Investors....come in please!

[Oldmoparguy1]

Originally Posted By: JBinKC
Tough environment to commit funds for
most stocks. I am wondering how investors are currently managing their liquid (cash) portion of their portfolio given the returns are ridiculously low.
Has anyone done a recent switch to a MMF that holds T bills?

I have a limited portfolio of stocks that I plan to keep for the foreseeable future. All have 4% or higher dividend and all have a good history of growth. 3 of them have a certain amount of volatility so I have standing orders to buy on a dip. By doing this, I have small blocks of stock that I can sell at a profit should I need to maintain my cash position. This is new to me this year. I used to trade often and have not done well with that. What I'm doing is working so far. I'm up ~10% ytd.

 

[gfh77665]

Originally Posted By: JBinKC
Tough environment to commit funds for most stocks.


Domestically, I would agree. Our market P/E is about 18, give or take.

Internationally, you can find much better values. Look up "expected market returns by country". You can find P/E's in the low teens, if you look around the globe. FWIW, my 401K is 100% international.

 

[Mr Nice]

Why 401K is 100% international ?
Is that better than 100% domestic small, mid and large Cap funds ?

 

[gfh77665]

International, because I seek best value, wherever it may be. The fund is global, giving me ample geographic diversification. Additionally, I have a rather large stake in my (domestic) company stock, and I have five rental homes. All in all, I am well diversified.

 

[Vuflanovsky]

Well...maybe, but I think you're possibly operating on an assumption that a low P/E equates to best value when the domestic vs. international indices over the last two decades don't particularly bear that out.

If you're swinging for the fences with an India fund for example that would be different than investing in U.S. based Global blue chip players Like Dow, Boeing ( both PEs around 15 ), J&J (17), or GE (19)...most of which have a majority of their sales overseas. It's true that "International" and "Global" can have more than a few variations on a theme...and it seems some of those themes might be more appropriate than others with today's global market.

 

[gfh77665]

These are the details of the expected return for the world's largest markets:

Projected Annual Return

Apr. 8, 2015
Singapore 16.4%
Australia 12.8%
Spain 12.2%
Italy 8.3%
Korea 7.8%
UK 7.5%
Netherlands 6.9%
Canada 4.6%
France 4.5%
Sweden 4.4%
Switzerland 2.7%
Japan 0.7%
Germany 0.5%
USA 0.0%

Emerging Market

Russia 30.2%
China 27.6%
India 16.5%
Brazil 16.3%
Indonesia 14.9%
Mexico 3.1%

Pretty compelling for international equity, IMO.

 

[cjcride]

Thanks Gfh, good post.

 

[Mr Nice]

Projected returns is much different than.... actual returns.

 

[gfh77665]

Originally Posted By: Mr Nice
Projected returns is much different than.... actual returns.


Uh, yes, obviously.

With that said, if you want to buy into a market thats fully valued, instead of ones that appear UNDERvalued, be my guest. I stated my opinion, and even said "FWIW".

 

[Vuflanovsky]

It seems the correlation of U.S. and foreign stocks is pretty tight in recent historical terms. Things like regulatory culture and productivity of some of these countries have the potential to have a greater impact than just if the stock's P/E is 11. Personally, I like undervalued...just not all in one bucket...as these days the international stocks take it in the shorts in increasingly connected ways to U.S. stocks because there's less divergence than in the past...with typically higher volatility.

The indices for the 5, 10, and 20 year time frames tell me that investing internationally certainly doesn't match up with these projected annual returns if they're spread over a large number of stocks and blocks of time.

 

[gfh77665]

International governments instituted quantitative easing, just as the US did, but a bit later. Therefore, the full effect of their stimulus has yet to fully work its way throughout their economies, since it is proportioned out over time. The correlation between domestic and international markets is strong, but it is offset time wise as they seem to follow behind us.

Also, the fact that their indices has lagged the US market over the past 5, 10, and 20 year time frames further augments the premise that the US may be fully valued, while other markets have room to mature.

 

[Warstud]

It looks like the Correction is underway folks. Long Bonds....Gold and Natural Gas.

 

[surfstar]

LOL - I thought we were back in a recession in January, right?


Nobody knows nuthin.

 

[Mr Nice]

Up. Down. Sideways... I'm not worried.
I did hit a milestone recently so I'm happy so far.

Why is Peter Schiff saying there is a crash coming soon?
I sometimes watch his YouTube videos about the economy.

 

[Drew99GT]

Originally Posted By: Mr Nice
Up. Down. Sideways... I'm not worried.
I did hit a milestone recently so I'm happy so far.

Why is Peter Schiff saying there is a crash coming soon?
I sometimes watch his YouTube videos about the economy.


He always says a crash is coming. He's a complete perma bear bull [censored] artist.

 

[Warstud]

Originally Posted By: surfstar
LOL - I thought we were back in a recession in January, right?


Nobody knows nuthin.


I said Correction not Crash. There's a difference.

 

[Oldmoparguy1]

I watch CNBC most mornings. I'm hearing more negative outlooks now, but it's still more up then down. i just took some profit his week from a small piece of one of my stocks. Brings my cash up to about 30%.

 

[Gasbuggy]

Originally Posted By: Oldmoparguy1
I picked up some FTR this morning on a lowball order. Not flashy but chunks out 8% quarter after quarter.


I have followed FTR for years. Take a look at GAIN if you like stocks with large dividends but no real share price appreciation.

 

[Mr Nice]

Drew,

Yes its comical when he argues with other guests on CNBC.

 

[Oldmoparguy1]

Originally Posted By: Gasbuggy
Originally Posted By: Oldmoparguy1
I picked up some FTR this morning on a lowball order. Not flashy but chunks out 8% quarter after quarter.


I have followed FTR for years. Take a look at GAIN if you like stocks with large dividends but no real share price appreciation.

Actually, GAIN looks like a reasonable income stock. Trading right now at it's average low, pays 10.65% at current price, 1000 shares gives $750/year. Has a solid history. Potential appreciation is ~$1. whats not to like?
Thanks.