Error : 100% in one BROKER

[frugal]

Dear colleagues:

I have 100% in only one broker which is a MISTAKE and more RISKY.

I need to split it and have at least 2 brokers, because at the moment I have a PP of ETFs because I don't feel safe with physical gold at home and there is no access to longterm bonds directly in my country (europe).

TRANSFERENCE of  assets is not possible also

How would you do it?

Close half positions in the rebalancing times, and open them at the new account?

What about the 1 week of delay?



Thank you all!

[Pointedstick]

...and there is no access to longterm bonds directly in my country (europe).

Really?

TRANSFERENCE of  assets is not possible also

Why not?

What about the 1 week of delay?[/b]

Not a big deal.

[frugal]

PS,

I asked and they don't do it 

I would have to close, imagine, half of each position and transfer and open new positions.

This will take about 3-4 days, I guess. That's horrible for a PP STRATEGY!

[notsheigetz]

This will take about 3-4 days, I guess. That's horrible for a PP STRATEGY!

Consider yourself lucky. I transferred some accounts from Fidelity to Vanguard earlier in the year and it took over a month.

[Pointedstick]

You could always open an account with another brokerage and make your new contributions to that account for a while. It's really not a huge deal. If you're nervous about the safety of your assets, personally I would try to acquire some physical gold bullion before I worried about diversifying brokerages. If home storage seems too dangerous, just put it in a bank safe deposit box, or half at home, half in a the box, or whatever makes you most comfortable.

[Ad Orientem]

Home storage of gold is high risk and should be avoided if at all possible. Use a bank safe deposit box or alternatively a private high security storage facility. If you want to go with an ETF try the Canton Bank of Zurich Gold Fund (ZGLD). Note this is not available for US citizens.

In all other respects see Pointedstick's comments.

[frugal]

Home storage of gold is high risk and should be avoided if at all possible. Use a bank safe deposit box or alternatively a private high security storage facility. If you want to go with an ETF try the Canton Bank of Zurich Gold Fund (ZGLD). Note this is not available for US citizens.

In all other respects see Pointedstick's comments.

I agree

but all the ETF's are in brokers name, not mine! (another problem I have    )

This will take about 3-4 days, I guess. That's horrible for a PP STRATEGY!

Why?

it's the time needed for bank transferences

[Ad Orientem]

The PP is remarkably stable. I wouldn't worry too much if you have a lag of a few days or even a week or so while sorting things out. Remember this is not a day trading scheme. If you have a week or two of funds sitting in cash, it's not a big deal.

[Pointedstick]

but all the ETF's are in brokers name, not mine! (another problem I have    )

Don't let the perfect be the enemy of the good. Money put in the financial markets will never be totally safe, no matter what do you with it or who's keeping it. Heck, money you put in the bank or hold as paper bills isn't safe either! Eventually I think you need to decide what type of risk you're comfortable assuming and then just move on. Life's too short to worry that your broker is going to steal your ETFs!

[AgAuMoney]

I understand that.  I was really wanting to hear why you think it is horrible for a PP strategy.

For me, the PP provides peace of mind.  So if you are in all cash for a week, what's the big deal?

And why would you need to be in all cash for a week?  Never more than 50% cash, because that is what you are moving, right?

A PP is 'normal' at 25% cash.  If your entire PP is normal (very rare) then sell 20% to 25% of the other three assets and now your PP is 40% to 50% cash.  Move that cash.  Divide it among the 4 classes in the new account.  Sell more of each in the old account to raise cash back up to around 25% again.

[AgAuMoney]

I asked and they don't do it 

I would have to close, imagine, half of each position and transfer and open new positions.

Many brokers resist PUSHing assets other than cash to a new broker.

Instead, ask your new broker to PULL the assets.  They are usually more happy about PULLing assets in than PUSHing them out.

A PULL is also safer, in that some brokers do not allow some funds or some stocks.  Your existing broker does not know about the new broker limitations and trying to PUSH something not allowed can be a problem.  A PULL will never face that because the new broker knows their limitations and will not initiate a PULL for something not allowed.

[frugal]

I asked and they don't do it 

I would have to close, imagine, half of each position and transfer and open new positions.

Many brokers resist PUSHing assets other than cash to a new broker.

Instead, ask your new broker to PULL the assets.  They are usually more happy about PULLing assets in than PUSHing them out.

A PULL is also safer, in that some brokers do not allow some funds or some stocks.  Your existing broker does not know about the new broker limitations and trying to PUSH something not allowed can be a problem.  A PULL will never face that because the new broker knows their limitations and will not initiate a PULL for something not allowed.

I don't think that PUSHing is possible, but its a nice idea which I'll try again.


Now I had another idea, to use leverage before the funds arrive. I put some money on the new BROKER, then I close the partial positions at the OLD broker and in the meantime I have leveraged poistions in the NEW broker... what do you think?

[Pointedstick]

Now I had another idea, to use leverage before the funds arrive. I put some money on the new BROKER, then I close the partial positions at the OLD broker and in the meantime I have leveraged poistions in the NEW broker... what do you think?

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[koekebakker]

Wow,
all it takes is to be overweight in cash for a few days and you're
thinking about leverage? How complicated do you want it to be?

Cash is risky when you hold it for years, not a few days...

[Pointedstick]

Yeah, don't overthink things, frugal. I mean, for probably the first 15-25 years of your life you were in all cash and you survived, right? Don't be your own worst enemy.

[frugal]

I think the only problem of LEVERAGE is to pay interest in those days! Money will arrive soon and the leverage disappears.

No?

I was trying to avoid having some days without PP variation, imagine that I lose 5 UP DAYS after a DRAWDOWN ...


Please advice.

[koekebakker]

Please advice.

Stop worrying about the short-term.
Split your etf's between two brokers. 
Store your gold in a safe-deposit box.

Passive investing should be simple.
Worrying about where to put your new money, how to transfer between accounts etc. etc. is all irrelevant in the long-term.

[frugal]

1- I have to watch the short term and the longterm If we didn't watch short term the DRAWDOWNS would be EASY, and as we know they are extremely difficult.

2- My PP is the most easy way (all in ETFs) It is not the most secure but the cheapest I can do.

3- Gold in a safe deposit box in a foreign country would be for me similar to have an ETF in a foreign broker. Also physical and storage are not cheap.

4- Missing 4-5 days of up-trending on the PP would be also very difficult. That's why I thought to use during one week a leveraged portfolio, only during the transference time.


Waiting your comments to these 4 points I remain.


Thank you all

[koekebakker]

1 - No you don't have to watch the short-term. When you invest drawdowns are inevitable. They shouldn't be 'extremely difficult' for you. If they are, you're portfolio is too volatile for you and you should adjust.

2- ?

3- I meant a safe deposit box in your own country.  And no, it's not very cheap...

4- Missing 4-5 days is irrelevant in the long-term. It's the same as your starting date. Starting 5 days sooner or later could have made a difference in a single year but in the long-term it doesn't make a difference.

Keep it simple.

[Ad Orientem]

1 - No you don't have to watch the short-term. When you invest drawdowns are inevitable. They shouldn't be 'extremely difficult' for you. If they are, you're portfolio is too volatile for you and you should adjust.

2- ?

3- I meant a safe deposit box in your own country.  And no, it's not very cheap...

4- Missing 4-5 days is irrelevant in the long-term. It's the same as your starting date. Starting 5 days sooner or later could have made a difference in a single year but in the long-term it doesn't make a difference.

Keep it simple.

+1

[Pointedstick]

+2

Don't outwit yourself.

[AgAuMoney]

The problem with leverage is you do NOT want to be levered when another event like Black Monday 1987 comes around.

Since you are talking about multiple days, you should also consider the big drops the market has experienced over a week or longer.

But since you are talking about leverage, if you are borrowing against your portfolio you also need to consider intra-day price swings because your positions may get sold at the low of the market because you exceeded your margin limit due to the price drop.

The biggest gain days are all about greed and are not as interesting if you are talking about safety.

If you are concerned about safety you'd much rather be in cash.

If you are talking about greed, then sure, leverage it all.  But why are you in the permanent portfolio if you are not concerned about safety?

[jabba]

I have the same issues as the OP. Brokers in Europe are insured up to 100k eur. If you have 1 million to invest it is a real headache, it would be prudent to have as many as 5 brokers from an insured standpoint but terrible from a login/allocation/management point of view.

The good part I think though is that equities actually stay in your name, in my current broker at least. I need to find out if the 100k covers cash and equities combined.

You guys may say life is too short to worry but hello, MF Global anyone?

[AgAuMoney]

I have the same issues as the OP. Brokers in Europe are insured up to 100k eur. If you have 1 million to invest it is a real headache, it would be prudent to have as many as 5 brokers from an insured standpoint but terrible from a login/allocation/management point of view.

I'd definitely be concerned.  Maybe not enough to split my account 5 ways, but I'd definitely put it into 2 or 3.

Have you checked if your broker carries supplemental insurance or if supplemental insurance is available for your account or for you personally?

Additional insurance is a fairly standard practice in the U.S.  Here the standard insurance (sipc.org but wikipedia is more clear) is for $500,000 per investor including no more than $250,000 in "cash".  However almost all if not all of the major national brokerage firms buy additional coverage and will document that coverage on the their website.

One of the common providers of that supplemental insurance is Lloyds of London.  I understand it is fairly inexpensive even for an individual purchase (much less than hiring a manager for your funds), but I'm not to the point where I am shopping for my own brokerage insurance.

[frugal]

I have the same issues as the OP. Brokers in Europe are insured up to 100k eur. If you have 1 million to invest it is a real headache, it would be prudent to have as many as 5 brokers from an insured standpoint but terrible from a login/allocation/management point of view.

The good part I think though is that equities actually stay in your name, in my current broker at least. I need to find out if the 100k covers cash and equities combined.

You guys may say life is too short to worry but hello, MF Global anyone?

hi,

4 brokers with one asset each at least.

What do you think?