Desert, how do these two hold up in the two periods 2000-2013 & 2008-2013? Thanks for your input!Desert wrote: Ozzy, is this the mix you're looking at now?
25% GLD
25% Wellesley
25% TLT
25% VTI
If so, it certainly did well in the past. I do a lot of back-testing as I'm trying to figure out the best portfolio for my family, even though I know that back-testing can lead investors down a bad path at times. I looked at the above portfolio and compared it with the PP and my present portfolio (using Simba's spreadsheet). My present portfolio is 30% equity (10% each in EM, SCV and TSM), 60% 10-year treasury (or CD's if I can beat the 10-year T yield), and 10% gold.
Results for 1972-2013:
PP PP+Wellesley 30/60/10
CAGR 8.89 10.13 10.37
SD 7.87 8.64 7.11
Sharpe 0.51 0.61 0.76
Results for 1985-2013:
PP PP+Wellesley 30/60/10
CAGR 7.69 9.22 9.79
SD 5.83 7.44 7.33
Sharpe 0.68 0.75 0.84
Replacing Cash with VWINX, the results look juicy
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Re: Replacing Cash with VWINX, the results look juicy
Re: Replacing Cash with VWINX, the results look juicy
I have used tools like the portfolio visualizer to back test different portfolios. I have not found one that also showed a maximum draw down calculation. I would like to see how this portfolio's draw down compares to a true PP. Any recommendations on a calculator? Has anyone calculated draw down for this particular portfolio?
Re: Replacing Cash with VWINX, the results look juicy
TNT - I posted the returns per decade on my website http://www.tightwadweb.com/customportfolio.html
But to answer your question, here's the Juicy PP yearly average returns for those two periods:
2000-2013 +8.40%
2008-2013 +9.16%
And BTW, yesterday I rebalanced my RothIRA into my Juicy PP and feel much better now. That old cash portion would torment me every time I looked at it, and now its gone! Good riddance!
But to answer your question, here's the Juicy PP yearly average returns for those two periods:
2000-2013 +8.40%
2008-2013 +9.16%
And BTW, yesterday I rebalanced my RothIRA into my Juicy PP and feel much better now. That old cash portion would torment me every time I looked at it, and now its gone! Good riddance!
Re: Replacing Cash with VWINX, the results look juicy
Thanks Ozzy for your link and all the help. Those numbers are beautiful and reinforce the compatibility of PP with VWINX since VWINX did 7.9 from 2000-2013 by itself and PP 7.3, from 08-13 vwinx did 7.6 and PP 6.7. This portfolio surviving QE with such strength is good. My problem is getting back into the stock side at these levels. Right now i only have 5.6% in the S&P and 5.3% of stocks through PRPFX which I will phase out of. I am considering taking a 25% position in VWINX now which will add 9.5% to my stock total, then slowly dollar cost average into a 25% total in S&P @ 1% /month unless there is at least a 10% decline then I will add more.
Re: Replacing Cash with VWINX, the results look juicy
Ozzy, love the picture at your site. I did not realize you had international in there although small at 10% it adds a lot of volatility. Considering the % it takes to recover from big losses I figure the period from 2000-2013 at an average of around 5.9 with extreme volatility compared to 7.9 & 7.3 for straight VWINX or PP in that same time.
Re: Replacing Cash with VWINX, the results look juicy
Hi TNT, I prefer some international for global diversification. I don’t think the volatility is too bad because the Juicy PP's worst year was only -4.92%.
I created the Juicy PP for myself. It fits my own personal goals and objectives perfectly, but everyone is different.
Everyone is welcome to tweak it for their goals. If you don't like the international just replace it VTI. If you think my 20% gold weighting is insufficient, simply add more. Do whatever lets you sleep at night.
I just could not accept the cash portion in my retirement account anymore so I come up with my own portfolio.
I created the Juicy PP for myself. It fits my own personal goals and objectives perfectly, but everyone is different.
Everyone is welcome to tweak it for their goals. If you don't like the international just replace it VTI. If you think my 20% gold weighting is insufficient, simply add more. Do whatever lets you sleep at night.
I just could not accept the cash portion in my retirement account anymore so I come up with my own portfolio.
Re: Replacing Cash with VWINX, the results look juicy
Good enough Ozzy, you were a big help to me and I appreciate it.
Re: Replacing Cash with VWINX, the results look juicy
Desert, thank you for your insight.
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Re: Replacing Cash with VWINX, the results look juicy
Wow. I didn't realize the fund had been around that long. I just looked it's annual returns back to the early 70's and I have to say that they look pretty impressive. Esp since I am sure they do not include dividends.
Last edited by Ad Orientem on Wed Mar 19, 2014 7:35 pm, edited 1 time in total.
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Re: Replacing Cash with VWINX, the results look juicy
Desert, thank you for that wondering mind. That is a good one! This forum is an amazing place and is filled with people helping others and I love it.Desert wrote: One more thought I had, driving to work today, was what VWINX + 10% gold would look like in the rearview mirror:
Results for 1972-2013:
PP PP+Wellesley Wellesley + 10% GLD
CAGR 8.89 10.13 10.14
SD 7.87 8.64 7.57
Sharpe 0.51 0.61 0.69
You can't get much simpler than that. Higher return and lower SD than PP or PP+Wellesley (instead of cash).
Re: Replacing Cash with VWINX, the results look juicy
I like / use Wellesley elsewhere, but for a two funder, an option:
VG Target Retirement Income + 10% Gold
Stocks: 27% (19% TSM, 8% TISM)
Total Bond: 48% (intermediate term; > 50% Govt; 35% US, 12% Intl)
ST Bond (TIPS): 15%
Gold: 10%
(%'s rounded)
Or use VG Lifestrategy Conservative growth (40/60 stock/bond) + 10% Gold is closer to Wellesleys allocation, but using total market indexes (inc intl) for stock/bond instead of the US LC Val / Corp bonds in Wellesley.)
VG Target Retirement Income + 10% Gold
Stocks: 27% (19% TSM, 8% TISM)
Total Bond: 48% (intermediate term; > 50% Govt; 35% US, 12% Intl)
ST Bond (TIPS): 15%
Gold: 10%
(%'s rounded)
Or use VG Lifestrategy Conservative growth (40/60 stock/bond) + 10% Gold is closer to Wellesleys allocation, but using total market indexes (inc intl) for stock/bond instead of the US LC Val / Corp bonds in Wellesley.)
Re: Replacing Cash with VWINX, the results look juicy
The beauty of vwinx is not the managers, they are only executing the marching orders of the company so over 40 years they have plugged in different managers with the same results. Unfortunately I will not be able to try that mix since I am down another road, 28% S&P 500(401k), 20% TLT, 20%GLD, 32% VWINX. Thanks again for all the info and ideas.
Re: Replacing Cash with VWINX, the results look juicy
So these great returns do NOT include their massive dividends?Ad Orientem wrote: Wow. I didn't realize the fund had been around that long. I just looked it's annual returns back to the early 70's and I have to say that they look pretty impressive. Esp since I am sure they do not include dividends.
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Re: Replacing Cash with VWINX, the results look juicy
I am pretty sure the list of returns on Yahoo Finance do not factor in the dividends paid out on each share. They are just the base price per share. I am open to correction though.Reub wrote:So these great returns do NOT include their massive dividends?Ad Orientem wrote: Wow. I didn't realize the fund had been around that long. I just looked it's annual returns back to the early 70's and I have to say that they look pretty impressive. Esp since I am sure they do not include dividends.
Last edited by Ad Orientem on Thu Mar 20, 2014 5:15 pm, edited 1 time in total.
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Re: Replacing Cash with VWINX, the results look juicy
Under the performance section with the year by year returns, they are total returns, dividends included. The charting is price only and can be deceptive.
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Re: Replacing Cash with VWINX, the results look juicy
Thanks for that clarification.tnt wrote: Under the performance section with the year by year returns, they are total returns, dividends included. The charting is price only and can be deceptive.
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Re: Replacing Cash with VWINX, the results look juicy
Ozzy
Have you ever considered VT for your stock portion instead of VTI and international. It would also give you a little Emerging Market exposure.
FISH
Have you ever considered VT for your stock portion instead of VTI and international. It would also give you a little Emerging Market exposure.
FISH
Re: Replacing Cash with VWINX, the results look juicy
Fish - thanks for your suggestion. Yes that's fine if you want to substitute International and VTI with VT.
Personally I won’t, because I view Emerging Markets as a speculation. The only International I want to own are developed nations.
Personally I won’t, because I view Emerging Markets as a speculation. The only International I want to own are developed nations.
Re: Replacing Cash with VWINX, the results look juicy
I agree that this will probably perform worse than a standard PP. It was not long ago that cash had a 6% yield. The forecast for the Federal Funds rate is 3% in 2015 and than a 4% in 2016. If this comes to past, than your are looking at 60% of your VWINX losing 24%. This loss will be offset with the roll over of higher rates and the dividends received.Dieter wrote: I've also been considering what to do with the Cash part due to low yield, still accumulating, and have a deprecate emergency fund. (Currently my "cash" part is split between VG Prime Money Market and VG ST Bond index, and less than 25% target.)
What you have now (assuming other aspects are standard PP)
35% Stock with a large value tilt
40% bond, 40% intermediate corporate bond
25% Gold
Will probably have higher return and volatility.
I expect it to do worse than standard PP with rising interest rates.
Still seems a solid portfolio.
My best guess is that your like cash allocation will lose about 10% assuming the rest of you allocation stays flat.
Re: Replacing Cash with VWINX, the results look juicy
In regards to VWINX, realizing of course we are speculating for conversation here. In 40 years, the worst year end for VWINX is -9.84% in the 08 crash. The other mitigating factor is that this fund is managed and not an index fund so the fund guidelines in the prospectus allow the managers to take action if needed to stem losses. They actively manage the bonds so they are not sitting in a static position and they are masterful at those moves. They did quite well with high rates in the past. The economy would have to go crazy to take us to the rates you speak of and most think we are headed to slow growth. I know the first rate hike may be in 2015 but I believe the projection you speak of is 3% growth not the fed funds rate. The first hike will probably be .10 to .25 %. If those interest rates did happen, the stock portion would put it back in black, you eluded to some of this. With that said, I am a PP guy or at least a variable PP guy with the only difference being VWINX like Ozzy but the reason I do PP is because I accept the inability to see the future but it's fun to debate.
Re: Replacing Cash with VWINX, the results look juicy
The Federal Fund rates quoted appear in error. Here is a link from Bloomberg. For 2.25% in 2016.tnt wrote: In regards to VWINX, realizing of course we are speculating for conversation here. In 40 years, the worst year end for VWINX is -9.84% in the 08 crash. The other mitigating factor is that this fund is managed and not an index fund so the fund guidelines in the prospectus allow the managers to take action if needed to stem losses. They actively manage the bonds so they are not sitting in a static position and they are masterful at those moves. They did quite well with high rates in the past. The economy would have to go crazy to take us to the rates you speak of and most think we are headed to slow growth. I know the first rate hike may be in 2015 but I believe the projection you speak of is 3% growth not the fed funds rate. The first hike will probably be .10 to .25 %. If those interest rates did happen, the stock portion would put it back in black, you eluded to some of this. With that said, I am a PP guy or at least a variable PP guy with the only difference being VWINX like Ozzy but the reason I do PP is because I accept the inability to see the future but it's fun to debate.
http://www.bloomberg.com/news/2014-03-1 ... -2015.html
Still, bad time for bonds but not but as bad as a 4% Federal Funds rate. And guess what? 2.25% may not be in the cards with a weak business world.
Re: Replacing Cash with VWINX, the results look juicy
Good comments modeljc, as always we have to add the disclaimer of the strange times we are in because of the fed market manipulation. Due to them circumventing the marketplace from moving capital to the most efficient assets we have even less of an idea as to what may happen. I do feel very comfortable in the PP handling whatever comes our way. There are many people that have no hedge in their investments and I will bet most do not know that stocks have only returned an annual avaerage of 5.5% in the last 14 years when you account for the additional percentage needed to recover the larger losses of 20% and more. The 37% loss in 08 took 58% to recover to even.
Re: Replacing Cash with VWINX, the results look juicy
TNT - Excellent points. Exactly why protecting from heavy down years is so important. Unfortunately many people believe if they lose 30% in their stock fund and the next year its up 30%, they've broke even. But that's not how the math works.
Re: Replacing Cash with VWINX, the results look juicy
So if you think 2.25% is the Federal funds rate, then guess what WVINX will lose in 2015, 2016. My guess is that if you pick up 2014 returns of 7% you will still be down in 2016. Almost cash like but not for two years.
Re: Replacing Cash with VWINX, the results look juicy
Modeljc, all projections further than anyone knows. A lot of people playing games trying to manipulate market forces. Your view on vwinx is understood but everything will not happen in a static environment. Bond prices of course will decline as rates rise but if you continue to hold the bonds, they will continue to pay interest and yields will overcome price declines over time, new bonds will cycle in the portfolio and stocks will continue to pay dividends, meanwhile gold and long bonds will do their job. If we stay the course and rebalance on schedule, things will work out. Also, since 08, vwinx has gained over 50% compared to cash losing a little to inflation every year so that puts it way ahead to start. I do understand the vwinx position replacing cash adds a little drawdown to my portfolio which I accept for the returns. Thank you for your comments, it is healthy to discuss and test our theories along with what may or may not transpire.