The Weird Portfolio - latest from Tyler/Portfolio Charts

[mathjak107]

i don’t follow the logic though of the insurance bucket with a 40 plus year duration as a retiree ….

first off i wouldn’t say gold has a duration of 40 plus years .

you can pick almost any time frame the last 25 years and equities and gold have beaten equities and bonds .

so i fail to see the long duration on it

[Kevin K.]

i don’t follow the logic though of the insurance bucket with a 40 plus year duration as a retiree ….

first off i wouldn’t say gold has a duration of 40 plus years .

you can pick almost any time frame the last 25 years and equities and gold have beaten equities and bonds .

so i fail to see the long duration on it

The paper shows gold with a duration of 28 years. I suggest reading the whole paper carefully. Gold and LTT’s are what he calls asymmetrical assets that often underperform for years and then rescue the portfolio when everything else is tanking.

[mathjak107]

i will check out the whole report .

but it still doesn’t sit right with me ….gold has done better then bonds over most time frames since it has become main stream and used in quite a few portfolios …

it is really a different animal today as proven by pretty much any time frame you can pick for almost 3 decades where a simple 50/50. of equities and gold has beaten equities and bonds

[mathjak107]

it reminds me of a cross between bernsteins liability matching and ray lucia’s bucket system

[TomWexler]

Out of curiosity, I compared the Weird Portfolio to one I'd played around with for some time (I call it 25s, or Golden Quarters), a hybrid of the GB and PP, but with more stock allocation, it is 25% TSM, 25% SCV, 25% Gold, 25% ITT.

Here it is in PV. It has the same performance as the Weird Portfolio, but with better ratios and a lower draw-down.

It seems to slightly out-perform the GB and the Weird Portfolio in the Portfolio Charts Matrix as well (although a slightly better version of it would be 25% TSM, 25% SCV, 10% LTT, 15% ITT, 25% Gold). I've been tempted to invest in it for a while, but the heavy allocations to gold and SCV always stop me. Any thoughts?

It's an interesting variant but how impressive the returns are is highly start-date dependent. Portfolio Visualizer only has data for International Small Cap Value from 1995 onwards. Change the dates to 2000-2023 (my favorite recent timeframe for backtests as it captures the worst-case recent scenarios of the dot.com bust, the GFC and the short-lived pandemic meltdown) and the Weird trounces the other two while the GB and GQ are more-or-less on par. And again, the GQ just like the Weird totally lacks an allocation to cash making it cumbersome at best in the real world.

Cullen Roche has a great white paper about these issues:

https://www.pragcap.com/new-white-paper ... investing/

After reading his paper I gained some additional appreciation for the value of the bond barbell in the PP/GB as well as the serious behavioral and logistical issues with portfolios like the classic 60:40 (let alone the Weird) that have no assets at all to provide for near-term spending needs or rebalancing. We saw the kind of problems this creates last year when anyone holding a classic Bogleheads portfolio who failed to "cheat" (as doubtless most of them do) by having a sizable cash bucket on the side they don't count as part of their portfolio) had no choice but to sell at a loss if they needed cash because they only held intermediate-term bonds which are a ~7 year duration asset and stocks which are ~15-25 year assets.

I just remembered this thread almost a year old. According to PortfolioCharts, the GQ still has the lowest start date sensitivity, and the cash issue can be gotten around using something like 28% GDE instead of 25/25 VOO/AVUV if one is inclined towards leverage. Interesting to see how it has performed in the last year out in the wild though, not too bad, though not as good as a pure 60/40, as one might expect.