Slice and Dice

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poppa23
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Slice and Dice

Post by poppa23 » Mon Nov 20, 2017 11:14 pm

i have seen members list there portfolios some of there are significantly sliced and diced with 7 8 9 different funds ie small cap value small cap blend etc..my question is how much can that really add to a portfolio over what a 3 fund portfolio. I ask because at some point its just not worth managing 7 funds for an extra .5 in return for the year.Your thoughts please.

livesoft
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Re: Slice and Dice

Post by livesoft » Mon Nov 20, 2017 11:17 pm

Some years it adds a lot and some years it doesn't. There is no way to predict the future.

As for managing lots of funds, I will say that you can have lots of funds and not manage them at all, so I am not sure what you mean by managing. That is, just because you own shares in a fund it does not mean that you have to do anything with those shares. They could sit untouched for 50 years or more if you desired that.
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Taylor Larimore
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8 Lazy Portfolios

Post by Taylor Larimore » Mon Nov 20, 2017 11:44 pm

poppa23 wrote:
Mon Nov 20, 2017 11:14 pm
i have seen members list there portfolios some of there are significantly sliced and diced with 7 8 9 different funds ie small cap value small cap blend etc..my question is how much can that really add to a portfolio over what a 3 fund portfolio. I ask because at some point its just not worth managing 7 funds for an extra .5 in return for the year.Your thoughts please.
poppa23:

In my opinion, "managing 7 funds for an extra .5 in return" is more likely to result in .5% less return. You can see it here:

Total Returns for 8 Lazy Portfolios*

*The leading Second Grader Starter Lazy Portfolio is The Three-Fund Portfolio.

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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saltycaper
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Re: Slice and Dice

Post by saltycaper » Tue Nov 21, 2017 12:07 am

poppa23 wrote:
Mon Nov 20, 2017 11:14 pm

I ask because at some point its just not worth managing 7 funds for an extra .5 in return for the year.Your thoughts please.
Well, an extra 0.5% annually over 30 years could mean you end up with a portfolio that is 10-15% bigger than you would have if you didn't get that extra 0.5% I think that's substantial and absolutely worth whatever trivial extra work would come with adding a few funds. The key is there is no guarantee you get the extra 0.5%.
"I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said." --Alan Greenspan

DrGoogle2017
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Re: Slice and Dice

Post by DrGoogle2017 » Tue Nov 21, 2017 12:25 am

There is nothing to manage, just buy and hold.

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Re: Slice and Dice

Post by AlohaJoe » Tue Nov 21, 2017 12:46 am

poppa23 wrote:
Mon Nov 20, 2017 11:14 pm
I ask because at some point its just not worth managing 7 funds for an extra .5 in return for the year.Your thoughts please.
That extra .5 per year might be $15,000. What would you do for $15,000 a year for the rest of your life?

People spend time clipping coupons or driving an extra 5 minutes to save 3 cents a gallon on gas or move their savings account to get an extra 0.1% interest on $5,000 or open a dozen credit cards....it shouldn't really surprise you that a sizeable minority of people find the cost-benefit of something worth it -- whatever that "something" is.

Some people spend time/effort/energy on things that I think are a waste of time or a poor return on effort. Some people feel the same way about things I do.

Diversity is what makes life wonderful.

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steve roy
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Re: Slice and Dice

Post by steve roy » Tue Nov 21, 2017 12:47 am

I slice and dice. But I question myself all the time: "How much good is this doing?"

It might do a bit of good ... or might not. The quaint little secret is, it's NOT the slicing and dicing, but the overall stock bond allocation that ultimately makes you a successful investor. If you want less hassle, pick an allocation with which you're comfortable and execute a Three Fund portfolio. Then STICK WITH IT.

Because it's the sticking with it, coupled with a broadly diversified stock-bond allocation that is the important part of the investing equation. Whether you're tilted to small cap value, or overweight emerging markets, or do the Intermediate Bond Fund rather than Total Bond Fund isn't going to make a big difference to your portfolio. What WILL make a difference is if you chase performance, or jump in and out of the market, buying high and selling low. Those are the things that will you louse you up in significant ways.

Want it really simple? Dump a large sum of cash into a Vanguard LifeStrategy Fund and forget that you own it. Then remember it's there twenty-seven years later, open the account, and be pleasantly surprised.

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triceratop
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Re: 8 Lazy Portfolios

Post by triceratop » Tue Nov 21, 2017 1:32 am

Taylor Larimore wrote:
Mon Nov 20, 2017 11:44 pm
poppa23 wrote:
Mon Nov 20, 2017 11:14 pm
i have seen members list there portfolios some of there are significantly sliced and diced with 7 8 9 different funds ie small cap value small cap blend etc..my question is how much can that really add to a portfolio over what a 3 fund portfolio. I ask because at some point its just not worth managing 7 funds for an extra .5 in return for the year.Your thoughts please.
poppa23:

In my opinion, "managing 7 funds for an extra .5 in return" is more likely to result in .5% less return. You can see it here:

Total Returns for 8 Lazy Portfolios*

*The leading Second Grader Starter Lazy Portfolio is The Three-Fund Portfolio.

Best wishes.
Taylor
All,

As has been pointed out many times: these Portfolios cannot be fairly compared.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

WanderingDoc
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Re: 8 Lazy Portfolios

Post by WanderingDoc » Tue Nov 21, 2017 2:37 am

triceratop wrote:
Tue Nov 21, 2017 1:32 am
Taylor Larimore wrote:
Mon Nov 20, 2017 11:44 pm
poppa23 wrote:
Mon Nov 20, 2017 11:14 pm
i have seen members list there portfolios some of there are significantly sliced and diced with 7 8 9 different funds ie small cap value small cap blend etc..my question is how much can that really add to a portfolio over what a 3 fund portfolio. I ask because at some point its just not worth managing 7 funds for an extra .5 in return for the year.Your thoughts please.
poppa23:

In my opinion, "managing 7 funds for an extra .5 in return" is more likely to result in .5% less return. You can see it here:

Total Returns for 8 Lazy Portfolios*

*The leading Second Grader Starter Lazy Portfolio is The Three-Fund Portfolio.

Best wishes.
Taylor
All,

As has been pointed out many times: these Portfolios cannot be fairly compared.
Why not?
One day it suddenly dawned on me that I had won the real estate lottery. | I'm not looking to get rich quickly. I'm not looking to get rich slowly. I'm looking to get rich for sure.

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triceratop
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Re: 8 Lazy Portfolios

Post by triceratop » Tue Nov 21, 2017 3:54 am

WanderingDoc wrote:
Tue Nov 21, 2017 2:37 am
triceratop wrote:
Tue Nov 21, 2017 1:32 am
Taylor Larimore wrote:
Mon Nov 20, 2017 11:44 pm
poppa23 wrote:
Mon Nov 20, 2017 11:14 pm
i have seen members list there portfolios some of there are significantly sliced and diced with 7 8 9 different funds ie small cap value small cap blend etc..my question is how much can that really add to a portfolio over what a 3 fund portfolio. I ask because at some point its just not worth managing 7 funds for an extra .5 in return for the year.Your thoughts please.
poppa23:

In my opinion, "managing 7 funds for an extra .5 in return" is more likely to result in .5% less return. You can see it here:

Total Returns for 8 Lazy Portfolios*

*The leading Second Grader Starter Lazy Portfolio is The Three-Fund Portfolio.

Best wishes.
Taylor
All,

As has been pointed out many times: these Portfolios cannot be fairly compared.
Why not?
The Merriman portfolio holds a different asset allocation: 40% bonds. Compare to the Second Grader's portfolio which is 10% bonds. This has been repeatedly mentioned in previous discussions when this problematic comparison is made.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

red5
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Re: Slice and Dice

Post by red5 » Tue Nov 21, 2017 4:07 am

I do about 7 funds and spend about 30 minutes a year managing them. Really, it's not really harder to manage 7 funds than 3. I'm not saying one way is right and the other way is wrong either. Both are great ways to invest.

red5
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Re: Slice and Dice

Post by red5 » Tue Nov 21, 2017 4:15 am

Here is a link Madsingers Monthly Report (this is a Bogleheads.org link)

You'll see listed quite a few different porfolios/funds and how they have done over multiple time periods. The 3-fund is an excellent portfolio but there are other good ones out there as well.

heyyou
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Re: Slice and Dice

Post by heyyou » Tue Nov 21, 2017 5:55 am

First consider how many allocations are all good enough since the savings rate is far more important than minor allocation differences.
My allocation suits me. Others should do what suits them.

Since the 2000 Crash, I've tried to reduce my Large Growth exposure that is so common in S&P500 and Total Market funds, so I am tilting away from LG mega-stocks which by default is owning more value and somewhat smaller stocks. The ten largest holdings are 17.4% of the total market fund, and 21.2% of the 500 fund.

With that, my confirmation bias cherishes this:
Michael H. McClung ran each of the equity sub-asset classes separately in a retirement spending calculator. Yes, Small Growth was the worst, but Large Growth was second worst so he skipped adding funds of those to his suggested retirement portfolio allocations. He used mostly equal slices of blend and value funds, so there is some LG and SG exposure.

It is a noticeable coincidence that most of our revered financial writers suggest slice and dice portfolios, even Dr. Wm. Bernstein who was not likely to be trying to boost his business by impressing his clients with complicated portfolios.

Costs matter, but there may be some point of diminishing savings on the lowest portfolio costs versus low costs. Foreign funds cost more, so are they avoided due to fund expenses? That did not work well for Japanese investors. Do you also choose your bond fund by ERs similar to your equity fund(s) choices, or by which types of bonds are in the fund?

Cap weighting is the cheapest way to run an equity mutual fund, but I missed how the current winners of that popularity contest are considered to be the best businesses in which to invest for the future. Looks to me that new purchases are buying an extra amount of the very highest priced stocks late, after their high growth.

Again, do what suits you, while I do what suits me.

WanderingDoc
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Re: 8 Lazy Portfolios

Post by WanderingDoc » Tue Nov 21, 2017 11:39 am

triceratop wrote:
Tue Nov 21, 2017 3:54 am
WanderingDoc wrote:
Tue Nov 21, 2017 2:37 am
triceratop wrote:
Tue Nov 21, 2017 1:32 am
Taylor Larimore wrote:
Mon Nov 20, 2017 11:44 pm
poppa23 wrote:
Mon Nov 20, 2017 11:14 pm
i have seen members list there portfolios some of there are significantly sliced and diced with 7 8 9 different funds ie small cap value small cap blend etc..my question is how much can that really add to a portfolio over what a 3 fund portfolio. I ask because at some point its just not worth managing 7 funds for an extra .5 in return for the year.Your thoughts please.
poppa23:

In my opinion, "managing 7 funds for an extra .5 in return" is more likely to result in .5% less return. You can see it here:

Total Returns for 8 Lazy Portfolios*

*The leading Second Grader Starter Lazy Portfolio is The Three-Fund Portfolio.

Best wishes.
Taylor
All,

As has been pointed out many times: these Portfolios cannot be fairly compared.
Why not?
The Merriman portfolio holds a different asset allocation: 40% bonds. Compare to the Second Grader's portfolio which is 10% bonds. This has been repeatedly mentioned in previous discussions when this problematic comparison is made.
I don't think there is a problem with comparing eponymous portfolios with each other, even if they have different bond allocations. For ex. just to see how each one did over 10, 20, or 30 years. All investments have different levels of risk. For example, I think real estate is a better investment than Treasury Bills. Different levels of risk but I think one can choose one over the other and therefore compare them :)
One day it suddenly dawned on me that I had won the real estate lottery. | I'm not looking to get rich quickly. I'm not looking to get rich slowly. I'm looking to get rich for sure.

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saltycaper
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Re: 8 Lazy Portfolios

Post by saltycaper » Tue Nov 21, 2017 11:57 am

WanderingDoc wrote:
Tue Nov 21, 2017 11:39 am
triceratop wrote:
Tue Nov 21, 2017 3:54 am
WanderingDoc wrote:
Tue Nov 21, 2017 2:37 am
triceratop wrote:
Tue Nov 21, 2017 1:32 am
Taylor Larimore wrote:
Mon Nov 20, 2017 11:44 pm

poppa23:

In my opinion, "managing 7 funds for an extra .5 in return" is more likely to result in .5% less return. You can see it here:

Total Returns for 8 Lazy Portfolios*

*The leading Second Grader Starter Lazy Portfolio is The Three-Fund Portfolio.

Best wishes.
Taylor
All,

As has been pointed out many times: these Portfolios cannot be fairly compared.
Why not?
The Merriman portfolio holds a different asset allocation: 40% bonds. Compare to the Second Grader's portfolio which is 10% bonds. This has been repeatedly mentioned in previous discussions when this problematic comparison is made.
I don't think there is a problem with comparing eponymous portfolios with each other, even if they have different bond allocations. For ex. just to see how each one did over 10, 20, or 30 years. All investments have different levels of risk. For example, I think real estate is a better investment than Treasury Bills. Different levels of risk but I think one can choose one over the other and therefore compare them :)
If performance differences are attributed to one cause when the differences are attributable to something else, that is a problem. When the error in making the comparison is pointed out, and the person continues to make the same comparisons over and over, that is a major problem. At this time, I have concluded that it is a clear intent on deceiving readers.
"I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said." --Alan Greenspan

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bengal22
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Re: 8 Lazy Portfolios

Post by bengal22 » Tue Nov 21, 2017 12:04 pm

triceratop wrote:
Tue Nov 21, 2017 1:32 am
Taylor Larimore wrote:
Mon Nov 20, 2017 11:44 pm
poppa23 wrote:
Mon Nov 20, 2017 11:14 pm
i have seen members list there portfolios some of there are significantly sliced and diced with 7 8 9 different funds ie small cap value small cap blend etc..my question is how much can that really add to a portfolio over what a 3 fund portfolio. I ask because at some point its just not worth managing 7 funds for an extra .5 in return for the year.Your thoughts please.
poppa23:

In my opinion, "managing 7 funds for an extra .5 in return" is more likely to result in .5% less return. You can see it here:

Total Returns for 8 Lazy Portfolios*

*The leading Second Grader Starter Lazy Portfolio is The Three-Fund Portfolio.

Best wishes.
Taylor
All,

As has been pointed out many times: these Portfolios cannot be fairly compared.
And the reason for that of course is the most important factor in your portfolio performance is your stock/bond ratio. In the Second Grade Starter fund the ratio is 90/10. The coffee house is 60/40. And you should not use the S&P 500 as your benchmark unless your portfolio is designed to match the S&P 500. I use the Target Retirement 2020 and 2015 to benchmark my performance because that closely matches my stock/bond ratio. However, I am moving away from a tilt(small cap value, REIT, and low quality bond fund) to get to a 3 fund portfolio - Total Stock, International, and Total Bond Fund. I am doing this to simplify things for my wife in the likely event that I meet my Transition phase before she does.

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Taylor Larimore
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Lazy Portfolios

Post by Taylor Larimore » Tue Nov 21, 2017 12:58 pm

Bogleheads:

It is interesting to read Mr. Ferrill's reasoning for publishing his eight "Lazy Portfolios":

https://www.marketwatch.com/lazyportfolio/howto

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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triceratop
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Re: Lazy Portfolios

Post by triceratop » Tue Nov 21, 2017 2:11 pm

Taylor Larimore wrote:
Tue Nov 21, 2017 12:58 pm
Bogleheads:

It is interesting to read Mr. Ferrill's reasoning for publishing his eight "Lazy Portfolios":

https://www.marketwatch.com/lazyportfolio/howto

Best wishes.
Taylor
This doesn't justify your comparison. If your stock/bond allocation is the most important part of an allocation it only stands to reason you cannot fairly compare a portfolio with 10% bonds and one with 40% bonds.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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Re: Slice and Dice

Post by Jack FFR1846 » Tue Nov 21, 2017 2:38 pm

Of course a 3 fund portfolio can be any percentage of the 3 asset classes. I would agree that a 90/10 won't perform like my own 50/50. But in a down year, I'll be happy that my 50/50 doesn't perform like a 90/10.

I'd like to think that I own the entire haystack. I like that index funds put the individual pieces of straw in that haystack so I don't have to be bothered. I just ask the tractor driver to dump this percentage of US stock, that percentage of international stock and the other percentage of bond. Then I go inside and have a nice piece of apple pie. I do tend to like to slice the pie..... but not my investments.
Bogle: Smart Beta is stupid

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Earl Lemongrab
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Re: Slice and Dice

Post by Earl Lemongrab » Wed Nov 22, 2017 1:51 pm

The slicing is less important than the tilts it allows. The research data supports higher expected returns from small and value.

My target allocation is:

Code: Select all

US:	
Large Cap	20.00%
Large Value	10.00%
Small Cap	10.00%
Small Value	20.00%
Real Estate	10.00%
Intl:	
Large Cap	7.50%
Large Value	7.50%
Small Cap	10.00%
Emerging Mkts	5.00%
Total		100.00%
This gives a style box of:

Code: Select all

18 16 12
07 07 05
13 12 10
So not the Trev 50/50 tilt, but definite small and value leanings at least.

Now that's just allocations. I have many more funds than that, due to tax-loss harvesting and multiple accounts. I don't find it to be complicated to manage. Were I starting from scratch I'd probably do it a bit simpler.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

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Taylor Larimore
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Re: Slice and Dice

Post by Taylor Larimore » Wed Nov 22, 2017 4:02 pm

Earl Lemongrab wrote:
Wed Nov 22, 2017 1:51 pm
The slicing is less important than the tilts it allows. The research data supports higher expected returns from small and value.

My target allocation is:

Code: Select all

US:	
Large Cap	20.00%
Large Value	10.00%
Small Cap	10.00%
Small Value	20.00%
Real Estate	10.00%
Intl:	
Large Cap	7.50%
Large Value	7.50%
Small Cap	10.00%
Emerging Mkts	5.00%
Total		100.00%
This gives a style box of:

Code: Select all

18 16 12
07 07 05
13 12 10
So not the Trev 50/50 tilt, but definite small and value leanings at least.

Now that's just allocations. I have many more funds than that, due to tax-loss harvesting and multiple accounts. I don't find it to be complicated to manage. Were I starting from scratch I'd probably do it a bit simpler.
Earl:

How many funds do you own? What about bonds/fixed-income?

Best wishes
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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czeckers
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Re: Slice and Dice

Post by czeckers » Wed Nov 22, 2017 4:07 pm

Of course large growth has beaten the pants off of most tilted portfolios over the last 8 years or so. Maybe small/value tilt is set for a come back. :greedy
The Espresso portfolio: | | 16% LCV, 16% SCV, 16% EM, 8% Int'l Value, 8% Int'l Sm, 8% US REIT, 8% Int'l REIT, 20% Inter-term US Treas | | "A journey of a thousand miles begins with a single step."

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Re: Slice and Dice

Post by CFK » Wed Nov 22, 2017 4:53 pm

I slice and dice to avoid the regret I know that i would feel when one asset class outperforms - in other words, to avoid performance chasing. My asset allocation - 17.5% Total Stock Market, 17.5% small cap, 17.5% Emerging Markets, 17.5% Developed Markets, 30% Bonds.

Were I to invest only in total stock market, I know that I would feel deep pangs of regret during periods (like the last year) when international stocks perform well. Also, this takes minimal upkeep given most rebalancing occurs through introduction of new money.

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Re: Slice and Dice

Post by Trev H » Wed Nov 22, 2017 5:37 pm

You can keep it simple and still manage 3 factor global diversification... below an old post I did a few years back.

viewtopic.php?t=38374

Someone above mentioned SV coming back... LG having it's hay day lately...

That is a fact... that you will see if you study the data over and over... they will swap places taking the lead, and sometimes one will out perform the other for 6-7-8 years in a row, then the swap happens.

If you 3 fund... then you are really only getting large cap (equity) performance... (1 factor - Beta).

At times that is Great... (for 6-7-8 years) but at times it Stinks for 6-7-8 years (those years when small and value are kicking butt) and Large looks like DIRT.

I personally prefer to equally weight large and small, market and value, US and International, and you can do that and keep it quite simple (link to post above). This also eliminates the problem of having the Greatest performing portfolio for 6-7-8 years, followed by the Worst performing portfolio for the next 6-7-8 years.

It is much better just always being good enough (somewhere in the middle).

Trev H

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Re: Slice and Dice

Post by patrick013 » Wed Nov 22, 2017 5:54 pm

Image

Main idea is to reduce beta with as good or better than market return.
Without further going into sectors, which I think would increase beta,
these should at least satisfy various tilts, etc..
age in bonds, buy-and-hold, 10 year business cycle

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Re: 8 Lazy Portfolios

Post by racy » Wed Nov 22, 2017 6:05 pm

Taylor Larimore wrote:
Mon Nov 20, 2017 11:44 pm
poppa23 wrote:
Mon Nov 20, 2017 11:14 pm
i have seen members list there portfolios some of there are significantly sliced and diced with 7 8 9 different funds ie small cap value small cap blend etc..my question is how much can that really add to a portfolio over what a 3 fund portfolio. I ask because at some point its just not worth managing 7 funds for an extra .5 in return for the year.Your thoughts please.
poppa23:

In my opinion, "managing 7 funds for an extra .5 in return" is more likely to result in .5% less return. You can see it here:

Total Returns for 8 Lazy Portfolios*

*The leading Second Grader Starter Lazy Portfolio is The Three-Fund Portfolio.

Best wishes.
Taylor
Yeah, but: the 2nd Grader portfolio has only 10% in bonds. The rest are usually around 40%. Are you recommending that to the OP?

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Earl Lemongrab
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Re: Slice and Dice

Post by Earl Lemongrab » Thu Nov 23, 2017 1:24 am

Taylor Larimore wrote:
Wed Nov 22, 2017 4:02 pm
Earl:

How many funds do you own? What about bonds/fixed-income?
I'm not sure how to answer the first. Do you mean distinct funds, or including the same fund in different accounts?

As far as fixed income, 20% each in bond index and stable value.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

bling
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Re: Slice and Dice

Post by bling » Thu Nov 23, 2017 5:51 am

for me the biggest advantage for slice and dice is more opportunities for tax-loss harvesting. if you only have TSM, then you can only harvest when the entire market falls. but if you have large-caps, mid-caps, and small-caps, there will be times when small caps fall while the others remain the same, etc.

also, with multiple jobs and 401ks, you'll need to manage your desired allocation across multiple accounts anyway, and if you're following the tax efficient allocation guidelines, it will not be equal across all of them, because you'll want bonds in tax advantaged accounts and equities in taxed.

so, adding slicing/dicing on top of that really isn't that much more work.

for me, i have a modified swensen portfolio where i slice/dice the equities and heavily tilt to mid and small caps.

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Taylor Larimore
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Re: Slice and Dice

Post by Taylor Larimore » Thu Nov 23, 2017 7:45 am

Earl:

Distinct funds (and individual stocks).

Thank you and have a Happy Thanksgiving.

Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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Re: Slice and Dice

Post by abuss368 » Thu Nov 23, 2017 9:11 am

poppa23 wrote:
Mon Nov 20, 2017 11:14 pm
i have seen members list there portfolios some of there are significantly sliced and diced with 7 8 9 different funds ie small cap value small cap blend etc..my question is how much can that really add to a portfolio over what a 3 fund portfolio. I ask because at some point its just not worth managing 7 funds for an extra .5 in return for the year.Your thoughts please.
Hi poppa23 -

Jack Bogle has stated that "simplicity is the master key to investment success". For good reason the Three Fund Portfolio does just that. I would caution hat a 0.5% additional return could very well be a 0.5% additional oss (or more).

Best.
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs

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Re: Slice and Dice

Post by abuss368 » Thu Nov 23, 2017 9:11 am

One should structure an investment portfolio that is low cost and diversified and importantly allows them to sleep at night.
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs

Nicolas
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Re: Slice and Dice

Post by Nicolas » Thu Nov 23, 2017 11:15 am

CFK wrote:
Wed Nov 22, 2017 4:53 pm
I slice and dice to avoid the regret I know that i would feel when one asset class outperforms - in other words, to avoid performance chasing. My asset allocation - 17.5% Total Stock Market, 17.5% small cap, 17.5% Emerging Markets, 17.5% Developed Markets, 30% Bonds.

Were I to invest only in total stock market, I know that I would feel deep pangs of regret during periods (like the last year) when international stocks perform well. Also, this takes minimal upkeep given most rebalancing occurs through introduction of new money.
But TSM already has a significant allocation to small/micro (about 9% according to M*), so it would seem you're overweighting sc. Shouldn't you be in an S&P 500 fund instead of TSM to properly follow your investment philosophy? By the way, this plan appeals to me too as I hate regret.

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Earl Lemongrab
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Re: Slice and Dice

Post by Earl Lemongrab » Thu Nov 23, 2017 11:26 am

Taylor Larimore wrote:
Thu Nov 23, 2017 7:45 am
Earl:
Distinct funds (and individual stocks).
Looks like 16 ETFs and funds on the stock side. I have some shares of Megacorp stock that they gave us in a profit-sharing program from years back. I don't even have those in the asset allocation spreadsheet, although I probably should. Actually I should sell them as Megacorp has been on a tear and the share value is way up.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

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Taylor Larimore
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Re: Slice and Dice

Post by Taylor Larimore » Thu Nov 23, 2017 2:05 pm

Earl:

Thank you for your reply.

Please read my "Simplicity" link below.

Enjoy a Happy Thanksgiving Day!

Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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triceratop
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Re: 8 Lazy Portfolios

Post by triceratop » Thu Nov 23, 2017 2:11 pm

racy wrote:
Wed Nov 22, 2017 6:05 pm
Taylor Larimore wrote:
Mon Nov 20, 2017 11:44 pm
poppa23 wrote:
Mon Nov 20, 2017 11:14 pm
i have seen members list there portfolios some of there are significantly sliced and diced with 7 8 9 different funds ie small cap value small cap blend etc..my question is how much can that really add to a portfolio over what a 3 fund portfolio. I ask because at some point its just not worth managing 7 funds for an extra .5 in return for the year.Your thoughts please.
poppa23:

In my opinion, "managing 7 funds for an extra .5 in return" is more likely to result in .5% less return. You can see it here:

Total Returns for 8 Lazy Portfolios*

*The leading Second Grader Starter Lazy Portfolio is The Three-Fund Portfolio.

Best wishes.
Taylor
Yeah, but: the 2nd Grader portfolio has only 10% in bonds. The rest are usually around 40%. Are you recommending that to the OP?
Taylor,
Any followup on this? Surely you agree that a stock-bond split is a major determinant of returns (either positive or negative). Do you agree that these portfolios cannot be fairly compared?

-triceratop
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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oldcomputerguy
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Re: Slice and Dice

Post by oldcomputerguy » Thu Nov 23, 2017 3:13 pm

DrGoogle2017 wrote:
Tue Nov 21, 2017 12:25 am
There is nothing to manage, just buy and hold.
Well, rebalance, but that shouldn’t take much effort, even with eight or nine funds.
Anybody know why there's a 20-pound frozen turkey up in the light grid?

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Taylor Larimore
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Paul Farrell's 8 MarketWatch portfolios

Post by Taylor Larimore » Thu Nov 23, 2017 9:03 pm

Taylor,
Any followup on this? Surely you agree that a stock-bond split is a major determinant of returns (either positive or negative). Do you agree that these portfolios cannot be fairly compared? -triceratop
triceratop:

Yes, I wholeheartedly agree that "a stock-bond split is a major determinant of returns."

I am sure that Mr. Paul Farrell picked the eight expert designed portfolios for comparison. They are what they are.

Fair or not, I would rather have been invested in the Second Grader Starter Three-Fund Portfolio during the past 10 years (which included a crushing bear market) than invested in the other seven portfolios.

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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Earl Lemongrab
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Re: Slice and Dice

Post by Earl Lemongrab » Fri Nov 24, 2017 12:46 pm

Taylor Larimore wrote:
Thu Nov 23, 2017 2:05 pm
Earl:

Thank you for your reply.

Please read my "Simplicity" link below.
I have seen it. Not sure why you think it relevant to my situation.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

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abuss368
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Re: 8 Lazy Portfolios

Post by abuss368 » Fri Nov 24, 2017 1:21 pm

triceratop wrote:
Thu Nov 23, 2017 2:11 pm
racy wrote:
Wed Nov 22, 2017 6:05 pm
Taylor Larimore wrote:
Mon Nov 20, 2017 11:44 pm
poppa23 wrote:
Mon Nov 20, 2017 11:14 pm
i have seen members list there portfolios some of there are significantly sliced and diced with 7 8 9 different funds ie small cap value small cap blend etc..my question is how much can that really add to a portfolio over what a 3 fund portfolio. I ask because at some point its just not worth managing 7 funds for an extra .5 in return for the year.Your thoughts please.
poppa23:

In my opinion, "managing 7 funds for an extra .5 in return" is more likely to result in .5% less return. You can see it here:

Total Returns for 8 Lazy Portfolios*

*The leading Second Grader Starter Lazy Portfolio is The Three-Fund Portfolio.

Best wishes.
Taylor
Yeah, but: the 2nd Grader portfolio has only 10% in bonds. The rest are usually around 40%. Are you recommending that to the OP?
Taylor,
Any followup on this? Surely you agree that a stock-bond split is a major determinant of returns (either positive or negative). Do you agree that these portfolios cannot be fairly compared?

-triceratop
If you follow the Lazy Portfolios (which range form a few funds to many) long enough, one will notice that they will lead the pack at different times. Right now the Three Fund Portfolio has done well. It was not long ago, the Yale, and David Swensen were well ahead. Then REITs and TIPS pulled back.
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs

mjb49
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Re: Slice and Dice

Post by mjb49 » Fri Nov 24, 2017 4:37 pm

It is my understanding that slicing and dicing is to reduce risk as well as increase returns. When I compare my 10 fund portfolio 50/50 equity to fixed (Swedroe) to the Second Grader's Portfolio in the Backtest Portfolio Returns spreadsheet from this site 1985-2016, my returns trail by 45 BP. My SD is 9.79% compared to 15.87% in the Second Grader's Portfolio. 2005-2016 my portfolio trails by 48 BP with a 55% reduction in risk. I would gladly give up 45 to 48 BP in returns for a 40% to 55% reduction in risk.

Thank you in advance for any input.

Mike
Last edited by mjb49 on Sat Nov 25, 2017 6:33 am, edited 2 times in total.

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zaboomafoozarg
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Re: Slice and Dice

Post by zaboomafoozarg » Fri Nov 24, 2017 6:39 pm

I slice-and-dice with size/value/REITs and a little alternatives. But I have conviction issues. I always worry if I'm S&D'ing enough, or overdoing it, or not doing it the right way.

Honestly sometimes I wish I could just go back to the way I did things 6 years ago - 50% US stocks, 25% international stocks, 25% US bonds.

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