Very neat long-term backtesting site

[clacy]

Found this from a post on another site.....

http://www.longtermreturns.com/p/histor ... _1__10yr_1

[Kel]

Thanks Clacy - great site - ran across the  risk-averse strategy where he suggested something like 15% in US stocks, 10% in international stocks, and 75% in bonds and CDs. Here's how such a strategy would have performed over the past 40 years: http://www.longtermreturns.com/p/histor ... 0__10yr_75

I entered a version of that into simba's spreedsheet and it was pretty impressive with slight better returns than the permanent porfolio but downside SD was comparable for 1985 thru 2011 time frame.

[frugal]

HB PP is still the best
HB PP is still the best
HB PP is still the best
HB PP is still the best
HB PP is still the best

[Kel]

furgality - why do you say that - (there's no smiley with horns)

[frugal]

furgality - why do you say that - (there's no smiley with horns)

I didnt find any better portfolio. Did you?

Regards

[Pointedstick]

furgality - why do you say that - (there's no smiley with horns)

I didnt find any better portfolio. Did you?

Regards

The PP isn't perfect for everyone. I happen to find that it helps me achieve my goals better than any other one I've found, but my goals are very conservative. Someone with a higher appetite for risk tolerance could easily construct a portfolio with a higher CAGR. Heck, it would be as easy as taking the PP, removing cash, and substituting small-cap stocks for the total market allocation. It wouldn't be a PP anymore, but it would still be informed by Harry Browne's thinking, of course. Here's how it would fare (the regular PP is portfolio A, the one outlined above is portfolio B):

[Gumby]

The site seems to make the backtesting graphs look extremely smooth. If you had a much higher resolution — say day-to-day or even month-to-month — every portfolio would look far more erratic. For most people, it's the erratic movements between the shown data points that tends to throw people off their game. Combine that with constant media bombardment and you can see why typical investing isn't so easy.

For instance, here is my monthly backtest for the PP (inflation-adjusted) — up to 2011, as I haven't updated it in awhile.

[align=center][/align]

Notice the increased volatility? While the backtesting site is certainly helpful, I don't think it's a realistic view of what it's like to own one of those backtested portfolios.

[frugal]

furgality - why do you say that - (there's no smiley with horns)

I didnt find any better portfolio. Did you?

Regards

The PP isn't perfect for everyone. I happen to find that it helps me achieve my goals better than any other one I've found, but my goals are very conservative. Someone with a higher appetite for risk tolerance could easily construct a portfolio with a higher CAGR. Heck, it would be as easy as taking the PP, removing cash, and substituting small-cap stocks for the total market allocation. It wouldn't be a PP anymore, but it would still be informed by Harry Browne's thinking, of course. Here's how it would fare (the regular PP is portfolio A, the one outlined above is portfolio B):

Big PS,

and for your hard earned money you can see it losing 40% ?

If you are talking about some small amount of money there is no problem, but for years and years of savings it seems CRAZY, and most people ARE :-)

Maybe they never faced that DD.

That is to be used as VP, HB teached us greatly!

And for active daytrading do you have any strategy?


Regards

[Pointedstick]

Big PS,

and for your hard earned money you can see it losing 40% ?

I certainly hope it doesn't, and that's why the PP appeals to me, but anything can happen. Maybe it will turn out that 40% of my money that's with a particular broker is overseen by a crook with political connections to the president who steals it but goes unpunished (coughMFGlobalcough). I hope for the best, prepare for the worst, and expect that nothing is guaranteed.

And for active daytrading do you have any strategy?

No, absolutely not! I have no interest in day-trading. I can think of many, many preferable day jobs than buying and selling stocks.

[frugal]

Big PS,

and for your hard earned money you can see it losing 40% ?

I certainly hope it doesn't, and that's why the PP appeals to me, but anything can happen. Maybe it will turn out that 40% of my money that's with a particular broker is overseen by a crook with political connections to the president who steals it but goes unpunished (coughMFGlobalcough). I hope for the best, prepare for the worst, and expect that nothing is guaranteed.


IF PP HAS A DD OF 30% IT WILL BE HARD TO HANG ON TO IT AND REBALANCE, THAT'S THE MOST BIG ISSUE I FORSEE

And for active daytrading do you have any strategy?

No, absolutely not! I have no interest in day-trading. I can think of many, many preferable day jobs than buying and selling stocks.

JUST CURIOSITY, TELL ME SOME

[Pointedstick]

Big PS,

and for your hard earned money you can see it losing 40% ?

I certainly hope it doesn't, and that's why the PP appeals to me, but anything can happen. Maybe it will turn out that 40% of my money that's with a particular broker is overseen by a crook with political connections to the president who steals it but goes unpunished (coughMFGlobalcough). I hope for the best, prepare for the worst, and expect that nothing is guaranteed.

IF PP HAS A DD OF 30% IT WILL BE HARD TO HANG ON TO IT AND REBALANCE, THAT'S THE MOST BIG ISSUE I FORSEE

It will? I don't think so. If the PP falls 30%, that implies that one asset has gone to zero, or all assets have fallen 30%, or something in between. If something that disastrous is happening, the economy is probably in very bad shape. I'm willing to bet that all other portfolios are doing even worse and people are running around terrified, trying to sell ASAP. Sounds like a great opportunity to buy some more assets at rock-bottom prices!

And for active daytrading do you have any strategy?

No, absolutely not! I have no interest in day-trading. I can think of many, many preferable day jobs than buying and selling stocks.

JUST CURIOSITY, TELL ME SOME

I'm afraid I can't tell you what I don't know. Day trading really is something that holds zero interest for me, so I'm not really very interested in learning more about how to do it. I just don't have the right appetite for risk to enjoy it, and it sounds like you don't either if you're fretting over a 30% drawdown.

[MachineGhost]

It will? I don't think so. If the PP falls 30%, that implies that one asset has gone to zero, or all assets have fallen 30%, or something in between. If something that disastrous is happening, the economy is probably in very bad shape. I'm willing to bet that all other portfolios are doing even worse and people are running around terrified, trying to sell ASAP. Sounds like a great opportunity to buy some more assets at rock-bottom prices!

That's true, but in a situation like that it is "he who loses the least, wins".  So keeping your capital intact is part and parcel of being able to buy at rock-bottom prices.  1980 is very instructive on what actions should be taken.

[HB Reader]

The site seems to make the backtesting graphs look extremely smooth. If you had a much higher resolution — say day-to-day or even month-to-month — every portfolio would look far more erratic. For most people, it's the erratic movements between the shown data points that tends to throw people off their game. Combine that with constant media bombardment and you can see why typical investing isn't so easy.

For instance, here is my monthly backtest for the PP (inflation-adjusted) — up to 2011, as I haven't updated it in awhile.

[align=center][/align]

Notice the increased volatility? While the backtesting site is certainly helpful, I don't think it's a realistic view of what it's like to own one of those backtested portfolios.

Gumby --

As I mentioned in a much earlier post, this is a great chart.  If it isn't too much work, I would love to see it updated through the end of 2012.

Wish List:  It would be great to also have a 80/20 (stock/cash) or 60/40 (stock/bond) component included, athough that might complicate the chart and explanation box a bit.  Even most longterm stock bulls would agree investors/savers should have some significant cash or ST bond component in their holdings for unexpected contingencies.  The substantial and elegant way in which this neccessary element is fully integrated into the overall PP design is often overlooked (as opposed to the usual "have a three or six month reserve" set aside).  In other words, cash provides more than just portfolio stability and ammunition to pick up occasional rebalancing bargains -- it provides immediately accessible protection for real world emergencies. To me, this would provide realistic and integrated "apples to apples" comparisons of the true situations in which most portfolio holders/savers find themselves.  Just a thought.       

[ngcpa]

Here is another backtesting site:

http://backtest.org/

Norm