Golden Technology Portfolio

Discussion of the Stock portion of the Permanent Portfolio

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Tyler
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Re: Golden Technology Portfolio

Post by Tyler » Mon Jul 20, 2020 9:11 pm

jalanlong wrote:
Mon Jul 20, 2020 9:11 am
My question from earlier still stands though. If stocks are for the growth part of the economic cycle, wouldn't you want growth stocks as your 25%?
In theory, that makes sense. But what if I told you "growth stocks" is just a really good marketing term for "overpriced stocks"?
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Re: Golden Technology Portfolio

Post by jalanlong » Mon Jul 20, 2020 9:53 pm

Tyler wrote:
Mon Jul 20, 2020 9:11 pm
jalanlong wrote:
Mon Jul 20, 2020 9:11 am
My question from earlier still stands though. If stocks are for the growth part of the economic cycle, wouldn't you want growth stocks as your 25%?
In theory, that makes sense. But what if I told you "growth stocks" is just a really good marketing term for "overpriced stocks"?
Then I would ask how does a fund which screens for stocks with above average EPS, sales, and return on equity necessarily come up with a group of overpriced stocks? Because successful companies with high future growth prospects might be more expensive than companies with lower prospects?
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Tyler
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Re: Golden Technology Portfolio

Post by Tyler » Mon Jul 20, 2020 10:42 pm

jalanlong wrote:
Mon Jul 20, 2020 9:53 pm
Then I would ask how does a fund which screens for stocks with above average EPS, sales, and return on equity necessarily come up with a group of overpriced stocks? Because successful companies with high future growth prospects might be more expensive than companies with lower prospects?
Actively managed growth funds may indeed be selective like that. But your typical growth index fund by definition generally just buys the other half of the market that's not considered value. So it depends on the fund, but it's often a lot less glamorous than people think.
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Re: Golden Technology Portfolio

Post by pmward » Mon Jul 27, 2020 12:34 pm

Kbg wrote:
Thu Jul 16, 2020 9:57 pm
QQQ and a small cap index are a much better mix than QQQ and SPY. I think pairing QQQ and an S&P600 index fund is an excellent option. They do a good job of zig zagging with each other in terms of performance. A 50/50 QQQ/IJR portfolio beats a 100% allocation to either in every performance metric there is and trashes the S&P 500.

The SP600 is a much better small cap index than the Russell 2000...the selection criterion of the S6 avoids a lot of crap.
I agree. The tests I've done, doing a large cap growth/ S&P 600 split with rebalancing has trashed the S&P alone, as well as the typical TSM/SCV split in the GB. Value has always done poorly in the large cap universe, but it does well over time in the small cap universe. So having a QQQ/IJR split makes sense. One will always out perform the other, but by rebalancing the two overtime you get to play the pendulum swings. Like you said, the two really do zig and zag with each other. S&P 600 is like the R2K with a more sensical rebalancing strategy (Russell makes great indexes but poor funds) and a slight skew towards both quality and value. If one wants to temper the large cap growth a bit more, they could always do QQQ/IJS to skew a bit more toward value on the small-cap side. If I were starting a GB from scratch today it would be QQQ/IJR for the equities.
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