Bookending the PP with the Pinwheel

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Kevin K.
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Bookending the PP with the Pinwheel

Post by Kevin K. » Sat Jan 08, 2022 4:45 pm

In light of recent discussions here, along with a truly epic thread on Bogleheads prompted by Tyler's fantastic recent article on "The Most Efficient Portfolios," it has occurred to me that his PInwheel Portfolio deserves every bit as much attention as his Golden Butterfly portfolio. But while the GB is essentially a prosperity-tilted iteration of the PP, the Pinwheel, while obviously incorporating the key lessons to be learned from Harry Browne, strikes me as a brilliant revamping of complicated slice-and-dice portfolios like the Merriman Ultimate or 7Twelve. Here's the link to the PInwheel:https://portfoliocharts.com/portfolio/p ... portfolio/

The allocation is:

15% Total Stock Market
10% Small Cap Value
15% International Stocks
10% Emerging Markets
15% Intermediate Bonds
10% Cash
15% REITs
10% Gold

SWR and PWR are within a tenth of a percent of the GB or Tyler's suggested 80% Wellesley/20% gold combo at 5.9% and 4.7% albeit with 3x the ulcer index at 6.1 (still moderate in the overall scheme of things). But what strikes me as being so great about it as a VP is that it neatly addresses all of the weaknesses we've been discussing about the PP (and by extension GB) in the current environment.

With only 10% in cash and 15% in ITT's there's a bare minimum of cash drag and no exposure to the kind of potential interest rate disaster of LTT's (and the cash could be kept all or mostly in iBonds which uniquely do have a positive real rate of return). Equities are fully diversified, you have a meaningful slice of real assets (REITS and a slice of gold), while avoiding the drag on returns of having 20-25% in gold in the GB/PP. And - last not least - it seems to me that the equities and REITs offer far better inflation protection long-term than "buying insurance from the arsonist" in the form of TIPS.

It seems to me that those in the accumulation phase could do much worse than go all-in with the Pinwheel, while those committed to the PP or GB might consider making it their variable portfolio as a way to diversify across asset classes and strategies.
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mathjak107
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Re: Bookending the PP with the Pinwheel

Post by mathjak107 » Sat Jan 08, 2022 5:05 pm

Personally I wouldn’t use it in the accumulation stage as I am not a fan of bonds and gold in that stage ….only 100- equities for the decades of accumulation..

But for someone who wants a 50/50 it is a nice mix down the road.

About 10 years prior to retirement would be a nice glide path from 100% equities
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