VS % vs PP %

[williswine]

Hello everyone,

Out of curiosity, what percentage of your invested + speculated money is in a VP vs your PP?
I have 0% VP, 100% PP.

Thank you,
williswine

[Pkg Man]

Currently close to 50-50 but will soon be 90-10 (90 PP).

[Reido]

Well, currently 100% PP - since I currently have no savings outside tax protected accounts... The PP is fairly tax-inefficient so I will have to alter my strategy for non-advantaged accounts - and that will, in turn, be a VP - I wish it could all be PP - but it simply isn't feasible...

My VP will be somewhat composed of Variable annuities and tax exempt bonds. 

Ultimatley  --  the answer is "As Much As Possible"

[PP4me]

100% 4x25 PP and lovin' it!

[williswine]

Clive,

I do see the utility of using the VP as a way to reduce tracking error regret.  Without going all the way to 60% stocks, one could imagine a more conservative 5x20 where 80% is PP while the remaining 20% is a VP invested either in TSM (for a U.S. investor) or in more exotic investments/speculative vehicles (e.g. all world ex-U.S. for the same U.S. investor wishing to gain exposure to international).

Such deviation (especially using TSM), while not eliminating tracking error regret, could diminish it sufficiently to avoid capitulation.

Furthermore, such allocation could still be seen as relatively neutral and potentially more palatable to those used to more traditional portfolios: 40% for good times, 40% for bad times (gold, bonds), and the rest in cash for emergencies and recession (i.e. when nothing else really works).

williswine

[pplooker]

50/50. 

But my VP is a Boglehead style one with wide sweeping, low cost index funds.  The approaches really are not that different.

Half of me is an optimist, half of me is a pessimist.  100% of me likes ignoring market noise and minutiae.

I may get a little wild and add a small cap value tilt and REIT component to the variable side but I'm leaning against it as simpler is better, right now four funds make up the VP and going to six seems a bit much.  Also fixed income there is half bond index and half TIPS.

Yes I sleep very soundly.  And yes I am a completely insane person.

[Reido]

I think there are a lot of good points brought up...  My VP will be a boggleheads - style portfolio - for tax efficiency...

That being said - I don't necessarily agree with the idea that we need to worry about market tracking - Sure the PP looks like a poor choice during a long bull-market, but I just don't see that coming any time reasonably soon: Here's why:

IMO - stock returns will generally equal dividends, plus inflation plus economic growth. http://www.investorsfriend.com/return_versus_gdp.htm
Dividends are at a historic low, inflation is low to nil, and economic growth is likely to be severely limited in the U.S.

- The baby-boomers are aging, and there is a huge paucity of savings in this country - I've seen estimates that retirements are underfunded by about 7 Trillion dollars...   In 2011-2016 the first wave of baby-boomers will be hitting retirement age - which will signal several problems
- Higher taxes to support them since the current social-security taxes are inadequate and there simply is no "Social Security Trust Fund" http://www.fourwinds10.com/siterun_data ... 1284585959
- Boomers will be withdrawing money from the market - placing negative pressure on stock returns
- Decreased workforce: While this may help employment, the last bull markets correlated with high productivity and expansion of the labor force - first imediately after WWII then again as 'boomers entered the workforce.

I would epect that Gold will be the top asset, followed by LTGB for the next 15 - the last worry I have will be underperforming the market

[Jan Van]

I think I'm around 30% PP, 40% Ultimate B&H, 30% various stocks currently...

...and perhaps 60% in maybe Decision Moose (or whatever).

Clive, where do you come up with these?    Makes me curious about the "(or whatever)"...

[Wonk]

I am currently:

20% PP

80% VP consisting of:

30% gold
25% silver
25% PM miners (large and juniors)
20% cash

I believe in the existence of secular market cycles.  In the investment world, it's like believing in UFOs or ghosts.  Doesn't bother me.  Planning to migrate to about 80-90% PP in roughly 5 years unless markets clear faster--in which case I'd accelerate that timeline.

[Jan Van]

Thanks Clive! Yes, it must be a bit of a hobby to keep track of all of that!
One thought I had, how do you make sure that the grand total of the strategies you use don't start resembling a total market index, or overlap too much?

[Jan Van]

Thanks Clive, very interesting. Hadn't thought about it in that way!