Ask Rande 10,000+

» Kirk - Re: Good Diversified Fund

In response to message posted by Bernie777:

Hi Bernie

Welcome to the group!

You are giving us a wonderful example of how difficult it is once someone tries massive market timing and makes a wrong guess. Once you make one bad "guess" then you often get "stuck" where you have a hard time acting. It sure sounds like you are on the right track to getting your allocation back in order for the long term.

I'll second SteveT's advice on Fidelity. The Total market fund from them or buy the Viper work well to give you great diversity.

Dollar Cost Averaging is a good way to go also. The recovery, when it comes, could have a quick 20% pop and then a slow rise from there so having somethign in ASAP means you participate at some level. IF the market continues lower, then you have more cash to buy also.

The real deal is to not get caught with massive market timing. The market could have a big pop, get many people excited and then drop lower before it hits a final bottom.. or the final bottom could have been put in on Friday. The truth is NOBODY knows but it is good for your firm and ego to have an opinion so they put ya on TV. IF ya can turn a clever phrase like Art Cashin, then you get on TV on a regular basis. (Plus I think Art is a great guy!)

Good luck!

-- posted by Kirk

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» Rande - ***SPECIAL ALERT***ACT IMMEDIATELY***ACTION BULLETIN***

***SPECIAL ALERT***ACT IMMEDIATELY***ACTION BULLETIN***

Well, sort of. But now that you're paying attention, here's some more boring advice. Now may actually be a great time to get your portfolio in order AND get some help from Uncle Sam in the process. Sitting on losses in taxable accounts? Been meaning to re-allocate for some time to lower-cost, tax-efficient funds? You might want to take advantage of lower prices to do some house cleaning. We've talked about switching out of QQQ into XLK, etc. (but ONLY if you still think tech is the place to be for some reason and aren't over-weighted to begin with). The same might hold true elsewhere. Have some large-caps underwater? Why not switch from that high-turnover, high-cost fund into SPY? Have some SPY underwater? Why not switch to VTI? You could even make a switch from any of the above into the Schwab 1000 or vice versa. Why do it? Well, if you can virtually maintain (or get into proper order if it isn't already) your asset allocation while taking a tax loss and avoiding the wash sale rule, then why not go for it? Just a thought.

BTW -- Agree with Kirk and Steve on checking out the Fidelity Total Market Index. Compare the costs to VTI or the Vanguard fund version. Either way, doesn't get much more diversified.

-- posted by Rande

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» chz - Re: Re: Good Diversified Fund

In response to message posted by SteveT:

question for both Steve T and Randy re Bernie 777's request. How much more risk of missing
an upswing would you envision if one waited until
the trendlines begin to move up again, rather
than starting now......if one hasn't been dollar
cost averaging in all along? Yes, sometimes there is a mighty upswing after the capitulation.
Does this flash-upswing occur more often than
a rise that soon becomes apparent with the change
in trendline with increased volume? We've been
whipsawed enuf times these last months thinking
the bottom is inplace, only to find it going on
down.

thanks.
chz

-- posted by chz

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» chz - Re: ***SPECIAL ALERT***ACT IMMEDIATELY***ACTION BULLETIN***

In response to message posted by Rande:

Rande: once again thanks for your thread, and
your advice. Have followed your advice over the
last 3 years, to my betterment.

I noted your post about YTD averages, etc. on another thread yesterday. I was kindof amazed
at how close the total stock market index was
to many of the other losses such as SPY, MDY,
and Russell 2000. The Nasdaq being the exception.
With this exception there wasn't a great deal
of difference, at least year to date. Unless I
missed something obvious. Usually true?, or an
aberation???

thanks again, Rande. I might greatefully add,
your kick-in-the-butt-do-it-now post many many
months ago to diversify, and assess my allocation
saved my tail feathers this year. To say I'm
thankful is a massive understatement,

chz

-- posted by chz

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» Erik75 - Re: ***SPECIAL ALERT***ACT IMMEDIATELY***ACTION BULLETIN***

In response to message posted by Rande:

Just a thought. BTW -- Agree with Kirk and Steve on checking out the Fidelity Total Market Index. Compare the costs to VTI or the Vanguard fund version. Either way, doesn't get much more diversified

Rande the fidelity fund (FSTMX) has an expense ratio of 0.25%, the Vanguard (VTSMX) has a ratio of 0.20%, but if you have enough money to get into Vanguards Admiral class the expense ratio gets a tad better. We moved my wifes 403b to Fidelity from another place and are DCAing into FSTMX over 12 months, if Vanguard had been approved by her employer we would have gone with them, but are happy enough with the Fidelity fund.

We had some delays getting her 403b transfered, so we did our first monthly DCA from money market into FSTMX last Thursday. We are sticking to a once a month DCA for one year. I am no longer even tempted (well not very) to follow any timing advice.

-- posted by Erik75

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» Erik75 - Re: ***SPECIAL ALERT***ACT IMMEDIATELY***ACTION BULLETIN***

In response to message posted by Rande:

We've talked about switching out of QQQ into XLK, etc. (but ONLY if you still think tech is the place to be for some reason and aren't over-weighted to begin with).

Rande, I have a big festering pile of QQQ brand manure sitting over in the corner of the barn. I bought a big truckload of the stuff about 11 months ago from some city slicker. It cost me more than my barn and tracter did. It was supposed to expand by some big percentage so I could fertilize the south 40 with it, but instead it keeps shrinking. Now the pile is down to about 35% of it's original size and it's just big enough to fertilize a lawn, but I'm skeered to use it because it's so concentrated that it would burn the grass, besides it smells terrible.

BTW, my friend Ira built the barn for me and I have an agreement with the revenuers that I don't have to pay taxes on that manure unless I take it off the farm and sell it.

My question is, should I just let the QQQ manure sit and fester to see if it eventually expands, or should I get out my DCA tractor and slowly push it into the FSTMX stall to see if it will expand any better over there?

Oh, I almost forgot, in the rest of the farm, I've lost interest (pun intended) in tech manure and am going to use regular applications of FSTMX and VTSMX for the 35% of crops I want to grow faster but can accept uneven growth and am already using VBFMX or equivilant on the 65% of crops where I want a slower but steadier growth rate.

-- posted by Erik75

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» SteveT - Re: Re: Re: Good Diversified Fund

In response to message posted by chz:

chz, what is a trendline?

Seriously There is no way I can answer that question. I could do a great deal of research and look at past bear markets and guess. Is this bear market like any we have had in the past? I think not. Besides I hate to guess.

I would like to see the market turn up about 10% or so then turn down back to about where we are now on light volume. If I see that I MAY increase my allocation from bonds into stocks by another 5% or so. If not I stick to my plan (which includes DCA)& allocation and sleep like a baby.

-- posted by SteveT

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» SteveT - Re: Re: ***SPECIAL ALERT***ACT IMMEDIATELY***ACTION BULLETIN***

In response to message posted by Erik75:

Erik great post! Maybe what you need is a "special soil amendment" I think they call it Ultra Tech Stepover. I understand it still smells pretty bad and you definitely need to wear rubber boots while applying it to your lawn

-- posted by SteveT

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» Rande - Re: Re: ***SPECIAL ALERT***ACT IMMEDIATELY***ACTION BULLETIN***

In response to message posted by Erik75:

Erik,

You know my advice on that -- whatever has happened in the past is meaningless and all that matters is positioning your portfolio in the most appropriate way for the future. For me, that means being as diversified as possible within my current strategic asset allocation guidelines. So long as your overall stock allocation is where you want it, I would definitely not sell the "manure" portion to cash (that would be capitulating on extreme weakness, which is not good). It's a personal decision to be overweighted in any particular sector of the market, and my view on how technology will perform relative to the rest going forward is as useless as everyone else's. Re-allocating to the broad market might make sense so long as you don't kick yourself if QQQ outperforms (as hard as that might be to imagine, given relative valuations that are STILL out of whack).

BTW -- Don't let the lack of a tax deduction keep you from doing what makes sense. Some people refuse to sell a dog in a deferred account only because they can't take the tax loss, even if that means they continue to sit on an unsuitable portfolio indefinitely going forward. That sort of approach is better explained by a pshrink than a financial consultant.

-- posted by Rande

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» JohnSavage - Re: Re: Re: ***SPECIAL ALERT***ACT IMMEDIATELY***ACTION BULLETIN

Rande, I too have taken a bath im my small position of QQQ. What do you think of the option of selling for the 31 day period, then buying it back. Thanks, John

-- posted by JohnSavage

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