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#21
12-21-2005, 03:32 AM
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Re: Evaluating Managed Funds
[ QUOTE ]
[ QUOTE ] I am in investment advisor, and as I mentioned in another thread, I feel strongly about passive, non-forecasting investments strategies. [/ QUOTE ] It may be your job to convince people of this, that doesn't make it true. It's only difficult to beat the S&P because you guys are too busy charging fees. [/ QUOTE ] The mutual funds are worse. The guy gives good advice and you don't need an investment advisor to implement his advice. I know its easy to take shots at the way a man puts food on the table but investment advisors have their place. If one has a large portfolio that can be tax-loss harvested every year to offset other cap gains, a CFA is worth the money and then some. They will rebalance for you optimally and get you optimal tax losses. You don't need a CFA for this but if your portfolio is big and has many securities or funds it can be worth it. 
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#22
12-21-2005, 08:42 AM
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Re: Evaluating Managed Funds
[ QUOTE ]
[ QUOTE ] [ QUOTE ] I am in investment advisor, and as I mentioned in another thread, I feel strongly about passive, non-forecasting investments strategies. [/ QUOTE ] It may be your job to convince people of this, that doesn't make it true. It's only difficult to beat the S&P because you guys are too busy charging fees. [/ QUOTE ] The mutual funds are worse. The guy gives good advice and you don't need an investment advisor to implement his advice. [/ QUOTE ] I thought he meant mutual funds with his advice. I'm not against financial advisors per se, but some of them are quacks who take there fees then recommend mutual funds that charge fees/loads and you end up being better off buying bonds or something. I guess I'm still bitter from my personal experience [img]/images/graemlins/mad.gif[/img]
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#23
12-21-2005, 09:29 AM
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Re: Evaluating Managed Funds
Ed, my allocation looks a lot like yours, but I am heavier in Foreign markets (35-40%).
This is something to consider as it is a hedge against a major drop in the dollar.
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#25
12-21-2005, 10:44 AM
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Re: Evaluating Managed Funds
[ QUOTE ]
Ed, my allocation looks a lot like yours, but I am heavier in Foreign markets (35-40%). This is something to consider as it is a hedge against a major drop in the dollar. [/ QUOTE ] I haven't read this whole thread, but I suspect this is the best post in it.
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#26
12-21-2005, 11:05 AM
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Re: Evaluating Managed Funds
[ QUOTE ]
This is something to consider as it is a hedge against a major drop in the dollar. [/ QUOTE ] Why should Ed have to be concerned about a major drop in the US dollar if his assets are based on US companies? Most of these companies transactions will be dollar to dollar. Also, with the Fed increasing rates and the EU unlikely to do so, it's more likely the dollar will get stronger not weaker versus euro and other currencies, so european funds will need to overcome that drag.
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#27
12-21-2005, 11:53 AM
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Re: Evaluating Managed Funds
[ QUOTE ]
Why should Ed have to be concerned about a major drop in the US dollar if his assets are based on US companies? Most of these companies transactions will be dollar to dollar. [/ QUOTE ] Well there is taking advantage of the "tailwind" foriegn equity values get from the declining dollar. [ QUOTE ] Also, with the Fed increasing rates and the EU unlikely to do so, it's more likely the dollar will get stronger not weaker versus euro and other currencies, so european funds will need to overcome that drag. [/ QUOTE ] How much longer will the Fed increase rates? How much longer CAN the fed increase rates? Not much longer I think. Our government is still running huge deficits, this devalues the dollar over time. This year the dollar got a respite because of a one time large inflow of repatriated corporate foreign income. That "tax holiday" just ended. I think it's highly likely the dollar has a bad year next year and that this will continue until we address our budget deficits.
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#28
12-21-2005, 12:03 PM
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Re: Evaluating Managed Funds
[ QUOTE ]
I think it's highly likely the dollar has a bad year next year and that this will continue until we address our budget deficits. [/ QUOTE ] So does Mr. Buffett.
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#29
12-21-2005, 12:10 PM
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Re: Evaluating Managed Funds
[ QUOTE ]
[ QUOTE ] Why should Ed have to be concerned about a major drop in the US dollar if his assets are based on US companies? Most of these companies transactions will be dollar to dollar. [/ QUOTE ] Well there is taking advantage of the "tailwind" foriegn equity values get from the declining dollar. [ QUOTE ] Also, with the Fed increasing rates and the EU unlikely to do so, it's more likely the dollar will get stronger not weaker versus euro and other currencies, so european funds will need to overcome that drag. [/ QUOTE ] How much longer will the Fed increase rates? How much longer CAN the fed increase rates? Not much longer I think. Our government is still running huge deficits, this devalues the dollar over time. This year the dollar got a respite because of a one time large inflow of repatriated corporate foreign income. That "tax holiday" just ended. I think it's highly likely the dollar has a bad year next year and that this will continue until we address our budget deficits. [/ QUOTE ] Probably not many more increases, but everyone's figuring on at least one more. At that's 1 more than the EU plans. With the deficit increasing this year the Fed tightening of the money supply has managed to strengthen the dollar. FWIW, I just don't think rising/declining dollar is much of an issue for someone with there money in US markets. It might be a reason to get into europe markets.
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#30
12-21-2005, 02:33 PM
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Re: Evaluating Managed Funds
[ QUOTE ]
[ QUOTE ] Ed, my allocation looks a lot like yours, but I am heavier in Foreign markets (35-40%). This is something to consider as it is a hedge against a major drop in the dollar. [/ QUOTE ] I haven't read this whole thread, but I suspect this is the best post in it. [/ QUOTE ] Ok, that's a fair point... my worry when I first constructed it was that I was too heavily invested in US stocks. So how would you change it exactly? How about? Fairholme - 30% Vanguard 500 Index Fund Investor Shares (VFINX) - 15% Vanguard Small-Cap Index Fund Investor Shares (NAESX) - 20% Vanguard European Stock Index Fund Investor Shares (VEURX) - 20% Vanguard Total International Stock Index Fund (VGTSX) - 15% I don't like skimping on Fairholme, though... I think it's quite likely to beat the market less fees (the fees and turnover are modest). Maybe just take out the 500 fund altogether, just letting Fairholme represent the big stuff: Fairholme - 40% Vanguard Small-Cap Index Fund Investor Shares (NAESX) - 20% Vanguard European Stock Index Fund Investor Shares (VEURX) - 20% Vanguard Total International Stock Index Fund (VGTSX) - 20% BTW, this is more of a learning exercise than anything else. The actual amount of money in my Microsoft 401k is small (by small, I mean 10% is about the smallest allocation I can make into any fund).
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