Riding HEDGEFUNDIE’s excellent adventure

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Semantics
Posts: 312
Joined: Tue Mar 10, 2020 1:42 pm

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by Semantics »

Uncorrelated wrote: Thu Oct 22, 2020 3:51 pm
Semantics wrote: Thu Oct 22, 2020 3:14 pm
Uncorrelated wrote: Thu Oct 22, 2020 1:49 pm
stockmaster wrote: Thu Oct 22, 2020 1:06 pm Why would anybody use TMF when TYD has fewer drawdowns and similar market correlation?

Image
You should look at the total portfolio, not the individual parts. TYD is roughly comparable with 40% TMF. If you want to compare these ETF's directly, it would be better to compare TYD with 40% TMF.

I'm fairly certain I did some calculations on TMF/TYD somewhere, but I can't find it. If I remember correctly, the conclusion was that TYD is not worth using because there just isn't enough space in your portfolio to utilize it. If you want to keep the same ratio between equity risk and treasury risk as with 55/45 UPRO/TMF, you would be looking at 33/66 UPRO/TYD. For obvious reasons this has significantly lower expected return and risk. But if you want to take less risk, there are better ways to do that (see viewtopic.php?f=10&t=322366 for inspiration).
When I plugged TYD into your mean variance optimizer (using ter=1.1, itt=3), and set the returns to 3% for ITT and 4% for LTT to try and model expected returns ~10 years ago the solution actually included a decent amount of TYD for a gamma = 2 investor. It gave approx 30% UPRO / 20% TMF / 50% TYD. For gamma = 1 it was pretty close to 50% UPRO / 50% TMF as expected. So would it be fair to say that TYD may have made sense in the past, and may make sense in the future for some levels of risk aversion if treasury yields rise? It seems like there's a point where the LTT-ITT spread is too small to justify the extra risk for investors who are slightly more risk averse.
I suppose that simulation didn't include total stock market? I always find decent allocations to total stock market at the high gamma's.
I had S&P 500 in there but not TSM. The simulation chooses the latter over the former, but it doesn't seem to make a big difference. In any case, I have to go back quite a bit in time to much higher yields to get a significant allocation to TYD so I agree it makes sense not to consider it now. I like this exercise as an illustration of your MVO being more powerful than backtesting - the optimizer would have matched the backtests if run 10 years ago, and now it's indicating to change things up slightly.
keith6014
Posts: 473
Joined: Thu Jan 02, 2014 11:58 pm

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by keith6014 »

whodidntante wrote: Tue Oct 20, 2020 9:38 pm
corp_sharecropper wrote: Sat Oct 03, 2020 5:12 pm One thing I'm curious to hear what others think about is cheaper, more efficient/customizable alternatives. I'll explain where I'm coming from here. I'm assuming that anyone on bogleheads is already in the >95th percentile of both financial literacy, attention to the current financial landscape, and desire to learn more about finance/investing. So regardless of the simplicity and hands-off mantra of bogleheads, there seems to me both the aptitude and willingness/desire to be hands-ON and accepting of at least moderate "complexity". So why not implement this with futures? Either both sides of the equation (stocks & bonds) or one of them at least. My personal preference would be equities held outright, and treasury exposure through futures. The main hurdle with that is the notional value of a single treasury futures contract (going to be > $100K). It would definitely be cheaper than these LETFs. I also get the sense that people like the HF implementation (using LETFs), due to the fact that it uses implicit leverage, which means there's no margin to monitor on a personal level. That said, it would take a combination of the grossest of negligence along with incredibly bad market conditions to blow up an account using treasury futures, at the same amount of leverage as TMF. Honestly, you'd really have to try to blow it up, it's just not going to happen. I also adamantly believe having just long treasuries and stocks is sub optimal, and has potential to be a problem at some point but that's something for different thread. So I'm curious what some of you think on the points/opinions/assumptions I've described.
Most of the time I get no engagement when I suggest futures for various use cases that come up on this site. From the age of your unloved post, the same happened to you. I've just decided that is what happens when I bring up futures. I must be speaking gibberish. Do you want to join my gibberish club? :P
I wish there was more talk about options, futures and FX for this strategy. I would subscribe.
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RovenSkyfall
Posts: 267
Joined: Wed Apr 01, 2020 11:40 am

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by RovenSkyfall »

keith6014 wrote: Sat Oct 24, 2020 7:17 am
whodidntante wrote: Tue Oct 20, 2020 9:38 pm
corp_sharecropper wrote: Sat Oct 03, 2020 5:12 pm One thing I'm curious to hear what others think about is cheaper, more efficient/customizable alternatives. I'll explain where I'm coming from here. I'm assuming that anyone on bogleheads is already in the >95th percentile of both financial literacy, attention to the current financial landscape, and desire to learn more about finance/investing. So regardless of the simplicity and hands-off mantra of bogleheads, there seems to me both the aptitude and willingness/desire to be hands-ON and accepting of at least moderate "complexity". So why not implement this with futures? Either both sides of the equation (stocks & bonds) or one of them at least. My personal preference would be equities held outright, and treasury exposure through futures. The main hurdle with that is the notional value of a single treasury futures contract (going to be > $100K). It would definitely be cheaper than these LETFs. I also get the sense that people like the HF implementation (using LETFs), due to the fact that it uses implicit leverage, which means there's no margin to monitor on a personal level. That said, it would take a combination of the grossest of negligence along with incredibly bad market conditions to blow up an account using treasury futures, at the same amount of leverage as TMF. Honestly, you'd really have to try to blow it up, it's just not going to happen. I also adamantly believe having just long treasuries and stocks is sub optimal, and has potential to be a problem at some point but that's something for different thread. So I'm curious what some of you think on the points/opinions/assumptions I've described.
Most of the time I get no engagement when I suggest futures for various use cases that come up on this site. From the age of your unloved post, the same happened to you. I've just decided that is what happens when I bring up futures. I must be speaking gibberish. Do you want to join my gibberish club? :P
I wish there was more talk about options, futures and FX for this strategy. I would subscribe.
Look at the last couple of pages of the actual thread. This thread is just to discuss results.
I saved my money, but it can't save me | The Chariot
Ramjet
Posts: 1114
Joined: Thu Feb 06, 2020 11:45 am
Location: Ohio

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by Ramjet »

Thinking of moving towards the target volatility approach but here it is:

Start date: June 2019
Approach: Fixed allocation - 55/45 UPRO/TMF
Rebalancing frequency: Quarterly
Return total: 57%
Initial contribution: $30K
Additional contributions: $0
Portfolio location: Roth IRA, M1Finance
VT & HFEA
Topic Author
CanaBogle24
Posts: 24
Joined: Sat Jun 27, 2020 7:47 am

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by CanaBogle24 »

Fun to give the update after the first full quarter in the game. Here's to hoping the next few quarters will look the same 8-) Happy new year, all :sharebeer

Start date: 9/28/20
Approach: Fixed allocation - 33/32/35 UPRO/TQQQ/TMF
Rebalancing frequency: Quarterly
Return (total / YTD): 21.1% / 0.0%
Initial contribution: $48,000 (~10% of invested assets)
Additional contributions: $1,500 / month
Current balance: $64,506

Mix before latest rebalance:
UPRO: 34.9% (33% target)
TQQQ: 34.8% (32%)
TMF: 30.2% (35%) <-dragged up by additional monthly contributions
jeremyl
Posts: 295
Joined: Sat Dec 20, 2014 8:38 am
Location: Indiana

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by jeremyl »

Giving this a go to start the new year on Monday 1/4. Right now plan to do in a separate Roth IRA with Fidelity but contemplating a taxable at Fidelity to help with goal of being FIRE as I need the taxable to grow to cover the gap years until pension can kick in if I do FIRE.


Start date: 1/4/21
Approach: Fixed allocation - 55/45 UPRO/TMF
Rebalancing frequency: Quarterly
Return (total / YTD):
Initial contribution: $10,000 (just under 3% of our portfolio)
Additional contributions: Yearly Roth amounts unless I start in taxable.
lkar
Posts: 320
Joined: Sat May 04, 2019 4:02 pm

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by lkar »

Start date: 5/23/19
App: Fixed allocation. From 5/23/19-2/11/20 40/60 UPRO/TMF. From 2/11/20- 55/45 UPRO/TMF.
Rebalancing frequency: 6 mos.
Return (total/CAGR) 92%/49%
Initial contribution: $25k
Current: $48k
Additional contributions: $30.00
Portfolio location: Roth IRA/Fid
BullHouse_BearMarket
Posts: 67
Joined: Sun Jul 10, 2016 4:19 pm

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by BullHouse_BearMarket »

BullHouse_BearMarket wrote: Thu Oct 01, 2020 7:43 am Today is rebalance day for me.

Start date: 11/7/2019

Approach: Fixed allocation - 55/45 UPRO/TMF

Rebalancing frequency: Quarterly

Return (total / YTD): 61% / ?

Initial contribution: $10,000

Additional contributions: $4,000

Portfolio location: Roth IRA, M1Finance
Rebalanced today. Return since inception is 82%
civex
Posts: 38
Joined: Wed Dec 17, 2014 12:06 pm

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by civex »

Start date: 2/2/21
Approach: Fixed allocation - 55/45 UPRO/TMF
Rebalancing frequency: Quarterly
Return (total / YTD): 0.58%% / 0.58%
Initial contribution: $9777.09 Roth IRA <2% of portfolio total; ~5% of Roth
Additional contributions:$0
Current balance: $9833.81
Brokerage:M1 Finance Roth IRA

I've been reading and watching how this portfolio has performed on and off over the last year, but wasn't sure I wanted to join the adventure until I saw how it performed through a major drop like Covid. I'm going to stick with the initial plan for a year and assess if we want to risk additional funds. Remainder of our portfolio is in a standard 2 fund 75/25 VTSAX/Total bond portfolio.

I'm hoping this will increase our odds of hitting 1M by 35. :sharebeer
Impatience
Posts: 428
Joined: Thu Jul 23, 2020 3:15 pm

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by Impatience »

CanaBogle24 wrote: Fri Jan 01, 2021 8:06 am Fun to give the update after the first full quarter in the game. Here's to hoping the next few quarters will look the same 8-) Happy new year, all :sharebeer

Start date: 9/28/20
Approach: Fixed allocation - 33/32/35 UPRO/TQQQ/TMF
Rebalancing frequency: Quarterly
Return (total / YTD): 21.1% / 0.0%
Initial contribution: $48,000 (~10% of invested assets)
Additional contributions: $1,500 / month
Current balance: $64,506

Mix before latest rebalance:
UPRO: 34.9% (33% target)
TQQQ: 34.8% (32%)
TMF: 30.2% (35%) <-dragged up by additional monthly contributions
I have almost the same allocation and almost the same return, having begun last august. Phew! Sometimes I feel like I must be doing something wrong ... not sure why.
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danbdzs
Posts: 62
Joined: Mon Feb 17, 2020 6:29 pm

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by danbdzs »

Interesting, and for future reference

Start date: 2/15/21
Approach: Fixed allocation - 55/45 UPRO/TMF
Rebalancing frequency: Quarterly
Return (total / YTD): na
Initial contribution: $17k
Additional contributions: $1-3k/month (Until 5-10% of portfolio, with a maximum of 10%)
Current balance: $ 17k
Lost Halls
Posts: 6
Joined: Sun Aug 11, 2019 9:09 pm

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by Lost Halls »

Start date: 07/17/2019

Approach: 50% is dedicated to a 25% target volatility approach / 50% is dedicated to minimum variance with 20-day volatility look back.

Assets used for each model are: FNGU (or TQQQ depending on momentum)/TMF

Rebalancing frequency: Monthly via an automated script that calculates target percentages and makes the trades on the last trading day of each month (right before market close).

Return (total / YTD): hard to determine at this point as I have switched strategies/assets/brokerages since my start date.

Initial contribution / related contributions: started with $100 and have continually added.

Current balance: around $31,000

Brokerage: Robinhood, but will be switching over to IBKR in the next couple of months.
euphonious
Posts: 115
Joined: Tue Aug 04, 2020 2:43 am

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by euphonious »

Hodgepodge of accounts, far from disciplined.

Start date: August, 2019
Approach: Fixed allocation - 55/45 UPRO/TMF
Rebalancing frequency: Rebalance through contributions (roughly every 2-3 months), because taxable.
Return (total / 1m): 86.06% / 5.21% (using 1m instead of YTD because it's the closest data point from M1 Finance)
Initial contribution: $2k
Additional contributions: $10k total since inception.
Portfolio location: Taxable, M1Finance

Start date: September, 2019
Approach: Fixed allocation - 43/57 UPRO/EDV
Rebalancing frequency: Rebalance through contributions (roughly every 2-3 months), because taxable.
Return (total / 1m): 72.89% / 4.47%
Initial contribution: $1k
Additional contributions: $6k total since inception.
Portfolio location: Taxable, M1Finance

Start date: September, 2020
Approach: Target Volatility using UPRO/TQQQ/TMF - 25% volatility, 69/31 UPRO/TQQQ, 1 month lookback
Rebalancing frequency: Rebalance through contributions (roughly every 2-3 months), because taxable.
Return (total / 1m): 16.84% / 6.12%
Initial contribution: $500
Additional contributions: $1.25k total since inception.
Portfolio location: Taxable, M1Finance

Start date: September, 2020
Approach: Inverse Volatility using UPRO/TQQQ/TMF - 69/31 UPRO/TQQQ, 1 month lookback
Rebalancing frequency: Rebalance through contributions (roughly every 2-3 months), because taxable.
Return (total / 1m): 6.29% / 0.17%
Initial contribution: $500
Additional contributions: $1.25k total since inception.
Portfolio location: Taxable, M1Finance

Initial and additional contributions combined are less than 0.33% of net worth. Obviously this is not a significant part of my portfolio, and I'm mainly doing this out of curiosity / boredom.

Because of various reasons, I could not use any tax advantaged accounts for these adventures. If I had the option to, I would have. I do not recommend doing this in taxable.

I'm also incredibly guilty of timing my contributions. I could never shake the idea from the back of my mind that long term treasuries are doomed because of low rates, even with yield curve convexity and unpredictability of future rates. So I tended to contribute during periods that favored adding to the equity portion over the bond portion.

I should probably find a better hobby, tbh. 😆🤷‍♀️
Afrofreak
Posts: 36
Joined: Sat Feb 20, 2021 3:09 pm

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by Afrofreak »

Start date: May 2020
Approach: Fixed allocation - 70/30 TQQQ/TMF
Rebalancing frequency: 1st of every quarter
Return (total / YTD): 87%/-3.5% through end of Jan. 2021
Initial contribution: $25k
Additional contributions: $3k per month

I'm 22 and want to achieve FI as soon as humanely possible, so I'm going all-in. This portfolio represents about 70% of my NW (with most of the rest being in cryptos that have been on a tear lately :D ) I'm also in the process of borrowing another $36k to invest. If we repeat the 2010s, I could retire already and just watch my money grow, but realistically I think I'll wait till this has ballooned to $250k minimum before pulling the plug and divesting a portion of it into a "safe" asset mix at every milestone I hit. For the time being I've set my sights on 10% every $250k ($25k @ $250k, another $50k @ $500k, etc.) into 70/30 ACWV/TLT to limit drawdowns and volatility as much as possible while still achieving a solid 8% return.

Hoping to be a millionaire before 30, as crazy as that sounds. Losing it all would be painful to say the least, but I am thankful to have a government job, emergency funds and family that could support me in a time of need. Moreover, I live in Canada so there are fewer concerns when it comes to being unemployed and using this strategy: Don't need to worry about health insurance or short-term capital gains, generous unemployment insurance, decent old age security.

I would have to start over building assets for retirement again, but with a loooooong runway ahead, I should be OK. The next 3-5 years will be the most crucial ones in determining whether I get to break free and live life on my own terms or whether I'm strapped in for the long-haul. Wish me luck... I'm gonna need it.
lkar
Posts: 320
Joined: Sat May 04, 2019 4:02 pm

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by lkar »

lkar wrote: Fri Jan 01, 2021 9:37 am Start date: 5/23/19
App: Fixed allocation. From 5/23/19-2/11/20 40/60 UPRO/TMF. From 2/11/20- 55/45 UPRO/TMF.
Rebalancing frequency: 6 mos.
Return (total/CAGR) 92%/49%
Initial contribution: $25k
Current: $48k
Additional contributions: $30.00
Portfolio location: Roth IRA/Fid
Ever since I posted, TMF has been getting crushed!
Volkl_One
Posts: 12
Joined: Tue May 14, 2019 8:00 am

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by Volkl_One »

Volkl_One wrote: Tue Sep 29, 2020 10:02 am Start date: 2/28/20
Approach: Fixed allocation - 55/45 UPRO/TMF
Rebalancing frequency: Quarterly
Return (total / YTD): 17.11% / 17.11%
Initial contribution: $38k (~33% of invested assets)
Additional contributions: $6,000 / year (committed for at least first year, then re-evaluate)
Portfolio location: Roth, Charles Schwab
Today was rebalancing day for me so I figured an update was due. TMF had a very bad quarter but UPRO did alright. My numbers might be a little off as I sold covered calls on TMF and UPRO during this period and got assigned a few times.

Start date: 2/28/20
Approach: Fixed allocation - 55/45 UPRO/TMF
Rebalancing frequency: Quarterly
Return (total / YTD): 17.75% / -12.95%
Contribution: $64k (~23% of invested assets)
Additional contributions: $6,000 / year
Alaric
Posts: 114
Joined: Tue Feb 05, 2019 1:38 pm
Location: Florida

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by Alaric »

Start date: 02/27/19
Approach: Fixed allocation: 02/27/19 — 10/01/19: 40/60 UPRO/TMF
10/01/19 — 02/10/20: 55/45 UPRO/TMF
02/11/20 — 12/31/20: 30/25/45 UPRO/TQQQ/TMF
01/01/21 — present: 30/30/40 UPRO/TQQQ/TMF
Rebalancing frequency: Quarterly (actual rebals 10/1/19; 2/11/20; 4/6/20; 7/1/20; 10/1/20; 1/6/21; 3/31/21)
Return (Total / CAGR): 81.3% / 52.1%
Initial contribution: $10k (~5% of invested assets) 2/27/19
Additional contributions: $28.5k added 2/11/20
HFEA weight of total portfolio: 15%
Portfolio location: Roth IRA, E*Trade
Topic Author
CanaBogle24
Posts: 24
Joined: Sat Jun 27, 2020 7:47 am

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by CanaBogle24 »

Start date: 9/28/20
Approach: Fixed allocation - 33/32/35 UPRO/TQQQ/TMF
Rebalancing frequency: Quarterly
Return (total / YTD): 11.78% / -6.74%
Contributions: $48k initial + $10k incremental (total is <10% of invested assets)
Portfolio location: Taxable, M1Finance

Today's my scheduled rebalance day, but I'm going to skip it. I've used some additional contributions to nudge things back toward my target allocation, but actual is sitting at 40/34/26 UPRO/TQQQ/TMF. I'll likely hold off on additional contributions or rebalancing until I either feel a bit better about TMF's near/mid-term prospects or start to get uncomfortable with the excessive equity allocation.
jeremyl
Posts: 295
Joined: Sat Dec 20, 2014 8:38 am
Location: Indiana

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by jeremyl »

jeremyl wrote: Fri Jan 01, 2021 8:39 am Giving this a go to start the new year on Monday 1/4. Right now plan to do in a separate Roth IRA with Fidelity but contemplating a taxable at Fidelity to help with goal of being FIRE as I need the taxable to grow to cover the gap years until pension can kick in if I do FIRE.


Start date: 1/4/21
Approach: Fixed allocation - 55/45 UPRO/TMF
Rebalancing frequency: Quarterly
Return (total / YTD):
Initial contribution: $10,000 (just under 3% of our portfolio)
Additional contributions: Yearly Roth amounts unless I start in taxable.
Rebalanced this week. I went with 60/40 on the rebalance.
Made just a little bit this quarter.

Start date: 1/4/21
Approach: Fixed allocation - 55/45 UPRO/TMF
Rebalancing frequency: Quarterly
Return (total / YTD): 1.67%
Initial contribution: $10,000 (just under 3% of our portfolio)
tchoupitoulas
Posts: 68
Joined: Wed Jan 11, 2017 9:20 am

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by tchoupitoulas »

tchoupitoulas wrote: Wed Sep 30, 2020 7:53 pm Start date: 4/3/2019

Approach until 10/2019:
Fixed allocation - 40/60 UPRO/TMF
Rebalancing frequency: Quarterly

Approach 10/2019 to present:
Adaptive allocation (risk parity)
Rebalancing frequency: Monthly

Return (total / YTD): (77%/25%)
Initial contribution: $36K
Additional contributions: None
Portfolio location: M1
Checking in on my two year anniversary.

Return (total / past year): 72% / 27.5%
(vs. 39% for the S&P over the past two years)
No additional contributions or changes to the strategy since my last post.
jarjarM
Posts: 1507
Joined: Mon Jul 16, 2018 1:21 pm

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by jarjarM »

May as well, a bit over 2 year now in this.

Start Date: March 10, 2019
Initial investment: $100k (no additional contribution)
Initial allocation: 50/50 (UPRO/TMF) - didn't quite buy in on the 40/60 argument in the OG thread.
New allocation 1: 55/45 (UPRO/TMF) - based on 2nd thread.
Rebalance quarterly initially but switch over to TAA method
Current allocation: (84/16) - no rebalance until 10yr rate >2-2.5%

Return (total/ 1 yr) 135%/94%

Brokerage - Fidelity

March 2020 was quite brutal for this strategy but the rebound is also fast and furious. In holding pattern for rebalancing as I have substantial exposure to LTT elsewhere in my portfolio.
rchmx1
Posts: 464
Joined: Sat Oct 26, 2019 6:38 pm

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by rchmx1 »

Passed my "1 year anniversary" on 3/18/21. Anniversary in quotes because I'm counting my start date as when I started playing around with small dollar amounts in LETFs. I didn't move to a more conventional mix of UPRO/TQQQ/TMF until 7/17/2020. Also for simplicity sake, I now bucket off the portion of my HFEA that is in my 401k for tracking purposes. Not running a traditional fixed allocation, more of an opportunistic yet conservative momentum strategy.

Start date: 3/18/2020
Total contributions: $12.4k
Current allocation: 58.5/33.4/8.1 UPRO/TQQQ/TMF
Total Return: 116.36%
401k at Schwab

My dilemma currently is to see how far TMF will continue to fall before I either reallocate or up the TMF percentage with new money, or a mix of both.
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Gui0507
Posts: 88
Joined: Wed May 13, 2020 4:46 pm

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by Gui0507 »

rchmx1 wrote: Tue Apr 13, 2021 5:32 pm Passed my "1 year anniversary" on 3/18/21. Anniversary in quotes because I'm counting my start date as when I started playing around with small dollar amounts in LETFs. I didn't move to a more conventional mix of UPRO/TQQQ/TMF until 7/17/2020. Also for simplicity sake, I now bucket off the portion of my HFEA that is in my 401k for tracking purposes. Not running a traditional fixed allocation, more of an opportunistic yet conservative momentum strategy.

Start date: 3/18/2020
Total contributions: $12.4k
Current allocation: 58.5/33.4/8.1 UPRO/TQQQ/TMF
Total Return: 116.36%
401k at Schwab

My dilemma currently is to see how far TMF will continue to fall before I either reallocate or up the TMF percentage with new money, or a mix of both.
Curious about the 401k at schwab. Do you have that Schwab PCRA offered by some 401k plans? I know my Transamerica plan offers it but with an annual fee of 50.00 to have it opened
rchmx1
Posts: 464
Joined: Sat Oct 26, 2019 6:38 pm

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by rchmx1 »

Gui0507 wrote: Sun May 16, 2021 8:44 pm Curious about the 401k at schwab. Do you have that Schwab PCRA offered by some 401k plans? I know my Transamerica plan offers it but with an annual fee of 50.00 to have it opened
No, I just set up my Individual 401k plan with them, since back then I wanted to have all my accounts at one brokerage, and I knew more people who used and liked Schwab than other brokerages. It was pretty much an arbitrary choice vs Fidelity etc, but for my needs it has worked just fine.
DMoogle
Posts: 290
Joined: Sat Oct 31, 2020 10:24 pm

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by DMoogle »

Gui0507 wrote: Sun May 16, 2021 8:44 pmCurious about the 401k at schwab. Do you have that Schwab PCRA offered by some 401k plans? I know my Transamerica plan offers it but with an annual fee of 50.00 to have it opened
I have the PCRA, but it's through Empower Retirement. No annual fee for me, I don't think.
Z33
Posts: 8
Joined: Fri Jun 11, 2021 11:21 pm

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by Z33 »

Only found HEFA recently and spent the past week reading both threads. Insightful and a fresh way at looking at portfolio management. Markets are at an inflection point, for both equities and bonds, so the jury is still out there if this strategy will perform in the coming decade.

Planning to give it a go, likely starting July to keep things simple and I wanted to see what the Fed has to say this week.

Still working out my allocation - 5% or 10% of my portfolio.

Good luck all.
Topic Author
CanaBogle24
Posts: 24
Joined: Sat Jun 27, 2020 7:47 am

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by CanaBogle24 »

Start date: 9/28/20
Approach: Fixed allocation - 33/32/35 UPRO/TQQQ/TMF (has drifted to 39/36/25 after a skipped rebalance last quarter)
Rebalancing frequency: Quarterly
Return (total / YTD): +43.25% / unknown due to M1 Finance's (annoying) lack of YTD return data
Contributions: $48k initial + $10k incremental (total is ~10% of invested assets)
Portfolio location: Taxable, M1Finance

Tomorrow is rebalancing day. I plan to rebalance with additional contributions, but am adjusting the target allocation to 35/35/30, slightly further reducing exposure to TMF.

I still feel like TMF is the best option as a hedge, but don't feel as confident in it going forward relative to its historic contributions. Therefore, I figure I might as well lean into the equity position a bit more heavily, betting that gains during good times will outweigh the reduced insurance during equity drawdowns.
Alaric
Posts: 114
Joined: Tue Feb 05, 2019 1:38 pm
Location: Florida

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by Alaric »

Start date: 02/27/19
Approach: Fixed allocation: 02/27/19 — 10/01/19: 40/60 UPRO/TMF
10/01/19 — 02/10/20: 55/45 UPRO/TMF
02/11/20 — 12/31/20: 30/25/45 UPRO/TQQQ/TMF
01/01/21 — present: 30/30/40 UPRO/TQQQ/TMF
Rebalancing frequency: Quarterly (actual rebals 10/1/19; 2/11/20; 4/6/20; 7/1/20; 10/1/20; 1/6/21; 3/31/21; 7/1/21)
Return (Total / CAGR): 126.0% / 62.5%
Initial contribution: $10k (~5% of invested assets) 2/27/19
Additional contributions: $28.5k added 2/11/20
HFEA weight of total portfolio: 17%
Portfolio location: Roth IRA with E*Trade
tabby123
Posts: 4
Joined: Thu Nov 01, 2018 12:25 pm

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by tabby123 »

Can we add "Current balance" to the template? I realize the template already has "Return," but I think Current balance may be additionally helpful.

I will be shifting a lot of my future investing dollars to this strategy. Although risky, I'm in my mid-30s and have a lot of earning years ahead of me. I also have a comfortable amount invested in my more conventional portfolio.

Here's my first post:

Start date: 6/29/2021
Approach: Fixed allocation - 55/45 UPRO/TMF
Rebalancing frequency: Quarterly
Return (total / YTD): 3.08% / 3.08%
Initial contributions over a period of a few weeks: $26,754
Additional contributions: Going forward, plan to contribute $5,000 / month
Current balance: $27,644.31
Portfolio location: Taxable, M1Finance
MattB
Posts: 225
Joined: Fri May 28, 2021 12:27 am

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by MattB »

I'm beginning with $3,000 and will be contributing $99/day ($495/wk; $2,079/mo; $25k/year) for the foreseeable future. My plan is to begin with 33/33/34 UPRO/TQQQ/TMF until I reach $100k, then ride progressively more conservative allocations according to the following schedule.

$3k to $100k: 33/33/34 UPRO/TQQQ/TMF
$100k to $200k: 32/32/36 UPRO/TQQQ/TMF
$200k to $400k: 31/31/38 UPRO/TQQQ/TMF
$400k to $800k: 30/30/40 UPRO/TQQQ/TMF
$800k to $1600k: 29/29/42 UPRO/TQQQ/TMF
$1.6m to $3.2m: 28/28/44 UPRO/TQQQ/TMF

Start date: 8/2/2021
Approach: 33/33/34 TQQQ/UPRO/TMF
Rebalancing: Quarterly
Initial contribution: $3k
Additional contributions: $2,224 (Aug. 21);
Total contributions to date: $5,244/total
Current balance: $5,997
HFEA weight of total portfolio: 0.01%, as of 9/1/2021
Location: M1, Taxable

Updates:

Date / Allocation / Balance / Notes
Aug., 21 / 33/33/34 UPRO/TQQQ/TMF / $3,069 / Started the adventure.
Sep., 21 / 33/33/34 UPRO/TQQQ/TMF / $5,997 / Added $2,244; no rebalance needed.
Last edited by MattB on Fri Sep 03, 2021 9:09 am, edited 8 times in total.
Hydromod
Posts: 663
Joined: Tue Mar 26, 2019 10:21 pm

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by Hydromod »

MattB wrote: Thu Jul 29, 2021 7:07 pm **I will be rebalancing ~1/3 of my allocation each quarter to reduce return variance. I've simplified the process for doing this by using 3 brokerage accounts at M1. The first will be rebalanced in January, April, July, and October. The second, February, May, August, November. The third, March, etc.
There's an interesting way to get to monthly rebalancing.

A logical extension would be to have 12 accounts, cycling through monthly, so that all rebalancing is automatically long-term capital gains instead of short-term. Hmm.
jarjarM
Posts: 1507
Joined: Mon Jul 16, 2018 1:21 pm

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by jarjarM »

jarjarM wrote: Fri Apr 02, 2021 7:54 pm May as well, a bit over 2 year now in this.

Start Date: March 10, 2019
Initial investment: $100k (no additional contribution)
Initial allocation: 50/50 (UPRO/TMF) - didn't quite buy in on the 40/60 argument in the OG thread.
New allocation 1: 55/45 (UPRO/TMF) - based on 2nd thread.
Rebalance quarterly initially but switch over to TAA method
Current allocation: (84/16) - no rebalance until 10yr rate >2-2.5%

Return (total/ 1 yr) 135%/94%

Brokerage - Fidelity

March 2020 was quite brutal for this strategy but the rebound is also fast and furious. In holding pattern for rebalancing as I have substantial exposure to LTT elsewhere in my portfolio.
Since the thread has been revived for a bit, my current balance on this is $308k. Current AA is 85/15, no rebalancing in the last 4 months. Let's see if there will be another 200%+ growth in the next 2 years :twisted: :beer
TetrisCollider
Posts: 64
Joined: Sun Nov 18, 2018 3:03 pm

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by TetrisCollider »

Start date: 11/18/2020
Approach: Initial plan was to start with 55/45 UPRO/TMF; since I was buying over several months, and later added TQQQ, here is the current ratio - 47/28/25 UPRO/TQQQ/TMF
Rebalancing frequency: no dedicated rebalancing so far - using opportunistic buying approach - I do not sell
Return (total / YTD): +36.15% / 33%
Contributions: $13,387 so far
Current Balance: $18,227
Portfolio location: Roth IRA, Schwab
For some reason, people that know nothing, seem to know everything...
MattB
Posts: 225
Joined: Fri May 28, 2021 12:27 am

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by MattB »

Hydromod wrote: Thu Jul 29, 2021 7:31 pm
MattB wrote: Thu Jul 29, 2021 7:07 pm **I will be rebalancing ~1/3 of my allocation each quarter to reduce return variance. I've simplified the process for doing this by using 3 brokerage accounts at M1. The first will be rebalanced in January, April, July, and October. The second, February, May, August, November. The third, March, etc.
There's an interesting way to get to monthly rebalancing.

A logical extension would be to have 12 accounts, cycling through monthly, so that all rebalancing is automatically long-term capital gains instead of short-term. Hmm.
For clarity, the three-account approach maintains quarterly balancing for every dollar that is invested, while reducing variance in the return.

I came to this after chewing on the problem of which month to start rebalancing. Do I start in January, February, or March? Starting on a different date will obviously give a different result. Some results being better than others. By rebalancing 1/3 of my total investment every month I'm able to get the average return. This is analogous to index investing. Say you have three stocks to pick from, tickers: JAN, FEB, and MAR. You pick JAN and might get above average returns. Or you might have below average returns. Alternatively, you could invest one third of your money into each JAN, FEB, and MAR. This would give you the average return of the three. That's what I'm doing.

There seems to be no way, at least none that I'm aware of, to enjoy the benefits of quarterly rebalancing without suffering the cost of potentially having to realize short-term capital gains. Dollar cost averaging helps, initially, at least, to avoid the need for rebalancing. But over time, with luck, the portfolio should grow such that new contributions are inconsequential. At that point, quarterly rebalancing may force the realization of short-term capital gains.
Hydromod
Posts: 663
Joined: Tue Mar 26, 2019 10:21 pm

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by Hydromod »

MattB wrote: Thu Jul 29, 2021 10:14 pm
Hydromod wrote: Thu Jul 29, 2021 7:31 pm There's an interesting way to get to monthly rebalancing.

A logical extension would be to have 12 accounts, cycling through monthly, so that all rebalancing is automatically long-term capital gains instead of short-term. Hmm.
For clarity, the three-account approach maintains quarterly balancing for every dollar that is invested, while reducing variance in the return.

I came to this after chewing on the problem of which month to start rebalancing. Do I start in January, February, or March? Starting on a different date will obviously give a different result. Some results being better than others. By rebalancing 1/3 of my total investment every month I'm able to get the average return. This is analogous to index investing. Say you have three stocks to pick from, tickers: JAN, FEB, and MAR. You pick JAN and might get above average returns. Or you might have below average returns. Alternatively, you could invest one third of your money into each JAN, FEB, and MAR. This would give you the average return of the three. That's what I'm doing.

There seems to be no way, at least none that I'm aware of, to enjoy the benefits of quarterly rebalancing without suffering the cost of potentially having to realize short-term capital gains. Dollar cost averaging helps, initially, at least, to avoid the need for rebalancing. But over time, with luck, the portfolio should grow such that new contributions are inconsequential. At that point, quarterly rebalancing may force the realization of short-term capital gains.
It's not clear if you are treating these as three independent replicates or one portfolio split across three accounts.

I thought you were treating it as one portfolio, so each month the account being rebalanced trues up the overall portfolio balance.

Now it looks like you are looking at it as three independent replicates, so rebalancing is only for the account.

As I mentioned, you could set up a ladder of accounts, where each account is balanced annually (long-term gains only) but the rebalance is for the entire portfolio. Twelve accounts is overkill, but you might consider four accounts, rebalanced sequentially by quarter. The initial setup with contributions will make it so that you can wait for more than a year before needing rebalancing. In this case you could do long-term only rebalancing.

I don't know how M1 handles rebalancing; is it first-in-first-out? If so, you may be only doing long-term gains even in a single account, if the first rebalance is after more than a year. I understand some places allow you to specify lots, I have no idea about M1. I'd be interested to hear.

You might want to do some back of the envelope calculations of the drag from short-term gains. I've read that it's like adding a 1% ER, which might be acceptable. I haven't done the calculations myself, but now I'm intrigued.
Z33
Posts: 8
Joined: Fri Jun 11, 2021 11:21 pm

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by Z33 »

Happy Friday!

My contribution below:

Start date: June 2021
Approach: Fixed allocation - 55/45 UPRO/TMF
Rebalancing frequency: Quarterly
Return total: 14%
Initial contribution: $50K
Additional contributions: $0 so far but if the strategy works, may consider topping up in the next couple of re-balancing windows

Cheers,
Z
MattB
Posts: 225
Joined: Fri May 28, 2021 12:27 am

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by MattB »

Hydromod wrote: Thu Jul 29, 2021 10:54 pm It's not clear if you are treating these as three independent replicates or one portfolio split across three accounts.

I thought you were treating it as one portfolio, so each month the account being rebalanced trues up the overall portfolio balance.

Now it looks like you are looking at it as three independent replicates, so rebalancing is only for the account.

As I mentioned, you could set up a ladder of accounts, where each account is balanced annually (long-term gains only) but the rebalance is for the entire portfolio. Twelve accounts is overkill, but you might consider four accounts, rebalanced sequentially by quarter. The initial setup with contributions will make it so that you can wait for more than a year before needing rebalancing. In this case you could do long-term only rebalancing.

I don't know how M1 handles rebalancing; is it first-in-first-out? If so, you may be only doing long-term gains even in a single account, if the first rebalance is after more than a year. I understand some places allow you to specify lots, I have no idea about M1. I'd be interested to hear.

You might want to do some back of the envelope calculations of the drag from short-term gains. I've read that it's like adding a 1% ER, which might be acceptable. I haven't done the calculations myself, but now I'm intrigued.
I'm not precisely sure what you're saying, three independent replicates or one portfolio split across three accounts, nor am I sure what the implications of this characterization would be.

As I understand it, quarterly rebalancing is believed to yield optimal returns using HFEA.

A single account strategy can achieve quarterly balancing. You simply rebalance the account to the desired AA each quarter. But this has the problem of which month to start in? Do you start in January, February, or March? (Or equivalently in April, May, or June; etc.) Starting in January may result in better returns than starting in February. Or it might be worse.

A three account strategy as I'm proposing can achieve quarterly balancing (for every dollar that is invested). A third is rebalanced quarterly beginning in January. A third is rebalanced quarterly beginning in February. And a third is rebalanced quarterly beginning in March. This ensures that every dollar invested in HFEA in my accounts is rebalanced quarterly. This also gives me the average return of rebalancing a single account beginning either January, February, or March.

A ladder of twelve accounts rebalanced as you proposed would not achieve quarterly rebalancing for every dollar invested in the strategy. You simply can't rebalance an account once a year and expect, because you're rebalanced some other account, that you will have achieved the benefits of quarterly rebalancing for each of the accounts.

Apart from that, and to answer your question: M1 supposedly sells shares for rebalancing in the order of: high to low long-term capital losses, high to low short-term capital losses, low to high long term capital gains, low to high short term capital gains. This is generally the ideal structure for selling any investments.
User avatar
PicassoSparks
Posts: 212
Joined: Tue Apr 28, 2020 5:41 am

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by PicassoSparks »

The question is:

Let’s say your target AA is 55/45
It’s been an explosive quarter and it is January 1.
Your buckets are showing 75/25
It is time to rebalance bucket 1.

Do you balance it to 55/45 leaving your total AA as 68/32?
Do you balance it to 15/85 restoring your total AA to 55/45?

This gets weirder over time since your idea is that some buckets will outperform and some will underperform given the timing of rebalancing. How will you manage this if one of your buckets gets significantly bigger or smaller than the others?
Hydromod
Posts: 663
Joined: Tue Mar 26, 2019 10:21 pm

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by Hydromod »

MattB wrote: Thu Jul 29, 2021 11:30 pm Apart from that, and to answer your question: M1 supposedly sells shares for rebalancing in the order of: high to low long-term capital losses, high to low short-term capital losses, low to high long term capital gains, low to high short term capital gains. This is generally the ideal structure for selling any investments.
Thanks. So regardless of the rebalance strategy, it will minimize taxes. Very good to know.
Hydromod
Posts: 663
Joined: Tue Mar 26, 2019 10:21 pm

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by Hydromod »

MattB wrote: Thu Jul 29, 2021 11:30 pm I'm not precisely sure what you're saying, three independent replicates or one portfolio split across three accounts, nor am I sure what the implications of this characterization would be.

As I understand it, quarterly rebalancing is believed to yield optimal returns using HFEA.

You have to understand a little about the basis for this conclusion.

It turns out that the standard quarterly rebalancing protocol in portfolio visualizer rebalances at the end of the standard quarters. The standard monthly rebalancing protocol rebalances at the end of months. Both have historically been sweet spots. People like quarterly over monthly because they want to rebalance as infrequently as possible.

People haven't really done much checking of returns from other potential quarters, so you are right to question whether the quarter makes a difference.

My experience with backtesting various strategies suggests that monthly rebalances and the best quarterly rebalances gave approximately the same returns, but there was a wider spread in returns with quarterly rebalances (i.e., luck plays a bigger role in determining returns).

So I recommend either turn-of-month or turn-of-quarter as appropriate strategies, or even rebalance bands of around 15% if you are willing to track allocations relatively frequently.


A ladder of twelve accounts rebalanced as you proposed would not achieve quarterly rebalancing for every dollar invested in the strategy. You simply can't rebalance an account once a year and expect, because you're rebalanced some other account, that you will have achieved the benefits of quarterly rebalancing for each of the accounts.

Just to be clear, the twelve accounts was more of a thought experiment than a practical suggestion.
Especially now that I know M1 handles selling shares based on the optimal tax basis.
PicassoSparks wrote: Fri Jul 30, 2021 6:58 am The question is:

Let’s say your target AA is 55/45
It’s been an explosive quarter and it is January 1.
Your buckets are showing 75/25
It is time to rebalance bucket 1.

Do you balance it to 55/45 leaving your total AA as 68/32?
Do you balance it to 15/85 restoring your total AA to 55/45?

This gets weirder over time since your idea is that some buckets will outperform and some will underperform given the timing of rebalancing. How will you manage this if one of your buckets gets significantly bigger or smaller than the others?
PicassoSparks put it better than I did. You are setting up the same problem folks have when they try to balance an overall portfolio across taxable, Roth, and tax-deferred accounts.

If you are resetting your total AA to 55/45 each rebalance, then you are just doing monthly rebalances in a complicated way.

If you are resetting an individual account AA to 55/45 each rebalance (which I think is what you are proposing), then you may need to transfer between accounts to balance after some time (although I have a hard time thinking that this will be something to worry about for a long while, given that each account returns to 55/45 within a quarter).

My thought is that the overall AA is the thing that matters. I think you would be better off keeping it simple with one account and just rebalancing monthly, which you are prepared to do anyway. That should give you about the same effect as the best quarterly approach.

****

Another tangential thing that occurred to me after thinking about this for a while: you may run into wash sales, because the monthly rebalance strategy will run afoul of the 31-day limit if rebalancing oscillates between UPRO buys and sells. This may not be an issue if you are not trying to do tax-loss harvesting.
Ramjet
Posts: 1114
Joined: Thu Feb 06, 2020 11:45 am
Location: Ohio

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by Ramjet »

jarjarM wrote: Thu Jul 29, 2021 7:43 pm
jarjarM wrote: Fri Apr 02, 2021 7:54 pm May as well, a bit over 2 year now in this.

Start Date: March 10, 2019
Initial investment: $100k (no additional contribution)
Initial allocation: 50/50 (UPRO/TMF) - didn't quite buy in on the 40/60 argument in the OG thread.
New allocation 1: 55/45 (UPRO/TMF) - based on 2nd thread.
Rebalance quarterly initially but switch over to TAA method
Current allocation: (84/16) - no rebalance until 10yr rate >2-2.5%

Return (total/ 1 yr) 135%/94%

Brokerage - Fidelity

March 2020 was quite brutal for this strategy but the rebound is also fast and furious. In holding pattern for rebalancing as I have substantial exposure to LTT elsewhere in my portfolio.
Since the thread has been revived for a bit, my current balance on this is $308k. Current AA is 85/15, no rebalancing in the last 4 months. Let's see if there will be another 200%+ growth in the next 2 years :twisted: :beer
Are you still not rebalancing until the 10yr rate > 2-2.5%?
VT & HFEA
jarjarM
Posts: 1507
Joined: Mon Jul 16, 2018 1:21 pm

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by jarjarM »

Ramjet wrote: Fri Jul 30, 2021 9:26 am
jarjarM wrote: Thu Jul 29, 2021 7:43 pm
jarjarM wrote: Fri Apr 02, 2021 7:54 pm May as well, a bit over 2 year now in this.

Start Date: March 10, 2019
Initial investment: $100k (no additional contribution)
Initial allocation: 50/50 (UPRO/TMF) - didn't quite buy in on the 40/60 argument in the OG thread.
New allocation 1: 55/45 (UPRO/TMF) - based on 2nd thread.
Rebalance quarterly initially but switch over to TAA method
Current allocation: (84/16) - no rebalance until 10yr rate >2-2.5%

Return (total/ 1 yr) 135%/94%

Brokerage - Fidelity

March 2020 was quite brutal for this strategy but the rebound is also fast and furious. In holding pattern for rebalancing as I have substantial exposure to LTT elsewhere in my portfolio.
Since the thread has been revived for a bit, my current balance on this is $308k. Current AA is 85/15, no rebalancing in the last 4 months. Let's see if there will be another 200%+ growth in the next 2 years :twisted: :beer
Are you still not rebalancing until the 10yr rate > 2-2.5%?
Good question, still pondering over it. As of now, I'm still expecting to only rebalance when 10yr rate above 2%.
MattB
Posts: 225
Joined: Fri May 28, 2021 12:27 am

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by MattB »

PicassoSparks wrote: Fri Jul 30, 2021 6:58 am The question is:

Let’s say your target AA is 55/45
It’s been an explosive quarter and it is January 1.
Your buckets are showing 75/25
It is time to rebalance bucket 1.

Do you balance it to 55/45 leaving your total AA as 68/32?
Do you balance it to 15/85 restoring your total AA to 55/45?

This gets weirder over time since your idea is that some buckets will outperform and some will underperform given the timing of rebalancing. How will you manage this if one of your buckets gets significantly bigger or smaller than the others?
This clarifies the question. Thank you.

Using your example, my plan would be to rebalance one bucket to 55/45 leaving the total AA as 68/32. My goal isn't to bring the total AA of the three buckets to 55/45 each month. Rather, it's to bring one of the three bucket back to 55/45 each month.

Yes. This will get weirder over time. One bucket may outperform the others. Though by how much I don't know. I think I'll let it go for a while to see if they fluctuate within a reasonable range. If they get too out of whack I'll rebalance funds across buckets. E.g., selling in the over performing bucket and buying in the other one or two.
MattB
Posts: 225
Joined: Fri May 28, 2021 12:27 am

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by MattB »

jarjarM wrote: Fri Jul 30, 2021 11:51 am Good question, still pondering over it. As of now, I'm still expecting to only rebalance when 10yr rate above 2%.
Is the point of this rebalancing threshold to wait out the decline in TMF resulting from the increase in rates?
MattB
Posts: 225
Joined: Fri May 28, 2021 12:27 am

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by MattB »

Hydromod wrote: Fri Jul 30, 2021 9:23 am PicassoSparks put it better than I did.
PicassoSparks did clear up the question. See above. (You were correct: I'm resetting an individual account AA to 55/45 each rebalance.)
Hydromod wrote: Fri Jul 30, 2021 9:23 am My thought is that the overall AA is the thing that matters. I think you would be better off keeping it simple with one account and just rebalancing monthly, which you are prepared to do anyway. That should give you about the same effect as the best quarterly approach.
I'm going to stick with quarterly rebalancing as described. The administration is no trouble. It takes me 30 seconds in the M1 app once a month. And it decreases the risk of large declines in a prolonged bear stock market.
Hydromod wrote: Fri Jul 30, 2021 9:23 am Another tangential thing that occurred to me after thinking about this for a while: you may run into wash sales, because the monthly rebalance strategy will run afoul of the 31-day limit if rebalancing oscillates between UPRO buys and sells. This may not be an issue if you are not trying to do tax-loss harvesting.
I'm not going to bother with tax loss harvesting for the first few years because I'm dollar cost averaging into the accounts. I may reconsider this if and when balances grow to the point that future contributions have no real effect on future performance.
jarjarM
Posts: 1507
Joined: Mon Jul 16, 2018 1:21 pm

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by jarjarM »

MattB wrote: Fri Jul 30, 2021 2:43 pm
jarjarM wrote: Fri Jul 30, 2021 11:51 am Good question, still pondering over it. As of now, I'm still expecting to only rebalance when 10yr rate above 2%.
Is the point of this rebalancing threshold to wait out the decline in TMF resulting from the increase in rates?
Yeah, that's essentially the idea though predicted interest rate movement is just as hard as stock movement.
Mother_McCrankel
Posts: 5
Joined: Fri Oct 30, 2020 9:36 pm

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by Mother_McCrankel »

Start date: 02/01/2021
Approach: Short SQQQ 60%, TMF 35%, BTC 15%, cash 110%
Rebalancing frequency: Monthly
Return (total / YTD): +46.16% / 46.16% (MWR)
Contributions: $125,000
Current Balance: $165,452
Portfolio location: IB
MattB
Posts: 225
Joined: Fri May 28, 2021 12:27 am

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by MattB »

jarjarM wrote: Fri Jul 30, 2021 4:00 pm Yeah, that's essentially the idea though predicted interest rate movement is just as hard as stock movement.
Very true.
gtrplayer
Posts: 56
Joined: Sat Dec 08, 2018 4:13 pm

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by gtrplayer »

Just started, relatively small amount in, but up over 10% at this point. Am considering contributing more towards it on a somewhat regular basis, but is setting up a weekly contribution a good idea or is more effective to contribute quarterly when rebalancing? I know in a normal world, invest as soon as you can, but HFEA is a different beast so I wasn’t sure the best method for contributing more to it.
jarjarM
Posts: 1507
Joined: Mon Jul 16, 2018 1:21 pm

Re: Riding HEDGEFUNDIE’s excellent adventure

Post by jarjarM »

gtrplayer wrote: Fri Jul 30, 2021 11:05 pm Just started, relatively small amount in, but up over 10% at this point. Am considering contributing more towards it on a somewhat regular basis, but is setting up a weekly contribution a good idea or is more effective to contribute quarterly when rebalancing? I know in a normal world, invest as soon as you can, but HFEA is a different beast so I wasn’t sure the best method for contributing more to it.
If your expectation is for this little adventure to have significant appreciation, then it’s best to get in on the ground floor (lump sum). However, since the individual component do have significant volatility, you could market time a bit to buy in on low (it’s a sin here though :oops: ). In the end, it really depends on your comfort level with risk and regret.
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