Portfolio comparisons

[mathjak107]

Different time frames , end up with different results as far as which portfolios work best ..the butterfly was pretty consistent...
So was the pp ....60/40 not very consistent..

The two time frames were 1986 to 2002 and then 2002 to 2018 ..

So, if in 2002 you were interested solely in returns, you might conclude that the best portfolio for the next 16 years would be the super-simple S&P 500 index fund. And if you were interested solely in minimizing volatility, you might pick the Permanent portfolio instead.

Well how would that have worked out the next 16 years with that assumption?

https://www.mindfullyinvesting.com/you- ... portfolio/

[Kriegsspiel]

He also assumed that the person didn't rebalance (or add to it). How is that relevant or useful to those of us who do?

[mathjak107]

He also assumed that the person didn't rebalance (or add to it). How is that relevant or useful to those of us who do?

It is really just showing there is no such thing as a portfolio that will do the best and is buy and die ....

1987 to about 2003 saw almost 14% cagr for 17 years ...anything with a high equity position ran with the ball ....but the next almost 2 decades were very different .....those years had 2 back to back recessions in a decade and we had the lost decade for stocks .....

So the portfolios that are going to do better as well as offer different risk vs reward are all going to be different that run with the ball ....so the bottom line assumption is whatever the past results were , they can be very different going forward ...

I am using the pp now but I am not convinced that prolonged rising rates back are not going to be kryptonite to it .....we have not had a real bear market in bonds in 40 years , just those speed bumps we encountered.

As far as rebalancing , it is easy enough in portfolio visualizer to check the box for rebalancing and see how much difference there is ....because they are all compared like that it may be like he said , not as big a difference as we think

[Tyler]

Thanks for the link, Mathjak.

I agree with his overall points about not being able to predict the future. But I get the impression the author doesn't understand the charts I make or realize that Portfolio Charts is about studying that uncertainty. I guess I still need to hone my messaging.

In any case, the one thing I'd add is that while it's true that no portfolio is perfectly predictable, not every portfolio is equally unpredictable. Studying history can't tell us the single best portfolio for the future, but it can give us a very good idea for the range of possible outcomes for each option.

[mathjak107]

That view I agree with ......well said.... portfolios are not predictable ,but some are more unpredictable.....I like that