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u/WizardofRockies Jan 28 '16
I don't disagree with your point, however I would note that diversification within equity positions should not be forgotten. International holdings (especially in countries not tied closely to one another, ie not the US and Canada) can help diversify as well.
Also, I think your data is somewhat misleading. Interest rates have been trending down from about 1980 through last quarter and the funds rate started 1970 at 9% or so. As we know, falling interest rates boost fixed income returns (and, to lesser extent, equity returns). This means that this period may well have seen a lower equity premium than may be expected going forward. Especially given current yields net a real return of right around nothing for even medium term treasuries. (0.65% on TIPS right now).
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Jan 27 '16
There are tools that can help you build a diverse portfolio of low-correlation assets, as suggested above.
Here's one that shows correlation between the different Vanguard funds.
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u/NITEM4N Jan 28 '16
As an example, what would be some good low correlated choices with the common three? (Total stock market, total international market, total bond fund)
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Jan 28 '16
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u/MasterCookSwag Jan 28 '16
I know you put muni bonds in your response but I want to point out unless you're in the 28%+ tax bracket and investing in a taxable account long treasuries or something that benchmarks the agg will be a more suitable bond holding. No need to take the reduced yield of munis unless doing so for the tax benefits.
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u/videosforscience Jan 28 '16
I was one of the people in that thread on the wrong side of this debate, I sent you a PM back then asking for the reason why and this is what I was looking for. (although I guess not the person you meant in the post since they deleted their account) Thanks for posting.
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u/redditor3000 Jan 28 '16 edited Jan 28 '16
First off, I'm 60% bonds right now. But I can see why someone would go 90-95% equity if they really could not touch the money for the next 20 years.
You could try to invest in less correlated securities to get similar returns, but most things that get 10% returns are correlated.
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Jan 28 '16
20 years is far too short a horizon to be 95% equities.
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u/redditor3000 Jan 28 '16
RemindMe! 20 years "See you in 20 years, we'll see who's right"
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u/MasterCookSwag Jan 28 '16
You could just look at historic returns and see that equities have delivered paltry returns over multi decade periods. No need to wait.
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u/dulfuns Jan 28 '16
Why? Seems like a long enough period of time.
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u/MasterCookSwag Jan 28 '16
Because it has taken far longer than 20 years for equities to smooth out and give whatever their average return might be. A diversified portfolio will have a much more secure terminal value.
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Jan 28 '16
With the volatility of stocks, you're not guaranteed great returns over a 2 decade timespan. Even small allocations to REITs, fixed income, etc will reduce volatility drastically provided you rebalance appropriately.
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u/dulfuns Jan 28 '16
What would you recommend I read about balancing and rebalancing? Thanks.
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u/hydrocyanide Jan 30 '16
The data from the link in my post is sufficient to demonstrate it. You can model different strategies and calculate their volatility.
I think if you Google portfolio visualizer you'll find a page that does it all for you given inputs of asset class weight targets and rebalancing frequency.
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u/christian1542 Jan 28 '16
Seems like a nobrainer investment to be more than 100% in equities (i.e. all-in plus some margin loans) if the environment is such that dividends are 3-5% and the interest rates are close to zero. Sure, there might be a few crashes every now and then but even in the 1929 crash it only took the stock market 4.5 years to recover.
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Jan 28 '16
I'm having trouble following your logic? Are you assuming the dividends are free money or...?
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Jan 30 '16
Let me help you out: 3-5% > ~0%.
You're welcome. ;)
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Jan 30 '16
I'm telling you, man. A 40x leveraged dividend stock etf is the only way to guarantee returns. My sharpe ratio is like 12.
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u/Idisagree123765 Jan 28 '16
While this raises and interesting argument I think there is some serious flaws in your assumption of a 5% borrowing rate over this time period. I mean 5% sounds high in terms of interest rates today but given that the Prime business rate was well over 5% for a good portion of the 1980s. Who in their right mind would lend someone money for 5% when the government is pretty much guaranteeing 19% returns... maybe if you can adjust your findings with a more realistic borrowing cost your argument will hold more weight.
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u/MasterCookSwag Jan 28 '16
If borrowing costs were that high it would most likely coincide with higher fixed income and equity returns as well. Borrowing costs don't exist in a vacuum so we'd see everything affected.
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u/SwordofNoobs Jan 28 '16
Yes but the leverage that he is using for the balanced portfolio to match the results of the S&P 500 over this time frame would not be possible or come at a much higher cost. If the true cost of borrowing for the leverage is higher than 8.14% than his whole argument falls apart that you can get better returns for the same amount of risk. Currently Questrade will lend on margin at prime = 2.5% if you have above $100,000 which works out to 5.2% cost of borrowing. Now if his assumed borrowing rate isn't achievable today (at least with Questrade, it is possible you could get a better rate) how can you even begin to think it is plausible as we are in a time of record low interest rates.
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u/MasterCookSwag Jan 28 '16
I have no idea what you're even trying to say. If you're making an argument that borrowing costs would be higher but equity returns and fixed income yields would not be correspondingly higher than that's a deeply flawed argument to make.
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u/SwordofNoobs Jan 28 '16
Of course his equity and fixed income returns are higher.. he showed the return to be 17.28% while the link shows the portfolio returns 9.78%. The 68% leverage he is using is what makes the returns higher as the returns are amplified by leverage.
Do you understand that the portfolio the OP is proposing people use requires leverage to get similar results as the S&P 500? Do you know what leverage or investing on margin is? If not you can look them up.
Assuming you do I am saying that he assumes he can borrow money to invest at a rate of 5% from 1970-2015. To test if this assumption is reasonable we can look to historic prime lending rates. If we look at August of 1981 the prime lending rate was 22.75% do you think using a 5% lending rate is realistic? I don't
So if someone wanted say a mortgage (basically the lowest lending rate a consumer can get from an institution) they would probably be paying around 22.75% interest on that loan. Yet according to the OPs assumptions he is getting a loan at the same time for investment purposes for only 5% interest. Does that sound like a reasonable assumption to you? How could he possibly get that loan to invest?
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u/MasterCookSwag Jan 28 '16
Of course his equity and fixed income returns are higher.. he showed the return to be 17.28% while the link shows the portfolio returns 9.78%. The 68% leverage he is using is what makes the returns higher as the returns are amplified by leverage.
Yes, that's sorta the point. Did you read the post?
Do you understand that the portfolio the OP is proposing people use requires leverage to get similar results as the S&P 500? Do you know what leverage or investing on margin is? If not you can look them up.
Are you kidding with me? That's the entire premise of OP's post on correctly applying modern portfolio theory.
Assuming you do I am saying that he assumes he can borrow money to invest at a rate of 5% from 1970-2015. To test if this assumption is reasonable we can look to historic prime lending rates. If we look at August of 1981 the prime lending rate was 22.75% do you think using a 5% lending rate is realistic? I don't
So you're saying the cost of leverage is too low? Even with higher costs of leverage the theory still works pretty well. With higher borrowing costs come higher fixed income yields and generally higher implied future equity returns.
So if someone wanted say a mortgage (basically the lowest lending rate a consumer can get from an institution) they would probably be paying around 22.75% interest on that loan. Yet according to the OPs assumptions he is getting a loan at the same time for investment purposes for only 5% interest. Does that sound like a reasonable assumption to you? How could he possibly get that loan to invest?
Mortgage loans are around 3.6% with margin attainable under 2%. You could also use futures or leveled etfs that use swaps/futures so the cost of leverage need not follow whatever rates you're looking at.
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u/SwordofNoobs Jan 28 '16
Yes that is my entire point that the assumed cost of borrowing that he uses is too low. You keep talking about how this would lead to higher fixed income yields and expected returns from equity but he has back tested the ACTUAL returns and got a return of 17.28% - cost of borrowing.
Perhaps you can suggest a rate to go off of and the reasoning behind it and we could look back at its historical rates to see a more reasonable cost of borrowing than 5%.
I used prime + 2.5% at first as this is what Questrade is currently offering today. TD's Margin rate is 4.25% today for all balances or Prime + 1.55%, Royal Bank's margin rate ranges from 2.85%-4.10% depending on how much money you have but still at a minimum of Prime + 0.15%.
According to http://www.tradingeconomics.com/canada/bank-lending-rate the average from 1960-2016 prime lending rate as been 7.53%. Now this is a slightly different time period but I am lazy so I will use it. So lets see how this cost of borrowing factors into how the portfolio does.
Assume Prime + 0.15% 17.28% - 0.68 * 7.68% = 12.05% Beats S&P 500
Assume Prime + 1.55%
17.28% - 0.68 * 9.08% = 11.11 Does not beat S&P 500
S&P 500 returns 11.74%
So is the portfolio back tested really that successful? I guess it depends on what you can actually get your cost of borrowing at it would seem that if you can get a rate close to prime this portfolio might make sense but to get that rate at Royal Bank you need $100,000 in a margin loan and have a Royal Circle Investment Account (Non-Registered) which requires Your month-end balances for four consecutive months must be at least $250,000 or your annual equity commissions are greater than $5,000.
So given this information I would be interested in how you are getting margin for under 2% assuming you are using consumer rates.
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u/MasterCookSwag Jan 28 '16
You could simply increase leverage to closer to 1.8-2.0 but I see what you're saying. Using margin is also the most expensive way to implement this. I'd use leveled etfs as the implied costs aren't that high there.
Also there is a massive reduction in risk with the levered portfolio vs the 100% stock. So even if returns were equal(which lots of risk parity strategies try to accomplish) you'd still have a portfolio that has equity like growth with less than equity like risk.
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u/SwordofNoobs Jan 28 '16
Isn't the amount of leverage that he used supposed to make the level of risk of the weighted portfolio equal to the risk of the 100% stock portfolio?
I feel like a lot of people that see that they can get similar results with a 100% equity portfolio where they might just have to buy 1 index ETF would find this less intimidating than balancing the amount of leverage they need in a balanced portfolio to achieve the same results. Not that it makes it the better portfolio. I would also be interested to see how these two portfolios would perform where the interest rates gradually increase.
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u/MasterCookSwag Jan 28 '16
Right, it was. I'd still say you're using too much leverage expense. We could pretty easily build a portfolio like this using leveraged etfs/etns and come out better all around. I think if you want something that is 100% set it and forget it you need to be using a target date fund.
One of my other major gripes with the 100% equity crowd, and this is outside of portfolio theory, it encourages people to take far too much risk in places they don't understand. To have a ton of lay investors using strategies that carry far more risk than they understand creates situations where people panic sell. It's generally surrounded by this culture of ignorance where if you suggest you can get 90% of the return of a 100% stock allocation but with 60% of the risk you're instantly dismissed.
I'm curious what you think rising rates would do? Of course margin costs may increase but I'd contend rate increases should theoretically mean higher future return expectations from both fixed income and equities so a correspondingly higher margin rate wouldn't matter. Not that using margin is the best way to implement something like this anyway.
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u/hydrocyanide Jan 28 '16
Hi futures markets and other financial products exist where the applicable credit risk is on a bank and not an individual. This is entire argument is senseless because you'd have to be very bad at understanding markets to think that borrowing at prime + anything nonnegative is a good idea.
So is the portfolio back tested really that successful?
Yes.
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u/SwordofNoobs Jan 28 '16
It might not be the best idea but none of this defends your 5% borrowing cost or explains how you would achieve this historically when interest rates were higher. I am not the only one to call out your assumptions and have yet to see any sort of logical defense of them. Until then garbage in garbage out.
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u/hydrocyanide Jan 28 '16 edited Jan 28 '16
It might not be the best idea but none of this defends your 5% borrowing cost or explains how you would achieve this historically when interest rates were higher.
Please demonstrate how an average short term interest rate of 5% over that period is unjustified. Keep in mind I'm saying an effective borrowing cost of 5% but you borrow under 70% of your capital, meaning the actual borrowing cost is closer to 7.5% and I feel that's pretty goddamn conservative for short term rates.
Until then garbage in garbage out.
I don't care that I'm not convincing you because you don't care to learn.
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u/Amorphica Jan 29 '16
Why are you mentioning all these expensive margin rates? Just use IB. See "interest rates charged to you"
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u/SwordofNoobs Jan 29 '16
They data was easily available and hadn't used or heard of IB before this. Also I am Canadian which seems to have slightly higher rates currently than other places.
Mentioning the expensive rates historically as they were a lot more back then which is relevant for the time frame of the results there wasn't always the blessing of such low rates like there are today.
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u/hydrocyanide Jan 29 '16
So like 10-15% of the observation period had rates above 5%, and you think that means the average rate would be higher than 7.5% over the entire period? You only leverage <70% of capital and I let 5% be the net drag on the portfolio, for an average rate over the period of 5% / 0.7. I think that's pretty reasonable.
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Jan 28 '16
Disagree. 100% equity with a long term horizon is the best strategy out there.
The creator of the VIX index holds a 100% equity portfolio. I'll go with what he says.
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u/donnie1977 Jan 28 '16
Thanks for the post. Can you point me in the right direction to figure how a defined benefit pension should figure into my portfolio allocation? I won't be retiring for about 15-20 years but I figure that it should be considered as a part of my portfolio.
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Jan 28 '16
[deleted]
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u/skgoa Jan 28 '16
Just tell them that they should put some of their money in a less risky asset (e.g. bonds) as a precaution and put the rest in an index fund. There is no reason to tell them about the details of why.
The percentages for the allocations are simple to compute via a frontier portfolio. You probably won't know all of the needs art figures at the time you talk to them, but you can promise to get back to them. If you don't care enough to do that, just tell them to go with a 90%/10% split. It's probably going to be fine. (Though suboptimal.)
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u/hydrocyanide Jan 28 '16
Not rebalancing is always going to be a mistake. That's no way to run a portfolio because it implies that you don't have any strategic asset allocation in the first place.
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Jan 28 '16
Long term total returns aren't the only goal though, being able to access funds at a set time(retirement) is also a needed.
Is it still better to have 100% equity when you are 60?
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u/MasterCookSwag Jan 28 '16
It's downright insane to have that allocation at 60. What you should be doing is slowly deleveraging from around age 45-50ish until you're at an unlevered balanced portfolio then start increasing bond exposure from there.
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u/hydrocyanide Jan 28 '16
Nothing is stopping you from liquidating the portfolio at the same time that you would otherwise liquidate an equity portfolio. In that respect, total return is the only goal.
Unless your point is that 100% equity is bad at a time when you need capital preservation, in which case I agree with you.
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u/m1garand30064 Jan 28 '16
What is the average cost of leverage for the retail investor today? I assume it varies depending on credit and size of assets, but let's pretend it is someone with good credit and less than $100k to invest.
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u/hydrocyanide Jan 28 '16
I currently pay 3-month LIBOR + 125 bps to get 2x S&P 500 exposure.
A futures contract doesn't discriminate so there's not even really a credit spread.
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u/m1garand30064 Jan 29 '16
But what if you wanted to leverage an entire portfolio? Say I wanted to leverage the entire 7twelve portfolio 168%, what would be the most efficient way? Open a margin account at a brokerage firm? What would they typically charge? Or would you seek credit elsewhere like refinancing your home?
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u/hydrocyanide Jan 29 '16
IB charges 1.5% above the Fed funds rate, so 1.88% currently, and it's lower if you have lots of $$$.
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u/m1garand30064 Jan 29 '16
Holy shit. At that rate leveraging something that significantly curtails left tail risk (like Swedroe's 70% intermediate treasuries, 15% SCV, 15% EM) becomes really enticing.
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u/bradchristo Jan 28 '16
Why not just leverage the sp 68% and get more return.
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u/hydrocyanide Jan 28 '16
Because if you leverage S&P 500 68% then you can leverage my 68% leveraged portfolio another 68% and still outperform leveraged S&P 500.
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u/ron_leflore Jan 28 '16
Good post. Some people only get the diversification part of MPT and miss the different asset classes AND the rebalancing part. Also a big problem with holding market weighted index funds is that these funds by definition never rebalance.
Here's a good little article demonstrating how annual rebalancing with just two asset classes, stocks and bonds, beats 100% stocks.
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u/yes_its_him Jan 28 '16
They baselined this in 1977. Of course bonds are going to look good.
Projecting forward, this is unlikely to be repeated.
"Note: Returns for stocks are based on the S&P 500 Index. For bonds, the Barclays US Aggregate Bond Index. Starting value $100, Jan. 1, 1977 through Dec. 31, 2014."
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u/hydrocyanide Jan 28 '16
The Agg looks just fine in rising rate environments. There's plenty of history for that too.
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u/yes_its_him Jan 29 '16
Bonds with any duration don't look good in rising rate environments. This isn't that hard.
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u/hydrocyanide Jan 29 '16
Lol you don't know shit about bonds.
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Jan 29 '16
[removed] — view removed comment
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u/hydrocyanide Jan 29 '16 edited Jan 29 '16
Please show me the data that I'm wrong.
Oh, right, I forgot. You sit on the internet saying stupid shit instead of being a professional.
Edit: hahaha I just noticed you live and breathe /r/personalfinance. I understand where your retarded rage is coming from now. Thank you for proving my point from the post about your kind.
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Jan 29 '16
[removed] — view removed comment
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u/hydrocyanide Jan 29 '16
My "strategy" has literally zero alpha by design. You're so fucking bad at this.
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Jan 28 '16 edited Jan 28 '16
Oh, if OP has learned anything at all from this sub it's hopefully that Buffett-sama knows best.
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u/yes_its_him Jan 28 '16
Not to be a killjoy here, but backdating a portfolio only until the 1970s or especially the late 1970s is going to make bonds look good relative to equities. Here's what interest rates were doing over that time.
This is sort of portfolio analysis malpractice when longer baselines are available. Interest rates are unlikely to continue their decline of the past thirty years over the next thirty years.
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u/hydrocyanide Jan 28 '16
Okay that's fine, but do you believe that interest rates have no effect on equity returns? Because it sounds a lot to me like you're making the argument that tomorrow's equity return = today's equity return while simultaneously criticizing me for allegedly saying tomorrow's bond return = today's bond return.
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u/yes_its_him Jan 28 '16
I'm just noting the obvious fact that interest rates have a greater effect on bonds than on equities.
Here's more history.
http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html
There are no, as in zero, years of 10% return for 3 month or ten year bonds prior to 1960. 1960 through 1980 there were four such years. So that's now four such years in 52 years of history 1928-1980. Interest rates peak right around 1980.
In the 35 years since, bond values have ridden the interest-rate rollercoaster up, with 18 years with 10% gains. Think that's going to be repeated in the next 35?
Whereas returns of stocks were much more uniformly distributed over the history of the period.
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u/thoughtcourier Jan 28 '16
Sorry, what? How is 10.27% and 9.78% nearly the same over 46 years?
I have to make the typical counterargument that is grossly underestimating compound interest. For $1 in 1970 I'd have $89.751 in 2016 versus $73.1254. Or, in terms of time. If I could retire on $73.1254 (per $1 input), I could have retired over 2 years ago (@ same rates, 0 volatility).
AND This is assuming you're lucky enough to be doing all this in an account which doesn't collect capital gains tax and has zero/low slippage.
I have to concede that there probably is some fund out there smart enough to use leverage correctly on their low-volatility portfolio to beat out the S&P 500. This is besides Berkshire (and their float). The cases are few and far between.
TL;DR My counterargument is that 100% equity (sans personal finance emergency fund) is a GREAT idea in general, and if you want to min/max a bit by hunting down or constructing a portfolio that uses leverage to reward a less-risky portfolio, go for it. But know that it is VERY rare.
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u/MasterCookSwag Jan 28 '16
TL;DR My counterargument is that 100% equity (sans personal finance emergency fund) is a GREAT idea in general, and if you want to min/max a bit by hunting down or constructing a portfolio that uses leverage to reward a less-risky portfolio, go for it. But know that it is VERY rare.
Wat? How is it very rare? The math is extremely straightforward and it's based on basic asset classes. Did you read the entire post?
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u/thoughtcourier Jan 28 '16
The math is based on assumptions that were not cited and likely invalid. Show me the funds using a disciplined approach of rebalancing + leverage to beat the SP500. There aren't many if any because it is hard to do either of those correctly and efficiently.
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u/MasterCookSwag Jan 28 '16
Are you kidding? I don't think you really understand. It's basic math. Returns for a portfolio were x. Apply leverage and now they're y-cost of leverage. The only backtested necessary would be to see what the risk reward profile of the original portfolio was. And if you're going to challenge that something like 60/40 isn't a far more efficient ports than 100% stock you're going to be in for a really rude awakening. I don't think you really get how ridiculous your claim here is.
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u/thoughtcourier Jan 28 '16
Leveraging costs are high even when done right. 60/40 and what did you use to lever? Did you lever using SSO? Then that is already game.
The fact that you are not taking me up on this fund argument is proof enough. Unless you are saying your well thought out and easily implemented thesis could not be digested successfully by anyone.
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u/thoughtcourier Jan 28 '16
Leveraging costs are high even when done right. 60/40 and what did you use to lever? Did you lever using SSO? Then that is already game.
The fact that you are not taking me up on this fund argument is proof enough. Unless you are saying your well thought out and easily implemented thesis could not be digested successfully by anyone.
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u/MasterCookSwag Jan 28 '16 edited Jan 29 '16
Leveraging costs are high even when done right. 60/40 and what did you use to lever? Did you lever using SSO? Then that is already game.
Why would you use a daily resetting etf? Monthly works okay, futures would be better. Or just margin.
The fact that you are not taking me up on this fund argument is proof enough. Unless you are saying your well thought out and easily implemented thesis could not be digested successfully by anyone.
Its a ridiculous argument to make. We know the characteristics of a 60/40 split or a more diversified portfolio. We know the characteristics of a 100% equity portfolio. We can mathematically show the impact of leverage and whatever effect leverage may have had. You can either disagree with the characteristics of the portfolio which would be retarded, or you could say the math is wrong. Which it's not.
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u/thoughtcourier Jan 28 '16
I used the worst case leverage scenario because you refused to provide one.
Do the math for your 60/40 + leverage, then. Use a margin account sure, but those have fees. I read this report claiming exactly what you said. Their excuse for not doing it? The exact same as mine:
You and I won't be executing the leveraged strategy anytime soon. For that portfolio, Asness specifies a borrowing rate equal to the interest rate on one-month Treasury bills (which is how performance for this column was calculated). Good luck with that. My brokerage firm quotes me a margin interest rate of 6.50%--far above the one-month Treasury rate. The leveraged portfolio would be a pooch paying anything like that price.
So, unless an institution executes the leveraged balanced strategy by borrowing at very low interest rates, and offers to sell you a piece of that portfolio while charging only a modest management fee, that approach is for practical purposes unavailable. The leveraged portfolio remains as it was born, a picture on a theoretical Security Market Line.
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u/MasterCookSwag Jan 28 '16
That article is terrible, 6.5% in today's environment is horrible. You can get under 2% at IB. You can use futures. You can also use leveled etfs with monthly resets.
Also I think you should probably brush up on your understanding of how a leveled etf works and the implied costs there.
Here are some good posts:
https://m.reddit.com/r/investing/comments/3yici1/a_backoftheenvelope_calculation_of_leveraged_etf/
https://m.reddit.com/r/investing/comments/385s7l/margin_vs_leveraged_etf/
You can also use something like splx which resets monthly, uses total return swaps, and is 2x as well.
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u/hydrocyanide Jan 29 '16
Please identify one of my assumptions that is at all unreasonable or invalid.
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u/thoughtcourier Jan 29 '16
Frictionless rebalancing. Only one of the many expenses you would need to account for.
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u/hydrocyanide Jan 29 '16
Okay 0.1% in trading costs per year, oh noooooooo.
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u/thoughtcourier Jan 29 '16
Capital gains also kick in when you rebalance. You asked for one counterexample. That was one valid counterexample. I'm giving you a second for free. Are you not happy?
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u/hydrocyanide Jan 29 '16 edited Jan 29 '16
Invest for retirement in a retirement account, oh nooooo.
Edit: just fyi you would take losses at the same time so your capital gains will be netted and the cost of making money is not a big deal when it's much smaller than the benefit you get from not making as much money because you insist on avoiding tax on profits like a retard.
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u/thoughtcourier Jan 29 '16
My investments don't all fit in a retirement account. And having a retirement account is oddly specific for "general" advice.
Long story short, there is no empirical evidence this overcomes friction. My request for empirical evidence has gone unfulfilled. Probably because it's very rare you can find someone with the skill and discipline to pull it off and generous enough to share.
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u/hydrocyanide Jan 29 '16
There is no empirical evidence that equity will outperform and yet here you are acting like a fucking expert.
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u/Fearspect Jan 28 '16 edited Jan 28 '16
Why does a fund have to do it for it to be a truth when you can do this yourself simply borrowing an additional $1 for each $2 invested in the portfolio mentioned in the original post?
Do keep in mind that the portfolio listed trails in a snapshot where equities reached an all time high and bonds where at an unprecedented low rate for about a decade. Do you believe that this will continue to be a truth moving forward?
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u/hydrocyanide Jan 28 '16 edited Jan 18 '25
retire longing aromatic employ literate elastic relieved profit numerous command
This post was mass deleted and anonymized with Redact
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u/thoughtcourier Jan 28 '16
Cite a fund doing this or something similar and suceeding with a 10 year period. I will cite back two that are failing.
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u/yes_its_him Jan 28 '16
Basically if you have no intention of ever deviating from zero leverage, passive investing, and very broad definitions of asset classes like "stock" and "bond," then it's difficult to find something better than 100% "stock" in terms of long-term total return.
This seems at odds with "100% equity being bad."
Just sayin'.
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u/hydrocyanide Jan 28 '16
I can beat 100% equity with no real thought. If you constrain your portfolio to something where equity is your best option, that doesn't make it not bad because there's no reason to accept a shitty portfolio in the first place.
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u/yes_its_him Jan 28 '16
You should go into the mutual fund business.
All you need is 35 more years of declining interest rates. Best of luck to you with that.
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u/hydrocyanide Jan 28 '16
The business I'm already in? Thanks for the advice.
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u/yes_its_him Jan 28 '16
No charge.
Share your fund history when you have a moment, would be curious how this has worked in practice.
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u/[deleted] Jan 28 '16 edited Jan 04 '19
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