Other Lazy Portfolios

Discussion of funds that implement the Permanent Portfolio strategy

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barrett
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Other Lazy Portfolios

Post by barrett » Tue Aug 05, 2014 7:00 am

So there seems to be some interest in discussing other lazy portfolios so I thought I'd try to get the ball rolling. Using the PP starting this year is the first time I have ever followed any kind of investment strategy that actually had a plan or reason behind it. Anyone on here have any experience with other asset allocations that have worked (or failed) for them over time?

I'd like to add that the couple of people I know who have done well in stocks are the kind of people who just keep buying when they have cash and don't panic sell when the stock market stinks. I would say that neither one of them are particularly shrewd in terms of investing. One claims to have read one book on investing 30 years ago and the other has always gotten all of his advice from an uncle who is shrewd.

I guess the first thought I have is that maybe it's actually counterproductive to discuss this stuff if the two examples above are typical of successful investing!
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Re: Other Lazy Portfolios

Post by rickb » Tue Aug 05, 2014 9:27 am

Lazy portfolios are the antithesis of shrewdness.  I'd expect a far greater percentage of lazy investors are successful than investors attempting to be shrewd.  For example, Scott Burns claims his Couch Potato portfolios (http://assetbuilder.com/couch_potato/co ... o_cookbook) would almost always be in the top 50%, and frequently in the top 25%, of Morningstar's “Moderate Allocation”? or “World Allocation”? categories.  Note that this is comparing these portfolios not to the results of a random shrewd guy on the street, but funds run by Wall Street "professionals".

Paul Boyer's Mad Money Machine site tracks (well, used to track - looks like he hasn't updated his results charts since 2011) a pretty comprehensive set of lazy portfolios, see http://madmoneymachine.com/portfolios/ .  One he does not track is Mebane Faber's Ivy Portfolio, which is modeled after successful Ivy League school endowments - maybe this one is a little too hands on to truly call "lazy".

Will some shrewd people beat these?  Sure.  But some shrewd people will win the lottery as well.  Maybe shrewd isn't quite the right word here.
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Re: Other Lazy Portfolios

Post by Reub » Wed Aug 06, 2014 5:40 pm

I found this quick synopsis describing 8 of the most popular Lazy Portfolios:

http://www.obliviousinvestor.com/8-lazy-etf-portfolios/

Hey, this one sounds pretty good:

"6. Harry Browne’s Permanent Portfolio
25% Vanguard S&P 500 Index ETF (VOO)
25% Vanguard Long-Term Government Bond ETF (VGLT)
25% Cash (i.e., money market funds)
25% SPDR Gold Trust ETF (GLD)

The idea behind Browne’s Permanent Portfolio is that the four asset classes have sufficiently low correlation that the portfolio should be able to put up modest gains each year under just about any circumstance imaginable."
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Mountaineer
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Re: Other Lazy Portfolios

Post by Mountaineer » Mon Sep 01, 2014 7:49 am

Here is some information that may be of interest, especially if you are in the distribution phase of portfolio management; it is a bit dated but still worth reviewing in my opinion - from Vanguard.

https://personal.vanguard.com/pdf/icrria.pdf

https://personal.vanguard.com/pdf/s557.pdf

https://personal.vanguard.com/us/funds/ ... IntExt=INT

The Vanguard Target Retirement funds are very lazy portfolios, and as with almost all Vanguard funds, have low expenses.  I am in the distribution phase, so the Target Retirement Income fund meets my needs.  Mentally, it is similar to the PP as it is an almost a "hands off" approach, and since I'm closer to the end than the beginning, and my wife does not have much interest in the ins and outs of investing, it is a very simple portfolio that will hopefully help keep her from making bad choices if I precede her to happy land.  I find that I do not spend much of my time or energy thinking about my portfolio as I used to, especially when I was in the accumulation phase.  Returns are adequate for my needs - I guess I am a proponent of the "enough is enough" strategy; I do not choose to go after every last dime that is possible.  Your needs may be different.

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dualstow
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Re: Other Lazy Portfolios

Post by dualstow » Mon Sep 01, 2014 9:59 am

barrett wrote: Anyone on here have any experience with other asset allocations that have worked (or failed) for them over time?
I was wending my way toward a 60/40 (stock-bond) standard Boglehead-type portfolio when I discovered the pp.

I had begun with individual stocks, no bonds, and no real strategy beyond blue chips with increasing dividends. Discovered the pp via Craig's posts at Bogleheads.

I would say the 60/40 plan was working fine and, even though it probably would have walloped my pp during this uptrend in stocks and downtrend in gold, I'm happy to keep my pp core.

rickb wrote: One he does not track is Mebane Faber's Ivy Portfolio, which is modeled after successful Ivy League school endowments - maybe this one is a little too hands on to truly call "lazy".
I think so. I haven't read the book but every page I find on it (the ivy p'f')  calls it market timing, the opposite strategy of lazy.
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rickb
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Re: Other Lazy Portfolios

Post by rickb » Mon Sep 01, 2014 10:44 am

dualstow wrote:
rickb wrote: One he does not track is Mebane Faber's Ivy Portfolio, which is modeled after successful Ivy League school endowments - maybe this one is a little too hands on to truly call "lazy".
I think so. I haven't read the book but every page I find on it (the ivy p'f')  calls it market timing, the opposite strategy of lazy.
Actually, there are several versions of "Ivy" - a 5-way and a 10-way that are buy/hold and rebalance annually (which probably do qualify as "lazy") and a timed version of the 5-way that is the same assets in the same allocation but in/out per asset class based on a 10 month simple moving average signal checked once a month.  The 5-way allocation is

20% US stocks (e.g. VTI)
20% international stocks (e.g. VEU)
20% intermediate bonds (e.g. IEF)
20% commodities (e.g. DBC)
20% real estate (e.g. VNQ)

This is very similar to one of Scott Burns's Couch Potato portfolios (the "Five Fold"), but Burns uses TIPS rather than commodities.

I think most people associate Ivy with timing because of the momentum "enhancement" Faber overlays on top of the basic allocation, which he argues reduces volatility of any portfolio without significantly impacting long term performance.  He's even done a comparison of timed vs. buy/hold PP, which shows a smoother ride and better long term results for the timed version - see http://mebfaber.com/2010/10/28/timing-t ... bernstein/
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