Fund up 100% in one year

**disneysteve** · 09-20-2009, 01:10 PM

I don't know much about the fund but just looking at the numbers, it has a 5-year average annual return of 18.69% which means it did extremely well throughout a major global recession. The recovery is just beginning. I'm not so sure I'd jump off that wave quite yet.

VBTSX is a perfectly good fund. We own it ourselves. But it certainly wouldn't replace the Overseas fund in your portfolio without messing up your asset allocation.

**Broken Arrow** · 09-21-2009, 04:33 AM

Yeah, there has been some recovery with several kinds of investments I've been keeping an eye on. Some have tripled, quadrupled, and at its peak, even quintupled since 4th quarter 2008.

The problem I have so far is the risk involved. I haven't seen anything that justified this sort of meteoric rise on the basis of sound fundamentals, but rather, seemed to be driven out of sheer emotions and speculative runs. At least, it seems that way, and it's hard to tell which which way it's going to go next....

Which is why I personally didn't get myself involved with it.

Recent readings regarding the subject of inflation has turned mixed. Everyone seems worried, but then, if the economy could rebound somewhat, it would strengthen the dollar and with a controlled decrease in money supply, perhaps be able to keep inflation from running out of control. At least, that's Bernanke's stated hope when he was being reinstated for a second term.

It may be possible, but it also seems a little bit optimistic to me. Some passive investors have allocated as much as 10% of their portfolio into inflation-protected bonds, and I don't think that's a bad idea at all.

I guess this is my long-winded way of saying I don't know what's going to happen here... I'm still looking to see what I should do actively, if anything. But surfing analogies are OK with me!

**Scanner** · 09-21-2009, 09:23 AM

Yeah, well, I may go with PRIPX with 50% of my portfolio and SIVR with the other 50% of my portfolio. Since I am divorcing though. . .and my wife carried the blue chips. . .not sure what to do about that . . .but I am losing some money off the top so I think I can be more risky in my allocation mix.

You can tell I am really gearing my portfolio for inflation risk, huh - hedging between silver and inflation-protected treasuries? I must think inflation is inevitable, huh, do ya think?

Yes, Janus Overseas has really been a kick-ass fund. NOt saying I would never jump back on but this is an extremely volatile fund but great performer. And not an index to boot. . .I am sure I'll be seeing Janus Overseas again in the future.

**Snodog** · 09-21-2009, 11:40 AM

I just changed our new contributions to 40/60% stocks/bonds ratio. With the recent runup in stocks our overall allocation went to 67/33. My target is 63/37.

**Scanner** · 09-21-2009, 12:44 PM

Well, the hardest part to assess is this:

Were stocks oversold in 2008?

or

Were stocks overpriced in 2006?

It could be argued that we should just be around 9500 for the Dow. I thought 13000, where it was at, was too high.

Did we "overcorrect"? Maybe a little. I thought 8600 was going to be the bottom but it wasn't, was it? We hit what? Around 6000? (I forget)

**Scanner** · 09-21-2009, 12:51 PM

Which kind of brings me to another point. . .not knowing whether stocks were overpriced before or oversold at this point. . .I hate stocks.

I understand bonds and commodities much better.

Yeah, I know. . .you can make a case for market psychology in commodities but to a certain extent, supply and demand rule the fundamentals. With stocks, you have management, regulation changes, accountants fudging balance sheets. . .the more I know about stocks, the less I understand.

All the more reason to exit them fro awhile.

It was a good ride this year, even if it goes up another 100%.

**Snodog** · 09-21-2009, 12:52 PM

Originally posted by Scanner View Post

Well, the hardest part to assess is this:

Were stocks oversold in 2008?

or

Were stocks overpriced in 2006?

It could be argued that we should just be around 9500 for the Dow. I thought 13000, where it was at, was too high.

Did we "overcorrect"? Maybe a little. I thought 8600 was going to be the bottom but it wasn't, was it? We hit what? Around 6000? (I forget)

I'm not smart enough to know the answers to those questions and no matter what they say neither is anyone else....at least going forward. This is why I blindly stick to my allocation. KISS is your best friend when it comes to investing.

**kork13** · 09-21-2009, 01:54 PM

Originally posted by Snodog View Post

KISS is your best friend when it comes to investing.

Amen to that.... or heck, I'd say it works for just about any subject.

**Broken Arrow** · 09-21-2009, 03:05 PM

Scanner, first of all, I was a little shocked when I read that you are going through a divorce. I am sorry to hear that and you have my condolences.

Now, 50% PRIPX and 50% SIVR seems like a 100% bet against the dollar. I mean, it's way crossing the line all the way from hedging to betting the farm on inflation. I don't know if this money is meant to be for speculative trading or not, but....

Plus, remember that there are very large forces at work whose interest is nothing else except to see a strong dollar. The primary examples are the US, but also China! And remember that the Fed deliberately kept the money supply that is in circulation at a very high level in order to keep prices down. We are currently in a forced inflationary state in order to combat recession, but they can just as easily turn off the spigot. So, I guess what I am saying is that I don't think inflation is a sure thing. Yeah, I agree it's still a good idea to hedge it for protection, but it's a different beast entirely if you bet all-or-nothing on it....

As for precious metal, there are ways to invest in physical entities (such as coins or bars), but ETFs are a different matter. You really have to be careful about the inner workings of them. For example, some fund companies do control how many ounces of precious metal the ETF is being traded over. When prices go too low, they may inject a lot more inventory. And when the prices get too high, they may remove some. Commodity ETFs is arguably closer to stocks than they are to actual commodities....

Speaking of stocks, why the hate for them? To me, they're all just investment vehicles. Sometimes, you need a truck and you drive a truck. Sometimes, you need to go fast, so you drive a sports car. Other times, you need to go over water, so you drive a boat. Whatever it takes to get to your destination, or that's what I think anyway. So, when you don't invest in something simply because you somehow "hate" it, even if it's a perfectly workable and perhaps even ideal vehicle, aren't you sort of hurting yourself in the long run?

Finally, with the point of KISS, I too believe in the adage. However, I think Albert Einstein captured the full essence of simplicity most accurately when he said, "Make everything as simple as possible, but not simpler." In other words, yes, it is possible to make things too simple, so much so that it actually becomes counter-productive. We must make things as simple as possible for it to be effective, but we mustn't over-simplify.

For an inflation hedge, I think perhaps as much as 25% should be the limit, but of course, that's only my personal opinion.

**Snodog** · 09-21-2009, 04:12 PM

Originally posted by Broken Arrow View Post

Finally, with the point of KISS, I too believe in the adage. However, I think Albert Einstein captured the full essence of simplicity most accurately when he said, "Make everything as simple as possible, but not simpler." In other words, yes, it is possible to make things too simple, so much so that it actually becomes counter-productive. We must make things as simple as possible for it to be effective, but we mustn't over-simplify.

Yes I agree with you and Einstein. For example doing something like taking all your money and putting it in one stock would be too simple and counter-productive.

**Scanner** · 09-23-2009, 11:30 AM

Broken Arrow,

Thank you for the condolences. It was a long time in coming. She needed something different and I was happy to leave and wish her luck. I think though, she realizes divorce is no cake-walk as she originally thought. I was the one in marital therapy, she wasn't attending and my counselor basically advised me it was the end of the road. I am moving on.

Anyway. . .back to the topic. . .as you note, I am 100% betting against the dollar but. . .look at my allocation mix and I think I have compensated for my bet on inflation/weak dollar.

50% commodity/50% bonds.

Yeah, TIPS could take a hit. . .but they are bonds and they'll only go down so much.

I like ETF's because I can put a bottom on it if I want. I am going to switch from SLV to SILV because it's a lower expense ratio and it's 1 oz./silver for every share vs. .1 oz/silver or every share.

I think my portfolio is simple. . . .or maybe I am a simpleton

PS: I don't hate stocks per se. . .just dont understand them as much as bonds and commodities. After all, I did own Janus Overseas and got 100% return out of it in 10 months.

And as far as inflation. . .I know what you are saying. I think the main problem is the US Debt, not to mention other fiat currency countries borrowing. I think it's inevitable for commodities to continue to rally.

Now, the dollar. . .that IS more interesting. If other gov't borrow just as much or more than the US. . .well. . .the dollar could remain strong and strengthen. I still think gold and silver would rally. I'll be back in stocks sometime I'm sure.

**Broken Arrow** · 09-23-2009, 11:58 AM

Originally posted by Scanner View Post

I was the one in marital therapy, she wasn't attending and my counselor basically advised me it was the end of the road.

Funny, I was in that situation too. I completed the entire six month counseling program. My ex was only there the first time, crying to the counselor about what a terrible person I am.

But at least that's all in the past for me now. Best of luck with yours.

I still think gold and silver would rally.

Well, for what it's worth, gold is already in a technical rally right now, exactly because a lot of people have already fled to it to shelter against inflation. The last time I looked, it peaked at $1020 per ounce before pulling back.

The last 30 days:

From the charts, it would appear that $1000 was the expected support level and not the resistance level I was anticipating. So, clearly I was wrong about that part.

But we'll see how much further it runs. Either way though, I would call this more of a potential bubble in the works than a potential buy-in at this point.

**Scanner** · 09-23-2009, 12:30 PM

Our divorces are probably a topic for a separate thread because a lot of it was financial and would make for good discussion. It's a shame. . .as "financial/investing" as a person I am, not loving a person becuase of money is just plain foreign to me but that's what it did come down to (not just according to me, according to professional psychological analysis). I know being married to a small business person isnt easy and maybe she came to expect a "doctor-lifestyle" (in which case -marry a high risk OB/GYN, not a chiropractor/CAT scan tech

)but I always did my best to compromise and provide in other ways, mainly child care, when the business wasn't donig so well.

Now. . .I am working 2 jobs (and loving it) and she has the 3 kids by herself most of the time (mainly because my hours vary). And business hasn't looked better in years.

Anyway, I would be remiss to say, you do have a point. . .perhaps I could "hedge" with 1/3rd REIT ETF, 1/3rd SLV, and 1/3rd TIPS.

It's just that commercial real estate looks to be in a bubble also and I would probably opt for residential at this point.

I'll think about your centrist points, BA.

But only if you consider my radical suggestions

**Scanner** · 09-23-2009, 12:40 PM

Besides BA,

This discussion sounds eeriely familiar - my spider senes tingle and you all tell me to stay the course and then I lose half my shirt.

No, seriously, I am starting to evolve from a passive investor to more an active one.

Fund up 100% in one year