75% stocks and 25% gold

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jason
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75% stocks and 25% gold

Post by jason » Wed Sep 28, 2022 8:16 pm

Has a 75% total stock market and 25% gold portfolio been discussed? How do the numbers look? I played with it in portfoliovisualizer and it seems pretty good. Seems like it's a helluva lot safer than 100% stocks. Because of the gold, you're covered in a nuclear war, hyperinflation, or other SHTF scenarios so you can sleep easy at night. Who really needs bonds and cash anyway? Sure, the PP has much less volatility than 75/25 stocks and gold, but the long term returns for 75/25 stocks and gold are so much better in recent years, no?
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Re: 75% stocks and 25% gold

Post by vnatale » Wed Sep 28, 2022 8:24 pm

jason wrote:
Wed Sep 28, 2022 8:16 pm

Has a 75% total stock market and 25% gold portfolio been discussed? How do the numbers look? I played with it in portfoliovisualizer and it seems pretty good. Seems like it's a helluva lot safer than 100% stocks. Because of the gold, you're covered in a nuclear war, hyperinflation, or other SHTF scenarios so you can sleep easy at night. Who really needs bonds and cash anyway? Sure, the PP has much less volatility than 75/25 stocks and gold, but the long term returns for 75/25 stocks and gold are so much better in recent years, no?


How about the short-term? That is always the true test of how viable it could be. The long-term does not exist for those who cannot stay for all the short-term cycles.

How did it do from September 2008 to March 2009? During March 2020?
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: 75% stocks and 25% gold

Post by jason » Wed Sep 28, 2022 8:27 pm

vnatale wrote:
Wed Sep 28, 2022 8:24 pm
jason wrote:
Wed Sep 28, 2022 8:16 pm
Has a 75% total stock market and 25% gold portfolio been discussed? How do the numbers look? I played with it in portfoliovisualizer and it seems pretty good. Seems like it's a helluva lot safer than 100% stocks. Because of the gold, you're covered in a nuclear war, hyperinflation, or other SHTF scenarios so you can sleep easy at night. Who really needs bonds and cash anyway? Sure, the PP has much less volatility than 75/25 stocks and gold, but the long term returns for 75/25 stocks and gold are so much better in recent years, no?
How about the short-term? That is always the true test of how viable it could be. The long-term does not exist for those who cannot stay for all the short-term cycles.

How did it do from September 2008 to March 2009? During March 2020?
September 2008 to March 2009? -26.5%
During March 2020? -10.4%

Considering I'm down over 20% this year with the PP, those numbers don't look so bad.
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Re: 75% stocks and 25% gold

Post by whatchamacallit » Wed Sep 28, 2022 8:41 pm

I know Hal has posted before:

By Request Mixes of Stocks, Bonds, and Gold
belangp


https://www.youtube.com/watch?v=LA2Yr6NoZyA



Spoiler: The sweet spot was 65% stocks, 35% gold


That is how I have decided to fund retirement accounts going forward and save in cash outside of retirement.

It also makes it easy to keep it in balance with a quick glance by keeping a ratio of 2:1 stocks:gold.
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Re: 75% stocks and 25% gold

Post by vnatale » Wed Sep 28, 2022 8:54 pm

jason wrote:
Wed Sep 28, 2022 8:27 pm

vnatale wrote:
Wed Sep 28, 2022 8:24 pm

jason wrote:
Wed Sep 28, 2022 8:16 pm

Has a 75% total stock market and 25% gold portfolio been discussed? How do the numbers look? I played with it in portfoliovisualizer and it seems pretty good. Seems like it's a helluva lot safer than 100% stocks. Because of the gold, you're covered in a nuclear war, hyperinflation, or other SHTF scenarios so you can sleep easy at night. Who really needs bonds and cash anyway? Sure, the PP has much less volatility than 75/25 stocks and gold, but the long term returns for 75/25 stocks and gold are so much better in recent years, no?


How about the short-term? That is always the true test of how viable it could be. The long-term does not exist for those who cannot stay for all the short-term cycles.

How did it do from September 2008 to March 2009? During March 2020?


September 2008 to March 2009? -26.5%
During March 2020? -10.4%

Considering I'm down over 20% this year with the PP, those numbers don't look so bad.


This year annualized would be about 28%.

September 2008 to March 2009 about 53%

March 2020 about 120%

Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: 75% stocks and 25% gold

Post by Hal » Thu Sep 29, 2022 2:11 am

whatchamacallit wrote:
Wed Sep 28, 2022 8:41 pm
Spoiler: The sweet spot was 65% stocks, 35% gold

That is how I have decided to fund retirement accounts going forward and save in cash outside of retirement.
What I find interesting is that the BelangP and PP portfolios have the same safe withdrawal rates... (5.4%)

btw, How do you plan to transition from the PP to 65/35? Would you want to sell bonds now they have dropped so much in price?
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Re: 75% stocks and 25% goldo

Post by mathjak107 » Thu Sep 29, 2022 9:58 am

If we eliminate the worst dates where 4% failed which pretty much if you run from 1970 on that would , then a withdrawal rate for 60/40 would be about 6.50% .so not very stressed as far as outcomes go .

The worst retirement years to have retired are 1907 ,1929, 1937 , 1965 and 1966 so starting in 1970 you miss the years a safe withdrawal rate is based on and so I would call it a withdrawal rate since it isn’t based on the STANDARDIZED worst outcomes to date and does not qualify as the proverbial safe withdrawal rate that one speaks of when discussing safe withdrawal rates.

Safe withdrawal rates are bench marked against those dates above ….the wild card for the pp would be gold because of unique once in a lifetime situations if one wanted to go back to those dates.

Every failure happened when the first 15 years of a 30 year period fell below a 2% real return …even some of the best bull markets that happened down the road couldn’t bring them back to life as to much was spent down upfront.

Pretty much all the failure periods had very average 30 year results ,but it was the first 15 years that did all of them in
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Re: 75% stocks and 25% goldo

Post by jason » Thu Sep 29, 2022 10:41 am

mathjak107 wrote:
Thu Sep 29, 2022 9:58 am
If we eliminate the worst dates where 4% failed which pretty much if you run from 1970 on that would , then a withdrawal rate for 60/40 would be about 6.50% .so not very stressed as far as outcomes go .

The worst retirement years to have retired are 1907 ,1929, 1937 , 1965 and 1966 so starting in 1970 you miss the years a safe withdrawal rate is based on and so I would call it a withdrawal rate since it isn’t based on the STANDARDIZED worst outcomes to date and does not qualify as the proverbial safe withdrawal rate that one speaks of when discussing safe withdrawal rates.

Safe withdrawal rates are bench marked against those dates above ….the wild card for the pp would be gold because of unique once in a lifetime situations if one wanted to go back to those dates.

Every failure happened when the first 15 years of a 30 year period fell below a 2% real return …even some of the best bull markets that happened down the road couldn’t bring them back to life as to much was spent down upfront.

Pretty much all the failure periods had very average 30 year results ,but it was the first 15 years that did all of them in
SWR failed for which type of portfolio? 60/40?
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Re: 75% stocks and 25% goldo

Post by barrett » Thu Sep 29, 2022 11:46 am

jason wrote:
Thu Sep 29, 2022 10:41 am
mathjak107 wrote:
Thu Sep 29, 2022 9:58 am
If we eliminate the worst dates where 4% failed which pretty much if you run from 1970 on that would , then a withdrawal rate for 60/40 would be about 6.50% .so not very stressed as far as outcomes go .

The worst retirement years to have retired are 1907 ,1929, 1937 , 1965 and 1966 so starting in 1970 you miss the years a safe withdrawal rate is based on and so I would call it a withdrawal rate since it isn’t based on the STANDARDIZED worst outcomes to date and does not qualify as the proverbial safe withdrawal rate that one speaks of when discussing safe withdrawal rates.

Safe withdrawal rates are bench marked against those dates above ….the wild card for the pp would be gold because of unique once in a lifetime situations if one wanted to go back to those dates.

Every failure happened when the first 15 years of a 30 year period fell below a 2% real return …even some of the best bull markets that happened down the road couldn’t bring them back to life as to much was spent down upfront.

Pretty much all the failure periods had very average 30 year results ,but it was the first 15 years that did all of them in
SWR failed for which type of portfolio? 60/40?
I'm not mathjak but check out this Michael Kitces article:

https://www.kitces.com/blog/the-ratchet ... he-4-rule/

This is for a 60/40 portfolio (stock/bonds) and he says "In the “modern era” of markets since the 1920s, such a less-than-starting-principal outcome has only occurred four times: those retiring in 1929, 1937, 1965, and 1966."

Off hand I can't find the Kitces article that talks about the 15 years of crappy returns at the beginning of retirement and how that puts the 4% SWR in jeopardy. But I am sure mathjak has it.
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Re: 75% stocks and 25% gold

Post by whatchamacallit » Thu Sep 29, 2022 9:28 pm

Hal wrote:
Thu Sep 29, 2022 2:11 am

btw, How do you plan to transition from the PP to 65/35? Would you want to sell bonds now they have dropped so much in price?
I didn't have any long bonds and plan to keep current cash allocations in place. My stock/gold ratio was already at 2:1 due to dabbling in golden butterfly portfolio.

Really I am using the 66/33 as a personality hack to keep me on track with easy contributions and balancing. I will still try to save plenty of interest chasing cash(i bonds) outside of retirement accounts with no plans to rebalance it. I expect to end up with something close to 40 stocks, 20 gold, 40 fixed income. I know it probably won't be as tax efficient but the benefit of it keeping me on track feels worth it.
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Re: 75% stocks and 25% goldo

Post by vnatale » Thu Sep 29, 2022 9:47 pm

barrett wrote:
Thu Sep 29, 2022 11:46 am

jason wrote:
Thu Sep 29, 2022 10:41 am

mathjak107 wrote:
Thu Sep 29, 2022 9:58 am

If we eliminate the worst dates where 4% failed which pretty much if you run from 1970 on that would , then a withdrawal rate for 60/40 would be about 6.50% .so not very stressed as far as outcomes go .

The worst retirement years to have retired are 1907 ,1929, 1937 , 1965 and 1966 so starting in 1970 you miss the years a safe withdrawal rate is based on and so I would call it a withdrawal rate since it isn’t based on the STANDARDIZED worst outcomes to date and does not qualify as the proverbial safe withdrawal rate that one speaks of when discussing safe withdrawal rates.

Safe withdrawal rates are bench marked against those dates above ….the wild card for the pp would be gold because of unique once in a lifetime situations if one wanted to go back to those dates.

Every failure happened when the first 15 years of a 30 year period fell below a 2% real return …even some of the best bull markets that happened down the road couldn’t bring them back to life as to much was spent down upfront.

Pretty much all the failure periods had very average 30 year results ,but it was the first 15 years that did all of them in


SWR failed for which type of portfolio? 60/40?


I'm not mathjak but check out this Michael Kitces article:

https://www.kitces.com/blog/the-ratchet ... he-4-rule/

This is for a 60/40 portfolio (stock/bonds) and he says "In the “modern era” of markets since the 1920s, such a less-than-starting-principal outcome has only occurred four times: those retiring in 1929, 1937, 1965, and 1966."

Off hand I can't find the Kitces article that talks about the 15 years of crappy returns at the beginning of retirement and how that puts the 4% SWR in jeopardy. But I am sure mathjak has it.


This would be another good source to look at (though I'm not sure that what Tyler offers for free is not superior):

http://retirementoptimizer.com/

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Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: 75% stocks and 25% gold

Post by vnatale » Thu Sep 29, 2022 9:54 pm

Just bought his book which I had been unaware of until now. Just came out this year.

He has been a favorite of mine since I favor those who come from outside personal finance rather than those who come from the sales side.

Those like him, who was an engineer, and Bernstein, who was a neurosurgeon, seem to first gather all the facts and then see where the facts lead rather than the directions that the more sales oriented take.

Advanced Retirement Income Planning

https://www.amazon.com/dp/B08J2RLJSH/?r ... l_huc_item

Only $4.99.

Note Smith1776 - He is Canadian!
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: 75% stocks and 25% goldo

Post by mathjak107 » Fri Sep 30, 2022 5:05 pm

vnatale wrote:
Thu Sep 29, 2022 9:47 pm
barrett wrote:
Thu Sep 29, 2022 11:46 am
jason wrote:
Thu Sep 29, 2022 10:41 am
mathjak107 wrote:
Thu Sep 29, 2022 9:58 am
If we eliminate the worst dates where 4% failed which pretty much if you run from 1970 on that would , then a withdrawal rate for 60/40 would be about 6.50% .so not very stressed as far as outcomes go .

The worst retirement years to have retired are 1907 ,1929, 1937 , 1965 and 1966 so starting in 1970 you miss the years a safe withdrawal rate is based on and so I would call it a withdrawal rate since it isn’t based on the STANDARDIZED worst outcomes to date and does not qualify as the proverbial safe withdrawal rate that one speaks of when discussing safe withdrawal rates.

Safe withdrawal rates are bench marked against those dates above ….the wild card for the pp would be gold because of unique once in a lifetime situations if one wanted to go back to those dates.

Every failure happened when the first 15 years of a 30 year period fell below a 2% real return …even some of the best bull markets that happened down the road couldn’t bring them back to life as to much was spent down upfront.

Pretty much all the failure periods had very average 30 year results ,but it was the first 15 years that did all of them in
SWR failed for which type of portfolio? 60/40?
I'm not mathjak but check out this Michael Kitces article:

https://www.kitces.com/blog/the-ratchet ... he-4-rule/

This is for a 60/40 portfolio (stock/bonds) and he says "In the “modern era” of markets since the 1920s, such a less-than-starting-principal outcome has only occurred four times: those retiring in 1929, 1937, 1965, and 1966."

Off hand I can't find the Kitces article that talks about the 15 years of crappy returns at the beginning of retirement and how that puts the 4% SWR in jeopardy. But I am sure mathjak has it.
This would be another good source to look at (though I'm not sure that what Tyler offers for free is not superior):

http://retirementoptimizer.com/

Capture.JPG
Here you go …this is the article on the crappy 15 years doing In the worst case outcomes

https://www.kitces.com/blog/what-return ... ased-upon/
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Re: 75% stocks and 25% goldo

Post by seajay » Sat Oct 01, 2022 11:09 am

mathjak107 wrote:
Fri Sep 30, 2022 5:05 pm
vnatale wrote:
Thu Sep 29, 2022 9:47 pm
barrett wrote:
Thu Sep 29, 2022 11:46 am
jason wrote:
Thu Sep 29, 2022 10:41 am
mathjak107 wrote:
Thu Sep 29, 2022 9:58 am
If we eliminate the worst dates where 4% failed which pretty much if you run from 1970 on that would , then a withdrawal rate for 60/40 would be about 6.50% .so not very stressed as far as outcomes go .

The worst retirement years to have retired are 1907 ,1929, 1937 , 1965 and 1966 so starting in 1970 you miss the years a safe withdrawal rate is based on and so I would call it a withdrawal rate since it isn’t based on the STANDARDIZED worst outcomes to date and does not qualify as the proverbial safe withdrawal rate that one speaks of when discussing safe withdrawal rates.

Safe withdrawal rates are bench marked against those dates above ….the wild card for the pp would be gold because of unique once in a lifetime situations if one wanted to go back to those dates.

Every failure happened when the first 15 years of a 30 year period fell below a 2% real return …even some of the best bull markets that happened down the road couldn’t bring them back to life as to much was spent down upfront.

Pretty much all the failure periods had very average 30 year results ,but it was the first 15 years that did all of them in
SWR failed for which type of portfolio? 60/40?
I'm not mathjak but check out this Michael Kitces article:

https://www.kitces.com/blog/the-ratchet ... he-4-rule/

This is for a 60/40 portfolio (stock/bonds) and he says "In the “modern era” of markets since the 1920s, such a less-than-starting-principal outcome has only occurred four times: those retiring in 1929, 1937, 1965, and 1966."

Off hand I can't find the Kitces article that talks about the 15 years of crappy returns at the beginning of retirement and how that puts the 4% SWR in jeopardy. But I am sure mathjak has it.
This would be another good source to look at (though I'm not sure that what Tyler offers for free is not superior):

http://retirementoptimizer.com/

Capture.JPG
Here you go …this is the article on the crappy 15 years doing In the worst case outcomes

https://www.kitces.com/blog/what-return ... ased-upon/
But how might that be actionable?

One way might be if the current year paper-value is down -20% then actually loading in for real reduces the risk.

67/33 SCV/Gold, 7% SWR monte-carlo suggests a 10th percentile (worst cases) of the inflation adjusted money lasting 25 years PV whilst reducing that by a 20% lower share price as per SCV declines this year to 5.6% saw a much higher probability of still having money at the end of the 30 years in all but the most extreme worst cases.

Even at 25 years however, for a 65 year old retiree another 25 years of drawing income to age 90 has a relatively high probability of them not living that long.

For someone close to the wire, perhaps $30K of pensions income, $50K/year spending, $20K of SWR income required with $300K of liquid assets/wealth, then a 6.7% SWR applied to 67/33 SCV/gold at a time when SCV were down -20% has a reasonable monte-carlo based probability of having their money outlive them.

A failed 30 year SWR might not be a failure if it still ran for 25 years whilst the investor only lived another 24 years. And if forward time SWR's fall within historic ranges, such as a 4% historic worst case SWR, then if you can lump in after stocks are down -20% you might equally assume a minimum of 4% / 0.8 = 5% SWR has equal chance of success from that lower share price base.

For those with modest spending and millions of capital, there's no need to take risk, where Harry even preferred T-Bills, but proposed the PP as a alternative to that. The PP is more for those with more than enough for their needs, better than hard cash stuffed under the mattress, likely better than T-Bills.
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Re: 75% stocks and 25% gold

Post by mathjak107 » Sat Oct 01, 2022 11:52 am

A 90% success rate is considered enough since once life expectancy odds are included it is like a 99% success rate
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Re: 75% stocks and 25% gold

Post by vnatale » Sat Oct 01, 2022 12:00 pm

mathjak107 wrote:
Sat Oct 01, 2022 11:52 am

A 90% success rate is considered enough since once life expectancy odds are included it is like a 99% success rate


Which aligns with what I had above from Otar's web site:

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Re: 75% stocks and 25% gold

Post by seajay » Tue Feb 28, 2023 7:32 am

whatchamacallit wrote:
Wed Sep 28, 2022 8:41 pm
I know Hal has posted before:

By Request Mixes of Stocks, Bonds, and Gold
belangp


https://www.youtube.com/watch?v=LA2Yr6NoZyA

Spoiler: The sweet spot was 65% stocks, 35% gold

That is how I have decided to fund retirement accounts going forward and save in cash outside of retirement.

It also makes it easy to keep it in balance with a quick glance by keeping a ratio of 2:1 stocks:gold.
66 stock value halves to 33
33 gold value doubles to 66
Your portfolio value is unchanged despite stocks having halved, and rebalancing has you back to 67/33 whilst having doubled up on the number of shares being held.

It's not unreasonable IMO to consider gold = bonds in the broad sense.
Half in a 2x leveraged stock as you'd have invested in the 1x, half in bonds (or gold) and the two tend to compare.

33/67 2x-stock/gold has just 33% counter-party risk (such as street name (pooled shares) failure). Losing a third is unpleasant, but not fatal. Compared to losing two-thirds that for those in drawdown could be critical.

Since 2008/9 (financial crisis) there has been noticeable transition away from bail-outs towards bail-ins where savers/investors fund the bail-out, not taxpayers. In such a world the less counter-party risk you have the better. I don't like how money deposited into a bank becomes the banks money, nor do I like electronic pooed shares either, where the shares are registered in the brokers name, not yours.

34% owner occupier home, 22% 2x stock, 44% gold, and that's just 22% counter-party risk. If lost, well a portfolio can naturally decline 22% or more in some years, just a niggle.

If You Can’t Touch It, You Don’t Own It
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