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CGM Focus Message Board

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  • ryanruiz100 ryanruiz100 Sep 4, 2008 2:59 AM Flag

    For those who invest based on emotion

    A financial planner would probably say to put 15% in bonds, 25% in international funds, 5% in gold funds, 15% in CGMFX, and the balance in index funds. Supposedly you're supposed to put 5% in gold as a hedge against inflation, and some in bonds as "safety." I say why would you put 5% in gold if your horizon is over 30 years? Why do I need "safety" of bonds when I won't need the money in the next 20 years and it doesn't matter what happens to it meanwhile? Stocks have outperformed 100% of the time over 30 years since 1800's. If the shit really hits the fan, and this country goes into chaos, do you really think you're going to carry gold around and go into the store and saw some of the gold off to pay for a loaf of bread, instead of cash? Or sell your Gold mining company to buy a compound in Waco TX? No, at that point, a shotgun would be a better hedge. Maybe I'm going about it wrong, but I don't think so. I know what's better suited for me than some "financial advisor" who took a 4 week training course at Charles Schwab to give me financial advice after he quit his previous job of telemarketer.

    I don't need a hedge against inflation, or stability of bonds, when I won't touch the money for 30+ years and the best LONG TERM stability is having more money when I retire, and the best LONG TERM hedge against inflation is stocks. That is my opinion and I am able to handle the daily/yearly fluctuations stocks bring. When I get closer to retirement, I may change my mind some. When you're 24, you probably don't have a lot of money to begin with. The sooner you start compounding your money via stocks, the easier it is to hit your target equity when you're 65.

    What you do have to be careful of is getting wrapped up in bubbles, like tech bubbles, biotech bubbles, etc. A focus fund is prone to this and I think there's a chance CGMFX got wrapped up in an oil bubble so we will have to see. Regardless, I have such a long term horizon I'm not going to go switching from one fund to another on a monthly or yearly basis because of short term losses, unless I find another place better suited for my money.


    Heebner is no miracle man. He is not going to get you rich by putting 15% in CGMFX. Last year was a fluke. The last few years were a fluke I'd say. I've never seen someone nail the stock market so perfectly as Heebner since 2000. It will probably never happen again. So if you're in CGMFX to get rich in 5 years, I thnk you're in it for the wrong reasons. The reason I'm in CGMFX so much is because I don't believe in diversifying for the sake of diversifying, bought CGMFX because I was looking for a FOCUS fund (it was either this or Legg Mason Focus, guess I lucked out), and take whatever comes with it because my time horizon is so long.

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    • Well I guess I'll stop dollar cost averaging into CGMFX and start putting more into my FAIRX position, try to balance out and get a little more sanity into my portfolio. I won't pull anything out of CGMFX just let it sit for a couple years.

 
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