That is what I do, but I do not currently use factor investing consciously in my plan, although my allocation will obviously have some tilts due to number of funds (~10) and the way I accumulate/rebalance (mostly through additions, but also through changing life situations).larryswedroe wrote: ↑Thu Jul 11, 2019 7:47 amABC
don't have time to address each issue butThis is EXACTLY what one should do, and it can be done via reviewing MCS outcomes, showing the estimated odds of successful outcomes, achieving your goals be that not running out of money while alive or leaving a certain size bequeth. That is how one decides on the right AA and right withdrawal rate best for their situation. That should answer I think all your questions.And yet you said that over time more thoughtful decision making should prevail. An investor should know if the likely/expected pay off period is 10 years, 20 years, 100 years, or 500 years so that they can pick a strategy that is appropriate for their personal situation. What is true for the individual is not true for the strategy as a whole. So while our individual results may not be indicative of a good strategy, the combined results of all those using a strategy should be able to show the predicted metrics of a good strategy.
I'm certainly not holding you personally accountable for answering these specific questions, but I would expect the factor tilt experts to be able to do so as a whole.
I'm asking where the expected value for factor investing can be found, and where I can find the expected time period expect to see those gains, and where anyone has published such probability distributions? Can anyone point me to these publications? There should be a plethora of such results if this is exactly what one should do. The probability distribution is what I am looking for - not net average values, which are less useful for risk assessment.
These results would be the basis for choosing whether or not factor investing is appropriate for my situation. There are nuances, as Larry talks about the ability to increase bond percentage. Regardless of the nuances used, net or expected outcomes should be able to be able to be clearly communicated for factor investing, and it should be trivial to show probability distributions, even at level of one representative case that shows how factor investing adds value.
I'd be happy to read such publications if anyone can't point me to them. I want to see either a distribution of possible outcomes for representative case(s), or an ability to describe how one should properly build a MCS to include factor tilting intelligently rather than as a fool. Assume the creation of the actual MCS is trivial.