I'd be curious to hear thoughts from both the (many, I believe) here who own this legendary fund as well as those who don't.
First, the context for me (AKA sharing a few of my own many mistakes/"learning opportunities" along the way). ER'd in 2002 (not great timing, market-wise) without a tested/clear idea of risk tolerance. ~100 investing books later and convinced by the arguments-cum-backtesting in Bob Clyatt's "Live More, Work Less," I implemented pretty much the full RIP portfolio (DFA-fund based complicated slice-and-dice). Losses of ~23% during the '08 meltdown (on an allocation that "couldn't" lose more than ~8-9%) showed me my risk tolerance wasn't what I thought it was, and had me looking for a true all-weather portfolio.
Harry Browne's Permanent Portfolio seemed to fit the bill and I certainly did well with it for a number of years, but Bill Bernstein and others finally convinced me that the effects of the "paper gold" market and other factors made the PP a dubious choice going forward.
I've found myself coming full circle to giving up chasing alpha and pretty much just doing the Bogleheads 3 fund portfolio with total stock, bond and (unfortunately?) total international index funds, but as I look at performance of not just my portfolio but many, many others supposedly perfect for retirees wanting to live on ~4% while avoiding major drawdowns I see nothing - not 60:40 or 50:50, not any of the DFA/MPT-based slice and dice plans, Larry Swedroe's no fat tails, Clyatt's stuff, etc. etc. that has offered even two-thirds of the return of Vanguard's Wellesley fund over not just the past couple of decades but for a long time before that.
Of course I'm well aware of the pitfalls of backtesting and recency bias, but after how many decades of an actively-managed fund with only 35% exposure to equity volatility outperforming far riskier allocations does one just throw in the towel and choose the simplicity of this one fund solution (or perhaps a 50-50 mixture of it and Target Retirement Income Fund so as to have some exposure to beaten-down-and-due-to-recover international equities and bonds)?
I appreciate the collective wisdom here and look forward to hearing some thoughts (while apologizing for what has turned into an over-long rant!).
First, the context for me (AKA sharing a few of my own many mistakes/"learning opportunities" along the way). ER'd in 2002 (not great timing, market-wise) without a tested/clear idea of risk tolerance. ~100 investing books later and convinced by the arguments-cum-backtesting in Bob Clyatt's "Live More, Work Less," I implemented pretty much the full RIP portfolio (DFA-fund based complicated slice-and-dice). Losses of ~23% during the '08 meltdown (on an allocation that "couldn't" lose more than ~8-9%) showed me my risk tolerance wasn't what I thought it was, and had me looking for a true all-weather portfolio.
Harry Browne's Permanent Portfolio seemed to fit the bill and I certainly did well with it for a number of years, but Bill Bernstein and others finally convinced me that the effects of the "paper gold" market and other factors made the PP a dubious choice going forward.
I've found myself coming full circle to giving up chasing alpha and pretty much just doing the Bogleheads 3 fund portfolio with total stock, bond and (unfortunately?) total international index funds, but as I look at performance of not just my portfolio but many, many others supposedly perfect for retirees wanting to live on ~4% while avoiding major drawdowns I see nothing - not 60:40 or 50:50, not any of the DFA/MPT-based slice and dice plans, Larry Swedroe's no fat tails, Clyatt's stuff, etc. etc. that has offered even two-thirds of the return of Vanguard's Wellesley fund over not just the past couple of decades but for a long time before that.
Of course I'm well aware of the pitfalls of backtesting and recency bias, but after how many decades of an actively-managed fund with only 35% exposure to equity volatility outperforming far riskier allocations does one just throw in the towel and choose the simplicity of this one fund solution (or perhaps a 50-50 mixture of it and Target Retirement Income Fund so as to have some exposure to beaten-down-and-due-to-recover international equities and bonds)?
I appreciate the collective wisdom here and look forward to hearing some thoughts (while apologizing for what has turned into an over-long rant!).