When Harry Met Larry 3 Fund Portfolio

[Kevin K.]

Learned about this rather interesting allocation from a very knowledgeable poster (who's also a PP and Portfolio Charts fan) on Bogleheads. He didn't give this a name but I could resist a mash up of Larry (Swedroe) with his penchant for small cap and value tilts and of course the estimable Harry Browne.

The risk-adjusted returns of this very simple portfolio (40% each Small Cap Value and Long Term Treasuries, 20% Gold) trounce both the PP and GB over the time frames I tested. Here's a link to Portfolio Visualizer:

https://www.portfoliovisualizer.com/bac ... tion5_3=20

Not to say you're gonna find me diving into 40% thirty-year Treasuries anytime soon, but this "three fund" portfolio sure beats the hell out of the Bogleheads version.

[pors]

Interesting! I tried it in portfoliocharts and it beats all other portfolios on almost any aspect.

Screenshot 2021-01-09 at 10.14.21.png (249.44 KiB) Viewed 1993 times

[mathjak107]

A 40 year bull market in long term treasuries can produce all kinds of results you wouldn’t expect ..

The truth is a reversal in rates can do the same and not in a good way ..i always said the pp kryptonite is rising rates as a trend and not these speed bumps we saw over 40 years

[Kevin K.]

A 40 year bull market in long term treasuries can produce all kinds of results you wouldn’t expect ..

The truth is a reversal in rates can do the same and not in a good way ..i always said the pp kryptonite is rising rates as a trend and not these speed bumps we saw over 40 years

Exactly!

The LTT bull market is clearly the biggest rearview mirror factor, followed perhaps by alpha generated from size and value tilts, which has been replaced for since 2008-09 with the dominance of the FAANG stocks.

As impressive as the performance of this three-fund portfolio has been I can't personally imagine placing such massive bets on LTT's or SCV going forward. Some version of the Golden Butterfly or PP makes more sense to me. YMMV.

[jatwell]

If you want to see one even crazier in Portfolio Charts (see it's Avg Return) try: 60% SCV, 20% LTT, 20% GLD

I couldn't really do 60% SCV or 40% LTT though.

The actual allocation I settled on and use is somewhat similar and seems to have similar SWR/PWR to the one mentioned above in the thread. Below is really the golden butterfly juiced for returns and diversified w/ some international. I guess you could look at this as ~40% PP and a very heavily tilted Stock/Gold variable portfolio.

30% SCV
20% TSM
10% ISV
5% EM

18% GLD
10% LTT
7% STT (iBonds for inflation protection)

I think I'll end up sticking with this for the long haul, not sure what I would modify once I've "won the game" really. The poor metric for the above allocation on Portfolio Charts is Standard Deviation is rather high, but similar to a base 60/40 - probably due to > 60% being stocks.