Gyroscopic Investing

From another thread

ozzy wrote: Mathjak-
I totally agree that Small/Midcap increase long-term performance.  Which is why I use them in my JuicyPP:  http://www.tightwadweb.com/customportfolio.html

Tyler, PointedStick-
Here's the results off Small/Mid vs Large (S&P500).  Chart below shows the difference from 1972-2014.  I realize that past performance does not predict future returns, but there are fundamental reasons why Small/Mid perform better, mainly their enormous growth potential.
[img width=600]http://tightwadweb.com/comparison.jpg[/img]

This looks interesting, but do you really have 88% of your money in iShares funds?

I think I'd take physical possession of the gold and hold actual long term bonds rather than TLT - reducing the amount in iShares funds to 40%. 

Actually, this much is still kind of scary.  I'd perhaps replace IEFA with VTMGX (or FSIIX/FSIVX).  This would get the iShares portion down to 25%, which is still well beyond how much of my money I'd trust with BlackRock - but it's at least not completely insane.

Hi rickb,

Thanks for the feedback.  I'm personally comfortable with my heavy dose of iShares.  That said, I certainly have no problem with your suggestion of using similar funds. 

Depending on your broker, various funds are commission-free, so that needs to be considered too, especially if you're in the accumulation phase and making frequent contributions (me).

And I do personally own some physical gold/silver in addition to my 15% weighting in IAU.

That's a pretty nice looking portfolio.  If I squint and think about the bands I can see the PP resemblance, with the cash poured into international stocks. 

[img width=300]http://s18.postimg.org/m6gdvrk55/Juicy_PP.jpg[/img]

Larry Swedroe has written a lot about tilting the stock allocation towards mid and small caps to justify reducing stock exposure overall.  I can appreciate that perspective.  The one thing I'd caution against is over-fitting using back-testing to identify the optimal portfolio for the past that may not perform as well in the future.  The same portfolio with 37% TSM instead of the mid and small cap tilt looks pretty darn similar (try it).  The CAGRs are a little lower, but 90% of the good work is done in the broad diversification between LTTs and Gold and only the last 10% is really about slicing and dicing the stocks.

In any case, nice work! Stick with the plan, and I'm sure you'll do fine. 

Thanks Tyler.