IRA Composition? first

pacmandefense

ill go first

BAC @ 5%
GE @ 4.75%
MSFT @ 5.51%
EEM @ 8%
EFA @ 8%
IJH @ 18%
IVV @ 43%
IWM @ 8%

Swanand

@tombrokaw, the most efficient investment on a risk/return basis is fixed income (based on the last time I had to calculate this in 2010).

mamuka12

these portfolios look a lot like my elderly grandmothers. beef up the beta fellas. we're not ready to die yet.

sameeragarwal

Zesty Wrote:
-------------------------------------------------------
> My IRA:
>
> ~70% - MSFT
>
> ~10% - Covered Call (MSFT APR 12' 26 CALL Option I
> sold)
> - Proceeds from covered call used to
> Purchase ARY (senior notes @ 7.75% coupon)
>
> ~20% - GSF (Goldman sachs senior notes @ 6.125%
> coupon)


He's got the right idea. It's foolish to NOT maximize the income component of your return in an IRA. Otherwise, IRA's are pointless.

(and I know what a lot of you are going to say.....think before you say it.)

jacksparrow

That does seem like an awfully concentrated portfolio for a retirement fund. Sure, when you're younger, you're supposed to be able to take more risk with your capital, but most of that should be market risk, unless you're prepared to put in beaucoups of research time. And even if you go for alpha, you'd want it diversified across about 15-20 individual stocks.

defour44

@LBriscoe, you can't beat the market trying to replicate it

willsucceed

Zesty Wrote:
-------------------------------------------------------
> My IRA:
>
> ~70% - MSFT
>
> ~10% - Covered Call (MSFT APR 12' 26 CALL Option I
> sold)
> - Proceeds from covered call used to
> Purchase ARY (senior notes @ 7.75% coupon)
>
> ~20% - GSF (Goldman sachs senior notes @ 6.125%
> coupon)


is this a joke?

bkballa

Some people are better at analyzing companies; others are better at macro-type bets (large cap/small cap; developed/emerging; sector; etc).

So part of the answer isn't about whether stock picking or asset allocation is inherently better, but where you think your specific edge is. If you really are a superior stock picker, then you have many more ways to make money with 8000 stocks to choose from vs maybe 150 ETFs and/or related indexes. But you'd are also taking on a lot of ideosyncratic risk, which - on average - is uncompensated unless you have superior analysis. Adding that risk is a bad idea unless you really do have stock-picking talent. If you do a decent job of making even moderate macro calls, it makes more sense to stick with an asset allocation and rebalance.

Remember also that this is a personal account and/or IRA, so former trader may have a day job that means they can't take the time to carefully watch 50 different stocks that are more or less correlated to the market. So there are fewer opportunities to outperform massively, but also fewer opportunities to mess up. If you are investing with a long term time horizon and have a day job that requires your brain cycles, asset allocation strategies are very reasonable. Otherwise you are going to be putting in a lot of work to add what will most likely wash out to a small improvement over holding the SPY.

It's also safer from a compliance point of view, because it is harder to be accused of inside trading an index, than a company.



Edited 3 time(s). Last edit at Wednesday, August 3, 2011 at 11:25PM by bchadwick.

bpdulog

I'm interested in hearing why you think that, and secondly your point doesn't necessarily address my curiosity for holding multiple indices with some overlap of security ownership. While I don't disagree with what you're saying, your assertion also doesn't say anything about the usefulness (or non-usefulness) of indices; investors that aren't indexed and pick individual securities also have to think about asset allocations.



Edited 1 time(s). Last edit at Wednesday, August 3, 2011 at 10:45PM by numi.

NakedPuts

numi Wrote:
-------------------------------------------------------
> Just curious why you hold so many different types
> of indices? I know a lot of firms recommend this
> as an "easy fix," but seems like you are just
> giving away any competitive advantages you might
> otherwise have if you could pick individual
> stocks.
>


I believe you add more value picking asset allocations over picking individual stocks.