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That'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 classe
by marcrosoft 9y ago
That'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).