Gyroscopic Investing

That's fine.

One should not assume that a SWR calculated since 1972 would still hold up in all timeframes before that.  Just as one should not assume that a SWR calculated since 1926 would still hold up in all timeframes before that.  One should also not assume that either can accurately predict the future.

And one should not assume that a SWR calculated for a bucket of stocks and bonds not representative of the portfolio they actually hold applies to them no matter how far back the study goes. 

as usual good chatting .  going off to the gym for a while . c-ya later .

Pointedstick wrote: It's a glorious tool. There are all kinds of amazing options out there, like this:

(image here)

5-6% sustainable withdrawal rate!

My favorite PP-like option so far is a simple 5x20 portfolio that adds small cap value stocks as the 5th asset class.  Compared to the PP, the real CAGR is a full 1% higher with the same volatility and an even smaller(!) max single-year drawdown (-9% vs. -12%).  As a result, the long-term withdrawal rates are also about 1% higher.  A 5%+ Sustainable WR is pretty impressive, and the ride is remarkably smooth.

[img width=300]http://s13.postimg.org/lwvqxyzdz/5x20.jpg[/img]

It isn't a perfect analogy, but my hypothesis is that adding SCV to complement the TSM fund (dominated by large caps) sorta extends the barbell concept to stocks.  That helps boost returns without necessarily increasing volatility.  Not bad.  It has me considering shifting the cash in my tax-deferred accounts to SCV to start a small VP. 

with the exception of 2014 the last 6 years had midcaps and small caps beat the s&p 500 by 5 to 6% .  you wouldn't notice it with a total market fund much as the s&p dominates it to the point that you saw less than a 1% difference between an s&p 500 fund  and the a total market fund .


but seasoning with an extended market fund could let you capture more of that action . but the flip side is it can hurt more when things go down .  don't be fooled by the ytd .  they were up more than an s&p 500 fund and fell more  but they had such a big cushion it looks like they barely fell at down 1.40% for vxf

Nice!

I was thinking of buying a small cap fund for my next taxable stock purchase, instead of simply adding to the total stock market index fund.  The idea was to add a bit of volatility to stocks while minimizing yield in taxable.  Small cap value is a great idea and yield still comes in under the total market index.

Tyler, can you add your "Tyler 5x20 PP" to the selections of portfolios in your great website?

Thanks!

PS: Are we supposed to be able to click on Calculator and get anything to happen?  Nothing happens when I do...

Thanks for your great charts and work!

PP67 wrote: Tyler, can you add your "Tyler 5x20 PP" to the selections of portfolios in your great website?

Thanks!

PS: Are we supposed to be able to click on Calculator and get anything to happen?  Nothing happens when I do...

Thanks for your great charts and work!

Good idea.  I'll add it to the list.  But it definitely needs a better name. 

Yes, each calculator page has an embedded excel spreadsheet.  They may take a few seconds to load, and you may occasionally have to refresh.  If nothing shows up at all, you might see if an ad blocker is filtering it out.  If that doesn't work, please PM me with what device/browser you're using so that I can look into any compatability issues.  Thanks!

Food for thought - I use the paul merriman index fund mix (which he calls the ultimate buy and hold portfolio) for my 25% stock portion of the HBPP.  It includes large cap, large cap value, small cap, small cap value and emerging markets, and is roughly 50% US and 50% International.  Here is a link:  http://paulmerriman.com/the-ultimate-bu ... tegy-2014/ and http://paulmerriman.com/vanguard/.  I use the stock only mix.

If one were to buy some SCV, what would be a good fund or etf?

i like the fidelity small cap funds .

That's very nice.

Tyler wrote: My favorite PP-like option so far is a simple 5x20 portfolio that adds small cap value stocks as the 5th asset class.  Compared to the PP, the real CAGR is a full 1% higher with the same volatility and an even smaller(!) max single-year drawdown (-9% vs. -12%).  As a result, the long-term withdrawal rates are also about 1% higher.  A 5%+ Sustainable WR is pretty impressive, and the ride is remarkably smooth.

FYI -- I added a new topic in the VP section discussing the PP variant idea in a lot more detail.

http://gyroscopicinvesting.com/forum/va ... portfolio/

dragoncar wrote: If one were to buy some SCV, what would be a good fund or etf?

VISVX and IWN are two notable options. 

Also VBR. Anything Vanguard I highly recommend.

Pointedstick wrote: It might be useful to have options for determining spending, or even adding of subtracting from inflation to account for people who don't trust CPI. If it could be shown that a given portfolio would survive even if CPI were only half of the supposed real value, for example, that would be a very powerful piece of information to have.

No portfolio survives the actual real rate of inflation.  The only way to get ahead is to accumulate capital faster than everyone else.

The median stock is now more overvalued than at the 2000 peak when just large caps were.  That includes small cap "value".  Don't expect the historical outperformance going forward.