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2021 bonds percentage for Dalio/Robbins All-Seasons Portfolio?

Posted: Sun Dec 27, 2020 1:40 pm
by jreality
If Dalio were recommending an All Seasons Portfolio to Robbins right now, using ETFs, to start investing in Jan 2021, would it still have 55% in bonds? If not, then what percentage in bonds, and what percentage of each bond ETF within that percentage?

If the percentage in bonds would be reduced below 55% , then exactly what ETFs would be used to replace bonds, and in what percentages?

Or would Dalio really still advise someone who wants an All Seasons port to stick with the same 55% bonds percentage that he recommended to Robbins years ago, even though he is telling people that they're crazy to own bonds in this environment?

Re: 2021 bonds percentage for Dalio/Robbins All-Seasons Portfolio?

Posted: Wed Jan 06, 2021 11:14 pm
by jreality
Actually, Dalio's own hedge fund holds extremely little in bonds according to the 13F filing, so even though he has recommended the "All Seasons" portfolio in the past to the average investor, he doesn't much bonds in his own hedge fund:

https://whalewisdom.com/filer/bridgewat ... s_tab_link

Re: 2021 bonds percentage for Dalio/Robbins All-Seasons Portfolio?

Posted: Thu Jan 14, 2021 3:25 pm
by Hal
:D

Re: 2021 bonds percentage for Dalio/Robbins All-Seasons Portfolio?

Posted: Sat Jan 16, 2021 2:58 pm
by Smith1776
Even before the era of today's rates I've personally always felt that the All Seasons portfolio had too much term risk.

I'd shorten the 40% long bonds to intermediate and the 15% intermediates to cash/short.

That seems much more "all seasons" to me.

Hell, while we're at it, I'd tweak the percentages so that the portfolio is more "symmetrical".

-15% cash
-35% stock
-35% intermediate treasury bonds
-7.5% commodities
-7.5% gold

As for which ETFs, just buy the lowest cost Vanguard or Blackrock funds you have access to.

Re: 2021 bonds percentage for Dalio/Robbins All-Seasons Portfolio?

Posted: Sat Jan 16, 2021 6:03 pm
by vnatale
Smith1776 wrote:
Sat Jan 16, 2021 2:58 pm

Even before the era of today's rates I've personally always felt that the All Seasons portfolio had too much term risk.

I'd shorten the 40% long bonds to intermediate and the 15% intermediates to cash/short.

That seems much more "all seasons" to me.

Hell, while we're at it, I'd tweak the percentages so that the portfolio is more "symmetrical".

-15% cash
-35% stock
-35% intermediate treasury bonds
-7.5% commodities
-7.5% gold

As for which ETFs, just buy the lowest cost Vanguard or Blackrock funds you have access to.


What did you think of Rickards's current recommendation per his latest book?


Re: 2021 bonds percentage for Dalio/Robbins All-Seasons Portfolio?

Posted: Sat Jan 16, 2021 6:04 pm
by Smith1776
vnatale wrote:
Sat Jan 16, 2021 6:03 pm


What did you think of Rickards's current recommendation per his latest book?
I have not yet read it! If it's not too much trouble, would a quick summary of his recommendations be possible? I'm sure it involves gold. ^-^

Re: 2021 bonds percentage for Dalio/Robbins All-Seasons Portfolio?

Posted: Sat Jan 16, 2021 6:14 pm
by vnatale
Smith1776 wrote:
Sat Jan 16, 2021 6:04 pm

vnatale wrote:
Sat Jan 16, 2021 6:03 pm



What did you think of Rickards's current recommendation per his latest book?


I have not yet read it! If it's not too much trouble, would a quick summary of his recommendations be possible? I'm sure it involves gold. ^-^


I had a whole topic on his book, in which I had a post devoted to each chapter (except for two chapters for which I used two posts).

His recommendations are in either my last or second to last post in that Topic.

If I am remembering correctly gold was 10%.


Re: 2021 bonds percentage for Dalio/Robbins All-Seasons Portfolio?

Posted: Sat Jan 16, 2021 7:06 pm
by Smith1776
vnatale wrote:
Sat Jan 16, 2021 6:14 pm

I had a whole topic on his book, in which I had a post devoted to each chapter (except for two chapters for which I used two posts).

His recommendations are in either my last or second to last post in that Topic.

If I am remembering correctly gold was 10%.
Dang. Sorry I missed this.
Cash

30 percent of investible assets

Gold

10 percent of investible assets

Residential real estate

20 percent of investible assets

Treasury notes

20 percent of investible assets

Equities

10 percent of investible assets

Alternatives

10 percent of investible assets
Doesn't look bad at all. Assuming that REITS can suffice as real estate (in Rickards' eyes probably not), this actually looks like a cool portfolio. Of course, one can't help but be reminded of the PP.

Let's see what it backtests at:
rickards portfolio.png
rickards portfolio.png (117.33 KiB) Viewed 150 times
I don't think the backtest really does the strategy justice since the cash is to be deployed opportunistically. I wasn't really sure what to put in place of alternatives so I plugged in commodities and precious metal miners instead.

Re: 2021 bonds percentage for Dalio/Robbins All-Seasons Portfolio?

Posted: Sat Jan 16, 2021 7:28 pm
by vnatale
Smith1776 wrote:
Sat Jan 16, 2021 7:06 pm

vnatale wrote:
Sat Jan 16, 2021 6:14 pm


I had a whole topic on his book, in which I had a post devoted to each chapter (except for two chapters for which I used two posts).

His recommendations are in either my last or second to last post in that Topic.

If I am remembering correctly gold was 10%.


Dang. Sorry I missed this.

Cash

30 percent of investible assets

Gold

10 percent of investible assets

Residential real estate

20 percent of investible assets

Treasury notes

20 percent of investible assets

Equities

10 percent of investible assets

Alternatives

10 percent of investible assets


Doesn't look bad at all. Assuming that REITS can suffice as real estate (in Rickards' eyes probably not), this actually looks like a cool portfolio. Of course, one can't help but be reminded of the PP.

Let's see what it backtests at:

rickards portfolio.png

I don't think the backtest really does the strategy justice since the cash is to be deployed opportunistically. I wasn't really sure what to put in place of alternatives so I plugged in commodities and precious metal miners instead.


Yes, he sees REITs as being a poor investment since this virus has taught businesses that they no longer need all this office space.

And, yes, he is seeing that allocation as a six month thing. With a new review being done every six months with adjustments made accordingly to fit then existing conditions and outlooks. Not something that I could ever handle so the Permanent Portfolio fits great for someone like me.


Re: 2021 bonds percentage for Dalio/Robbins All-Seasons Portfolio?

Posted: Sun Jan 17, 2021 8:14 pm
by vnatale
Smith1776 wrote:
Sat Jan 16, 2021 6:04 pm

vnatale wrote:
Sat Jan 16, 2021 6:03 pm



What did you think of Rickards's current recommendation per his latest book?


I have not yet read it! If it's not too much trouble, would a quick summary of his recommendations be possible? I'm sure it involves gold. ^-^


As a fellow book reader of books involving money....the following passage from the book I am reading (Blood and Money) may be of interest of you regarding the place of gold many centuries ago.

Vinny

Sacred Hunger: Gold, Money, and State Finance

As Hobbes recognized in Leviathan, published the same year the 1651 Navigation Act was enacted, world money—the money accepted as payment between nations—consisted of precious metals. “Gold and Silver,” he wrote, “being (as it happens) almost in all Countries of the world high-valued, is a commodious measure of the value of all things else between Nations.”3 In a European world economy increasingly characterized by the global movement of goods, an international means of payment was crucial. In the absence of a national currency that could function as international money, as had the Athenian owl, global payments relied on precious metals, be they in the form of bullion or high-quality coins.

In the sixteenth century, the acquisition of gold became the obsessive aim of European colonial policy. By the 1470s, Portuguese mariners were reaping the stuff along Africa’s “Gold Coast.” Meanwhile, Spain, the first European power with extensive colonies in the Americas, displayed a devotion to gold (and soon after to silver) that can only be described as maniacal. “Gold is the most excellent, gold is treasure, and who has it can do whatever he likes in this world,” wrote Columbus. “With it he can bring souls to Paradise.”4 It was the craze for gold that first induced “the discoverer” to deploy indigenous peoples as slaves, just as it inspired his earlier fixation on selling them in Europe.5 Yet, as Adam Smith would later argue in The Wealth of Nations, this “mercantilist” devotion to precious metal is fetishistic. It confuses the thing (precious metal) with the activity—labor—that brings it into being. It mistakes a result for a cause. As Smith could easily see by the second half of the eighteenth century, wealth accrues ultimately to those who succeed in raising the productivity of labor, capturing markets in the process, not those who pursue money as an end in itself. Win the battle for markets in goods, and money will flow your way. Spain’s leaders, like Portugal’s monarchs, were led astray in seeking to build up great hoards of gold rather than investing to raise the efficiency of labor. Almost a century before Smith’s great text, pamphleteer Charles Davenant had made a similar point. “Affluence of money,” he urged, may simply induce a “lazy temper.” After all, “it is not the taking in a great deal of food but it is good digestion and distribution that nourishes the body.” However, it was precisely this—good digestion and distribution—that had been scandalously neglected by the rulers of Spain. Disregarding labor and manufactures, they had allowed New World riches to pass through their country undigested, without having provided any “spirits, strength, or nourishment.”6

By the 1580s, Spain controlled vast New World territories, along with trading posts in India, Africa, the Philippines, and beyond. Its inflows of silver and gold were staggering. To all appearances, its imperial power was unrivaled. Yet already it was reeling from massive financial crises based on imperial overextension and the weakness of domestic production. Before the decade was out, upstart England would defeat the Spanish Armada. By now, crises were endemic. Portugal deserted its ally in 1640, while Catalonia set down the road of revolt. The manic pursuit of precious metals had come up empty, prompting talk of a “curse of gold.”7

Certainly, England’s rulers, too, were fueled by what one writer, in 1686, called “the sacred hunger of gold.”8 But generations of English experience with boosting profits via investment in agriculture, trade, and manufacture had instilled practices of “improving” the means of production. And by establishing plantation colonies in the New World, by building up a protected shipping industry, by investing in colonial trade and production—and by backing all of this up with unrivaled military force—England was moving into first place in the new imperial order. One ominous indicator of this is that between 1697 and 1702, as a new financial order was being established, the monetary value of enslaved people exported from Africa exceeded that of gold.9 It was now the means of producing wealth—enslaved labor power—not the metallic means of payment, that was central to New World fortunes. Nevertheless, prior to the 1690s, England’s rulers were financially constrained from fully unleashing English imperial power. These constraints would be burst only via revolution in state and finance.

Re: 2021 bonds percentage for Dalio/Robbins All-Seasons Portfolio?

Posted: Sun Jan 17, 2021 8:47 pm
by vnatale
vnatale wrote:
Sun Jan 17, 2021 8:14 pm

Smith1776 wrote:
Sat Jan 16, 2021 6:04 pm

vnatale wrote:
Sat Jan 16, 2021 6:03 pm



What did you think of Rickards's current recommendation per his latest book?


I have not yet read it! If it's not too much trouble, would a quick summary of his recommendations be possible? I'm sure it involves gold. ^-^


As a fellow book reader of books involving money....the following passage from the book I am reading (Blood and Money) may be of interest of you regarding the place of gold many centuries ago.

Vinny




More on the evolving role of gold in the money system...

Vinny


Since the future is inherently unknowable, risk and uncertainty enter into the very modular form of modern bank money. Of course, this is inherent in all fantastic wagers on the future, from the Dutch tulip mania of the 1630s to England’s South Sea Bubble three-quarters of a century later (to which I return below). But modern bank money, only loosely constrained by precious metal, can fuel such speculative ventures. There is an inherent risk that paper money can proliferate out of all proportion to the past labor (precious metals) or the future labor (in the form of anticipated government revenues) that are its vital underpinnings. It was precisely this that happened to Chinese paper money, which regularly went through massive collapses in value. Lawmakers were thus concerned to contain overproduction of paper currency, as well as financial manias. They also had to reckon with the fact that the mass of the population still lived and moved in an economic universe dominated by coins, not bills and notes. To build confidence in the new monetary and financial arrangements of the late seventeenth century, political figures not only endeavored to lock in government’s responsibility to honor its contractual obligations. They also sought to ground bank money in gold, because of both its popular acceptance and its role in international payments. Insistence on the contractual obligations of the monarch and the need to anchor money in precious metal figure prominently in the interventions of that most bourgeois of philosophers, John Locke, during the raging debates about money in the 1690s.