Comments on: How Oakmark International Helped Me Turn $6500 into $10000

By: Posts I Enjoyed Last Week

Posts I Enjoyed Last Week — Fri, 14 Nov 2008 04:59:47 +0000

[...] at Money Smart Life is getting huge return from his investments in Oakmark International Fund (OAKIX). I have similar experience with Dodge & Cox International Fund (DODFX) , which is also [...]

By: Ben

Ben — Sun, 17 Jun 2007 19:48:12 +0000

Okay guys, I changed my title and first paragraph to better reflect the total amount I invested.

mapgirl, it’s not that I have a pessimistic outlook on the international markets, I just know not all upward trends last forever so I’d like to take some profits now to hedge against scenarios where they would stop growing or lose value. I’m sure long term the international market will grow so I’m not looking to sell it all, just some. The question is how much.

By: mapgirl

mapgirl — Sun, 17 Jun 2007 14:29:29 +0000

Tsk tsk! Definitely misleading, but still a very good post. And the 20+% annual gain is still pretty awesome compared to the S&P.

I have always wondered when to sell. In my case, I have most of my investment in tax-deferred accounts, so I don’t worry about capital gains taxes. What I do worry about is when to lock in profits. I never, ever know when to sell. In this way, I’ve ridden individual stocks down.

In a case like yours, I’d probably go with the portfolio rebalance and leave it at that. I know I recently rebalanced mine by changing allocations around. (Less large cap, more international growth.) I didn’t sell anything off, just had my future contributions routed differently.

I guess you have a pessimistic outlook about the future of the international market. But do you think it’ll still be positive the next year? Next 2 years? Next 5? If there’s a sign telling you that the international market is going to tank, I’d love to hear why. I mean, could you ride out a short term fall of 2-10% on the fund, keep buying in to reduce your dollar cost average, and ride the next wave up?

Just curious since I only hear a pessimistic view that doesn’t actually have a researched opinion about the view of international market outlook. I’m not trying to be nitpicky, but maybe understand my own opinion of the matter. I am holding a US large cap stock that has appreciated 30% (before commissions) and I am ready to sell it any day now. However, I think the stock could go up almost 50% in the next 2 years which is how I keep talking myself out of selling. (The 1-yr estimates are about 50% higher than my buy price. Their earnings outlook and forecasted industry outlook is strong, etc.) I think I’d rather watch this stock go to 50% and sell it as it slides, rather than sell it early and watch it keep rising so I can’t buy back into it.

Decisions, decisions!!!

By: Denney

Denney — Thu, 14 Jun 2007 19:50:35 +0000

Although your title is misleading, your story does bring up an interesting point. Should I stay or should I go? At the current pace you will double the amount of money in another 2 years all things being equal. Now what you should consider is not only the taxes but where you move that money. As a person who lends money to small businesses, I ask business owners if there is an ROI in the equipment or product they need to expand their business. If you can answer yes to that with confidence and it beats your 2% a month then yes invest in your business. If not continue to grow at a slower pace. I see business owners who have terrible personal credit and want to purchase a piece of machinery that will increase their revenue by 60% with a 30% ROI and they are unwilling to pull the trigger. The first question is what is the interest rate? Does not really matter if there is and ROI.

By: Ben

Ben — Thu, 14 Jun 2007 00:23:52 +0000

Thanks for the tips Art, I’ll talk to my tax friend.

By: Ben

Ben — Tue, 12 Jun 2007 03:02:44 +0000

I’m afraid I don’t know of a way to earn a 2,000% ROI with the level of risk I’m comfortable with. I guess the first paragraph could have been worded a little better. You’re right my regular contributions following the initial investment, coupled with good returns, got the investment to 10K.

By: Gaming the Credit System

Gaming the Credit System — Mon, 11 Jun 2007 21:18:54 +0000

Sorry, but your headline and your first paragraph (“A $500 investment is now worth $10,000″) are misleading. If you’ve paid $125/mo for 4 years (roughly from July 2003 to June 2007), plus your initial $500, you’ve put in roughly $6,500 which is now worth $10,000. This is a big difference. You make it sound like this fund has produced a 2,000% ROI.

By: Millennium Mommy

Millennium Mommy — Mon, 11 Jun 2007 19:35:46 +0000

I wish you luck.

By: Art Dinkin

Art Dinkin — Mon, 11 Jun 2007 17:15:27 +0000

Ben, The tax issues you raise are interesting. Cost basis on mutual funds can be tricky, since the mutual fund is buying and selling securities throughout your holding period and passing the tax implications on to you… all of which effects your basis.

You have two choices. Either account for the basis of each individual share and then select which specific shares you are selling, or take an average cost basis. Frankly, this is not my area. I would seek a CPA’s advise. Once you choose one method, I believe you must stick with it for the life of the investment.

Art Dinkin, CFP

By: Ben

Ben — Sun, 10 Jun 2007 20:57:26 +0000

You guys make a good point about allocation. My international investments have grown larger than their intended allocation due to their performance. Maybe I’ll sell enough to get me 1-2% under my international allocation level.

Harm, I know what you mean about timing the market. I generally stay away from buying and selling based on market conditions but as I just mentioned my investments in international funds have grown larger than planned so I’m looking to trim them back.