Dual Momentum GEM + HBPP a great combo, easy to test

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

Moderator: Global Moderator

HappyMan
Full Member
Full Member
Posts: 67
Joined: Thu Nov 09, 2017 7:01 am

Re: Dual Momentum GEM + HBPP a great combo, easy to test

Post by HappyMan » Sun Jul 01, 2018 7:23 am

jhogue wrote:
Sat Jun 30, 2018 1:23 pm
Talk to someone else at Schwab.

I buy both LTTs and STTs through my Fidelity brokerage account. Fidelity's minimum bond purchase is $1,000. The Bond Desk will talk to you over the phone if you have questions. I think Vanguard has roughly the same deal. Even though Treasury bonds are liquid and can be sold at any time, I aim to hold them until maturity.

I also recommend that you read Gumby's tutorial on the Bond board before buying bonds online at Fidelity.
Thank you for recommending a tutorial. I guess it applies to bonds at Schwab as well.

Where can one find this guide? Googling has not brought satisfying results.
User avatar
jhogue
Executive Member
Executive Member
Posts: 215
Joined: Wed Jun 28, 2017 10:47 am

Re: Dual Momentum GEM + HBPP a great combo, easy to test

Post by jhogue » Sun Jul 01, 2018 7:40 pm

See "Treasury Bond Buying Tutorial," the first thread under "Bonds"

or:

viewtopic.php?f=3&t=1670
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
HappyMan
Full Member
Full Member
Posts: 67
Joined: Thu Nov 09, 2017 7:01 am

Re: Dual Momentum GEM + HBPP a great combo, easy to test

Post by HappyMan » Sun Jul 01, 2018 10:00 pm

jhogue wrote:
Sun Jul 01, 2018 7:40 pm
See "Treasury Bond Buying Tutorial," the first thread under "Bonds"

or:

viewtopic.php?f=3&t=1670
Thank you. Will look at it.
HappyMan
Full Member
Full Member
Posts: 67
Joined: Thu Nov 09, 2017 7:01 am

Re: Dual Momentum GEM + HBPP a great combo, easy to test

Post by HappyMan » Mon Jul 02, 2018 12:52 am

jhogue wrote:
Sun Jul 01, 2018 7:40 pm
See "Treasury Bond Buying Tutorial," the first thread under "Bonds"

or:

viewtopic.php?f=3&t=1670
I've read that guide a couple of months ago along with the FAQ. After that I purchased my first bond with Schwab.

What would you recommend to read to someone after that? Just stick to a pro like that woman from Schwab? I'm interested in strategic buying of bonds. Would be good to familiarize myself with different strategies.
User avatar
ochotona
Executive Member
Executive Member
Posts: 2148
Joined: Fri Jan 30, 2015 5:54 am

Re: Dual Momentum GEM + HBPP a great combo, easy to test

Post by ochotona » Tue Jul 03, 2018 5:57 pm

Marilyn Cohen, "The Little Bond e-Book"
HappyMan
Full Member
Full Member
Posts: 67
Joined: Thu Nov 09, 2017 7:01 am

Re: Dual Momentum GEM + HBPP a great combo, easy to test

Post by HappyMan » Wed Jul 04, 2018 9:31 am

ochotona wrote:
Tue Jul 03, 2018 5:57 pm
Marilyn Cohen, "The Little Bond e-Book"
Nice! Currently free for Kindle.
User avatar
jhogue
Executive Member
Executive Member
Posts: 215
Joined: Wed Jun 28, 2017 10:47 am

Re: Dual Momentum GEM + HBPP a great combo, easy to test

Post by jhogue » Wed Jul 04, 2018 1:04 pm

Let the buyer beware! Marilyn Cohen is promoting the sale of municipal and corporate bonds in this book. These are not suitable for the HBPP.

1. Anyone tempted to buy munis because they are free of federal, state, and local taxes should read up on Puerto Rico and Chicago or ask pug chief for a tutorial on fiscal finance in the Land of Lincoln.

2. As for corporate bonds, about 20 years ago, I took Marilyn Cohen's advice (she writes a bond column for Forbes) and bought some really neat GMAC zero coupon bonds with a coupon of 7.65%. They tanked during the 2008-2009 recession, and while I eventually got out at a profit, it was a wild ride while GMAC was being bailed out by TARP and then converted into Ally Bank. Trust me, you don't want to go for that ride. Bonds should be boring, not exciting.
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
User avatar
ochotona
Executive Member
Executive Member
Posts: 2148
Joined: Fri Jan 30, 2015 5:54 am

Re: Dual Momentum GEM + HBPP a great combo, easy to test

Post by ochotona » Wed Jul 04, 2018 1:54 pm

jhogue wrote:
Wed Jul 04, 2018 1:04 pm
Let the buyer beware! Marilyn Cohen is promoting the sale of municipal and corporate bonds in this book. These are not suitable for the HBPP.

1. Anyone tempted to buy munis because they are free of federal, state, and local taxes should read up on Puerto Rico and Chicago or ask pug chief for a tutorial on fiscal finance in the Land of Lincoln.

2. As for corporate bonds, about 20 years ago, I took Marilyn Cohen's advice (she writes a bond column for Forbes) and bought some really neat GMAC zero coupon bonds with a coupon of 7.65%. They tanked during the 2008-2009 recession, and while I eventually got out at a profit, it was a wild ride while GMAC was being bailed out by TARP and then converted into Ally Bank. Trust me, you don't want to go for that ride. Bonds should be boring, not exciting.
This is a VP discussion.
User avatar
jhogue
Executive Member
Executive Member
Posts: 215
Joined: Wed Jun 28, 2017 10:47 am

Re: Dual Momentum GEM + HBPP a great combo, easy to test

Post by jhogue » Wed Jul 04, 2018 2:19 pm

Yeah, I know.

My caveat emptor about munis and corporate bonds applies to holders of VPs as well as more orthodox holders of the HBPP.

Are you recommending investors buy munis and corporate bonds?
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
User avatar
ochotona
Executive Member
Executive Member
Posts: 2148
Joined: Fri Jan 30, 2015 5:54 am

Re: Dual Momentum GEM + HBPP a great combo, easy to test

Post by ochotona » Wed Jul 04, 2018 3:12 pm

jhogue wrote:
Wed Jul 04, 2018 2:19 pm
Yeah, I know.

My caveat emptor about munis and corporate bonds applies to holders of VPs as well as more orthodox holders of the HBPP.

Are you recommending investors buy munis and corporate bonds?
I don't make any recommendations to anyone.
User avatar
ochotona
Executive Member
Executive Member
Posts: 2148
Joined: Fri Jan 30, 2015 5:54 am

Re: Dual Momentum GEM + HBPP a great combo, easy to test

Post by ochotona » Sun Jul 08, 2018 7:57 am

A reminder about why this thread exists:

2005-Today performance (because GLD doesn't go back further)

HBPP
CAGR 6.74%
MaxDD -12.59%
Sharpe 0.84
US Mkt correlation 0.39

GEM
CAGR 8.73%
MaxDD -17.72%
Sharpe 0.72
US Mkt correlation 0.66

50% HBPP + 50% GEM
CAGR 7.80%
MaxDD -11.12%
Sharpe 0.92
US Mkt correlation 0.66

The blend has lower drawdown, higher Sharpe ratio, 1% higher return, and it's still relatively lazy (look once a month; trade a few times per year). What's not to like? (But I don't recommend it to anyone. Make your own decisions).

GEM uses SWPPX, SWISX, and VFITX is the risk-off asset
HBPP uses SWPPX, GLD, TLT, and Cash
Last edited by ochotona on Sun Jul 08, 2018 12:59 pm, edited 1 time in total.
HappyMan
Full Member
Full Member
Posts: 67
Joined: Thu Nov 09, 2017 7:01 am

Re: Dual Momentum GEM + HBPP a great combo, easy to test

Post by HappyMan » Sun Jul 08, 2018 8:51 am

Nice summary, Ochotona! Thanks for your work!
Post Reply