Just note that the link isn't GB (https://portfoliocharts.com/portfolio/golden-butterfly/) vs Desert (https://portfoliocharts.com/portfolio/desert-portfolio/), if those links are correct...Kevin K. wrote:I've been spending some more time looking at the GB and various iterations and am wondering why Desert's variation hasn't gotten more discussion. With the obvious caveat that backtesting only goes so far when I run the numbers comparing the GB with Desert's version the latter comes out well ahead on the risk:return scale. Here's one set of numbers from 1975-2015:
https://www.portfoliovisualizer.com/bac ... 0&Gold2=10
Since it's essentially a gold-enhanced version of one of Larry Swedroe's "No Fat Tails" portfolios I played around with substituting other stock allocations and also removing the gold entirely and didn't do nearly as well. I also substituted the intermediate-term treasuries that make up 60% of his allocation for the bond barbell in the GB and it made no difference to the returns, though obviously from a practical rebalancing and/or retiree perspective having 20% of the allocation in SHY or cash makes for greater ease.
Backtesting aside, I'm looking at the 30% highly-diversified stocks, 60% highest-quality bonds of optimum duration in terms of risk:reward sweet spot and just enough gold for (as Desert puts it) some modest SHTF insurance but not enough to be a hassle to own and wondering why this isn't a significant improvement on the GB, especially in retirement.
-- The GB-like one has Small-Balanced instead of Small Value; total US vs LCB
-- The Desert-like one replaces 30% total market with 10% each of Total Market, Small Cap Value, and EM
(not saying bad, but different than what I expected)
Making the GB-Like one actually GB (switch SCB to SCV) makes the comparison closer:
-- Same CAGR
-- Desert-like has lower volatility (60% bonds; 10% Gold)
But who knows if the next 35 years will be a falling rate environment and how Gold performs vs Treasury's (or EM, SCV, US Total Market, ....)
Below link is the above with actual GB. And I threw in a third portfolio, cause, well, I get sucked in when I go to that site, and was something kinda in the middle of the two....
https://www.portfoliovisualizer.com/bac ... 0&Gold3=12
[Edit: added links to GB / Desert portfolios on Portfolio Charts]
[Edit2: switched Total US to LC Balanced in GB in link I provided; added note re: diff]