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

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

Post by ochotona » Sat Jul 28, 2018 7:24 pm

FYI, this is where I am now:

10% cash (90 day T-Bills, Ally Bank)
10% gold
10% TIPS (I put I-Bonds in the TIPS bucket)
25% core bonds with 4 year duration (Treasuries, Total Bond Market, Short Term High Quality Corporates - no junk, no EM, no preferreds)
45% GEM

This is sleep well at night portfolio for sure. :)
HappyMan
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Re: Dual Momentum GEM + HBPP a great combo, easy to test

Post by HappyMan » Sat Jul 28, 2018 10:34 pm

ochotona wrote:
Sat Jul 28, 2018 7:24 pm
FYI, this is where I am now:

10% cash (90 day T-Bills, Ally Bank)
10% gold
10% TIPS (I put I-Bonds in the TIPS bucket)
25% core bonds with 4 year duration (Treasuries, Total Bond Market, Short Term High Quality Corporates - no junk, no EM, no preferreds)
45% GEM

This is sleep well at night portfolio for sure. :)
Nice allocation! Keep thinking why did you chose 3-4 year bonds over, for example, 1 year or 10 year ones?
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ochotona
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Re: Dual Momentum GEM + HBPP a great combo, easy to test

Post by ochotona » Sun Jul 29, 2018 5:45 am

HappyMan wrote:
Sat Jul 28, 2018 10:34 pm
Nice allocation! Keep thinking why did you chose 3-4 year bonds over, for example, 1 year or 10 year ones?
My criterion was: how much can I tolerate losing, emotionally, if interest rates were to rise? That's why I chose that duration. It's my pain threshold. Through the long bond fluctuations I have not had much discomfort, and on a point-forward basis, 4 year bonds are in the meaty, juicy part of the yield curve.

When GEM goes out of stocks, I may lengthen, however, anticipating more QE.
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Kbg
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Re: Dual Momentum GEM + HBPP a great combo, easy to test

Post by Kbg » Sun Jul 29, 2018 10:19 am

A rotational strategy using momentum and various types of bonds funds/ETFs works very well. To execute it you need a source of dividend adjusted prices...which will generally require a subscription and specialized software. Someone who may be interested and cheap might dig into Stockcharts.com to see if their prices are div adjusted.
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ochotona
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Re: Dual Momentum GEM + HBPP a great combo, easy to test

Post by ochotona » Sun Jul 29, 2018 2:33 pm

Morningstar.com and Stockcharts( Perfcharts) both report total return for free.
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Re: Dual Momentum GEM + HBPP a great combo, easy to test

Post by HappyMan » Sun Jul 29, 2018 10:10 pm

ochotona wrote:
Sun Jul 29, 2018 5:45 am

My criterion was: how much can I tolerate losing, emotionally, if interest rates were to rise? That's why I chose that duration. It's my pain threshold. Through the long bond fluctuations I have not had much discomfort, and on a point-forward basis, 4 year bonds are in the meaty, juicy part of the yield curve.

When GEM goes out of stocks, I may lengthen, however, anticipating more QE.
Thank you for sharing your wisdom with us!
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ochotona
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Re: Dual Momentum GEM + HBPP a great combo, easy to test

Post by ochotona » Tue Jul 31, 2018 5:15 pm

Very important content from Gary and others. A must-read. This suggests dual momentum portfolios outperform in retirement.

https://www.dualmomentum.net/2018/07/mo ... t.html?m=1
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ochotona
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Re: Dual Momentum GEM + HBPP a great combo, easy to test

Post by ochotona » Wed Aug 01, 2018 5:28 am

No change to the GEM for August 2018. Still 100% in US stock ETFs like SCHX, IVV, VOO, etc.
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Re: Dual Momentum GEM + HBPP a great combo, easy to test

Post by Kbg » Wed Aug 01, 2018 8:58 am

ochotona wrote:
Tue Jul 31, 2018 5:15 pm
Very important content from Gary and others. A must-read. This suggests dual momentum portfolios outperform in retirement.

https://www.dualmomentum.net/2018/07/mo ... t.html?m=1

There are a lot of caveats behind the 4% rule and the study it was based on. One would be well advised to dive into the details. Draw downs make a big difference in the math of it all and even if trend following/Mo under performs a B&H allocation it definitely does a good job of trimming DDs.
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ochotona
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Re: Dual Momentum GEM + HBPP a great combo, easy to test

Post by ochotona » Wed Aug 01, 2018 10:17 am

At least I'd feel quite confident about spending to the upper limit of the SWR for the corresponding non-momentum portfolio.
Last edited by ochotona on Wed Aug 01, 2018 5:08 pm, edited 1 time in total.
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Kbg
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Re: Dual Momentum GEM + HBPP a great combo, easy to test

Post by Kbg » Wed Aug 01, 2018 2:48 pm

After diving into this topic a while back I concluded it is an assumption laden minefield and it really comes down to your risk tolerance.

A very good conservative approach (highly conservative in fact with solid actuarial math behind it) is to simply use the RMD tables from the IRS. The downside is it back loads withdrawals which, given normal health and mortality trends, means you are likely overly frugal when your health is good and pulling out lots when you don't really get to enjoy it.
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ochotona
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Re: Dual Momentum GEM + HBPP a great combo, easy to test

Post by ochotona » Fri Aug 03, 2018 5:53 pm

I can dream, right?

The GEM pops out of stocks in 2019
Just as the 10 year Treasury hits 4%
Just as gold dives under $1000 because of the strong Dollar due to 4% bond yields

I rebalance gold back up to 10%, dump my stocks and go to bonds, and my retirement plan will work OK with 4% CAGR so who cares if no stocks?

After three years, in 2022, I buy back into the S&P500 at 1000. In the meantime, the banks did more QE, so my bond holdings have appreciated.

By 2026, my portfolio has doubled. I retire. The wheels fall off of the US Dollar due to trillion dollar deficits, gold goes to $5000 per ounce. Because I converted my IRA to Roth IRA, I escape most of the massively increased taxes needed to pay for Boomer retirement benefits.

I can dream, right?
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