The Correlated Risk Parity PP
Moderator: Global Moderator
- Pointedstick
- Executive Member
- Posts: 8866
- Joined: Tue Apr 17, 2012 9:21 pm
- Contact:
Re: The Risk Parity PP
I'm not sure what accounts for the differences but I imagine how survivorship bias is taken into account may have something to do with it. Perhaps people who were unlucky enough to invest in companies that closed their doors got the lower return. Either way, those are not impressive numbers.
Human behavior is economic behavior. The particulars may vary, but competition for limited resources remains a constant.
- CEO Nwabudike Morgan
- CEO Nwabudike Morgan
- mathjak107
- Executive Member
- Posts: 4456
- Joined: Fri Jun 19, 2015 2:54 am
- Location: bayside queens ny
- Contact:
Re: The Risk Parity PP
i could never guess by how much we will go up or even when we will see no return back down lower than we are , even if temporary . but i will say with quite certainty we will go up and it will be very painful for tlt and for quite a long time .iwealth wrote:I have no idea but if I had to guess:mathjak107 wrote: why did rates on bonds rise the last 6 months ?
1) got too low too fast
2) fed is telegraphing a rate increase and with no QE program underway, bond traders are worried people might freak and liquidity in the bond market will dry up making it wildly volatile (which could work in either direction)
3) all that QE over in Europe - why not invest in bonds where the central banks are buying?
Maybe the better question is, why do you think bond yields reached all time lows just 6 months ago considering everyone already knew a rate increase is on the way?
Also, how high do you think our rates can get when German 10-year yields are still under 1%?
i think for a strategy that claims to be neutral it is making one hell of a bet on rates staying low . but time will tell who is right , we can debate this in advance forever. my prediction is THE PP WILL HAVE SOME REAL TOUGH HEADWINDS GONG FORWARD . .
with rates this low and valuations this high conventional investing is going to find it tough but i believe the pp's weight in long term treasury's and low equity allocations will make it way more difficult than ever before ..
Last edited by mathjak107 on Sat Jul 11, 2015 2:29 pm, edited 1 time in total.
- mathjak107
- Executive Member
- Posts: 4456
- Joined: Fri Jun 19, 2015 2:54 am
- Location: bayside queens ny
- Contact:
Re: The Risk Parity PP
these studies are based on broad index's or well diversified funds not individual companies which introduces a whole other issue of risk namely individual company risk and are not comparable .Pointedstick wrote: I'm not sure what accounts for the differences but I imagine how survivorship bias is taken into account may have something to do with it. Perhaps people who were unlucky enough to invest in companies that closed their doors got the lower return. Either way, those are not impressive numbers.
- mathjak107
- Executive Member
- Posts: 4456
- Joined: Fri Jun 19, 2015 2:54 am
- Location: bayside queens ny
- Contact:
Re: The Risk Parity PP
they don't have to be impressive . they just point out that equity's are not as risky as all those who are gun shy make them out to be over the long haul.Pointedstick wrote: I'm not sure what accounts for the differences but I imagine how survivorship bias is taken into account may have something to do with it. Perhaps people who were unlucky enough to invest in companies that closed their doors got the lower return. Either way, those are not impressive numbers.
while they don't hit a home run every year they do perform the best long term out of every asset class and likely will continue to do so .
there is nothing that risky about a 50/50 or 60/40 portfolio. it may have volatility but risk over 20-30 years is going to be one of the lowest ways you can invest .
as an investor i know i am not going to win all the time but i do want the highest odds on my side.
Last edited by mathjak107 on Sat Jul 11, 2015 2:53 pm, edited 1 time in total.
- Pointedstick
- Executive Member
- Posts: 8866
- Joined: Tue Apr 17, 2012 9:21 pm
- Contact:
Re: The Risk Parity PP
Well, the S&P500 was created in 1957. The DJIA is old enough but certainly not representative of all stocks. So which index was chosen over which time periods and which weighting will certainly have en effect on the numbers.mathjak107 wrote:these studies are based on broad index's or well diversified funds not individual companies which introduces a whole other issue of risk namely individual company risk and are not comparable .Pointedstick wrote: I'm not sure what accounts for the differences but I imagine how survivorship bias is taken into account may have something to do with it. Perhaps people who were unlucky enough to invest in companies that closed their doors got the lower return. Either way, those are not impressive numbers.
Human behavior is economic behavior. The particulars may vary, but competition for limited resources remains a constant.
- CEO Nwabudike Morgan
- CEO Nwabudike Morgan
- mathjak107
- Executive Member
- Posts: 4456
- Joined: Fri Jun 19, 2015 2:54 am
- Location: bayside queens ny
- Contact:
Re: The Risk Parity PP
i believe the dow was t the first index going back to 1896 or so. s&p introduced their first one in the 1900's which eventually molded in to the s&p 500 index in 1956.
i see this one is marked the s&p 500 and its prior predecessor from s&p
just about everything that goes back that far says data from composite s&p index so they must have had something standardized since then because shillers data starts in 1871
i see this one is marked the s&p 500 and its prior predecessor from s&p
just about everything that goes back that far says data from composite s&p index so they must have had something standardized since then because shillers data starts in 1871
Last edited by mathjak107 on Sat Jul 11, 2015 3:34 pm, edited 1 time in total.
Re: The Risk Parity PP
Here's a good article on advisers, computers, and investing trends.iwealth wrote:2013 should have been an amazing year for high growth stocks, but your newsletter underperformed the S&P500 by 6%. There's a reason hedge funds have been getting destroyed by index funds lately and it's because all of those quants and high frequency traders running the funds are exploiting the same edges. It's all been arbitraged away.mathjak107 wrote: http://www.fidelityinsight.com/about/pe ... f2012.html
http://www.wsj.com/articles/SB100014241 ... 4109438438Man vs. Machine: The Great Stock Showdown
It has always been difficult for investors to consistently beat index funds. It has been nearly impossible lately.
And there's a double whammy: The small number of advisers who outperform the market rarely can keep doing so.
One big culprit, experts say: the rise of sophisticated computer-trading programs.
Consider the 51 advisers out of more than 200 on the Hulbert Financial Digest's list who beat the market in the decade-long period that ended April 30, 2012, as measured by the Wilshire 5000 Total Market index, including reinvested dividends.
Of that group, just 11—or 22%—have outperformed the overall market since then. That's no better than the percentage that applies to all advisers, regardless of past performance. Over the past year, on average, the group has lagged the Wilshire index by 6.2 percentage points.
- mathjak107
- Executive Member
- Posts: 4456
- Joined: Fri Jun 19, 2015 2:54 am
- Location: bayside queens ny
- Contact:
Re: The Risk Parity PP
the problem with indexing and i own them is they are straw man returns no one really gets.
unless you never add money ,,never sell , never rebalance , never dollar cost average in you will not get those returns at all.
the other flaw in the argument is that while many times 80% of managers do not beat their index that is not true of investors if you follow the money.
there are thousands of funds out there , one year they are on top and another the bottom . if you added up the investor dollars in them they are such a small piece of fund dollars that they are barely a blip in the list . most of the time follow the money and you will find the biggest builk of investor dollars going in to the better consistent long term performers that are usually in the middle of the pack of those who beat their indexes ..
funds like fidelity balanced , fifelity growth company , etc , all have good long term track records and many billiions in investor dollars .
selecting from these funds that have the bulk of investor money improves your odds greatly .
even so for all the reasons above each one of us will have different results , some better some a lot worse using the same funds.
we have not even gotten to tax planning yet . grandma can have a slightly higher expense fee but sell at a better time and have a better tax plan and blow mr boglehead's performance away.
your balance is going to be the only guide as to how you are really doing unless that money just sits and sits from the day you put it in.
that is why i don't look at percentages that my funds do , i just look at my balance and either i am happy or i am not . but i have nothing to really compare to. anything else is a static mix .
even the pp is different for everyone here . some may have done better and some may have had a bigger balance in cd's and they bought in the same year ..
http://www.reuters.com/article/2014/01/ ... P520140128
unless you never add money ,,never sell , never rebalance , never dollar cost average in you will not get those returns at all.
the other flaw in the argument is that while many times 80% of managers do not beat their index that is not true of investors if you follow the money.
there are thousands of funds out there , one year they are on top and another the bottom . if you added up the investor dollars in them they are such a small piece of fund dollars that they are barely a blip in the list . most of the time follow the money and you will find the biggest builk of investor dollars going in to the better consistent long term performers that are usually in the middle of the pack of those who beat their indexes ..
funds like fidelity balanced , fifelity growth company , etc , all have good long term track records and many billiions in investor dollars .
selecting from these funds that have the bulk of investor money improves your odds greatly .
even so for all the reasons above each one of us will have different results , some better some a lot worse using the same funds.
we have not even gotten to tax planning yet . grandma can have a slightly higher expense fee but sell at a better time and have a better tax plan and blow mr boglehead's performance away.
your balance is going to be the only guide as to how you are really doing unless that money just sits and sits from the day you put it in.
that is why i don't look at percentages that my funds do , i just look at my balance and either i am happy or i am not . but i have nothing to really compare to. anything else is a static mix .
even the pp is different for everyone here . some may have done better and some may have had a bigger balance in cd's and they bought in the same year ..
http://www.reuters.com/article/2014/01/ ... P520140128
Last edited by mathjak107 on Sat Jul 11, 2015 4:02 pm, edited 1 time in total.
Re: The Risk Parity PP
So you've come around! We all agree now that just looking at long-term returns on paper does not tell the whole story.mathjak107 wrote: the problem with indexing and i own them is they are straw man returns no one really gets.
unless you never add money ,,never sell , never rebalance , never dollar cost average in you will not get those returns at all.
We've narrowed it down to you preferring the Fidelity Insight financial adviser to other options. Not simply the PP, but also the stock market, the Trinity study portfolios, and other asset allocations. That's fine, but it's a very different discussion. You'll find pushback not just here but also on Bogleheads and many other forums.
The Fidelity growth model only started in '86. The Income model in 1992. I'm happy it has worked for you so far, but there's no guarantee that will continue. Advisers have a terrible track record in the long run.
Last edited by Tyler on Sat Jul 11, 2015 4:18 pm, edited 1 time in total.
- mathjak107
- Executive Member
- Posts: 4456
- Joined: Fri Jun 19, 2015 2:54 am
- Location: bayside queens ny
- Contact:
Re: The Risk Parity PP
it is only common sense your mileage will vary comparing to some index but some things do not change just because they are based on your own balance and portfolio.
everything i said about the pp stands . it will never be a growth vehicle , never . but it was never designed as one . so if it is long term growth you wanted then you can pretty much count on not getting any where near the nest egg saved a growth portfolio will by games end .
if it is less volatility and a smaller balance you want -perfect.
i won't use the word safety but i will use the word less volatile since all 20-30 year time frames that the pp was around a growth portfolio went through the same events and still came out way farther a head in most if not all of them at the end of the day ..
so for the most part , long term we have not seen "safer " from the pp but we have seen less volatile.
everything i said about the pp stands . it will never be a growth vehicle , never . but it was never designed as one . so if it is long term growth you wanted then you can pretty much count on not getting any where near the nest egg saved a growth portfolio will by games end .
if it is less volatility and a smaller balance you want -perfect.
i won't use the word safety but i will use the word less volatile since all 20-30 year time frames that the pp was around a growth portfolio went through the same events and still came out way farther a head in most if not all of them at the end of the day ..
so for the most part , long term we have not seen "safer " from the pp but we have seen less volatile.
Last edited by mathjak107 on Sat Jul 11, 2015 4:27 pm, edited 1 time in total.
Re: The Risk Parity PP
I think most people here will have no problem with that assessment. Building your wealth via your career and not via investing is literally the first rule in the book that proposed the PP. Not everyone prioritizes maximum long-term growth over other portfolio attributes. Different strokes for different folks.mathjak107 wrote:
if it is long term growth you wanted then you can pretty much count on not getting any where near the nest egg saved a growth portfolio will by games end .
if it is less volatility and a smaller balance you want -perfect.
Re: The Risk Parity PP
Agreed. And we didn't even need to hold a referendum.mathjak107 wrote: i won't use the word safety but i will use the word less volatile since all 20-30 year time frames that the pp was around a growth portfolio went through the same events and still came out way farther a head in most if not all of them at the end of the day ..
so for the most part , long term we have not seen "safer " from the pp but we have seen less volatile.
- mathjak107
- Executive Member
- Posts: 4456
- Joined: Fri Jun 19, 2015 2:54 am
- Location: bayside queens ny
- Contact:
Re: The Risk Parity PP
i have a different view. compounding on your money can be one of the most powerful forces .
the little bits we manage to save from our incomes is generally peanuts compared to what those bits and pieces can compound to over time.
for years now a decent up year is more than my wife and i earn in a year added together . while it is nice to grow a career most folks can't commit a lot of money to savings while raising a family for decades.
that is why i am so big on maximizing gain potential while matching ones pucker factor .
personally, while growing money odds are being to conservative will end up hurting you more than going as aggressive as lets you sleep .
well off to dinner in Manhattan with friends , catch you all later .
the little bits we manage to save from our incomes is generally peanuts compared to what those bits and pieces can compound to over time.
for years now a decent up year is more than my wife and i earn in a year added together . while it is nice to grow a career most folks can't commit a lot of money to savings while raising a family for decades.
that is why i am so big on maximizing gain potential while matching ones pucker factor .
personally, while growing money odds are being to conservative will end up hurting you more than going as aggressive as lets you sleep .
well off to dinner in Manhattan with friends , catch you all later .
Last edited by mathjak107 on Sat Jul 11, 2015 5:13 pm, edited 1 time in total.
- Pointedstick
- Executive Member
- Posts: 8866
- Joined: Tue Apr 17, 2012 9:21 pm
- Contact:
Re: The Risk Parity PP
This couldn't be more different from the view here, which is that your career provides your wealth and that you should save up as much of it as possible. If you're only saving "little bits" then you'd better count on time and compounding because that's all you've got!mathjak107 wrote: i have a different view. compounding on your money can be one of the most powerful forces .
the little bits we manage to save from our incomes is generally peanuts compared to what those bits and pieces can compound to over time.
Human behavior is economic behavior. The particulars may vary, but competition for limited resources remains a constant.
- CEO Nwabudike Morgan
- CEO Nwabudike Morgan
- mathjak107
- Executive Member
- Posts: 4456
- Joined: Fri Jun 19, 2015 2:54 am
- Location: bayside queens ny
- Contact:
Re: The Risk Parity PP
well why do you think the savings rate is so low in this country ?
in fact wages have lagged for decades now . wages have fallen well behind inflation .
they are actually worse than the numbers even show since what improved wage growth from what it is was the fact women are earning more than they used to by a lot. wage incereases for men are a lot worse when you separate male and female.
the only savings folks seem to be able to round up is what they force themselves to contribute.
they need the maximum amount of compounding to help them out.
as they say a penny saved is a penny earned but it will always stay a penny unless allowed to compound well.
in fact wages have lagged for decades now . wages have fallen well behind inflation .
they are actually worse than the numbers even show since what improved wage growth from what it is was the fact women are earning more than they used to by a lot. wage incereases for men are a lot worse when you separate male and female.
the only savings folks seem to be able to round up is what they force themselves to contribute.
they need the maximum amount of compounding to help them out.
as they say a penny saved is a penny earned but it will always stay a penny unless allowed to compound well.
Last edited by mathjak107 on Sat Jul 11, 2015 9:14 pm, edited 1 time in total.
Re: The Risk Parity PP
They need to fix the actual problem, which is not enough savings, rather than trying to throw a Hail Mary with their investments.
- Pointedstick
- Executive Member
- Posts: 8866
- Joined: Tue Apr 17, 2012 9:21 pm
- Contact:
Re: The Risk Parity PP
Bingo.Xan wrote: They need to fix the actual problem, which is not enough savings, rather than trying to throw a Hail Mary with their investments.
And as for why people are such poor savers, there are a million reasons, and that's exactly the point: it's the easy thing to do, and people generally do the easiest thing. But it's really not that hard. For the most part you just have to avoid buying pointless shit. Right now my savings rate is 69% of my post-tax income, and what's left supports a 3-person family. We live a comfortable life and keep this up simply by avoiding the bafflingly awful expenses that most people seem to consider necessary.
Human behavior is economic behavior. The particulars may vary, but competition for limited resources remains a constant.
- CEO Nwabudike Morgan
- CEO Nwabudike Morgan
- mathjak107
- Executive Member
- Posts: 4456
- Joined: Fri Jun 19, 2015 2:54 am
- Location: bayside queens ny
- Contact:
Re: The Risk Parity PP
you need both a career , savings and your money working for you .
while you work for your money it is just as important to have your money work for you as hard as it can .
a good career and pay check is only 1/2 the story , without growth on that money all you have is that penny you saved and little more.
i have made more money investing in nyc real estate deals the last 12 years than i likely saved my entire life from working . it took me 50 years of life to hit my first million and that was with a good stock market . it took me only 3 years to triple it through investing after that point .
the deals i did got bigger , the investments more lucrative and the opportunity's i was privy to got better as my connections got better .
but even taking the real estate out of the picture , a nothing special mix of funds invested for decades still grew nice amounts of money .
100k to more than 2 million in markets is an awful lot of growth too.
while yes the early years in the late 80's were good market years the fact is as of 2000 all that older money hit a brick wall and grew very little the last 15 years . so over the long term those gains will likely average out the same as all the other 30 year average returns and not anything special.
even an s&p 500 index fund would have given you about 500k less and that is with 15 years of money producing 1.86% real returns .
those early years when markets were good may not t have a lot of money accumulated yet either , certainly no where near the amount that hit that wall in 2000 for many investors who counted on monthlly contributions to feed the investment machine . .
that is what history shows , markets tend to average out over decades to about the same thing no matter how they start off or end up . i would bet those who started in 2000 and saw such anemic growth early on will still end up some where near the return averages we have had over 30 year periods too when they get there . .
for decades folks have been going "this time is different " but in the end things seem to end up not so different ,
the accumulation stage has a way of working out in the end for investors who were quite aggressive in their growth years using diversified funds ..
the decumulation stage is very different though as you have time restrains now when spending down.
burn up to much capital early on and it does not matter what the long term averages are , that money is gone and can not recover .
so the early years of spending down are the most crucial to get through . you want the highest odds on your side and being to conservative can have the same effect as being to volatile .
you need a balance or you need insurance products to set a base income .
but in any case nothing is going to be 100% . just different levels of success or failure odds
.
while you work for your money it is just as important to have your money work for you as hard as it can .
a good career and pay check is only 1/2 the story , without growth on that money all you have is that penny you saved and little more.
i have made more money investing in nyc real estate deals the last 12 years than i likely saved my entire life from working . it took me 50 years of life to hit my first million and that was with a good stock market . it took me only 3 years to triple it through investing after that point .
the deals i did got bigger , the investments more lucrative and the opportunity's i was privy to got better as my connections got better .
but even taking the real estate out of the picture , a nothing special mix of funds invested for decades still grew nice amounts of money .
100k to more than 2 million in markets is an awful lot of growth too.
while yes the early years in the late 80's were good market years the fact is as of 2000 all that older money hit a brick wall and grew very little the last 15 years . so over the long term those gains will likely average out the same as all the other 30 year average returns and not anything special.
even an s&p 500 index fund would have given you about 500k less and that is with 15 years of money producing 1.86% real returns .
those early years when markets were good may not t have a lot of money accumulated yet either , certainly no where near the amount that hit that wall in 2000 for many investors who counted on monthlly contributions to feed the investment machine . .
that is what history shows , markets tend to average out over decades to about the same thing no matter how they start off or end up . i would bet those who started in 2000 and saw such anemic growth early on will still end up some where near the return averages we have had over 30 year periods too when they get there . .
for decades folks have been going "this time is different " but in the end things seem to end up not so different ,
the accumulation stage has a way of working out in the end for investors who were quite aggressive in their growth years using diversified funds ..
the decumulation stage is very different though as you have time restrains now when spending down.
burn up to much capital early on and it does not matter what the long term averages are , that money is gone and can not recover .
so the early years of spending down are the most crucial to get through . you want the highest odds on your side and being to conservative can have the same effect as being to volatile .
you need a balance or you need insurance products to set a base income .
but in any case nothing is going to be 100% . just different levels of success or failure odds
.
Last edited by mathjak107 on Sun Jul 12, 2015 8:57 am, edited 1 time in total.
Re: The Risk Parity PP
Mathjak107
You know, I have now read your many responses and the premise to this thread. I cannot argue with logic, I am 50, so probably still have 10-15 years left to accumulate. I have been in the PP for a couple of years and agree, I have just preserved what I have, not much gain. My initial portfolio was the Swenson portfolio and I am going back to this one starting Monday. In 10 years or so, I think the PP will then be a better option for me. Thank you for the persistence and counter arguments, it just may allow me to reach my retirement goals after all.
Just out of curiosity, what do YOU think of the Swenson portfolio? VTI 30%, VWO 10%, VNQ 15%, VGLT 15%, VTIP 15%, VEA 15% That is the original I also add a VBR component and substitute Long term treasuries for VGIT (intermediate term treasuries) and split VNQ with VNQI
THANK YOU
You know, I have now read your many responses and the premise to this thread. I cannot argue with logic, I am 50, so probably still have 10-15 years left to accumulate. I have been in the PP for a couple of years and agree, I have just preserved what I have, not much gain. My initial portfolio was the Swenson portfolio and I am going back to this one starting Monday. In 10 years or so, I think the PP will then be a better option for me. Thank you for the persistence and counter arguments, it just may allow me to reach my retirement goals after all.
Just out of curiosity, what do YOU think of the Swenson portfolio? VTI 30%, VWO 10%, VNQ 15%, VGLT 15%, VTIP 15%, VEA 15% That is the original I also add a VBR component and substitute Long term treasuries for VGIT (intermediate term treasuries) and split VNQ with VNQI
THANK YOU
- mathjak107
- Executive Member
- Posts: 4456
- Joined: Fri Jun 19, 2015 2:54 am
- Location: bayside queens ny
- Contact:
Re: The Risk Parity PP
as i said my intervention is not to talk anyone out of the pp . it is just to make sure that they look at whether they are using something that will meet their goals and lifestyle and not just drink the kool aid and in some cases leave a million bucks in retirement money on the table for no other reason than a vision in their head has them convinced that something worse than the great depression is coming .
that thinking has left many behind over decades under invested and while they may have had a comfortable ride the end result is they paid a big price for that comfort ,
if they can afford it , great . heck if living in nyc wasn't so costly and this is where our kids and grand children are i could move , sell everything , go to TIPS ,short term bonds and an immediate annuity and call it a day but 2% inflation withdrawals would be all that is bullet-proof.
not enough to meet our goals so i have to trade that comfort for more volatility to have a high success rate of meeting the income levels we would like .
it looks like that portfolio it is very similar to my own which stands at 55/30/15 as of friday. equity's /bonds /cash .
the version as it stands now :
fidelity growth and income fund FDGRX - had this and blue chip growth for many many years.
fidelity blue chip growth FBGRX
vanguard total market index vti
vanguard extend market index VXF
vanguard veu all world index etf
vanguard vig dividend achievers etf
that is the equity side.
the bond side uses
vanguard admiral total bond fund (now only 10% of the portfolio , reduced from 30% )
fidelity floating rate high yield
vanguard bsv short term bond
vanguard vtip short term inflation proof bond etf
my logic is i will give equity's every possibility to squeak out gains with out being weighted down heavy or wiped away when interest rates rise by holding a lot of very interest rate sensitive bond funds.
there is always time to nudge things if another recession looks possible .. the max of 60/40 is still pretty conservative compared to an all out growth model ,
that thinking has left many behind over decades under invested and while they may have had a comfortable ride the end result is they paid a big price for that comfort ,
if they can afford it , great . heck if living in nyc wasn't so costly and this is where our kids and grand children are i could move , sell everything , go to TIPS ,short term bonds and an immediate annuity and call it a day but 2% inflation withdrawals would be all that is bullet-proof.
not enough to meet our goals so i have to trade that comfort for more volatility to have a high success rate of meeting the income levels we would like .
it looks like that portfolio it is very similar to my own which stands at 55/30/15 as of friday. equity's /bonds /cash .
the version as it stands now :
fidelity growth and income fund FDGRX - had this and blue chip growth for many many years.
fidelity blue chip growth FBGRX
vanguard total market index vti
vanguard extend market index VXF
vanguard veu all world index etf
vanguard vig dividend achievers etf
that is the equity side.
the bond side uses
vanguard admiral total bond fund (now only 10% of the portfolio , reduced from 30% )
fidelity floating rate high yield
vanguard bsv short term bond
vanguard vtip short term inflation proof bond etf
my logic is i will give equity's every possibility to squeak out gains with out being weighted down heavy or wiped away when interest rates rise by holding a lot of very interest rate sensitive bond funds.
there is always time to nudge things if another recession looks possible .. the max of 60/40 is still pretty conservative compared to an all out growth model ,
Last edited by mathjak107 on Sun Jul 12, 2015 8:43 am, edited 1 time in total.
- mathjak107
- Executive Member
- Posts: 4456
- Joined: Fri Jun 19, 2015 2:54 am
- Location: bayside queens ny
- Contact:
Re: The Risk Parity PP
if nothing else i certainly perked up this forum lol .fishdrzig wrote: Mathjak107
You know, I have now read your many responses and the premise to this thread. I cannot argue with logic, I am 50, so probably still have 10-15 years left to accumulate. I have been in the PP for a couple of years and agree, I have just preserved what I have, not much gain. My initial portfolio was the Swenson portfolio and I am going back to this one starting Monday. In 10 years or so, I think the PP will then be a better option for me. Thank you for the persistence and counter arguments, it just may allow me to reach my retirement goals after all.
Just out of curiosity, what do YOU think of the Swenson portfolio? VTI 30%, VWO 10%, VNQ 15%, VGLT 15%, VTIP 15%, VEA 15% That is the original I also add a VBR component and substitute Long term treasuries for VGIT (intermediate term treasuries) and split VNQ with VNQI
THANK YOU
Re: The Risk Parity PP
Burn the witch! Burn the unbeliever! Let's shun him!mathjak107 wrote:if nothing else i certainly perked up this forum lol .fishdrzig wrote: Mathjak107
You know, I have now read your many responses and the premise to this thread. I cannot argue with logic, I am 50, so probably still have 10-15 years left to accumulate. I have been in the PP for a couple of years and agree, I have just preserved what I have, not much gain. My initial portfolio was the Swenson portfolio and I am going back to this one starting Monday. In 10 years or so, I think the PP will then be a better option for me. Thank you for the persistence and counter arguments, it just may allow me to reach my retirement goals after all.
Just out of curiosity, what do YOU think of the Swenson portfolio? VTI 30%, VWO 10%, VNQ 15%, VGLT 15%, VTIP 15%, VEA 15% That is the original I also add a VBR component and substitute Long term treasuries for VGIT (intermediate term treasuries) and split VNQ with VNQI
THANK YOU
Background: Mechanical Engineering, Robotics, Control Systems, CAD Modeling, Machining, Wearable Exoskeletons, Applied Physiology, Drawing (Pencil/Charcoal), Drums, Guitar/Bass, Piano, Flute
"you are not disabled by your disabilities but rather, abled by your abilities." -Oscar Pistorius
"you are not disabled by your disabilities but rather, abled by your abilities." -Oscar Pistorius
- Pointedstick
- Executive Member
- Posts: 8866
- Joined: Tue Apr 17, 2012 9:21 pm
- Contact:
Re: The Risk Parity PP
Did you successfully predict the recessions in 2001 and 2008 and react correctly beforehand?mathjak107 wrote: there is always time to nudge things if another recession looks possible .. the max of 60/40 is still pretty conservative compared to an all out growth model ,
Human behavior is economic behavior. The particulars may vary, but competition for limited resources remains a constant.
- CEO Nwabudike Morgan
- CEO Nwabudike Morgan
Re: The Risk Parity PP
The exact % savings rate is sort of irrelevant isn't it? Saving 69% of $1,000,000/yr isn't all that hard. Saving 69% of $50,000 is a different story. The actual dollar amount you use to support that 3-person family is the critical data point. Not that I want you to divulge, but I'm sure you understand what I'm getting at.Pointedstick wrote: And as for why people are such poor savers, there are a million reasons, and that's exactly the point: it's the easy thing to do, and people generally do the easiest thing. But it's really not that hard. For the most part you just have to avoid buying pointless shit. Right now my savings rate is 69% of my post-tax income, and what's left supports a 3-person family. We live a comfortable life and keep this up simply by avoiding the bafflingly awful expenses that most people seem to consider necessary.
- Pointedstick
- Executive Member
- Posts: 8866
- Joined: Tue Apr 17, 2012 9:21 pm
- Contact:
Re: The Risk Parity PP
To a certain extent that's true, but lifestyle inflation is a real thing, and by the time you're making a million bucks a year, you're likely running with a crowd that will pressure you to own a mansion whose running costs are $50k a year, vacation home, a boat, multiple luxury vehicles, expensive art, titanium golf clubs, etc. Also, the number of people earning a million dollars a year is pretty small. For the average income range of, say, $30-100k, I think it's pretty good.iwealth wrote: The exact % savings rate is sort of irrelevant isn't it? Saving 69% of $1,000,000/yr isn't all that hard. Saving 69% of $50,000 is a different story. The actual dollar amount you use to support that 3-person family is the critical data point. Not that I want you to divulge, but I'm sure you understand what I'm getting at.
Human behavior is economic behavior. The particulars may vary, but competition for limited resources remains a constant.
- CEO Nwabudike Morgan
- CEO Nwabudike Morgan