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Who should live in the "Coffeehouse"
Old 01-14-2007, 04:11 PM   #1
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Who should live in the "Coffeehouse"

I have been reading lately about the so-called coffeehouse portfolio. Old hat I know, but I am new to this game.

For those that don't know, the portfolio is structured as follows:

40% TOTAL BOND MARKET
10% LARGE CAP
10% LARGE VALUE
10% SMALL CAP
10% SMALL VALUE
10% REIT
10% INTERNATIONAL

Seems like a well-rounded diversified portfolio. Low cost, easy to set up and manage and can structure it in the most tax-efficient way possible.

My question is, is this type of portfolio appropriate at all stages of life. Is it meant for retirees, those saving for retirement or both? Is this a portfolio I could use for life. I am 30 and want to retire in 20 years.

I would describe myself as having moderate risk tolerance.
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Re: Who should live in the "Coffeehouse"
Old 01-14-2007, 04:16 PM   #2
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Re: Who should live in the "Coffeehouse"

IMHO -- It's one of many options for a balanced portfolio based on asset classes. It's ideal for indexing.

There are many options. Why don't you read Scott Burn's collection of columns on variations of the "Couch Potato Portfolio."

http://assetbuilder.com/?cat=18

I don't follow any of his exactly since I do not like bond mutual funds for fixed income. I am, however, almost entirely indexed. Vanguard is my bulk of my holdings.
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Re: Who should live in the "Coffeehouse"
Old 01-14-2007, 04:20 PM   #3
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Re: Who should live in the "Coffeehouse"

For those who don't have the link: http://coffeehouseinvestor.com/Default.htm

Schultheis claims that the coffeehouse portfolio is for everyone. Personally I think that 40% bonds is a bit high for someone in their 20's with a long time horizon, say 30 years before ER. I'm 58 so it looks good from where I sit. I'm not following it exactly, but sort of. I like Larry Swedroe's "The Only Guide to a Winning Investment Strategy", and Bernstein's "Four Pillars of Investing", and the Vanguard Diehards' message board on Morningstar.
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Re: Who should live in the "Coffeehouse"
Old 01-14-2007, 04:32 PM   #4
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Re: Who should live in the "Coffeehouse"

Charlie is a big coffee house investor IIRC. You might try PM'ing him...he'll probably get an email notifying him of the pm and might come back for a post or two on the topic.
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Re: Who should live in the "Coffeehouse"
Old 01-14-2007, 04:33 PM   #5
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Re: Who should live in the "Coffeehouse"

Quote:
Originally Posted by Want2retire
For those who don't have the link: http://coffeehouseinvestor.com/Default.htm

Schultheis claims that the coffeehouse portfolio is for everyone. Personally I think that 40% bonds is a bit high for someone in their 20's with a long time horizon, say 30 years before ER. I'm 58 so it looks good from where I sit. I'm not following it exactly, but sort of. I like Larry Swedroe's "The Only Guide to a Winning Investment Strategy", and Bernstein's "Four Pillars of Investing", and the Vanguard Diehards' message board on Morningstar.
I agree I don't think anybody under 40 who is still working needs 40% in bonds. If I was just starting out in investing I'd go with Scott Burns Margarita portfolio 1/3 TIPS, 1/3 Total Stock Market 1/3 Total international Market.
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Re: Who should live in the "Coffeehouse"
Old 01-14-2007, 07:04 PM   #6
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Re: Who should live in the "Coffeehouse"

Quote:
Originally Posted by clifp
I agree I don't think anybody under 40 who is still working needs 40% in bonds. If I was just starting out in investing I'd go with Scott Burns Margarita portfolio 1/3 TIPS, 1/3 Total Stock Market 1/3 Total international Market.
uhhh... that 1/3 in TIPS is close to "40 % in bonds." I like the Margarita portfolio as well btw.

I think you have to go with whatever portfolio will allow you to not make any rash decisions. If that's 100% stock , that's fine, but I know that I need some bonds to help me sleep at night. I'm 31 and have b/w 35-40% bonds.

Here's a nice short article written by Peter Bernstein on 60/40:

The 60/40 Solutions
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Re: Who should live in the "Coffeehouse"
Old 01-14-2007, 07:53 PM   #7
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Re: Who should live in the "Coffeehouse"

Someone was nice enough to collect many of the various index-ey asset allocations available including the Bernstein collections, Coffeehouse, using DFA funds, etc here:

http://www.geocities.com/finplan825/...lios-Data.html

But sounds like Coffeehouse is as good as any other if you're comfortable with it.

Hope this helps (and isn't just overload)...
Olav

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Engineer vs Hacker www.evsh.net

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Re: Who should live in the "Coffeehouse"
Old 01-14-2007, 08:02 PM   #8
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Re: Who should live in the "Coffeehouse"

Hmmm

I humbly suggest one sit down and study the recommended ages/asset mixtures in the Vanguard Target Retirement Series and decide if you fit the intended audience or are a - 'dirty market Timer' ala psst Wellesley, Balanced Index, etc.

heh heh heh

Postscript - 1966 to 1992 with the great benefit of hindsight ages 21 to 49 I held asset classes in the handgrenade range of Ben Graham's 50/50 to a pension like 60/40 at various times. I never calculated the difference but I suspect a heavy aka as close to 100% stock would have served me better in spite of the 'infamous' 1966 to 1982 flat stock market period.

Ah to be young again - with what I know now(or at least think I know).

Go Saints.
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