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And all of these assume the classic AA, meaning rebalancing to hold a steady allocation.
James, In those studies, they had to make a lot of assumptions. One of them was to rebalance annually. Not because it was the right thing to do. But just because they had to assume something. As you know, computer demand that sort of thing! In the real world, rebalancing might have been completely the wrong thing to do. At end of each year investors would have decided.

In the original study, you are right - the AAs used were nor arbitrary. They were specific - 0%, 25%,50%, 75% and 100%. 50% equity worked best, but then they found that 75% was just as good. But really, what do those numbers really mean? The exact same portfolio could change, for example, from 60% to 40% or vice versa if you just started the study a year earlier or later.

I had some trouble with the term "Classic". I have a couple of Classic cars. There is a definition of Classic for cars. I know financial industry people use the term classic, but does it really mean anything at all? Maybe just sounds good when selling a product?

Anyway, snowy day/night here. Time to go read a book :)
 

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Similarly, the kind of things I do (permanent portfolio / risk parity) have not been thorough studied either for withdrawal and capital depletion. I can't say conclusively that it's a good idea, or that it's any better than classic asset allocation for living off capital.
I don't know what the studies show on the withdrawal phase of the PP, but given it has had comparable returns with less volatility, my guess is that the SWR should be similar to a 50/50.
 

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Discussion Starter #263
I don't know what the studies show on the withdrawal phase of the PP, but given it has had comparable returns with less volatility, my guess is that the SWR should be similar to a 50/50.
That's where I landed too. I think PP can be a substitute for 50/50 including for living off capital.

If for some reason I suddenly saw a huge flaw in gold, I'd happily fall back to 50/50.
 

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Discussion Starter #264
Another example of the low volatility of the PP... I'm using a slight variation: 30% stocks, 50% bonds, 20% gold

On today's market panic, various things plunged. Even some conservative funds are down, mainly driven by sharp international losses

VBAL -0.7%
VCNS -0.4% ... certainly milder

I logged in to see what happened to my RRSP, since it's invested precisely at my asset allocation targets. The result: +0.2%

Surely there is some value in that? I am still happy "sacrificing" 0.4% CAGR long term performance for this kind of stability. By the way, long term return stats of my allocation can be found in this other thread which also compares to 60/40.
 

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Another example of the low volatility of the PP... I'm using a slight variation: 30% stocks, 50% bonds, 20% gol

On today's market panic, various things plunged. Even some conservative funds are down, mainly driven by sharp international losses

VBAL -0.7%
VCNS -0.4% ... certainly milder

I logged in to see what happened to my RRSP, since it's invested precisely at my asset allocation targets. The result: +0.2%

Surely there is some value in that? I am still happy "sacrificing" 0.4% CAGR long term performance for this kind of stability. By the way, long term return stats of my allocation can be found in this other thread which also compares to 60/40.

How did it end the day?
 

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I have a 15+% Gold allocation and I will tell you that YTD I am up....

I don't have the ability from this computer to do a bunch of easy math BUT I am guessing that I am up 2.5% overall..... not bad with 1 month of growth and a 'topsy turvy' stock market....

Last year my growth was 10.3% !!! It was actually higher, but we have a piece of land that just sits, and doesn't show growth - so it just drags down the numbers.

I'm still happy with 10.3% though....
 

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Discussion Starter #267
How did it end the day?
Ended the day +0.2% and in fact, new all time high value. Some others for comparison

VCNS -0.2%
VBAL -0.7%
XBAL-0.5%

Of course one can't read too much into one day but from this brief sample, the permanent portfolio and VCNS both look like pretty mild reactions on a bad day.
 

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Discussion Starter #268
Just one quick post before I stop posting today. Today's market crash really shows the value of the permanent portfolio as a method to preserve capital.

The theory of the permanent portfolio / all weather was that it can smooth volatility by diversifying between different assets so that you aren't overly concentrated in stocks. Today I logged in to look at my RRSP, which precisely follows my variation of PP. Before the TSX quote feeds kicked the bucket and stopped working (around 09:45), I saw that my account value is basically flat. Yes, during the market crash, my value is unchanged.

How is this possible? Stocks are down 7%, bonds are up 2.5%, gold is up 3%

Using my own allocation, overall PP move = (0.30 * -7.0%) + (0.50 * +2.5%) + (0.20 * +3.0%)
= -0.25% ... virtually unchanged

Q.E.D.
 

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Discussion Starter #269
This early morning post ^ was over optimistic, but my losses by end of day were more significant. Can't believe the TSX ended down 10% in a single day.

Looks like my PP was down 2.1% today

Certainly did not prevent losses in a crash, but I think it's fair to say that it softened the blow. Compare this result to similar portfolios
VCNS -3.1%
XBAL -4.1%
VBAL -4.5%
 

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MAW104 is still up 9% today from when I bought last Feb. Likely will drop some more after todays value gets updated.
 

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Well despite lots of volatility and equities being down and bonds taking a beating, Gold today turned out almost 10% - WOW...... Good thing its 20% of my portfolio !

Looks like when govts decide to start the printing press the currency value drops and the limited supply / scarcity of gold really shines through.

Our economy is in a death spiral and our govts are effectively buying the debt and equity markets with fake cash.... nice.... (yes the nice is sarcasm).

Oh yah with govts about to quarantine everyone and not let them go to work - govts will have to supplement the populace with free cash until they can get back to work.... it will only get better for gold given the current climate !
 

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Looks like gold is up today too, almost 5%. Thats almost 15% in 2 days ! Nice results for us gold owners....

Honk, Honk (tooting a horn here)
 

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Well Gold ironically has outperformed the TSX60 and SP500 for the last week, month, 3 months, 6 months, 1 year and even 5 years right now. It doesnt beat the sp500 for the 10 year but it does beat the TSX60 on the 10 year. Nothing to complain about.

I am happy that equities did well today, I hope they can hold the momentum !
 
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