Gyroscopic Investing

Or how about a hybrid of 50% cash and 50% Wellesley for the 25% cash portion? This would probably yield a greater return than the regular PP, and would still allow for a sizeable amount of stabilizing cash.

Does anyone have backtesting numbers for something like this?

Reub, without some big interest for cash it would underperform PP and be a little more volatile.  Although the worst year end was -9.84.  In the last 13 years vwinx has averaged 7.9 and pp 7.3. We need the long bonds and gold to deliver the lower volatility and add returns considering the S&P has underperformed pp by 1.8 annually for the last 13 years

I think that I wasn't clear enough. I am proposing a hybrid for the 25% cash portion of the portfolio only, half in cash and half in VWINX. The gold, LTT's, and stocks would also contribute 25% each to the overall portfolio, just as the HBPP calls for.

My fault Reub, I did not pay close enough attention, Ozzy and I are close to that but a little more aggressive with all our cash in vwinx but that would be another option.  I have some cash outside my vp version so I am being a little more aggressive since I have about 13 years to go.

You might also look at VWELX.  Not so much for the cash portion of the PP, but for your VP or in a 401k or other retirement account where you can't replicate a PP.  Larger allocation to stocks than VWINX, with slightly higher returns over time.  Both are good "set it and forget it" funds, with low expense ratios of 25/26bp.  If you can swing the Admiral shares minimum purchase of $50K, expenses drop to 18bp for each.  That makes these arguably the cheapest actively managed funds out there.

Rocketdog - thanks for your feedback.  I have looked at VWELX and its a good fund, in fact it was on my shortlist when I decided to abandon the cash portion.  Ultimately I went with VWINX because it held up much better in the 2008 meltdown.  VWINX was only down -9%, while VWELX was down -22%.  Also VWELX only returns a tiny bit more than VWINX (about 0.75%) so not worth it for me.

The one thing I'm going to do during by next rebalance is add some SmallCap to my Juicy PP because its currently LargeCap heavy.  I'm going to reduce VTI to 15%, and add 5% IWM.

You're not restricted from owning both VWINX and VWELX, don't forget.  You can mix and match them to get the blend you want: heavier on VWELX while you're young, then gradually shifting more and more into VWINX as retirement approaches.  Just a thought. 

Hey Ozzy
  Give us an update on your current holdings in the Juicy variable permanent portfolio and let us know how it is doing now that we are more than half way through with 2014.  Thanks

Hi fishdrzig,

I'm very pleased with the JuicyPP performance YTD, its up 7.3%, here's the details: 




Almost identical to the PurePP performance YTD which is up 7.2%.

Happy New Year all!

I've updated my Juicy Portfolio website with the Year 2014 results.  It returned +9.45%.  I'm happy.

http://www.tightwadweb.com/customportfolio.html

I wish you all a prosperous 2015!
-Ozzy

Substituting VWINX or it's richer brother VWIAX straight up for the 25% cash portion of the HBPP brings the return to just over 11% for the year.

That's true Reub.  And that's initially what I set out to do.  Nothing wrong with that approach.  Its simple, and my backtesting shows it delivered a 10.29% CAGR from 1971, with only 3 small negative years, the worst was in 1981, it was down only -6.94%.  Its a damn good portfolio.

However, for myself, I don’t like the large concentration in VWINX, and my Juicy portfolio does a little better anyway, 10.98% CAGR.

I guess I like to tinker too much 

Hey Ozzy
  Just out of curiosity why didn't you include REITS or TIPS?
I have a modified portfolio similar to yours and will be finalizing it today so will post it later.

Hi Fish,

If you peruse this forum you'll find we don’t like TIPS.  They don't add any value to the portfolio.  I think CraigR said it best "buying TIPS is like buying arson insurance from an arsonist".  As for REITs, I don't see the value there either.  I already own all the REITs as part of my total stock market allocation.  A REIT stock is still a stock, and it correlates to the total stock market pretty closely.

On a separate note, I'm currently debating abandoning the VWINX from my Juicy Portfolio.  VWINX seems quite sluggish compared to the ETFs.  After doing more backtesting, here's the allocation I may be implementing at year-end (I only touch my portfolio once a year at rebalancing time):

IAU 15%
IEFA 15%
TLT 33%
IJR 10%
IJH 15%
VTI 12%

Its basically a cash-free stock-heavy PP.  Its performed very well, 10.97% CAGR from 1971-2014.

Hello Ozzy

Wow, surprised to hear you are giving up the VWINX fund.  Here is what I have decided to go with for my portfolio:

VWENX
IAU
EDV
VIOO
IVOO
VSS                                    The percentages come out to be about 50% stocks, 35% bonds, 15% gold

Hey Ozzy

How did the Juicy Portfolio do against a traditional HPP last year?
Any way you can run/backtest your portfolio against HPP for as far back as you can?
At least for me this would be a helpful comparison.  Thank you

Hi Fish,

I’ve updated my JuicyP website, it’s all ETFs now.  I dollar cost average in monthly so I’m only adding to the ETFs and will sell my remaining VWINX at year-end rebalance time. 

Yes my JuicyP outperforms the pure PP (that’s the point), but it’s not really a fair comparison because my portfolio has no cash-drag.  A more comparable benchmark would be a balanced Boglehead fund like VWELX.  My website has that comparison. 

If you’re interested in doing backtesting of various ETFs/mutual funds/portfolios, I recommend these 2 free tools: 

http://ezbacktest.blogspot.com

https://www.portfoliovisualizer.com/backtest-portfolio

ozzy wrote: Hi Fish,

I’ve updated my JuicyP website, it’s all ETFs now.  I dollar cost average in monthly so I’m only adding to the ETFs and will sell my remaining VWINX at year-end rebalance time. 

Yes my JuicyP outperforms the pure PP (that’s the point), but it’s not really a fair comparison because my portfolio has no cash-drag.  A more comparable benchmark would be a balanced Boglehead fund like VWELX.  My website has that comparison. 

If you’re interested in doing backtesting of various ETFs/mutual funds/portfolios, I recommend these 2 free tools: 

http://ezbacktest.blogspot.com

https://www.portfoliovisualizer.com/backtest-portfolio

More important question is how a no-cash portfolio deals with down/deflationary years.