This whole thread you are making the argument for Hedgeable. The use dynamic correlations weighing intra day trades, daily correlations, weekly, monthly along with longer term. So as correlations shift dynamically they adjust the portfolio targets.siamond wrote:I have a broader question though. I find myself quite unconvinced by the value-added of the 'robot' doing the TLH and/or the rebalancing on my behalf. And I don't see that the two portfolios documented so far are that special, aside from what I would call 'fairly meaningless hair splitting' in some categories.
Where I would see true value-added would be a truly useful process requiring more computational and modeling power. Optimizing correlations to death ala MPT might be one (and yes, a 3 fund portfolio isn't entirely optimal in this respect), but it seems a fool's errand to me, first because it's an always moving target (correlation patterns keep changing - just ask questions about gold miners to MPT supporters before/after 2008!),
Volatility is sort of the standard definition of risk. I personally lean towards the Kondratiev model: how does the portfolio do in inflation recessions, deflationary depressions, reflationary growth surges, disinflationary asset booms? So right now for example I think we are either near the end of deflation or the beginning of reflation (depending on choices not yet made). Which means I'm worried about default risk. I'm also worried about sharp sudden inflation as monetary velocity picks up. I'm not worried about gradually falling interest rates or stagflation. Though I think any "good for all seasons" portfolio needs to be (one of the reasons I think TSM + intermediate high quality bonds is terrible for income investors).siamond wrote: but more importantly because it equates risk with volatility, and personally, volatility is like the 5th or 6th item of my list of risks to put under control... I actually view long-term risks as much more important than short-term risks, and defined my AA accordingly. And trying to explain a lot of shades of grey about risks to a computer, good luck with that.
So I agree with your sentiment for myself but I don't see how to define that rigorously in a way that could get broad agreement in this society.
That starts getting into wealth management not financial advisors. You can get that and much more but it ain't cheap. Expect something like a min fee of $20k / yr. As far as robos I think robos are a classic disruptive technology for financial advice / wealth managementsiamond wrote: Where I would see true value-added would be tax optimization, and that goes way beyond TLH. Full tax planning requires analyzing decades ahead to what will happen (e.g. RMDs, SSA/Pension) and what could happen (asset location selection and changes, things like Roth conversion, states when you work/retire, etc). THAT is complicated. Personally, I did my own spreadsheet for this, but I know it will be a pain to maintain, and that I am not taking all factors in account, very far from it, and not everybody is as geeky as I am. It appears that there are few financial advisors capable of doing something like that, actually. Heck, because it's complicated!
They are working towards green line customers. What you want is the purple line. Add in things like intergenerational transfer of wealth and strategic philanthropy and you have the purple line. Give them another decade or two. They'll get there to the green and start challenging the purple.
Sort of. The cyborg-advisor model I mentioned robos have that sort of service. Basically the robo does the day to day implementation of the advisor's plan. I was thinking of skipping robos like Envestnet that aim themselves at the cyborg-advisor relationship because Bogleheads is a very do-it-yourself kind of crowd.siamond wrote: jbolden1517, are you aware of any robo-adviser going in such direction, some form of tax-optimized long-term planning?
It wouldn't surprise me if Hedgeable in say 2030 is moving in that direction providing they can stay in business. They are having trouble growing fast right now. The next bear I think will be make or break for them. If they do as well as they claim they will, I suspect they quickly rise to billions in assets. If they don't then there is no more Hedgeable. Motif is already massive and their platform already has most of the customization to allow for what you are talking about in a cyborg advisor role. The money behind them is Goldman Sachs, JP Morgan, Foundation (Uber, Netflix, Lending Club)... Certainly Goldman and JPMorgan offer those services. Foundation has the pockets and technical depth to handle anything. So there is hope. But I have no inside info on their direction. The other one that I think might go that far near term is Macroaxis. They have $60b (not a typo) under management, don't seem to sell stuff at all as far as I can tell, and gets talked about in the financial press all the time. The are already doing rather sophisticated stuff with portfolios and this is before they even consider themselves to be a product.
So there is hope but no options I know of today.