Golden Butterfly Portfolio

A place to talk about speculative investing ideas for the optional Variable Portfolio

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Smith1776
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Re: Golden Butterfly Portfolio

Post by Smith1776 » Thu Aug 11, 2022 2:42 pm

The more and more I reflect on it, the more I'm inclined to say that the GB is the best "default" portfolio out there.
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Re: Golden Butterfly Portfolio

Post by whatchamacallit » Thu Aug 11, 2022 4:21 pm

That makes it easier having only one value fund option.


I became more discouraged as I reviewed value funds. They all have their own little way to try to market time.

I decided I don't like the stress of picking the best fund. I sympathize with ochotona on RSP but would rather just use FZROX with 0 expense ratio.
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Re: Golden Butterfly Portfolio

Post by Smith1776 » Thu Aug 11, 2022 4:41 pm

whatchamacallit wrote:
Thu Aug 11, 2022 4:21 pm
That makes it easier having only one value fund option.


I became more discouraged as I reviewed value funds. They all have their own little way to try to market time.

I decided I don't like the stress of picking the best fund. I sympathize with ochotona on RSP but would rather just use FZROX with 0 expense ratio.
I feel you. I remember once reading that one of the secret's of Costco's success was to avoid subjecting shoppers with the paradox of choice. Too many choices leads people to not make a decision at all. Sales improved when choices became more limited. People don't want to go through the cognitive work of comparing umpteen different options, so they just throw their hands up instead. At least, that's how the theory goes.

Have you considered the SCV funds offered by Avantis? They seem to be the bleeding edge option for U.S. investors right now.
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Re: Golden Butterfly Portfolio

Post by whatchamacallit » Thu Aug 11, 2022 5:02 pm

Yes. AVUV has had quite the run and it is impressive how quickly it has increased it's assets under management. It is almost as big as SLYV now.

https://etfdb.com/etfdb-category/small- ... -equities/


Maybe it will continue to outperform but it is definitely market timing and history tells us it won't last forever.
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Re: Golden Butterfly Portfolio

Post by Smith1776 » Thu Aug 11, 2022 5:31 pm

For those of you who watch/listen to the excellent Rational Reminder podcast, I made a request for them to do an episode on strategies like the PP and GB. Who knows, maybe Harry Browne will get his due.
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Re: Golden Butterfly Portfolio

Post by joypog » Thu Aug 11, 2022 6:20 pm

I’d hope, but I suspect gold is not going to fare well.

Though much better than their crypto series. Whohooo they are (very politely) taking a flamethrower to the edifice. Their episode 10 with Professor Hillary Allen cuts to the heart of the matter.
1/n weirdo. US-TSM, US-SCV, Intl-SCV, LTT, STT, GLD (+ a little in MF)
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Re: Golden Butterfly Portfolio

Post by boglerdude » Thu Aug 11, 2022 7:03 pm

> I became more discouraged as I reviewed value funds. They all have their own little way to try to market time.

And can be front run, as they are forced to sell by rigid metrics. Paying Vanguard active managers to take a holistic look at a company, and decide if it's "value" isnt a crazy idea. Vanguard rather than a hedge fund celeb/guru because Vanguard is under heavy public scrutiny
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Re: Golden Butterfly Portfolio

Post by Smith1776 » Thu Aug 11, 2022 8:12 pm

boglerdude wrote:
Thu Aug 11, 2022 7:03 pm
> I became more discouraged as I reviewed value funds. They all have their own little way to try to market time.

And can be front run, as they are forced to sell by rigid metrics. Paying Vanguard active managers to take a holistic look at a company, and decide if it's "value" isnt a crazy idea. Vanguard rather than a hedge fund celeb/guru because Vanguard is under heavy public scrutiny
A good point. VVL, for instance, despite being highly systematic, is a fund that Vanguard considers to be active -- it doesn't follow an index. Nothing explicit to front run.
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Re: Golden Butterfly Portfolio

Post by vnatale » Fri Aug 12, 2022 9:06 am

Smith1776 wrote:
Thu Aug 11, 2022 4:41 pm

whatchamacallit wrote:
Thu Aug 11, 2022 4:21 pm

That makes it easier having only one value fund option.


I became more discouraged as I reviewed value funds. They all have their own little way to try to market time.

I decided I don't like the stress of picking the best fund. I sympathize with ochotona on RSP but would rather just use FZROX with 0 expense ratio.


I feel you. I remember once reading that one of the secret's of Costco's success was to avoid subjecting shoppers with the paradox of choice. Too many choices leads people to not make a decision at all. Sales improved when choices became more limited. People don't want to go through the cognitive work of comparing umpteen different options, so they just throw their hands up instead. At least, that's how the theory goes.

Have you considered the SCV funds offered by Avantis? They seem to be the bleeding edge option for U.S. investors right now.


It is more than a theory. I have read of this many times. The usual example is that people buy more when presented with only five choices of jellies than when confronted with 24 choices of jellies.
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: Golden Butterfly Portfolio

Post by Smith1776 » Fri Aug 12, 2022 4:07 pm

vnatale wrote:
Fri Aug 12, 2022 9:06 am
Smith1776 wrote:
Thu Aug 11, 2022 4:41 pm
whatchamacallit wrote:
Thu Aug 11, 2022 4:21 pm
That makes it easier having only one value fund option.


I became more discouraged as I reviewed value funds. They all have their own little way to try to market time.

I decided I don't like the stress of picking the best fund. I sympathize with ochotona on RSP but would rather just use FZROX with 0 expense ratio.
I feel you. I remember once reading that one of the secret's of Costco's success was to avoid subjecting shoppers with the paradox of choice. Too many choices leads people to not make a decision at all. Sales improved when choices became more limited. People don't want to go through the cognitive work of comparing umpteen different options, so they just throw their hands up instead. At least, that's how the theory goes.

Have you considered the SCV funds offered by Avantis? They seem to be the bleeding edge option for U.S. investors right now.
It is more than a theory. I have read of this many times. The usual example is that people buy more when presented with only five choices of jellies than when confronted with 24 choices of jellies.
I think my favourite is three types of pizza rather than ten. O0
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Re: Golden Butterfly Portfolio

Post by vnatale » Sat Aug 13, 2022 9:36 am

Smith1776 wrote:
Fri Aug 12, 2022 4:07 pm

vnatale wrote:
Fri Aug 12, 2022 9:06 am

Smith1776 wrote:
Thu Aug 11, 2022 4:41 pm

whatchamacallit wrote:
Thu Aug 11, 2022 4:21 pm

That makes it easier having only one value fund option.


I became more discouraged as I reviewed value funds. They all have their own little way to try to market time.

I decided I don't like the stress of picking the best fund. I sympathize with ochotona on RSP but would rather just use FZROX with 0 expense ratio.


I feel you. I remember once reading that one of the secret's of Costco's success was to avoid subjecting shoppers with the paradox of choice. Too many choices leads people to not make a decision at all. Sales improved when choices became more limited. People don't want to go through the cognitive work of comparing umpteen different options, so they just throw their hands up instead. At least, that's how the theory goes.

Have you considered the SCV funds offered by Avantis? They seem to be the bleeding edge option for U.S. investors right now.


It is more than a theory. I have read of this many times. The usual example is that people buy more when presented with only five choices of jellies than when confronted with 24 choices of jellies.


I think my favourite is three types of pizza rather than ten. O0


As a vegetarian (when eating outside of home) and I am choosing pizza by the slice I'm happy for many, many choices as I'm first automatically excluding any that have meat on them. So I'm happy to have more than one choice of just cheese pizza.
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: Golden Butterfly Portfolio

Post by Smith1776 » Sat Aug 13, 2022 9:42 am

vnatale wrote:
Sat Aug 13, 2022 9:36 am


As a vegetarian (when eating outside of home) and I am choosing pizza by the slice I'm happy for many, many choices as I'm first automatically excluding any that have meat on them. So I'm happy to have more than one choice of just cheese pizza.
Stuffed crust for the win!
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Re: Golden Butterfly Portfolio

Post by seajay » Sun Oct 02, 2022 3:27 pm

Tyler wrote:
Sat Jun 06, 2020 9:19 pm
For reference, the thing that eventually pushed me over the top on my own SCV vs SCB debate (I settled on SCV) was when I realized just how different the sector makeup is for SCV vs LCB. Large caps are dominated by tech and healthcare, while small cap value is heavily weighted towards financials and industrials (SCB is a lot more similar to LCB in sector makeup than you'd think). Balance them equally and you get a nice amount of sector diversification on top of the other economic diversification in the portfolio.
Small cap tend to lag during the lead up to a recession, because the recession measure is a lagged measure (a recession is two consecutive quarters of declining GDP [*A]). By the time the (lagged) recession indicator actually fires SC tend to start rebounding. SC are more of a real-time recession indicator. As you say a nice additional element of economic diversification.

[*A] As of September 2022 US GDP has fallen for two consecutive quarters, 1.6% during the first quarter of 2022, and 0.6% the next. In most countries, that's a recession, but just not in the US. The official recession call is made by the Business Cycle Dating Committee - a group of eight economists chosen by the National Bureau of Economic Research, a non-profit organisation. And so far, the committee has refused to declare a recession.
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Re: Golden Butterfly Portfolio

Post by seajay » Sun Oct 02, 2022 3:54 pm

Smith1776 wrote:
Thu Aug 11, 2022 2:42 pm
The more and more I reflect on it, the more I'm inclined to say that the GB is the best "default" portfolio out there.
GB is a form of 40/60 stock/bond comprised of SCV/TSM for the stock and LTT/TBill/Gold for the 'bonds'.

Compared to Wellesley and 40/60 TSM/TBM and since 2003 the GB out-ran the other two PV
However compared to further back and 1987 to 2002 and GB lagged 40/60 PV

But broadly you'd be in good company with many others in opting for a 40/60 albeit via TSM/TBM, Wellesely or the GB.
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Re: Golden Butterfly Portfolio

Post by TomWexler » Sat Jan 21, 2023 6:12 am

To any holders of the GB, or anyone really, what is your review of its performance in 2022, and how do you see it going forwards? How did it do vs the PP?
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Re: Golden Butterfly Portfolio

Post by seajay » Sat Jan 21, 2023 8:12 am

TomWexler wrote:
Sat Jan 21, 2023 6:12 am
To any holders of the GB, or anyone really, what is your review of its performance in 2022, and how do you see it going forwards? How did it do vs the PP?
PV indicates similar outcomes, GB -11.5% compared to -12% for the PP. In the scale of 20 or 30 years a short term single point to point 365 day measure will just fade into insignificance. But such a measure is suggestive of a possible good time to buy or add to either a GB or PP.
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Re: Golden Butterfly Portfolio

Post by Dieter » Sat Jan 21, 2023 3:40 pm

TomWexler wrote:
Sat Jan 21, 2023 6:12 am
To any holders of the GB, or anyone really, what is your review of its performance in 2022, and how do you see it going forwards? How did it do vs the PP?
If Quicken isn’t lying to me, Gold, LTT, and SCV have all beaten the S&P500 for the last three months (up 18-11%!) and YTD, so, looking better so far!

I Shoulda rebalanced in September (although didn’t hit any rebalance bands)

Future returns may vary
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Re: Golden Butterfly Portfolio

Post by Lucho Jr » Sun Jan 22, 2023 8:40 am

Has any non-US investor here implemented a GB portfolio? What ETFs do you use?

I'm currently thining about using the following:

20% Global stocks: SSAC - iShares MSCI ACWI UCITS ETF (Acc) - TER: 0.20%
20% Small Cap Value: USSC (USD ver. of ZPRV) - SPDR MSCI USA Small Cap Value Weighted UCITS ETF (Acc) - TER: 0.30%
20% Long Term Bonds: DTLA - iShares USD Treasury Bond 20+yr UCITS ETF USD (Acc) - TER: 0.07%
20% Short Term Bonds: IB01 - iShares USD Treasury Bond 0-1yr UCITS ETF (Acc) - TER: 0.07%
20% Gold: ZGLDUS - ZKB Gold ETF A (USD) - TER: 0.40%

Looking at how International SCV performed in the past compared to US SCV, I think the international version would change the profile of the GB too much. But for the TSM part, SSAC seems like an ok alternative?
I am not too keen to go full "US-only".

Also, what does everyone use for Gold outside the US? I tend towards the ETF mentioned because it is a real ETF (not ETC), but the fact that the TER is high and it cannot be bought in fractional shares makes it a bit difficult to buy/rebalance to the exactly the necessary amount.
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Re: Golden Butterfly Portfolio

Post by senecaaa » Sun Jan 22, 2023 9:37 am

I live in the EU and my gold fund is 4GLD. Real gold backed, you can actually request conversion to actual physical gold.
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Re: Golden Butterfly Portfolio

Post by seajay » Mon Jan 23, 2023 9:04 am

senecaaa wrote:
Sun Jan 22, 2023 9:37 am
I live in the EU and my gold fund is 4GLD. Real gold backed, you can actually request conversion to actual physical gold.
Are you really sure about that? I know nada about 4GLD however many that claim to be backed by physical and that permit conversion often have criteria/conditions, such as certain sized/amounts only and/or only by certain entities. Push come to shove in a gold-rush and you might be towards the back of the queue only to find none remained by the time it was your turn. Opps sorry, no gold left, we're bankrupt, the queue to sue us is over there. Such that the greatest time to have held (physical) gold was lost to you.

Circumstances during the early phases of a disconnect between physical and paper gold could make it very appealing for funds to lend more of the physical gold they held than usual, leaving less actually available should that progress into a gold-run (high demand for delivery of physical gold ... and subsequent failures to fulfil the demand).
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Re: Golden Butterfly Portfolio

Post by senecaaa » Mon Jan 23, 2023 10:39 am

seajay wrote:
Mon Jan 23, 2023 9:04 am
senecaaa wrote:
Sun Jan 22, 2023 9:37 am
I live in the EU and my gold fund is 4GLD. Real gold backed, you can actually request conversion to actual physical gold.
Are you really sure about that? I know nada about 4GLD however many that claim to be backed by physical and that permit conversion often have criteria/conditions, such as certain sized/amounts only and/or only by certain entities. Push come to shove in a gold-rush and you might be towards the back of the queue only to find none remained by the time it was your turn. Opps sorry, no gold left, we're bankrupt, the queue to sue us is over there. Such that the greatest time to have held (physical) gold was lost to you.

Circumstances during the early phases of a disconnect between physical and paper gold could make it very appealing for funds to lend more of the physical gold they held than usual, leaving less actually available should that progress into a gold-run (high demand for delivery of physical gold ... and subsequent failures to fulfil the demand).

Well we can never be sure, but read this: https://www.xetra-gold.com/en/product/

Hard to believe they are lying?
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Re: Golden Butterfly Portfolio

Post by seajay » Tue Jan 24, 2023 12:23 pm

https://www.xetra-gold.com/fileadmin/us ... pektEN.pdf
page 18
d) No Rights or Beneficial Ownership in the Gold

Purchasers of the Notes will only acquire the rights securitised by the Notes. Purchasers of the Notes will not acquire any title to, or security interests or beneficial ownership in, the physical Gold held in custody on behalf of the Issuer. An investment in the Notes does not constitute a purchase or other acquisition of Gold.

In the event of insolvency of the Issuer, the physical Gold is therefore generally deemed to be part of the insolvency estate. This means that if the Issuer becomes unable to pay or insolvent the claims of the holders of the Notes in respect of the Gold held in custody are not adequately secured (see also risk note "2.1.1.a) Insolvency Risk due to the Limited Assets of the Issuer"). In the event of the Issuer's inability to pay or insolvency, this may even lead to the loss of the entire capital invested by the holders of the Notes when purchasing the Notes.
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Re: Golden Butterfly Portfolio

Post by senecaaa » Tue Jan 24, 2023 2:19 pm

I guess if you want to prevent that you better get gold bullion (which I also do).
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Re: Golden Butterfly Portfolio

Post by Lucho Jr » Tue Jan 24, 2023 9:56 pm

Lucho Jr wrote:
Sun Jan 22, 2023 8:40 am
Has any non-US investor here implemented a GB portfolio? What ETFs do you use?

I'm currently thining about using the following:

20% Global stocks: SSAC - iShares MSCI ACWI UCITS ETF (Acc) - TER: 0.20%
20% Small Cap Value: USSC (USD ver. of ZPRV) - SPDR MSCI USA Small Cap Value Weighted UCITS ETF (Acc) - TER: 0.30%
20% Long Term Bonds: DTLA - iShares USD Treasury Bond 20+yr UCITS ETF USD (Acc) - TER: 0.07%
20% Short Term Bonds: IB01 - iShares USD Treasury Bond 0-1yr UCITS ETF (Acc) - TER: 0.07%
20% Gold: ZGLDUS - ZKB Gold ETF A (USD) - TER: 0.40%

Looking at how International SCV performed in the past compared to US SCV, I think the international version would change the profile of the GB too much. But for the TSM part, SSAC seems like an ok alternative?
I am not too keen to go full "US-only".

Also, what does everyone use for Gold outside the US? I tend towards the ETF mentioned because it is a real ETF (not ETC), but the fact that the TER is high and it cannot be bought in fractional shares makes it a bit difficult to buy/rebalance to the exactly the necessary amount.
I've decided to go with SGLD (Invesco Physical Gold ETC Fund) instead of ZGLDUS. Gold fund TER's don't seem to include all the annual cost and the ZKB Gold ETF is probably closer to 0.70% p.a. SGLD is one of the largest funds, with lower annual cost and the possibility of buying in smaller increments.
As for safetly, I still believe ZKB Gold is probably closer to holding your own gold bullion, though (with all it's up and downsides).

Still not 100% sure about the other parts of the portfolio.
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