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Also checkout Harry Browne's Permanent Portfolio if you want a passive investment strategy that yields similar results to a buy-and-hold index fund with much le
by marcrosoft 9y ago
Also checkout Harry Browne's Permanent Portfolio if you want a passive investment strategy that yields similar results to a buy-and-hold index fund with much less volatility.
- dsr_ 9y agoTo any index fund, or a specific one?
- marcrosoft 9y agoVanguard (VTI) or S&P500
- dsr_ 9y agoAs I understand it, 25% of his portfolio would approximate one of those... by being one of them, or a similar all-market fund. The other 75% has no relationship to them at all.
- marcrosoft 9y agoThat's right. It's designed that way on purpose. A 30% decline in VTI will likely have no bearing on the other asset classes. Best case: the other asset classes overcompensate in value (see volatility harvesting) offsetting the crash. Worst case: you re-balance with a portion of the 25% cash you have on hand. As a concrete example, look at what this portfolio did in 2008.
- dsr_ 9y agoYou miss my point. You can't claim to replicate an index fund by investing 25% in that index fund and then not even attempting to do so with the other 75%. It's a simple false claim.
- marcrosoft 9y agoOh the similar yield comes from back testing a 30 year period for this portfolio compared to S&P500. Both have roughly the same CAGR yet the permanent portfolio has an amazing Sharpe ratio (risk adjusted return).
- tanderson92 9y ago*have yielded. Tenses are important in investing.