2022 Returns

[ppnewbie]

I haven’t looked, but did anyone hit any rebalance bands?

I did on my gold when it spiked to 2k but I did not follow the rules! But I’ve been pretty good since. One way I have been able to force my reluctance to buy losers is to “go halfsies” if I need to buy / sell something, I give myself license to do half the amount. It’s freed me of always thinking about all or nothing. Its helping me build the muscle memory of doing the opposite of what my brain is telling me to do.

[ppnewbie]

One thing I am proud of is that I worked up the courage to purchase 30 year treasuries recently. One interesting thing about the PP / GB is that it makes you confront financial behaviors. I was talking to a friend and telling him that your body physically will not allow you to step off a cliff. Thats what if feels like, at least to me, to buy a big loser and sell a big winner.

+1 That's why I like the concept of the two fund (GoldSmith) PP. We run an extended family retirement fund, and all parties have to sign off on any purchases or sales due to Gov't requirements. Makes management much easier.
How about a US version of a 2 fund GB ie 20% Gold, 80% VDBA
(https://fund-docs.vanguard.com/ETF-Vang ... S_VDBA.pdf)

I’m looking hard at 80 Wellesley / 20 gold

[flyingpylon]

I haven’t looked, but did anyone hit any rebalance bands?

I did on my gold when it spiked to 2k but I did not follow the rules! But I’ve been pretty good since. One way I have been able to force my reluctance to buy losers is to “go halfsies” if I need to buy / sell something, I give myself license to do half the amount. It’s freed me of always thinking about all or nothing. Its helping me build the muscle memory of doing the opposite of what my brain is telling me to do.

I also find it more palatable to spread out rebalancing rather than doing it all at once. It becomes more of an art than a science. I assume that I’ll never have perfect timing on trades and that I will be buying through a dip or selling through a peak. It helps to avoid reacting to temporary spikes. To lower my expectations I also assume it adversely affects performance, though sometimes it works in my favor. But if you’re someone that only checks once a year or something then it probably makes sense to just follow the rules.

In 2022 I moved enough funds out of stocks and accumulated cash into bonds to stay out of my rebalancing bands (GB) but it didn’t amount to much.

[Ugly_Bird]

I haven’t looked, but did anyone hit any rebalance bands?

I was close for LTTs. 16.7% But now they are going up.
Might be missing out or maybe not if Feds increase the rates again this year.
Would be nice to be able to time this but... We do not do market timing, don't we? :-)

[johnnywitt]

Gold is almost flat for the year ..down less than 1% on gld .

On the other hand tlt got smashed , down 32% including interest ….and shy down over 3%

SHY ain't part if a HBPP: a real T-Bill Ladder is, but BIL will do in a pinch.

[ppnewbie]

I just looked and I am down only 6.8 percent from the high on 3/22. This is after gold has started to move. Now I may need to rebalance! I may be close to even year to date.

I checked and the one year return and I’m down only 1.3 percent.

[mathjak107]

Gold is almost flat for the year ..down less than 1% on gld .

On the other hand tlt got smashed , down 32% including interest ….and shy down over 3%

SHY ain't part if a HBPP: a real T-Bill Ladder is, but BIL will do in a pinch.

This is true but shy does tend to outperform cash ..in fact even with the drop it has still outperformed t bills the last 5 and 10 years

[seajay]

Gold is almost flat for the year ..down less than 1% on gld .

On the other hand tlt got smashed , down 32% including interest ….and shy down over 3%

SHY ain't part if a HBPP: a real T-Bill Ladder is, but BIL will do in a pinch.

This is true but shy does tend to outperform cash ..in fact even with the drop it has still outperformed t bills the last 5 and 10 years

PV indicates that for a PP with T-Bills (CASHX), when you click the 'Drawdowns' tab/button

Jan 2022 Sep 2022 -15.11%
Mar 2008 Oct 2008 -12.35%

Not that much different, but I guess that in having aligned with a start of calendar year time-point the 2022 drawdown was more noticeable.

Giving back even 15% after preceding three years of a 12.26% annualised (8.3% real) across 2019/20/21 (compounded 41% gain) is still a +5.5% annualized (1.3% real) 4 year outcome. Looks like just regular volatility, where you may see +8.5% annualized real for some periods, 1.5% for others, broader middle average of 5% real. Shorter term volatility (less than 5 or 10 years) is just noise - unless you are lumping in/out over the shorter term, which most shouldn't be doing.

[Tyler]

I measured the PP with a real return (including inflation) that was down a little more than 18%. Yes, that's the worst year I have on record since 1970. That may not sound very good until you realize that it was still in the top third of all portfolio options and still quite tame compared to other all-time worst cases. Pain is relative, and it was a tough year for everyone.

More here: Learning the Hard Way: 2022 Portfolio Rankings

[Smith1776]

Another great article dropped my Tyler!

[Mark Leavy]

...
Pain is relative, and it was a tough year for everyone.

Thank you Tyler. Excellent as always.
2022 was the only year since 1989 that had negative returns for both equities and bonds.

Equity and Bond Scatter Plot.png (201.89 KiB) Viewed 10545 times

[Tortoise]

2022 was the only year since 1989 that had negative returns for both equities and bonds.

Equity and Bond Scatter Plot.png

Interesting chart, thanks Mark! I found a similar one on this page that goes back even farther, to 1929.

The only years since 1929 in which stocks and bonds both had a negative annual return were 1931, 1941, 1969, and 2022.

[Dieter]

I measured the PP with a real return (including inflation) that was down a little more than 18%. Yes, that's the worst year I have on record since 1970. That may not sound very good until you realize that it was still in the top third of all portfolio options and still quite tame compared to other all-time worst cases. Pain is relative, and it was a tough year for everyone.

More here: Learning the Hard Way: 2022 Portfolio Rankings

Excellent — thanks

Got me thinking again about maybe 5% in commodities, but, likely not enough and too late for that this market cycle

[ochotona]

Back in 2019, BetterBuyAndHold.com forecast a worst-case "currentized" drawdown of the HBPP of -19.1%.

Well... they were just about right!

https://betterbuyandhold.com/buy-hold-b ... trategies/

disclosure: I am a paid subscriber

[johnnywitt]

Gold is almost flat for the year ..down less than 1% on gld .

On the other hand tlt got smashed , down 32% including interest ….and shy down over 3%

SHY ain't part if a HBPP: a real T-Bill Ladder is, but BIL will do in a pinch.

This is true but shy does tend to outperform cash ..in fact even with the drop it has still outperformed t bills the last 5 and 10 years

In the interest of not being a hypocrite, I'm moving from 1 yr Bills to 50/50 3mo Bills & 2yr Notes this month. I think, for me, this strikes a pretty good balance of having liquidity & some gain on your Cash. I guess I will no longer have a true blue HBPP if I do, in fact, proceed with this move.
Then again, HB said the equity portion was to be S&P 500: he didn't say anything about a Total Stock Market equity position, if I recall. That came from Rowland & Med. Tex., just like mixing in all, or part STT in the HBPP. Maybe I'm wrong though.

[yankees60]

Gold is almost flat for the year ..down less than 1% on gld .

On the other hand tlt got smashed , down 32% including interest ….and shy down over 3%

SHY ain't part if a HBPP: a real T-Bill Ladder is, but BIL will do in a pinch.

This is true but shy does tend to outperform cash ..in fact even with the drop it has still outperformed t bills the last 5 and 10 years

In the interest of not being a hypocrite, I'm moving from 1 yr Bills to 50/50 3mo Bills & 2yr Notes this month. I think, for me, this strikes a pretty good balance of having liquidity & some gain on your Cash. I guess I will no longer have a true blue HBPP if I do, in fact, proceed with this move.
Then again, HB said the equity portion was to be S&P 500: he didn't say anything about a Total Stock Market equity position, if I recall. That came from Rowland & Med. Tex., just like mixing in all, or part STT in the HBPP. Maybe I'm wrong though.

I think you are correct. At the time the book was written did either exist? My memory says he was saying invest in large growth funds?

[ppnewbie]

I believe Portfolio Visualizer shows that VTI and VOO track each other very closely.

[mathjak107]

Most of the time under 1% difference.
The 10 year returns are separated by less then half a point , maybe even closer to a third of a point

[johnnywitt]

Gold is almost flat for the year ..down less than 1% on gld .

On the other hand tlt got smashed , down 32% including interest ….and shy down over 3%

SHY ain't part if a HBPP: a real T-Bill Ladder is, but BIL will do in a pinch.

This is true but shy does tend to outperform cash ..in fact even with the drop it has still outperformed t bills the last 5 and 10 years

In the interest of not being a hypocrite, I'm moving from 1 yr Bills to 50/50 3mo Bills & 2yr Notes this month. I think, for me, this strikes a pretty good balance of having liquidity & some gain on your Cash. I guess I will no longer have a true blue HBPP if I do, in fact, proceed with this move.
Then again, HB said the equity portion was to be S&P 500: he didn't say anything about a Total Stock Market equity position, if I recall. That came from Rowland & Med. Tex., just like mixing in all, or part STT in the HBPP. Maybe I'm wrong though.

I think you are correct. At the time the book was written did either exist? My memory says he was saying invest in large growth funds?

Yes, he recommended some no load mutual funds that were growth and one that was value. He said to buy 3 funds that were all large cap.

[ppnewbie]

Just checked my one year return for my GB-ish is down 1.8 percent.