Portfolio Charts

The Portfolio Charts[0] site has heat maps showing how long it takes for a given portfolio to have a positive ROI. The charts only go as far back as 1970, but they're interesting nonetheless. Indeed, for the Total Stock Market portfolio[1], if you had invested a lump sum in 2000 you would have needed to wait until 2014 to see a positive ROI. A more conservative 60% stock / 40% bonds portfolio[2] would have recovered (though not by much) by 2010. That said, as another commented pointed out, this is not very reflective of the reality of most retail investors: most people will invest over long periods of time rather than all at once. [0] https://portfoliocharts.com/ [1] https://portfoliocharts.com/portfolio/total-stock-market/ [2] https://portfoliocharts.com/portfolio/classic-60-40/

There is no need to short. Just simply being in cash or assets uncorrelated to the stock market will be plenty. Study what outperformed after the dot com bubble burst. Things like gold, small cap value, and long term treasuries did well. And the great thing is you don’t have to time it, those assets historically provide great returns rain or shine. https://portfoliocharts.com/2021/12/16/three-secret-ingredients-of-the…

You can use a site like this to compare: https://portfoliocharts.com/portfolio/total-stock-market/ versus https://portfoliocharts.com/portfolio/classic-60-40/ Mixing bonds gives you a slightly higher safe withdrawal rate but you do lose 2 percentage points average yearly returns.

There are considerably safer bets than S&P500, with similar returns, including a classic 60/40. https://portfoliocharts.com/portfolio/portfolio-matrix/ https://portfoliocharts.com/portfolio/risk-and-return/

25% in each: gold/stocks(index fund)/30 year US bonds/cash Its called the Permanent Portfolio and it has a great long term track record: https://portfoliocharts.com/portfolio/permanent-portfolio/

For some charts that _are_ useful aids to choosing an asset allocation, check out this guy's site: https://portfoliocharts.com/

Quite a few. Some I use regularly: - Text snippet app to reply to support request emails. Use this to reply to about a dozen emails each day. I have over 300 snippets. - App to got through a folder with my bank statement PDFs and produce a number of transaction and investment reports (calculates IRR and other metrics). - An app to simulate all possible portfolio combinations for a given set of assets (this was before https://portfoliocharts.com) - An egg timer that you can start before you set the time right after you put the eggs into the water. Those seconds are precious. Wrote this as a gift for somebody. - App to generate monthly invoices for my app sales. - A nice frontend to manipulate csv files. While I was looking for an apartment, an app to look for new listings and notify me right away (often the nice apartments would already be gone by the time the daily email reached my inbox). A workout timer. Simple app that tells me the time every 15 seconds. Throws in the occasional Tony Horton quote for motivation. Oh, and a personal notes app, of course!

> > Dahiya and Yermack found that the performance of the typical endowment fund [from 2009-2016] was so poor that it would have earned substantially higher returns if its trustees had followed a simplistic investment strategy of holding 100% Treasury bonds and taken no equity market risk whatsoever. As a non-expert this intrigued me so I found an online calculator for that period (https://dqydj.com/treasury-return-calculator/) and was confused when it showed an annualized return of 1.72%.[1]. But then I read the actual paper where they make it clear their "simplistic strategy" is investing in a "CRSP 10-Year U.S. Treasury Bond Index". (See page 10 of PDF at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3291117) Digging further, as explained on this bond index calculator, https://portfoliocharts.com/bond-index-calculator/, a bond index fund uses mechanical rules, similar to an equities index fund, for buying and selling bonds, making money on changes in the market price, which can be greater or lesser than the nominal coupon return. IOW, such an index isn't simply buying and holding onto treasuries. If you download the spreadsheet from the above link (the calculator is a spreadsheet) you'll see that YoY swings are huge, ranging from -4.5% in 2009 to 17.5% in 2011 for 10-year treasury index.[2] Those very good years are why a treasury bond index can achieve such amazing returns over longer periods--greater than 2x the nominal + reinvestment return, without using…

Sorry the examples are confusing. I mention periods of relative underperformance as a nod to your cherrypick comment: yes, the time frames matter in both directions. The question is how much the strategy goes up or down relative to the benchmark and for how long. My claim with respect to this thread is that there is a strategy that outperforms in certain conditions like the 2008 selloff and 1970s inflation and does so without the risk of losing the gains as soon as the market turns around. Relative to stocks or 60/40 during a bull market, it doesn't look so good, but it still generates positive returns, holding for some time any edge gained during the earlier conditions. The overall result is a smooth climb, so I do claim it works well (enough) all the time. I don't claim absolute outperformance long term. The best chart for what I'm trying to show is beneath the data table in [1]. And the Envy calculator at [2] has great data back to 1972 for different assets (and lets you change the start date). [1] http://www.crawlingroad.com/blog/2008/12/22/permanent-portfolio-histor… [2] http://portfoliocharts.com/calculators/

So it bubbled and crashed forty years ago. In the past 25 years it's had decent returns, and in particular: 2007: 31.59%, 2008: 3.41%, 2009: 27.63%, 2010: 27.74% [1] Owning too much gold is terrible, but a modest allocation to gold in a portfolio of mostly stocks, which you rebalance every year or two, works out pretty well. [2] [1] https://www.macrotrends.net/1333/historical-gold-prices-100-year-chart [2] https://portfoliocharts.com/2021/12/16/three-secret-ingredients-of-the…

For the curious thread-reader, here are some websites that offer ideas that might make you question whether all "timing the market" is the same and equally bad long term. - https://portfoliocharts.com/portfolios/ (one step up in activity from B&H one ETF forever) - https://allocatesmartly.com/blog/ (another step up in activity from sticking to one asset allocation that you simply rebalance periodically) - https://qoppac.blogspot.com/p/systematic-trading-start-here.html (several steps up in complexity and activity)

As posted elsewhere in the comments, this link went a long way to explain it for me: https://portfoliocharts.com/2019/05/27/high-profits-at-low-rates-the-b…

Golden Butterfly portfolio: https://portfoliocharts.com/portfolio/golden-butterfly/ Or some other portfolio among the many options on the site. The nice thing about this site is that you can simulate how your allocation would do historically.

I really like this site for backtesting different mixes: https://portfoliocharts.com/portfolios/

> especially if the discussions happen during a good market run when modeling a perennial 7% YoY return on the pension portfolio seems reasonable. That's a pretty reasonable, even conservative, assumption for the long-run nominal total return of the stock market. I wish I could find the version that had figures in it (rather than simply 3% wide buckets, but all of the 25 and 30-year long periods in the heatmap have real returns in excess of 6% (meaning the nominal would be over 7%) https://portfoliocharts.com/portfolio/total-stock-market/ I think 7% nominal over a long period (such as a pension fund could expect) is quite reasonable and would expect a pension so funded to be quite stable.

didn't say they would. Simply that parent expressed dissatisfaction about only being able to invest in equities and you asking i.e. what in the world is the alternative? Asset allocation is key to control returns and volatility. Consider: http://portfoliocharts.com/portfolio/permanent-portfolio/ and http://portfoliocharts.com/portfolio/total-stock-market/

Assuming that in order to preserve wealth you are targeting 4-5% safe withdrawal rate (including inflation adjustments), an all-weather portfolio or risk parity type of portfolios can serve this purpose well and designed to be very resilient and robust to different market environments. Checkout various implementations of these portfolios: 1) Understanding All-weather portfolio: https://ofdollarsanddata.com/ray-dalio-all-weather-portfolio/ 2) The Permanent Portfolio: https://www.bogleheads.org/blog/2014/09/11/harry-brownes-permanent-por… 3) Golden butterfly portfolio: https://portfoliocharts.com/2016/04/18/the-theory-behind-the-golden-bu… 4) All-in-one Risk Parity ETF based on an actively managed index: RPAR ETF: https://rparetf.com/rpar 5) Wealthfront risk parity mutual fund WFRPX: https://research.wealthfront.com/whitepapers/risk-parity/