Manage my 401k

Alrighty, in the spirit of the times, I’ll let “the community” (Did you know you’d stepped into a community? Oops, be sure to wipe your shoes!) participate in a historically closed process.

I have a 401k account. Not a ton of money – so little in fact that it isn’t gauche to talk about it in a blog, believe me.

Currently it’s allocated like this, ordered – at least according to traditional wisdom- from least risky to most risky:

  • Bonds  17%
  • Large cap growth (which probably really just means “large cap”)  28%
  • Small cap / speciality  34%
  • Global  20%

New money goes in allocated 20/30/30/20 percent.  [Let’s pause here to let various wags say things like “What is this, an old person’s porfolio from 1999?” or “Is this how you play chess?” or whatever. Okay, moving on.]

My current inclination is to take the money out of the stock market ASAP, at least domestically. This is largely because of my doom-and-gloom reading (see previous post on economic blogs – I’m reading bears mostly).

Let’s imagine this is your play money. What would YOU do, and why?


54 thoughts on “Manage my 401k

  1. Seriously, you’re sill a young man (can you tell my birthday’s coming up :) ), shouldn’t you be taking more risk for the next 10-15 years? In the long run the markets always go up despite those gloomy times. Mine is all in TIAA-CREF Growth and International. I just leave it in there and forget about it. Every couple of months I check it out of curiosity and say, “Wow, can I have that *now*?”

    But, I bet you’re waiting for an answer from DK… :)

  2. Matt – my long-time desire has been to park & forget, but slowly dawns my interest in actually managing it for better returns.

    DK is quite generous with his expertise and I could probably ask him via private email, but I’m also interested in hearing suggestions/approaches from others. (Yours, for example. So thanks!)

  3. p.s. Sign me up as a Buddy, link to Reassembler. If I ever manage to make it to the club again, I’ll give you the cash. (‘zat okay?) If I weren’t already convinced, I’d pay just for Jorge’s game last night. Which I admire greatly because his opening play baffles me completely, and I say that as a long-time gambit player.

  4. I’ll ditto Globular. You’re still decades from retirement, unless you plan on quitting early. Even if the market’s down in 5 or 10 years, it doesn’t really matter. I’d move everything out of bonds into something more aggressive.

    When you hit 50 or so, this may be the time to start gradually moving money to lower risk options as stability becomes more important.

    (Caveat: Not anywhere close to being an expert at this stuff.)

  5. Thanks Donnie.

    Which reminds me that this account was originally configured to be balanced a bit with my wife’s 401k – hers was WAY more aggressive. But she was only in the corporate setting for a couple of years and her account was so small that we just cashed it out when she went into business for herself.

  6. OK, consider yourself a Blitz Buddy!

    You’ll find out when Chris Bird posts the video interview that Jorge had no idea what he was playing in the opening. When he played 1. e4 e5 2. d4! he looked over at me and gave a quick nod and look that said “F^&k it! I’m gonna crush that little cock-a-roach!”

    Great stuff indeed.

    Y’all can see the game at

    Any other takers for Blitz Buddy’s? It only takes $20 to get your name in lights and get my never ending gratitude!

    (Again, go to

    (Thanks for the shameless promotion, and now back to your regularly scheduled boring retirement funds conversation. :) )


  7. If you’d like I could start up a company and let you be my main backer…I hear the bedazzler is on sale again, wanna start a jean jacket company?

  8. i would take the money and open a “checking type” account with my local edward jones guy. the interest is higher than most savings and checking, and the money will eventually make more money, with the edward jones guy. that’s what i would do…

  9. The more you dork with it, the more obsessed you’ll be and run the risk of hosing it (speaking from lousy experience). A well managed fund would naturally shift money to avoid big losses. Is your money fixed in a particular country?

  10. Me – nice, I’ve always wanted to be a venture capitalist. And that business model does sound like a winner.

    CL – I’ll have to find out more about that.

    Harvey – that’s why I’m collecting a lot of advice before acting :) The global fund is, I believe, flexible in terms of where money is invested. The Large Cap and Small Cap funds are all in the US, and that’s the country I’m most afraid of (in terms of near-term market performance).

  11. sell it all and buy QID if you can control the assets or go cash for intra employer accounts, usually the met life stable value A.

    even bonds can be bad now, as long rates can go up.

    i know, i stayed at a Holiday Inn Express (at Morgan Stanley and Piper Jaffray 1993 to 2000, and from 2000 to 2002 my own independent trading, and from 2003 to 2007 trading options…).

    look at the VIX, and you will see. it quotes like a stock, and moves reciprocle to the market. it measures fear or more particularly the price of lack of fear.

    at Yahoo Finance! use ^VIX

    it is the key to all of it.

    warmest, dk

  12. emerging markets are enticing, but we are in a bubble, no Intl cannot save anyones ass now. see graphic of EEM and FXI.

    at Y! use ^SSEC or at Bloomberg use the Shanghai Composite A.

  13. LEP

    oh yes it does matter!

    if the entire market goes down 15 to 20% in the next three years, when the SPX and NDX has gone straight up since March of 02, this is fools gold. bad, bad, bad.

    remember, Derek has not taxation here.

    stay in, to what, try to make another 4% to risk 16%????

    bad, bad, bad.

    or as Zen Master Soen Sa Nim used to always say ‘Number One Bad!’

  14. DK – thanks!

    Now I gotta go look up a bunch of stuff :) I was definitely aware that you’re pessimistic at the moment but didn’t know what you thought about the global funds. So that’s too bad.

    The gain 4%/risk 16% idea reminds me of poker.

  15. Derek: Glad David responded, so you can listen to someone who knows something.

    David: One question about the concept of the 401k: it assumes that stocks, in the long run (over a few decades), will go up, even accounting for bubble bursts. So what do think? Is this reasonable to expect for the next X decades, or could the paradigm change?

    That FXI chart was particularly frightening. It makes me want to take everything out of int’l now and put it back in after the inevitable crash.

  16. Derek,

    If you really want to get scared, read Nassim Taleb’s new book, The Black Swan, then follow it up with Benoit Mendlebroit’s The (Mis)Behavior of Markets. Basically, their whole theory is that markets behave according to fractal statistics, and not the Gaussian statistics all these money “experts” rely on. But what’s money, anyway, when you’ve got chess?


  17. with no disrespect to my most erude senior chessic Howard, you shouldnt read those books, or if you do, not for four years. I will send you my xls model. much better, and does the same.

    if you must read:

    Market Wizards, Swaggart
    The Money Masters, Train
    The Inteligent Investor, Graham
    Super Stocks, Ken Fischer

    Trader Vic, Sperindeo (sp?)” he has that 3:1 and 4:1 idea writ large. brilliant. yes, it is the same idea as poker. Vic was a card shark, and many are both card players and traders and chessPlayers. killer instinct. superDot, speed button. kill them all.

  18. Follow my advice. Invest your money in whatever index fund your 401k plan has available. Actively managed funds are a scam. If you pay just 1% in fees well that’s an additional 1% the fund has to earn to just match the market. That is no small task. In fact that’s a huge hurdle. Plus most funds keep some cash reserves. These equal a lost return (% of cash reserves X return of benchmark.)

    If you want to be a little more clever, you can do what I do. Have your deductions deposited into whatever money market account is available in your 401K. On days when the market is down do an exchange moving whatever you feel comfortable with into the index fund from the money market account. This should cost you nothing. This way you are dollar cost averaging, buying when the market is down or buying when others are selling.

    Anyone who thinks they can beat the market by treating it as a part time job is seriously deluding themselves. You’re competing against extemely bright individuals who in most cases are working 100 hours a week to slit your throat. Who did Bill Gates say Microsoft’s biggest competitor for talent was? Google? No, Goldman Sachs.

    For further reading try A Random Walk Down Wall Street or for a more pithy read try The Little Book of Common Sense Investing by John C. Bogle, one of the very few investment books endorsed by Warren Buffett.

  19. Hi and thanks – I am definitely not going to compete with the experts! Will have to look at the costs on the exchanges you suggest but right now I’m just plain old sitting out.

  20. Like a criminal I’ve returned to the scene of the crime, the crime being giving a investment advice. Well I can’t help myself…be careful with market timing. Really the best you can hope to do is to train your self to buy when others are selling. But if you really are trying to time the market be aware the following:

    (1) The S&P 500 is on the cusp of trading below it’s 15 year inflation adjusted moving average. Not a common occurence and historically if you bought when this occurred you enjoyed rich returns subsequently.
    (2) The current PE of the S&P 500 is trading below it’s 15 year moving average. A another very rare buy signal.
    (2) The dividend yeild of the S&P 500 is trading above it’s 15 year moving average. Another rare and great buy point on a valuation basis
    (3) The earnings yield on the S&P 500 has been fluctuating above and below AAA bond yields – another rare buy signal.

    To my knowledge the market has never crashed from these valulation levels (famous last words?)

    Go to:

    (4) Warren Buffet has been buying as have other renowned value investors.
    (5) The news sucks big time. Record Oil prices. Foreclosures. Middle income famlies going homeless. Hedge Fund traders being hauled of to jail (Bear Sterns) or committing faux suicides. Capitulation or close to it in financial stocks. War. Famine. Flood. I guess only pestilence hasn’t occurred yet. Blood is starting to flow in the streets. Maybe I should sell too. :)

  21. derek, if a person took my advise on or about 19 october, they would only be up 25.5%, versus a decline of 25%+ in the SPX. only a delta of 5)%.

    i do not doubt the above commentator knows much about financial markets and can teach us all something.

    but who said anything about trading? i am position holding with rare adjustments. indeed, as he aptly suggests, few can do this. but then again, i only used to manage $40,000,000 at the investment firm of Migrain Stintley.

    someone once said that chess mastery was like builing a brick wall, one brick at a time. you must try all methods to learn. the key is to minimize the cost of learning. if you have no cost to learning, you might not be taking the learning. you cannot do this intelectually, but must experience it.

    again, to be clear, many good points above, but i have no inclinition to elaborate, but of course dont agree with all of it.

    much to do here. got to run. bye.

    thx, dk
    (ive done a lot more at my other blog. have you seen it? link above)

  22. derek, if you wish me to teach you, i gladly will as a friend, but not in public. i have nothing to prove in markets, not at least in the public eye. dk

    PS 50%+ above.

  23. Stupid/Smart (heh) – thanks again! I want to get back in, after I have a reasonable basis for imagining things are poised for an uptick. So this is good information.

    DK – thanks as always. Mostly wanted your “this advice is crazy/not crazy” reaction, exactly as you’ve provided :)

    Your one-brick-at-a-time description resonates. Same thing in the physical security world. Reading and schoolwork are great but you still have to confront each situation, make a judgment call, see the outcome, analyze and adjust. Over time your judgment gets better. There really is no substitute for experience.

  24. Some of these guys above sound like financial market wizards. But as the guy calling himself “So Stupid” noted, there are a lot of well-paid experts at Wall Street firms out to rattle and bend the market according to their own design. You, in the meantime, might best only surf a wave if you can catch it. But rather than getting out in panic everytime there’s a downturn, the useful option (that doesn’t seem to be listed among your fund choices) would be to look into blended or balanced funds. The value of those funds is that they will maintain gains and losses at a steady pace by offsetting fixed and variable income investments. Speaking from a little experience, in the 1999/2000 downturn, my portfolio value declined 30% because it was all “aggressive”. In the latest downturn, it has declined only about 5% because I shifted some of the aggressive funds into balanced funds. Thus, when the storm passes, I hope to be in a better position to re-invest more aggressively. To the wizards, I’d just say that the whole point of a 401K is not having to spend your entire day analyzing investment choices.

  25. Some of these guys above sound like financial market wizards. But as the guy calling himself “So Stupid” noted, there are a lot of well-paid experts at Wall Street firms out to rattle and bend the market according to their own design. You, in the meantime, might best only surf a wave if you can catch it. But rather than getting out in panic everytime there’s a downturn, the useful option (that doesn’t seem to be listed among your fund choices) would be to look into blended or balanced funds. The value of those funds is that they will maintain gains and losses at a steady pace by offsetting fixed and variable income investments. Speaking from a little experience, in the 1999/2000 downturn, my portfolio value declined 30% because it was all “aggressive”. In the latest downturn, it has declined only about 5% because I shifted some of the aggressive funds into balanced funds. Thus, when the storm passes, I hope to be in a better position to re-invest more aggressively. To the wizards, I’d just say that the whole point of a 401K is not having to spend your entire day analyzing investment choices.

  26. :) I have already seen plenty enough of DK’s #s to know he knows how to do this stuff.

    re: Bears and bulls – Believe it or not, in my salad days I wrote a weekly stock market column for Computerworld. In spite of my ignorance it was easy to do, as we got sheaves of reports from Wall Street analysts and most of them would return a quick reporter’s call from CW.

    Somewhere in there I did figure out that when certain players were going to short a stock, it was indeed in their best personal interests to shout it from the rooftops and smear the concerned company in every way possible. So I am aware of that and hopefully able to weigh that among many other factors as I listen and learn from the many information sources available today.

    Regarding 401ks, frankly I would say over the course of my career my 401k has underperformed versus the overall market. At any rate that was certainly true when the market was going up and all I wanted, alhtough I didn’t know the terminology, was a fund that would track the market (which not among my available selections).

    So while I don’t want to be a day trader, I do think I can reach a level of understanding whereby I can manage my meager investments for better performance than I will get by just ignoring them. Case in point, my 401k savings went up slightly in the last quarter, whereas if I had not pulled the money in October I would have been down a significant percentage. I’ll get back in when it looks intelligent to do so.

  27. Buy SRS, which is ultrashort the housing market. I just bought it at 29.42-.35 variously in my three accounts. Right now, it is 10:34 EST, Monday 20 Apr 2009, back down from here… I cannot say as far as before, but too far up, too fast.

    SRS is weighted in 39% of the largest REIT’s mostly, both for malls, health care, office properties, and apartments. SRS moves inverse to housing stocks times two.

    grab your ass and hold on, but if you have a brokerage account, nice to buy some.

  28. that is to say, the ten largest make up 39% of its virtual holdings…

    this is not unlike the S&P 500, where the top 40 stocks make up 40% of the market capitalization of the index, and the bottom 460 make up 60%… it might be 37/63 now, whatever, but same Pareto’s law reality.

  29. I think the housing downturn is a little long in the tooth to be ultra short. Yes the commercial real estate market is likely to take a beating next as evidenced by the recent bankruptcy of one the largest mall holding companies. However there is no chance one of those funds would be available in a 401K.

    Frankly DK if your results are so stellar and if you are are as able a trader as you proclaim I’m not sure why you would not want to post your trading returns for public scrutiny. I recall several years ago Michael Burry did just that. As a medical student he launched the website ValueDoc and from there after gaining public exposure and building his credibility went on to launch his own hedge fund, Scion Capital. Incidentally he made a huge, huge killing shorting the mortgage market before almost anyone else was on to what was afoot. The guys is now managing billions. Or even look at the Kirk Report. I wonder how much that guy is making at $50 a pop in annual subscriptions.

    Well it goes without saying famous last words rang true as the market obviously crashed. In fact I called the bottom because I bought an ultra short fund on the very day the market turned around. Selling almost immediately I took a small loss. Goddamn I’m a horrible trader.

    But we may just be nearing a bottom because finally pestilence has arrived by way of the Swine Flu. God bless everyone.

  30. i mean this with no hint or suggestion of sarcasm,

    you might well be right…

    i was short most of last year, and this markets doesnt seem to want to go down now, but yes, my annualized returns are very good, but today is a new day. thank you.

    its humbling, to say the least.

  31. My current allocations:

    Description 1 Description 2 Total
    Bonds Investment Grade Corporate 12.1%
    Junk Bonds 3.0%
    TIPS 3.5%
    Total Bond 3.8%
    Bonds Total 22.4%
    Equity 500 Index 32.8%
    Emerging Markets 1.7%
    Energy 2.7%
    European 2.1%
    International Value 0.3%
    Mid Cap 0.5%
    Pacific 1.6%
    Real Estate 0.2%
    Small Cap Value 0.2%
    Small Value 0.3%
    Total International Index 6.8%
    Value 5.7%
    Small Cap 10.2%
    Equity Total 65.0%
    Money Market Money Market 8.7%
    Money Market Total 8.7%
    Precious Metals Precious Metals 1.8%
    Precious Metals Total 1.8%
    REIT REIT 2.1%
    REIT Total 2.1%
    Grand Total 100.0%

    When allocation drops from target allocation that’s where new investment dollars go. All bond holdings are in tax deferred accounts so I don’t pay taxes on the dividends. Some equity in tax deferred too but only equity in taxable accounts (plus money market of course). Occasionally I do something stupid like by an ultra short on day the market kisses 6600 or whatever it was and begins subsequent ascent. I believe I need to increase allocations in energy and precious metals as I think we are in store for some serious inflation down the pike. My 401K is simply invested in only three funds Fidelity Spartan (500 index) Fidelity Spartan Int’l (index) and Fidelity Total Bond (cost efficient). Fidelity would not be my first choice (that would be Vanguard) but that’s what they offer. I stay out of all their other funds. Best book for average investor I’ve read is The Four Pillars of Investing by William Bernstein (see his website Efficient Frontiers.) His other books The Birth of Plenty and A Splendid Exchange are also very good but less geared towards investing. He is a lucid writer and keenly smart. Don’t ask me how I came up with allocations, I think it was more an intuitive byproduct of looking at lots of different allocations and working out what seemed sensible to me. And besides the main thing is not so much the allocations as to maintain starting allocations as target. I’m hoping one day to possess the mathematical aptitude to work this out properly but no their yet.

  32. Have you gotten back into 401k contribution? As you mentioned last year: “I’ll get back in when it looks intelligent to do so.”

    Speaking for myself, I don’t have the knowledge or time to figure out when to make these decisions. Most people don’t do this correctly, either selling after peaks or not buying during troughs (one of the benefits of contributing to the 401k in the bad times is getting cheap stuff)

  33. I’m still out. This recent runup made no sense to me, and I frankly think the potential impact of the flu this fall is not factored in.

    I make no pretense of being an expert tho, so don’t take it as advice. Obviously if I were a genius I woulda bought everything at 6k.

  34. stay the hell out, unless its to go short.
    us current account is a nosebleed, china owns us.

    short term, dollar will rally, so oil/metals fall.

    markets more down than up. stay out or sell.

  35. Sometimes, stocks seem to be merely a legalized form of gambling.

    DK, curious about something: what about the case if the employer matches 401k contributions? It’s hard to pass up “free” money. Or do you foresee things being so bad, it won’t matter?

  36. LEP, its fine to put it in to get the match.

    just BE sure to not put it in stocks, but only the safe money fund, or stable value, or fixed income. odd to say, but some plans dont necessarily allow that allow that, and while its bordering on hideous NOT to, if they dont, bonds are ok for now. but even there, raising rates to avert a nascent falling dollar, will loose money, or fail to make marginal money…

    bonds have a yield, but underlying can decline in values, making it a wash.

    the us is in serious trouble, doubly noxious because we act as through the recovery is sustainable, like, *ahem* the false global warming, only attributable to stochastical gausian Russian sub noise ???????????

    a GM called me from Europe called me last week, 30 minute talk just to dialogue on this very topic. can you imagine? flattering.

    but its worse than you can know. the usa is fu?cked.

    we are immature, juvenial, trivial, and filled with entitlement.

    suffering? hugh? we dont know suffering. do to darfor, go to burma. we suffer when our latte isnt foamy enough.

    sorry, but cant type now, my eyes are falling out… im in love, and long notes too and fro……… magic is real guys……

  37. It feels weird to place the money in “safe” stuff seeing as retirement is 30-40 years away. I seem to remember you saying some time ago not even a heavy international distribution is reasonable. Still feel the same way?

    I miss your blogging, by the way.

  38. Right – I am still making a contribution (tho I think even the match is not there any more) but it’s going in like .0000001%-return ‘stable assets’ type vehicles, as DK says.

  39. yes, LEP, your are right, but if you shit goes down 20% after you buy it, its no good. i am here. i am all over twitter. i started back on my System of The System Blog, as of today, wrote my first post in half year.

    courtney moves me to do so. i have found the one for me…………

    call me if you want, not early………..
    20 6 2. 8….4 ********* &&&&&&&& 2 cbccbcb 7 chcchch 2 fjffjfj 2.

    second, the world will not sustain this recovery. if you must buy, wait a bit. it can go up, yes, but its 3:1 more likely down than up, or maybe 3:2 down to up, or 5:1 d to up.

    haste is the worst in investment. if you got to buy, buy slv or slw on weakness, but 401k wont allow it.

  40. derek, yes. but a 0000.01 return is even better than bonds.

    go to:$SPX,$NDX,$RUT,$VIX,$TNX,$USD,$CRB,$WTIC,$CPCE,$nikk|B|B4

    and look at TNX. it is the 10 year rate.
    IRX is 3 mo tbills,
    FVX the five year note
    TNX the ten year govt bond
    and TYX is the 30 year bond, but TNS is the major measure of fixed income, with libor, or London Interbank rates………

    TNX is going up. thats yield……. this means as yield HAS to go up to quell immanent nascent inflation, or sim, flight of capital out of the USA due to fiscal (tax rates) and monetary (fed rates) excess, so as rates go up to slow (not stop) as dollar that must go down, as we cannot spend more, and as china puts its foot on our neck (‘David, if the chinese get their foot on our necks, they will NEVER take it off’ someone wisely said)….

    so as rates MST go up as was in japan when their rates went to zero in the 90′, so here.

    up rates is falling bonds. a bond fund can pay 4 or 5% while losing you six or four. can it gain? yes. but its not worth the risk.

    you dont risk a 2% gain when you can loose 4. sleep at night, money markets for now.

    anyone can email to find out when its time. i will be here.

    love david korn, david underscore korn at cabl e sp eed dotttt communisiticy. no crapy please. cable speed is one word…….

  41. If you want a real intellectuals take on the US versus say Europe read Nassim Nicholas Taleb’s “The Black Swan”, it’s funny and illuminating. He believes in the US and he is no pollyana.

    If you try to trade your way to financial freedom you are going to be working your entire life and that is a cold hard fact (unless you are very skilled, very smart and/or lucky.) I actually agree, somewhat, with DK regarding growth prospects for US versus Asia, India, Brazil and Russia. However this is not new news to Wall Street. Just read When the Markets Collide (#1 FT/GoldmanSachs business book)by the CEO/CIO off PIMCO.
    If you believe the secular destination is that the USA is doomed then increase the weight of your allocation in emerging markets and the pacific but don’t stay out of stocks completely.

    Further if you believe inflation is imminent then why would you be in money markets, stocks will hold up better than bonds during an inflationary period. Again if you believe that is the secular destination then you add extra weight to to real assets such as: real estate, commodities, gold. Money markets or cash will get killed.

    The fact is these emerging markets face their own host of problems. India and Pakistan are at each other’s necks with nukes. China has a gigantic aging population, as does Japan, unlike the US (realatively speaking). Russia is run by a thugs. South Africa’s new leader is still an unknown quantity. Investors in frontier markets like Africa are being scared off by Al-Queda in Africa – see this weekends WSJ. Latin America is dealing with a renewed wave of strong men and socialism.

  42. So Smart – Black Swan is big in security circles also. (I mean operational security ala CSOonline.)

    In fact, some years back we tried to interview Peter Bernstein for CSO. Point being that risk is better understood in finance and that there should be metrics or mindset the security field could learn from his POV on market risk. But he shot us down. Too busy making money I guess :)

  43. if i promise to not get too wild, why not interview for an usual view of the world/risk, complexity, chaos theory in investment? can be a small paragraph. i give your mag goldman sachs chief strategist cannot do!

  44. @ SSIS, all well said:

    A. be in money markets because bonds can loose value.
    B. to not be in stocks now.
    C. yes, emerging markets, or anything not tied to US Dollar.
    D. i am not sure if we delfate or inflate. im not a world bank economist, but i do place my single best bet on silver, long term. ratio to gold still way lagging, but not buy it now either.

    thank you, great comments. dk

  45. Derek – Actually Nassim Nicholas Taleb, author of the Black Swan, thinks risk is highly misunderstood by most economists and finance professionals, outside of street-smart traders. In fact he decimates most of the financial-economic academic establishment, Nobel winning economists and modern portfolio theory. He would probably take issue with a lot of my views and no doubt kick my ass. The problem is I don’t currently see a viable alternative to MPT and when it works, it really works. If he thinks anyone understands risk it isn’t economists or philosophers but the military who cannot afford the luxury of pet theories.

    I have not read Peter Bernstein yet but his books are very high on my reading list. I want to read Capital Ideas. Sadly Peter Bernstein has passed. In his last article in the WSJ he said the market would not turn till the housing market turned and if China went into recession, God help us all.

    DK – I’m in this for the long haul (longer than I’d like probably) so if I can get a bond yield in a tax deferred account of 5-6% or a 3-5% equity dividend yield in a tax deferred I’ll take it.

    In tax deferred

    TIP 4.3% yield TIPS
    LQD 5.3% yield Investment Grade Corp
    REM 6.1% yield REIT
    JNK 12-14% yield Junk bonds 3% allctn
    FTBFX 4.5%-5% yield Fidelity Total Bond
    recently added BDJ 14% yield Blackrock Enhanced Dividends 1% allctn

    Yields based on prices I bought at.

    Back of envelope – sock away $15K per year for 30 years at 5% and you end up with $1 million at the end. If I can get an equity yield of 3% with the promise of 2-3% earnings growth then I’ll be grateful. And if you read your Bogle you learn that over the long haul the speculative return is miniscule with most of the growth coming from yield and earnings.

    I will own up that I have pulled back on infusions into bond funds as of late as yields have dropped.

    Right now you can get good yields in European equity funds. Even my 401K Spartan Intl is yielding 3%. I buy it any day the market drops 1-2% or more. Vanguard Euro Vipers VGK is yielding 6.5%. These yields might not hold up – we’ll see. You take your risks. But what am I getting in a money market – next to nothing and again I have a long time horizon. Look I know the market can drop. I rode it down to 6600 but bought heavily on the way down too.

    I’m not a trader – I literally bought an ultra short fund at the bottom of the market when the Dow fell below 6600. I couldn’t believe it – and I’ve read Market Wizards (both books), Trader Vic (both books), O’Neal, etc. I would love to be as astute or attuned to the market as someone like DK but I’ll never get there.

    To quote Dirty Harry – “a man’s got to know his limitations.” Yes, I get my philosophy from Hollywood movies, so you’ve been warned.

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