Merriman "Ultimate Buy & Hold" Strategy

[kevink]

The Merriman Ultimate is one of the stock portfolios on the excellent Portfolio Charts site, which allows you to look at returns of a given allocation in an in-depth way I haven't found anywhere else.

It's an excellent portfolio, though there are simpler ones that work as well or better (the 3 and 4 fund not being among them, however).

https://portfoliocharts.com/portfolios/

 

[Bongleur]

Have you tried any of the PDF-to-Word or PDF-to-Excel converters? I would, but I do not feel like doing it now.

Still waiting for it to email the data back. They never do. And these sites are NOT free -- my security software always blocks something that they call that wants to run scripts. Have you found a reliable one that does not inject malicious crap or trackers?

 

[Bongleur]

https://portfoliocharts.com/portfolios/

Seems not to work unless it calls data from onedrive.live.com. But that seems to be served by akamaihd.net which is a huge, but unethical content distributor -- they track you & at least in the past, distributed some nasty adware that embedded itself deep into your system:
https://better.fyi/trackers/akamaihd.net/

 

[COcheesehead]

In the time it takes to wait for a third party solution that you won’t trust anyway, you could just key in the data...old school style.

 

[imnontrad]

I am looking at the ETF version of the "Buy and Hold". But I have Traditional, taxable, and Roth portfolios (and plan to draw down in that order with some of the Traditional drawdown actually a Roth conversion).
I am trying to figure out how to spread this over the 3 portfolios. I want Roth to have the more aggressive ETFs and the traditional to have the most conservative. I will rebalance every year so some of the ETF 10% may be in 2 of the portfolios.
Any idea/ranking?

 

[OldShooter]

Do you think you can learn anything useful from a sample period this short? There's a long history out there, and if we accept it all (not excluding certain periods for reasons unknown) then it looks like the small and value premiums continue.


Perhaps the markets. as would be predicted by EMH, will eventually get rid of the small/value premium, but it's been known for decades and so far, it persists. I think we'll find the explanation for the persistent small/value premiums in behavioral economics and human processing quirks, and not among the "econs."


ETA: I have a small/value tilt to our holdings, but not a huge one.

Hmm ... This thread popped up because of a new post and I realize that I missed seeing/answering your question. Sorry.

Of course a two year experiment is too short to be statistically valid. Probably ten years is a better number. But for an old fart that is IMO not an experiment; it is a commitment.

I have used two years as an experiment period several times, comparing a benchmark to the experimental portfolio. By comparing the TR of the pairs on a quarterly basis I do believe that I can learn things. For example, I ran a $100K experiment with the Schwab robot and found that it tracked a simple two-fund benchmark pretty well but involved ten (!) funds. So ... not much payoff and the funds chosen were so conventional that there were any future circumstances where the robot would/could excel.

I have also used two year periods to benchmark a couple of portfolios run by professional FAs for a couple of nonprofits where I am involved. Again, using a similar benchmark told me easily after two years that the more complex "pro" portfolios were not particularly competitive and given their composition I could not see this changing.

Comparing two radically different portfolios over two years would be useless. Nowhere near long enough.

Depending on how things look, I may let the DFA experiment run longer. It's only a single-digit percentage of our equity portfolio --- really a small tilt. Actually I like the DFA story a lot and I have haggled the FA down to a 50bps fee, so it's at worst cheap entertainment.

 

[RobLJ]

For more than 15 years, I've used an eclectic allocation that most closely resembles the Coffeehouse portfolio (with about 8% cash in the bond allocation, and with some bias to healthcare and emerging/China stocks). Most funds are Fidelity since my largest account is there (a 403b) but DW's is split between Fidelity and Vanguard.

My 10 year return is about 9% annually, similar to the Coffeehouse; I suspect this is largely due to the cash allocation, fund costs, and small/value/EM underperformance.
For perspective, the Vanguard Balanced (60-40) fund 10 year return is 10.6, so I have "underperformed." The high proportion of stock allocation to essentially the Total Market (it is described as a large blend) probably helped the Balanced Fund's performance, versus allocations like the Coffeehouse that have some small/value/foreign emphasis versus its index.

However, now that I have been actually making withdrawals the last year, I appreciate the ability to skim highest performers and the bond fund dividends for the withdrawals. If I have significant health issue, however, I will tell DW to sell and reallocate to 95% Vanguard Balanced Fund (or Wellington or Fidelity Puritan) and 5% cash, for simplicity.

 

[OldShooter]

... My 10 year return is about 9% annually, similar to the Coffeehouse; I suspect this is largely due to the cash allocation, fund costs, and small/value/EM underperformance.
For perspective, the Vanguard Balanced (60-40) fund 10 year return is 10.6, so I have "underperformed." The high proportion of stock allocation to essentially the Total Market (it is described as a large blend) probably helped the Balanced Fund's performance, versus allocations like the Coffeehouse that have some small/value/foreign emphasis versus its index. ...

I don't think "underperformed" is a correct assessment. You are comparing a broad portfolio with a sector ("large blend" probably aka S&P 500). That happens to have been a hot sector for past few years, but of course hot sectors are always hightly visible in the rear view mirror (and never through the windshield.) Over the long term, your diversified portfolio is the safest even though it will be beaten by one or more sectors during any arbitrary time period. S&P 500 will regress to the mean at some point and your portfolio will probably look pretty good when compared then.

 

[Animorph]

I am looking at the ETF version of the "Buy and Hold". But I have Traditional, taxable, and Roth portfolios (and plan to draw down in that order with some of the Traditional drawdown actually a Roth conversion).
I am trying to figure out how to spread this over the 3 portfolios. I want Roth to have the more aggressive ETFs and the traditional to have the most conservative. I will rebalance every year so some of the ETF 10% may be in 2 of the portfolios.
Any idea/ranking?

I did the Merriman Buy and Hold style for a decade or so, with lots of slices. In general, I created the same AA in each type of account, so taxable, tIRA, and Roth had the same AA. Some of the ETF/fund selections had to be varied a bit depending on availability on specific platforms.

In a taxable account rebalancing can be a problem. I'm not sure I would recommend it for a taxable account. Though if you consider all accounts as one portfolio you could rebalance just in the tax advantaged accounts and leave the taxable stuff as a base.

When I wanted to simplify even more to a four fund portfolio, some of my holdings in taxable accounts had 100% capital gains or more. VNQ in particular. I just leave them alone until I need to sell, so my AA is a little strange and still not as simple as I'd like. Maybe 5 years to go to get them all sold off.

Otherwise I liked the portfolio. U.S. stocks took off over most of the years I held it, so all S&P 500 might have performed better, but I didn't "hold" for long enough for anything else to lead. Eventually, as I aged, it just became too much to track everything.

 

[RobLJ]

Yea, that's why I put it in quotes, although I think the Balanced Fund is probably the best comparison since the broad allocations (total stock/bonds) are pretty much the same.

On the S&P note, I vividly remember the S&P/tech outperformance in the late 90's-2001. I looked at the PEs (I was using Contrafund as a large cap growth) of large growth versus small/mid value and they were turning insane in 2000/2001, so I took gains in Contra and reallocated to Fid LowPrice (and a foreign fund). I looked like an idiot from 2000-2002, but when the hammer hit and Low Price went down about 2/3 of Contra's losses, then LowPrice shot up like a rocket in late '02?-04, I looked a bit less dumb. (I think the comparative PE were 38 or 40 to 11 or 12 when I reallocated.) That was kind of the beginning of using large gains to cover more sectors (I had started moving some funds into biotech in '96, however). I think I recovered portfolio peak from the early 2000s crash in a year; I forget how long it took for the S&P to recover but it was quite a while.

So I don't trust the S&P outperformance to continue, despite its dominance over the last 10 year period. Contrafund gains have been sweet, however.

I don't think "underperformed" is a correct assessment. You are comparing a broad portfolio with a sector ("large blend" probably aka S&P 500). That happens to have been a hot sector for past few years, but of course hot sectors are always hightly visible in the rear view mirror (and never through the windshield.) Over the long term, your diversified portfolio is the safest even though it will be beaten by one or more sectors during any arbitrary time period. S&P 500 will regress to the mean at some point and your portfolio will probably look pretty good when compared then.