Basic portfolio that beats the index, once a year reconfiguration

[HappyMan]

All,

As gratitude to many wonderful investors here who have been extremely helpful, I am sharing this basic portfolio that does beat S&P in the long run, and yet it is easy to maintain. Reconfiguration is required only once a year - once you get ready to meet a New Year, sell extra and buy what is missing from the equation.

There are three basic tickers: QQQ, TLT and IAU.

The key is in ratio: 70, 25, and 5 respectively.

Tested from 2006 to 2018.

All the numbers are available here:

https://www.portfoliovisualizer.com/bac ... tion3_1=70

Best Regards,

[boglerdude]

Huge bet on SF Bay. And howbout EDV?

[D1984]

All,

As gratitude to many wonderful investors here who have been extremely helpful, I am sharing this basic portfolio that does beat S&P in the long run, and yet it is easy to maintain. Reconfiguration is required only once a year - once you get ready to meet a New Year, sell extra and buy what is missing from the equation.

There are three basic tickers: QQQ, TLT and IAU.

The key is in ratio: 70, 25, and 5 respectively.

Tested from 2006 to 2018.

All the numbers are available here:

https://www.portfoliovisualizer.com/bac ... tion3_1=70

Best Regards,

https://www.portfoliovisualizer.com/bac ... tion3_1=70

Here it is backtested to early 1994 (using RYOCX in place of QQQ, VUSTX in place of TLT, and ^GOLD in place of IAU since all three of said ETFs only go back to the early or mid-2000s); note the huge drawdown in 2000-02. I have actually tested something similar back to 1968 (using NASDAQ-100 data back to 1973 and a simulated data set roughly equivalent to the NASDAQ-100 before that) and owing to the fact that the NASDAQ-100 got its butt kicked in 1969, 1970, 1973, 1974, 1981, 1984, 1990, and--while not actually losing money--only did kind of "meh" for 1986 through 1988, this portfolio overall did beat the S&P 500 over the long run but had huge stretches where it underperformed as well. Also, testing only over the last 10, 15, or 20 years gives a rather biased sample since rates have been in a long-term secular downtrend since the early 1980s; had TLT or VUSTX existed from the mid-1950s through 1981 it would've basically been up a total of maybe 78% in nominal terms (and that is counting reinvested interest payments....without those it would've been down in nominal terms) over the entire period and would have actually lost money in real inflation-adjusted terms. See http://quotes.morningstar.com/chart/fun ... 2%3A955%7D and notice how there is very little growth until around 1982 when it suddenly spikes upwards. We have been in a falling rate environment ever since then; long-term Treasury rates fell from 15% to 1.5% from 1982 to 2020. This will not be repeated any time soon unless rates somehow manage to fall to negative 13 or 14%.

Even with 5% gold the 1969-74 period would've been brutal for this portfolio as long bond values declined (due to rising rates) while at the same time the NASDAQ had four bad years spaced very close together.

[HappyMan]

Thanks for the feedback.