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thu posted: Thu 2018-02-15 22:12:29 tags: n/a
Investment and bank account links are all settled. Took a deep breath and took this year's plunge into the IRA where I'm investing in mutual funds. Last year I picked a handful of mfunds and rather arbitrarily allocated: 24.4% to UGPIX (China market index fund)
24.4% to RYVYX (NASDAQ-100 2x strategy fund)
17% to INPIX (Internet sector index fund)
17% to BIPIX (biotech sector index fund)
17% to SMPIX (semiconductor sector index fund)

I don't know how to calculate exactly what happened because dividends and capital gains are automatically reinvested - but the growth in my shares of these over the half-year I held them was approximately:
UGPIX: 37.76% (wow!)
INPIX: 26.48%
SMPIX: 24.66%
RYVYX: 17.53%
BIPIX: "only" 9.85%

With a new chunk of change to invest tax-free for 2018, I thought about how I should slice up the pie to keep diversified while still favoring the historical performers. So I calculated a relative growth percentage for each fund. The sum of their growth percentages was 116.28%, so UGPIX's relative growth was (37.76/116.28) = 32.47%.

I was leery of tying the lion's share of this year's retirement nut to China's economy, so I backburnered that purchase and redirected about 2/3 of what I would have put there into SMPIX. When I was done allocating among the other funds I went back to UGPIX and ended up matching what I put into RYVYX again.

Why not INPIX? Fake news, the sub-human social media experience, Samsung's exploding phones and Google's shoddy phones, broadband providers lobbying to dismantle popular net neutrality and subscriber privacy rules, Apple intentionally and secretly slowing older hardware, the ad-blocking arms race as thumbnail sketch of the privacy and security race, etc. The Internet has some fuzzy trust and contentious ethics challenges to overcome, whereas the semiconductor sector is relatively straightforward.

A while back I read Merriman's "Ultimate Buy and Hold Strategy". Just today he updated it ("2018 edition"). It is essentially the same prescription as the previous version, slightly reworded: 10% each in S+P 500, large-cap value, small-cap blend, small-cap value, U.S. REITs, foreign large-cap blend, foreign large-cap value, foreign small-cap blend, foreign small-cap value, and emerging markets index funds. Each of those slices can be purchased in the form of an EFT; almost all can be purchased commission-free from a single brokerage house, although not all ETFs perform equally so the choice of brokerages or the decision to eat commission fees becomes important for small, starting investors. If I went with my oldest IRA broker I'd have to turn to mutual funds to pick up the foreign small-cap value sector commission-free, and their mutual funds are not top performers in that category.