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The Ultimate Portfolio

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ithalvey
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The Ultimate Portfolio  Reply with quote  

I am just curious to what you guys think is the best portfolio / asset allocation for any market condition?

I have heard the best one is:
30% stocks
15% intermediate bonds
40% long term US Bonds
7.5% gold
7.5% commodities

I am also curious as to which vanguard funds you would invest in for bonds and commodities?


Last edited by ithalvey on Sun May 31, 2015 1:37 pm; edited 2 times in total
Post Sun May 31, 2015 12:06 pm
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blixet
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An investment portfolio is a tool. This is like saying you've heard the best tool is a hammer. There is no best tool. It depends on the situation.

Information is more valuable sold than used – Fischer Black
Post Sun May 31, 2015 12:59 pm
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ithalvey
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Well i guess what i meant to say is that the portfolio i listed above is good for any situation, they call it the all weather / all season portfolio.
Post Sun May 31, 2015 1:32 pm
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oldguy
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quote:
I have heard the best one is:
30% stocks
15% intermediate bonds
40% long term US Bonds
7.5% gold
7.5% commodities


I don't know who gave you that advice - but in any case, I'd quit listening to them.

Gold - in about 1980, gold and the Dow were 'even', both at about 800. Today the Dow is at about 18,000, where is gold?

Commodities - yeah, traders/speculators prefer them, I traded corn futures for a while. And there are lots & lots of Oil traders in the market now. It's entertaining - but not a good way to play with your families 30-years core funds.

My guess is that long bonds are among the worst things that you could own, they are highly leveraged against interest rates-, one little pop upwards in fedral rates and the value of long bonds will plummet. Or maybe not, who knows? But why flip that coin?

At your age, I would (and was) 100% in SP500 Index Funds and leave them undisturbed for at least 30 years so that you can see the power of compounding.
Post Sun May 31, 2015 6:18 pm
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blixet
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"They" are probably in the business of attracting viewers to advertisements on a web site. No reputable financial planner would say such a thing with a straight face.

Information is more valuable sold than used – Fischer Black
Post Sun May 31, 2015 6:53 pm
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ithalvey
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Yeah right now i am 100% in the sp500, i got that portfolio from a book i am reading called Money Master the Game, by Tony Robbins. It is a really good book, he got that portfolio from Ray Dalio who manages over 160 billion and produces more than 21% annual returns for his investors. When the sp500 dropped almost 50% from 2000 to 2002 this portfolio would have only lost 3.98%. it just seems really risky for me to be all in on the sp500, i want more leverage when there is a sudden surprise and stocks go down, it will take a long time to make up for a loss. Any ideas?
Post Sun May 31, 2015 8:45 pm
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oldguy
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quote:
Any ideas?


The goal isn't to lose only 3.98%, the goal is to MAKE 11%/yr for 30 yrs, that's a factor of 22.

quote:
it just seems really risky for me to be all in on the sp500, i want more leverage when there is a sudden surprise and stocks go down,


It might be even more risky to NOT be 100% in the SP500, you only get one 30-yr chance to build wealth, after that you must move into wealth-preservation.

The Law of Investing - risk and return are directly proportional. There is no investment that is "safe" and "risky" at the same time. The market continually fluctuates with the economic situation of the world, it goes up/down. The only way to stay 'safe' is to use an income product -savings account, CDs, money market - they are designed to provide safe storage of money (but no growth).

One standard deviation is about 16% for the SP500, ie, 19 years out of 20 it goes up/down within the range of +/- 32%. As you can see, that prediction of an annual move (32%) isn't very useful. So you cannot count on the SP500 for shortterm returns. However, when you let those up/downs statistically average for 30 years, they nearly cancel, and converge on 11%/yr.

http://politicalcalculations.blogspot.com/2006/12/sp-500-at-your-fingertips.html#.VWuUbUbmeUl
Check several 30-year blocks of time on this site - and see what the usual average is. Be sure to pick time blocks that include the 200 to 2002 period - also the 2008 crash - and the great crash of 1987. (I was in all of them, went right thru them, and somehow I get 11%/yr, just like everyone who stayed.)
Post Sun May 31, 2015 11:46 pm
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christcorp
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Gold and silver most definitely be in your portfolio. Although I would have 2 caveats. 1st. It has to be physical. Not etf's, mining stocks, or any other paper version. If you can't hold it, it doesn't exist. Or should I say it can be instantly taken away. Especially considering there's not enough physical silver and gold to cover all the paper being sold.

2nd. I would suggest 10-15% instead of 7.5%.

Silver and gold aren't investments. They are "money". They are the only true money. If you look at it as an investment, then you don't know anything about silver or gold. It doesn't matter what it does vs the a&up, Dow, Nasdaq, or anything else. What matters is, it's the only thing that has ever maintained its value. And that's what money is suppose to do. An ounce of silver or gold today, will buy what it could buy 100 years ago. Even when taking in account for inflation, higher wages, and cost of living, the dollar can't say that. Only silver and gold can say that.

I'm not against investing. I have ira's, 401k, mutual funds, stocks, real estate, and a number of other investments. But every portfolio also needs to have money. Mind you, I didn't say cash. You need money to hedge against inflation. You need it to get through hyper inflation as an insurance policy. In the 2008 era, the market went from 12000 to 6000. The current WILL do similar. It is not unrealistic to see it drop below 10000 from the 18000 where it's at. And when this happens, my investments will sit there and be ready for the rebound just like the last one. And I'll be ahead like I a, now vs the 2008 era. While others are losing their jobs and raiding their savings and 401k, IRA, etc. to make ends meet, I'll have my silver and gold as my insurance policy. I've used it to buy a new SUV for my wife as well as reduce debt and pay off my mortgage. Which should also be noted. The best investment you can have is to become debt free. You're better off with $50,000 in investments after a crash and no debt, than to have $150,000 after a crash and a monster mortgage you still need to pay each month.

Silver and gold are money. They are the only real money. They are the only thing guaranteed to maintain their buying power and value. Those who see it as an investment have no idea. Those who see it as money, savings, and insurance know exactly what I'm talking about.
Post Mon Jun 01, 2015 11:08 pm
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