Pinwheel vs. PP?

[Kevin K.]

In light of numerous recent threads discussing conditions (e.g. unprecedented low interest rates, cryptocurrencies possibly usurping gold) I thought it would be interesting to look at another one of Tyler's brilliant portfolio ideas, the Pinwheel:

https://portfoliocharts.com/2018/10/01/ ... portfolio/

Of course on the surface one might legitimately ask what possible appeal this portfolio might have to those drawn to the PP? It's fairly complex and is quite volatile and subject to large (albeit usually brief) drawdowns. But if you dig down a bit into the thinking behind it it seems to me that the Pinwheel is arguably much more of an "all-weather" allocation than the PP, GB or Dalio's All Seasons. It's thoroughly diversified across countries and asset classes.

Some of the potential advantages I see to the Pinwheel going forward are that its equities are super-diversified (vs. Total Stock Market's complete reliance on a handful of tech stocks), it holds just the right fixed income (intermediate Treasuries and cash) for ballast and inflation protection but doesn't hold enough of them for their negative real returns to drag down the entire portfolio, and holds just enough gold to provide some sequence-of-returns-risk insurance without betting the farm on it.

[johnnywitt]

Pinwheel is for Pinheads

Seriously, it might be a great portfolio. It might beat everything else going forward for the next two decades, or longer. You just have to do your own due diligence and stick to a portfolio through thick and thin, but in order to do this, you have to have faith in your portfolio. The way that I have garnered this faith is through backtesting historical performance, but this is problematic because no one can possibly know what will happen in the future. So, in the end, you place your faith in a particular asset allocation and stick with it and not jump around trying to assuage your uncertainty and fear.

[StrategyDriven]

I find the Golden Butterfly has better characteristics, it has had more shallow drawdowns, and also supports higher withdrawal rates in retirement.

[johnnywitt]

I find the Golden Butterfly has better characteristics, it has had more shallow drawdowns, and also supports higher withdrawal rates in retirement.

I agree, but backtesting being what it is...who knows.

[StrategyDriven]

I find the Golden Butterfly has better characteristics, it has had more shallow drawdowns, and also supports higher withdrawal rates in retirement.

I agree, but backtesting being what it is...who knows.

Sure, it may not do as well relatively speaking going forward, however, given that Pinwheel has 10% more stock AND 15% REIT, I think it's likely to have bigger drawdowns when it hits the fan.

[johnnywitt]

I find the Golden Butterfly has better characteristics, it has had more shallow drawdowns, and also supports higher withdrawal rates in retirement.

I agree, but backtesting being what it is...who knows.

Sure, it may not do as well relatively speaking going forward, however, given that Pinwheel has 10% more stock AND 15% REIT, I think it's likely to have bigger drawdowns when it hits the fan.

I agree.

[johnnywitt]

I find the Golden Butterfly has better characteristics, it has had more shallow drawdowns, and also supports higher withdrawal rates in retirement.

I agree, but backtesting being what it is...who knows.

Sure, it may not do as well relatively speaking going forward, however, given that Pinwheel has 10% more stock AND 15% REIT, I think it's likely to have bigger drawdowns when it hits the fan.

I agree, but I was merely trying to say how nobody knows what the future holds. No way to tell what will work best in the coming decades.