Portfolio7 wrote: ↑Mon Feb 12, 2018 7:30 pm
I love these monthly reports, thanks Madsinger! I am curious about something. Do you know the story behind those newsletters? I have to admit to being curious at their apparent outperformance of some very respectable funds and approaches. That may be due to slightly different Eq/Bond splits, but I'm curious what's going on there. These newsletters appear to be yielding some pretty amazing returns relative to perhaps similarly constructed funds (??), which is not something I really expect from a newsletter that an investing small fry like myself can access. At the same time, I realize that not all the portfolios in each grouping have the same stock and bond split, so I was thinking that may be the reason, or they could simply be very high volatility portfolios?
Do you or have you considered following the newsletter advice? Appreciate your thoughts whenever you get a moment. Sounds like you've been busy lately (I'm traveling on business this week for the 2nd time in the past 4 weeks, I've left a ton of things undone so far this year.)
Taz wrote: ↑Tue Feb 13, 2018 7:25 am
Madsinger - I appreciate these reports - thank you. I am curious about the makeup of the newsletter portfolios, although not enough to subscribe to any of them (past performance is no .......) .
BTW, looks great in landscape on my phone.
Responding to a couple of questions about the newsletter portfolios....
I do not subscribe to the newsletter. I am personally not a fan of newsletters, but I am not an enemy of them either. I think many investors would be much better off paying $100 per year and following advice that uses very low cost Vanguard funds, has very low turnover, as long as they pick an asset allocation that works for their situation, rather than paying an adviser literally thousands of dollars in fees that uses high cost funds, too many funds, and too much turnover. I don't think most Boglehead followers fall into this latter category.
I personally would not consider following any of the newsletter's portfolios, but that's just my preference.
That said...one can not argue with the past results. Through private correspondence with people who do subscribe to the newsletter, I have been told that the stock/bond allocations of the portfolios tend to be more aggressive than the categories I have put them in on the charts. The two growth portfolios have had more than 80% stocks, moderate growth more than 60% stocks, "income" more than 40% stocks. This "tilt to stocks" has obviously been very helpful to the portfolios. I've also been told that in the past few years, they have shied away from International stocks, which has also been a plus. I don't hold this against them....this is precisely what one pays an adviser to do...assess the markets, make their predictions, and structure their portfolios accordingly. I do not know how these portfolios are "tilted" today, and even if I did, it would not be right to publicize this!
When I started these charts almost 15 years ago, there had been (somewhat heated) discussions about how these portfolios were far outpacing the S&P 500 index fund (after a terrible three year stretch from 2000-2002). One can look at the charts today and see that the S&P 500 index fund is beating all portfolios in 1, 3, 5, and 10 year returns. Is this a fair comparison? A reason to sell everything and buy the S&P 500 fund? Probably not. Similarly, the Hot Hands strategy was clobbering everything back then...today, it has the lowest 10 year return of all "portfolios" tracked. If nothing else, I hope these two examples point out the both the usefulness of these charts, and the uselessness of these charts when trying to predict what the "best" portfolio going forward will be.
The best advice I can offer, which I attribute of Larry Swedroe (because I read it in his books first) is to find an asset allocation that best matches your need, ability, and willingness to take risk, and to find a low cost, low turnover method to implement it. Simple..but maybe not easy!