I saw this story about Odell Beckham Jr and bitcoin. Thought it was interesting. I know nothing about cryptocurrency
I guess I wouldnāt hire him to manage my retirement accountā¦
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Agreed, but heās having a good game today!
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I moved a chunk of money into fixed income and REITs about six months ago. This equity bubble hasnāt popped yet. Valuations are still crazy.
I found a better way to ārebalanceā on DHās 401k. This post is more specific on what we did (some mentioned in an earlier post).
Look at historic data with each of the funds you are in. I had always looked at the long term picture on each specific fund group - for a time we were in at 25/25/25/25. Then prior to 2020, I realized that certain of these investment groups didnāt downturn during the downturn months (usually I look at quarterly, but during wild fluctuations I look at the monthly performance of the group fund investments) ā so I adjusted the amount in each of these 4 fund groups. This did increase portfolio performance. I had a ācompare fundsā feature where all 4 are side by side with the details - including performance YTD, prior month, prior quarter, 1 yr, 3 yr, 5 yr, 10 yr, since inception. Again I adjusted. I believe it is good to keep the diversification and keep in all four fund groups, but essentially now, based on performance I have 10/10/40/40. The highest fund group sizes also match current 10 year performance data (21.57% and 20.52%) while the smaller fund groups have 14.44% and 13.57% 10 year performance.
Talking to our financial professional, he said not all funds ārespondā the way the general analyses say - for example they may talk about small cap growth being on a downturn but that is not what happened with my small cap growth fund where it did fine during that period.
Instead of investing in bonds, we have annuities - and these are specific annuities our financial professional has shown to us while he has been watching for the right opportunities. This keeps our portfolio risk level to what we are comfortable with. Our annuities have out performed any bond fund.
Key is being able to SWAN. Some people have certain situations where there are variables like health issues and burdens on the retirement funds. Having the comfort level to not be ruminating over the money situation.
We transfer money out of the 401k to purchase the annuities ā direct fund transactions and the annuities are also as retirement funds. We purchased our first annuities September 2013, and purchased our last one July 2021.
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I can predict with certainty that the financial advisor will make money
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And thatās fine. I donāt expect to get professional advice and assistance for free.
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So put another way, at the end of a decade long bull market for tech, you decided to rebalance towards tech (or other high beta) funds? Sounds a lot like the rationale for buying a house in 2007ā¦
Each of the 4 fund groups are in varying asset classes - one is large cap value, one is large cap growth, one is small cap blend, and one is small cap growth. The two that we invest heavier in are the two labeled as growth funds ā however their Morningstar descriptions (of the 4) has them saying in the first line of Description/Objective: the investment seeks capital appreciation, long term capital growth, or long term capital appreciation. The small cap blend states it is seeking capital growth over the long term - but doesnāt have the performance like the two funds we have the major investments.
Morningstar also has other general description āInvestments in large cap funds are subject to market fluctuations and may lose valueā¦ā
For the Small Cap Funds, Morningstar states āSmall and mid-sized companies may present greater opportunities for capital appreciation, but may also involve greater risks than larger companiesā¦ā
So I surmise that the fund management on my two funds with better results do a better job with their investment choices and timing.
Not really. The managers may or not have been good, but you can only tell that by looking how they compared to other funds with the same investing style. Much more important is that you picked the one decade in the last century where growth (mainly tech) consistently outperformed value:
That strongly suggests the reverse will be true in coming years and ultra-aggressive growth funds (eg ARK) will be wiped out, just as happened to the most aggressive fund managers (including Cathie Wood) in the dotcom crash.
In a morningstyle box, would you be ~25% on each of the corners, i.e., 25% each of Large-Value, Large-Growth, Small-Value, Small-Growth? (no-midcaps?)
https://www.morningstar.com/content/dam/marketing/apac/au/pdfs/Legal/Stylebox_Factsheet.pdf?
The two large cap are both in the top left corner style box (large value),one small cap is in the small size mid-blend (lower row middle), and one small cap is mid-growth (so right row middle). The lower return large cap is in moderate category for investment volatility (but more towards the higher end), and the other 3 are in the higher investment volatility but on the lower to mid end of that scale.
I didnāt pick from style box but selected after seeing all the returns (really focusing on returns through 10 years, or inception if longer) on our investment choices on our 401k - and researching the 4 best - reading the Morningstar reports and deciding from there. Looking at the fund return versus the primary index. Finding out length of time fund manager is there, and other information gleaned from either our 401k info or Morningstar info
One on the investment choices (DHās 401k which has been under Prudential since 2009 ā before it was under Dreyfus) was also on my companyās 401k investment choices (mine was under Fidelity) ā the small cap growth. I had also identified another great investment choice at my 401k/Fidelity and had 50/50 with the two investment choices. Since my 401k was small (due to only a few years of working there and 4% my contribution and 4% company match) - it had pretty much equal returns on the years in as our larger 401k but I cashed it out (under $20K) in 2021 as DH had retired and beefing up our easy access (checking) account. Our taxable income in 2021 can absorb it - and they withheld 20% for federal taxes. We had pretty strong 6 figure money in DHās 401k back in 2006 (my current binder and summary sheets look back).
We do look at the returns on the other funds we have to choose from on analysis and will change investment choices or amounts as we see fit - I have been more involved in analysis after I survived aggressive stage III cancer (treatment period 11-2009 with first chemo to last IV 1-2011 with all kinds of stuff in between, surgeries, radiation etc.). Started moving funds out of 401k to lower our overall risk and purchase researched and proposed annuities starting in 2013, and purchased the most recent annuity July 2021. Still this 401k is our largest single asset. but we have quite a lot in Roth IRAs and our Annuities, in addition to our home (real estate) and cash value on some insurance policies.
The changes (drops) in market value we had in 2008 and some in 2009 - some of it was when we were under Dreyfus and some under Prudential and we had a period where there was juggling to be in ālike fundsā going into Prudential, and then we had to research Prudential funds and decide where we wanted the $$ to be. I had 16 chemo treatments with 4 drugs (2 at a time) starting 11/2009 and the last really toxic combination was 3/2010(two extremely toxic chemos which was a low point in my life - I was receiving disability from private policy due to my medical status of full disability) - until a dramatic turn around point (no cancer detected from pathology from primary tumor location site, which happens less than 10% of the time in cases like mine) - May 2010.
Recovered most of financial downturn by end of 2010, and 2011 we had gains just under 1% for the year but then 2012 had 12.88% and we were well above what our fund held prior to the loss period.
DH would have been totally lost if I had died. We didnāt have our financial advisor yet (DH has learned a lot more with meetings with him), and has been more receptive understanding things from me. He has a brother who is pretty good with his investments, but finding our financial advisor and what we have been able to build up in the 401k after the market recovery has been terrific.
Understand, this 401k is our most aggressive thing in our overall portfolio and has been having the best returns. Our managed funds under financial advisor is more protected from losses but also not as big of gains either - from our period with him, protected from losses. Canāt be accurate āfor sureā in any forecast.
Please share anything you have learned in these past periods and what you are doing. Also how far you are from retirement and your retirement goals.
DH retired Nov 2020, 8 months before he turned 65 and 11 months before the plan (when I retired Sept 2021 just prior to turning 65 Oct 2021). He saw we had enough money and he was getting weary of his work travel (he typically was flying at least twice a month with long stays away from home) and his boss was being a super jerk - and this guy wasnāt that way when he was my boss but a sign of the times and the industry work pressuresā¦ (and then his parents died Dec 2020 and Mar 2021 so it worked out with his retirement as he was needed out of state along with the stress level he had with his parentsā death - both were 92 and in poor health, but it was still a shock).
Iām mid 50s but self-employed with an immensely enjoyable job that I can very likely do part time well into my 70s (and can deduct healthcare costs plus some travel too). I love it and spouse wouldnāt let me stay at home with nothing to do all day anyway. The major question is staying in our house in a very expensive location (Silicon Valley) vs cashing in and moving elsewhere. Thatās very common amongst friends but would only happen if I couldnāt work and we felt we needed the money.
The first lesson I take from being here in the dotcom and 2008 crashes is that I should have had more confidence to invest when everything is at its worst (and to have some liquid funds to do so). I did some of that in March 2020, but wasnāt confident enough (and was too distracted) to go further. Hats off to our friends who borrowed to buy a $2M Palo Alto house in spring 2009 that turned into an $8M house today.
The second lesson is that the market has gone up so far that the Fed canāt afford to crash the market and the economy completely, so we will likely have a lot of inflation in the next few years, as some of the nonsense/fraud unwinds (as itās already doing). That means buying things that hold their value or will cost more in the future (eg fixing up the house in 2020-21) and locking in a fixed rate mortgage to have cash on hand if my income fluctuates or thereās the opportunity to invest it either in hard assets like a holiday home or in the market if/when the bubble bursts (which in our case might be done through converting pre-tax IRA money to a Roth when the market is down).
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This thread is a wake-up call. I frankly donāt understand most of what has been said for the past several days. 
Reading bogleheads now.
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Welcome to my world! I come on here and think, āI hope I donāt know about all these things because I donāt have enough money that they affect me.ā 
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Donāt feel too bad. Iām a finance guy and have had trouble understanding the investment-retirement strategies of recent posts.
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I like this guy. Very smart. Probably the best employee I hired (not counting an out-of-this world stellar EA) came from GMO.
My recollection is that he has successfully predicted 10 of the last 3 recessions. Heās generally on the pessimistic end of things. Or more charitably, maybe he started predicting a crash years before it happened.
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