7H
It's great that you dared to do it, that's what the community thrives on. 💪
About your portfolio:
It looks well-organized and well thought-out at first. The devil lies in various risks that you rarely see. I hope you're aware of them.
1. drawdown: Your portfolio has a certain risk on the currency side. Your ETFs are all unhedged, so your portfolio will lose significantly if the USD falls.
2. diversification: Most of your portfolio is highly correlated. I estimate >0.8, i.e. if one position falls, most of the others will fall too.
3. liquidity: Your portfolio essentially depends on the liquidity situation of the markets, especially the USA. There are already dark clouds on the horizon. If there is a liquidity squeeze, your portfolio will be defenseless.
4th strategy: You are only pursuing a single strategy, i.e. virtually no diversification on this side. B&H has done well for the last 15 years, 2000-2011 was terrible. I would diversify here.
Good luck!
About your portfolio:
It looks well-organized and well thought-out at first. The devil lies in various risks that you rarely see. I hope you're aware of them.
1. drawdown: Your portfolio has a certain risk on the currency side. Your ETFs are all unhedged, so your portfolio will lose significantly if the USD falls.
2. diversification: Most of your portfolio is highly correlated. I estimate >0.8, i.e. if one position falls, most of the others will fall too.
3. liquidity: Your portfolio essentially depends on the liquidity situation of the markets, especially the USA. There are already dark clouds on the horizon. If there is a liquidity squeeze, your portfolio will be defenseless.
4th strategy: You are only pursuing a single strategy, i.e. virtually no diversification on this side. B&H has done well for the last 15 years, 2000-2011 was terrible. I would diversify here.
Good luck!
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@Epi cool that you're commenting, thanks! I read your post on the momentum strategy some time ago and even halfway understood it.
At least it's been thought through superficially, and I didn't expect much more.
1. I am aware of that. But I thought that the dollar is fundamentally in a better position than the euro, if only because it is supported by oil, and I also think that there is more of a crisis in the eurozone than in the dollar area, or am I wrong? What would your approach be? I can't hold everything in Eurohedged as well. Or only buy in hedged? What happens if the euro falls and the dollar rises? I don't know much about that yet...
2. do I hold a lot of things twice via ETF and then individually? Or is that sector-related? So I should watch out for hidden duplication and expand to more sectors?
3. Unfortunately, I don't really understand this point. So of course my plan is very USA-heavy, that makes sense to me. But doesn't the market always depend on the liquidity of the respective investment area?
4. okay, I understand. Of course, I've already read around a bit and it's always said that you should develop your strategy and stick to it. Constantly changing would be counterproductive. Are you saying that you should pursue several strategies at the same time? For example, include your explained momentum strategy?
Sorry for all the questions, but that's the only way I can understand it.
Thank you, I wish you the same!
At least it's been thought through superficially, and I didn't expect much more.
1. I am aware of that. But I thought that the dollar is fundamentally in a better position than the euro, if only because it is supported by oil, and I also think that there is more of a crisis in the eurozone than in the dollar area, or am I wrong? What would your approach be? I can't hold everything in Eurohedged as well. Or only buy in hedged? What happens if the euro falls and the dollar rises? I don't know much about that yet...
2. do I hold a lot of things twice via ETF and then individually? Or is that sector-related? So I should watch out for hidden duplication and expand to more sectors?
3. Unfortunately, I don't really understand this point. So of course my plan is very USA-heavy, that makes sense to me. But doesn't the market always depend on the liquidity of the respective investment area?
4. okay, I understand. Of course, I've already read around a bit and it's always said that you should develop your strategy and stick to it. Constantly changing would be counterproductive. Are you saying that you should pursue several strategies at the same time? For example, include your explained momentum strategy?
Sorry for all the questions, but that's the only way I can understand it.
Thank you, I wish you the same!
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11
•5H
@_Barren_Wuffet_
For the time being, I have only indicated potentially problematic points. I don't have any universal patent solutions and there probably aren't any because every investor profile is different. Very few investors do what is objectively best for them, most believe they know better and ignore the risks until it is too late. Then there is a lot of moaning and the next irrational decisions are on the cards. So: I can only say what possible solutions might be, but not whether they suit you.
1. USD: If you are willing to hold through 15 years of USD weakness, the point doesn't matter. If potentially 30-50% currency related losses bother you, then you need a hedge.
2. correlations: Do a correlation check of your positions and throw out anything that is >0.8 correlated to the core. This will not bring you any gain in security, performance or anything else. Intuition doesn't matter either. 🤷
3. liquidity: You should protect your long-term portfolio from extreme scenarios, otherwise you will first get into trouble yourself and then the portfolio. One is a liquidity squeeze. There is not much that will rise. This should play a role in the portfolio.
4 Of course you should stick to your strategy. But it's better not to stick to suboptimal strategies. 😅
I consider various strategies to be useful for reducing volatility, smoothing the performance curve, boosting the safe withdrawal rate and lowering the retirement age accordingly.
Momentum is one possibility. There are other strategies. The main thing is low correlation and correct weighting. One simple option is the Epi portfolio: 60% equity ETF, 30% gold, 10% BTC. The most important, uncorrelated asset classes are roughly equally weighted. This B&H portfolio can also be weighted 50% and supplemented with 50% GTAA, alternatively 35% 1xGTAA, 15%3xGTAA. Then you have two largely uncorrelated multi-asset strategies, each with uncorrelated assets.
This should run fairly smoothly and still perform well. Quieter than a world ETF portfolio in any case!
But as I said, very few people subjectively consider it to be objectively the best.
For the time being, I have only indicated potentially problematic points. I don't have any universal patent solutions and there probably aren't any because every investor profile is different. Very few investors do what is objectively best for them, most believe they know better and ignore the risks until it is too late. Then there is a lot of moaning and the next irrational decisions are on the cards. So: I can only say what possible solutions might be, but not whether they suit you.
1. USD: If you are willing to hold through 15 years of USD weakness, the point doesn't matter. If potentially 30-50% currency related losses bother you, then you need a hedge.
2. correlations: Do a correlation check of your positions and throw out anything that is >0.8 correlated to the core. This will not bring you any gain in security, performance or anything else. Intuition doesn't matter either. 🤷
3. liquidity: You should protect your long-term portfolio from extreme scenarios, otherwise you will first get into trouble yourself and then the portfolio. One is a liquidity squeeze. There is not much that will rise. This should play a role in the portfolio.
4 Of course you should stick to your strategy. But it's better not to stick to suboptimal strategies. 😅
I consider various strategies to be useful for reducing volatility, smoothing the performance curve, boosting the safe withdrawal rate and lowering the retirement age accordingly.
Momentum is one possibility. There are other strategies. The main thing is low correlation and correct weighting. One simple option is the Epi portfolio: 60% equity ETF, 30% gold, 10% BTC. The most important, uncorrelated asset classes are roughly equally weighted. This B&H portfolio can also be weighted 50% and supplemented with 50% GTAA, alternatively 35% 1xGTAA, 15%3xGTAA. Then you have two largely uncorrelated multi-asset strategies, each with uncorrelated assets.
This should run fairly smoothly and still perform well. Quieter than a world ETF portfolio in any case!
But as I said, very few people subjectively consider it to be objectively the best.
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@Epi
No, you're right, if there was THE way, then a platform like this would probably be useless.
I don't want to ignore any risks because I'm not greedy, emotional or rash, at best ignorant, but that's why I'm here now.
1. that would bother me. So I have to look for my investments in the hedged version and switch to them to escape a possible weak dollar?
2. I first need to understand what such a correlation is. My understanding is that if my core rises by e.g. 10%, an individual security also rises by 8-10%. Then the two correlate and the individual stock is of no use to me in that sense. If the core stagnates or even falls slightly and an individual security rises at the same time, there is no correlation and it is a good diversification to offer me security. Is that right?
3. I understand that in uncertain times, when there is hardly any capital inflow into the market, only a few investments rise (e.g. gold or BTC would come to mind?) and I should have enough of these in my portfolio to have an increase even in stagnating markets?
4. well said, the plan is useless if it is stupid 😂
So a large strategy consisting of 2-3 independent strategies. Sounds sensible but also time-consuming. So if I take your 50/50 suggestion, consider my plan as 50% B&H and add the other 50% in GTAA?
I'll read up on GTAA, I don't know much about it yet.
My goal is of course to be able to sleep peacefully and still make the most of it.
On that note, thanks for all the food for thought! I would be delighted if we could stay in touch.
No, you're right, if there was THE way, then a platform like this would probably be useless.
I don't want to ignore any risks because I'm not greedy, emotional or rash, at best ignorant, but that's why I'm here now.
1. that would bother me. So I have to look for my investments in the hedged version and switch to them to escape a possible weak dollar?
2. I first need to understand what such a correlation is. My understanding is that if my core rises by e.g. 10%, an individual security also rises by 8-10%. Then the two correlate and the individual stock is of no use to me in that sense. If the core stagnates or even falls slightly and an individual security rises at the same time, there is no correlation and it is a good diversification to offer me security. Is that right?
3. I understand that in uncertain times, when there is hardly any capital inflow into the market, only a few investments rise (e.g. gold or BTC would come to mind?) and I should have enough of these in my portfolio to have an increase even in stagnating markets?
4. well said, the plan is useless if it is stupid 😂
So a large strategy consisting of 2-3 independent strategies. Sounds sensible but also time-consuming. So if I take your 50/50 suggestion, consider my plan as 50% B&H and add the other 50% in GTAA?
I'll read up on GTAA, I don't know much about it yet.
My goal is of course to be able to sleep peacefully and still make the most of it.
On that note, thanks for all the food for thought! I would be delighted if we could stay in touch.
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