Gyroscopic Investing

Tyler wrote: ↑Tue Aug 20, 2019 3:39 pm

modeljc wrote: ↑Tue Aug 20, 2019 3:26 pm Thanks for all the good work over at Portfolio charts. I would be interested to know what you think might end up being a final allocation for you.

"Final" is a strong word. I always have an open mind to new information. But I'm leaning towards this:

20% Total Stock Market
20% Small Cap Value
20% Long Term Treasuries
20% Gold
10% REITs
10% Short Term Treasuries

It still basically runs like a PP with a side of SCV. I'm just looking at replacing some of the cash with REITs. They provide some of the same inflation protection with a bit more income and my cash levels are already pretty healthy relative to my expenses. The overall portfolio also has performed especially well in certain metrics that matter to me like perpetual WRs.

One of these days I'm going to write a post about my portfolio and how I got there. Not that my story is anything special, but it's always good to hear different investing perspectives.

I think I'm a fan of this. I have some serious concerns about cash going forward, as I think we are going back negative nominal (and possibly might even go negative real) and this just might address those fears. Looks very good in test as well.

pmward wrote: ↑Tue Aug 20, 2019 5:37 pm

Tyler wrote: ↑Tue Aug 20, 2019 3:39 pm

modeljc wrote: ↑Tue Aug 20, 2019 3:26 pm Thanks for all the good work over at Portfolio charts. I would be interested to know what you think might end up being a final allocation for you.

"Final" is a strong word. I always have an open mind to new information. But I'm leaning towards this:

20% Total Stock Market
20% Small Cap Value
20% Long Term Treasuries
20% Gold
10% REITs
10% Short Term Treasuries

It still basically runs like a PP with a side of SCV. I'm just looking at replacing some of the cash with REITs. They provide some of the same inflation protection with a bit more income and my cash levels are already pretty healthy relative to my expenses. The overall portfolio also has performed especially well in certain metrics that matter to me like perpetual WRs.

One of these days I'm going to write a post about my portfolio and how I got there. Not that my story is anything special, but it's always good to hear different investing perspectives.

I think I'm a fan of this. I have some serious concerns about cash going forward, as I think we are going back negative nominal (and possibly might even go negative real) and this just might address those fears. Looks very good in test as well.

For +2% it a real deal. Let me know how to implement this one! NOW? OR? later. Three year returns are small on VNQ and VRB vs SPY. Or wait for 30% correction in SPY.

modeljc wrote: ↑Tue Aug 20, 2019 6:15 pm

pmward wrote: ↑Tue Aug 20, 2019 5:37 pm

Tyler wrote: ↑Tue Aug 20, 2019 3:39 pm

"Final" is a strong word. I always have an open mind to new information. But I'm leaning towards this:

20% Total Stock Market
20% Small Cap Value
20% Long Term Treasuries
20% Gold
10% REITs
10% Short Term Treasuries

It still basically runs like a PP with a side of SCV. I'm just looking at replacing some of the cash with REITs. They provide some of the same inflation protection with a bit more income and my cash levels are already pretty healthy relative to my expenses. The overall portfolio also has performed especially well in certain metrics that matter to me like perpetual WRs.

One of these days I'm going to write a post about my portfolio and how I got there. Not that my story is anything special, but it's always good to hear different investing perspectives.

I think I'm a fan of this. I have some serious concerns about cash going forward, as I think we are going back negative nominal (and possibly might even go negative real) and this just might address those fears. Looks very good in test as well.

For +2% it a real deal. Let me know how to implement this one! NOW? OR? later. Three year returns are small on VNQ and VRB vs SPY. Or wait for 30% correction in SPY.

The long term S&P 500 is way ahead, but in the last year VNQ is +9.2% vs SPY +1.5%. If you're going to do it and hold forever, just do it now. Otherwise, DCA might be a good idea. Not sure I would wait for a correction, as I think it's likely (though of course not guaranteed) that SPY will drop more than VNQ in the next bear market. I also think VNQ is likely to draw more interest if rates continue to drop as a fixed income replacement.

[deleted]

Bought some REITs for my vp today. I’ll drip more in each week.
Paralysis over

InsuranceGuy wrote: ↑Tue Aug 20, 2019 9:24 pm

Tyler wrote: ↑Tue Aug 20, 2019 3:39 pm But I'm leaning towards this:

20% Total Stock Market
20% Small Cap Value
20% Long Term Treasuries
20% Gold
10% REITs
10% Short Term Treasuries

If I were to B&H, I would probably do something similar. I might be more likely to make a small modification only because I tend to favor equities:

20% Total Stock Market
20% Small Cap Value
10% Long Term Treasuries
20% Gold
20% REITs
10% Short Term Treasuries

or maybe even ditch the barbell and go:

20% Total Stock Market
20% Small Cap Value
20% Intermediate Term Treasuries
20% Gold
20% REITs

Going that low on long term treasuries scares me. I wouldn't do it. Too heavily tilted to "inflation" and not anywhere near enough "deflation" protection for me.

I've been thinking about a TSM/IT/BIL/GLD/REIT portfolio ever since I saw it drop out of the Portfolio Charts portfolio finder a while ago.
https://portfoliocharts.com/portfolio/portfolio-finder/

It does perform really well againt the measures that matter to me (ulcer index, perpetual withdrawal rate) and would easy to transition to.

However I've never really seen any discussion / advocacy of this mix. Apart from the "home ownership means overexposure to realestate" and "driving with the rearview mirror" arguments *, am I missing any obvious red flags ?


*Edit - Actually just remembered I think I got gated in to a REIT in 2008.

[deleted]

[deleted]

So far, my trading 10% of my small caps for REIT's last week is looking like a good move. REIT's are breaking out of a double bottom with handle base today going back to June. We will see if the breakout holds. I would love to see a weekly close above the breakout level.

So in the past REITs have been an uncorrelated diversifier in backtests? With financialization increasing, should we expect that to continue? They crashed with stocks in 08. Whats the macroeconomic/real world explanation for why they might outperform total stock market. Leverage? Companies leverage too...

boglerdude wrote: ↑Thu Sep 05, 2019 11:23 pm So in the past REITs have been an uncorrelated diversifier in backtests? With financialization increasing, should we expect that to continue? They crashed with stocks in 08. Whats the macroeconomic/real world explanation for why they might outperform total stock market. Leverage? Companies leverage too...

Personally, I would not invest in REITs with the expectation that they are a perfect foil to stocks in down years nor with the idea that they should outperform stocks overall. Instead, I see diversified & liquid real estate as a rare real asset largely disassociated from corporate profits that generates good income and is uniquely capable of quickly adjusting to inflation (through rising rents). It's not a solo portfolio savior, but it's a nice ingredient in many well-diversified portfolios that in the right proportions has a decent knack of increasing returns without the associated increased volatility.

boglerdude wrote: ↑Thu Sep 05, 2019 11:23 pm So in the past REITs have been an uncorrelated diversifier in backtests? With financialization increasing, should we expect that to continue? They crashed with stocks in 08. Whats the macroeconomic/real world explanation for why they might outperform total stock market. Leverage? Companies leverage too...

Real estate was where the crisis happened in 08. Stocks crashed because of what happened to the banks, what happened to the banks happened because of bad loans, bad loans were mostly against real estate. So basically, if real estate has a bubble burst it will effect stocks. However, if stocks have a bubble burst, it won't necessarily effect real estate. A REIT is still a stock at the end of the day, so they will likely catch some headwinds, but it will still function as a diversifier, just as it should, imo.

My subjective story as to why they are likely to outperform is that they are historically cheaper than stocks as a whole right now. Stocks in general are extremely overvalued. But, for a good number of years, up until the last year really, REIT's have underperformed stocks by a large margin. So there's the rotation to REIT's that is still relatively fresh and like most big macro shifts has potential to continue for years. If interest rates continue to go down, REIT's will also start really catching a bit as a bond income proxy by desperate retirees and pension funds. Also, if the current political and populist risks wind up following through over the next decade, then real assets in general will be where it's at. I'm a fan of REIT's right now. I'm very iffy and unsure about stocks right now.

dualstow wrote: ↑Wed Aug 21, 2019 9:57 am Bought some REITs for my vp today. I’ll drip more in each week.
Paralysis over

It's always good to kick the paralysis one way or another. FWIW, I joined you and bought some SCHH this week. I've been tracking it for so long that I started taking it for granted that it was already part of my portfolio, so I figured it was time to make it official.

I'm glad you posted- forgot to buy this week!

My father has a significant amount of his net worth in a single REIT: RioCan Real Estate Investment Trust.

That one stock. I shudder slightly every time I get a glimpse of his accounts.

At least it's not puny. It's the biggest REIT in Canada. Still... this is the man who was teaching me about money as I was growing up. Could have been worse lessons I suppose.

[deleted]

InsuranceGuy wrote: ↑Mon Oct 21, 2019 3:02 pm REITs have again blown past their all time highs. VNQ closed at $95.28 with it's previous intraday high of $94.07 busted both Friday and again today. Good time to be in REITs!

Very nice!