Strategy for doubling Bogleheads Total Return over 20 years

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grayfox
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Strategy for doubling Bogleheads Total Return over 20 years

Post by grayfox » Sun Feb 10, 2019 7:36 am

Here's a simple strategy for getting 2x Bogleheads total return over 20 years.

Invest the Bogleheads way for 20 years. E.g. the portfolio might be a typical 60/40 TSM/TBM portfolio with annual rebalancing. Let's say you get 5% CAGR. At the end of 20 years, sell all the mutual funds, withdraw the cash, take it to Monte Carlo, go to the roulette table, and put all the money on Black. If it comes up Black, you will double your total return.

This has been verified through Monte Carlo simulation. When I was in Monte Carlo a few years ago, I bought a 5 EURO chip and put it on Black. It came up Black and I got back my 5 EUR chip, plus another 5 EUR chip.** So the strategy has been verified through backtesting.

Of course, there is some element of risk. Investing involves a tradeoff between risk and return. You could extend this idea to get 4x or 8x total return at higher risk.

Who's in?

** Full disclosure: I put the second 5 EUR chip on Black and it came up Red, and lost it. I quit and took my first 5 EUR chip home as a souvenir. I still have it. True story.

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Spinola
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Re: Strategy for doubling Bogleheads Total Return over 20 years

Post by Spinola » Sun Feb 10, 2019 10:33 am

I would bet on an index of black and red at all the casinos.. šŸ˜Ž

Shallowpockets
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Re: Strategy for doubling Bogleheads Total Return over 20 years

Post by Shallowpockets » Sun Feb 10, 2019 10:41 am

Go to the Craps table. Odds of rolling out a 7 on the come out roll are marginally better then the 50/50 of the black or red in roulette.

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Kenkat
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Re: Strategy for doubling Bogleheads Total Return over 20 years

Post by Kenkat » Sun Feb 10, 2019 10:43 am

You can also switch this and do it with much less risk. Place the bet at the beginning instead of the end and you can still double your money but with much less risk. For example, place that $5 bet and turn it into $10. Then invest it the Boglehead Way and you will have twice as much in the end as the investor who just started with $5. :happy

averagedude
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Re: Strategy for doubling Bogleheads Total Return over 20 years

Post by averagedude » Sun Feb 10, 2019 10:50 am

Obviously you have a conservative risk tolerance. Why would you settle for a 2X boglehead return by picking a color when you can get a 35X boglehead return by picking a number. Being this conservative, you may find it difficult to reach your financial goals.

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Epsilon Delta
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Re: Strategy for tripling Bogleheads Total Return over 20 years

Post by Epsilon Delta » Sun Feb 10, 2019 11:55 am

While you'd double something it's not total return.

You might want to check the random number generator in your simulator -- it's clearly biased.

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HomerJ
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Re: Strategy for doubling Bogleheads Total Return over 20 years

Post by HomerJ » Sun Feb 10, 2019 11:57 am

Homer J Simpson: After years of disappointment with get rich quick schemes, I know I'm gonna get rich with this scheme. And quick.
The J stands for Jay

dknightd
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Re: Strategy for doubling Bogleheads Total Return over 20 years

Post by dknightd » Sun Feb 10, 2019 12:06 pm

grayfox wrote: ā†‘
Sun Feb 10, 2019 7:36 am
Here's a simple strategy for getting 2x Bogleheads total return over 20 years.

Invest the Bogleheads way for 20 years. E.g. the portfolio might be a typical 60/40 TSM/TBM portfolio with annual rebalancing. Let's say you get 5% CAGR. At the end of 20 years, sell all the mutual funds, withdraw the cash, take it to Monte Carlo, go to the roulette table, and put all the money on Black. If it comes up Black, you will double your total return.

This has been verified through Monte Carlo simulation. When I was in Monte Carlo a few years ago, I bought a 5 EURO chip and put it on Black. It came up Black and I got back my 5 EUR chip, plus another 5 EUR chip.** So the strategy has been verified through backtesting.

Of course, there is some element of risk. Investing involves a tradeoff between risk and return. You could extend this idea to get 4x or 8x total return at higher risk.

Who's in?

** Full disclosure: I put the second 5 EUR chip on Black and it came up Red, and lost it. I quit and took my first 5 EUR chip home as a souvenir. I still have it. True story.
I'm glad you had fun and broke even. You were lucky!

HEDGEFUNDIE
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Re: Strategy for doubling Bogleheads Total Return over 20 years

Post by HEDGEFUNDIE » Sun Feb 10, 2019 12:08 pm

The real question is, why didnā€™t you backtest during the 1970s when inflation killed everything? Totally invalidates your strategy.

pdavi21
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Re: Strategy for doubling Bogleheads Total Return over 20 years

Post by pdavi21 » Sun Feb 10, 2019 12:10 pm

The most rediculous thing about this post is a 40% Bond allocation for a 20 year investment horizon.

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Re: Strategy for doubling Bogleheads Total Return over 20 years

Post by LadyGeek » Sun Feb 10, 2019 12:12 pm

This thread has run its course and is locked (gambling is off-topic).
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