Thank you very much for this article and a big fat @ccf! Don't have time right now, but will surely come back to it later.
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1Yr
@randomdude Thank you, I am curious. There are still many aspects to be discussed (asset allocation, risk control, implementation).
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Yes, maybe I can contribute a bit, but it's more of a field report where I also try to address your points. But first: Hats off, excellent written contribution. You really went deep into it and built up a tremendous amount of knowledge. I first heard about GTAA 1.5 years ago and have been into it ever since. First I read "The Ivy Portfolio" by Meb Faber (just google it, give it a free download pdf). Very well written and easy to understand. I also enjoyed watching an interview or two with him (youtube). He's a fundamentally likeable guy, more surfer than banker, who doesn't want to sell you anything, but encourages you to think for yourself. After that I did several backtests (preparation in Excel, implementation in Portfolio Performance). Very time-consuming, but enormously instructive. Although I work a lot with numbers in my job, it was something completely different to become at home in the world of price charts. In the fall of '22 I started to implement my strategy (50% Dividend Growth ETFs, 50% GTAA with 7 ETFs, see here https://getqu.in/GA9WUFZ8LYU7/er5S5CSA5C/) and so far I am very satisfied. What were my learnings? basically: 1. don't expect too much. and 2. know what you are doing. What do I mean by that? Faber and the publications based on it (e.g. the linked finanzen100.de text) suggested to me that it is easy to achieve returns of +12%. Yes, even in the Portfolio Visualizer backtests you can do that. However, with my own calculations for the last few years, I have not been able to replicate it, nor do I stress myself with an unrealistic (from my point of view) expectation. For me the crucial thing in the backtest was to see how the Corona and Ukraine drawdowns were reliably ironed out and that with market-driven price increases in bullish phases. I have about 12 years left for wealth accumulation and assume that I will reach my goal mainly through deposits and less through compound interest. But what I still don't need is a phase like between 2002 and 2009, when I am fully invested in stocks. Therefore, I have designed my GTAA variant rather relaxed and hedged: I am invested in 3 assets (if with positive momentum) and refer to the price increase of the last 3 and 6 months. This was not necessarily the model with the best return in Portfolio Visualizer, but I was able to develop a good understanding of how my model behaves in which situation based on the market development of the last years. And I'm totally satisfied when it returns around 6% after taxes. I have narrowed down my investment universe a bit after the last discussions here and now have 7 assets: NASDAQ 100, Eurozone Small Caps, Emerging Markets, Aggregated Bonds, Commodities, Gold, Money Market/Day Money. Risk control such as monitoring against the 100 or 200 day line and selling before the turn of the month if necessary does nothing after all that Faber has tested and that I have tracked in Portfolio Visualizer and by watching the market. By the way, I track the monthly closing prices with Excel (coming from XETRA) and trade on the first of the month at smartbroker. It has been quite an arduous journey up to here, but it has been fun and I expect it to be worth it. Anything to trade, what you do not understand and can not understand, is in any case not recommended.
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•1Yr
@randomdude A big thank you for your experience report! I find a super important addition to the sometimes quite abstract strategy explanation. My first contact with GTAA was also about 1.5 years ago. But it wasn't until about 6 months ago that the need to reorganize my finances arose, as the family income had increased to the point where financial freedom seemed realistic. So that was the challenge: save for 12 years and constantly approx.10% pa. and my family is financially free. Essential to this is consistency of return. I am a fan of the Gebert indicator, which has achieved approx. 15% pa since 1996 - 2020. Unfortunately, the indicator has lost its reliability badly in recent years. So I remembered Faber's GTAA and delved into it. I fully agree with you, one should understand GTAA as a process. With every step new questions and perspectives open up, so you have to keep learning. Right now I am trying to find a way to deal with the fact that the top momentum assets sometimes change positions back and forth within a few hours. This challenges my idea ,just before the turn of the month to optimize the specific entry with chart technique. That you are not hunting for the highest performing combo, but have picked out the right one for you, I think is exactly right! I also had a good combo with gold, but since a larger part of my investments already consist in it, I have in GTAA because of the danger of overweighting renounced. Here, everyone has to pick the right one for himself. Only if you feel comfortable with your asset combo, you can get through the stress when it does not go so. Overall, I am still in the beginning in the implementation. I find the performance since my start at the beginning of Feb okay, but I have not yet achieved a significant excess return. But based on my backtests and the long-term studies of Faber and Co, I see the statistics on my side, so that I can now look calmly on the coming stock market years. I wish us and all who give GTAA a chance, much success on this exciting journey!
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•@Epi Maybe getquin will still be around in twelve years and we can do the ultimate review here 😎
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