NOT by a long-shot. It's still going strong three and half years after Kevin K's post above!
Vinny
Moderator: Global Moderator
NOT by a long-shot. It's still going strong three and half years after Kevin K's post above!
He was usually WRONG!vnatale wrote: ↑Mon Dec 23, 2019 9:17 pmDesert WAS WRONG!Desert wrote: ↑Sun Dec 06, 2015 9:06 pm
I think the combination of small real return + small inflation = tiny nominal returns is going to continue driving a lot of investors crazy. I think we see it a lot on this forum already. Real returns are what matter, but nominal returns are what produce numbers that make people feel good about their choices. We're not going to have many feel-good returns in the next decade, I believe. I hope I'm wrong.
Vinny
I agree it would make perfect sense to put at least part of the GB equity into emerging market value stocks.ochotona wrote: ↑Mon Dec 23, 2019 8:53 pm Sometimes I wonder if the 20% SCV wedge of GB wouldn't be profitably position in EM Value, due to this.
I continue to make my way through all the posts on this topic. I've made it to page 21 (of 36) in my careful reading of each post.Kbg wrote: ↑Sun Aug 28, 2016 8:46 amI've written about this before, but with regard to SCV it is somewhat like gold in the very early 1970s. Once something becomes exploitable its ability to generate returns decreases, sometimes significantly. I'm a fan of rolling 10 year average returns as a way to analyze a portfolio. If a port's 10 year rolling returns stay stable then you probably have something that continues to work. If they do nothing but decrease then there is cause for concern. I did an analysis of a standard HBPP through 2015 and interestingly it's rolling 10 year is increasing after bottoming out in 2001. That's an extremely good sign and somewhat rare.barrett wrote:Also - and this question is for anyone who wants to answer - I haven't really hovered up everything written on the GB, but isn't much of its attractiveness due to the amazing performance of stocks in general (forget about SCV, LCB, etc. for a moment) from 1982 to 2000?
According to my calcs the latest 10 year rolling return for the PP is 6.98 with a low in 2001 of 6.47. The max occurred in 1982 at 13.29%. On the downside last year was the worst 3 year rolling average ever at 1.39%. If we come in close to where we are now then the rolling 3 year will go back to normal in the 6ish range.
Update/Edit
The latest 3/5/10 year rolling returns are (through 2015):
GB: 3.97/5.74/7.36%
PP: 1.39/4.29/6.98%
Comparing 100% SCV to Large Cap Blend and Total Market on the PV website has SCV with lowest 5 year rolling return by a little under 2% points.
Is it Tyler who builds that website? If so, could you add a 10 year rolling to the 3 and 5?
My personal opinion is the big kicker is 40% stocks more than anything vs. a PP. But I digress.
The main point of this analysis was the value added of SCV. If you analyze the rolling returns of SCV they fall off the proverbial cliff in 1988 as compared to their previous history going back to 1972. Anyone want to guess what happened at the end of June 1987? The advent of the Russell 2000 indexes. Accordingly, a more accurate use/estimate of returns using historical data for SCV should probably start in 1988. Checking average returns since then as well as a 20 and 10 year look back we find:
SCV: 13.06/11.45/9.17
LCB: 11.68/9.83/9.01
TMkt: 11.78/9.97/9.30
And that's what the data has to say on the issue...
However, if your scenario above DID occur if you were not holding that physical gold somewhere on your own property would you be able to get at it if being held in a bank safety security box? I realized you painted extreme examples but a serious question regarding the value of holding physical gold outside of somewhere on your own property.stuper1 wrote: ↑Wed May 31, 2017 11:44 am Exactly, so if there is a solar flare or electromagnetic weapon in the next war that knocks out the power for months, or some kind of financial shenanigans or hacker that erases everybody's brokerage accounts, you still have your physical gold. The calculations above show that you can hold as much as 20% physical gold and still get almost the same CAGR as somebody who holds no gold, plus it lowers the volatility of returns. I sure feel better holding physical gold and having insurance against the possible black swan events.
2 1/2 years later, what did you end up doing?Desert wrote: ↑Tue Jun 06, 2017 8:21 amI really don't feel comfortable increasing equity exposure right now. As you said, equities are expensive, by any measure I'm aware of, particularly U.S. equities. But I'm trying to stay focused on the long-term view, and remind myself that predictions are difficult, particularly those regarding the future. I did decide to do it gradually, just directing new contributions toward equities rather than doing it in one lump-sum rebalance (and yes Mathjak, I know this is sub-optimal, so there is no need to lecture me on this point).grapesofwrath wrote:You feel comfortable increasing your equity exposure at a time when US stocks are "richly" valued ?Desert wrote:I do like the 40 percent equity though, and am slowly building up from 30% to 40%.
I'm well below 30% and would like to increase towards 40% but am reluctant to do so now and wish to wait for a "mean reversion". Of course I could be waiting a long time as US stocks could be on a permanently high plateau.
At 40 percent equities, I think it's necessary to be prepared for a ~20% decline in portfolio value at any time in the future.
After no one posting on this topic for nearly a year, Tyler pops up to give us his update on the next chapter of his personal Golden Butterfly investing! And, gives the reason why the change. I look forward to any future announcements!Tyler wrote: ↑Mon May 21, 2018 6:17 pm Just thought I'd give a quick update on my own personal Golden Butterfly portfolio for anyone keeping track.
If you read back a ways you'll note that I have 100% of my money in the GB but (after an extended bout of analysis paralysis) chose to go with small cap blend over small cap value when first setting things up. While that has worked out very well, after updating my source data, studying it every way I can think of, and educating myself on the theory behind the value premium I finally decided to go all-in and convert my SCB allocation to SCV. I don't anticipate a huge change in performance or anything and still believe that other options are just fine, but I figured it was time to trust my data-driven instincts.
So for anyone reading along wondering if people really invest in the Golden Butterfly or if it's just some crazy idea on the internet, know that there's at least one guy happy to share his experience.
there are stupid things done whether growth or value or dividends or not .vnatale wrote: ↑Wed Dec 25, 2019 8:21 pm From a footnote in: The Overtaxed Investor: Slash Your Tax Bill & Be a Tax Alpha Dog
"Let it be remembered that one reason value stocks perform better than growth stocks over time (at least pre-tax) is because management on average destroys capital with its far-flung investment schemes."
Vinny
With treasuries you don't run the risk of bail-ins.senecaaa wrote: ↑Thu Dec 26, 2019 3:21 am Short term treasuries in the EU have a negative yield. We have "bank loans" that provide a couple of percent interest (at the cost of not being allowed to use it for a year or two). Can I use that for the GB instead? Or do short-term treasuries provide some special behavior that is essential?
Am I correct in assuming that nearly four years later you hold to the same analysis? Your analysis seems reasonable to me but just checking to see if you still believe the same.Kbg wrote: ↑Wed Apr 20, 2016 10:33 am It's called negatively and weakly correlated assets. The risk mitigation is organically built in not externally derived. I continue to be dumbfounded at the focus on the PPs individual pieces.
The only thing that makes sense to me is a "factor" tilt of some kind. For someone younger I can easily see altering the stock component up to 30 or 35% by taking from gold/LTTs/both. Of course volatility will go up a bit, but not a ton.
Lastly, the portfolio performance profile is entirely visible in the historical returns...stock market strong bull the PP is not fun. Flat to down the PP is awesome. Hit rinse cycle and repeat. Over very long periods of time the results are comparable but WAY more predictable with the PP.
Yes. I do what I call a VP PP...more risk, more growth but based on PP principles.vnatale wrote: ↑Tue Feb 18, 2020 6:31 pmAm I correct in assuming that nearly four years later you hold to the same analysis? Your analysis seems reasonable to me but just checking to see if you still believe the same.Kbg wrote: ↑Wed Apr 20, 2016 10:33 am It's called negatively and weakly correlated assets. The risk mitigation is organically built in not externally derived. I continue to be dumbfounded at the focus on the PPs individual pieces.
The only thing that makes sense to me is a "factor" tilt of some kind. For someone younger I can easily see altering the stock component up to 30 or 35% by taking from gold/LTTs/both. Of course volatility will go up a bit, but not a ton.
Lastly, the portfolio performance profile is entirely visible in the historical returns...stock market strong bull the PP is not fun. Flat to down the PP is awesome. Hit rinse cycle and repeat. Over very long periods of time the results are comparable but WAY more predictable with the PP.
Vinny
Just resurrecting the SCV topic. I think this series of three lectures on how ETF's are structured explain the outperformance.Smith1776 wrote: ↑Sun Dec 22, 2019 2:13 pm This recent turn of conversation has me curious as to how much of the GB's outperformance over the PP is due to the SCV tilt, rather than the fact that it has more equity in an absolute sense (40% vs 25%).
I'd like to research into this more. You'd also have to control for the altered levels of gold, cash and bonds.
My first brief glance at the numbers seems to suggest the balance of GB outperformance over the PP may indeed be because of the tilt, rather than the 40% equity.
However, if that's the case, we go back to the gnarly problem of whether or not the factor premiums will persist.
If indeed a SCV tilted PP closes most of the gap in performance against the GB, it'd make me that much more content with the 4 x 25% allocation.
I'm personally using SCV right now. But I've owned SCB in the past and think that also is a good choice. Value has slightly better historical returns but has faded a bit over time, while blend has slightly lower returns but has been more consistent.