the accelerated permanent portfolio

[mathjak107]

well for those looking for returns along the lines of 100% s&p but with a lot less risk , we have the accelerated permanent portfolio

25% upro leveraged s&p etf

27.5% TMF leveraged bonds fund

25% PFF PREFERRED INCOME etf or for better inflation protection a commodities fund

22.50% gold gldm or iau



about 8 minutes in is about this model in an updated pod cast

[boglerdude]

Whats an easy cartoonish way to explain what PFIX does, in effect

Instead of me loaning 10,000 to the government for 30 years for 5%, someone(?) is loaning me 10,000 for 30 years at 5%?

So when rates go up I can park that money at a higher rate?

But the fund also owns some treasuries and pays a small dividend to offset costs?

[mathjak107]

all i know is it works .

today long term bonds up , pfix down almost as much , so it is that proverbial SEE SAW hedge against the damage of rates rising.

the only question is finding the right balance so you don’t stall things

right now i own only 10k worth which is so little it wouldn’t hedge much , its just an exercise in watching its action.

so far it looks like these alternatives do what the basic asset classes can’t and that is maintain a true negative correlation

[yankees60]

well for those looking for returns along the lines of 100% s&p but with a lot less risk , we have the accelerated permanent portfolio

25% upro leveraged s&p etf

27.5% TMF leveraged bonds fund

25% PFF PREFERRED INCOME etf or for better inflation protection a commodities fund

22.50% gold gldm or iau



about 8 minutes in is about this model in an updated pod cast

In another financial forum someone private messaged me the same Risk Parity that you have above! Is it catching on??!!

[mathjak107]

i think more and more investors are gaining interest in something protective but with better returns …

risk parity radio is very popular and these models come from the show

[dualstow]

I say this with peace and love but there is nothing permanent about your investing strategies. It's always the next big thing.
Not that there's anything wrong with that. It's adapting to new information available!
But permanent, it ain't.

[yankees60]

I say this with peace and love but there is nothing permanent about your investing strategies. It's always the next big thing.
Not that there's anything wrong with that. It's adapting to new information available!
But permanent, it ain't.

You definitely had me laughing out loud on that one! That is exactly my thoughts. Plus, something I could never do. I cannot follow judgement investing systems, only mechanical or set ones.

[mathjak107]

I say this with peace and love but there is nothing permanent about your investing strategies. It's always the next big thing.
Not that there's anything wrong with that. It's adapting to new information available!
But permanent, it ain't.

the only thing permanent is i am always invested

i am always looking to get better returns with lower risk and more consistency.

after doing this since 1987 i was unhappy with the performance vs risk from conventional investing. .

it became obvious after a while even the most defensive portfolios sucked at performance but they were the best we could do with conventional investing .

my daughter in law was always trying to get me to invest with the hedge fund she worked for where she ran the tax dept .

when it comes to all out gains and beating some index they usually failed at it .

but where they did do well is in protective strategies and on a risk vs reward basis were so much more effective at it then conventional investing .

but it was costly and i never really trusted anyone to call the shots .

but now we have those same strategies available to us the last few years .

and that intrigues me .

i find with these leveraged risk parity portfolios if you don’t juice the gains by kerping the same dollars invested but instead take advantage of the improved risk vs rewards the efficiency is amazing .


i now have a huge cash hoard of 7 figures free because you get the same bang for the buck i have so much less money invested for the same return potential than i did

so it’s worth a shot trying it.

so far the last year so good and i have been shifting more and more in to 3 different leveraged risk parity portfolios adding the last one today.

ironically the accelerated pp has the power of 100% equities yet i have only a third of my money at risk in doing so .

i want between 45-55% equities if i take everything as a whole to be my actual allocation but with far less of my own money at risk doing so than i used to where every dollar of lifting power was mine

[seajay]

If you're going to leverage you might just take the STT/LTT barbell, that's comparable to a 10 year bullet, and 'borrow' from that in order to leverage up stock and gold

https://www.portfoliovisualizer.com/bac ... zCxKaQtWvm

25% UPRO (3x stock), 75% gold, 13.93% CAGR 2015-2024 inclusive (Sharpe 0.81)
S&P500 12.95% CAGR, Sharpe 0.71
Accelerated PP 7.29% CAGR, Sharpe 0.37

(Not really inclined to lend to someone who has a money printing press)

[mathjak107]

that would have had a huge drawdown in 2022..

not a problem for a long term investor but for someone living off a dynamic draw rate keeping these draw downs is highly important

one of the problems of creating portfolios by using specific time frames of the past and then molding the portfolio to be really good. over a particular period tend to do worse during other periods.

especially the ones we have our own money on the line .

[dualstow]

Sounds like you’re having fun. If I had a “7 figure cash hoard”, implying an additional 7-figure noncash investing hoard at work, I think I’d probably just do Warren Buffett’s 90-10 allocation and focus on pickleball and Mick Herron novels. But I don’t really have anything to spend money on except restaurants and health insurance.

[mathjak107]

i don’t want anymore of an allocation to equities ..

i have the overall allocation i want so if anything i will try to just add money to the existing models as assets fall from their starting point .


i may commit more dollars to something like pff in my taxable account .

the i shares preferred stock income fund shouldn’t move to much and provide a good income stream like bonds without being bonds

[seajay]

that would have had a huge drawdown in 2022..

not a problem for a long term investor but for someone living off a dynamic draw rate keeping these draw downs is highly important

one of the problems of creating portfolios by using specific time frames of the past and then molding the portfolio to be really good. over a particular period tend to do worse during other periods.

especially the ones we have our own money on the line .

Had a lower drawdown in 2022 than the accelerated PP (that holds TMF when TLT did poorly)

BTC has pretty much established itself since 2018 and appears to be running similar to a 5x stock. 1/6 = 16.66% weighting, leaving 83.33% in gold. 16.66 x 5 = 83.33% long stock type weighting, that combined with 83.33% gold = 1.66 overall x (leverage) factor. So de-leverage that (0.6) and 10% BTC, 50% gold, 40% cash https://www.portfoliovisualizer.com/bac ... ozYSJk2MtF and broadly comparable to the S&P500. Rebalanced once/year and your maximum loss due to BTC is limited to 10% of the total portfolio value. If gold drops likely stocks (BTC) will do OK and hedge the gold losses. BTC hedges gold hedges BTC

[mathjak107]

i own ibit and for years owned gbtc for years .

the problem with bitcoin is it has a mind of its own and more often than not seems linked to what happens with tech stocks.

there is no real pinning it down to the point it can be counted on reliably the same way more modern products can be thru options and futures

i hold bitcoin to no more than 2% of total assets but it kind of stands alone and no portfolio actually counts on it

[dualstow]

Smithers’ portfolio counts on it.

[mathjak107]

yes it does , and i like his portfolio…

i just find that bitcoin is to hard to pin down as to when its going to do its part of the job in a portfolio.

i find it easier to just keep it on its own where it can march to its own drummer and no other component looks to it to react at a certain point

[dualstow]

Same here. I have no idea where it’s going and I don’t think anyone else does either.
It’s such a wildcard that it makes gold look predictable.

[seajay]

The creeping presence of BTC on corporate balance sheets will play a part in creating a correlation between Bitcoin and stocks. The four public companies with the largest BTC balances – MicroStrategy Inc., Marathon Digital Holdings, Coinbase, and Square Inc. and the rise and fall of Bitcoin will have a direct impact on the valuation of those companies.

Stocks are generally leveraged, broadly borrow (issue bonds) to the value of around half of book-value amounts, are 1.5x. Leverage is inclined to broadly yield comparable rewards to the non-leverage, leverage primarily just scales volatility (which in turn is inclined to lower annualised rewards by amounts not dissimilar to what additional average gains that leverage might yield).

I'd put SSO as 2x SPY leverage, SPXL (or UPRO) at 3x, TQQQ at more than that, BTC at around 5x (but where that very well may decline with time). Largely interchangeable and generally stock aligned (but like stocks having a element of inverse correlation to the dollar, as does gold). At historic 20x type leverage/volatility, 5% weighting. As volatility has declined (to more recent 5x type levels) more weighting.

Instead of 67/33 stock/cash, 13.5/86.5 BTC/cash, or 22/78 SPXL/cash. Or combine all three 4.3/66/22.3/7.4 BTC/cash/SPY/SPXL as a alternative/more diverse choice of 67/33 https://www.portfoliovisualizer.com/bac ... qkVGadYoGY

[mathjak107]

at this stage bitcoin really has no roll to fill in my models , but i certainly do hold it in isolation

[seajay]

Part of de-dollarisation. Swap out Treasury's for gold, swap out Stocks for BTC, and a country is separated from the likes of the sanctions that the US applied to Russia. BRICS-PAY for clearance rather than SWIFT. Which in turn weakens the US militarily - can't so easily export inflation, print dollars to manufacture a massive military might and instead having to directly fund that. Trumps tariffs applied to China/others - will just accelerate US isolation.

From a gold as 'cash' perspective, for a leverage such as 5x the reciprocal of that plus one = weighting in the leverage, rest in gold. So for ULPIX for instance that has PV historic data back to 1998 and is 2x leverage, 1 / 3 = 33% ULPIX/67% gold. Broadly wont be that dissimilar to S&P500. At 5x (BTC) 16.6/83.4 BTC/gold - where BTC and gold can be held without any US oversight/control.