madsinger monthly report (July 2015)

[madsinger]

Here is a big fat collection of portfolios, with their July 2015 returns, 2015 YTD return, and annualized returns since 1999, 2005, 2010 and 2012 (16 years 7 months, 10 years 7 months, 5 years 7 months, 3 years 7 months). I broke them into four categories, roughly corresponding to 100/0, 80/20, 60/40, 40/60 stock/bond portfolios, sorted by 10 year Total Return. The 3 fund is 50/30/20 Total Stock/Total Int'l/Total Bond. The s&d is 10 each of VFINX, VIVAX, NAESX, VISVX, VGSIX, 25 VGTSX, 5 VINEX, 20 VBMFX. The coffeehouse is a 60/40 described at The Coffeehouse Investor. The Newsletter portfolios are from a newsletter following Vanguard funds. William Bernstein's "Sheltered Sam" is an all stock portfolio which is 20% VFINX, 25% VIVAX, 5% NAESX, 15% VISVX, 10% VGSIX, 3% VGPMX, 5% each VEURX, VPACX, VEIEX, and 7% VTRIX. The madsinger portfolio is my real-world portfolio, roughly 50/6/11/33 stock/REIT/Gold/bond. The madsingerPP portfolio is the "permanent portfolio" portion of my portfolio consisting of 25% each of stock, long bond, cash, gold.

-Brad.

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                                     CAGR    CAGR    CAGR    CAGR
                    July    YTD      since   since   since   since
                    2015    2015     2012    2010    2005    1999
VFINX               2.09%   3.28%   17.73%  14.24%   7.45%   5.14%
Hot Hands           1.81%   1.43%   16.35%  13.58%   7.42%  11.77%
Sheltered Sam       0.26%   1.48%   14.18%  11.53%   7.24%   7.50%
                  
Newsletter G        1.15%   5.10%   17.60%  13.37%   8.71%   9.73%
Newsletter G-IND    1.26%   4.50%   16.61%  13.76%   8.51%   6.65%
s&d                 0.69%   2.62%   12.07%   9.98%   7.00%   7.45%
3 fund              0.71%   3.22%   12.23%   9.63%   6.81%   5.80%
LS G                0.82%   3.12%   12.65%  10.23%   6.17%   5.21%

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Newsletter CG       1.07%   4.30%   15.87%  12.37%   7.96%   8.04%
Wellington          1.78%   2.09%   12.19%  10.43%   7.73%   7.46%
coffeehouse         0.91%   1.45%   10.38%   9.58%   6.81%   7.17%
STAR                0.92%   3.00%   11.61%   9.60%   6.74%   6.72%
LS MG               0.87%   2.53%   10.09%   8.82%   5.84%   5.28%
                  
Wellesley           1.24%   0.79%    7.80%   8.63%   6.87%   6.81%
Newsletter Inc      1.58%   3.10%   12.29%  10.77%   6.75%   5.89%
LS CG               0.87%   1.86%    7.54%   7.11%   5.19%   5.05%
                  
madsinger          -0.08%   0.58%    9.75%   8.79%   6.44%   
madsinger PP        0.00%  -1.06%            

[madsinger]

Kind of a spray in returns in July.

Large US stocks up 1% to 2%, small US down -1% to -0.3%. Developed int'l up a bit, emerging (think Greece) down -6.8%. REITs up 5.6%, gold down -6.7% and Precious Metals stock fund down over -16%. My PP was flast last month, long bonds up over 4%, gold down over -6%.

-Brad.

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           STOCK  LONG BOND  CASH     GOLD   PORTFOLIO 
January   -3.14%    9.37%    0.08%    8.37%   3.40%
February   5.68%   -5.65%    0.08%   -5.79%  -1.43%
March     -1.61%    1.13%    0.08%   -2.22%  -0.67%
April      0.91%   -3.06%    0.08%   -0.09%  -0.50%
May        1.24%   -2.15%    0.09%    0.61%   0.00%
June      -1.97%   -3.72%    0.08%   -1.48%  -1.74%
July       2.04%    4.22%    0.09%   -6.70%   0.01%
               
YTD        2.82%   -0.21%    0.58%   -8.24%  -1.06%

[cfs]

Thank you.

Thanks to our shipmate Brad for all the hard work. I look forward to reading this monthly report.

Thanks again.

[madsinger]

Updated with newsletter numbers.

I have been doing this report for about 10 years, and I believe this is the first report where the S&P 500 fund is leading the Hot Hands fund (comparing the 10 year/ 7 month returns). (in fact, leading in the 1,3,5 and 10 year returns...though not 16). There's no big conclusion here, just an observation.

-Brad.

[investor]

Thanks Brad, always enjoy the report.

investor

[LadyGeek]

This report is now in the wiki: Madsinger monthly reports

FYI- The wiki is a collaborative effort, I didn't make this update. The View history tab in the upper right-corner of every wiki article shows the editor who made the change and what was done.

[Martin]

Had to lookup the Hot Hands Portfolio, basically a momentum play. Pure luck that it beat the three fund portfolio across all timeframes. I'm sure this anomaly will be gone by Friday.

[investor]

that HH portfolio has been lucky quite a number of times. One uses it so as to save money by not going to Las Vegas

investor

[Wagnerjb]

Had to lookup the Hot Hands Portfolio, basically a momentum play. Pure luck that it beat the three fund portfolio across all timeframes. I'm sure this anomaly will be gone by Friday.

Some of that is due to a fortunate starting period chosen by Brad for the Hot Hands comparison, some of that is due to dubious benchmarking. From 1992 to 1999, the Hot Hands strategy was a dud. It did not produce any outperformance on a cumulative basis. The strategy had some very lucky years in the 2000-2004 time frame and since then has been a dud again. Sadly, performance chasers who piled into that strategy after those glorious years ended up with nothing.

The benchmarking is debatable, since we are talking about a "logic free" zone here - market timing and active strategies. In my opinion, it would be logical to benchmark the Hot Hands strategy against a reasonably similar fund. For example, in the years when the Hot Hands fund is an international fund one would use the Total International fund as a benchmark (since logical people would keep their AA constant and take from International to fund the Hot Hands strategy that year). Benchmarking the Hot Hands strategy against the S&P500 is pretty dubious in my mind, but as long as Bogleheads realize this isn't a credible and sensible strategy then it isn't worth debating much.

Best wishes.

[digarei]

The Newsletter portfolios are from a newsletter following Vanguard funds

I have some questions regarding several of the portfolios that appear in these monthly reports.

1. What is the source for the Newsletter G and Newsletter G-IND portfolios?  
2. What are their constituent asset classes and/or funds?
3. Do the 'news' portfolios have 60/40 allocations?  90/10?  
4. Do they own gold or other alternative investments? 
5. Are the performance figures net of expenses? 

The Bogleheads Wiki entry for madsinger reports outlines each portfolio featured in the posts.  It describes most of them in detail and uses pie charts to show the precise AA including sub-classes and includes URL links to assist readers who may wish to learn more information about the sampled portfolio. The "newsletter" portfolios, however, are unsourced and largely undefined. 

Googling "newsletter following Vanguard funds", Dan Wiener's name comes up in nearly every link. Is he he author of the newsletter that recommends the portfolios you're logging?

I have wondered if these were/are fictitious, in the sense that they are malleable, unpublished and no one is actually investing in them? — Perhaps these are back-tested allocations programmed to achieve an idealized target return or serve a similar goal?  

If the portfolios are real but their construction and contents must be (for whatever reason) undisclosed, I don't see what useful information could be taken by the reader nor do I understand the reason for their inclusion. Please enlighten me.


Thanks!

[ResearchMed]

The Newsletter portfolios are from a newsletter following Vanguard funds

I have some questions regarding several of the portfolios that appear in these monthly reports.

1. What is the source for the Newsletter G and Newsletter G-IND portfolios?  
2. What are their constituent asset classes and/or funds?
3. Do the 'news' portfolios have 60/40 allocations?  90/10?  
4. Do they own gold or other alternative investments? 
5. Are the performance figures net of expenses? 

The Bogleheads Wiki entry for madsinger reports outlines each portfolio featured in the posts.  It describes most of them in detail and uses pie charts to show the precise AA including sub-classes and includes URL links to assist readers who may wish to learn more information about the sampled portfolio. The "newsletter" portfolios, however, are unsourced and largely undefined. 

Googling "newsletter following Vanguard funds", Dan Wiener's name comes up in nearly every link. Is he he author of the newsletter that recommends the portfolios you're logging?

I have wondered if these were/are fictitious, in the sense that they are malleable, unpublished and no one is actually investing in them? — Perhaps these are back-tested allocations programmed to achieve an idealized target return or serve a similar goal?  

If the portfolios are real but their construction and contents must be (for whatever reason) undisclosed, I don't see what useful information could be taken by the reader nor do I understand the reason for their inclusion. Please enlighten me.


Thanks!

Yes, these are the portfolios from Wiener's newsletter.

However they are very "real".

He publishes an update to each portfolio (there are 4) every month, based upon the latest monthly returns for each of the funds within each portfolio.

I can't verify if there was or was not any backtesting for the earliest reported returns, but for some number of years, these have indeed been real time, actual returns.

The portfolios aren't "undisclosed" to newsletter subscribers.
Presumably they are "undisclosed" in other places because the information is proprietary and/or for copyright reasons.

The newsletters have a lot of other information also, which some may/may not find useful.

We don't follow any of the portfolios.

RM

[investor]

Three of the portfolios consist of active funds. The last is made up of all index funds. The 'Hot Hands" fund is also a DW creation.

Like RM, I do not follow any portfolios. The site has a very good forum and the newsletter useful information.

investor

[digarei]

ResearchMed & investor,

Thanks for your replies.

I don't doubt that subscribers to the newsletter have a strong interest in the performance metrics for the portfolio they're invested in or considering. Presumably they are privileged to know its structure, the funds or other investment vehicles that are recommended and appropriate allocations for each. Some of those subscribers may visit the Bogleheads forum and appreciate seeing how their fund has done against competing portfolios. Though, I'm fairly sure they would get the return numbers before they're reported here.

I'm still not seeing what benefit accrues to non-subscribers. It feels a bit like stealth advertising. Here's a secret portfolio that's performing beyond anything you've ever seen... look!—here it is beating the coffeehouse portfolio (known alloc) and making mincemeat of your small-valuey slice & dice (known alloc)! But it's impervious to examination.

Just my 2x100 centavos.

[madsinger]

The Newsletter portfolios are from a newsletter following Vanguard funds

I have some questions regarding several of the portfolios that appear in these monthly reports.

1. What is the source for the Newsletter G and Newsletter G-IND portfolios?  
2. What are their constituent asset classes and/or funds?
3. Do the 'news' portfolios have 60/40 allocations?  90/10?  
4. Do they own gold or other alternative investments? 
5. Are the performance figures net of expenses? 

The Bogleheads Wiki entry for madsinger reports outlines each portfolio featured in the posts.  It describes most of them in detail and uses pie charts to show the precise AA including sub-classes and includes URL links to assist readers who may wish to learn more information about the sampled portfolio. The "newsletter" portfolios, however, are unsourced and largely undefined. 

Googling "newsletter following Vanguard funds", Dan Wiener's name comes up in nearly every link. Is he he author of the newsletter that recommends the portfolios you're logging?

I have wondered if these were/are fictitious, in the sense that they are malleable, unpublished and no one is actually investing in them? — Perhaps these are back-tested allocations programmed to achieve an idealized target return or serve a similar goal?  

If the portfolios are real but their construction and contents must be (for whatever reason) undisclosed, I don't see what useful information could be taken by the reader nor do I understand the reason for their inclusion. Please enlighten me.


Thanks!

Hello digarei,

I'm sorry I did not see these questions until now.

As others pointed out, the newsletters portfolios are the collections of portfolios put together and tracked in a newsletter that follows Vanguard funds. (others have posted the name of the newsletter). I am not a subscriber to the newsletter, so I do not know the composition of the portfolios. I have been told that they tend to be more stock heavy than the 80/20, 60/40, and 40/60 allocations that I have grouped them into. I am quite sure they are all made up of Vanguard mutual funds (no "gold", no alternatives that are not directly Vanguard funds). The reported returns come straight from the newsletter website (which others have privately messaged to me that these are accurate). I assume the returns are simply a reflection of a portfolio of these funds, and therefore net of any expenses. The returns do not reflect of the cost of subscribing to the newsletter.

The whole reason this "madsinger monthly report" got started (10 years ago now), was because people had posted returns, and others complained that these were "data mined", etc. So, I offered to write this report, not touting nor dismissing the newsletter, simply reporting data "going forward". If you look at the chart since 2005, you can see results of these portfolios that have not been "data mined" or "back tested", as these portfolios are printed and followed. This is also one of the reasons I am hesitant to add portfolios that people have suggested over the years, simply because I don't want to jump on a recent rally idea, and then include a portfolio that no one was talking about 10 years earlier.

Personally, I am not a fan nor a subscriber to newsletters. However, I am not against publishing data.

-Brad.