The "Opposite" Portfolio

[Reub]

Has anyone ever experimented with an "opposite" portfolio, where they do the exact opposite of what they think that they should do? It seems that most of the time I am better off not making a financial move that I made or was about to make. How about you?

[Ad Orientem]

A few years ago we had a contest on here where the object was to see who could lose the most money by constructing the absolutely worst portfolio. It was both interesting and highly amusing.

[dualstow]

I think the Opposite or "Costanza Portfolio" came up at Bogleheads before, if not here. Funny!

[Reub]

As the world seems to be falling apart as I write this, I guess that my inclination would be to sell stocks and buy LTT's and gold. The "opposite" strategy would therefore be to go long on stocks and sell LTT's and gold. But there's no way I'd be able to do it because my first inclination is just so damn obviously correct! 

[ozzy]

I think the worst portfolio would be 100% cash.  All other assets at least keep up with inflation.

[Ad Orientem]

I think the worst portfolio would be 100% cash.  All other assets at least keep up with inflation.

I do not agree. Cash is relatively stable and if it lags inflation it rarely does so by much.  Barring a catastrophic event cash will not go to zero in value. I can think of a lot of stocks that have gone to zero and even a lot of bonds. Cash will not make you rich, but in most cases it will keep you from going broke.

We should run another worst portfolio contest again.

[ozzy]

Ad Orientem - I'm don't mean individual stocks, I'm talking about indexes.  I don't know any portfolio that use individual stocks.

If you buy a bond index (BND) or stock index (VTI) or any commodity index (CRBQ) you'll keep up with inflation.  If you keep all your money in cash you're GUARANTEED to lose money to inflation every year, maybe only 2 or 3 percent yearly, but that compounds over time.

[Ad Orientem]

Ad Orientem - I'm don't mean individual stocks, I'm talking about indexes.  I don't know any portfolio that use individual stocks.

If you buy a bond index (BND) or stock index (VTI) or any commodity index (CRBQ) you'll keep up with inflation.  If you keep all your money in cash you're GUARANTEED to lose money to inflation every year, maybe only 2 or 3 percent yearly, but that compounds over time.

Of course lots of people (unwisely) keep individual stocks in their portfolio. But that aside bonds can absolutely lose value relative to inflation. Just look at the 1970's. The bond market got killed. Stocks can also lag inflation as a class although this is more rare. Gold has lagged inflation for decades.

[barrett]

My Opposite Portfolio is 100% long bonds. Anyone got a worse idea than that?

[Ad Orientem]

My Opposite Portfolio is 100% long bonds. Anyone got a worse idea than that?

If we are limiting ourselves to asset classes, that would probably be my pick.

[barrett]

Ad O,

We are up about 1% on the LTTs today. Time to sell and buy pork bellies?

[Ad Orientem]

Ad O,

We are up about 1% on the LTTs today. Time to sell and buy pork bellies?

Damn ISIS!

[dualstow]

As the world seems to be falling apart as I write this, I guess that my inclination would be to sell stocks and buy LTT's and gold. The "opposite" strategy would therefore be to go long on stocks
...

So far so good, man.