Earlier quoted context omitted.
yeah but there, other currencies make more sense.
For example?
euro, pound, yuan, yen
Golden Rules of Financial Safety (1999)
111–118 of 118 posts
Re: Golden Rules of Financial Safety (1999)
#112Earlier quoted context omitted.
I appreciate you schooling me on how to better contribute to the discussion. This was my attempt at what you're discussing (admittedly appended perhaps after your initial comment): > Harry's 25% cash isn't dollar bills, it's treasury bills, which have held up to inflation. OP seemed to be under the misconception that cash meant dollar bills under the mattress. The article addresses this in the section beginning "To e…
If your only point is that "cash" includes short-term T-bills, then 1) What else is the article adding? The fact that it (historically) yields something above inflation was enough to refute the OP's implied claim about negative real returns. 2) That wouldn't address the OP's point that they still have a low RoR for a long-term portfolio. 3) As in my comment it wouldn't refute that T-bills haven't kept up with inflati…
My points were that cash includes short-term T-bills, and that they have held up to inflation, both points addressed in the article I linked.
> Sorry if my comments come off as mean.
You're not coming off as mean. I can tell you're genuinely trying to improve the discussion here, and you reminded me that when I'm replying to someone, the audience is wider than just that person. Thanks.
Re: Golden Rules of Financial Safety (1999)
#113Earlier quoted context omitted.
yeah but there, other currencies make more sense.
well is this advice of 25% applicable in this day and age, have we moved past precious metals occupying such a large percentage?
That percentage has been and will be debated forever, even by proponents of the Browne PP model, but 4x25 has done well as recently as the past two decades.
Also the exact number is not all that critical. Earlier versions of Browne’s portfolio were more complicated and he simplified it to 4x25 later on, still allowing that people could tweak it if they must. But 4x25 is simple and works.
Re: Golden Rules of Financial Safety (1999)
#114Most of these look great. I am somewhat skeptical of Rule #8 about not giving anyone signature authority. Maybe he means this in a narrow sense that I don't understand, but when you have your money being managed for you, trades are being made on your behalf, you aren't doing them yourself. This is true from robo-advising all the way up to private banking and family funds.
He would argue against having your money managed for you. He wouldn't be against working with an advisor, but he'd want the advisor to explain things to you so that you can execute on your own behalf.
That'd be fine if I could do the trades my banker does for me, but I can't. I know this isn't a problem most people have, but this advice is unimplementable without costing me real money (I'm sure he would advocate lowering the cost basis, although strangely he doesn't say much about that).
Re: Golden Rules of Financial Safety (1999)
#115Re: Golden Rules of Financial Safety (1999)
#116Earlier quoted context omitted.
Vanguard (VTI) or S&P500
As I understand it, 25% of his portfolio would approximate one of those... by being one of them, or a similar all-market fund. The other 75% has no relationship to them at all.
That's right. It's designed that way on purpose. A 30% decline in VTI will likely have no bearing on the other asset classes. Best case: the other asset classes overcompensate in value (see volatility harvesting) offsetting the crash. Worst case: you re-balance with a portion of the 25% cash you have on hand. As a concrete example, look at what this portfolio did in 2008.
Re: Golden Rules of Financial Safety (1999)
#117Earlier quoted context omitted.
As I understand it, 25% of his portfolio would approximate one of those... by being one of them, or a similar all-market fund. The other 75% has no relationship to them at all.
That's right. It's designed that way on purpose. A 30% decline in VTI will likely have no bearing on the other asset classes. Best case: the other asset classes overcompensate in value (see volatility harvesting) offsetting the crash. Worst case: you re-balance with a portion of the 25% cash you have on hand. As a concrete example, look at what this portfolio did in 2008.
You miss my point. You can't claim to replicate an index fund by investing 25% in that index fund and then not even attempting to do so with the other 75%. It's a simple false claim.
Re: Golden Rules of Financial Safety (1999)
#118Earlier quoted context omitted.
That's right. It's designed that way on purpose. A 30% decline in VTI will likely have no bearing on the other asset classes. Best case: the other asset classes overcompensate in value (see volatility harvesting) offsetting the crash. Worst case: you re-balance with a portion of the 25% cash you have on hand. As a concrete example, look at what this portfolio did in 2008.
You miss my point. You can't claim to replicate an index fund by investing 25% in that index fund and then not even attempting to do so with the other 75%. It's a simple false claim.
Oh the similar yield comes from back testing a 30 year period for this portfolio compared to S&P500. Both have roughly the same CAGR yet the permanent portfolio has an amazing Sharpe ratio (risk adjusted return).