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by **slbnoob** » Fri Oct 11, 2013 8:03 pm

I have some small play money with which I want to speculate on VGPMX (Vanguard Precious Metals and Mining Inv) for a relatively short period (get out after some gains, hopefully). It is down nearly 40% YTD. I only have VTSMX, VGTSX and VNQ in my IRA and there is no more space. So, I have the following 2 options which allow me to buy a small position in VGPMX:

1. Obviously, buy it in taxable.

2. Exchange $X of VGTSX (Tot. Intl.) in my IRA for $X of VGPMX. Maintain my position in VGTSX by buying $X of it in my taxable. My rationale for doing this is that VGPMX seems less tax efficient and is better placed in IRA. VGTSX, on the other hand is tax efficient and I can claim foreign tax credit in my taxable. When I am done playing, I can simply sell VGTSX in taxable and buy it back in my IRA (after selling my position in VGPMX).

Does option 2 sound reasonable from a tax efficiency point of view? Please share your perspectives. Thanks.

by **livesoft** » Fri Oct 11, 2013 8:18 pm

You cannot tax-loss harvest VGPMX if held in a tax-advantage account [easily].

by **slbnoob** » Fri Oct 11, 2013 8:37 pm

livesoft wrote:You cannot tax-loss harvest VGPMX if held in a tax-advantage account [easily].

Good point. Though I wonder if I could TLH it at all. What would be a similar fund?

However, as of now, I hope to not make a loss

. So assuming even a nominal gain, is plan 2 in my OP workable? Or should I simply go with plan 1?

by **slbnoob** » Sat Oct 12, 2013 1:39 pm

**bump for advice**

by **ruralavalon** » Sat Oct 12, 2013 2:57 pm

Vanguard Precious Metals and Mining Fund (VGPMX) is extremely volatile, set a target allocation with upper and lower rebalancing limits for selling and buying, and be discplined about rebalancing when hitting those limits. So hold it in tax protected so you can rebalance without generating tax liability.

Be prepared for it to stay down for a stretch, it doesn't always fluctuate the way you want when you want :shock:

.

I wouldn't buy it expecting a gain anytime soon just because its recently dropped 40%.

by **livesoft** » Sat Oct 12, 2013 3:11 pm

In taxable, who cares what a "similar fund" would be for TLH purposes? You would just sell it to book the loss and go on with your life.

If you buy this fund in tax-advantage and it drops, you will be really bummed out because there is really no way to have others share your loss like there would be in a taxable account.

Of course, if you were not speculating, then you would have a percentage of your portfolio already figured out for this asset class. Then if it was in tax-advantaged and it droppped in value, you would be buying more to get back to your desired AA. Can you psychologically do that? Can you give me an example where you have done something like that before? For example, did you buy shares in an emerging markets index fund at the end of June when those EM threads were all the rage on this forum? If not, why not?

by **stratton** » Sat Oct 12, 2013 6:54 pm

It's not tax efficient.

VGPMX has made distributions at the end of the year as high as 20% of NAV. Check 2008 or 2009.

Paul

by **slbnoob** » Sat Oct 12, 2013 10:39 pm

livesoft wrote:In taxable, who cares what a "similar fund" would be for TLH purposes? You would just sell it to book the loss and go on with your life.

If you buy this fund in tax-advantage and it drops, you will be really bummed out because there is really no way to have others share your loss like there would be in a taxable account.

Of course, if you were not speculating, then you would have a percentage of your portfolio already figured out for this asset class. Then if it was in tax-advantaged and it droppped in value, you would be buying more to get back to your desired AA. Can you psychologically do that? Can you give me an example where you have done something like that before? For example, did you buy shares in an emerging markets index fund at the end of June when those EM threads were all the rage on this forum? If not, why not?

Having learnt the basics of investing from this forum, this fund has no space in my retirement account AA. This is purely a speculative play and I want to see if this gets any far with some extra money. That money is just sitting in my savings earning nothing and wouldn't have gone into VTSMX or VGTSX for the long term. So there is absolutely no question of me rebalancing into this fund when it goes down further

. I'll just let it ride till I can sell it and book the profits/loss. If I was on this forum in June, I may or may not have bought into EM. I may or may not when it becomes a rage next time. If I do, I will do it knowing fully well I am speculating and not investing according to the principles professed on this forum.

by **pkcrafter** » Sat Oct 12, 2013 11:41 pm

sibnoob wrote:

Having learnt the basics of investing from this forum, this fund has no space in my retirement account AA. This is purely a speculative play and I want to see if this gets any far with some extra money.

With all due respect, I wonder if you have really learnt the basics because I don't believe speculative investing is included. :happy

Paul

by **artbug** » Sun Oct 13, 2013 1:26 am

It's weird. When I see people post portfolios with sector funds like energy and health care, I think, "Why would anyone do that?" But somehow sectors like REITs don't make me think that when perhaps they should. Concerning precious metals, I first read about them in William Bernstein's The Four Pillars of Investing. After he blew my mind with...well...everything he wrote, I had to take the idea of precious metals seriously. (It has been a while since I readThe Four Pillars, but I'm reading the book again.) Looking at a couple charts, what catches my eye is what appears to be varying degrees of negative, low and non-correlation over long and short periods.:

(11.5 years)

(3 years)

(3 months)

I even think I see varying degrees of non-correlation when I compare it to REITs. Anyway, that's what my eyeball sees. Of course, my eyeball also spots protracted periods of going nowhere and loss.

I'll admit that the opportunist/market-timer is curious again now that I can see a heavy decline in VGPMX since 2011. I've never been able to get a sense of what Bogleheads think of them or if they're even recommended, let alone used by forum members, but I'd appreciate others' perspective.

by **slbnoob** » Sun Oct 13, 2013 2:22 pm

pkcrafter wrote:sibnoob wrote:

Having learnt the basics of investing from this forum, this fund has no space in my retirement account AA. This is purely a speculative play and I want to see if this gets any far with some extra money.

With all due respect, I wonder if you have really learnt the basics because I don't believe speculative investing is included.

Paul

With all due respect, I have at least learnt enough to keep speculation separate from investing and I have made this very clear in my post

Speculation is not investing. It is just that.

And as the poster above this has noted, VGPMX has activated the opportunist/market-timer in me :twisted:

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Monday, October 14, 2013

Tax efficient placement of VGPMX (Vanguard Precious Metals and Mining Inv)

Tax efficient placement of VGPMX

Tax efficient placement of VGPMX

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Re: Tax efficient placement of VGPMX

Re: Tax efficient placement of VGPMX

Re: Tax efficient placement of VGPMX

Re: Tax efficient placement of VGPMX

Re: Tax efficient placement of VGPMX

Re: Tax efficient placement of VGPMX

Re: Tax efficient placement of VGPMX

Re: Tax efficient placement of VGPMX

Re: Tax efficient placement of VGPMX

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