The tech-dumbell portfolio

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vnatale
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Re: The tech-dumbell portfolio

Post by vnatale » Sun Mar 29, 2020 5:39 pm

Libertarian666 wrote:
Sun Mar 29, 2020 4:42 pm
ppnewbie wrote:
Sun Mar 29, 2020 2:32 pm
Technolvelist - You may be on the cusp of being an overnight genius. Have fun at Davos!
If so, it has taken me only 50 years to be an overnight genius. Better late than never!
Doesn't it always take a minimum of 3 years to accomplish something "overnight"??!!

Vinny
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Re: The tech-dumbell portfolio

Post by Libertarian666 » Sun Mar 29, 2020 6:02 pm

vnatale wrote:
Sun Mar 29, 2020 5:39 pm
Libertarian666 wrote:
Sun Mar 29, 2020 4:42 pm
ppnewbie wrote:
Sun Mar 29, 2020 2:32 pm
Technolvelist - You may be on the cusp of being an overnight genius. Have fun at Davos!
If so, it has taken me only 50 years to be an overnight genius. Better late than never!
Doesn't it always take a minimum of 3 years to accomplish something "overnight"??!!

Vinny
Yes, generally that's the minimum time.
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Re: The tech-dumbell portfolio

Post by ppnewbie » Mon Mar 30, 2020 2:21 pm

I'm hoping my kids think I'm a genius when I pass on my hoard to them in 40 years. Right now everyone thinks I'm cookoo.
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Re: The tech-dumbell portfolio

Post by Libertarian666 » Mon Mar 30, 2020 2:50 pm

ppnewbie wrote:
Mon Mar 30, 2020 2:21 pm
I'm hoping my kids think I'm a genius when I pass on my hoard to them in 40 years. Right now everyone thinks I'm cookoo.
That's normal.
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Re: The tech-dumbell portfolio

Post by Libertarian666 » Tue Mar 31, 2020 10:53 am

It has occurred to me that my portfolio has a hidden "risk" component.

Namely, the only situation I'm aware of where someone of modest means can become very wealthy without taking inordinate risks is when there is a currency reset and they have a significant gold holding.

(I put "risk" in quotes because this is only an upside risk.)
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Re: The tech-dumbell portfolio

Post by shekels » Tue Mar 31, 2020 12:29 pm

Libertarian666 wrote:
Tue Mar 31, 2020 10:53 am
It has occurred to me that my portfolio has a hidden "risk" component.

Namely, the only situation I'm aware of where someone of modest means can become very wealthy without taking inordinate risks is when there is a currency reset and they have a significant gold holding.

(I put "risk" in quotes because this is only an upside risk.)
Fed reserve notes be dammed.

So in this case Gold is similar to a floating currency.
¯\_(ツ)_/¯
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Re: The tech-dumbell portfolio

Post by WhiteElephant » Sun Apr 05, 2020 8:20 am

Interesting, I like the simplicity!

What is the reason you didn't include a small stock allocation at all? Can a portfolio like this act as a sort of counterweight/inverse correlation to your career?

I can imagine that for a disaster portfolio you'd want to own some stocks as it's very likely to be worth at least something. A bit like gold I guess ;)
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Re: The tech-dumbell portfolio

Post by Libertarian666 » Sun Apr 05, 2020 1:53 pm

WhiteElephant wrote:
Sun Apr 05, 2020 8:20 am
Interesting, I like the simplicity!

What is the reason you didn't include a small stock allocation at all? Can a portfolio like this act as a sort of counterweight/inverse correlation to your career?

I can imagine that for a disaster portfolio you'd want to own some stocks as it's very likely to be worth at least something. A bit like gold I guess ;)
Yes, my theory is that in normal prosperity I can make good money in my profession, so my portfolio performance isn't as important. When things are crazy is when I care more about my portfolio performance.
I don't think a small stock allocation would make much difference overall, and I don't trust the accounting of public companies anyway.

And there is also the "lottery ticket" aspect of my portfolio. It does take more than "a dollar and a dream", but the expected return is better than that approach. :D
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Re: The tech-dumbell portfolio

Post by mathjak107 » Sun Apr 05, 2020 3:31 pm

Libertarian666 wrote:
Sat Mar 28, 2020 8:45 am
I didn't aim my portfolio at the current financial climate. If I'd known what was going to happen, I'd have my own private jet by now.
But for a disaster portfolio, it seems to be pretty successful so far.
And it's about as simple as you can get:

2/3rd actual physical gold (geographically diverse)
1/3rd US T-Bills

Comments?
There used to be a portfolio called the armadillo ..it was 90% treasuries and 10% gold..it was a book I think by Richard band
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Re: The tech-dumbell portfolio

Post by dualstow » Sun Apr 05, 2020 5:13 pm

tech, a few months ago I believe you were considering getting back into an HBPP.
I guess this is a weird time for people to make portfolio changes. Still, if I had cheaply-bought gold that I could sell at 1645 an ounce and buy stocks, I’d probably do some of that.

{I think what I’m really trying to say is that I hope the whole economy doesn’t collapse}
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Re: The tech-dumbell portfolio

Post by Libertarian666 » Sun Apr 05, 2020 6:59 pm

dualstow wrote:
Sun Apr 05, 2020 5:13 pm
tech, a few months ago I believe you were considering getting back into an HBPP.
I guess this is a weird time for people to make portfolio changes. Still, if I had cheaply-bought gold that I could sell at 1645 an ounce and buy stocks, I’d probably do some of that.

{I think what I’m really trying to say is that I hope the whole economy doesn’t collapse}
I'm not interested in getting into the stock market. I also hope the whole economy doesn't collapse but I'm not reducing my hedge against that until and unless I see the light at the end of the tunnel.

And am sure it isn't an oncoming train.
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Re: The tech-dumbell portfolio

Post by Smith1776 » Mon Apr 06, 2020 12:35 am

Libertarian666's portfolio, with its zero stock allocation, reminds me of the old martial arts master that beats the big villain with just his fists -- no weapons at all.

Hiyah!!! O0
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Re: The tech-dumbell portfolio

Post by Hal » Mon Apr 06, 2020 2:27 am

Smith1776 wrote:
Mon Apr 06, 2020 12:35 am
Libertarian666's portfolio, with its zero stock allocation, reminds me of the old martial arts master that beats the big villain with just his fists -- no weapons at all.

Hiyah!!! O0
Is this how you picture Libertarian666 ? :)
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Re: The tech-dumbell portfolio

Post by Libertarian666 » Mon Apr 06, 2020 7:07 am

Hal wrote:
Mon Apr 06, 2020 2:27 am
Smith1776 wrote:
Mon Apr 06, 2020 12:35 am
Libertarian666's portfolio, with its zero stock allocation, reminds me of the old martial arts master that beats the big villain with just his fists -- no weapons at all.

Hiyah!!! O0
Is this how you picture Libertarian666 ? :)
Where did you get that picture? Now my cover is blown!
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Re: The tech-dumbell portfolio

Post by Smith1776 » Mon Apr 06, 2020 7:38 am

Exactly!! Or, another character comes to mind. Nicholai, from Resident Evil 3. He runs around with nothing but a pistol with ONE CLIP and a friggin' knife but somehow always manages to get the highest scores in mercenary mode.

I like the Libertarian666 portfolio because it's so... novel. O0

This is piquing my interest. Here's a 10,000 ft view of the Tech Portfolio.
Tech-Portfolio.png
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Re: The tech-dumbell portfolio

Post by WhiteElephant » Mon Apr 06, 2020 10:45 am

Oh man, my hands are itching to 'optimize' that chart by adding some stocks and/or bonds 8)
Not doing it!
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Re: The tech-dumbell portfolio

Post by Smith1776 » Mon Apr 06, 2020 11:03 am

WhiteElephant wrote:
Mon Apr 06, 2020 10:45 am
Oh man, my hands are itching to 'optimize' that chart by adding some stocks and/or bonds 8)
Not doing it!
And some long bonds. ;D

But yeah, I'm surprised that the backtest looks as good as it does. Those short treasury bonds really picked up the slack in the 1981 to 2000 bear market for gold.
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Re: The tech-dumbell portfolio

Post by ppnewbie » Tue May 05, 2020 1:11 am

That chart seems like it is basically an inverse of the value of a dollar.
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Re: The tech-dumbell portfolio

Post by mathjak107 » Tue May 05, 2020 5:27 am

fireplan wrote:
Sun Mar 29, 2020 6:40 am
Libertarian666 wrote:
Sat Mar 28, 2020 8:45 am
2/3rd actual physical gold (geographically diverse)
1/3rd US T-Bills

Comments?
No doubt there are periods when this portfolio will do quite well, and the next 10-20 years could very well be one of them, but...

If you plug this into portfoliocharts.com, this portfolio is impressive in the fact that it comes out dead last or second to last in every metric! Gold makes a great diversifier to balance the gyroscope, but gold can also have decades of negative performance, so a portfolio with 2/3rds gold and no equities or LTTs is highly unbalanced and thus very risky on a long term basis.

For me, as an early retiree, I find the perpetual withdrawal rate (PWR) of a portfolio to be the best measure of the risk vs reward of that portfolio, as it encapsulates the long term CAGR, volatility, length and depth of drawdowns, all into a single metric that directly corresponds to expected lifetime income from the investment.

A portfolio of 2/3rds gold and 1/3rd US T-Bills has a historical PWR (out to 40 years) of only 0.3%, meaning you would need a $10 million portfolio just to harvest $30k a year from it. In comparison, a total stock market portfolio, which sounds very risky in comparison, has a 3.6% PWR at 40 years, which makes it 12x less risky by this metric.
i agree .... far to risky and certainly in our case would never have given us the growth we needed to retire .

i believe in planning around what was , what is , and what stands a reasonable chance of continuing ....


a penny saved is a penny earned but without good compounding it will always stay a penny or less...

i also would never go back to the 1970's ... owning stocks and commodities or gold was not something the public did as a whole ...there were no 401ks and most of us or our parents had most of their money in banks . throw in the high frequency trading that dominates 90% of each days volume and you are fighting yesterdays war .

so i would certainly want far more diversification then a bad news portfolio.

i mean if you wait for a bear markets in equities to start comparing to other assets , that to is not going to be accurate either ....

we spend 80% of our time somewhere between the last low and last high ..... so say comparing a decade or two of gold to a bear market in stocks would not be a good comparison
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Re: The tech-dumbell portfolio

Post by ppnewbie » Tue May 05, 2020 12:20 pm

One perspective is that if you are a high earner / saver this may be a high probability plan. Fireplan mentioned a .3 percent perpetual withdrawal rate of 10 million. But the actual withdrawal rate is pretty high. 250k for 40 years not counting any other forms of income such as social security.
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Re: The tech-dumbell portfolio

Post by mathjak107 » Tue May 05, 2020 1:46 pm

Personally I didn’t work a lifetime and scrimp ,Save and invest just so I can draw peanuts out of it in the last down of our lives ...quite frankly any draw less than 3.50% or so would be inefficient use of money I could be enjoying . As it is a 4% swr left you with more than you started 90% of the 120 30 year cycles we had to date.

We are retired but if we could double our assets I would simply enjoy spending that much more
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Re: The tech-dumbell portfolio

Post by vnatale » Tue May 05, 2020 7:47 pm

mathjak107 wrote:
Tue May 05, 2020 1:46 pm
Personally I didn’t work a lifetime and scrimp ,Save and invest just so I can draw peanuts out of it in the last down of our lives ...quite frankly any draw less than 3.50% or so would be inefficient use of money I could be enjoying . As it is a 4% swr left you with more than you started 90% of the 120 30 year cycles we had to date.

We are retired but if we could double our assets I would simply enjoy spending that much more
If you could increase your assets 100% by what corresponding percentage would you increase your spending?

For me I'd say zero % because I got to the amount of assets I have by being extremely frugal. It's my DNA. To buy a lot of things I never have (while easily affording to) goes against all my ways.

Vinny
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: The tech-dumbell portfolio

Post by mathjak107 » Wed May 06, 2020 4:04 am

vnatale wrote:
Tue May 05, 2020 7:47 pm
mathjak107 wrote:
Tue May 05, 2020 1:46 pm
Personally I didn’t work a lifetime and scrimp ,Save and invest just so I can draw peanuts out of it in the last down of our lives ...quite frankly any draw less than 3.50% or so would be inefficient use of money I could be enjoying . As it is a 4% swr left you with more than you started 90% of the 120 30 year cycles we had to date.

We are retired but if we could double our assets I would simply enjoy spending that much more
If you could increase your assets 100% by what corresponding percentage would you increase your spending?

For me I'd say zero % because I got to the amount of assets I have by being extremely frugal. It's my DNA. To buy a lot of things I never have (while easily affording to) goes against all my ways.

Vinny

i sure would increase spending likely proportionately ... our want to do list is longer than our funds are ... if we couldnt find things to spend it on for ourselves , well we have 6 grand kids .

i have no desire to die with the biggest pile nor did i work , save and do without many times trying to get the retirement pile as big as we could , just to look at it
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Re: The tech-dumbell portfolio

Post by vnatale » Wed May 06, 2020 7:08 am

mathjak107 wrote:
Wed May 06, 2020 4:04 am
vnatale wrote:
Tue May 05, 2020 7:47 pm
mathjak107 wrote:
Tue May 05, 2020 1:46 pm
Personally I didn’t work a lifetime and scrimp ,Save and invest just so I can draw peanuts out of it in the last down of our lives ...quite frankly any draw less than 3.50% or so would be inefficient use of money I could be enjoying . As it is a 4% swr left you with more than you started 90% of the 120 30 year cycles we had to date.

We are retired but if we could double our assets I would simply enjoy spending that much more
If you could increase your assets 100% by what corresponding percentage would you increase your spending?

For me I'd say zero % because I got to the amount of assets I have by being extremely frugal. It's my DNA. To buy a lot of things I never have (while easily affording to) goes against all my ways.

Vinny

i sure would increase spending likely proportionately ... our want to do list is longer than our funds are ... if we couldnt find things to spend it on for ourselves , well we have 6 grand kids .

i have no desire to die with the biggest pile nor did i work , save and do without many times trying to get the retirement pile as big as we could , just to look at it
I am the ultimate security seeking personality so there is never too much. Plus, how would deal with this one?

There could arise some medical breakthrough that could truly extend your life in a meaningful way. The catch is that no private insurance or Medicare would pay a cent towards it. It would be equivalent in cost to 1/2 or more of your present portfolio. Would you ever want to set a aside a large part of your portfolio for the low probability that could be a possibly for you later in life?

Vinny

Vinny
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: The tech-dumbell portfolio

Post by mathjak107 » Wed May 06, 2020 9:01 am

just maintaining a 4% inflation adjusted draw off the balance for 30 years generally leaves a lot not spent regardless of amount .

we had 120 actual 30 year retirement cycles to date ...

with 50/50 to 60/40

90% of the time it left you with more than you started , 67% of the time you were left with 2x what you started , 50% of the time it left you with 3x what you started ...in fact the odds of failure are the same odds as ending with 6x what you started with .

so even sticking to 4% of your balance has in my opinion way to much most likely left for even the odds of living longer.

certainly raises would be in order along the way .
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