Hello old friends

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Desert
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Hello old friends

Post by Desert » Fri Apr 02, 2021 10:43 pm

Sorry to start a new thread, but I didn't want to pollute a decent existing thread.

Just wanted to say hello to all the old (in seniority terms, not age) friends and new folks on the forum. I semi-retired a few years back, and decided to depart from most all my online forum activities. It's been a good opportunity to decompress, get some fresh air, and examine many of my belief systems. Not surprisingly, I spent very little time thinking about investment philosophies. If anything, I've come out of this period in life more convinced than ever that investing is one of the simplest things we humans need to tackle.

Anyway, I hope you all are doing well. The world has seemingly changed much since I was last on this forum, and yet so much has not changed. I realize that "returning" after multiple years away is not deserving of a prodigal son's welcome. But I hope to be a more calm version of my previous poster-self. Hugs to all, and I look forward to hanging out with y'all a bit.
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Re: Hello old friends

Post by Smith1776 » Sat Apr 03, 2021 1:14 am

Hi Desert. You and I never really interacted, as it seems I joined the forum around the time your activity was winding down.

Nonetheless, your Desert Portfolio idea is still very influential and practical.

Welcome back!
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Re: Hello old friends

Post by Kriegsspiel » Sat Apr 03, 2021 6:18 am

Whatup broski. I agree, investing is pretty chill.
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Re: Hello old friends

Post by pugchief » Sat Apr 03, 2021 6:46 am

Glad to have you back, Desert.
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Re: Hello old friends

Post by Mountaineer » Sat Apr 03, 2021 6:55 am

Desert wrote:
Fri Apr 02, 2021 10:43 pm
Sorry to start a new thread, but I didn't want to pollute a decent existing thread.

Just wanted to say hello to all the old (in seniority terms, not age) friends and new folks on the forum. I semi-retired a few years back, and decided to depart from most all my online forum activities. It's been a good opportunity to decompress, get some fresh air, and examine many of my belief systems. Not surprisingly, I spent very little time thinking about investment philosophies. If anything, I've come out of this period in life more convinced than ever that investing is one of the simplest things we humans need to tackle.

Anyway, I hope you all are doing well. The world has seemingly changed much since I was last on this forum, and yet so much has not changed. I realize that "returning" after multiple years away is not deserving of a prodigal son's welcome. But I hope to be a more calm version of my previous poster-self. Hugs to all, and I look forward to hanging out with y'all a bit.
.

Welcome back, Kotter. ;)

Re. your points:

Agree strongly on the "very little time spent thinking about investmenrt philosophies". A portfolio on mostly "automatic" is a wonderful thing that reduces stress, frees up time for other more rewarding and enjoyable activities, and in general promotes well-being - my opinions of course.

Remember, the prodigal son was welcomed back with wide open arms and a feast. I've always thought the son who remained, the grumpy jealous self-righteous one, was the real prodigal. I'll bring the virtual beer, you bring the virtual BBQ. Perhaps someday we can enjoy the non-virtual version. O0

Good to have you back.

.
Everything is a gift from God. Something to ponder, and confess, and for which to give thanks 8) . Or not - and take your chances >:D .
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Re: Hello old friends

Post by vnatale » Sat Apr 03, 2021 10:06 am

Welcome back!

A year ago I spent an incredible amount of time in the archives. During that time I read a lot of what you had written and many times wished you were still present in the forum. Now my wish has been granted!
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Re: Hello old friends

Post by sophie » Sat Apr 03, 2021 10:22 am

Nice to see you returning to the forum Desert!

It's a different place than when you left for sure. But, still a place for thought provoking discussion, and look forward to seeing your contributions!

and btw fwiw, I've drifted into the KISS philosophy for investments. I just really don't want to spend a lot of time on it anymore - life has piled on with more important things. And, in the retrospectoscope, very little of the tinkering made any real difference - which is good news indeed!
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Re: Hello old friends

Post by GT » Sat Apr 03, 2021 3:19 pm

Desert wrote:
Fri Apr 02, 2021 10:43 pm
Sorry to start a new thread, but I didn't want to pollute a decent existing thread.

Just wanted to say hello to all the old (in seniority terms, not age) friends and new folks on the forum. I semi-retired a few years back, and decided to depart from most all my online forum activities. It's been a good opportunity to decompress, get some fresh air, and examine many of my belief systems. Not surprisingly, I spent very little time thinking about investment philosophies. If anything, I've come out of this period in life more convinced than ever that investing is one of the simplest things we humans need to tackle.

Anyway, I hope you all are doing well. The world has seemingly changed much since I was last on this forum, and yet so much has not changed. I realize that "returning" after multiple years away is not deserving of a prodigal son's welcome. But I hope to be a more calm version of my previous poster-self. Hugs to all, and I look forward to hanging out with y'all a bit.
Welcome back - I enjoyed reading the Desert portfolio thread -
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Re: Hello old friends

Post by geaux saints » Sun Apr 04, 2021 10:28 am

WHO DAT
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Re: Hello old friends

Post by Don » Sun Apr 04, 2021 2:35 pm

:)
Last edited by Don on Mon Apr 05, 2021 10:44 am, edited 1 time in total.
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Re: Hello old friends

Post by ppnewbie » Mon Apr 05, 2021 12:24 am

Welcome back.
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Re: Hello old friends

Post by barrett » Mon Apr 05, 2021 7:36 am

Hey Desert,

Glad to hear that you are still out there and spending little time online! Before you leave again, would you mind sharing what you are doing with your large (60% IIRC) fixed income slice? Any tricks up your sleeve or have you just chosen to hold a bunch of near-zero, high-quality debt until yields rise? I do seem to recall that you would grab some bonds with longer durations, so maybe your are still holding a significant percentage of issues from 2018 or whenever it last was that investors could get a bit of yield. Thanks in advance for any input.
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Re: Hello old friends

Post by Kevin K. » Mon Apr 05, 2021 10:16 am

Welcome back Desert! It's a delight to see your name pop up again. You were always one of the most thoughtful posters on these forums and I have fond memories of the way you intelligently combined insights from Larry Swedroe's "minimizing fat tails" portfolios with the PP.

I kind of had the same question as barrett in that I wondered if you'd stuck with ~60% ITT's, 30% equities divided between SCV, TSM and EM and a 10% slice of gold, which as I recall was [close to] your last portfolio iteration. I was pretty close to that myself for awhile but ended up back in Golden Butterfly land, albeit with ITT's instead of the barbell. With the 40+ year bond market tailwind apparently done blowing it's hard to know what safe harbor looks like anymore but I try to remember Harry Browne's key lessons lest I end up back in Boglehead land or screwing around with Tesla and Bitcoin.

Anyway, welcome back - and thanks again for being such an exemplary participant here for so many years. You've been missed.
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Re: Hello old friends

Post by Desert » Tue Apr 06, 2021 8:16 pm

Thank you all so much for the kind comments, that's much appreciated.

Barrett, unfortunately I don't have any tricks up my sleeve for boosting yield in the bond allocation. Some investors have "reached" for more return in the form of a higher equity allocation, longer duration, more credit risk, etc. But I think it's important to try to maintain one's chosen risk profile, despite the sad, small present interest rates.

Prior to the pandemic, I had watched the Wellesley Income fund (VWIAX) for many years, as many of us have. I continue to be impressed with the track record of that fund, so I finally decided to put a portion of our investments into it, to bring a bit of an allocation to corporate bonds and large value equities. I've maintained that position now for a couple years, and plan to keep it for a long time, assuming the fund continues to stick with its investment philosophy.

But other than that, I'm pretty much sticking with the 60/30/10 allocation I had previously. It's probably too conservative for many, but it's working fine for my low investment risk tolerance. The HBPP, Golden Butterfly, and a bunch of other portfolios continue to look great as well. I'm thinking we may finally see some wage pressure and resulting price inflation in the coming years, so I expect and hope that interest rates will climb a bit in response.
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Re: Hello old friends

Post by barrett » Fri Apr 09, 2021 7:40 am

Desert wrote:
Tue Apr 06, 2021 8:16 pm
Barrett, unfortunately I don't have any tricks up my sleeve for boosting yield in the bond allocation. Some investors have "reached" for more return in the form of a higher equity allocation, longer duration, more credit risk, etc. But I think it's important to try to maintain one's chosen risk profile, despite the sad, small present interest rates.

Prior to the pandemic, I had watched the Wellesley Income fund (VWIAX) for many years, as many of us have. I continue to be impressed with the track record of that fund, so I finally decided to put a portion of our investments into it, to bring a bit of an allocation to corporate bonds and large value equities. I've maintained that position now for a couple years, and plan to keep it for a long time, assuming the fund continues to stick with its investment philosophy.
Thanks for responding, Desert. I had almost forgotten about that Wellesley Income Fund, so it's good to be reminded of that option. My wife continues to only have a vague interest in how we invest and that fund could be a good option for her as a sort of one-stop shopping should my mental faculties deteriorate at some point down the line.

As I recall, you were always willing to "reach for yield" but only within what you consider reasonable. Is that a fair assessment? In other words, there's a long arc between zero-yielding T-Bills and the worst crap-level corporate junk or Venezuelan Munis.
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Re: Hello old friends

Post by Desert » Sat Apr 10, 2021 9:43 am

Barrett,

Right, there are some other very low risk options for fixed income besides treasuries that can be considered. I was using CD's for quite some time, since the yield was often 50-100 basis points higher than treasuries of the same term.

I believe that's still the case, but I have to admit that I haven't taken the time recently to investigate. The CD's I held previously matured, and I consolidated back to two financial institutions.

But if I had the time and inclination to try to get a bit more yield, I'd be looking at I Bonds and CD's, to see if it was worth moving some money. CD's are an interesting case: The risk is very low, but some deals can be had because the CD market is relatively inefficient. It can't be accessed by large institutional investors, and individual banks will often offer a higher-than-market rate to attract needed capital or new customers. So it can be worth the hassle to move some money to CD's when the yield is higher than treasuries.

The corporate bonds included in the Wellesley fund are definitely a riskier move, so I'd use more caution when considering adding a slice of Wellesley. The fund holds pretty highly-rated corp bonds, but they're of course much more risky than treasuries.
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Re: Hello old friends

Post by Kevin K. » Sat Apr 10, 2021 12:28 pm

Just wanted to make sure Desert that you saw this thread I started awhile back, with an especially brilliant contribution from Tyler:

viewtopic.php?f=10&t=11196#p206084

Historically anyway, Wellesley with 20% gold ("Golden Wellesley" - the old fogy's Golden Butterfly?) has pretty much matched the GB in every metric. I got enthralled enough with it for much of last year to run it in parallel with my GB but ultimately decided it was a few too many moving parts to keep track of and that the lower quality and duration risk of W's corporate bonds and focus on dividend-paying stocks vs. owning index funds didn't appeal as much to me. Of course me having made that choice probably ensures the GW will out-perform the GB for decades to come.

I keep some of the GB cash allocation in Vanguard Treasury MM fund paying nothing but have been buying our annual iBond purchase limit every year and will probably keep doing so until they make up about half of our cash, while also buying 1-2 year CDs opportunistically. Heck our local credit union pays .35% on high-yield MM funds at this point...still much better risk:reward than LTT's let alone T-bills.
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Re: Hello old friends

Post by pp4me » Sat Apr 10, 2021 1:04 pm

Very interesting bringing Wellesley into the discussion. My first exposure to the PP was a heated debate on another forum (not Bogleheads) about the superiority of Wellesley to the PP. On the PP side were none other than Medium Tex and Craig Rowland. Both sides had good arguments but I ultimately declared MT and Craig the winner although I did hold some Wellesley for a while.
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Re: Hello old friends

Post by jalanlong » Tue Jun 29, 2021 9:44 pm

I continue to be amazed at how the basic Desert Portfolio of 60% 10 year Treasuries, 30% Stocks and 10% Gold has performed over the last 40 years both in absolute and risk adjusted terms.

Are there any headwinds anyone can see that would make this portfolio underperform a PP substantially going forward? I am drawn to the simplicity of this portfolio for sure.
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Re: Hello old friends

Post by whatchamacallit » Tue Jun 29, 2021 11:19 pm

jalanlong wrote:
Tue Jun 29, 2021 9:44 pm
I continue to be amazed at how the basic Desert Portfolio of 60% 10 year Treasuries, 30% Stocks and 10% Gold has performed over the last 40 years both in absolute and risk adjusted terms.

Are there any headwinds anyone can see that would make this portfolio underperform a PP substantially going forward? I am drawn to the simplicity of this portfolio for sure.
I will say that I hope it doesn't do well. A world where 1.5% nominal return for the next 10 years does well will be a scary world. It might not be enough gold if 1.5% is determined to be too far negative real yield.

Is there a single fund you would use like Wellesley Income to handle the stocks and bonds together?
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Re: Hello old friends

Post by Kevin K. » Wed Jun 30, 2021 10:11 am

It seems to me that Desert’s portfolio, which I understand to be a variant of the Larry Swedroe “Larry” portfolio that incorporates Desert’s deep understanding of Harry Browne’s work, ought to be compared to both the Larry and PP but also the Golden Butterfly, Wellesley, Vanguard Target Retirement Income and perhaps Vanguard LifeStrategy Conservative growth.

As for “doing well going forward,” surely it all depends on how each individual investor defines “well.” Yes the 40+ year tailwind for bonds appears to be over, but stocks (especially U.S.) are unbelievably frothy in their valuations and very possibly poised for deep and long-lasting losses. Maybe not an issue for those still in the accumulation phase or with enough assets that they could live off a 1 or 2% annual withdrawal rate but surely all of the portfolios mentioned above appeal primarily to those primarily concerned with preserving the wealth they already have and stacking the deck in favor of the highest possible safe and perpetual withdrawal rates in all market conditions.

The equities in the Desert are 10% each Total U.S.Stock Market, Small-Cap Value and Emerging Markets. Add in 10% gold for SHTF insurance and a modicum of sequence-of-returns risk protection and balance all of the above with a boatload of intermediate-term Treasuries (and in so doing avoid both the disastrous exposure to interest rate spikes of LTT’s as well as the longish duration and far lower credit quality of the bonds in Wellesley and the Vanguard funds) and you’ve got a seemingly conservative allocation that’s actually quite robust; I’d argue that it’s so much so that only the Golden Butterfly compares as a truly “all weather” choice.

I think Desert’s ideas have enduring value because, among other things, 10% in gold is probably the upper limits of what many investors would ever consider (while rightly being viewed by PP’ers as barely enough to be worth the bother), and because the data in support of Swedroe’s “minimize fat tails” approach of using comparatively small amounts of the most volatile and highest (likely) return equities offset by an ocean of “sweet spot” Treasuries is quite robust. But these are all portfolios for those who have either “won the game” or those whose assets are modest enough that they must carefully tread the knife edge between deep and shallow risk.

I’d be happy to hear of any other allocations that compete with these, or that seem likely to do so going forward in our bizarre zero-real return/high inflation/Gamestop-crazy world.
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Re: Hello old friends

Post by I Shrugged » Wed Jun 30, 2021 11:36 am

Maybe we’ll have a lengthy time when nothing works. I’m being serious.
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Re: Hello old friends

Post by Desert » Wed Jun 30, 2021 12:22 pm

It's tough to be optimistic regarding future returns right now, regardless of portfolio mix. Interest rates are low, and equity valuations are super high (as we'd expect, when interest rates have been anchored low for so long). I expect gold to continue to deliver its uncorrelated and unpredictable fluctuations.

We might finally see some international outperformance, but that's not a certainty either, of course. Since everything looks pricey to me, it's pretty easy to stay the course! :)
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Re: Hello old friends

Post by jalanlong » Wed Jun 30, 2021 2:20 pm

Desert wrote:
Wed Jun 30, 2021 12:22 pm
It's tough to be optimistic regarding future returns right now, regardless of portfolio mix. Interest rates are low, and equity valuations are super high (as we'd expect, when interest rates have been anchored low for so long). I expect gold to continue to deliver its uncorrelated and unpredictable fluctuations.

We might finally see some international outperformance, but that's not a certainty either, of course. Since everything looks pricey to me, it's pretty easy to stay the course! :)
My bank account offers me 3.5% right now. It is tough for me not to just take that and try to increase my savings rate other than to depend on market returns for the future!
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Re: Hello old friends

Post by vnatale » Wed Jun 30, 2021 4:48 pm

jalanlong wrote:
Wed Jun 30, 2021 2:20 pm

Desert wrote:
Wed Jun 30, 2021 12:22 pm

It's tough to be optimistic regarding future returns right now, regardless of portfolio mix. Interest rates are low, and equity valuations are super high (as we'd expect, when interest rates have been anchored low for so long). I expect gold to continue to deliver its uncorrelated and unpredictable fluctuations.

We might finally see some international outperformance, but that's not a certainty either, of course. Since everything looks pricey to me, it's pretty easy to stay the course! :)


My bank account offers me 3.5% right now. It is tough for me not to just take that and try to increase my savings rate other than to depend on market returns for the future!


With what kind of conditions does your bank offer that? On unlimited amounts? Also, shouldn't your bank's offer be available to all of the rest of us?
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