critique my portfolio

[disneysteve]

Good point. (Presumably young if he is an M3 Racer.)

Ok. Thanks for driving me to Google to find out what an M3 racer is. Had no clue. Learn something every day.

[noppenbd]

I wouldn't go all-in on a MMF for the reasons suggested above. You should pick an asset allocation that works for your risk tolerance and age and stick with it, whether the funds are in a 401k or IRA. Since you are young you should probably stick to the aggressive end of the AA spectrum. However, the fact that you are considering bailing out of stocks suggests you are not as risk-tolerant as you thought you were. You are in 100% equities right now, suggesting you picked a fairly aggressive allocation.

When I first started investing I made the same mistake. Logically, I thought I should be very aggressive, and invested that way. But over the years I have found that even though I know I have many years to wait for the markets to come back, I still get anxious during drops, and start to question my porfolio. I think this is human nature, and hard to get past for many people. This is one reason that many financial advisors advocate having no less than 10% in bonds no matter the age. It really does help to see at least one part of your portfolio going up at any given time.

Your current asset allocation is 100% large-cap, with about 55% in US large-caps, and 45% in international large-caps. I would suggest altering your allocation to

45% Large-cap US stocks
25% Small-cap US stocks
20% International
10% Bonds

To get there, I would suggest

American Growth Fund (or Davis NY Venture) 55%
Small Cap blend 20%
Thornburg Int Value 10%
Bond fund 10%

Then keep the 45/25/20/10 split when you convert to IRA, maybe exchanging for index funds to make the whole thing more transparent.

[m3racer]

I wouldn't go all-in on a MMF for the reasons suggested above. You should pick an asset allocation that works for your risk tolerance and age and stick with it, whether the funds are in a 401k or IRA. Since you are young you should probably stick to the aggressive end of the AA spectrum. However, the fact that you are considering bailing out of stocks suggests you are not as risk-tolerant as you thought you were. You are in 100% equities right now, suggesting you picked a fairly aggressive allocation.

When I first started investing I made the same mistake. Logically, I thought I should be very aggressive, and invested that way. But over the years I have found that even though I know I have many years to wait for the markets to come back, I still get anxious during drops, and start to question my porfolio. I think this is human nature, and hard to get past for many people. This is one reason that many financial advisors advocate having no less than 10% in bonds no matter the age. It really does help to see at least one part of your portfolio going up at any given time.

Your current asset allocation is 100% large-cap, with about 55% in US large-caps, and 45% in international large-caps. I would suggest altering your allocation to

45% Large-cap US stocks
25% Small-cap US stocks
20% International
10% Bonds

To get there, I would suggest

American Growth Fund (or Davis NY Venture) 55%
Small Cap blend 20%
Thornburg Int Value 10%
Bond fund 10%

Then keep the 45/25/20/10 split when you convert to IRA, maybe exchanging for index funds to make the whole thing more transparent.

Thanks for the advice.

[m3racer]

m3racer: How old are you? You can't really critique a portfolio without knowing the age of the holder.

I'm in my early 30's.

[m3racer]

Ok. Thanks for driving me to Google to find out what an M3 racer is. Had no clue. Learn something every day.

LOL. That's pretty funny.

[m3racer]

I thought that I should take advantage of my long time horizon. That's why I allocated 100% stock funds. Go for the gold ...why the heck not. Maybe I should just stop checking my portfolio so frequently and take a chill pill. Every time I look at it I first do this and then I want to do this .

[kork13]

hahaha great smilies... lol

I find that's a good way to go... I know that I've got my stuff invested in at least a somewhat reasonable way... I balance it once a year, and that's the only time I really worry about how I've got my money allocated. Otherwise, although I'll check the balances/values weekly or so, I've trained myself to not give it much thought, knowing that it'll just change the next day anyway.

[tbc32]

Your portfolio seems awful aggressive, but that's because the economy is so shaky right now. If you can hold onto your money and weather the storm you should see some pretty decent returns.

[Snave]

I don't know where to find it and don't want to search the internet now to look for it, but there are studies that look at market timing. I believe they went back and looked at trying to time the market and you would miss the "up" days and the portfolio that tried to time the market was significantly down vs. the one that just held the course. It was something like over the course of aa year there were 10-12 really positive days that accounted for the years growth. Had you tried to time these, you couldn't have done it. Look at the last few months and the days where their were big upswings. There was nothing leading up to that where you would have been able to say "now's the time to jump in b/c tomorrow the market is going to be up 2-3%." We are down about 45K right now, so I can certainly feel your pain.

[m3racer]

Wow down 45k seems like a lot of cheddar!

[MaksimFA]

Those are all very good funds. Hold it. Simple as that. If you dont like the volatility should have more fixed income in there. It is the time in the market, not market timing that it is all about in the end. Let me know if you have any other questions.

[buzz]

I don't know where to find it and don't want to search the internet now to look for it, but there are studies that look at market timing. I believe they went back and looked at trying to time the market and you would miss the "up" days and the portfolio that tried to time the market was significantly down vs. the one that just held the course. It was something like over the course of aa year there were 10-12 really positive days that accounted for the years growth. Had you tried to time these, you couldn't have done it. Look at the last few months and the days where their were big upswings. There was nothing leading up to that where you would have been able to say "now's the time to jump in b/c tomorrow the market is going to be up 2-3%." We are down about 45K right now, so I can certainly feel your pain.

I have seen this line of reasoning many times, but not a single time was missing the "really negative days" mentioned.

I timed the market and got out last summer. Since the peak in October, I'm up about 4%. The ING stock I bought just several weeks ago is up 19.6%. I'm kicking myself for not buying JP Morgan and DR Horton, which were on my watch list for months. They are both through the roof recently.

The only things holding me back are my index funds and bonds (about 2/3 of my portfolio), but the index funds are breaking into the black now. If they reach their former levels within a couple of years, they will have provided a nice return. I'm still over 40% bonds and cash. I was thinking the market would take another significant plunge, and it may still. But Bernanke has stepped in at the right time and held things stable.

To the OP--those funds are good investments right now. Unfortunately, a lot of them were probably purchased in a high market. They will come back though. No money market will keep pace with them when the market turns around. Hold on to them.