10-ETF or 5-ETF Variable Portfolio

[Odysseusa]

Please let me know what you think about the 10-ETF Variable Portfolio and please offer me your suggestion and feedback. Thank you.


10-ETF Variable Portfolio


10% in IAU = gold
10% in SLV = silver

10% in EMLC = short-term bond
10% in  TLT = long-term bond

10% in IGE = natural resources
10% in IYR = real estate

10% in BKF = BRIC (Brazil, Russia, India, China)
10% in VSS = mid-cap stocks

10% in DGS = small-cap dividend
10% in VBR = small-cap value

[AdamA]

Please let me know what you think about the 10-ETF Variable Portfolio and please offer me your suggestion and feedback. Thank you.


10-ETF Variable Portfolio


10% in IAU = gold
10% in SLV = silver

10% in EMLC = short-term bond
10% in  TLT = long-term bond



10% in IGE = natural resources
10% in IYR = real estate

10% in BKF = BRIC (Brazil, Russia, India, China)
10% in VSS = mid-cap stocks

10% in DGS = small-cap dividend
10% in VBR = small-cap value

Seems kind of random/complicated. 

Can you explain your logic a bit more?

[MediumTex]

Are there rebalancing bands?

Has it been backtested?

Is there some broad economic theory it is attempting to take advantage of?

It just looks like it would have a lot of transaction expenses and the urge to tinker would be almost overwhelming.

What you may have there is a solution that is more complicated than the problem.

[Odysseusa]

I don't trade a lots. What I want is to follow the concept of Permanent Portfolio but I want to spread my money among 10 ETFs; instead of 4 ETFs.


I pay ~ $5 per trade and with 10 ETFs, I generally pay ~ $100 in commission fee per year, ~ 20 trades per year.

[AdamA]

What I want is to follow the concept of Permanent Portfolio... 

Then just follow it.  No need to make it more complicated. 

[MediumTex]

What I want is to follow the concept of Permanent Portfolio... 

Then just follow it.  No need to make it more complicated. 

You will save yourself an ENORMOUS amount of time, frustration and self-doubt by taking the sage advice above.

Don't let the spirit of Rube Goldberg cloud your thinking.

[MediumTex]

Clive,

Subtle.

I like it.

[Odysseusa]

Thank you, Clive.


12.5% GLD gold
12.5% IAU gold
25% TLT bond
8.3% VTI stock
8.3% VTSMX stock

8.4% RSP stock
6.25% SHY bond
6.25% SHV bond
6.25% VFISX bond
6.25% VBMFX bond

[MediumTex]

Wait a second, I thought Clive was joking.

Why do you need 10 ETFs to do what four can very easily accomplish?

I'm not following that.

[Odysseusa]

5-ETF Portfolio Backtest
(Cash, Bond, Gold, Stock, Real Estate)
SHY, TLT, GLD, VTI, VNQ


2011 YTD: +12.7%
2010: +17.3%
2009: +12.3%
2008: -5.7%
2007: +7.4%
2006: +15.7%
2005: +9.2%


Source:
http://www.etfreplay.com/combine.aspx

[Odysseusa]

10% in each ETF below

Gold = GLD
Silver = SLV

Natural Resource= IGE
Real Estate = VNQ

Swiss Franc = FXF
Bond = EMLC

Bond = SHY
Bond = TLT

Stock = VBR (small cap value)
Stock = DGS (emerging market small cap dividend)

[cabronjames]

@Odysseusa,

you probably already know this, but just in case it's helpful,

in Permanent Portfolio lingo:

bond = 30 yr aka "long term" treasury bonds, such as TLT.

cash = literal cash or cash equivalents, including a 1-3 yr short term treasury bond index, such as SHY.  US Savings Bonds' I Bond could be used for this.  Other items such as money market funds, or 4% Rewards Checking accounts meet the definition in terms of being cash equivalents, but not in the sense that they are not composed 100% of US Treasuries, & as such have a credit/default risk greater than the US Treasuries.

--

I agree with the others to keep the Perm Port simple.  If you want to invest in a non-PP asset like the REIT index VNQ, you could consider that your Variable Port.