Tyler's Pinwheel Portfolio

A place to talk about speculative investing ideas for the optional Variable Portfolio

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buddtholomew
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Re: Tyler's Pinwheel Portfolio

Post by buddtholomew » Tue Jan 01, 2019 2:04 pm

70/30 AA in retirement accounts, split 55/45 US/INT. Bonds are IT index and Stable Value. This is pretty easy to maintain.

US Total - 35%
US SCV - 10%
REIT - 10%
INT LC - 20%
INT SC - 10%
EM - 15%
Kevin K.
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Re: Tyler's Pinwheel Portfolio

Post by Kevin K. » Tue Jan 01, 2019 4:46 pm

I figured you'd know about Clyatt's book Tyler. Just listened to a nice interview with him on the FIRE Drill podcast talking about his 2+ decades in semi-retirement. Very smart guy.

I did a few comparisons of his Sandwich Portfolio with the PInwheel on Portfolio Visualizer. No gold ETFs before 2004 so that was a limiting factor but returns were neck-and-neck but with far lower drawdowns for the Sandwich. Looking for the retiree holy grail of steady 5-8% CAGR with few negative years was the basis for the extensive DFA modeling Clyatt paid for when he wrote the book. One thing I really like about his approach is that Clyatt recommends a mixture of stocks, bonds and "other" (mostly hard assets) @ roughly 40:40:20 and, wants to own the entire global market, and captures the small cap and value premiums without getting into ultra-complicated slice and dice.
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ochotona
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Re: Tyler's Pinwheel Portfolio

Post by ochotona » Sat Jan 05, 2019 3:03 am

I am a homeowner... why would I want to own REITs in the Pinwheel, and overweight real estate even further?
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Kbg
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Re: Tyler's Pinwheel Portfolio

Post by Kbg » Sat Jan 05, 2019 8:31 am

A while back I purchased and read Robert Carvers book Smart Portfolios. Highly recommended. One of the things he lays out early is that there are basically only two rational portfolios. Port 1 Max sharpe, Port 2 Max Geometric return. Everything else is a compromise. Iirc Max sharpe is 65/35ish bonds/stocks and Max geomean is 80/20 stocks/bonds. For the aggressive investor he recommends Max sharpe with a little under 2x leverage or Max geo. For more conservative Max sharpe or Max sharpe with cash.

There is a ton of good info in his book about all kinds of building and maintaining portfolio issues. Overall he pitches a process called handcrafting which implements the above basic premise in ever more complex variations using ETFs.
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Kriegsspiel
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Re: Tyler's Pinwheel Portfolio

Post by Kriegsspiel » Sat Jan 05, 2019 11:44 am

ochotona wrote:
Sat Jan 05, 2019 3:03 am
I am a homeowner... why would I want to own REITs in the Pinwheel, and overweight real estate even further?
REITs provide a yield, which might be valued low or high. If you can buy rental properties/REITs at a good valuation, who cares what your housing situation is? Would you tell a small business owner to avoid investing in stocks, because he'd be overweighting business ownership?
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ochotona
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Re: Tyler's Pinwheel Portfolio

Post by ochotona » Sat Jan 05, 2019 11:48 am

Kriegsspiel wrote:
Sat Jan 05, 2019 11:44 am
ochotona wrote:
Sat Jan 05, 2019 3:03 am
I am a homeowner... why would I want to own REITs in the Pinwheel, and overweight real estate even further?
REITs provide a yield, which might be valued low or high. If you can buy rental properties/REITs at a good valuation, who cares what your housing situation is? Would you tell a small business owner to avoid investing in stocks, because he'd be overweighting business ownership?
I indeed would advise people to avoid investing in their company or industry, because your investments are tanking just as you lose your job. It happened to me (I sold the Schlumberger stock as soon as I was vested, then 60 days later I was unemployed).

Why would one want to overweight an asset class which would be taking a hit at the same time you might be underwater on your home?
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Kriegsspiel
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Re: Tyler's Pinwheel Portfolio

Post by Kriegsspiel » Sat Jan 05, 2019 12:36 pm

ochotona wrote:
Sat Jan 05, 2019 11:48 am
Kriegsspiel wrote:
Sat Jan 05, 2019 11:44 am
ochotona wrote:
Sat Jan 05, 2019 3:03 am
I am a homeowner... why would I want to own REITs in the Pinwheel, and overweight real estate even further?
REITs provide a yield, which might be valued low or high. If you can buy rental properties/REITs at a good valuation, who cares what your housing situation is? Would you tell a small business owner to avoid investing in stocks, because he'd be overweighting business ownership?
I indeed would advise people to avoid investing in their company or industry, because your investments are tanking just as you lose your job. It happened to me (I sold the Schlumberger stock as soon as I was vested, then 60 days later I was unemployed).
You're responding to something I didn't say.
Why would one want to overweight an asset class which would be taking a hit at the same time you might be underwater on your home?
Owning one house in one neighborhood in one city (ad nauseum) is to owning your own company's stock
as
Owning a REIT is to owning a broad stock index.
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Re: Tyler's Pinwheel Portfolio

Post by gull1 » Mon Aug 12, 2019 6:49 am

Tyler wrote:
Tue Jan 01, 2019 12:07 pm
Ooh... Thanks for referencing that! I love that book, but apparently forgot about his portfolio recommendation. Looks like I'll be re-reading it soon. :)
Hey Tyler + All,

So I have been looking at the Pinwheel (PW) in comparison to the PP. A few questions:

1. Tyler says the PW is for someone who "Is uncomfortable with high percentages of unconventional assets found in many modern portfolios" . Can someone explain, in this context, what unconventional assets are?
2. Also, I understand the PW has different performance, seemingly better, than PP but with higher standard deviation. Is it accurate to say it follows the same broad theory as PP but with, arguably, more optimized portfolio allocation?
3. the 15% Intermediate Bonds - if I were to purchase the bonds directly on secondary market at Fidelity, would you just purchase 100% of this asset of the longest maturity 10 year bonds or split 50/50 between 3 and 10 year or....?
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Tyler
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Re: Tyler's Pinwheel Portfolio

Post by Tyler » Mon Aug 12, 2019 11:19 am

Hi Gull1. Good questions!

gull1 wrote:
Mon Aug 12, 2019 6:49 am
1. Tyler says the PW is for someone who "Is uncomfortable with high percentages of unconventional assets found in many modern portfolios" . Can someone explain, in this context, what unconventional assets are?
Flipping your question, the four "conventional" assets found in a large number of portfolios are a generic cap-weighted large cap fund, an international fund, intermediate bonds, and REITs. If you haven't already, I recommend reading this Pinwheel Portfolio explanation that walks through the assets.

gull1 wrote:
Mon Aug 12, 2019 6:49 am
2. Also, I understand the PW has different performance, seemingly better, than PP but with higher standard deviation. Is it accurate to say it follows the same broad theory as PP but with, arguably, more optimized portfolio allocation?
The Permanent Portfolio is built on four specific assets to track four economic conditions. The Pinwheel Portfolio is more about tilting traditional portfolio assets towards beneficial diversifiers. So while both take advantage of the benefits of diversification, I wouldn't go so far as to say they follow the same theory. I also wouldn't necessarily say one is more optimized than the other, as that depends on what you're personally interested in optimizing.

gull1 wrote:
Mon Aug 12, 2019 6:49 am
3. the 15% Intermediate Bonds - if I were to purchase the bonds directly on secondary market at Fidelity, would you just purchase 100% of this asset of the longest maturity 10 year bonds or split 50/50 between 3 and 10 year or....?
Personally, I'd just buy a intermediate treasury ETF like IEI or ITE. But if you want to buy bonds directly, you could either buy a ladder of 3-10 or simply use the PP method and buy 10-year bonds while selling them when they hit 3. And since we're talking intermediate bonds rather than long-term bonds, keeping them to maturity is also an option.
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