the future. How would you feel if VTMSX or VWO beats the pants off VTI for the next 10 years?
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neurosphere
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Re: Portfolio disaster help please

Post by neurosphere »

piq9540 wrote: Sat Jan 22, 2022 7:55 am 47 yo self employed male single no kids. Through my own stupidity and greed 16 years ago decided to diversify away from 100 percent vti in my stock allocation to 70 percent vti 15 percent vtmsx and 15 percent vo. In those years small and midcaps have underperformed and now i am stuck with a underperforming portfolio, almost 20 percent less than holding only vti, that also has 30 percent of its dividends not fully tax protected like vti. i am distraught by this horrible lack of judgement. My question is should i just cease the investments in vtmsx and vo and move forward with vti only. Second option is to sell all my vtmsx and vo shares converting to vti and pay a capital gains tax penalty of 450k. im embarrased and ashamed of what has transpired through my own blind greed and stupidity. help please:(
Congratuations on a very prudent, reasoned, and reasonable investment strategy at that time. I'm very impressed, and you've done very well! Now that almost 20 years have passed, you've learned that a somewhat more simply strategy may have been equally good. Mirroring what others have written DON'T FRET. There is absoltely no need to sell what you already have and pay taxes if you don't feel like it. Just keep those funds as is, don't reinvest dividends and capital gains, and put new money towards the investment of your choice. It may very well be that the "legacy" funds in your portfolio outperform VTI in the next 10-50 years. Kudos!
If you have to ask "Is a Target Date fund right for me?", the answer is "Yes" (even in taxable accounts).
gtrplayer
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Re: Portfolio disaster help please

Post by gtrplayer »

piq9540 wrote: Sat Jan 22, 2022 7:55 am 47 yo self employed male single no kids. Through my own stupidity and greed 16 years ago decided to diversify away from 100 percent vti in my stock allocation to 70 percent vti 15 percent vtmsx and 15 percent vo. In those years small and midcaps have underperformed and now i am stuck with a underperforming portfolio, almost 20 percent less than holding only vti, that also has 30 percent of its dividends not fully tax protected like vti. i am distraught by this horrible lack of judgement. My question is should i just cease the investments in vtmsx and vo and move forward with vti only. Second option is to sell all my vtmsx and vo shares converting to vti and pay a capital gains tax penalty of 450k. im embarrased and ashamed of what has transpired through my own blind greed and stupidity. help please:(
I don’t think you missed out on 20%, the math there doesn’t add up.

Also, you must have millions in the portfolio to have that tax bill when selling only 30% of it. Clearly you did something right?
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Tamarind
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Re: Portfolio disaster help please

Post by Tamarind »

piq9540 wrote: Mon Jan 24, 2022 5:20 pm expected capital gains tax is 450k. The problem with portfolio tinkering is you have to be disciplined im not. VTI keeps people from tinkering. I actually added vtmsx in jan 2017 and in that time it has trailed vti by a large amount. I should never have done this it was stupid and im trying to find the best way to fix this. im over allocated small and mid caps and i dont feel good about it. Vanguard doesnt recommend this and it was stupid to deviate. by selling vtmsx now i will pay a 130k capital gains tax as a penalty
You can't fix it in the sense of changing the past. Your problem is not about investing, it is emotional.

The solution which optimizes your wealth is to leave the small and midcap positions alone and just buy VTI going forward. Don't tinker anymore in the future.

I will repeat my suggestion that when you make charitable donations you should donate shares from the small and midcap positions. That will allow you to get rid of the shares while paying no capital gains tax and getting a deduction.

Here is an article for general audiences on the emotional benefits of donating: https://greatergood.berkeley.edu/articl ... od_for_you
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piq9540
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Sell international?

Post by piq9540 »

[Thread merged into here --admin LadyGeek]

Decided to diversify to 10 percent international in 2014. Even though Bogle advised against it. Well international has been killed by US stocks. Without sounding like a performance chaser. Should I just get all in to us? I keep thinking in a 20 year horizon US stocks will come out ahead. Just getting opinions.
3funder
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Re: Sell international?

Post by 3funder »

To the contrary, I would increase my international allocation. Every dog has its day, and US stocks are super expensive.
Global stocks, US bonds, and time.
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Cheez-It Guy
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Re: Sell international?

Post by Cheez-It Guy »

I don't have international. But usually whenever I make any change or financial decision, the opposite of what I would hope for happens shortly thereafter.
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ResearchMed
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Re: Sell international?

Post by ResearchMed »

piq9540 wrote: Tue Jan 25, 2022 12:12 pm Decided to diversify to 10 percent international in 2014. Even though Bogle advised against it. Well international has been killed by US stocks. Without sounding like a performance chaser. Should I just get all in to us? I keep thinking in a 20 year horizon US stocks will come out ahead. Just getting opinions.
First, welcome to Bogleheads!

Next, your question:
You are sounding *exactly* like a performance chaser :wink:

You even point to the performance of international ("international has been killed by US stock") in your reasoning.

Whether your current categories are right for you is indeed an important concern, but this kind of thinking shouldn't be the basis, and certainly not sort of on the run.

One of the most important things to learn is not to act in haste or in the heat of a specific day, especially with entire portfolio decisions.
IF you situation changes (retirement decision, other major life change), then yes, it would make sense to consider (calmly) whether your long term investing should change.

Good luck!

RM
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burritoLover
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Re: Sell international?

Post by burritoLover »

piq9540 wrote: Tue Jan 25, 2022 12:12 pm Decided to diversify to 10 percent international in 2014. Even though Bogle advised against it. Well international has been killed by US stocks. Without sounding like a performance chaser. Should I just get all in to us? I keep thinking in a 20 year horizon US stocks will come out ahead. Just getting opinions.
And what will you do if international outperforms the next 5, 10, 15, 20 or 25 years? Will you get back into international at any point along that spectrum because international has "killed" US stocks?
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LadyGeek
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Re: Portfolio disaster help please

Post by LadyGeek »

piq9540 - In order to provide appropriate advice, it's best to keep all the information in one spot. I merged your update back into the original thread. If you have any questions, ask them here.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
Da5id
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Re: Sell international?

Post by Da5id »

ResearchMed wrote: Tue Jan 25, 2022 12:20 pm
piq9540 wrote: Tue Jan 25, 2022 12:12 pm Decided to diversify to 10 percent international in 2014. Even though Bogle advised against it. Well international has been killed by US stocks. Without sounding like a performance chaser. Should I just get all in to us? I keep thinking in a 20 year horizon US stocks will come out ahead. Just getting opinions.
First, welcome to Bogleheads!

Next, your question:
You are sounding *exactly* like a performance chaser :wink:
Exactly. OP is a perfect candidate for an all-in-one fund and ignore it. IMO of course.
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TomatoTomahto
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Re: Sell international?

Post by TomatoTomahto »

Da5id wrote: Tue Jan 25, 2022 12:35 pm
ResearchMed wrote: Tue Jan 25, 2022 12:20 pm
piq9540 wrote: Tue Jan 25, 2022 12:12 pm Decided to diversify to 10 percent international in 2014. Even though Bogle advised against it. Well international has been killed by US stocks. Without sounding like a performance chaser. Should I just get all in to us? I keep thinking in a 20 year horizon US stocks will come out ahead. Just getting opinions.
First, welcome to Bogleheads!

Next, your question:
You are sounding *exactly* like a performance chaser :wink:
Exactly. OP is a perfect candidate for an all-in-one fund and ignore it. IMO of course.
The tax hit is too great to exchange your funds, but please OP, do yourself a favor (assuming your posts are in earnest) and get a Target Date fund or at least a World Equities Fund for your equities going forward.

I can’t begin to imagine the level of embarrassment and distress you must suffer for more meaningful events.
I get the FI part but not the RE part of FIRE.
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piq9540
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Re: Portfolio disaster help please

Post by piq9540 »

Going international was betting against America Buffett says never do that. International hasn't performed well since 1995(as far back as I can go on the charts). I'm not trying to ditch small and mid caps, I just want their allocations to be in line with VTI allocations.
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