Stocks, bonds on track for worst year since post-Civil War

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JoeRetire
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by JoeRetire »

ososnilknarf wrote: Fri Jul 01, 2022 3:01 pm I would argue that even comparing "first half years" is even kind of meaningless cherry picked data. Wouldn't it be more meaningful to compare any 6-month decline? Surely there are more larger ones if we don't confine ourselves to only Jan-June spans.
Very true. There's nothing magic about a 6 month span that happens to start in January.

Humans tend to pay more attention to and attribute more meaning to boundaries (1st of year, YTD, this day in history, etc), even when they have very little real meaning.
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by MnD »

Fremdon Ferndock wrote: Fri Jul 01, 2022 9:27 am It's a real challenge to maintain one's AA in the face of these kinds of headlines. Hopefully, "buy and hold" isn't going to turn into "buy and fold". If I were a young accumulator, the worse it looks the better it is. But, if I'm a retiree drawing down my retirement portfolio not so much.
Actually it's super-easy to stay the course as a retiree deriving income from portfolio if you have a properly constructed plan.
You have decades of experience and hopefully learned from all that.

I've been investing in stocks and bonds since July 86 right not long before the crash of 87.
In 35+ years of this game I've seen all the doom and gloom along with seeing (over and over) what happens to people that bail on their plan after significant declines. My portfolio which I draw from every month is still significantly higher than it was when I retired in late 2018 so I'd also quibble with the phrase "retiree drawing down my retirement portfolio". "Drawing from" is more accurate - lots of retirees have portfolios that grow throughout their retirement. I'm shooting for no real growth with a higher but variable SWR.
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by willthrill81 »

Fremdon Ferndock wrote: Fri Jul 01, 2022 9:27 am It's a real challenge to maintain one's AA in the face of these kinds of headlines. Hopefully, "buy and hold" isn't going to turn into "buy and fold". If I were a young accumulator, the worse it looks the better it is. But, if I'm a retiree drawing down my retirement portfolio not so much.
For a long time, some of us have been trying to warn folks that a portfolio comprised of only stocks and bonds isn't well diversified.
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by Zeno »

MnD wrote: Sun Jul 03, 2022 8:56 am
Fremdon Ferndock wrote: Fri Jul 01, 2022 9:27 am It's a real challenge to maintain one's AA in the face of these kinds of headlines. Hopefully, "buy and hold" isn't going to turn into "buy and fold". If I were a young accumulator, the worse it looks the better it is. But, if I'm a retiree drawing down my retirement portfolio not so much.
Actually it's super-easy to stay the course as a retiree deriving income from portfolio if you have a properly constructed plan.
You have decades of experience and hopefully learned from all that.

I've been investing in stocks and bonds since July 86 right not long before the crash of 87.
In 35+ years of this game I've seen all the doom and gloom along with seeing (over and over) what happens to people that bail on their plan after significant declines. My portfolio which I draw from every month is still significantly higher than it was when I retired in late 2018 so I'd also quibble with the phrase "retiree drawing down my retirement portfolio". "Drawing from" is more accurate - lots of retirees have portfolios that grow throughout their retirement. I'm shooting for no real growth with a higher but variable SWR.
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Last edited by Zeno on Mon Jul 11, 2022 9:09 pm, edited 1 time in total.
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by rockstar »

Here's some more doom and gloom for you:

https://www.autonews.com/sales/june-us- ... ses-toyota
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by PicassoSparks »

willthrill81 wrote: Sun Jul 03, 2022 9:35 am
Fremdon Ferndock wrote: Fri Jul 01, 2022 9:27 am It's a real challenge to maintain one's AA in the face of these kinds of headlines. Hopefully, "buy and hold" isn't going to turn into "buy and fold". If I were a young accumulator, the worse it looks the better it is. But, if I'm a retiree drawing down my retirement portfolio not so much.
For a long time, some of us have been trying to warn folks that a portfolio comprised of only stocks and bonds isn't well diversified.
For a long time, others of us have been trying to warn folks that headlines aren’t a great source of knowledge or investment timing advice.
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by willthrill81 »

PicassoSparks wrote: Mon Jul 04, 2022 12:51 pm
willthrill81 wrote: Sun Jul 03, 2022 9:35 am
Fremdon Ferndock wrote: Fri Jul 01, 2022 9:27 am It's a real challenge to maintain one's AA in the face of these kinds of headlines. Hopefully, "buy and hold" isn't going to turn into "buy and fold". If I were a young accumulator, the worse it looks the better it is. But, if I'm a retiree drawing down my retirement portfolio not so much.
For a long time, some of us have been trying to warn folks that a portfolio comprised of only stocks and bonds isn't well diversified.
For a long time, others of us have been trying to warn folks that headlines aren’t a great source of knowledge or investment timing advice.
Sound warning.
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by dogagility »

Fremdon Ferndock wrote: Fri Jul 01, 2022 9:27 am It's a real challenge to maintain one's AA in the face of these kinds of headlines.
Respectfully, I suggest you don't read this financial porn or start new forum threads seeking a discussion about it.
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Re: Stocks, bonds on track for worst year since post-Civil War

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willthrill81 wrote: Sun Jul 03, 2022 9:35 am
Fremdon Ferndock wrote: Fri Jul 01, 2022 9:27 am It's a real challenge to maintain one's AA in the face of these kinds of headlines. Hopefully, "buy and hold" isn't going to turn into "buy and fold". If I were a young accumulator, the worse it looks the better it is. But, if I'm a retiree drawing down my retirement portfolio not so much.
For a long time, some of us have been trying to warn folks that a portfolio comprised of only stocks and bonds isn't well diversified.
It doesn't seem like there has been any widespread recommendations for investments beyond stocks and bonds on Bogleheads. Of course there have been discussions of social security and annuities, but beyond those what alternatives have widespread support here on the forum? Certainly there's very limited support here for direct real estate, gold, commodities, etc.
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by LilyFleur »

dogagility wrote: Mon Jul 04, 2022 1:32 pm
Fremdon Ferndock wrote: Fri Jul 01, 2022 9:27 am It's a real challenge to maintain one's AA in the face of these kinds of headlines.
Respectfully, I suggest you don't read this financial porn or start new forum threads seeking a discussion about it.
I think we can be supportive of our Boglehead values in the face of a volatile market. I might have sold my equities in 2008 had I not had good advice to hang my hat on. That would have imperiled the fairly comfortable retirement I now enjoy. Younger folks who haven't weathered these types of conditions might need to hear from those of us who have.

This is a community, and our moderators do a good job curating it, so that we treat others with kindness and support.
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by willthrill81 »

tibbitts wrote: Mon Jul 04, 2022 1:44 pm
willthrill81 wrote: Sun Jul 03, 2022 9:35 am
Fremdon Ferndock wrote: Fri Jul 01, 2022 9:27 am It's a real challenge to maintain one's AA in the face of these kinds of headlines. Hopefully, "buy and hold" isn't going to turn into "buy and fold". If I were a young accumulator, the worse it looks the better it is. But, if I'm a retiree drawing down my retirement portfolio not so much.
For a long time, some of us have been trying to warn folks that a portfolio comprised of only stocks and bonds isn't well diversified.
It doesn't seem like there has been any widespread recommendations for investments beyond stocks and bonds on Bogleheads. Of course there have been discussions of social security and annuities, but beyond those what alternatives have widespread support here on the forum? Certainly there's very limited support here for direct real estate, gold, commodities, etc.
I agree that there hasn't been widespread support here for assets beyond TSM and TBM, but history has been clear that asset classes like SCV and gold have been helpful, and we're seeing that again in the current downturn.
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by rockstar »

willthrill81 wrote: Mon Jul 04, 2022 2:10 pm
tibbitts wrote: Mon Jul 04, 2022 1:44 pm
willthrill81 wrote: Sun Jul 03, 2022 9:35 am
Fremdon Ferndock wrote: Fri Jul 01, 2022 9:27 am It's a real challenge to maintain one's AA in the face of these kinds of headlines. Hopefully, "buy and hold" isn't going to turn into "buy and fold". If I were a young accumulator, the worse it looks the better it is. But, if I'm a retiree drawing down my retirement portfolio not so much.
For a long time, some of us have been trying to warn folks that a portfolio comprised of only stocks and bonds isn't well diversified.
It doesn't seem like there has been any widespread recommendations for investments beyond stocks and bonds on Bogleheads. Of course there have been discussions of social security and annuities, but beyond those what alternatives have widespread support here on the forum? Certainly there's very limited support here for direct real estate, gold, commodities, etc.
I agree that there hasn't been widespread support here for assets beyond TSM and TBM, but history has been clear that asset classes like SCV and gold have been helpful, and we're seeing that again in the current downturn.
The go to here has been the three fund portfolio. If you read Bogle's Little Book of Common Sense Investing, it's really a two fund portfolio with keeping fees down. If you read Graham's Intelligent Investor, he's negative on investments other than bonds and equities mainly because he states he doesn't understand how to value them. Marc Faber the doom and gloom guy is huge on gold and foreign markets. And if you read Bill Gross, he's opportunistic where ever he can find value.

If you read JP Morgan's guide to the markets, then REITs stand out: https://am.jpmorgan.com/us/en/asset-man ... e-markets/ (slide 63) And you can see a great separation now between an all equity approach versus a 60/40 portfolio.

I like Buffett's take where he says that if the common investor invested in the S&P 500 over time and continue to retirement that they will be in a good place.

Of course, there are so many different hairs to cut. There has been a lot of discussion on TIPS lately. Bond duration is finally becoming a topic. Last year there was a lot of discussion on small cap value. Real estate and gold probably get the least amount of love here.
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Re: Stocks, bonds on track for worst year since post-Civil War

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rockstar wrote: Mon Jul 04, 2022 2:21 pm Of course, there are so many different hairs to cut. There has been a lot of discussion on TIPS lately. Bond duration is finally becoming a topic. Last year there was a lot of discussion on small cap value. Real estate and gold probably get the least amount of love here.
I lost count of the threads and posts until 2021 at least of the flavor of 'SCV is bad', and many were clearly the product of recency bias. Many of the objections to gold are theoretical, despite there being significant empirical evidence that gold has been helpful. I've been espousing TIPS for fixed income for a long time, but many here seem to like TBM because it has the word 'total' in it.
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by abc132 »

willthrill81 wrote: Mon Jul 04, 2022 2:10 pm
tibbitts wrote: Mon Jul 04, 2022 1:44 pm
willthrill81 wrote: Sun Jul 03, 2022 9:35 am
Fremdon Ferndock wrote: Fri Jul 01, 2022 9:27 am It's a real challenge to maintain one's AA in the face of these kinds of headlines. Hopefully, "buy and hold" isn't going to turn into "buy and fold". If I were a young accumulator, the worse it looks the better it is. But, if I'm a retiree drawing down my retirement portfolio not so much.
For a long time, some of us have been trying to warn folks that a portfolio comprised of only stocks and bonds isn't well diversified.
It doesn't seem like there has been any widespread recommendations for investments beyond stocks and bonds on Bogleheads. Of course there have been discussions of social security and annuities, but beyond those what alternatives have widespread support here on the forum? Certainly there's very limited support here for direct real estate, gold, commodities, etc.
I agree that there hasn't been widespread support here for assets beyond TSM and TBM, but history has been clear that asset classes like SCV and gold have been helpful, and we're seeing that again in the current downturn.
Bonds are the first tier of diversification and probably the only one necessary to establish a financial plan that is not based on predicting the market. They are the best first choice of diversifier because they can guarantee a nominal or real return, unlike your other suggestions. Most anything beyond stocks and bonds becomes the realm of personal preference, speculation, and diminishing benefits.

When I look at discussions of these assets I notice that there is a business of quoting expert predictions of what to buy but hardly ever when to sell. I notice that backtesting is the primary reason for selecting an asset, and that a rational case for an asset can often be missing. As a specific example it doesn't seem actionable to me for someone to invest in a gold with an expected real return for gold. I would argue that a very strong case has been made for a stock/bond index portfolio, and that the case is weaker from there.

The more choices a person has to make the more likely they will succumb to behavioral issues, whether that is picking past winners, trying to be in the cool asset, timing the market, or constantly changing strategy and being unable to stick to a plan. If unsuccessful predictions can only be measured over a decade while successful predictions are declared over a much shorter span, this sets up a condition for behavioral error.

In conclusion, there really needs to be a stronger case if the a majority Boglehead recommendation is going to be to have SCV, gold, commodities, and direct real estate. I think most disagreement is about assuming this are very likely to be beneficial for the majority of Bogleheads and thus should be default recommendations, and not based on the idea that nobody should own them.
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by nisiprius »

willthrill81 wrote: Mon Jul 04, 2022 2:34 pm...I've been espousing TIPS for fixed income for a long time, but many here seem to like TBM because it has the word 'total' in it...
It probably is not helpful trying to analyze what "many here" have or have not been saying, but for the record TIPS have been very popular and much discussed in the forum. There was even a joke thread started about them in October, 2008... back in the days when moderators were more tolerant of frivolous threads...

TIPS, TIPS and more TIPS

"Maybe the forum needs to start a new section: 'All TIPS, All The Time'"

and dad-joke-quality puns.

It's not in this thread, but at one time VictoriaF had a sig reading "The name is TIPS. James TIPS."

And the one I really wish I could find... joking about the way most investment writers ignored the existence of TIPS, almost as if they did not exist, one poster said that it was an acronym for "The Investment Professionals Shun."

And Larry Swedroe on MoneyWatch, as well as here in the forum,
This blog is about the science of investing. And the recommendations from academic papers are that TIPS should dominate fixed income portfolios. One paper even recommended a 100 percent allocation to TIPS.
The book, The Bogleheads' Guide to Investing has a full chapter on TIPS and I bonds--it's one of the very few investment books even to mention I bonds.
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Re: Stocks, bonds on track for worst year since post-Civil War

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nisiprius wrote: Mon Jul 04, 2022 4:55 pm
willthrill81 wrote: Mon Jul 04, 2022 2:34 pm...I've been espousing TIPS for fixed income for a long time, but many here seem to like TBM because it has the word 'total' in it...
It probably is not helpful trying to analyze what "many here" have or have not been saying, but for the record TIPS have been very popular and much discussed in the forum.
Perhaps I've missed something in my years on the forum, but nearly every iteration of the 3-fund portfolio I've seen includes TBM, not TIPS.

To be sure, many here have had TIPS for a long time. But they seem to pale in comparison to how often TBM is used and recommended.
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by Ocean77 »

Chip wrote: Fri Jul 01, 2022 10:06 am The article annualized the YTD results, which I might charitably call really stupid.
:mrgreen: Indeed! And I got a laughing fit at reading this!
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by rockstar »

willthrill81 wrote: Mon Jul 04, 2022 6:27 pm
nisiprius wrote: Mon Jul 04, 2022 4:55 pm
willthrill81 wrote: Mon Jul 04, 2022 2:34 pm...I've been espousing TIPS for fixed income for a long time, but many here seem to like TBM because it has the word 'total' in it...
It probably is not helpful trying to analyze what "many here" have or have not been saying, but for the record TIPS have been very popular and much discussed in the forum.
Perhaps I've missed something in my years on the forum, but nearly every iteration of the 3-fund portfolio I've seen includes TBM, not TIPS.

To be sure, many here have had TIPS for a long time. But they seem to pale in comparison to how often TBM is used and recommended.
It's the go to recommendation here. I agree with your total comment. The simplest bit is holding the S&P 500 index fund. Fixed income isn't straight forward even with rates much higher. Remember all of the discussions about not having an emergency fund or emergency fund alternatives? I really hope folks haven't put their emergency fund into BND.

I feel like the only reason folks are questioning BND today is because it's likely to be negative for two years in a row. And the yields are really low too.
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by Dude2 »

Correct me if I'm wrong, and I realize this isn't a gold thread. The issue is and has always been how to hold gold, i.e. the difficulties associated with that aspect of it. In a forum that wants to optimize out expense ratios and trading costs, this is in my mind the chief reason we don't recommend gold. Sure, gold detractors can think of a few more good reasons, but that to me is the number 1 Boglehead reason for disassociation from gold as part of a well balanced, low-cost, passive portfolio.

In other words, if you gave me a mechanism to own gold such as if Vanguard or Fidelity (major players with deep pockets) offered a highly liquid, low cost, gold fund -- that maybe owned the real stuff, not stocks in gold mining companies or paper representing futures or options in gold or even perhaps currency that was referenced to gold -- and despite all of the storage costs and insurance costs that might be associated with it, and the bid/ask spreads were as good as stock and bonds, etc. I think at that point we'd all be on board. Otherwise, it's dubious, and everybody is doing their own thing with respect to gold.

Like I say, correct me if I'm wrong. I don't know nothing. This is what my antennae pick up. I am gold neutral -- always wishing that it would "bottom out" so I could sweep it up.
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by MichRoots »

I am not a big fan of gold. When I see late night commercials pushing gold, it makes me think it's snake oil. Sure gold did well in the 10% inflation period of the late 1970s (but since you earn no dividends, what is the point?). Stocks could earn 25% dividends over 10 years which gives them a huge advantage over gold IMO. Yes, you can try to time the market with gold and do okay. But gold should probably not be in your portfolio unless you are over age 50 and want to take your risk down.
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by Fremdon Ferndock »

MichRoots wrote: Tue Jul 05, 2022 7:54 am I am not a big fan of gold. When I see late night commercials pushing gold, it makes me think it's snake oil. Sure gold did well in the 10% inflation period of the late 1970s (but since you earn no dividends, what is the point?). Stocks could earn 25% dividends over 10 years which gives them a huge advantage over gold IMO. Yes, you can try to time the market with gold and do okay. But gold should probably not be in your portfolio unless you are over age 50 and want to take your risk down.
Been holding gold and commodities, but getting out of both. They've been declining steadily and are both below their 200-day MA. I surmise the market is expecting a recession, so stocks, gold, and commodities are all headed down together. Gold and commodities can be helpful over the short run but over the long run they're dogs. Can't overstay your welcome with these assets.
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by Call_Me_Op »

firebirdparts wrote: Fri Jul 01, 2022 1:13 pm
Call_Me_Op wrote: Fri Jul 01, 2022 10:13 am
Chip wrote: Fri Jul 01, 2022 10:06 am
Valuethinker wrote: Fri Jul 01, 2022 9:48 am I find both assertions to be absolutely baffling.

US stocks are down more than 2008? Let alone 1931? 1938? 1973?
The article annualized the YTD results, which I might charitably call really stupid.
Note that they said "in real terms." There is an 8.6% haircut from inflation alone.
Well, now, YTD that's a 4.3% haircut, sir.
I was referring to the past year - not YTD - sir. But I can see why one might assume I meant YTD.
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by willthrill81 »

Dude2 wrote: Tue Jul 05, 2022 7:21 am Correct me if I'm wrong, and I realize this isn't a gold thread. The issue is and has always been how to hold gold, i.e. the difficulties associated with that aspect of it. In a forum that wants to optimize out expense ratios and trading costs, this is in my mind the chief reason we don't recommend gold. Sure, gold detractors can think of a few more good reasons, but that to me is the number 1 Boglehead reason for disassociation from gold as part of a well balanced, low-cost, passive portfolio.

In other words, if you gave me a mechanism to own gold such as if Vanguard or Fidelity (major players with deep pockets) offered a highly liquid, low cost, gold fund -- that maybe owned the real stuff, not stocks in gold mining companies or paper representing futures or options in gold or even perhaps currency that was referenced to gold -- and despite all of the storage costs and insurance costs that might be associated with it, and the bid/ask spreads were as good as stock and bonds, etc. I think at that point we'd all be on board. Otherwise, it's dubious, and everybody is doing their own thing with respect to gold.

Like I say, correct me if I'm wrong. I don't know nothing. This is what my antennae pick up. I am gold neutral -- always wishing that it would "bottom out" so I could sweep it up.
Funds like GLD and IAU have closely tracked the price of gold for a long while now and have low ERs.
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by Dude2 »

willthrill81 wrote: Tue Jul 05, 2022 9:51 am
Dude2 wrote: Tue Jul 05, 2022 7:21 am Correct me if I'm wrong, and I realize this isn't a gold thread. The issue is and has always been how to hold gold, i.e. the difficulties associated with that aspect of it. In a forum that wants to optimize out expense ratios and trading costs, this is in my mind the chief reason we don't recommend gold. Sure, gold detractors can think of a few more good reasons, but that to me is the number 1 Boglehead reason for disassociation from gold as part of a well balanced, low-cost, passive portfolio.

In other words, if you gave me a mechanism to own gold such as if Vanguard or Fidelity (major players with deep pockets) offered a highly liquid, low cost, gold fund -- that maybe owned the real stuff, not stocks in gold mining companies or paper representing futures or options in gold or even perhaps currency that was referenced to gold -- and despite all of the storage costs and insurance costs that might be associated with it, and the bid/ask spreads were as good as stock and bonds, etc. I think at that point we'd all be on board. Otherwise, it's dubious, and everybody is doing their own thing with respect to gold.

Like I say, correct me if I'm wrong. I don't know nothing. This is what my antennae pick up. I am gold neutral -- always wishing that it would "bottom out" so I could sweep it up.
Funds like GLD and IAU have closely tracked the price of gold for a long while now and have low ERs.
Thanks for your input, Will. I'm always looking to get educated on something. These funds also, do they avoid any tax consequences that put you in a different category -- the whatever it is collectibles tax? I'll assume so or you wouldn't be dealing with it probably. I guess tracking the gold price is good enough in the sense that you could use these funds as a gold proxy (as a rebalance tool), and maybe that's all we need it for. I'm sure somebody might try to pry into how holding the funds is different than owning physical gold or perhaps how when the s hits the fan, they somehow will deviate from actual physical ownership or something. When all you need is as little as a few percentage points to make a difference, it gives me motivation to be open minded.
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by Valuethinker »

MichRoots wrote: Tue Jul 05, 2022 7:54 am I am not a big fan of gold. When I see late night commercials pushing gold, it makes me think it's snake oil. Sure gold did well in the 10% inflation period of the late 1970s (but since you earn no dividends, what is the point?). Stocks could earn 25% dividends over 10 years which gives them a huge advantage over gold IMO. Yes, you can try to time the market with gold and do okay. But gold should probably not be in your portfolio unless you are over age 50 and want to take your risk down.
Gold seemed to be supplanted in recent years by another class of "investable assets" (starts with c, but we are not allowed to discuss here).

I agree gold always has that kind of fringey-culty aspect to it. Late night cable tv etc. Hyperinflation. End of the world. etc etc. Has done since the early 80s (or before) and its all-time high real price (adjusted for inflation).

That said I have softened on gold, particularly after reading William Bernstein

http://www.efficientfrontier.com/ef/adhoc/gold.htm from 2005

I can see a place for it in a well-diversified portfolio.

That said, and poster market timer had a neat graph of this once, in recent years gold appeared to move very much as an inverse of the US inflation linked bond yield (say 10 year). In other words, the "carry trade" again - borrowing lost cost and investing long in more risky assets.

So gold became a play on US real interest rates. Which are now going up. And that's not good news for gold.

I found it impossible to put 10% of my portfolio (and it would need that kind of level of investment to make a difference) in an asset whose inherent return is arguably zero (minus storage & handling costs, which should be quite low). That's a painful thing to have in your portfolio.
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by Valuethinker »

Dude2 wrote: Tue Jul 05, 2022 11:40 am
willthrill81 wrote: Tue Jul 05, 2022 9:51 am
Dude2 wrote: Tue Jul 05, 2022 7:21 am Correct me if I'm wrong, and I realize this isn't a gold thread. The issue is and has always been how to hold gold, i.e. the difficulties associated with that aspect of it. In a forum that wants to optimize out expense ratios and trading costs, this is in my mind the chief reason we don't recommend gold. Sure, gold detractors can think of a few more good reasons, but that to me is the number 1 Boglehead reason for disassociation from gold as part of a well balanced, low-cost, passive portfolio.

In other words, if you gave me a mechanism to own gold such as if Vanguard or Fidelity (major players with deep pockets) offered a highly liquid, low cost, gold fund -- that maybe owned the real stuff, not stocks in gold mining companies or paper representing futures or options in gold or even perhaps currency that was referenced to gold -- and despite all of the storage costs and insurance costs that might be associated with it, and the bid/ask spreads were as good as stock and bonds, etc. I think at that point we'd all be on board. Otherwise, it's dubious, and everybody is doing their own thing with respect to gold.

Like I say, correct me if I'm wrong. I don't know nothing. This is what my antennae pick up. I am gold neutral -- always wishing that it would "bottom out" so I could sweep it up.
Funds like GLD and IAU have closely tracked the price of gold for a long while now and have low ERs.
Thanks for your input, Will. I'm always looking to get educated on something. These funds also, do they avoid any tax consequences that put you in a different category -- the whatever it is collectibles tax? I'll assume so or you wouldn't be dealing with it probably. I guess tracking the gold price is good enough in the sense that you could use these funds as a gold proxy (as a rebalance tool), and maybe that's all we need it for. I'm sure somebody might try to pry into how holding the funds is different than owning physical gold or perhaps how when the s hits the fan, they somehow will deviate from actual physical ownership or something. When all you need is as little as a few percentage points to make a difference, it gives me motivation to be open minded.
There's a gold ETF. Unlike other commodities ETFs (where storage costs are very large) the gold ETFs track the underlying metal pretty well, I think.
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by willthrill81 »

Dude2 wrote: Tue Jul 05, 2022 11:40 am
willthrill81 wrote: Tue Jul 05, 2022 9:51 am
Dude2 wrote: Tue Jul 05, 2022 7:21 am Correct me if I'm wrong, and I realize this isn't a gold thread. The issue is and has always been how to hold gold, i.e. the difficulties associated with that aspect of it. In a forum that wants to optimize out expense ratios and trading costs, this is in my mind the chief reason we don't recommend gold. Sure, gold detractors can think of a few more good reasons, but that to me is the number 1 Boglehead reason for disassociation from gold as part of a well balanced, low-cost, passive portfolio.

In other words, if you gave me a mechanism to own gold such as if Vanguard or Fidelity (major players with deep pockets) offered a highly liquid, low cost, gold fund -- that maybe owned the real stuff, not stocks in gold mining companies or paper representing futures or options in gold or even perhaps currency that was referenced to gold -- and despite all of the storage costs and insurance costs that might be associated with it, and the bid/ask spreads were as good as stock and bonds, etc. I think at that point we'd all be on board. Otherwise, it's dubious, and everybody is doing their own thing with respect to gold.

Like I say, correct me if I'm wrong. I don't know nothing. This is what my antennae pick up. I am gold neutral -- always wishing that it would "bottom out" so I could sweep it up.
Funds like GLD and IAU have closely tracked the price of gold for a long while now and have low ERs.
Thanks for your input, Will. I'm always looking to get educated on something. These funds also, do they avoid any tax consequences that put you in a different category -- the whatever it is collectibles tax? I'll assume so or you wouldn't be dealing with it probably. I guess tracking the gold price is good enough in the sense that you could use these funds as a gold proxy (as a rebalance tool), and maybe that's all we need it for. I'm sure somebody might try to pry into how holding the funds is different than owning physical gold or perhaps how when the s hits the fan, they somehow will deviate from actual physical ownership or something. When all you need is as little as a few percentage points to make a difference, it gives me motivation to be open minded.
If you're only holding gold for portfolio efficiency purposes, then an ETF is fine. Doing so avoids the comparatively high bid/ask spreads of physical gold. My understanding is that realized gains of at least most of the gold ETFs would be subject to the collectibles tax, which simply means that the gains are taxed at the lesser of your marginal tax rate or 28%. Holding gold in a tax-advantaged account obviously sidesteps all that.
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by Fremdon Ferndock »

Buying gold now is pretty much shutting the barn door a day or two after Nellie has left. The time to do it was yesterday. Just sayin'
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by willthrill81 »

Valuethinker wrote: Tue Jul 05, 2022 11:48 am
MichRoots wrote: Tue Jul 05, 2022 7:54 am I am not a big fan of gold. When I see late night commercials pushing gold, it makes me think it's snake oil. Sure gold did well in the 10% inflation period of the late 1970s (but since you earn no dividends, what is the point?). Stocks could earn 25% dividends over 10 years which gives them a huge advantage over gold IMO. Yes, you can try to time the market with gold and do okay. But gold should probably not be in your portfolio unless you are over age 50 and want to take your risk down.
Gold seemed to be supplanted in recent years by another class of "investable assets" (starts with c, but we are not allowed to discuss here).

I agree gold always has that kind of fringey-culty aspect to it. Late night cable tv etc. Hyperinflation. End of the world. etc etc. Has done since the early 80s (or before) and its all-time high real price (adjusted for inflation).

That said I have softened on gold, particularly after reading William Bernstein

http://www.efficientfrontier.com/ef/adhoc/gold.htm from 2005

I can see a place for it in a well-diversified portfolio.

That said, and poster market timer had a neat graph of this once, in recent years gold appeared to move very much as an inverse of the US inflation linked bond yield (say 10 year). In other words, the "carry trade" again - borrowing lost cost and investing long in more risky assets.

So gold became a play on US real interest rates. Which are now going up. And that's not good news for gold.

I found it impossible to put 10% of my portfolio (and it would need that kind of level of investment to make a difference) in an asset whose inherent return is arguably zero (minus storage & handling costs, which should be quite low). That's a painful thing to have in your portfolio.
An argument could certainly be made for holding 5% gold (even Bogle suggested it once for an endowment fund), but I agree that 10% is probably the minimum to result in a meaningful benefit.

I'm not convinced that the theory that gold's expected real return is zero is sound. Statisticians say that the gold's real return has not been statistically different from zero since the unwinding of Bretton Woods, even though the actual real return has been positive. If demand for gold outstrips supply, then prices can go up even though gold is 'just a shiny metal that sits there'. But all that is aside from the fact that gold has historically done well when U.S. stocks at least have faltered over multi-year periods. A modest allocation to gold has significantly improved historic SWRs. It's certainly holding up much better than stocks or bonds right now, and it's had significantly higher returns than both since the year 2000.
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by willthrill81 »

Fremdon Ferndock wrote: Tue Jul 05, 2022 12:25 pm Buying gold now is pretty much shutting the barn door a day or two after Nellie has left. The time to do it was yesterday. Just sayin'
Maybe, maybe not. Gold is almost flat YTD, which is a lot better than can be said of stocks or bonds.
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by Vulcan »

nisiprius wrote: Mon Jul 04, 2022 4:55 pm It's not in this thread, but at one time VictoriaF had a sig reading "The name is TIPS. James TIPS."
Forum signature doesn't stay static with the post but rather changes everywhere once changed.
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by Fremdon Ferndock »

willthrill81 wrote: Tue Jul 05, 2022 12:29 pm
Fremdon Ferndock wrote: Tue Jul 05, 2022 12:25 pm Buying gold now is pretty much shutting the barn door a day or two after Nellie has left. The time to do it was yesterday. Just sayin'
Maybe, maybe not. Gold is almost flat YTD, which is a lot better than can be said of stocks or bonds.
Since 1977 (earliest time available for short treasuries), the annualized nominal return from gold has been 5.70% with a max drawdown of -61.78% that lasted from 1980 to 1999. By comparison, short-term treasuries returned 5.52% annualized with a max drawdown of -4.26%. Which one do you think you would have been able to hold w/o bailing out? This year, short treasuries have lost about 3% while gold is down about 1.5%. Markets have been in turmoil, we have the war in Ukraine, there have been major supply shocks, and inflation is raging. Gold?
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by canadianbacon »

willthrill81 wrote: Tue Jul 05, 2022 12:29 pm
Fremdon Ferndock wrote: Tue Jul 05, 2022 12:25 pm Buying gold now is pretty much shutting the barn door a day or two after Nellie has left. The time to do it was yesterday. Just sayin'
Maybe, maybe not. Gold is almost flat YTD, which is a lot better than can be said of stocks or bonds.
Based on secondary market prices, music gear is doing better than gold, but I wouldn't suggest it as an investment based on that.
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by willthrill81 »

Fremdon Ferndock wrote: Wed Jul 06, 2022 8:22 am
willthrill81 wrote: Tue Jul 05, 2022 12:29 pm
Fremdon Ferndock wrote: Tue Jul 05, 2022 12:25 pm Buying gold now is pretty much shutting the barn door a day or two after Nellie has left. The time to do it was yesterday. Just sayin'
Maybe, maybe not. Gold is almost flat YTD, which is a lot better than can be said of stocks or bonds.
Since 1977 (earliest time available for short treasuries), the annualized nominal return from gold has been 5.70% with a max drawdown of -61.78% that lasted from 1980 to 1999. By comparison, short-term treasuries returned 5.52% annualized with a max drawdown of -4.26%. Which one do you think you would have been able to hold w/o bailing out? This year, short treasuries have lost about 3% while gold is down about 1.5%. Markets have been in turmoil, we have the war in Ukraine, there have been major supply shocks, and inflation is raging. Gold?
I don't dispute any of that. The behavioral risk of holding gold has been quite high. But in small 'doses' (e.g., 5-20%), it's been helpful as a means of counter-balancing extended periods of poor stock performance.
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by willthrill81 »

canadianbacon wrote: Wed Jul 06, 2022 9:21 am
willthrill81 wrote: Tue Jul 05, 2022 12:29 pm
Fremdon Ferndock wrote: Tue Jul 05, 2022 12:25 pm Buying gold now is pretty much shutting the barn door a day or two after Nellie has left. The time to do it was yesterday. Just sayin'
Maybe, maybe not. Gold is almost flat YTD, which is a lot better than can be said of stocks or bonds.
Based on secondary market prices, music gear is doing better than gold, but I wouldn't suggest it as an investment based on that.
Especially since most of that gear will likely be obsolete in a few years. The alchemists haven't yet figured out how to transform lead into gold.
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by canadianbacon »

willthrill81 wrote: Wed Jul 06, 2022 9:38 am
canadianbacon wrote: Wed Jul 06, 2022 9:21 am
willthrill81 wrote: Tue Jul 05, 2022 12:29 pm
Fremdon Ferndock wrote: Tue Jul 05, 2022 12:25 pm Buying gold now is pretty much shutting the barn door a day or two after Nellie has left. The time to do it was yesterday. Just sayin'
Maybe, maybe not. Gold is almost flat YTD, which is a lot better than can be said of stocks or bonds.
Based on secondary market prices, music gear is doing better than gold, but I wouldn't suggest it as an investment based on that.
Especially since most of that gear will likely be obsolete in a few years. The alchemists haven't yet figured out how to transform lead into gold.
The point wasn't to compare music gear with gold, it was to point out the silliness of using a six-month period to argue for an asset class as part of an investment strategy.

I think there is a test to apply to such an argument. If gold were down 40% YTD, so worse than stocks and bonds, and someone posted saying that was a reason to never invest in gold, would you accept that? I assume you would not.
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by willthrill81 »

canadianbacon wrote: Wed Jul 06, 2022 10:07 am
willthrill81 wrote: Wed Jul 06, 2022 9:38 am
canadianbacon wrote: Wed Jul 06, 2022 9:21 am
willthrill81 wrote: Tue Jul 05, 2022 12:29 pm
Fremdon Ferndock wrote: Tue Jul 05, 2022 12:25 pm Buying gold now is pretty much shutting the barn door a day or two after Nellie has left. The time to do it was yesterday. Just sayin'
Maybe, maybe not. Gold is almost flat YTD, which is a lot better than can be said of stocks or bonds.
Based on secondary market prices, music gear is doing better than gold, but I wouldn't suggest it as an investment based on that.
Especially since most of that gear will likely be obsolete in a few years. The alchemists haven't yet figured out how to transform lead into gold.
The point wasn't to compare music gear with gold, it was to point out the silliness of using a six-month period to argue for an asset class as part of an investment strategy.

I think there is a test to apply to such an argument. If gold were down 40% YTD, so worse than stocks and bonds, and someone posted saying that was a reason to never invest in gold, would you accept that? I assume you would not.
I agree that using short-term periods to analyze strategies that should inherently be long-term is highly fallacious. We've seen a lot of that here over the years, even by very prominent posters.
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by rkhusky »

One should look at short-, mid-, and long-term performance to determine the suitability of an investment.
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by HomerJ »

willthrill81 wrote: Mon Jul 04, 2022 2:10 pm
tibbitts wrote: Mon Jul 04, 2022 1:44 pm
willthrill81 wrote: Sun Jul 03, 2022 9:35 am
Fremdon Ferndock wrote: Fri Jul 01, 2022 9:27 am It's a real challenge to maintain one's AA in the face of these kinds of headlines. Hopefully, "buy and hold" isn't going to turn into "buy and fold". If I were a young accumulator, the worse it looks the better it is. But, if I'm a retiree drawing down my retirement portfolio not so much.
For a long time, some of us have been trying to warn folks that a portfolio comprised of only stocks and bonds isn't well diversified.
It doesn't seem like there has been any widespread recommendations for investments beyond stocks and bonds on Bogleheads. Of course there have been discussions of social security and annuities, but beyond those what alternatives have widespread support here on the forum? Certainly there's very limited support here for direct real estate, gold, commodities, etc.
I agree that there hasn't been widespread support here for assets beyond TSM and TBM, but history has been clear that asset classes like SCV and gold have been helpful, and we're seeing that again in the current downturn.
SCV and gold have not helped that much in the current downturn. Cash has been better than gold.
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by willthrill81 »

HomerJ wrote: Wed Jul 06, 2022 12:29 pm
willthrill81 wrote: Mon Jul 04, 2022 2:10 pm
tibbitts wrote: Mon Jul 04, 2022 1:44 pm
willthrill81 wrote: Sun Jul 03, 2022 9:35 am
Fremdon Ferndock wrote: Fri Jul 01, 2022 9:27 am It's a real challenge to maintain one's AA in the face of these kinds of headlines. Hopefully, "buy and hold" isn't going to turn into "buy and fold". If I were a young accumulator, the worse it looks the better it is. But, if I'm a retiree drawing down my retirement portfolio not so much.
For a long time, some of us have been trying to warn folks that a portfolio comprised of only stocks and bonds isn't well diversified.
It doesn't seem like there has been any widespread recommendations for investments beyond stocks and bonds on Bogleheads. Of course there have been discussions of social security and annuities, but beyond those what alternatives have widespread support here on the forum? Certainly there's very limited support here for direct real estate, gold, commodities, etc.
I agree that there hasn't been widespread support here for assets beyond TSM and TBM, but history has been clear that asset classes like SCV and gold have been helpful, and we're seeing that again in the current downturn.
SCV and gold have not helped that much in the current downturn.
I don't see why you believe that. Through June, GLD was down only -1.5%, and AVUV was down -13.7%, compared to VTSAX being down -21.4% and BND being down -10.4%.
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by folkher0 »

willthrill81 wrote: Wed Jul 06, 2022 12:52 pm
HomerJ wrote: Wed Jul 06, 2022 12:29 pm
willthrill81 wrote: Mon Jul 04, 2022 2:10 pm
tibbitts wrote: Mon Jul 04, 2022 1:44 pm
willthrill81 wrote: Sun Jul 03, 2022 9:35 am

For a long time, some of us have been trying to warn folks that a portfolio comprised of only stocks and bonds isn't well diversified.
It doesn't seem like there has been any widespread recommendations for investments beyond stocks and bonds on Bogleheads. Of course there have been discussions of social security and annuities, but beyond those what alternatives have widespread support here on the forum? Certainly there's very limited support here for direct real estate, gold, commodities, etc.
I agree that there hasn't been widespread support here for assets beyond TSM and TBM, but history has been clear that asset classes like SCV and gold have been helpful, and we're seeing that again in the current downturn.
SCV and gold have not helped that much in the current downturn.
I don't see why you believe that. Through June, GLD was down only -1.5%, and AVUV was down -13.7%, compared to VTSAX being down -21.4% and BND being down -10.4%.
It looks like AVUV is down 20% from ATH right now.
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by willthrill81 »

folkher0 wrote: Wed Jul 06, 2022 2:02 pm
willthrill81 wrote: Wed Jul 06, 2022 12:52 pm
HomerJ wrote: Wed Jul 06, 2022 12:29 pm
willthrill81 wrote: Mon Jul 04, 2022 2:10 pm
tibbitts wrote: Mon Jul 04, 2022 1:44 pm
It doesn't seem like there has been any widespread recommendations for investments beyond stocks and bonds on Bogleheads. Of course there have been discussions of social security and annuities, but beyond those what alternatives have widespread support here on the forum? Certainly there's very limited support here for direct real estate, gold, commodities, etc.
I agree that there hasn't been widespread support here for assets beyond TSM and TBM, but history has been clear that asset classes like SCV and gold have been helpful, and we're seeing that again in the current downturn.
SCV and gold have not helped that much in the current downturn.
I don't see why you believe that. Through June, GLD was down only -1.5%, and AVUV was down -13.7%, compared to VTSAX being down -21.4% and BND being down -10.4%.
It looks like AVUV is down 20% from ATH right now.
I was referring to YTD performance but didn't make that clear.
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by folkher0 »

willthrill81 wrote: Wed Jul 06, 2022 2:39 pm
folkher0 wrote: Wed Jul 06, 2022 2:02 pm
willthrill81 wrote: Wed Jul 06, 2022 12:52 pm
HomerJ wrote: Wed Jul 06, 2022 12:29 pm
willthrill81 wrote: Mon Jul 04, 2022 2:10 pm

I agree that there hasn't been widespread support here for assets beyond TSM and TBM, but history has been clear that asset classes like SCV and gold have been helpful, and we're seeing that again in the current downturn.
SCV and gold have not helped that much in the current downturn.
I don't see why you believe that. Through June, GLD was down only -1.5%, and AVUV was down -13.7%, compared to VTSAX being down -21.4% and BND being down -10.4%.
It looks like AVUV is down 20% from ATH right now.
I was referring to YTD performance but didn't make that clear.
I get it. I mean the whole thread is YTD. My point is that practically speaking, unless you could time it, AVUV hasn't been helpful "in the current downturn."
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by Fremdon Ferndock »

Since peaking on March 8, the GLD ETF is down by -18.1%. Just sayin'
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by willthrill81 »

folkher0 wrote: Wed Jul 06, 2022 3:21 pm
willthrill81 wrote: Wed Jul 06, 2022 2:39 pm
folkher0 wrote: Wed Jul 06, 2022 2:02 pm
willthrill81 wrote: Wed Jul 06, 2022 12:52 pm
HomerJ wrote: Wed Jul 06, 2022 12:29 pm

SCV and gold have not helped that much in the current downturn.
I don't see why you believe that. Through June, GLD was down only -1.5%, and AVUV was down -13.7%, compared to VTSAX being down -21.4% and BND being down -10.4%.
It looks like AVUV is down 20% from ATH right now.
I was referring to YTD performance but didn't make that clear.
I get it. I mean the whole thread is YTD. My point is that practically speaking, unless you could time it, AVUV hasn't been helpful "in the current downturn."
My point is that since the downturn for TSM started, AVUV hasn't fallen as much.

Beyond that, since its inception in 2019 until the end of June, AVUV has returned 13.6% nominal vs. 10.1% for VTSAX. So while AVUV has fallen from its peak in similar fashion to VTSAX, AVUV is still ahead.
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by HomerJ »

willthrill81 wrote: Wed Jul 06, 2022 12:52 pm
HomerJ wrote: Wed Jul 06, 2022 12:29 pm
willthrill81 wrote: Mon Jul 04, 2022 2:10 pm
tibbitts wrote: Mon Jul 04, 2022 1:44 pm
willthrill81 wrote: Sun Jul 03, 2022 9:35 am

For a long time, some of us have been trying to warn folks that a portfolio comprised of only stocks and bonds isn't well diversified.
It doesn't seem like there has been any widespread recommendations for investments beyond stocks and bonds on Bogleheads. Of course there have been discussions of social security and annuities, but beyond those what alternatives have widespread support here on the forum? Certainly there's very limited support here for direct real estate, gold, commodities, etc.
I agree that there hasn't been widespread support here for assets beyond TSM and TBM, but history has been clear that asset classes like SCV and gold have been helpful, and we're seeing that again in the current downturn.
SCV and gold have not helped that much in the current downturn.
I don't see why you believe that. Through June, GLD was down only -1.5%, and AVUV was down -13.7%, compared to VTSAX being down -21.4% and BND being down -10.4%.
I'm not sure you should be using AVUV, instead of the average SCV fund. Portfolio visualizer shows small value asset class as being down -15.5%

But anyway, my point stands, they didn't help that much. It's not like they were zigging when US stock market was zagging. Both SCV and International dropped at the same time as US stock market, just slightly less.

Just tilting a bit to SCV wouldn't have changed much...

YTD:

100% US stock market returned -21%
80/20 US stock market/SCV returned -20%
60/40 US stock market/SCV returned -19%

I guess having gold would have helped more, but how much are you suggesting one have in gold? 10%?

And in that case, 10% in cash would have helped more than gold.

I'm just saying tilting hasn't helped that much.
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by willthrill81 »

HomerJ wrote: Wed Jul 06, 2022 5:35 pm
willthrill81 wrote: Wed Jul 06, 2022 12:52 pm
HomerJ wrote: Wed Jul 06, 2022 12:29 pm
willthrill81 wrote: Mon Jul 04, 2022 2:10 pm
tibbitts wrote: Mon Jul 04, 2022 1:44 pm
It doesn't seem like there has been any widespread recommendations for investments beyond stocks and bonds on Bogleheads. Of course there have been discussions of social security and annuities, but beyond those what alternatives have widespread support here on the forum? Certainly there's very limited support here for direct real estate, gold, commodities, etc.
I agree that there hasn't been widespread support here for assets beyond TSM and TBM, but history has been clear that asset classes like SCV and gold have been helpful, and we're seeing that again in the current downturn.
SCV and gold have not helped that much in the current downturn.
I don't see why you believe that. Through June, GLD was down only -1.5%, and AVUV was down -13.7%, compared to VTSAX being down -21.4% and BND being down -10.4%.
I'm not sure you should be using AVUV, instead of the average SCV fund. Portfolio visualizer shows small value asset class as being down -15.5%

But anyway, my point stands, they didn't help that much. It's not like they were zigging instead of zagging.

Just tilting a bit to SCV wouldn't have changed much...

100% US stock market returned -21%
80/20 US stock market/SCV returned -20%
60/40 US stock market/SCV returned - 19%

I guess having gold would have helped more, but how much are you suggesting one have in gold? 10%? More?

Cash would have helped more than gold.

I'm just saying tilting would haven't helped much.
AVUV has been the most popular SCV fund around here ever since its inception as it has greater factor exposure than other SCV funds. But Vanguard's VISVX returned -15.5% through June, not much worse than AVUV and still better than VTSAX.

I agree that tilting a bit to SCV wouldn't have changed much. Tilts of a 'bit' rarely make much difference. Personally, I think that those who 'believe in' SCV should likely have at least half their equities in it. It still has plenty of exposure to market beta.

SCV dropping 6-8% less than TSM can be significant. Even if the two asset classes were even for a decade, that would be .6-.8% higher annualized returns, which many here would be very pleased with.

Gold allocations probably need to be in the 10-20% over the long-term to make a meaningful difference.

I don't see why cash's performance is relevant. Bonds are the de facto alternative to stocks around here. The 3-fund has no cash exposure.
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mikejuss
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by mikejuss »

David Jay wrote: Fri Jul 01, 2022 9:46 am
Fremdon Ferndock wrote: Fri Jul 01, 2022 9:27 amBut, if I'm a retiree drawing down my retirement portfolio not so much.
If you are a retiree, stop reading Seeking Alpha. Seriously.

(same if you are not a retiree, but it's probably less dangerous)
+1. So true.
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
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Richard1580
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by Richard1580 »

<yawn>

One thing I have learned from doing back testing is that the time periods you choose can have a startling impact on your results.

Here is something that would be interesting (but I suspect, largely useless) - looking at percentage declines, what were the largest hour, day, week, 30 day period, 90 day period and 180 day period declines in history (pick whatever index you wish)?

Do the shorter period declines actually correlate to long term declines, or are they anomalies? I have no idea.

I really don't see the current market drop to be anything to get excited over. Of course, my opinion will probably change if we are only halfway to the bottom. :-)
"The quest is the quest."
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HomerJ
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Re: Stocks, bonds on track for worst year since post-Civil War

Post by HomerJ »

willthrill81 wrote: Wed Jul 06, 2022 5:40 pm
HomerJ wrote: Wed Jul 06, 2022 5:35 pm
willthrill81 wrote: Wed Jul 06, 2022 12:52 pm
HomerJ wrote: Wed Jul 06, 2022 12:29 pm
willthrill81 wrote: Mon Jul 04, 2022 2:10 pm

I agree that there hasn't been widespread support here for assets beyond TSM and TBM, but history has been clear that asset classes like SCV and gold have been helpful, and we're seeing that again in the current downturn.
SCV and gold have not helped that much in the current downturn.
I don't see why you believe that. Through June, GLD was down only -1.5%, and AVUV was down -13.7%, compared to VTSAX being down -21.4% and BND being down -10.4%.
I'm not sure you should be using AVUV, instead of the average SCV fund. Portfolio visualizer shows small value asset class as being down -15.5%

But anyway, my point stands, they didn't help that much. It's not like they were zigging instead of zagging.

Just tilting a bit to SCV wouldn't have changed much...

100% US stock market returned -21%
80/20 US stock market/SCV returned -20%
60/40 US stock market/SCV returned - 19%

I guess having gold would have helped more, but how much are you suggesting one have in gold? 10%? More?

Cash would have helped more than gold.

I'm just saying tilting would haven't helped much.
AVUV has been the most popular SCV fund around here ever since its inception as it has greater factor exposure than other SCV funds. But Vanguard's VISVX returned -15.5% through June, not much worse than AVUV and still better than VTSAX.

I agree that tilting a bit to SCV wouldn't have changed much. Tilts of a 'bit' rarely make much difference. Personally, I think that those who 'believe in' SCV should likely have at least half their equities in it. It still has plenty of exposure to market beta.

SCV dropping 6-8% less than TSM can be significant. Even if the two asset classes were even for a decade, that would be .6-.8% higher annualized returns, which many here would be very pleased with.

Gold allocations probably need to be in the 10-20% over the long-term to make a meaningful difference.

I don't see why cash's performance is relevant. Bonds are the de facto alternative to stocks around here. The 3-fund has no cash exposure.
<shrug>

AVUV is less than 3 years old. It's a hot new fund. Probably shouldn't pick a hot new fund to represent an entire asset class.

-21% for 100% stocks, -19% for 60/40 stocks/SCV, which is a pretty big tilt.

I stand by my assertion that SCV didn't help MUCH. I wouldn't feel much different between -21% and -19% in a 6 month period.

SCV going UP while general stocks were going down would have helped a lot. But they both are down a lot. International is down -19%. Not as much as the general U.S. stock market, but close.

And it's only been 6 months... It's not a reason to suddenly believe that SCV and International should be large parts of one's portfolio.
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
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