Complementary investment for big Am Funds port

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Feb 4, 2010 9:26 pm

Hah - I learned that one at a large Indy.

  I can't blame you for your ignorance on this, I don't think DVP accounts usually hold American Funds.   ZING!
Feb 4, 2010 9:48 pm

[quote=Wet_Blanket]Hah - I learned that one at a large Indy.

  I can't blame you for your ignorance on this, I don't think DVP accounts usually hold American Funds.   ZING![/quote]   Hah!  If only they could.....
Feb 5, 2010 12:44 am

Do something completely different.
What about showing him a laddered bond portfolio buying individual stocks with the interest. Shouldn’t an endownment have more bonds, anyway, and maybe they[ll go for the active management of the stocks portion.

Some of those arguments against AF won’t fly, not unless you can prove to them that adding small or midcaps or emerging markets is really going to improve the return and dampen the volatility. Tough sell. Even the academics don’t agree on that.

Feb 5, 2010 3:46 am

Talk about alternatives…the Jones guy has NO exposure to them. They can help. 

Feb 5, 2010 2:54 pm

[quote=buyandhold]Do something completely different.
What about showing him a laddered bond portfolio buying individual stocks with the interest. Shouldn’t an endownment have more bonds, anyway, and maybe they[ll go for the active management of the stocks portion.

Some of those arguments against AF won’t fly, not unless you can prove to them that adding small or midcaps or emerging markets is really going to improve the return and dampen the volatility. Tough sell. Even the academics don’t agree on that.


[/quote]

Actually if you look at the last three years, small and micro-caps in general have less volatility than large caps.  Of course, that’s due to a lot of things.

I would argue strongly against endowments (especially small ones that expect to grow) having a lot of bonds in them.  Often these firms barely have enough to pay the light bill.  I have one next to me. 

The director purposefully doesn’t turn on any lights.  You wouldn’t even know anybody is there if their cars weren’t out front.

Feb 5, 2010 8:53 pm

This is going to sound offensive but isn’t meant to be…

  Do you guys ever have strategies that go beyond picking mutual funds? I read a fair amount on here, and the majority of investment strategy consists of fund X vs fund Y. And yes, this reply is the spawn of also reading BondGuy's post on his letters from MSSB.   Do something different. Generate cash flow that enables fresh cash always coming into the account so that you can make timely market decisions (no, not dollar cost averaging). Protect the assets in a down market. Eliminate some volatility. Take positions that have tremendous upside and little downside risk...and if those opprtunities aren't present at the time, don't be afraid to sit in cash.   No offense if I am missing someone, but Gaddock is one of the very few posters I can think of that diferentiates from just picking mutual funds with his options strategy.    
Feb 5, 2010 8:59 pm

I use no mutual funds.  With the exception of ETFs occassionally.



Feb 5, 2010 9:35 pm
Moraen:

I use no mutual funds.  With the exception of ETFs occassionally.



  Like I said, I wasn't trying to leave anybody out when I referenced Gaddock only...