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Discussion Starter #1
It's been a wild year after such a promising start, and I'm sure I'm not alone in disappointment after seeing stock indices dive last month. I began investing in 2007, thinking I would build a nest egg of dividend paying equities to fuel my retirement (and that I was getting in at a good time in history)... The feeling that something bigger, global and more dangerous is ahead has me backtracking from the stock market, and I made a major move to re-allocate yesterday.

(I'm at least 15 years from retirement and didn't think I would shuffle my allocation for another 5 years):

Before yesterday:
70% Equity (was 45% Cdn Index, 22% US index, 2% Intl Index, 1% Precious metals)
30% Income (Bond Index, Real Return Bonds index, Hi-Yield Income Fund )

After yesterday:
55% Equity (30% Cdn Index, 14% US index, 10% Precious Metals, 1% Intl Index)
45% Income (as above ,parking dollars from equity into money market funds for 30 days until I cool off and re-evaluate.)

My biggest fear is a catastrophic drop (as in the 1930's) that would never recover in my lifetime...I'm positive others out there are making similar defensive, long-term moves right now and the markets aren't showing it.

If you agree that it's time to backtrack and have done so, please share how you are responding.
 

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I wouldn't panic too much. While the volatility may discourage you and keep you up on some nights you don't want to miss out on the best days of the upswing.

You seem to have a pretty well balanced allocation so just keep track of it on a monthly basis and you should be okay, especially with a 15 year timeframe.

As you get closer to your retirement age, tweak your allocation according to your risk tolerance.
 

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I'm 100% in stocks, futures and options. I had a very bullish approach till the second mini-crash of the year (and lost a lot), but now I am neutral and playing the volatility.
 

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My biggest fear is a catastrophic drop (as in the 1930's) that would never recover in my lifetime...I'm positive others out there are making similar defensive, long-term moves right now and the markets aren't showing it.

If you agree that it's time to backtrack and have done so, please share how you are responding.
Markets aren't showing it?? You haven't noticed the correction? :p

When others are selling is normally the time to be buying. Problem is stocks are still expensive here...
 

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Sold about 40% of our ETFs 2 weeks ago and are sitting with cash looking to buy back in when and if things take a hard drop. If not I am going to do some shopping for good GIC rates to increase fixed income in our portfolios.
 

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Mike -

I think everyone is uncertain these days. Fundamentally, everyone has to be comfortable with their investment allocation and if your shift makes you sleep better for the next 5 years, it is the right answer for you.

For myself, also somewhere around 15 years from retirement, I plan to gradually invest in excess cash over the next 3-6 months in a disciplined manner, largely into equities. I'm still reasonably confident that over a 10+ year horizon, equities will outperform bonds as an asset class. I'm not sure, since the uncertainty of equity returns is higher. However, you have to weigh the risk of a catastrophic drop in equities (as you mention - and which by the way could bring bonds along) against the risk that a conservative income portfolio might not exceed inflation, or while less volatile might do so with returns too low to fund the retirement you expect. There is no simple answer to this.
 

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As I posted elsewhere, the iShares LargeCap 60 ETF has a ten year return of 4.42% as of May 31. If you had diversified internationally and also held the iShares S&P 500 ETF, which hasn't been around for ten years, you would have 'achieved' a negative 3.06% on that investment. Add the iShares International ETF into the mix and you would have achieved negative 2.81% on that investment.

Recently, things have only become worse!! The three year return on the XIU is negative 2.48%, on the XSP is negative 11.73%, and on the XIN is negative 14.89%!!:mad:

The iShares CDN Bond ETF (XBB) has had a five year return of 4.50%.:(

Is it any wonder that index investors aren't getting rich on their investments??

If the next ten years happen to reflect the past ten, then most of us won't be any richer and some of us will be dead!!!

Gotta love the stock markets!!!

I think that my only remaining hope is to win the lottery but that plan hasn't exactly been going too well either.

Have a nice day!!!
 

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As I posted elsewhere, the iShares LargeCap 60 ETF has a ten year return of 4.42% as of May 31.
Well, that's because the 10 year period conveniently includes the dot com bust in the returns calculation.
On the other hand, if do an 11 year calculation i.e. include 1999, then annualized returns jump to 7.20%
Refer:
http://ca.ishares.com/product_info/fund_returns.do?ticker=XIU

Not quite so bad anymore, isn't it?

I'm not arguing for or against ETF investing, simply saying that your starting period (i.e. entry price) has a very significant bearing on your total returns.
Folks who went into the TSX market in a big way between Oct 2008 - Mar 2009 will have vastly different returns today than those who went in only a few months earlier (say, June 2008).

The iShares CDN Bond ETF (XBB) has had a five year return of 4.50%.:(
Again, it depends on your starting period.
Go back a few months i.e. Nov 2000 and your total returns jump to 6.20%
Refer:
http://ca.ishares.com/product_info/fund_returns.do?ticker=XBB

Not bad for a bond fund, eh?
Considering the fact that XBB holds highest grade Govt. and Provincial bonds, 6.20% annualized returns aren't bad at all for over 10 years.
I know folks who'd do murder today to get that % annualized return for 10 years.
 

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My core stocks 5 banks, power corp/fin, riocan, trans pipe,fortis are all up 60- 80% from my avg. cost.
If Suncor would get to 28 I'd buy 45 sell. Have sold everything else, 25% cash. Don't think anything will happen until Oct+-. When fear hits I will be a buyer.
 

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This is why financial advisors can talk anyone into buying anything. They pick the time frame that suits them best and then quote the best returns that they can find.

I guess that it proves the old adage that you can use statistics to tell whatever story you want. You picks your time frame to tell whatever story suits you.

For example, if you had invested five years ago in the RBC Global Precious Metal Fund, you would have achieved a return of 28.20%.

There are a million stories in the 'Naked City' as the old TV series used to say.

When quoting the ten year return in 2020, what crises, yet to come, will you have to work around?
 

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I've been thinning out my portfolio as well and buying more dividend paying stocks and keeping more cash. Too much bad news lately and not enough closure. When some of the problems go away, I'll feel a little bit more confidence in the market.
 

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Discussion Starter #13
Gold hits high today at $1260/oz

...Looks like trading in 10% of my portfolio for precious metals wasn't so bad a move :)

I dedicated my monthly budget for investment (which was for equities mostly until now..) and purchased high-yield bonds today, we'll see how that goes.

Anyone else steering away from equities?
 

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Personally, I don't try to time the markets as it can be a dicey strategy at best. This is why you should establish an appropriate asset allocation for your circumstances and personality at the beginning and only buy or sell to rebalance periodically. This means selling your winners and investing more into the investments that have underperformed which is counter intuitive to most people who want to do the exact opposite which is to chase after the hot sectors of the moment.

Anyway, that is what I have learned from several years of investing but others may have had different experiences.
 

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Personally, I don't try to time the markets as it can be a dicey strategy at best. This is why you should establish an appropriate asset allocation for your circumstances and personality at the beginning and only buy or sell to rebalance periodically. This means selling your winners and investing more into the investments that have underperformed which is counter intuitive to most people who want to do the exact opposite which is to chase after the hot sectors of the moment.

Anyway, that is what I have learned from several years of investing but others may have had different experiences.
It depends on whether you're trying to time using the evening news and your gut feeling, or some more mechanical process. There is some evidence that mechanical timing systems can reduce risk, if not increase return.
 

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Anyone else steering away from equities?
I've mentioned elsewhere that, while I don't see a lot of deals (certainly not like late-2008, where you could practically throw a dart and score an easy double), there are a handful of decent, Graham'esque stocks here and there.

I have recently acquired small positions (on dips) in:

http://finance.yahoo.com/q?s=sj.to
http://finance.yahoo.com/q?s=UNS.TO

On my immediate watch list is:

http://finance.yahoo.com/q?s=fes.to (alternative writeup on ABC Funds)



(Disclaimer: This should not be construed as a recommendation to buy or sell any of the aforementioned stocks.)
 

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There should be many considerations to take into account when establishing your appropriate asset allocation.

There is no 'one size fits all'.
 
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