Why not 100% PSLDX?

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drzzzzz
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Re: Why not 100% PSLDX?

Post by drzzzzz »

fmackaw wrote: Wed Jan 06, 2021 6:58 pm Does anyone know if you can purchase additional shares of PSLDX at Fidelity if you already hold it?

i.e. if I transfer my Roth to a different brokerage and buy PSLDX, then transfer it back to Fidelity, would I be able to buy more PSLDX when I contribute next year or would I be stuck with the original allocation?

I ask because all of my accounts are at Fidelity right now, so it'd be convenient to keep it that way if possible.
We are in the process of transferring funds from Vanguard to Fidelity and I have PSLDX in a Roth account at Vanguard - while the initial buy in is high, it's not outrageous like at Fidelity where I recall it is a million dollars. I asked Fidelity if we transfer the shares to them, can we continue to buy additional shares and their response was no - we kept that piece of the account at Vanguard.
fmackaw
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Re: Why not 100% PSLDX?

Post by fmackaw »

drzzzzz wrote: Wed Jan 06, 2021 7:11 pm We are in the process of transferring funds from Vanguard to Fidelity and I have PSLDX in a Roth account at Vanguard - while the initial buy in is high, it's not outrageous like at Fidelity where I recall it is a million dollars. I asked Fidelity if we transfer the shares to them, can we continue to buy additional shares and their response was no - we kept that piece of the account at Vanguard.
Thanks for the info. Guess I need to take the plunge and move the account permanently. Is it right that the transaction fee for Vanguard is only $8 after the 25k minimum? If so, that sounds like one of the best places to move it to.
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UpsetRaptor
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Re: Why not 100% PSLDX?

Post by UpsetRaptor »

fmackaw wrote: Wed Jan 06, 2021 10:16 pm
drzzzzz wrote: Wed Jan 06, 2021 7:11 pm We are in the process of transferring funds from Vanguard to Fidelity and I have PSLDX in a Roth account at Vanguard - while the initial buy in is high, it's not outrageous like at Fidelity where I recall it is a million dollars. I asked Fidelity if we transfer the shares to them, can we continue to buy additional shares and their response was no - we kept that piece of the account at Vanguard.
Thanks for the info. Guess I need to take the plunge and move the account permanently. Is it right that the transaction fee for Vanguard is only $8 after the 25k minimum? If so, that sounds like one of the best places to move it to.
$20 transaction fee at VG.
drzzzzz
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Re: Why not 100% PSLDX?

Post by drzzzzz »

UpsetRaptor wrote: Wed Jan 06, 2021 10:33 pm
fmackaw wrote: Wed Jan 06, 2021 10:16 pm
drzzzzz wrote: Wed Jan 06, 2021 7:11 pm We are in the process of transferring funds from Vanguard to Fidelity and I have PSLDX in a Roth account at Vanguard - while the initial buy in is high, it's not outrageous like at Fidelity where I recall it is a million dollars. I asked Fidelity if we transfer the shares to them, can we continue to buy additional shares and their response was no - we kept that piece of the account at Vanguard.
Thanks for the info. Guess I need to take the plunge and move the account permanently. Is it right that the transaction fee for Vanguard is only $8 after the 25k minimum? If so, that sounds like one of the best places to move it to.
$20 transaction fee at VG.
Depends on your assets under management at Vanguard - could be $20 or zero per trade
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codoriti
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Re: Why not 100% PSLDX?

Post by codoriti »

Looks like with the fresh Roth contributions at the beginning of the year the fund crossed the Billion total assets mark :)
muffins14
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Re: Why not 100% PSLDX?

Post by muffins14 »

fmackaw wrote: Wed Jan 06, 2021 6:58 pm Does anyone know if you can purchase additional shares of PSLDX at Fidelity if you already hold it?

i.e. if I transfer my Roth to a different brokerage and buy PSLDX, then transfer it back to Fidelity, would I be able to buy more PSLDX when I contribute next year or would I be stuck with the original allocation?

I ask because all of my accounts are at Fidelity right now, so it'd be convenient to keep it that way if possible.
I was told that you _can_ make new contributions to PSLDX at Fidelity, but have not done it yet.

I opened an account at Ally this week that I am still waiting on approval for, and plan to purchase PSLDX and transfer in-kind to fidelity asap.

Will let you know how it goes
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firebirdparts
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Re: Why not 100% PSLDX?

Post by firebirdparts »

I bought some in a Fido 401k brokeragelink this week. So if you have some, you're good.
A fool and your money are soon partners
mroe800
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Re: Why not 100% PSLDX?

Post by mroe800 »

firebirdparts wrote: Thu Jan 07, 2021 1:20 pm I bought some in a Fido 401k brokeragelink this week. So if you have some, you're good.
(010952) Please call a Fidelity Representative at 1-800-544-6666 to buy this fund.
sundevil_jay
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Re: Why not 100% PSLDX?

Post by sundevil_jay »

mroe800 wrote: Thu Jan 07, 2021 1:21 pm
firebirdparts wrote: Thu Jan 07, 2021 1:20 pm I bought some in a Fido 401k brokeragelink this week. So if you have some, you're good.
(010952) Please call a Fidelity Representative at 1-800-544-6666 to buy this fund.
Last time I checked online, it showed me 1M minimum. Are you saying that calling fidelity, they can place this trade without min 1M? Let me know this is important for me as my retirement portfolio is in Fidelity and this would work really great if they do this. I dont think I can do 1M min on this fund but definitely can go decent amount in.
keith6014
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Re: Why not 100% PSLDX?

Post by keith6014 »

Long Term rates have been shooting up. PSLDX is holding its ground. All while my leveraged ETF strategy got a drubbing :oops:
NMBob
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Re: Why not 100% PSLDX?

Post by NMBob »

interesting as Hedgefundies excellent adventure is outperforming sp500 recent periods
hea = 55/45 upro/tmf

sep20 -dec 20 sp500 7.8% / hea 8.3%
oct20 - dec20 sp500 12.1 / hea 16.7
nov20-dec20 sp500 15.1 / hea 28.4
dec20-dec 20 sp500 3.84 / hea 5.08
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firebirdparts
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Re: Why not 100% PSLDX?

Post by firebirdparts »

sundevil_jay wrote: Thu Jan 07, 2021 7:10 pm
mroe800 wrote: Thu Jan 07, 2021 1:21 pm
firebirdparts wrote: Thu Jan 07, 2021 1:20 pm I bought some in a Fido 401k brokeragelink this week. So if you have some, you're good.
(010952) Please call a Fidelity Representative at 1-800-544-6666 to buy this fund.
Last time I checked online, it showed me 1M minimum. Are you saying that calling fidelity, they can place this trade without min 1M? Let me know this is important for me as my retirement portfolio is in Fidelity and this would work really great if they do this. I dont think I can do 1M min on this fund but definitely can go decent amount in.
I wouldn't get my hopes up, based on everything that's been consistently posted here.
A fool and your money are soon partners
mroe800
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Re: Why not 100% PSLDX?

Post by mroe800 »

sundevil_jay wrote: Thu Jan 07, 2021 7:10 pm
mroe800 wrote: Thu Jan 07, 2021 1:21 pm
firebirdparts wrote: Thu Jan 07, 2021 1:20 pm I bought some in a Fido 401k brokeragelink this week. So if you have some, you're good.
(010952) Please call a Fidelity Representative at 1-800-544-6666 to buy this fund.
Last time I checked online, it showed me 1M minimum. Are you saying that calling fidelity, they can place this trade without min 1M? Let me know this is important for me as my retirement portfolio is in Fidelity and this would work really great if they do this. I dont think I can do 1M min on this fund but definitely can go decent amount in.
That is a copy of the error I get when I try to buy PSLDX in my Fido 401K’s BrokerageLink. I do not hold any PSLDX at Fido, period.
Raraculus
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Re: Why not 100% PSLDX?

Post by Raraculus »

keith6014 wrote: Fri Jan 08, 2021 5:51 pmLong Term rates have been shooting up. PSLDX is holding its ground. All while my leveraged ETF strategy got a drubbing :oops:
Is this the reason why PSLDX zagged when the stock market zigged on January 6th, 2021?

I knew that rising interest rates would hit PSLDX... And PSLDX still managed to muddle through.

PSLDX is underperforming VTSAX for almost three months now. Still, cheaper prices can only mean buying more PSLDX! :)
manlymatt83
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Re: Why not 100% PSLDX?

Post by manlymatt83 »

Raraculus wrote: Sun Jan 10, 2021 3:16 pm
keith6014 wrote: Fri Jan 08, 2021 5:51 pmLong Term rates have been shooting up. PSLDX is holding its ground. All while my leveraged ETF strategy got a drubbing :oops:
Is this the reason why PSLDX zagged when the stock market zigged on January 6th, 2021?

I knew that rising interest rates would hit PSLDX... And PSLDX still managed to muddle through.

PSLDX is underperforming VTSAX for almost three months now. Still, cheaper prices can only mean buying more PSLDX! :)
ELI5: why is it underperforming?
ljford7
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Re: Why not 100% PSLDX?

Post by ljford7 »

PSDLX tracks a S&P500 index (benchmark).

VTSAX is tracking the total market (benchmark).

Small caps have been on a terror lately and are included in VTSAX, but not PSDLX.
manlymatt83
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Re: Why not 100% PSLDX?

Post by manlymatt83 »

ljford7 wrote: Sun Jan 10, 2021 4:02 pm PSDLX tracks a S&P500 index (benchmark).

VTSAX is tracking the total market (benchmark).

Small caps have been on a terror lately and are included in VTSAX, but not PSDLX.
Got it! Too bad there isn’t a PSLDX that tracks total market for the equity.
getjiggy
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Re: Why not 100% PSLDX?

Post by getjiggy »

mroe800 wrote: Sat Jan 09, 2021 5:37 am
sundevil_jay wrote: Thu Jan 07, 2021 7:10 pm
mroe800 wrote: Thu Jan 07, 2021 1:21 pm
firebirdparts wrote: Thu Jan 07, 2021 1:20 pm I bought some in a Fido 401k brokeragelink this week. So if you have some, you're good.
(010952) Please call a Fidelity Representative at 1-800-544-6666 to buy this fund.
Last time I checked online, it showed me 1M minimum. Are you saying that calling fidelity, they can place this trade without min 1M? Let me know this is important for me as my retirement portfolio is in Fidelity and this would work really great if they do this. I dont think I can do 1M min on this fund but definitely can go decent amount in.

That is a copy of the error I get when I try to buy PSLDX in my Fido 401K’s BrokerageLink. I do not hold any PSLDX at Fido, period.
Fidelity does require $1m min investment if you start there for brokeragelink or any account. If you already have psldx fmoved over there rom somewhere else they let you buy more without restrictions. That’s how I worked around
OuterBanks
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Re: Why not 100% PSLDX?

Post by OuterBanks »

Any thoughts on going 20% Vanguard Extended Market Index Fund Admiral Shares (VEXAX) and 80% PSLDX. This would capture everything not in the S&P500 to help round it out a bit more?
HSA 100% FZROX, 401K 100% FSKAX, Roth IRA 100% VTSAX, Taxable 100% VTSAX.
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cos
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Re: Why not 100% PSLDX?

Post by cos »

OuterBanks wrote: Tue Jan 12, 2021 11:50 am Any thoughts on going 20% Vanguard Extended Market Index Fund Admiral Shares (VEXAX) and 80% PSLDX. This would capture everything not in the S&P500 to help round it out a bit more?
Have you looked at PSCSX? It tracks the Russell 2000 small-cap index. You might also want to check out PISIX and/or PSKIX. They take the same approach as PSLDX but with international equities and shorter-term bonds, currency hedged and unhedged respectively.
Sasquatch1
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Re: Why not 100% PSLDX?

Post by Sasquatch1 »

Is there anything similar to this that would be efficient in a taxable account?
DMoogle
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Re: Why not 100% PSLDX?

Post by DMoogle »

Sasquatch1 wrote: Tue Jan 12, 2021 3:50 pm Is there anything similar to this that would be efficient in a taxable account?
NTSX is the closest, I've heard. Discussion thread here: viewtopic.php?f=10&t=302218

It's not as highly leveraged though (for better or for worse).
fmackaw
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Re: Why not 100% PSLDX?

Post by fmackaw »

getjiggy wrote: Tue Jan 12, 2021 1:05 am Fidelity does require $1m min investment if you start there for brokeragelink or any account. If you already have psldx fmoved over there rom somewhere else they let you buy more without restrictions. That’s how I worked around
Do you know what fee Fidelity charges when purchasing additional shares?(if there is one)
RonSea
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Re: Why not 100% PSLDX?

Post by RonSea »

Does anyone add VXX / VIXY to their portfolio?

For the past few months I've held 90% PSLDX 5% IAU 5% JPST in my roth.

3-4% VIXY does well at reducing volatility in backtesting (https://www.portfoliovisualizer.com/bac ... tion8_3=40), especially compared to other assets (gold, reits, emerging, cash, scv, etc). I added the IAU and JPST to slightly reduce drawdown / risk but now think a portfolio of 97% PSLDX 3% VXX would likely be better.

One issue is I don't understand how VIX and how much protection it offers. Although from my googling it appears that most people don't/barely understand it, including economists.


I'm also debating just switching to UPRO/TMF, perhaps with 55% UPRO, 40% TMF, 5% VXX... Partially just to avoid Schwab's $50 fee on PSLDX. I prefer PSLDX's risk though.
ma21n2
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Re: Why not 100% PSLDX?

Post by ma21n2 »

I'm going to buy some PSLDX in my Roth IRA. It's only going to be about 3% of my total portfolio, which is 85% in stocks. I'm not sure if I should count PSLDX towards my stock allocation, or just keep it completely separate and treat it as play money. What do most people do if PSLDX is just a small portion of their portfolio? Thanks!
manlymatt83
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Re: Why not 100% PSLDX?

Post by manlymatt83 »

ma21n2 wrote: Sat Jan 16, 2021 5:02 pm I'm going to buy some PSLDX in my Roth IRA. It's only going to be about 3% of my total portfolio, which is 85% in stocks. I'm not sure if I should count PSLDX towards my stock allocation, or just keep it completely separate and treat it as play money. What do most people do if PSLDX is just a small portion of their portfolio? Thanks!
I factor in PSLDX alongside my VTI holdings (essentially total market US even though it's only S&P.... close enough). So I just hold less VTI when compared to VXUS.
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firebirdparts
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Re: Why not 100% PSLDX?

Post by firebirdparts »

I consider it to be the S&P500. It outperforms a little bit, but daily movement is pretty stock-ish.
A fool and your money are soon partners
BJJ_GUY
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Re: Why not 100% PSLDX?

Post by BJJ_GUY »

FlantasticSea wrote: Sat Jan 16, 2021 2:56 pm Does anyone add VXX / VIXY to their portfolio?

For the past few months I've held 90% PSLDX 5% IAU 5% JPST in my roth.

3-4% VIXY does well at reducing volatility in backtesting (https://www.portfoliovisualizer.com/bac ... tion8_3=40), especially compared to other assets (gold, reits, emerging, cash, scv, etc). I added the IAU and JPST to slightly reduce drawdown / risk but now think a portfolio of 97% PSLDX 3% VXX would likely be better.

One issue is I don't understand how VIX and how much protection it offers. Although from my googling it appears that most people don't/barely understand it, including economists.


I'm also debating just switching to UPRO/TMF, perhaps with 55% UPRO, 40% TMF, 5% VXX... Partially just to avoid Schwab's $50 fee on PSLDX. I prefer PSLDX's risk though.
VIX definitely has a negative relationship with US equity markets, particularly when SPX experiences a pronounced move.

The problem with investing in an ETF that owns VIX futures is that the futures don't move nearly as much as the VIX, so you are using a pretty muted version of VIX. There are some other technicals that can alter this equation, but the takeaway is just to understand that futures aren't moving on a 1:1 ratio with the spot price moves
RonSea
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Re: Why not 100% PSLDX?

Post by RonSea »

BJJ_GUY wrote: Sat Jan 16, 2021 11:31 pm
FlantasticSea wrote: Sat Jan 16, 2021 2:56 pm Does anyone add VXX / VIXY to their portfolio?
[....]
VIX definitely has a negative relationship with US equity markets, particularly when SPX experiences a pronounced move.

The problem with investing in an ETF that owns VIX futures is that the futures don't move nearly as much as the VIX, so you are using a pretty muted version of VIX. There are some other technicals that can alter this equation, but the takeaway is just to understand that futures aren't moving on a 1:1 ratio with the spot price moves
It does look like you're right that VXX is more muted compared to VIX, but I'm not sure it matters as long as VXX can do its job (reducing volatility / depression drawdowns) more than any other asset/fund.
Ralphmacchiokick
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Re: Why not 100% PSLDX?

Post by Ralphmacchiokick »

New here, I’ve been in PSLDX for a while. But looking towards the future, I’m tempted to modify this approach and incorporate a Chinese iteration of the standard UPRO/TMF breakdown.

I wanted to know how you guys would do this, YINN/ something else but I’m not aware of any liquid, reliable 3X Chinese treasury ETFs.
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UpsetRaptor
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Re: Why not 100% PSLDX?

Post by UpsetRaptor »

Ralphmacchiokick wrote: Tue Jan 26, 2021 10:09 am New here, I’ve been in PSLDX for a while. But looking towards the future, I’m tempted to modify this approach and incorporate a Chinese iteration of the standard UPRO/TMF breakdown.

I wanted to know how you guys would do this, YINN/ something else but I’m not aware of any liquid, reliable 3X Chinese treasury ETFs.
You may want to try Hedgefundie's Adventure thread, which is more about discussing the various risk-parity combos of leveraged equities with leveraged bonds. This thread's more PSLDX-specific.

viewtopic.php?f=10&t=288192
FIRE55
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Re: Why not 100% PSLDX?

Post by FIRE55 »

firebirdparts wrote: Sat Jan 16, 2021 10:05 pm I consider it to be the S&P500. It outperforms a little bit, but daily movement is pretty stock-ish.
60% PSLDX : 40% EDV (correlation 0.12) rebalanced quarterly (or indeed 5% bands) looks great in backtest at ~16.5% CAGR and ~14% stdev. Any thoughts on EDV in the coming years?
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cos
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Re: Why not 100% PSLDX?

Post by cos »

FIRE55 wrote: Wed Feb 03, 2021 6:10 pm
firebirdparts wrote: Sat Jan 16, 2021 10:05 pm I consider it to be the S&P500. It outperforms a little bit, but daily movement is pretty stock-ish.
60% PSLDX : 40% EDV (correlation 0.12) rebalanced quarterly (or indeed 5% bands) looks great in backtest at ~16.5% CAGR and ~14% stdev. Any thoughts on EDV in the coming years?
Expect significant volatility and limited upside as rates rise.
BJJ_GUY
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Re: Why not 100% PSLDX?

Post by BJJ_GUY »

FIRE55 wrote: Wed Feb 03, 2021 6:10 pm
firebirdparts wrote: Sat Jan 16, 2021 10:05 pm I consider it to be the S&P500. It outperforms a little bit, but daily movement is pretty stock-ish.
60% PSLDX : 40% EDV (correlation 0.12) rebalanced quarterly (or indeed 5% bands) looks great in backtest at ~16.5% CAGR and ~14% stdev. Any thoughts on EDV in the coming years?
You can't rely on correlations to remain the same as the back-test. Treasuries tend to be less protective and lose the anti-correlation benefits as rates and yields approach zero.

PSLDX is a super long duration asset (equity) combined with long duration bonds. Do you really want to triple down on your long duration bet at current yields? That's a very (negatively) asymmetric risk/reward proposition.
BJJ_GUY
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Re: Why not 100% PSLDX?

Post by BJJ_GUY »

FlantasticSea wrote: Sun Jan 17, 2021 5:13 pm
BJJ_GUY wrote: Sat Jan 16, 2021 11:31 pm
FlantasticSea wrote: Sat Jan 16, 2021 2:56 pm Does anyone add VXX / VIXY to their portfolio?
[....]
VIX definitely has a negative relationship with US equity markets, particularly when SPX experiences a pronounced move.

The problem with investing in an ETF that owns VIX futures is that the futures don't move nearly as much as the VIX, so you are using a pretty muted version of VIX. There are some other technicals that can alter this equation, but the takeaway is just to understand that futures aren't moving on a 1:1 ratio with the spot price moves
It does look like you're right that VXX is more muted compared to VIX, but I'm not sure it matters as long as VXX can do its job (reducing volatility / depression drawdowns) more than any other asset/fund.
The problem is more than the fact that the ETF is a muted version of the VIX, generally. The other side of the analysis is the expected returns from the VXX ETF. Because of the decay from the futures curve, this ETF is going to lose materially more money than one might expect if using the VIX spot price as a proxy.

So here is the problem. To make the diversification/protection of VXX meaningful to alter the drawdown risk (of your total portfolio) you need to own a decent % of VXX as part of total allocation. But if the thing has a Negative 10% expected return in every year where there isn't a major market downturn, the negative impact from the performance drag is going to far outweigh any crisis hedge benefits being expected.
stormcrow
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Re: Why not 100% PSLDX?

Post by stormcrow »

Deleted - Provided duplicate info.
getjiggy
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Re: Why not 100% PSLDX?

Post by getjiggy »

fmackaw wrote: Tue Jan 12, 2021 10:42 pm
getjiggy wrote: Tue Jan 12, 2021 1:05 am Fidelity does require $1m min investment if you start there for brokeragelink or any account. If you already have psldx fmoved over there rom somewhere else they let you buy more without restrictions. That’s how I worked around
Do you know what fee Fidelity charges when purchasing additional shares?(if there is one)
$50 fee for every PSLDX trade
Raraculus
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Re: Why not 100% PSLDX?

Post by Raraculus »

Having a bit of buyer's remorse. PSLDX is lagging behind VTSAX lately. Who knew small cap stocks would go on a tear?

I wish there was a Total Stock version of PSLDX instead of SP500. Anyone? Ferris Bueller? :)
manlymatt83
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Re: Why not 100% PSLDX?

Post by manlymatt83 »

Raraculus wrote: Sun Feb 07, 2021 11:41 am Having a bit of buyer's remorse. PSLDX is lagging behind VTSAX lately. Who knew small cap stocks would go on a tear?

I wish there was a Total Stock version of PSLDX instead of SP500. Anyone? Ferris Bueller? :)
I also wish that there was a total stock version of PSLDX. S&P isn't diversified enough.
Tingting1013
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Re: Why not 100% PSLDX?

Post by Tingting1013 »

manlymatt83 wrote: Sun Feb 07, 2021 11:42 am
Raraculus wrote: Sun Feb 07, 2021 11:41 am Having a bit of buyer's remorse. PSLDX is lagging behind VTSAX lately. Who knew small cap stocks would go on a tear?

I wish there was a Total Stock version of PSLDX instead of SP500. Anyone? Ferris Bueller? :)
I also wish that there was a total stock version of PSLDX. S&P isn't diversified enough.
The issue is liquidity of equity index derivatives. The S&P 500 is the most liquid and hence lowest cost.

I just hold my International and SCV separately.
manlymatt83
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Re: Why not 100% PSLDX?

Post by manlymatt83 »

Tingting1013 wrote: Sun Feb 07, 2021 1:15 pm
manlymatt83 wrote: Sun Feb 07, 2021 11:42 am
Raraculus wrote: Sun Feb 07, 2021 11:41 am Having a bit of buyer's remorse. PSLDX is lagging behind VTSAX lately. Who knew small cap stocks would go on a tear?

I wish there was a Total Stock version of PSLDX instead of SP500. Anyone? Ferris Bueller? :)
I also wish that there was a total stock version of PSLDX. S&P isn't diversified enough.
The issue is liquidity of equity index derivatives. The S&P 500 is the most liquid and hence lowest cost.

I just hold my International and SCV separately.
Makes sense. So if someone owns PSLDX they should probably have some AVUV or SLYV too?
rchmx1
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Re: Why not 100% PSLDX?

Post by rchmx1 »

manlymatt83 wrote: Sun Feb 07, 2021 1:16 pm
Tingting1013 wrote: Sun Feb 07, 2021 1:15 pm
manlymatt83 wrote: Sun Feb 07, 2021 11:42 am
Raraculus wrote: Sun Feb 07, 2021 11:41 am Having a bit of buyer's remorse. PSLDX is lagging behind VTSAX lately. Who knew small cap stocks would go on a tear?

I wish there was a Total Stock version of PSLDX instead of SP500. Anyone? Ferris Bueller? :)
I also wish that there was a total stock version of PSLDX. S&P isn't diversified enough.
The issue is liquidity of equity index derivatives. The S&P 500 is the most liquid and hence lowest cost.

I just hold my International and SCV separately.
Makes sense. So if someone owns PSLDX they should probably have some AVUV or SLYV too?
I'm glad I stuck with SWSSX during the downturn. It has recovered very well, even though I wasn't able to plug much extra money into it during the big drop in March. I only got into it near the ATH around Nov '19, but it's now sitting at a 34% return for me. It has definitely been nice capturing some of the SC returns during this period of time, even if it's only around 7% of my portfolio. SWSSX is a SC blend mutual fund from Schwab btw.
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Re: Why not 100% PSLDX?

Post by bgf »

I currently have $100,000 in an old traditional IRA. I hold Vanguard Target Date 2050. Its basically a 'dead' account, no new money will be flowing in.

For simplicity, lets say that works out to:

$63k US
$27k International
$10k bonds
$0 cash

If I were to exchange for PSLDX but retain my international allocation, it would look something like this:

purchase $70k PSLDX and $30k VXUS.

$70k US (PSLDX)
$30k International (VXUS)
$70k Bonds (PSLDX)
-$70k Cash (PSLDX)

By doing this, I get a ~10% bump in my equity exposure to both US and International, $63k -> $70k and $27k -> $30k, and I get a, what is that 600%?, increase in bonds. In exchange, I take on $70k worth of debt/leverage.

As has been repeated on this thread many times, I'm basically assuming the cost of the leverage will be less than the yield on the bonds. That's great and may very well be the case, BUT I kind of am left feeling like if I'm gonna take on leverage, I'd rather get a larger exposure on the equity side, not the bond side. That looks like a VERY lopsided exchange, a 10% equity bump v. 600% bond bump??! Does that make sense or am I not conceptualizing this properly? That make it look like its not worth doing at all. It such a small equity bump to a smallish portion of my portfolio.

Great thread, and thanks for the help.
“TE OCCIDERE POSSUNT SED TE EDERE NON POSSUNT NEFAS EST"
Tingting1013
Posts: 862
Joined: Mon Aug 24, 2020 5:44 pm

Re: Why not 100% PSLDX?

Post by Tingting1013 »

bgf wrote: Mon Feb 08, 2021 10:50 am I currently have $100,000 in an old traditional IRA. I hold Vanguard Target Date 2050. Its basically a 'dead' account, no new money will be flowing in.

For simplicity, lets say that works out to:

$63k US
$27k International
$10k bonds
$0 cash

If I were to exchange for PSLDX but retain my international allocation, it would look something like this:

purchase $70k PSLDX and $30k VXUS.

$70k US (PSLDX)
$30k International (VXUS)
$70k Bonds (PSLDX)
-$70k Cash (PSLDX)

By doing this, I get a ~10% bump in my equity exposure to both US and International, $63k -> $70k and $27k -> $30k, and I get a, what is that 600%?, increase in bonds. In exchange, I take on $70k worth of debt/leverage.

As has been repeated on this thread many times, I'm basically assuming the cost of the leverage will be less than the yield on the bonds. That's great and may very well be the case, BUT I kind of am left feeling like if I'm gonna take on leverage, I'd rather get a larger exposure on the equity side, not the bond side. That looks like a VERY lopsided exchange, a 10% equity bump v. 600% bond bump??! Does that make sense or am I not conceptualizing this properly? That make it look like its not worth doing at all. It such a small equity bump to a smallish portion of my portfolio.

Great thread, and thanks for the help.
Money is fungible. The -$70k Cash you are borrowing isn’t “for bonds”, it’s “for” the total portfolio you have.

Now, if $70k bonds is too much bonds for your portfolio, that’s a different question.
Semantics
Posts: 228
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Re: Why not 100% PSLDX?

Post by Semantics »

BJJ_GUY wrote: Wed Feb 03, 2021 7:55 pm
FIRE55 wrote: Wed Feb 03, 2021 6:10 pm
firebirdparts wrote: Sat Jan 16, 2021 10:05 pm I consider it to be the S&P500. It outperforms a little bit, but daily movement is pretty stock-ish.
60% PSLDX : 40% EDV (correlation 0.12) rebalanced quarterly (or indeed 5% bands) looks great in backtest at ~16.5% CAGR and ~14% stdev. Any thoughts on EDV in the coming years?
You can't rely on correlations to remain the same as the back-test. Treasuries tend to be less protective and lose the anti-correlation benefits as rates and yields approach zero.

PSLDX is a super long duration asset (equity) combined with long duration bonds. Do you really want to triple down on your long duration bet at current yields? That's a very (negatively) asymmetric risk/reward proposition.
This seems backward. Long-term treasuries have been more strongly negatively correlated with equities than ever before during the past decade as yields have fallen to near zero, which you can verify with a backtest. The reason is that with yields this low, nobody is buying treasuries for the yield any more -- investors only buy them as a safe asset when there's a sell-off in equities, which the Fed is increasingly doubling down on in any crisis, thus amplifying the negative correlation. So, if anything, treasuries are more protective now than they've ever been in their history. We saw this in March 2020. The downside of the low yield is that the protection is more expensive during bull runs for equities, not that the protection is weaker. But this means you don't have to allocate as much to treasuries as in the past to get the same downside protection, and indeed any asset allocation optimization algorithm will show that. So PSLDX should be expected to beat the market by significantly less over the next little while than in the past, however they are still borrowing at close to 0% to earn some >0% yield, so unless treasury yields skyrocket, over a period of several years it should still add a bonus on top of stock returns, staying true to the StocksPLUS name.
bgf
Posts: 1557
Joined: Fri Nov 10, 2017 9:35 am

Re: Why not 100% PSLDX?

Post by bgf »

Tingting1013 wrote: Mon Feb 08, 2021 11:03 am
bgf wrote: Mon Feb 08, 2021 10:50 am I currently have $100,000 in an old traditional IRA. I hold Vanguard Target Date 2050. Its basically a 'dead' account, no new money will be flowing in.

For simplicity, lets say that works out to:

$63k US
$27k International
$10k bonds
$0 cash

If I were to exchange for PSLDX but retain my international allocation, it would look something like this:

purchase $70k PSLDX and $30k VXUS.

$70k US (PSLDX)
$30k International (VXUS)
$70k Bonds (PSLDX)
-$70k Cash (PSLDX)

By doing this, I get a ~10% bump in my equity exposure to both US and International, $63k -> $70k and $27k -> $30k, and I get a, what is that 600%?, increase in bonds. In exchange, I take on $70k worth of debt/leverage.

As has been repeated on this thread many times, I'm basically assuming the cost of the leverage will be less than the yield on the bonds. That's great and may very well be the case, BUT I kind of am left feeling like if I'm gonna take on leverage, I'd rather get a larger exposure on the equity side, not the bond side. That looks like a VERY lopsided exchange, a 10% equity bump v. 600% bond bump??! Does that make sense or am I not conceptualizing this properly? That make it look like its not worth doing at all. It such a small equity bump to a smallish portion of my portfolio.

Great thread, and thanks for the help.
Money is fungible. The -$70k Cash you are borrowing isn’t “for bonds”, it’s “for” the total portfolio you have.

Now, if $70k bonds is too much bonds for your portfolio, that’s a different question.
understood, and i think its clear from the example i provided that money is fungible... nevertheless, am i accurate when i describe the exchange as a 10% equity bump and a 600% bond bump? i just haven't seen it quite put in this manner anywhere on the thread so far.

many people have been saying its essentially a '100% stock" replacement, e.g., how to handle it in your asset allocation breakdown, but when i actually lay it all out, it looks like a method for gaining FAR MORE bond exposure while only getting a minimal increase equity exposure.

im not making any comment on the strategy itself, i just want to make sure that i am accurately seeing what the strategy is.

is that correct or a mischaracterization? or just plain wrong?
“TE OCCIDERE POSSUNT SED TE EDERE NON POSSUNT NEFAS EST"
muffins14
Posts: 501
Joined: Wed Oct 26, 2016 4:14 am

Re: Why not 100% PSLDX?

Post by muffins14 »

Well NTSX holds 90% as S&P 500 and PSLDX holds options to track 100% S&P 500, so, yes, you only get about 11% more equity exposure by choosing PSLDX, and you get more long-term bond exposure and credit exposure because NTSX is shorter-term and Treasury-only

People say it’s a 100% equity replacement because it holds exposure equivalent to 100% S&P 500, PLUS the long-duration bond exposure, it’s why they assigned the naming convention to the fund type
bgf
Posts: 1557
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Re: Why not 100% PSLDX?

Post by bgf »

muffins14 wrote: Mon Feb 08, 2021 12:03 pm Well NTSX holds 90% as S&P 500 and PSLDX holds options to track 100% S&P 500, so, yes, you only get about 11% more equity exposure by choosing PSLDX, and you get more long-term bond exposure and credit exposure because NTSX is shorter-term and Treasury-only

People say it’s a 100% equity replacement because it holds exposure equivalent to 100% S&P 500, PLUS the long-duration bond exposure, it’s why they assigned the naming convention to the fund type
thanks, maybe this strategy is just over my head a bit.

for me personally, if i wanted 10% more exposure to equities, i could just sell my 10% bonds and go 100% equities. bingo.

or, if i wanted to keep my bonds but gain leverage, i could buy futures/call options. or i could open a margin account and just borrow 10% of my holdings.

these seem like pretty simple, straightforward options.

but PSLDX doesn't do anything like those options because PSLDX buys a TON of bonds and then adds a TON of leverage (2x). it seems like a very roundabout strategy for someone hoping to gain some more equity exposure and a very odd strategy for a bond investor.

am i making an error by thinking about this as a sum of its parts? does it make more sense to simply look at how the fund behaves, eg., volatility, sharpe ratio, etc?
“TE OCCIDERE POSSUNT SED TE EDERE NON POSSUNT NEFAS EST"
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firebirdparts
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Re: Why not 100% PSLDX?

Post by firebirdparts »

bgf wrote: Mon Feb 08, 2021 11:30 am
many people have been saying its essentially a '100% stock" replacement, e.g., how to handle it in your asset allocation breakdown, but when i actually lay it all out, it looks like a method for gaining FAR MORE bond exposure while only getting a minimal increase equity exposure.

im not making any comment on the strategy itself, i just want to make sure that i am accurately seeing what the strategy is.

is that correct or a mischaracterization? or just plain wrong?
So I think there is only one possible meaning to the oft-repeated question, and that is if you look back on today 30 years from now, how will you wish you had rebalanced? That is where the action is. So that is why I answer it the way I do. I have no time machine, but people keep asking.

If you want to consider it 100% stocks + 100% bonds, obviously it's pretty easy to do and perfectly acceptable, but it takes on extra importance when placed in the context of a portfolio that's not 100% PSLDX.
A fool and your money are soon partners
DMoogle
Posts: 66
Joined: Sat Oct 31, 2020 10:24 pm

Re: Why not 100% PSLDX?

Post by DMoogle »

bgf wrote: Mon Feb 08, 2021 12:47 pm
muffins14 wrote: Mon Feb 08, 2021 12:03 pm Well NTSX holds 90% as S&P 500 and PSLDX holds options to track 100% S&P 500, so, yes, you only get about 11% more equity exposure by choosing PSLDX, and you get more long-term bond exposure and credit exposure because NTSX is shorter-term and Treasury-only

People say it’s a 100% equity replacement because it holds exposure equivalent to 100% S&P 500, PLUS the long-duration bond exposure, it’s why they assigned the naming convention to the fund type
thanks, maybe this strategy is just over my head a bit.

for me personally, if i wanted 10% more exposure to equities, i could just sell my 10% bonds and go 100% equities. bingo.

or, if i wanted to keep my bonds but gain leverage, i could buy futures/call options. or i could open a margin account and just borrow 10% of my holdings.

these seem like pretty simple, straightforward options.

but PSLDX doesn't do anything like those options because PSLDX buys a TON of bonds and then adds a TON of leverage (2x). it seems like a very roundabout strategy for someone hoping to gain some more equity exposure and a very odd strategy for a bond investor.

am i making an error by thinking about this as a sum of its parts? does it make more sense to simply look at how the fund behaves, eg., volatility, sharpe ratio, etc?
In the simplest terms: At its very core, a stock+bond portfolio will (should) have greater risk-adjusted returns than an all-stock portfolio. So why doesn't everyone do stock+bond portfolios? The answer, as you likely intuitively know, is that while risk-adjusted returns may be superior, absolute returns are lower.

Leverage is a way to get the best of both worlds; the additional diversification from a stock+bond portfolio, while matching or exceeding the returns of an all-equity portfolio. It's not riskless; in the unlikely (but not impossible) event that both stocks AND bonds get hammered at the same time, the leveraged portfolio will get hit hard. Depending on your risk appetite, it may be worth it. To me, it is.
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