20% annual returns over 40 years...interested?

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

Moderator: Global Moderator

Post Reply
User avatar
stone
Executive Member
Executive Member
Posts: 2627
Joined: Wed Apr 20, 2011 7:43 am
Contact:

Re: 20% annual returns over 40 years...interested?

Post by stone » Sun Dec 04, 2011 11:56 am

Clive regarding high beta stock holdings, are you familiar with BRSC? From what I can see, the discount increases when the market falls and vice versa. Surely that must add to potential rebalancing gains? I've got my stocks as equal parts BRSC, CTY and TEMIT.
Silver on the face of it does not seem like "high beta gold" to me. The lows of silver seem to mirror the lows of stocks whilst the highs of silver seem to mirror the highs of gold. So it doesn't help if, as with the UK PP at the end of 2008, you want to use gold to rebalance into stocks.
"Good judgment comes from experience. Experience comes from bad judgment." - Mulla Nasrudin
User avatar
stone
Executive Member
Executive Member
Posts: 2627
Joined: Wed Apr 20, 2011 7:43 am
Contact:

Re: 20% annual returns over 40 years...interested?

Post by stone » Mon Dec 05, 2011 4:22 am

Clive, within the context of a PP, I think the discount/premium does have a very strong tendency to swing things in the way you want. Discounts increase at the stock lows and tighten/change to premiums at the highs. I've been really puzzled why that hasn't led to closed-end funds being a part of the standard PP prescription ???
"Good judgment comes from experience. Experience comes from bad judgment." - Mulla Nasrudin
User avatar
MachineGhost
Executive Member
Executive Member
Posts: 10054
Joined: Sat Nov 12, 2011 9:31 am

Re: 20% annual returns over 40 years...interested?

Post by MachineGhost » Tue Dec 06, 2011 4:26 am

Trading, not investing.
stone wrote: Isn't it true that the Ranaissance Technologies Medallion Fund has had a 30% CAGR for decades? I think Ranaissance Technologies talk about each fund strategy having a certain maximum fund size. So the Medallion Fund has long been closed to new entrants (it is just for employees) and although the holders are employees they charge themselves massive (>30%) "management fees" so as to avoid outgrowing the strategy.
"All generous minds have a horror of what are commonly called 'Facts'. They are the brute beasts of the intellectual domain." -- Thomas Hobbes

Disclaimer: I am not a broker, dealer, investment advisor, physician, theologian or prophet.  I should not be considered as legally permitted to render such advice!
User avatar
stone
Executive Member
Executive Member
Posts: 2627
Joined: Wed Apr 20, 2011 7:43 am
Contact:

Re: 20% annual returns over 40 years...interested?

Post by stone » Tue Dec 06, 2011 6:18 am

Machine Ghost, I'm not sure what you're getting at.
"Good judgment comes from experience. Experience comes from bad judgment." - Mulla Nasrudin
User avatar
Storm
Executive Member
Executive Member
Posts: 1652
Joined: Tue Aug 24, 2010 1:04 pm

Re: 20% annual returns over 40 years...interested?

Post by Storm » Thu Dec 08, 2011 5:51 am

stone wrote: Machine Ghost, I'm not sure what you're getting at.
He's just pointing out that it's not some buy and hold passive fund, it's an actively traded fund, more comparable to a hedge fund than a Vanguard type fund.
"I came here for financial advice, but I've ended up with a bunch of shave soaps and apparently am about to start eating sardines.  Not that I'm complaining, of course." -ZedThou
Wonk
Executive Member
Executive Member
Posts: 470
Joined: Wed May 12, 2010 8:00 am

Re: 20% annual returns over 40 years...interested?

Post by Wonk » Sat Jan 21, 2012 5:28 pm

It's been exactly 2 years to the day on this experiment.  Here are the updated numbers:

1xPP: 26.47% (0 rebalance)

2xPP: 62.80% (2 rebalance)

Maybe we can have another 2008 liquidity crisis sometime soon so we can see what happens to these funds.  I've also been tracking an ultimate buy and hold (4-fund) PP, a small cap PP, a 2x small cap PP, a 30-30-30-10(cash) PP, and a 3xPP I added to the mix starting in October '11 out of curiosity.  The main observation is the 1x vs 2x PP.  Will report back in January 2013.
beafet
Full Member
Full Member
Posts: 53
Joined: Mon Nov 07, 2011 4:45 pm
Contact:

Re: 20% annual returns over 40 years...interested?

Post by beafet » Thu Feb 02, 2012 8:23 am

beafet wrote: How about:

BGU 33%
TMF 33%
UGLD 33%

???
Checked it today (a little over 2 months from when I started the simulated portfolio at SmartMoney.com), it is currently at 17.60% It fluctuates a percent or two or three most days, but like the standard PP, seems to average an upward trend. Fun to watch anyway.
modeljc
Executive Member
Executive Member
Posts: 187
Joined: Sat Feb 04, 2012 11:52 am

Re: 20% annual returns over 40 years...interested?

Post by modeljc » Mon Feb 13, 2012 11:15 am

Wonk,

What re balance bands would you use for 3XPP, 33% each just for fun.  Is it 46/20?  Anybody out there willing to risk real money? 
clacy
Executive Member
Executive Member
Posts: 1128
Joined: Mon Mar 14, 2011 8:16 pm

Re: 20% annual returns over 40 years...interested?

Post by clacy » Mon Feb 13, 2012 12:19 pm

I might be tempted to look at a 2x HBPP after a 10-15% draw down in the standard version.
modeljc
Executive Member
Executive Member
Posts: 187
Joined: Sat Feb 04, 2012 11:52 am

Re: 20% annual returns over 40 years...interested?

Post by modeljc » Wed Feb 15, 2012 2:39 pm

The follwoing link warns of Leverage Trap for 2X and 3X products .  Several other sites also say that the volativity is what kills the returns over longer periods.  http://kidgas.hubpages.com/hub/BewareLe ... oxicAssets
Wonk
Executive Member
Executive Member
Posts: 470
Joined: Wed May 12, 2010 8:00 am

Re: 20% annual returns over 40 years...interested?

Post by Wonk » Wed Feb 15, 2012 9:10 pm

modeljc wrote: Wonk,

What re balance bands would you use for 3XPP, 33% each just for fun.  Is it 46/20?  Anybody out there willing to risk real money? 
The 3xPP would be 25%x4, so the same 15/35 rebalancing bands would apply.  For a 33x3PP(no cash) I don't know...

As for the decay issue in leveraged funds, it may exist.  I haven't seen it over 25 months of tracking the leveraged PP, but it may exist.  As of today the numbers were approx 28% 1xPP and 68% 2xPP.
modeljc
Executive Member
Executive Member
Posts: 187
Joined: Sat Feb 04, 2012 11:52 am

Re: 20% annual returns over 40 years...interested?

Post by modeljc » Thu Feb 16, 2012 10:01 am

Wonk,

I went to Yahoo Historical prices.  I looked at the period Oct. 17, 2011 to Feb. 15, 2012.  GLD was 162.62 and went to 168.11 for a 3.3% increase.  UGL was 92.24 and went to 95.81 for a 3.9% increase.  UGLD was 50.10 and went to 51.38 for a 2.6% increase.  The 3/ product UGLD should be up 9.9%.  I then went to ETF replay and they had GLD up 3.4% and UGL up 3.9%. 
Post Reply