Contributor since: 2009
Company: LTI Systems, Inc.
More analytics (max drawdowns, Standard deviation, Sortino etc.) can be found on the portfolio page:
You are right on both counts:
1). we took a simplified approach in this example to equal weigh assets instead of risks. This is for illustration and make it comparable with Harry Browne's permanent portfolio. In the real risk parity all weather portfolio, the weights should be derived through the risks (such as volatility) instead. Depending on the choices of long bonds vs. intermediate bonds etc., the weights will be different and equities will get lower weights (but not that much lower if long bonds such as TLT or LQD is used).
2). EM debt spreads should be really long EM and short US and Corporate debt spread should be long Corporate bonds (mostly high yield depending on how you want your portfolio) and short treasury bonds/notes. Again, to implement/showcase this using vanilla mutual funds and ETFs, these were simplified.
Thanks for the good comments.
We did take 25% for each category and equal weight among those assets in the same category. For example, in the Growth-Rising category, each of the four assets in the box is spread with 25%/4=6.25% weight.
Please look at the weight table in the article.
excellent choice. PRWCX is ranked 5 star by MyPlanIQ: By the way, the plan does not have this fund as one of the choices? Can you confirm?
Thank you for reporting this. I have made the changes and will request the change to be made to the aritcle.
Yes, we assume that all dividends are re-invested.
Thank you for your insightful additional comments.
This would be my response:
1. The Motley Fool has a pretty broad distribution and it may be frivolous but it's worth measuring and making a comment. Maybe for the long time investors it's seen as junk but many people take it seriously.
2. Even if you think the choices are specious, it provides some contrast and hopefully spreads some light.
3. I have written articles on the best of the dividend stocks and the question then is whether they are over-priced.
4. In the end, it's horses for courses I guess.
We use 90 days Treasury Bills annualized interest rate to calculate Sharpe ratios.
I am checking with the technical team and I await their reply.
Thank you for your reply. You make a good point. will be more circumspect in my titles going forward.
Thanks for your comments.
I used to live in London and so know St. Pauls area well. Thanks for the tip next time I am there.
I am "recently long" in ZAGG so I appreciate your insight. Thanks.
It wasn't available when we started. As you know ETFs choices have grown rapidly and SIB was meant to be a simple benchmark. It's a fair point that we might want to tune the SIB because it has done pretty well and perhaps we could squeeze more out with tuned fund selection.
Thanks for the comment and the insight.
Perhaps too kindly to myself I would say that I have an intuitive (fuzzy) approach which does cross the boundaries.
However, I was surprised how well my bond funds did recently and that made me adjust my priorities on where dividend equities cross over with bond funds. I have both and I am trying to work out the right balance.
Anyway, your comments certainly add clarity and thank you for writing so nicely ;->
It is really not so much to beat the original pp. The purpose of this article is to show how investors with various goals (such as income seekers, risk averse, growth oriented etc.) can work under the pp framework and construct pp style portfolios to suit their needs.
We don't claim and don't intend to claim that all these pp varieties will surpass pp.
Regardless, the pp four corner framework is such a wonderful and simple foundation for investors of all sorts to base on, that we believe in firmly.
Thanks for the coment.
You are right that the ETF strategy could possibly be improved. The thing is that we are not necessarily recommending just one strategy. We use the one that was previously published. You can modify the parameters to come up with something else.
We aren't strategy experts, we provide two which can be altered. We are recommending that investors are consistent with whatever they use.
I will tell you from my clifftop apartment in Hawaii!
That is true -- however, I can allow my preferences, emotions, whatever to exclude certain stocks from my investing universe.
I understand your perspective and this selection was not designed with that in mind. I will look at the DRiP site and start reviewing those.
The question for banks is "which emerge stronger?" I have invested in Wells Fargo but I am not sure about the others.
I have ETF's and Mutual Funds and am also starting to look at stocks. I report on ideas given by others and review their historical returns compared to an ETF portfolio the like of which I do use.
When I come across something I like, I will invest. I have invested in MCD, MMM, CVX, RDS-A, WFC, WM and others as a result of the reviews I have made.
I am learning as I go along.
All dividends were reinvested -- I am working to be able to split them out but we can't do that at the moment.
I agree that it is very important to look at the companies and understand their business and associated risks.
I agree about DRIP'd -- I only recently came across the DRiP website and I think there is a lot of useful information there -- notwithstanding the importance of understanding any company's business.
Thanks for these excellent comments.
I absolutely think that they are potential take over targets but I am not sure whether a cable company or somebody else would be there.
I didn't want to make any comment that I knew anything because I don't.
This is something to watch.
I am happy to answer the question.
By training I am an engineer and I spent over 30 years in the semiconductor industry. My colleague and I founded MyPlanIQ with the goal of simplifying retirement investing. This has been established with ETFs and Mutual Funds and works for IRAs, 401K and taxable accounts.
I have recently started to see whether we can do anything based on stocks rather than ETF/Mutual Funds and the first thing I am doing is educating myself.
When I started covering stocks, I had none at all -- everything was mutual funds or ETFs.
Over the last several months I have taken on a few -- CVX, INTC, MCD, MMM, WM, TSCO and a few others based on what I have read and the analysis I have done myself.
I have recently published an article on three small telecom companies and I may invest in them.
I believe in automation and so I am hoping that these articles will lead to building an analysis capability that does the work for me.
I hope that answers your question.
The author (me) was reporting on an article written by a Motley Fool writer. My goal is to show the historical returns as part of the context of the recommendation.
You are right that I didn't pick up on that but I don't think that means you should ignore the returns data.
Before starting to write articles, I was in the high tech industry (software for IC design) and high growth companies (Intel, Broadcom) were my customers.
I think it is a mindset issue -- they don't think dividends, they think about being the leaders.
I also think its not that they couldn't pay investors, they just don't. Sadly, the money often goes into management's pockets rather than the investors.
I think we all have a way of taking incomplete data and coming up with our own judgements. I know it can be irritating to not get the data you want.
This may be heretical but even with all the data out there and six ways from Sunday to analyze it, there is an intuitive step whereby we read something that resonates and somehow gives us insight.
I think it's different for everybody.
I appreciate the input and I will add it when I can.
FYI I tend to queue up articles and submit them over a period so it may be a few days before this enhancement makes it in.
There are two answers to this question:
1. No because SA has a limit to the number of stocks that can be references.
2. This isn't my list of stocks -- this was an article I read from the Motley Fool. I know they are not everybody's favorite.
The reading of the subtext of the comment is that there is an attempt to pick up as many readers as possible by spraying tickers around. I think you will find that even if that is what I wanted to do, SA are pretty tight on what they allow.
I am sorry that you find no value in what I write.
I will tell you my purpose and you can just filter out everything from this source.
I read stock selections promoting one stock or the other without giving any historical perspective on the selection. I think adding that helps.
I can understand that you have your own way of evaluating any given stock or selection of stocks and it may be better than what I do.
In any case, I have found it useful for myself and there are some that find it useful.
Sorry it doesn't work for you.