Gyroscopic Investing

While putting together my permanent portfolio, I used the following backtesting tool.

http://ezbacktest.blogspot.com/

It uses the adjusted prices from yahoo historical quotes.  It computes and graphs returns based on any number of months for which your chosen investments existed, simulates periodic rebalancing, computes Sharpe ratios, shows drawdowns, and allows comparisons to other portfolios during a common period,  All in all, a nice tool (although the latest
version seems to be slower).

In this tool I created the following portfolio with a yearly rebalance:

• VTI (15%)
• IJH (10%) (not strict adherence to HB's components, I know, but I wanted to overweight on midcaps for a little spice)
• SHY (25%)
• TLT (25%)
• GLD (25%)

This combination performed better than PRPFX over the same 6 year period with no losses (even in 2008).  Of course, the tool assumes reinvestment of all income and the yahoo data are correct.  I have to assume (hope) that the tool is reasonably accurate in its own computations.  If nothing else, it gave me a feel for how a portfolio may have performed over the aforementioned period.

I also ran it against 2 of of the Ivy Portfolio variations (5 ETFs, 20% each and 10 ETFs, 10% each).  The volatility was wild in both cases without extra reward.  I'm just continued to be amazed by Harry's approach.

That looks like a pretty solid approach to me.