Ideas and Opinion

[woodie96]

Hello all, I am trying to figure out a couple of things inside my portfolio and was looking for some inputs. To lay out the scenario here goes:

In the fall of 2007 DW and I sold a house that she obtained in a divorce, we then put 20K of the profit in mutual funds, 5K in each (CGMFX, CGMRX, RYOHX, and RYVPX). In the summer of 2008 I started contributing through work in our 401K, we then switched providers about a year ago and I had to switch my distribution to what I currently have (ACDCX, GRLRX, ODVNX, TGVRX).

Of course since we bought in at the top in 2007, when the market dumped, those took a severe hit (CGMFX still showing down 26%) the rest have all at least climbed to where I'm finally at the break even point (ranging from 1% to the good to 15% to the good). The four that I bought through the work contributions are all in the good from 3% to 13%).

What I am considering is transferring some of the CGMRX to the CGMFX to lower my DCA. When I bought the CGMFX in in '07 with the 5K, the cost was $61 a share. Now it is trading at 31.88 a share. Over the course of the last 2 plus years, my DCA is down to 43.36. If I pull the 9K out of CGMRX and put it in the CGMFX, it will drop my DCA to around 36. Then hopefully it will come back up to a break even point in a year or two.

Thoughts, ideas.

PS.....FYI.....Reading through and looking at their holdings, it appears that CGMFX is currently using Goldman Sachs to fill close to 10% of their portfolio. So depending on what happens with them and their lawsuit, I would expect CGMFX to take a substantial hit.

What are some of you guru's thoughts?

Thanks

[Slug]

I own CGMFX as well. I bought in years ago so I'm squeaking by with a small gain. I decided not to add to my position last year which was a good move considering its recovery has been slower than I anticipated. I'm still a little gun-shy on it and now favor an index approach. If this is your entire portfolio, I'd consider getting into some lower cost index funds. ACDCX, GRLRX, ODVNX, TGVRX, and CGMFX all have pretty high expense ratios comparatively.

[jIM_Ohio]

I do not see any logic to your decision making...

Here is what I would do (or ask)... or suggest...

1) define your risk tolerance
2) define an asset allocation in % stocks and % bonds which reflects the risk tolerance
3) choose funds which meet the asset allocation

you are doing #3 and I have no idea what #1 and #2 in your situation are.

[woodie96]

I know what you mean slug, that was one of the reasons for my thinking about trying to get my average price per share down by doing the transfer.

jim the risk level is high, I don't plan on using that money for anything in the next 25 to 30 years, so it isnt critical to do anything at this point, I was just getting frustrated that it was taking it so long to recover compared to the rest of my portfolio.

Looking at my spreadsheet at work.....viewing the holdings of my protfolio, I am currently in 92% stock, 5% bond, and the remainder in cash positions.

[jpg7n16]

I think Jim's saying that once you have established a risk tolerance- 1st (in your case = high), then you should determine what allocation is appropriate from there - 2nd. Once your optimal allocation is established (based on risk tolerance), then you should choose the funds to fit into the optimal allocation - 3rd.

He's saying you picked the funds -1st and then calculated what allocation they got you -2nd.

92/5/3 is very aggressive. It'd be fine for me, and maybe for you too so there's no real need to switch funds. -ie you should consider switching when you want to change the allocation, not because the fund isn't cool anymore. But part of that extra risk you're taking is that the fund will remain low for a long time and then shoot up one day. (if at all)

There is one thing though - you say your risk tolerance is high, but then get frustrated when you don't see immediate consistent results. Is your tolerance as high as you say it is?

[jIM_Ohio]

I think Jim's saying that once you have established a risk tolerance- 1st (in your case = high), then you should determine what allocation is appropriate from there - 2nd. Once your optimal allocation is established (based on risk tolerance), then you should choose the funds to fit into the optimal allocation - 3rd.

He's saying you picked the funds -1st and then calculated what allocation they got you -2nd.

92/5/3 is very aggressive. It'd be fine for me, and maybe for you too so there's no real need to switch funds. -ie you should consider switching when you want to change the allocation, not because the fund isn't cool anymore. But part of that extra risk you're taking is that the fund will remain low for a long time and then shoot up one day. (if at all)

There is one thing though - you say your risk tolerance is high, but then get frustrated when you don't see immediate consistent results. Is your tolerance as high as you say it is?

right- if risk tolerance is high, then you need to make sure the allocation is appropriate (80-20 would be lowest stock bond allocation I would consider high risk).

And performance of the risk tolerance should be long term- 5-10-20 year returns are most important... not 1-2 year returns.

[woodie96]

I see what you guys are saying.
Just a little background, I have stable income coming in: currently have a 30K a year retirement check coming in, 55K income, plus wife's income of about 20K.
The money in the CGM account is not needed any time soon. I was looking to "help it along" and improve the price per share so it would go positive sooner.
I'm not contemplating selling for a long time.

Jim, you are correct in your 1, 2, 3 approach. I went about it kind of bass/ackwards because DW and I got a late start (both 45), so we decied to go very aggressive for a while since have a few years to recoup any losses that we may incur.

Have to love first day back at work from vacation...yukkk....