Re: The tech-dumbell portfolio
Posted: Mon Apr 06, 2020 7:07 am
Permanent Portfolio Forum
https://www.gyroscopicinvesting.com/forum/
https://www.gyroscopicinvesting.com/forum/viewtopic.php?t=10569
And some long bonds.WhiteElephant wrote: ↑Mon Apr 06, 2020 10:45 am Oh man, my hands are itching to 'optimize' that chart by adding some stocks and/or bonds![]()
Not doing it!
i agree .... far to risky and certainly in our case would never have given us the growth we needed to retire .fireplan wrote: ↑Sun Mar 29, 2020 6:40 amNo doubt there are periods when this portfolio will do quite well, and the next 10-20 years could very well be one of them, but...Libertarian666 wrote: ↑Sat Mar 28, 2020 8:45 am 2/3rd actual physical gold (geographically diverse)
1/3rd US T-Bills
Comments?
If you plug this into portfoliocharts.com, this portfolio is impressive in the fact that it comes out dead last or second to last in every metric! Gold makes a great diversifier to balance the gyroscope, but gold can also have decades of negative performance, so a portfolio with 2/3rds gold and no equities or LTTs is highly unbalanced and thus very risky on a long term basis.
For me, as an early retiree, I find the perpetual withdrawal rate (PWR) of a portfolio to be the best measure of the risk vs reward of that portfolio, as it encapsulates the long term CAGR, volatility, length and depth of drawdowns, all into a single metric that directly corresponds to expected lifetime income from the investment.
A portfolio of 2/3rds gold and 1/3rd US T-Bills has a historical PWR (out to 40 years) of only 0.3%, meaning you would need a $10 million portfolio just to harvest $30k a year from it. In comparison, a total stock market portfolio, which sounds very risky in comparison, has a 3.6% PWR at 40 years, which makes it 12x less risky by this metric.
If you could increase your assets 100% by what corresponding percentage would you increase your spending?mathjak107 wrote: ↑Tue May 05, 2020 1:46 pm Personally I didn’t work a lifetime and scrimp ,Save and invest just so I can draw peanuts out of it in the last down of our lives ...quite frankly any draw less than 3.50% or so would be inefficient use of money I could be enjoying . As it is a 4% swr left you with more than you started 90% of the 120 30 year cycles we had to date.
We are retired but if we could double our assets I would simply enjoy spending that much more
yankees60 wrote: ↑Tue May 05, 2020 7:47 pmIf you could increase your assets 100% by what corresponding percentage would you increase your spending?mathjak107 wrote: ↑Tue May 05, 2020 1:46 pm Personally I didn’t work a lifetime and scrimp ,Save and invest just so I can draw peanuts out of it in the last down of our lives ...quite frankly any draw less than 3.50% or so would be inefficient use of money I could be enjoying . As it is a 4% swr left you with more than you started 90% of the 120 30 year cycles we had to date.
We are retired but if we could double our assets I would simply enjoy spending that much more
For me I'd say zero % because I got to the amount of assets I have by being extremely frugal. It's my DNA. To buy a lot of things I never have (while easily affording to) goes against all my ways.
Vinny
I am the ultimate security seeking personality so there is never too much. Plus, how would deal with this one?mathjak107 wrote: ↑Wed May 06, 2020 4:04 amyankees60 wrote: ↑Tue May 05, 2020 7:47 pmIf you could increase your assets 100% by what corresponding percentage would you increase your spending?mathjak107 wrote: ↑Tue May 05, 2020 1:46 pm Personally I didn’t work a lifetime and scrimp ,Save and invest just so I can draw peanuts out of it in the last down of our lives ...quite frankly any draw less than 3.50% or so would be inefficient use of money I could be enjoying . As it is a 4% swr left you with more than you started 90% of the 120 30 year cycles we had to date.
We are retired but if we could double our assets I would simply enjoy spending that much more
For me I'd say zero % because I got to the amount of assets I have by being extremely frugal. It's my DNA. To buy a lot of things I never have (while easily affording to) goes against all my ways.
Vinny
i sure would increase spending likely proportionately ... our want to do list is longer than our funds are ... if we couldnt find things to spend it on for ourselves , well we have 6 grand kids .
i have no desire to die with the biggest pile nor did i work , save and do without many times trying to get the retirement pile as big as we could , just to look at it
It's possible for me in my frugal lifestyle to actually live off the social security which I will finally have to start collecting next year. Therefore, a large portion of my portfolio could be viewed as a huge self-insured medical insurance policy for some great procedure that would have to be self-paid.mathjak107 wrote: ↑Wed May 06, 2020 9:01 am just maintaining a 4% inflation adjusted draw off the balance for 30 years generally leaves a lot not spent regardless of amount .
we had 120 actual 30 year retirement cycles to date ...
with 50/50 to 60/40
90% of the time it left you with more than you started , 67% of the time you were left with 2x what you started , 50% of the time it left you with 3x what you started ...in fact the odds of failure are the same odds as ending with 6x what you started with .
so even sticking to 4% of your balance has in my opinion way to much most likely left for even the odds of living longer.
certainly raises would be in order along the way .
Wow, I didn't know that we had 360 years of retirement data!mathjak107 wrote: ↑Wed May 06, 2020 9:01 am just maintaining a 4% inflation adjusted draw off the balance for 30 years generally leaves a lot not spent regardless of amount .
we had 120 actual 30 year retirement cycles to date ...
with 50/50 to 60/40
90% of the time it left you with more than you started , 67% of the time you were left with 2x what you started , 50% of the time it left you with 3x what you started ...in fact the odds of failure are the same odds as ending with 6x what you started with .
so even sticking to 4% of your balance has in my opinion way to much most likely left for even the odds of living longer.
certainly raises would be in order along the way .
It's not 360 years. It is 120 rolling years....1990 to 2019 would be one, 1989 to 2018 would be another and so on.Libertarian666 wrote: ↑Wed May 06, 2020 10:25 amWow, I didn't know that we had 360 years of retirement data!mathjak107 wrote: ↑Wed May 06, 2020 9:01 am just maintaining a 4% inflation adjusted draw off the balance for 30 years generally leaves a lot not spent regardless of amount .
we had 120 actual 30 year retirement cycles to date ...
with 50/50 to 60/40
90% of the time it left you with more than you started , 67% of the time you were left with 2x what you started , 50% of the time it left you with 3x what you started ...in fact the odds of failure are the same odds as ending with 6x what you started with .
so even sticking to 4% of your balance has in my opinion way to much most likely left for even the odds of living longer.
certainly raises would be in order along the way .
In other words, you are reusing the same data, not independent data.yankees60 wrote: ↑Wed May 06, 2020 10:47 amIt's not 360 years. It is 120 rolling years....1990 to 2019 would be one, 1989 to 2018 would be another and so on.Libertarian666 wrote: ↑Wed May 06, 2020 10:25 amWow, I didn't know that we had 360 years of retirement data!mathjak107 wrote: ↑Wed May 06, 2020 9:01 am just maintaining a 4% inflation adjusted draw off the balance for 30 years generally leaves a lot not spent regardless of amount .
we had 120 actual 30 year retirement cycles to date ...
with 50/50 to 60/40
90% of the time it left you with more than you started , 67% of the time you were left with 2x what you started , 50% of the time it left you with 3x what you started ...in fact the odds of failure are the same odds as ending with 6x what you started with .
so even sticking to 4% of your balance has in my opinion way to much most likely left for even the odds of living longer.
certainly raises would be in order along the way .
Vinny
Not me. Mathjak. And, yes, that is a common criticism of using rolling data in this way.Libertarian666 wrote: ↑Wed May 06, 2020 10:53 amIn other words, you are reusing the same data, not independent data.yankees60 wrote: ↑Wed May 06, 2020 10:47 amIt's not 360 years. It is 120 rolling years....1990 to 2019 would be one, 1989 to 2018 would be another and so on.Libertarian666 wrote: ↑Wed May 06, 2020 10:25 amWow, I didn't know that we had 360 years of retirement data!mathjak107 wrote: ↑Wed May 06, 2020 9:01 am just maintaining a 4% inflation adjusted draw off the balance for 30 years generally leaves a lot not spent regardless of amount .
we had 120 actual 30 year retirement cycles to date ...
with 50/50 to 60/40
90% of the time it left you with more than you started , 67% of the time you were left with 2x what you started , 50% of the time it left you with 3x what you started ...in fact the odds of failure are the same odds as ending with 6x what you started with .
so even sticking to 4% of your balance has in my opinion way to much most likely left for even the odds of living longer.
certainly raises would be in order along the way .
Vinny
This greatly reduces the value of the analysis.
It does not reduce the value of the analysis at all. It is important to look at every possible start and end year. You average them together to get a more accurate picture. This is exactly how Tyler does the analysis on his website. It's an angle that most people fail to look at, and it holds a lot of value to take rolling periods into account on top of just absolute returns from some arbitrary start and end date.Libertarian666 wrote: ↑Wed May 06, 2020 10:53 amIn other words, you are reusing the same data, not independent data.yankees60 wrote: ↑Wed May 06, 2020 10:47 amIt's not 360 years. It is 120 rolling years....1990 to 2019 would be one, 1989 to 2018 would be another and so on.Libertarian666 wrote: ↑Wed May 06, 2020 10:25 amWow, I didn't know that we had 360 years of retirement data!mathjak107 wrote: ↑Wed May 06, 2020 9:01 am just maintaining a 4% inflation adjusted draw off the balance for 30 years generally leaves a lot not spent regardless of amount .
we had 120 actual 30 year retirement cycles to date ...
with 50/50 to 60/40
90% of the time it left you with more than you started , 67% of the time you were left with 2x what you started , 50% of the time it left you with 3x what you started ...in fact the odds of failure are the same odds as ending with 6x what you started with .
so even sticking to 4% of your balance has in my opinion way to much most likely left for even the odds of living longer.
certainly raises would be in order along the way .
Vinny
This greatly reduces the value of the analysis.
You don't agree that a set of totally independent data points are going to be more valid than an equal number of data points that have significant overlaps between those data points?pmward wrote: ↑Wed May 06, 2020 11:38 amIt does not reduce the value of the analysis at all. It is important to look at every possible start and end year. You average them together to get a more accurate picture. This is exactly how Tyler does the analysis on his website. It's an angle that most people fail to look at, and it holds a lot of value to take rolling periods into account on top of just absolute returns from some arbitrary start and end date.Libertarian666 wrote: ↑Wed May 06, 2020 10:53 amIn other words, you are reusing the same data, not independent data.yankees60 wrote: ↑Wed May 06, 2020 10:47 amIt's not 360 years. It is 120 rolling years....1990 to 2019 would be one, 1989 to 2018 would be another and so on.Libertarian666 wrote: ↑Wed May 06, 2020 10:25 amWow, I didn't know that we had 360 years of retirement data!mathjak107 wrote: ↑Wed May 06, 2020 9:01 am just maintaining a 4% inflation adjusted draw off the balance for 30 years generally leaves a lot not spent regardless of amount .
we had 120 actual 30 year retirement cycles to date ...
with 50/50 to 60/40
90% of the time it left you with more than you started , 67% of the time you were left with 2x what you started , 50% of the time it left you with 3x what you started ...in fact the odds of failure are the same odds as ending with 6x what you started with .
so even sticking to 4% of your balance has in my opinion way to much most likely left for even the odds of living longer.
certainly raises would be in order along the way .
Vinny
This greatly reduces the value of the analysis.
I think they both have value. One gives you a nice average of time periods, like Tyler uses. The other gives you independent time frames to analyze. There is nothing wrong with either, and it's good to look at both, imo. Both have their biases. Both have their strengths and weaknesses. Both ways are simply clues, small puzzle pieces that form the whole picture.yankees60 wrote: ↑Wed May 06, 2020 11:43 amYou don't agree that a set of totally independent data points are going to be more valid than an equal number of data points that have significant overlaps between those data points?pmward wrote: ↑Wed May 06, 2020 11:38 amIt does not reduce the value of the analysis at all. It is important to look at every possible start and end year. You average them together to get a more accurate picture. This is exactly how Tyler does the analysis on his website. It's an angle that most people fail to look at, and it holds a lot of value to take rolling periods into account on top of just absolute returns from some arbitrary start and end date.Libertarian666 wrote: ↑Wed May 06, 2020 10:53 amIn other words, you are reusing the same data, not independent data.yankees60 wrote: ↑Wed May 06, 2020 10:47 amIt's not 360 years. It is 120 rolling years....1990 to 2019 would be one, 1989 to 2018 would be another and so on.Libertarian666 wrote: ↑Wed May 06, 2020 10:25 amWow, I didn't know that we had 360 years of retirement data!mathjak107 wrote: ↑Wed May 06, 2020 9:01 am just maintaining a 4% inflation adjusted draw off the balance for 30 years generally leaves a lot not spent regardless of amount .
we had 120 actual 30 year retirement cycles to date ...
with 50/50 to 60/40
90% of the time it left you with more than you started , 67% of the time you were left with 2x what you started , 50% of the time it left you with 3x what you started ...in fact the odds of failure are the same odds as ending with 6x what you started with .
so even sticking to 4% of your balance has in my opinion way to much most likely left for even the odds of living longer.
certainly raises would be in order along the way .
Vinny
This greatly reduces the value of the analysis.
Vinny
yes it is 120 - rolling 30 year cyclesyankees60 wrote: ↑Wed May 06, 2020 10:47 amIt's not 360 years. It is 120 rolling years....1990 to 2019 would be one, 1989 to 2018 would be another and so on.Libertarian666 wrote: ↑Wed May 06, 2020 10:25 amWow, I didn't know that we had 360 years of retirement data!mathjak107 wrote: ↑Wed May 06, 2020 9:01 am just maintaining a 4% inflation adjusted draw off the balance for 30 years generally leaves a lot not spent regardless of amount .
we had 120 actual 30 year retirement cycles to date ...
with 50/50 to 60/40
90% of the time it left you with more than you started , 67% of the time you were left with 2x what you started , 50% of the time it left you with 3x what you started ...in fact the odds of failure are the same odds as ending with 6x what you started with .
so even sticking to 4% of your balance has in my opinion way to much most likely left for even the odds of living longer.
certainly raises would be in order along the way .
Vinny
all we are really interested in is the worst time frames retirees have hit ... 1907,1929,1937 , 1965 ,1966 were the worst on record and the poster children for the worst outcomes and the time frames safe withdrawal rates were based on .....pmward wrote: ↑Wed May 06, 2020 11:45 amI think they both have value. One gives you a nice average of time periods, like Tyler uses. The other gives you independent time frames to analyze. There is nothing wrong with either, and it's good to look at both, imo. Both have their biases. Both have their strengths and weaknesses. Both ways are simply clues, small puzzle pieces that form the whole picture.yankees60 wrote: ↑Wed May 06, 2020 11:43 amYou don't agree that a set of totally independent data points are going to be more valid than an equal number of data points that have significant overlaps between those data points?pmward wrote: ↑Wed May 06, 2020 11:38 amIt does not reduce the value of the analysis at all. It is important to look at every possible start and end year. You average them together to get a more accurate picture. This is exactly how Tyler does the analysis on his website. It's an angle that most people fail to look at, and it holds a lot of value to take rolling periods into account on top of just absolute returns from some arbitrary start and end date.Libertarian666 wrote: ↑Wed May 06, 2020 10:53 amIn other words, you are reusing the same data, not independent data.yankees60 wrote: ↑Wed May 06, 2020 10:47 amIt's not 360 years. It is 120 rolling years....1990 to 2019 would be one, 1989 to 2018 would be another and so on.Libertarian666 wrote: ↑Wed May 06, 2020 10:25 amWow, I didn't know that we had 360 years of retirement data!mathjak107 wrote: ↑Wed May 06, 2020 9:01 am just maintaining a 4% inflation adjusted draw off the balance for 30 years generally leaves a lot not spent regardless of amount .
we had 120 actual 30 year retirement cycles to date ...
with 50/50 to 60/40
90% of the time it left you with more than you started , 67% of the time you were left with 2x what you started , 50% of the time it left you with 3x what you started ...in fact the odds of failure are the same odds as ending with 6x what you started with .
so even sticking to 4% of your balance has in my opinion way to much most likely left for even the odds of living longer.
certainly raises would be in order along the way .
Vinny
This greatly reduces the value of the analysis.
Vinny
no , because thanks to kitces doing the numbers crunching all we need to know is the math behind the failures ..they all failed for the same reason mathematicallyyankees60 wrote: ↑Wed May 06, 2020 11:43 amYou don't agree that a set of totally independent data points are going to be more valid than an equal number of data points that have significant overlaps between those data points?pmward wrote: ↑Wed May 06, 2020 11:38 amIt does not reduce the value of the analysis at all. It is important to look at every possible start and end year. You average them together to get a more accurate picture. This is exactly how Tyler does the analysis on his website. It's an angle that most people fail to look at, and it holds a lot of value to take rolling periods into account on top of just absolute returns from some arbitrary start and end date.Libertarian666 wrote: ↑Wed May 06, 2020 10:53 amIn other words, you are reusing the same data, not independent data.yankees60 wrote: ↑Wed May 06, 2020 10:47 amIt's not 360 years. It is 120 rolling years....1990 to 2019 would be one, 1989 to 2018 would be another and so on.Libertarian666 wrote: ↑Wed May 06, 2020 10:25 amWow, I didn't know that we had 360 years of retirement data!mathjak107 wrote: ↑Wed May 06, 2020 9:01 am just maintaining a 4% inflation adjusted draw off the balance for 30 years generally leaves a lot not spent regardless of amount .
we had 120 actual 30 year retirement cycles to date ...
with 50/50 to 60/40
90% of the time it left you with more than you started , 67% of the time you were left with 2x what you started , 50% of the time it left you with 3x what you started ...in fact the odds of failure are the same odds as ending with 6x what you started with .
so even sticking to 4% of your balance has in my opinion way to much most likely left for even the odds of living longer.
certainly raises would be in order along the way .
Vinny
This greatly reduces the value of the analysis.
Vinny
to take it a step further , not only does what happens before and after the time frame you are looking at matter but so does how much you have invested at the time matter .pmward wrote: ↑Wed May 06, 2020 11:38 amIt does not reduce the value of the analysis at all. It is important to look at every possible start and end year. You average them together to get a more accurate picture. This is exactly how Tyler does the analysis on his website. It's an angle that most people fail to look at, and it holds a lot of value to take rolling periods into account on top of just absolute returns from some arbitrary start and end date.Libertarian666 wrote: ↑Wed May 06, 2020 10:53 amIn other words, you are reusing the same data, not independent data.yankees60 wrote: ↑Wed May 06, 2020 10:47 amIt's not 360 years. It is 120 rolling years....1990 to 2019 would be one, 1989 to 2018 would be another and so on.Libertarian666 wrote: ↑Wed May 06, 2020 10:25 amWow, I didn't know that we had 360 years of retirement data!mathjak107 wrote: ↑Wed May 06, 2020 9:01 am just maintaining a 4% inflation adjusted draw off the balance for 30 years generally leaves a lot not spent regardless of amount .
we had 120 actual 30 year retirement cycles to date ...
with 50/50 to 60/40
90% of the time it left you with more than you started , 67% of the time you were left with 2x what you started , 50% of the time it left you with 3x what you started ...in fact the odds of failure are the same odds as ending with 6x what you started with .
so even sticking to 4% of your balance has in my opinion way to much most likely left for even the odds of living longer.
certainly raises would be in order along the way .
Vinny
This greatly reduces the value of the analysis.