What is your contrarian/alternative play?

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P4100354
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What is your contrarian/alternative play?

Post by P4100354 »

Hi everyone!

I want to ask those Bogleheads, who have deviated away from the traditional 3-fund portfolio, what is your current contrarian/alternative asset play? For me personally, after doing a heavy dive into macroeconomics, I have started to allocated a minor portion to BTC and a slightly larger position to gold.
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whodidntante
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Re: What is your contrarian/alternative play?

Post by whodidntante »

I reject the idea that the 3 fund portfolio is traditional. I would be surprised if even a majority here only use three funds in their investment portfolio.
IndexCore
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Re: What is your contrarian/alternative play?

Post by IndexCore »

When a large number of people are in denial about a serious problem, the future may be worse than they expect. I took a very tiny part of my portfolio, and invested it to take advantage if the U.S. walks back towards lock downs. A significant amount of U.S. GDP and population are found in CA, TX and FL. Where TX has been in denial, it just required everyone wear a mask. As Covid-19 rises and denial loses to reality, I expect a tiny part of my portfolio to do well.

My base portfolio remains in boring passive index funds.
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geerhardusvos
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Re: What is your contrarian/alternative play?

Post by geerhardusvos »

- I think an over 4% wr will be safe over the next 30 years for high equity portfolios 8-)

- I refuse to buy a house ever again (well at least not one that costs more than 1-2x my current income)

- I don’t think low cost debt is bad
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occambogle
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Re: What is your contrarian/alternative play?

Post by occambogle »

IndexCore wrote: Sun Jul 05, 2020 11:07 pm. I took a very tiny part of my portfolio, and invested it to take advantage if the U.S. walks back towards lock downs.
Just curious... what did you do for this?
AlohaJoe
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Re: What is your contrarian/alternative play?

Post by AlohaJoe »

P4100354 wrote: Sun Jul 05, 2020 10:12 pm I want to ask those Bogleheads, who have deviated away from the traditional 3-fund portfolio, what is your current contrarian/alternative asset play?
My contrarian asset play is that I don't have 3 funds.
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imak
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Re: What is your contrarian/alternative play?

Post by imak »

Fundamental index with half large & half small allocation in US/Intl developed equity. Also, betting on Long term treasury to continue to be a useful hedge against equities even with negative expected real returns. Globally diversified REITs will continue to be an effective diversifier & emerging markets will continue to underperform on a risk adjusted basis due to widespread corruption in accounting practices.
401k/Roth: 60% US Mid-cap, 20% EAFE Mid-cap, 5% REITs, 5% Emerging mkt, 10% 3xLTT; | Emergency: 40% Mid-cap, 60% Long-bonds; | "Discipline matters more than asset allocation" ~W Bernstein
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unclescrooge
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Re: What is your contrarian/alternative play?

Post by unclescrooge »

US large cap fund is actively managed ETF.

Remainder of Slice and dice portfolio is all market cap weight index ETFs.

Overweight EM, and especially China ex-state owned enterprises.

Also small allocation to gold and gold miners.
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Re: What is your contrarian/alternative play?

Post by IndexCore »

occambogle wrote: Sun Jul 05, 2020 11:54 pm
IndexCore wrote: Sun Jul 05, 2020 11:07 pm. I took a very tiny part of my portfolio, and invested it to take advantage if the U.S. walks back towards lock downs.
Just curious... what did you do for this?
I bought short-dated put options on certain stocks that are more sensitive to the economy closing down.
Nowisee
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Re: What is your contrarian/alternative play?

Post by Nowisee »

US equities and ETFs with a few international stocks and ETFs.
12% cash.
Zero in funds, bonds, treasuries, gold or BTC. Did I understand the question correctly? hahaha
asif408
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Re: What is your contrarian/alternative play?

Post by asif408 »

My portfolio is about 60% EM Fundamental index (value play), 12% Global Silver Miners, 12% Global Oil Producers, and the remainder in a Total International Stock Market Index. So no US stocks or bond indexes in my portfolio. For the last few years I've had this and lagged a US only portfolio, but I figure my time will come eventually. If I'm still behind at the end of 2030 I'll officially throw in the towel.
Robot Monster
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Re: What is your contrarian/alternative play?

Post by Robot Monster »

The main way I deviate from a traditional portfolio is by keeping duration risk super-duper minimal because of hyperinflation risk. I've only taken a toe dip into commodity futures, as a pure hyperinflation hedge play. I have about 12% of my portfolio in TIPS (not short-term). Unsure how this information might be relevant to anyone else, though...actionable much?

I have various other miniscule plays that don't even warrant mentioning e.g. .1% of portfolio in Disney.
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hnd
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Re: What is your contrarian/alternative play?

Post by hnd »

my silliest contrarian play is ATACX. Tactical Allocation with like 2000% turnover and almost 2% expense ratio. 5 Years of ownership, was basically neck and neck with S&P 500 until end of 2018 when it dropped and s&p kept going. after fees its only beaten the S&P to this point by a percent over those 5 years only because he swapped all stocks for bonds in late february. I do believe for my 40th birthday, as i officially become an old man, I'll be selling and getting off that roller coaster and leaving it to the youngins to enjoy.

I read a book and found the guy who wrote the forward runs this fund. I was looking for some fun action and quite frankly this fund got me to pay attention to the stock market. While 39 yr old me would tell 34 yr old me to run away and to pick up a book on indexing, It served its purpose.
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cinghiale
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Re: What is your contrarian/alternative play?

Post by cinghiale »

Cash. Gobs of cash.

For now, I have almost 30% of my portfolio in Vanguard Treasury Money Market fund. I’ve lowered both equity and bond exposure. If it turns out to be a bad move, “so what... big deal.“ * The 30% stock holdings can continue to do their levitating act, and the 40% bond allocation can nibble at the edges as rates head closer and closer to zero.

But if...if... things get weird and wild, there’s plenty of cash available to buy into the swoons.

* The final line from The Adventures of Buckaroo Banzai (1984) for those whose film memory goes back that far.
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Taylor Larimore
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Re: What is your contrarian/alternative play?

Post by Taylor Larimore »

P4100354 wrote: Sun Jul 05, 2020 10:12 pm Hi everyone!

I want to ask those Bogleheads, who have deviated away from the traditional 3-fund portfolio, what is your current contrarian/alternative asset play? For me personally, after doing a heavy dive into macroeconomics, I have started to allocated a minor portion to BTC and a slightly larger position to gold.
Hi P4100354:

My investing has never been "asset play" which suggest a possible loss. My investing had one serious goal--to provide my family enough money to live comfortably throughout our lives.

I am happy to say that our Three-Fund Portfolio did the job (I'm 96).

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "Don't look for the needle. Buy the haystack."
"Simplicity is the master key to financial success." -- Jack Bogle
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Re: What is your contrarian/alternative play?

Post by abuss368 »

Taylor Larimore wrote: Mon Jul 06, 2020 2:26 pm
P4100354 wrote: Sun Jul 05, 2020 10:12 pm Hi everyone!

I want to ask those Bogleheads, who have deviated away from the traditional 3-fund portfolio, what is your current contrarian/alternative asset play? For me personally, after doing a heavy dive into macroeconomics, I have started to allocated a minor portion to BTC and a slightly larger position to gold.
Hi P4100354:

My investing has never been "asset play" which suggest a possible loss. My investing had one serious goal--to provide my family enough money to live comfortably throughout our lives.

I am happy to say that our Three-Fund Portfolio did the job (I'm 96).

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "Don't look for the needle. Buy the haystack."
Excellent advice to investors. Seriously money deserves serious consideration and investing. No speculation!

Keep investing simple.
John C. Bogle: “Simplicity is the master key to financial success."
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nisiprius
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Re: What is your contrarian/alternative play?

Post by nisiprius »

I believe that staying the course is contrarian. It is the opposite of what the majority of investors do, which is to try to duck and weave.

I don't know how to "be fearful when others are greedy and greedy when others are fearful," but if I just keep going straight down the center, then when others are fearful I will be more greedy then they, and when others are greedy I will be more fearful then they.

I never not invested in alternatives. Traditional securities--stocks and bonds--both offer a good risk-adjusted reward, and an easy intuitive explanation of how they make money and might be expected to keep making it. By choosing an asset allocation I can tune the risk to anywhere within the range suitable for me. The case for alternatives has always seemed dubious to me in the first place, and time after time when I watch what has happened to heavily-touted alternatives, they have not panned out. People always show charts of mouthwatering past performance during the days when retail investors had no vehicles for investing in them, and mysteriously the performance always seems to evaporate at just about the time they become available in liquid, easy-to-buy, suitable-for-retail-investors mutual funds or ETFs.
Last edited by nisiprius on Mon Jul 06, 2020 10:24 pm, edited 1 time in total.
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Normchad
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Re: What is your contrarian/alternative play?

Post by Normchad »

I wouldn’t count myself a contrarian. But some thoughts that I have, that aren’t universally held, are...

1. Still not sure about international. I fantasize about having all of my assets in VSMGX, but alternately just want to stuff it in VBIAX.
2. I am totally comfortable with the 4% SWR. But i will go further. I’d personally use it as a “withdrawal methodology”, not just a guideline. I’d also be okay making “robotic withdrawals” rather than adjusting as time unfolds. I probably won’t do theses things, but I’d be okay with doing it.
3, I plan on taking SS the minute I’m eligible.
4. I do have 30 shares of TSLA. The main reason I have it is because I never bought AAPL, and feel like a chump. I knew their stuff was great, and I bought the stuff. But I should have bought the stock. So I bought TSLA just so I wouldn’t feel like a chump if it blew up.
5. I love having gobs and bobs of cash in the bank or a MM account, earning basically nothing.
6. I buy brand new cars
7. I don’t spend any time thinking about credit card rewards or airline miles
8. I don’t haggle, or otherwise obsess, over getting the absolute best deal on things.

But these are all on the margin. The big flick picture is, I love well below my means, I invest faithfully in low cost index funds, and I basically never touch them. And doing those things has led to fabulous results for me, as it has for others.
CRTR
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Re: What is your contrarian/alternative play?

Post by CRTR »

1.. Entire taxable account (aside from a bunch of old, appreciated holdings which I'm giving to charities) is in a facsimile of Harry Browne's Permanent Portfolio:
25% VO
25% VGLT
25% VGSH
25% IAU
Started in 2016 and ever since, it has done EXACTLY as it was supposed to: rock stable. A SD of ~5%, unaffected at end of 2018 or by the COVID market drop this year. Nice and boring, just how I like it because this is what I'm living off now!

2. Roth account: started as "play" account in 2009 and put everything in two active funds:
50% POAGX
50% PRIDX
Just dumb luck here. Picked 2 spectacularly performing actively managed funds because the ones I wanted were closed (VHCOX) or not NTF at Etrade (VINEX). They've kicked the pants off my first choices as well as the BH standard, VTI/VXUS. Both are closed now. We'll see if they can keep up the performance,

Of course, I made some other contrarian moves that didn't work out so well (understatement) over the years but I just can't seem to remember the specifics . . . ;)
EdNorton
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Re: What is your contrarian/alternative play?

Post by EdNorton »

NLST - do your own diligence, NLST won a patent infringement case against Google. Could be a 10 bagger! Cheers! :sharebeer
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whodidntante
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Re: What is your contrarian/alternative play?

Post by whodidntante »

asif408 wrote: Mon Jul 06, 2020 7:12 am My portfolio is about 60% EM Fundamental index (value play), 12% Global Silver Miners, 12% Global Oil Producers, and the remainder in a Total International Stock Market Index. So no US stocks or bond indexes in my portfolio. For the last few years I've had this and lagged a US only portfolio, but I figure my time will come eventually. If I'm still behind at the end of 2030 I'll officially throw in the towel.
Fantastic! I do like your portfolio from an expected returns perspective. :beer

Maybe some short term pain is coming your way. Coronavirus rates to impact EMs more, at least India, Russia, Brazil, and Peru are taking it on the chin. But the USA is also taking it on the chin, leading the world in cases and in deaths, while the virus is relatively under control in Europe and Japan. And people have been predicting a bubble pop in Chinese real estate for years.

Good luck. Remind me in 2030 so I can lament how badly my portfolio trailed yours. :happy
langlands
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Re: What is your contrarian/alternative play?

Post by langlands »

IndexCore wrote: Mon Jul 06, 2020 4:01 am
occambogle wrote: Sun Jul 05, 2020 11:54 pm
IndexCore wrote: Sun Jul 05, 2020 11:07 pm. I took a very tiny part of my portfolio, and invested it to take advantage if the U.S. walks back towards lock downs.
Just curious... what did you do for this?
I bought short-dated put options on certain stocks that are more sensitive to the economy closing down.
Just curious how short-dated are your puts? I have puts on SPX October expiry (didn't want to bet on individual stocks on the downside).
tealeaves
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Re: What is your contrarian/alternative play?

Post by tealeaves »

Considering making some personal loans to decently capitalized acquaintances (structured and in writing of course) as a small part of my fixed income strategy,
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firebirdparts
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Re: What is your contrarian/alternative play?

Post by firebirdparts »

Mine is just being 50% stocks instead of 100%. I am doing the pinwheel, so I have quite a dog's breakfast of stuff and not a lot of it is USA glamour.
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Re: What is your contrarian/alternative play?

Post by LadyGeek »

I removed an off-topic comment and several replies. As a reminder, see: General Etiquette
We expect this forum to be a place where people can feel comfortable asking questions and where debates and discussions are conducted in civil tones.

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Dennisl
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Re: What is your contrarian/alternative play?

Post by Dennisl »

I agree with Taylor that it’s easier to stay the course of your portfolio is simple. I’m a 3 fund plus small cap and reits. I’m thinking about selling my small cap and reits and just doing a pure 3 fund. I would do a target date if the ER were lower.
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Re: What is your contrarian/alternative play?

Post by IndexCore »

langlands wrote: Mon Jul 06, 2020 6:39 pm
IndexCore wrote: Mon Jul 06, 2020 4:01 am
occambogle wrote: Sun Jul 05, 2020 11:54 pm
IndexCore wrote: Sun Jul 05, 2020 11:07 pm. I took a very tiny part of my portfolio, and invested it to take advantage if the U.S. walks back towards lock downs.
Just curious... what did you do for this?
I bought short-dated put options on certain stocks that are more sensitive to the economy closing down.
Just curious how short-dated are your puts? I have puts on SPX October expiry (didn't want to bet on individual stocks on the downside).
I've noticed the market can't predict Covid-19 cases that well, but once the impact is clear, the losses get priced in. So I'm not waiting for the moment of maximum damage, but rather the moment when losses get priced in. I think that happens within 2 weeks, which is why last week I bought PUT options dated July 17 on certain stocks (one retail, one restaurant, ... others). The short time frame makes the options cheaper, and if my theory is right, also gives very little time for recovery.

I avoided a longer term bet because the market could see an improvement in Covid-19 cases, price that in, and the PUT option becomes worthless. I'd also have to pay for the extra time value of the PUT, which requires greater price moves to be profitable. Finally, I didn't go with an overall market option because I'm solely focused on the areas most impacted by closing the economy. About 1/5th of SPY are big tech companies that performed extremely well during the shutdown, and seem to be responsible for most of the market's performance in the past 12 months. So personally, I'm avoiding bets against the tech sector.
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Re: What is your contrarian/alternative play?

Post by TechGuy365 »

Taylor Larimore wrote: Mon Jul 06, 2020 2:26 pm
P4100354 wrote: Sun Jul 05, 2020 10:12 pm Hi everyone!

I want to ask those Bogleheads, who have deviated away from the traditional 3-fund portfolio, what is your current contrarian/alternative asset play? For me personally, after doing a heavy dive into macroeconomics, I have started to allocated a minor portion to BTC and a slightly larger position to gold.
Hi P4100354:

My investing has never been "asset play" which suggest a possible loss. My investing had one serious goal--to provide my family enough money to live comfortably throughout our lives.

I am happy to say that our Three-Fund Portfolio did the job (I'm 96).

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "Don't look for the needle. Buy the haystack."
Thank you Taylor for your words of wisdom. Over the long weekend I re-listened to 6 or 7 Bogleheads podcasts and from the episode with Mel I learned about your early and continuing contribution to this very special community. I sincerely wish for your health so we can selfishly have you for another 20 years. 😀
GaryA505
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Re: What is your contrarian/alternative play?

Post by GaryA505 »

Here's my thing. I'm not going to argue that the 3-fund portfolio is obsolete, but since we're at the end of a 40-year bull market for bonds, I believe that the game has changed and it will not have the success it has enjoyed for those 40 years. So, I think it's anyone's guess if the 3-fund will work better or worse than someone's contrarian/alternative play.
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Re: What is your contrarian/alternative play?

Post by FrugalInvestor »

I went from a 3-fund to a 2-fund portfolio a few years ago. My commitment to international was never larger than 10% so I thought the simplicity of doing without it was more valuable than any financial benefit it might provide.
Have a plan, stay the course and simplify. Then ignore the noise!
freyj6
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Re: What is your contrarian/alternative play?

Post by freyj6 »

1) I've been 100% stocks except for a brief stint when there was some job uncertainty a few years ago and I wanted to play it extra safe.

2) My whole portfolio is basically factor based: 20% SCV, 20% Momentum,20% min vol, 20% EM, 20 Int Small.

I've been convinced by the research that a combination of these is likely to outperform the market in the long term. Even in the worst case I wouldn't expect it to dramatically under perform, so it doesn't feel particularly risky to me.
asif408
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Re: What is your contrarian/alternative play?

Post by asif408 »

whodidntante wrote: Mon Jul 06, 2020 6:25 pm
asif408 wrote: Mon Jul 06, 2020 7:12 am My portfolio is about 60% EM Fundamental index (value play), 12% Global Silver Miners, 12% Global Oil Producers, and the remainder in a Total International Stock Market Index. So no US stocks or bond indexes in my portfolio. For the last few years I've had this and lagged a US only portfolio, but I figure my time will come eventually. If I'm still behind at the end of 2030 I'll officially throw in the towel.
Fantastic! I do like your portfolio from an expected returns perspective. :beer

Maybe some short term pain is coming your way. Coronavirus rates to impact EMs more, at least India, Russia, Brazil, and Peru are taking it on the chin. But the USA is also taking it on the chin, leading the world in cases and in deaths, while the virus is relatively under control in Europe and Japan. And people have been predicting a bubble pop in Chinese real estate for years.

Good luck. Remind me in 2030 so I can lament how badly my portfolio trailed yours. :happy
I'm hoping I'll be able to quote my own post in a decade when it has outperformed and say I was patient and stuck with my strategy while everyone else was dumping foreign value stocks and running to US growth stocks. :beer

If I'm wrong I'll just hide and pretend this never happened. :oops:
TwoIdenticalIndexes
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Re: What is your contrarian/alternative play?

Post by TwoIdenticalIndexes »

asif408 wrote: Mon Jul 06, 2020 7:12 am My portfolio is about 60% EM Fundamental index (value play), 12% Global Silver Miners, 12% Global Oil Producers, and the remainder in a Total International Stock Market Index. So no US stocks or bond indexes in my portfolio. For the last few years I've had this and lagged a US only portfolio, but I figure my time will come eventually. If I'm still behind at the end of 2030 I'll officially throw in the towel.
This seems fairly out there. What's the rationale?
asif408
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Re: What is your contrarian/alternative play?

Post by asif408 »

TwoIdenticalIndexes wrote: Tue Jul 07, 2020 10:17 am
asif408 wrote: Mon Jul 06, 2020 7:12 am My portfolio is about 60% EM Fundamental index (value play), 12% Global Silver Miners, 12% Global Oil Producers, and the remainder in a Total International Stock Market Index. So no US stocks or bond indexes in my portfolio. For the last few years I've had this and lagged a US only portfolio, but I figure my time will come eventually. If I'm still behind at the end of 2030 I'll officially throw in the towel.
This seems fairly out there. What's the rationale?
Expected returns are high for EM value, the commodity producers (silver miners and oil producers) are a shorter term inflationary hedge, as they historically have done well during years of high inflation. And the international stock index is basically everything else except for the US, as valuations are better outside the US.

The other thing about my situation is I have a pension through work, and that pension is heavily invested in US companies and bonds, private equity, etc. I can't control how they invest but I don't see the pension changing their investment strategy dramatically anytime soon. So if my portfolio does poorly it is highly likely my pension will do reasonably well. If my pension does poorly, I will likely get a smaller pension benfeit down the road, but its possible that could be offset by my non-traditional portfolio doing well, since less than 5% of the pension's portfolio are in assets I own in my retirement accounts. So from my perspective I want to hedge against a US heavy portfolio in the pension fund.

I have to admit, though, I probably wouldn't change much about my strategy even without the pension, though I would add some US equities, just underweight them relative to global market cap. I do believe valuations matter; some don't. Valuations look better pretty much everywhere else, so to give a sports analogy to me it's like picking one golfer to win a tournament vs. the field, or one team to win a championship over the rest. I think the odds are better with my strategy than a heavily US or exclusively US strategy, though I admit I could be wrong.
langlands
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Re: What is your contrarian/alternative play?

Post by langlands »

IndexCore wrote: Mon Jul 06, 2020 9:46 pm
langlands wrote: Mon Jul 06, 2020 6:39 pm
IndexCore wrote: Mon Jul 06, 2020 4:01 am
occambogle wrote: Sun Jul 05, 2020 11:54 pm
IndexCore wrote: Sun Jul 05, 2020 11:07 pm. I took a very tiny part of my portfolio, and invested it to take advantage if the U.S. walks back towards lock downs.
Just curious... what did you do for this?
I bought short-dated put options on certain stocks that are more sensitive to the economy closing down.
Just curious how short-dated are your puts? I have puts on SPX October expiry (didn't want to bet on individual stocks on the downside).
I've noticed the market can't predict Covid-19 cases that well, but once the impact is clear, the losses get priced in. So I'm not waiting for the moment of maximum damage, but rather the moment when losses get priced in. I think that happens within 2 weeks, which is why last week I bought PUT options dated July 17 on certain stocks (one retail, one restaurant, ... others). The short time frame makes the options cheaper, and if my theory is right, also gives very little time for recovery.

I avoided a longer term bet because the market could see an improvement in Covid-19 cases, price that in, and the PUT option becomes worthless. I'd also have to pay for the extra time value of the PUT, which requires greater price moves to be profitable. Finally, I didn't go with an overall market option because I'm solely focused on the areas most impacted by closing the economy. About 1/5th of SPY are big tech companies that performed extremely well during the shutdown, and seem to be responsible for most of the market's performance in the past 12 months. So personally, I'm avoiding bets against the tech sector.
Wow, ok that's a really short term bet. If your hedge is against the current spike in cases though, that makes sense. I think the kind of put you buy also depends on your portfolio. My portfolio leans towards tech, so I welcome the tech exposure in my SPX put. I'm not trying to make money with my put; I'm just trying to hedge. The best case scenario is that markets make new highs and my puts expire worthless.
IndexCore
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Re: What is your contrarian/alternative play?

Post by IndexCore »

langlands wrote: Tue Jul 07, 2020 12:32 pm
IndexCore wrote: Mon Jul 06, 2020 9:46 pm
langlands wrote: Mon Jul 06, 2020 6:39 pm
IndexCore wrote: Mon Jul 06, 2020 4:01 am
occambogle wrote: Sun Jul 05, 2020 11:54 pm Just curious... what did you do for this?
I bought short-dated put options on certain stocks that are more sensitive to the economy closing down.
Just curious how short-dated are your puts? I have puts on SPX October expiry (didn't want to bet on individual stocks on the downside).
I've noticed the market can't predict Covid-19 cases that well, but once the impact is clear, the losses get priced in. So I'm not waiting for the moment of maximum damage, but rather the moment when losses get priced in. I think that happens within 2 weeks, which is why last week I bought PUT options dated July 17 on certain stocks (one retail, one restaurant, ... others). The short time frame makes the options cheaper, and if my theory is right, also gives very little time for recovery.

I avoided a longer term bet because the market could see an improvement in Covid-19 cases, price that in, and the PUT option becomes worthless. I'd also have to pay for the extra time value of the PUT, which requires greater price moves to be profitable. Finally, I didn't go with an overall market option because I'm solely focused on the areas most impacted by closing the economy. About 1/5th of SPY are big tech companies that performed extremely well during the shutdown, and seem to be responsible for most of the market's performance in the past 12 months. So personally, I'm avoiding bets against the tech sector.
Wow, ok that's a really short term bet. If your hedge is against the current spike in cases though, that makes sense. I think the kind of put you buy also depends on your portfolio. My portfolio leans towards tech, so I welcome the tech exposure in my SPX put. I'm not trying to make money with my put; I'm just trying to hedge. The best case scenario is that markets make new highs and my puts expire worthless.
I view it as a bet. Each PUT option controls more shares than I have. Overall, even if the bet is successful it will probably only offset some of my losses. So you could make a case that it hedges against some of my losses.

The closer the PUT option is to being in the money, the most it costs. But the further away from the current price, the less protection / hedging it offers. How did you strike a balance between the cost of the option, and it's price?
langlands
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Re: What is your contrarian/alternative play?

Post by langlands »

IndexCore wrote: Wed Jul 08, 2020 2:18 pm
langlands wrote: Tue Jul 07, 2020 12:32 pm
IndexCore wrote: Mon Jul 06, 2020 9:46 pm I've noticed the market can't predict Covid-19 cases that well, but once the impact is clear, the losses get priced in. So I'm not waiting for the moment of maximum damage, but rather the moment when losses get priced in. I think that happens within 2 weeks, which is why last week I bought PUT options dated July 17 on certain stocks (one retail, one restaurant, ... others). The short time frame makes the options cheaper, and if my theory is right, also gives very little time for recovery.

I avoided a longer term bet because the market could see an improvement in Covid-19 cases, price that in, and the PUT option becomes worthless. I'd also have to pay for the extra time value of the PUT, which requires greater price moves to be profitable. Finally, I didn't go with an overall market option because I'm solely focused on the areas most impacted by closing the economy. About 1/5th of SPY are big tech companies that performed extremely well during the shutdown, and seem to be responsible for most of the market's performance in the past 12 months. So personally, I'm avoiding bets against the tech sector.
Wow, ok that's a really short term bet. If your hedge is against the current spike in cases though, that makes sense. I think the kind of put you buy also depends on your portfolio. My portfolio leans towards tech, so I welcome the tech exposure in my SPX put. I'm not trying to make money with my put; I'm just trying to hedge. The best case scenario is that markets make new highs and my puts expire worthless.
I view it as a bet. Each PUT option controls more shares than I have. Overall, even if the bet is successful it will probably only offset some of my losses. So you could make a case that it hedges against some of my losses.

The closer the PUT option is to being in the money, the most it costs. But the further away from the current price, the less protection / hedging it offers. How did you strike a balance between the cost of the option, and it's price?
Well, more comprehensive insurance coverage as you allude to naturally costs more. I take a more or less "markets are efficient" stance on options pricing. As long as the implied volatility at a given strike or expiry looks more or less in line with the rest of the chain, I assume the market is pricing it fairly. Part of the reason I pick SPX puts is that the underlying is very liquid, and so I can be more confident that the options market is also functioning normally.

Now the question is how comprehensive should my insurance coverage be? Notice that since you bought July 17 puts, that is when your insurance expires. I personally want coverage until at least the end of summer. The strike price then determines how leveraged your insurance is (essentially the delta). There are the other greeks like gamma, vega, etc. but mostly I just ignore them. My rule of thumb was to pick a strike price so that my puts are effectively levered 10 to 1, i.e. for every 1% drop in the S&P 500, my puts gain 10%. It turns out this is somewhere around 20% out of the money for October puts. I don't really agree that further OOM options provide less protection. It's true that they cost less the further out you are, but you can always buy more of them.
CycloRista
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Re: What is your contrarian/alternative play?

Post by CycloRista »

I've stayed the course with most of my holdings since the mid 1980's.

I do speculate on IPO's (in small blocks) which has been very successful. I also play with <5% of my holdings on "contrarian" approaches and pull levers on:

BTC (direct from Coinbase rather than Robinhood or other semi-indirect players).

DUG (first play in it was excellent- bought @63 and sold within weeks @122)
SDP (still holding it at ~-12% right now)

Eyeing other plays and have some physical gold (inherited).
IndexCore
Posts: 159
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Re: What is your contrarian/alternative play?

Post by IndexCore »

langlands wrote: Wed Jul 08, 2020 4:27 pm
IndexCore wrote: Wed Jul 08, 2020 2:18 pm
langlands wrote: Tue Jul 07, 2020 12:32 pm
IndexCore wrote: Mon Jul 06, 2020 9:46 pm I've noticed the market can't predict Covid-19 cases that well, but once the impact is clear, the losses get priced in. So I'm not waiting for the moment of maximum damage, but rather the moment when losses get priced in. I think that happens within 2 weeks, which is why last week I bought PUT options dated July 17 on certain stocks (one retail, one restaurant, ... others). The short time frame makes the options cheaper, and if my theory is right, also gives very little time for recovery.

I avoided a longer term bet because the market could see an improvement in Covid-19 cases, price that in, and the PUT option becomes worthless. I'd also have to pay for the extra time value of the PUT, which requires greater price moves to be profitable. Finally, I didn't go with an overall market option because I'm solely focused on the areas most impacted by closing the economy. About 1/5th of SPY are big tech companies that performed extremely well during the shutdown, and seem to be responsible for most of the market's performance in the past 12 months. So personally, I'm avoiding bets against the tech sector.
Wow, ok that's a really short term bet. If your hedge is against the current spike in cases though, that makes sense. I think the kind of put you buy also depends on your portfolio. My portfolio leans towards tech, so I welcome the tech exposure in my SPX put. I'm not trying to make money with my put; I'm just trying to hedge. The best case scenario is that markets make new highs and my puts expire worthless.
I view it as a bet. Each PUT option controls more shares than I have. Overall, even if the bet is successful it will probably only offset some of my losses. So you could make a case that it hedges against some of my losses.

The closer the PUT option is to being in the money, the most it costs. But the further away from the current price, the less protection / hedging it offers. How did you strike a balance between the cost of the option, and it's price?
Well, more comprehensive insurance coverage as you allude to naturally costs more. I take a more or less "markets are efficient" stance on options pricing. As long as the implied volatility at a given strike or expiry looks more or less in line with the rest of the chain, I assume the market is pricing it fairly. Part of the reason I pick SPX puts is that the underlying is very liquid, and so I can be more confident that the options market is also functioning normally.

Now the question is how comprehensive should my insurance coverage be? Notice that since you bought July 17 puts, that is when your insurance expires. I personally want coverage until at least the end of summer. The strike price then determines how leveraged your insurance is (essentially the delta). There are the other greeks like gamma, vega, etc. but mostly I just ignore them. My rule of thumb was to pick a strike price so that my puts are effectively levered 10 to 1, i.e. for every 1% drop in the S&P 500, my puts gain 10%. It turns out this is somewhere around 20% out of the money for October puts. I don't really agree that further OOM options provide less protection. It's true that they cost less the further out you are, but you can always buy more of them.
Yes, my options expire July 17, which is further evidence of being a bet. Right now it looks like my thesis was correct (rising Covid-19 cases impact restaurants, retail, etc)... but the "bet" part is the amount of the fall, which will play out over the next 6 trading days. For those who want to hedge, it's better to sell the existing options and buy later dated options ("roll over", I think).

One annoying thing with PUT options: their value rises and falls, so they provide an additional decision of when to sell. For example, PUT options -20% below the current price... if SPY drops -10%, the market value of those options increases (despite being out of the money - it's more likely they will be valuable). So it might be worth selling, or it might be worth expecting a larger drop.
barberakb
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Re: What is your contrarian/alternative play?

Post by barberakb »

I invest in real estate
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CyclingDuo
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Re: What is your contrarian/alternative play?

Post by CyclingDuo »

P4100354 wrote: Sun Jul 05, 2020 10:12 pm Hi everyone!

I want to ask those Bogleheads, who have deviated away from the traditional 3-fund portfolio, what is your current contrarian/alternative asset play? For me personally, after doing a heavy dive into macroeconomics, I have started to allocated a minor portion to BTC and a slightly larger position to gold.
There are many Lazy Portfolios of which the Three Fund Portfolio is just one. It is one portfolio we do happen to like and use in our family (retirement accounts), but it does not represent our entire investment portfolio.

Gold does exist in some of the Lazy Portfolios, but I don't know if I've seen Bitcoin listed by itself outside of perhaps being called a commodity and residing within the commodity percentage portion of some of the Lazy Portfolios. Not sure many are banking on Bitcoin as a productive investment to fund our retirements. :)

There are many on these boards who do not hold the three fund portfolio. In fact, here are a few examples of the myriad of lazy portfolios....

150 Lazy Portfolios Better Than Yours (now updated to 200!)

https://www.whitecoatinvestor.com/150-p ... han-yours/

235 Lazy Portfolios Better Than Yours

https://www.portfolioeinstein.com/235-p ... han-yours/

We deviate primarily due to an inheritance of a pile of individual stocks and our prior investments in actively managed mutual funds and individual stocks where we have kept the better performing funds and stocks and sold the underperforming (higher expense in the case of funds) ones. The stocks run the full gamut and leave me dealing with them as a DIY fund with the long term, buy & hold strategy employed while using the dividends for reinvestment, managing the taxes and mitigating the tax hit as much as possible (spouse will not let me sell those she inherited, but has allowed me to deploy some of the dividends into our index and bond funds - so a mini win :beer ).

Alternative assets would primarily be in real estate with a little bit of gold (ETF), silver, and "other" which all totals up to be 9.6% of our portfolio.

CyclingDuo
"Save like a pessimist, invest like an optimist." - Morgan Housel
montanagirl
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Re: What is your contrarian/alternative play?

Post by montanagirl »

I bought into to the midcap growth index in March on a real bad day, with BND money.

Seems like when those do well, they do REALLY well...
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Taylor Larimore
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Slow Learners

Post by Taylor Larimore »

Dennisl wrote: Mon Jul 06, 2020 9:15 pm I agree with Taylor that it’s easier to stay the course of your portfolio is simple. I’m a 3 fund plus small cap and reits. I’m thinking about selling my small cap and reits and just doing a pure 3 fund. I would do a target date if the ER were lower.
Dennisl:

When we moved to Vanguard in 1986, I immediately purchased 15 Vanguard funds for "diversification." Like you, it took me a long time to sell our Small-Cap and REIT funds and gravitate to a Three-Fund Portfolio.

Some of us are slow learners. :wink:

Best wishes
Taylor
Jack Bogle's Words of Wisdom:
"Simplicity is the master key to financial success. We ignore the real diamonds of simplicity, seeking instead the illusory rhinestones of complexity."
"Simplicity is the master key to financial success." -- Jack Bogle
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CyclingDuo
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Re: Slow Learners

Post by CyclingDuo »

Taylor Larimore wrote: Thu Jul 09, 2020 12:24 pm
Dennisl wrote: Mon Jul 06, 2020 9:15 pm I agree with Taylor that it’s easier to stay the course of your portfolio is simple. I’m a 3 fund plus small cap and reits. I’m thinking about selling my small cap and reits and just doing a pure 3 fund. I would do a target date if the ER were lower.
Dennisl:

When we moved to Vanguard in 1986, I immediately purchased 15 Vanguard funds for "diversification." Like you, it took me a long time to sell our Small-Cap and REIT funds and gravitate to a Three-Fund Portfolio.

Some of us are slow learners. :wink:

Best wishes
Taylor
So you're saying some of us still have time between now and age 96. :wink:
"Save like a pessimist, invest like an optimist." - Morgan Housel
TheDDC
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Re: What is your contrarian/alternative play?

Post by TheDDC »

Bank and credit card bonuses for a portion of my fixed allocation.

-TheDDC
Rules to wealth building: 75-80% VTSAX piled high and deep, 20-25% VTIAX, 0% given away to banks, minimize amount given to medical-industrial complex
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abuss368
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Re: Slow Learners

Post by abuss368 »

Taylor Larimore wrote: Thu Jul 09, 2020 12:24 pm
Dennisl wrote: Mon Jul 06, 2020 9:15 pm I agree with Taylor that it’s easier to stay the course of your portfolio is simple. I’m a 3 fund plus small cap and reits. I’m thinking about selling my small cap and reits and just doing a pure 3 fund. I would do a target date if the ER were lower.
Dennisl:

When we moved to Vanguard in 1986, I immediately purchased 15 Vanguard funds for "diversification." Like you, it took me a long time to sell our Small-Cap and REIT funds and gravitate to a Three-Fund Portfolio.

Some of us are slow learners. :wink:

Best wishes
Taylor
Jack Bogle's Words of Wisdom:
"Simplicity is the master key to financial success. We ignore the real diamonds of simplicity, seeking instead the illusory rhinestones of complexity."
Lesson learned: simplicity wins!
John C. Bogle: “Simplicity is the master key to financial success."
bloom2708
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Re: What is your contrarian/alternative play?

Post by bloom2708 »

Not very contrarian. 60/40.

Total US
Int-Term Treasury Index
Wellington

No Wellington in my active 401k, so I have a Mid-Cap Index to go with US and Int-Term bonds.

Sort of 3 fund sans International.
"We are here to provoke thoughtfulness, not agree with you." Unknown Boglehead
EdNorton
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Re: What is your contrarian/alternative play?

Post by EdNorton »

EdNorton wrote: Mon Jul 06, 2020 5:56 pm NLST - do your own diligence, NLST won a patent infringement case against Google. Could be a 10 bagger! Cheers! :sharebeer
Good day for NLST yesterday. Not a 10 bagger yet for me but getting close.
:sharebeer
Outside a dog, a book is man's best friend, inside a dog, it's too dark to read - Groucho
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JonnyDVM
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Re: What is your contrarian/alternative play?

Post by JonnyDVM »

EdNorton wrote: Wed Apr 07, 2021 5:58 am
EdNorton wrote: Mon Jul 06, 2020 5:56 pm NLST - do your own diligence, NLST won a patent infringement case against Google. Could be a 10 bagger! Cheers! :sharebeer
Good day for NLST yesterday. Not a 10 bagger yet for me but getting close.
:sharebeer
Wow. What a good call there. Sorry I didn’t see that post earlier. 😂
I’d trade it all for a little more | -C Montgomery Burns
B. Wellington
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Re: What is your contrarian/alternative play?

Post by B. Wellington »

nisiprius wrote: Mon Jul 06, 2020 5:03 pm I believe that staying the course is contrarian. It is the opposite of what the majority of investors do, which is to try to duck and weave.

I don't know how to "be fearful when others are greedy and greedy when others are fearful," but if I just keep going straight down the center, then when others are fearful I will be more greedy then they, and when others are greedy I will be more fearful then they.

I never not invested in alternatives. Traditional securities--stocks and bonds--both offer a good risk-adjusted reward, and an easy intuitive explanation of how they make money and might be expected to keep making it. By choosing an asset allocation I can tune the risk to anywhere within the range suitable for me. The case for alternatives has always seemed dubious to me in the first place, and time after time when I watch what has happened to heavily-touted alternatives, they have not panned out. People always show charts of mouthwatering past performance during the days when retail investors had no vehicles for investing in them, and mysteriously the performance always seems to evaporate at just about the time they become available in liquid, easy-to-buy, suitable-for-retail-investors mutual funds or ETFs.
^^^This! Over this past year I have watched coworkers, friends, and family, jump from bonds to stocks. Stocks to crypto. Crypto to silver. Silver to Game stop. Always chasing the next hot fad. (Now the popular past-time is on-line gambling.)

Now that said, my contrarian view has always been total return investing. DW and I are looking at retirement in the coming months.
As always, YMMV.
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