Canadian LTT have achieved a similar return as TLT since April 4, 2011:metta2006 wrote:I feel the same way. I believe the reason why HB PP did so well in the last several years is the gold. Now gold is dropping everyday together with stocks and LTT is not enough to mitigate this with cash yield almost nothing. Especially Canadian LTT is not even as powerful as US LTT. Perhaps reduce gold allocation? PP seems more volatile than 40/60 bonds/stocks portfolio.MachineGhost wrote: As gold is the most volatile of the 4 assets, the negative real return risk can only be mitigated by using market timing or normalizing the risk of the portfolio assets.
I believe the [economic] situation is especially perilous at the moment with stocks still overvalued, bond yields near historical lows and gold up 10 years in a row. A year or two of deflation would not be unusual. There is no way 25% in long term Treasuries will make up for 50% of gold & stocks declining. Recognize this and find a way to deal, whether that is sticking to the plan or being proactive.
MG
TLT = 29.6% (return would increase by an additional 5% because of currency fluctuations, but then again this doesn't factor in the forex costs)
CAN LTT (30 Year) = 28.0%
XIC and XWD have seen a different return over the same period:
XIC = -17%
XWD = -3.9%
Would you feel better if you added 5% XWD and 5% TLT? Backtesting shows this decreases volatility for a CAPP.
It could be different this time, but I'm not sure what else we could do...go all to cash? But then you're placing your money in an asset that has a negative real return, and you would miss out on any upside potential in other financial assets. Personally I think 100% cash is more risky than the PP (over a period of a few years).metta2006 wrote: Would you say this time is different?
If the PP fails then just about every other portfolio will be doing just as bad or worse.