indexfundfan @ indextown

October 2008 had been a dismal month. My portfolio lost 16.28%, bringing the year-to-date (YTD) return to a loss of 28.45%. This makes it into yet another worst year to date (YTD) return record my portfolio has ever experienced since I started tracking monthly performances in Jan 2004.

The YTD return of the benchmark, a 50:50 split between the Vanguard LifeStrategy Moderate Growth fund and the Vanguard LifeStrategy Gowth fund, is -28.87%.

Individual Asset Classes

As we can see from the chart below, the worst performance came from VGPMX/PME (Precious Metals and Mining equity). This fund had a whopping 40% loss for the month. Other than that, the rest of the equity asset classes also had substantial losses, losing from 17% to 33%. There was simply no place to hide in October!

Portfolio Movements

Sold a substantial amount of fixed income and bought equities to keep the portfolio in balance (notice that my fixed income asset is almost at the target of 32.0%). Like the previous month, I also continued with more tax loss harvesting. 

One major change was that I eliminated International Developed Markets SmallCaps. I distributed most of the assets into International Developed Markets (EAFE) LargeCaps, and with small portions into US LargeCaps, US SmallCaps and Emerging Markets equities. The absence of sufficiently liquid investment vehicles of this asset class for tax loss harvesting prompted this move.

The allocation, as of the end of October, is shown below:

Recently I looked at two discount brokers in an effort to move my ETF holdings to a broker which can provide specific tax lot identification. The first broker is Just2Trade.com, and the second broker is TradeKing.com.

These two brokers are very similar. They both clear through Legent Clearing and both offer the MaxIt tax manager system, which allows you to specify a certain tax strategy (”Minimum Tax”, “First-In First-Out”, “Last-In First-Out”, “Maximum Gain” or “Average Cost”) for every security trade. This system is great when you want to sell only specific tax lots to minimize on taxes.

In terms of commission costs, Just2Trade wins hands down. Their stock / ETF trading commission is only half that of TradeKing ($2.50 versus $4.95) and their margin interest rates is also at least 0.25% lower than TradeKing.

Margin interest rate is also lower at Just2Trade (by at least 0.25%). Current margin interest rate for amounts less than $10,000 is 3.50% at Just2Trade while is it 3.75% at TradeKing. For a margin balance between $10,000 to $250,000, Just2Trade’s margin interest rate drops to 3.5%. The margin interest rate at TradeKing is fixed at 3.75% for all balances.

At Just2Trade, you can also trade mutual funds cheaply for $2.50 per transaction. At TradeKing, the fee is 6 times more, at $14.95.

I also tested their customer service with questions and requests using email, and both replied quickly (in 2 hours or less on a business day). However, unlike Ameritrade’s customer service, which you sometimes can get a break on certain fees or free trades, I found TradeKing’s customer service to be basically useless when you try to request for some concessions. They can only reply with a canned message that repeats their company policy. I have yet to try asking for any concessions from Just2Trade.

Looking beyond the fees, each broker has a severe shortcoming. For TradeKing, it is their online-ACH transfer limitation of $10,000 each day. I called them, and tried to reason with them to let me transfer in a larger sum of money for investment, but they were very stubborn about it and it was a no-go. In my opinion, their $10,000 transfer limit per day is way out-dated, as most brokers typically have $100,000 ACH transfer limit a day.

For Just2Trade, they do not have a $10,000 ACH transfer limitation per day; their disadvantage is in their cumbersome trading system. Specifically, it does not allow you to change the order once it is submitted. To change the order, the only way is to cancel it and re-submit. This means that if you want to change the price of a limit order, you have to first cancel it, and then re-key and submit all the order information again. This is a big swithc off for me.

In the end, I am inclined to stay with Tradeking for the moment. But if Just2Trade can update their traking system to include order modifications (customer service said that this improvement is in the pipeline), I would probably say good bye to TradeKing and move everything over to Just2Trade in a heart beat.

It seems like nowadays the monthly reports are chasing after me. Before I know it, it is already near the end of the month and I haven’t yet updated the monthly report. Anyway, here goes the report for September … (the report for October looks to be much WORSE, but that is for the next update).

My portfolio lost 8.52% in September 2008, bringing the year-to-date (YTD) return to a loss of 14.54%. This makes it into another worst year to date (YTD) return record my portfolio has ever experienced since I started tracking monthly performances in Jan 2004.

The YTD return of the benchmark, a 50:50 split between the Vanguard LifeStrategy Moderate Growth fund and the Vanguard LifeStrategy Gowth fund, is -16.45%.

Individual Asset Classes

As we can see from the chart below, the worst performance came from VGPMX/PME (Precious Metals and Mining equity). This fund posted a loss of about 24% for the month. The rest of the equity asset classes also had substantial losses, ranging from 6% to 16%; only US REITs escaped relatively unscarthed, with a loss of less than 2%.

Portfolio Movements

Sold fixed income and bought international equities (INT EAFE LargeCap and Emerging Markets equity) as well as VGPMX / PME. I was also kept busy with tax loss harvesting.

The allocation, as of the end of September, is shown below: