Cut and run: portfolio update

After reading this bearish post, “Sell some winners and most of your losers” I am thinking of increasing the cash-equivalents (bonds, money market, cash) portion of my portfolio.

I have an all-equity portfolio right now at TD, but I am just a few months away from transferring all my investments to Clearsight. Just waiting for the no-sell period to expire on some of my funds so I don’t get dinged with early redemption feeds. Once I switch to Clearsight I will assume a 25-75 bonds/equities ratio eventually. So I do not see this as a market timing strategy, but simply a re-allocation to where I will be in a few months/years from now anyways. This is my portfolio at TD as of now:

Fund % of holdings
TD CDN Equity 4.450%
TD CDN Money Mkt 7.680%
TD CDN Small-Cap Equity 4.460%
TD Emerging Mkt 1.770%
TD Global Select 13.320%
TD Science &Tech 3.480%
TD Energy 4.920%
TD US RSP Index-e 10.770%
TD Int’l Index-e 11.030%
TD CDN Blue Chip Equity 14.470%
TD Dividend Growth 14.230%
TD US Mid-Cap Growth 14.230%

The reason the money market fund is there is because that is the only thing I could put money into that doesn’t have a 90-day no-sell period. Before the monthly transfers from Clearsight were in effect I wanted to put my money somewhere (so I couldn’t spend it). Don’t ask me why I don’t have 25% bonds in my TD portfolio. I actually used to have at least that much but for some reason (can’t even remember), I sold them. That’s partly the reason I’m leaving TD. I want an advisor between me and my portfolio to stop myself from excessive trading and pointless fiddling. I think I’ll sell the Science & Tech fund. I’ve wanted to get rid of that for a long time. I have nothing good to say about tech funds or technology stocks in general. History has proved time and time again that they are nothing but trouble. I will probably also sell TD CDN Equity which has had a good run and did not perform as well in the previous bear market as did TD Dividend Growth or TD Blue-chip Equity.

I do not have access to the original article, but here is part of what The Big Picture quoted:

The disquieting overwhelming agreement among Street folk that we’re in a rally mode whose only real danger is that of missing out on the fun and profit that lie ahead is not the sole reason for our skepticism. The inevitable speculative excess that such an attitude begets is another tangible cause for unease. Speculation, of course, is always with us. And thank heavens it is, since it’s truly a vital investment ingredient, adding spice and whetting appetites. Heck, without speculation, Wall Street would be the epitome of dullness. But it’s the classic good thing that you can quickly and easily get too much of.

And whether you feel we’ve reached that state depends mostly, we reckon, on whether you own a stock that’s kicking up its speculative heels or not. What is clear, however, is that there’s no shortage of such stocks and their numbers do seem to be steadily rising. Here, we suspect the revived passion for momentum investing, the opportunistic approach of many hedge-fund managers, reminiscent of the day traders in the late ‘Nineties, to buy anything that moves, and the hyperventilating habitu├ęs of the online chat rooms are major stimulants

. . .

Stepping back a ways to get a little broader perspective, it seems to us that we are witnessing the beginnings of the end of the fabled era of easy money. And anyway you slice it, that shapes up as not exactly good news for a lot of businesses that battened rich in that extraordinary era

I do NOT listen to this kind of stuff. I do not buy in to any predictions about what the stock market is going to do next as it is completely unpredictable. I like to have a balanced asset allocation and rebalance from time to time. Predictions like these are not anything to be taken seriously or to lose sleep over; they are only a reminder that it is wise to not be 100% in equities.

4 thoughts on “Cut and run: portfolio update”

  1. Wow. You must be getting killed with management fees. The move to clearsight is probabaly good if your portfolio is big enough (what do they charge… i got an ad from them?)

    It seems that you like funds… move to etfs.

  2. Joe: You’re right, I am getting killed with MERs. The only fees I will be paying with Clearsight are commissions on stocks and ETFs. My portfolio at Clearsight will be simpler. I will be using XIC for my Canadian portion and CI Value Trust Fund for US. And probably TD Canadian Bond Fund or something similar as well as an International Fund. My advisor prefers Bill Miller’s Value Trust to the S&P500 and international funds over indexes. Keep checking the site as I’ll be fully switched to Clearsight by February and I’ll post updates here on my purchases.

  3. 100% equities can make sense for a small proportion of the population. As Jason Zweig notes on page 105 of Benjamin Graham’s ‘The Intelligent Investor’:

    “For a tiny minority of investors, a 100%-stock portfolio may make some sense. You are one of them if you:

    *have set aside enough cash to support your family for at least 1 year
    *will be investing steadily for at least 20 years to come
    *survived the bear market that began in 2000
    *did not sell stocks during the bear market that began in 2000
    *bought more stocks during the bear market that began in 2000
    *have read Chapter 8 (The Investor & Market Fluctuations) in this book (The Intelligent Investor) and implemented a formal plan to control your own investing behavior”

    I doubt if even 1% of the population would qualify for a 100%-stock portfolio under Zweig’s requirements. In other words, don’t do it!

  4. Tonekoffski: This was one part of Zweig’s commentary that I have looked at again and again. If it weren’t for this little note by Zweig I wouldn’t even consider a 100%-stock portfolio after reading the original Graham text. My mind (in 2005) wants to invest in a 100%-stock portfolio, however, unfortunately I do not pass his criteria.

    “did not sell stocks during the bear market that began in 2000”

    Prior to 2000 I had an all-equity portfolio, except for a significant portion in a balanced mutual fund. During the bear market I realized I was not comfortable and wanted some cushion. I swung the boat way too far tothe other side and went with a 40% bonds portfolio. I didn’t just shift my purchases towards bonds, but actually sold some of my equity mutual funds in order to buy bonds. Throughout the bull market post-2003 I gradually relaxed this bond allocation until I was where I am now. I was doing what many investors do; shying away from stocks when they are more attractive (lower-priced) and buying them when they become less attractive (more highly priced). It was a small portfolio and the shifts in allocation weren’t drastic, but I am glad to have made these mistakes early in life.

    I have decided to go with a 25-75 allocation for now and stick to it with the help of my advisor in keeping my meddling hands out of my portfolio (no more click-of-the-mouse online mutual fund trading for me!) If I can make it through a few more market cycles (>10 years) then maybe I will consider a different allocation.

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