Golden Technology Portfolio

Discussion of the Stock portion of the Permanent Portfolio

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modeljc
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Re: Golden Technology Portfolio

Post by modeljc » Sun May 24, 2020 4:44 pm

How about this as a Tyler Teck growth golden Portfolio:

33% VUG

17% SHY

25% TLT

25% GLD

One year is 24.9% and two years is 14.9% and three years is 11.8%. Ten years is 9.6% and 15 years is 8.4%.

All with a maximun drawdown of -19%.

No promise going forward but looks better than Golden butterfly.

If we can only get a correction I might JUMP at that one at age 83.
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Re: Golden Technology Portfolio

Post by Kevin K. » Mon May 25, 2020 3:15 pm

Good thread on VUG vs VTI on Reddit. The first response with the link to a backtest on Portfolio Visualizer is especially interesting to me:

https://www.reddit.com/r/investing/comm ... m_bets_on/

I could see replacing some or all of the SCV in the regular Golden Butterfly with VUG but I'd want the small-cap and value exposure of VTI too (modest as it may be). YMMV
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Re: Golden Technology Portfolio

Post by jalanlong » Tue May 26, 2020 8:21 pm

I have been doing something similar but instead of using QQQ I have been using aggressive growth etfs:

ARKK-Ark Innovation ETF
XITK - SPDR Innovative ETF
XT - Ishares Exponential Technologies
IHI - Ishares Medical Devices
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Re: Golden Technology Portfolio

Post by Kevin K. » Sun Jul 12, 2020 10:48 am

Resurrecting this thread to share this WaPo article and to suggest that perhaps instead of holding QQQ maybe just replace some or all of the SCV in the GB with TSM, since our COVID 19 world seems to be doing a fine job of turning the the total market into a landscape entirely dominated by megacap tech all on its own.

I just don't see a scenario in which SC or SCV soar here.

https://www.washingtonpost.com/outlook/ ... rc404=true
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Re: Golden Technology Portfolio

Post by modeljc » Sun Jul 12, 2020 12:30 pm

Kevin K. wrote:
Sun Jul 12, 2020 10:48 am
Resurrecting this thread to share this WaPo article and to suggest that perhaps instead of holding QQQ maybe just replace some or all of the SCV in the GB with TSM, since our COVID 19 world seems to be doing a fine job of turning the the total market into a landscape entirely dominated by megacap tech all on its own.

I just don't see a scenario in which SC or SCV soar here.

https://www.washingtonpost.com/outlook/ ... rc404=true
I did sell my SPY and went with VUG on May 26th. I know it is the top of the market for technolgy when I get in. I still remember the beating I took in 2000.

For the non-believers here are some buzz words: e-commerce boon, consumer habits to purely a digital world, entertainment and shopping from home, rapid cloud computing, big data, Internet of things, wearable, VR headset, drones, virtual reality, artifical intellgence, machine learning, self driving car, 5G technology and X box gaming.
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Re: Golden Technology Portfolio

Post by modeljc » Sun Jul 12, 2020 2:50 pm

modeljc wrote:
Sun Jul 12, 2020 12:30 pm
Kevin K. wrote:
Sun Jul 12, 2020 10:48 am
Resurrecting this thread to share this WaPo article and to suggest that perhaps instead of holding QQQ maybe just replace some or all of the SCV in the GB with TSM, since our COVID 19 world seems to be doing a fine job of turning the the total market into a landscape entirely dominated by megacap tech all on its own.

I just don't see a scenario in which SC or SCV soar here.

https://www.washingtonpost.com/outlook/ ... rc404=true
I did sell my SPY and went with VUG on May 26th. I know it is the top of the market for technolgy when I get in. I still remember the beating I took in 2000.

For the non-believers here are some buzz words: e-commerce boon, consumer habits to purely a digital world, entertainment and shopping from home, rapid cloud computing, big data, Internet of things, wearable, VR headset, drones, virtual reality, artifical intellgence, machine learning, self driving car, 5G technology and X box gaming.
I failed to mention that I have a history of chasing performance. With a PP of 33% VUG and 17% cash, 25% TLT and 25% GOLD the 15 year performance is 8.9% vs 100% SPY at 8.8%. The past is not the future but the drawdown is only 20%.
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Re: Golden Technology Portfolio

Post by jalanlong » Mon Jul 13, 2020 9:48 pm

modeljc wrote:
Sun Jul 12, 2020 2:50 pm
modeljc wrote:
Sun Jul 12, 2020 12:30 pm
Kevin K. wrote:
Sun Jul 12, 2020 10:48 am
Resurrecting this thread to share this WaPo article and to suggest that perhaps instead of holding QQQ maybe just replace some or all of the SCV in the GB with TSM, since our COVID 19 world seems to be doing a fine job of turning the the total market into a landscape entirely dominated by megacap tech all on its own.

I just don't see a scenario in which SC or SCV soar here.

https://www.washingtonpost.com/outlook/ ... rc404=true
I did sell my SPY and went with VUG on May 26th. I know it is the top of the market for technolgy when I get in. I still remember the beating I took in 2000.

For the non-believers here are some buzz words: e-commerce boon, consumer habits to purely a digital world, entertainment and shopping from home, rapid cloud computing, big data, Internet of things, wearable, VR headset, drones, virtual reality, artifical intellgence, machine learning, self driving car, 5G technology and X box gaming.
I failed to mention that I have a history of chasing performance. With a PP of 33% VUG and 17% cash, 25% TLT and 25% GOLD the 15 year performance is 8.9% vs 100% SPY at 8.8%. The past is not the future but the drawdown is only 20%.
Are there a lot of circumstances where tech would go down (or stay flat) while the rest of the market goes up? Given technology’s dominance in the market and our lives I just have a hard time envisioning that world. Plus if stocks are meant as the growth component of the PP, wouldn’t you want heavy growth stocks instead of utilities and consumer staples? In a market led by utilities and staples, wouldn’t another of the PP assets be carrying the portfolio?
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Re: Golden Technology Portfolio

Post by mathjak107 » Tue Jul 14, 2020 3:06 am

Before the Civil War, financial stocks were more 90% of the market

By the 1880s the railroads replaced them as railroads were 70% of the market , today they are less than 1%

By the early 1920s oil company valuations hit 25% of the market cap .


that happened again in the 1980's .

Led by IBM, information technology took off in the 1960s. today it's about 25%

And, of course, health care: over the last century, it
grew (rather steadily) from zero to 15%.


The S&P 500’s increased exposure to technology along with tech disruptors in other sectors, now gives it a similar weighting to the nasdaq in the 1980's .
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Re: Golden Technology Portfolio

Post by Kevin K. » Tue Jul 14, 2020 8:35 am

[/quote]Are there a lot of circumstances where tech would go down (or stay flat) while the rest of the market goes up? Given technology’s dominance in the market and our lives I just have a hard time envisioning that world. Plus if stocks are meant as the growth component of the PP, wouldn’t you want heavy growth stocks instead of utilities and consumer staples? In a market led by utilities and staples, wouldn’t another of the PP assets be carrying the portfolio?
[/quote]

Yeah I've asked this question on the Bogleheads forum and predictably the small-cap and small-cap value fans trotted out the "this time it's different" meme and reminders of the decades when value soared and growth languished.

But what these articles are pointing to are structural changes in the economy that got going in earnest during and after the peak of the Great Recession that have gone into warp speed during this pandemic. I like the charts in thie Marketwatch article:

https://www.marketwatch.com/story/inves ... 2020-07-12

The author of that piece seems to be freaking out at the lopsided dominance of the 5 megacorps and thinking that government regulation will somehow burst their bubble, but (a) that seems unlikely; and (b) what's going to replace them as the engine of growth. Certainly not utilities and consumer staples in a world with Great Depression+ levels of unemployment.

Sure some decade or other the tide is bound to turn, but as has often been said what matters to the individual investor isn't a hundred years or more of backtesting but their own investment horizon usually measured in a few decades. Personally I think TSM is plenty heavy in tech so I don't see the need to amplify things with QQQ, but I'm comfortable letting my ratio of TSM to SCV in the GB drift towards 2:1 without rebalancing.
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Re: Golden Technology Portfolio

Post by Kbg » Thu Jul 16, 2020 9:57 pm

QQQ and a small cap index are a much better mix than QQQ and SPY. I think pairing QQQ and an S&P600 index fund is an excellent option. They do a good job of zig zagging with each other in terms of performance. A 50/50 QQQ/IJR portfolio beats a 100% allocation to either in every performance metric there is and trashes the S&P 500.

The SP600 is a much better small cap index than the Russell 2000...the selection criterion of the S6 avoids a lot of crap.
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Re: Golden Technology Portfolio

Post by WhiteElephant » Fri Jul 17, 2020 2:18 am

It's pretty easy to make behavioral mistakes when you start to deviate from the total market.

It seems clear that a lot of people just added SCV to their portfolio because of backtesting. To switch from SCV to LCG right when LCG is outperforming seems like pure performance chasing to me. You can always find articles that'll say that 'this time it's different', 'the economy has changed' etc etc, but the good thing about a total market index is that if it really is different this time (probably not though), a total market index will reflect that change. And you can already see that happening. The big tech companies are starting to dominate the total market index. How much do you expect to profit by adding even more tech on top of that?

One of the reasons I'm sticking with total market is that I know I don't have what it takes to hold on to a under-performing subsector/style of the total market. What will all those 'Growth' investors do the moment QQQ starts under-performing? There will be articles saying 'Value is back', 'The tech bubble is bursting' etc etc. You don't have to worry about all this with a total market index. If you want to increase your expected return, you just increase your stock allocation.
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Re: Golden Technology Portfolio

Post by jalanlong » Mon Jul 20, 2020 9:11 am

WhiteElephant wrote:
Fri Jul 17, 2020 2:18 am
It's pretty easy to make behavioral mistakes when you start to deviate from the total market.

It seems clear that a lot of people just added SCV to their portfolio because of backtesting. To switch from SCV to LCG right when LCG is outperforming seems like pure performance chasing to me. You can always find articles that'll say that 'this time it's different', 'the economy has changed' etc etc, but the good thing about a total market index is that if it really is different this time (probably not though), a total market index will reflect that change. And you can already see that happening. The big tech companies are starting to dominate the total market index. How much do you expect to profit by adding even more tech on top of that?

One of the reasons I'm sticking with total market is that I know I don't have what it takes to hold on to a under-performing subsector/style of the total market. What will all those 'Growth' investors do the moment QQQ starts under-performing? There will be articles saying 'Value is back', 'The tech bubble is bursting' etc etc. You don't have to worry about all this with a total market index. If you want to increase your expected return, you just increase your stock allocation.
My question from earlier still stands though. If stocks are for the growth part of the economic cycle, wouldn't you want growth stocks as your 25%? In a scenario where value stocks like consumer staples or utilities are leading the market, wouldn't that mean we are in a recession and other parts of the PP carry the load for that. I could be wrong but are there times when stocks are pulling the PP and those stocks are value stocks?
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Re: Golden Technology Portfolio

Post by Tyler » Mon Jul 20, 2020 9:11 pm

jalanlong wrote:
Mon Jul 20, 2020 9:11 am
My question from earlier still stands though. If stocks are for the growth part of the economic cycle, wouldn't you want growth stocks as your 25%?
In theory, that makes sense. But what if I told you "growth stocks" is just a really good marketing term for "overpriced stocks"?
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Re: Golden Technology Portfolio

Post by jalanlong » Mon Jul 20, 2020 9:53 pm

Tyler wrote:
Mon Jul 20, 2020 9:11 pm
jalanlong wrote:
Mon Jul 20, 2020 9:11 am
My question from earlier still stands though. If stocks are for the growth part of the economic cycle, wouldn't you want growth stocks as your 25%?
In theory, that makes sense. But what if I told you "growth stocks" is just a really good marketing term for "overpriced stocks"?
Then I would ask how does a fund which screens for stocks with above average EPS, sales, and return on equity necessarily come up with a group of overpriced stocks? Because successful companies with high future growth prospects might be more expensive than companies with lower prospects?
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Re: Golden Technology Portfolio

Post by Tyler » Mon Jul 20, 2020 10:42 pm

jalanlong wrote:
Mon Jul 20, 2020 9:53 pm
Then I would ask how does a fund which screens for stocks with above average EPS, sales, and return on equity necessarily come up with a group of overpriced stocks? Because successful companies with high future growth prospects might be more expensive than companies with lower prospects?
Actively managed growth funds may indeed be selective like that. But your typical growth index fund by definition generally just buys the other half of the market that's not considered value. So it depends on the fund, but it's often a lot less glamorous than people think.
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Re: Golden Technology Portfolio

Post by pmward » Mon Jul 27, 2020 12:34 pm

Kbg wrote:
Thu Jul 16, 2020 9:57 pm
QQQ and a small cap index are a much better mix than QQQ and SPY. I think pairing QQQ and an S&P600 index fund is an excellent option. They do a good job of zig zagging with each other in terms of performance. A 50/50 QQQ/IJR portfolio beats a 100% allocation to either in every performance metric there is and trashes the S&P 500.

The SP600 is a much better small cap index than the Russell 2000...the selection criterion of the S6 avoids a lot of crap.
I agree. The tests I've done, doing a large cap growth/ S&P 600 split with rebalancing has trashed the S&P alone, as well as the typical TSM/SCV split in the GB. Value has always done poorly in the large cap universe, but it does well over time in the small cap universe. So having a QQQ/IJR split makes sense. One will always out perform the other, but by rebalancing the two overtime you get to play the pendulum swings. Like you said, the two really do zig and zag with each other. S&P 600 is like the R2K with a more sensical rebalancing strategy (Russell makes great indexes but poor funds) and a slight skew towards both quality and value. If one wants to temper the large cap growth a bit more, they could always do QQQ/IJS to skew a bit more toward value on the small-cap side. If I were starting a GB from scratch today it would be QQQ/IJR for the equities.
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