Boghies Account Talk

[Boghie]

Re: Game of Thrones: Summer is Coming

Sarcasm - Oh, the horror:ban:

Anyway, as Einstein may have said - "Compound interest is the most powerful force in the universe!!!"

Doing absolutely nuthin' has resulted in a more risky allocation. Fisiks has put some risk and thus more potential growth in this old geezers normal allocation:

• G: 18%
• F: 19%
• C: 29%
• S: 24%
• I: 10%

Return/Risk:
8% Expected Growth - Probably still accurate, I'll check when I get some time
7% Expected Risk - Probably actually 8%, or getting close to 8%

 

[Whipsaw]

Re: Game of Thrones: Summer is Coming

Boghie, I'm intrigued by your allocation and risk/return. Is there a formula you use to come up with that?

 

[Cactus]

Re: Game of Thrones: Summer is Coming

Boghie, I'm intrigued by your allocation and risk/return. Is there a formula you use to come up with that?

If memory serves me correctly, ha ha, Boghie uses Quicken with a 180 day average on our Funds. You can look at older posts in this thread where he talks about it.

 

[Whipsaw]

Re: Game of Thrones: Summer is Coming

If memory serves me correctly, ha ha, Boghie uses Quicken with a 180 day average on our Funds. You can look at older posts in this thread where he talks about it.

Wow! Quicken Power User! I'm still trying to balance my check book! :cheesy: Just kidding! Seriously though, haven't cracked the code on Quicken investing functionality yet.

 

[Boghie]

Re: Game of Thrones: Summer is Coming

Whipsaw,

For the quick and dirty I do use the Quicken Investment Allocation summary (just a tab on the Investments page - yuk, yuk). For that I have to shove our 'G Fund' into 'Cash' and our 'S Fund' into 'Small Cap'. That means that the numbers are not perfect, but they are quite good. Our 'G Fund' earns more interest than Cash, and the 'S Fund' includes ALL U.S. equities other than the S&P500. That means that the 'S Fund' is likely less risky than a true Small Cap fund. It also means that you can expect a 2%+ bump to whatever your 'Cash' allocation would normally provide. Good all around.

I am trying to track on the Portfolio Analysis site I used to use for more advanced research. I think that is what Cactus is talking about. That site allowed me to crosswalk our funds much closer to reality. After realizing that Cactus remembers me yammering about it here I realize I can just search through my thread to find it. I victimized myself with 'The Great Computer Smoke Check of 2019' recently. That has put a crimp in my life. There wasn't much of importance that I did not backup - but Web Favorites was one of them :-(.

In the end, the Quicken numbers are pretty accurate. The site I had is very accurate. And, with the market being so strong it really does not matter:cheesy:

 

[Boghie]

Re: Game of Thrones: Summer is Coming

Amoeba reminded me that my retirement fund crashed on Friday. It crashed by 0.33%

I think I lost some money. Oh well, time to take a nap

 

[Boghie]

Re: Game of Thrones: Summer is Coming

I tracked on that website I use for tighter growth/risk numbers: Portfolio Visualizer

In that site, the end numbers are entered in the 'Backtest Portfolio Asset Class Allocation'.

This weekend I'll carefully review where each of our individual funds map to, but if my aging brain is correct:

• G: Short Term Treasury
• F: Total US Bond Market
• C: US Large Cap
• S: US Small Cap - the growth/risk numbers seem to correlate best with this
• I: International Developed, ex-US Market

Given those mappings my allocation of:

• G: 18%
• F: 19%
• C: 29%
• S: 24%
• I: 10%

Results in a Return/Risk:

• 8.50% Expected CAGR / IRR
• 9.68% Expected Risk

Please note, a CAGR/IRR is generally a point or two lower than an Average Return. That also changes the Expected Risk. I think these numbers are a little bit 'more real' than the ones Quicken provides if you know what a CAGR is...

As a reference, the S&P500 has a:

• 10.44% Expected CAGR / IRR
• 14.74% Expected Risk

 

[nasa1974]

Re: Game of Thrones: Summer is Coming

I tracked on that website I use for tighter growth/risk numbers: Portfolio Visualizer

In that site, the end numbers are entered in the 'Backtest Portfolio Asset Class Allocation'.

This weekend I'll carefully review where each of our individual funds map to, but if my aging brain is correct:

• G: Short Term Treasury
• F: Total US Bond Market
• C: US Large Cap
• S: US Small Cap - the growth/risk numbers seem to correlate best with this
• I: International Developed, ex-US Market

Given those mappings my allocation of:

• G: 18%
• F: 19%
• C: 29%
• S: 24%
• I: 10%

Results in a Return/Risk:

• 8.50% Expected CAGR / IRR
• 9.68% Expected Risk

Please note, a CAGR/IRR is generally a point or two lower than an Average Return. That also changes the Expected Risk. I think these numbers are a little bit 'more real' than the ones Quicken provides if you know what a CAGR is...

As a reference, the S&P500 has a:

• 10.44% Expected CAGR / IRR
• 14.74% Expected Risk

Is that an expected yearly return?

 

[Boghie]

Re: Game of Thrones: Summer is Coming

Is that an expected yearly return?

No, a CAGR (Compound Annual Growth Rate) or IRR (Internal Rate of Return) (same thing) are intended to address the addition of new money into the holdings for the term (1 year). It is not perfect, and we mess with it quite a bit when we change our allocation. It is, however, probably less gameable than an annual return. The MoneyChimp site has a nice short discussion of the benefit of looking at a CAGR vs an Average Annual Return:

A problem with talking about average investment returns is that there is real ambiguity about what people mean by "average". For example, if you had an investment that went up 100% one year and then came down 50% the next, you certainly wouldn't say that you had an average return of 25% = (100% - 50%)/2, because your principal is back where it started: your real annualized gain is zero.
In this example, the 25% is the simple average, or "arithmetic mean". The zero percent that you really got is the "geometric mean", also called the "annualized return", or the CAGR for Compound Annual Growth Rate.
Volatile investments are frequently stated in terms of the simple average, rather than the CAGR that you actually get. (Bad news: the CAGR is smaller.)

Other areas of Quicken generate an IRR for your selected investments. I elected to manually input recent data rather than kludge all my old stuff in via backups so my long term IRR is no longer available. I might be able to get that info again or find the Average Annual Return from that site I mentioned.

 

[Boghie]

Doom - The Corona Virus is SO Scary. Gotta get into the market before it collapses!!!

I'm in an absolute panic.
There is a bad flu in China.
And, the world now all dying.
Now is the time all should panic.

The above is a horrid haiku with a nice pyramid shape!!!

IFT Change to:

• G: 4% - because science tells me to!!!
• F: 21% - science tells me this is good, but I don't really think so
• C: 32% - because the corona virus is so scary I have to put more into the market
• S: 29% - because the corona virus is so scary I have to put more into the market
• I: 14% - because I am stooped

Expected Annual Return: 9% (6% after inflation)
Expected Annual Risk: 10%

Wut just happened

 

[Whipsaw]

Re: Doom - The Corona Virus is SO Scary. Gotta get into the market before it collapse

You think this is a bottom already?

 

[Rod]

Re: Doom - The Corona Virus is SO Scary. Gotta get into the market before it collapse

You think this is a bottom already?

Much too early to be talking about a bottom, IMHO. We haven't even had an official pullback yet (5%). And we may be facing at least a correction (10%). Be careful out there.

 

[Whipsaw]

Re: Doom - The Corona Virus is SO Scary. Gotta get into the market before it collapse

Certainly want to buy on sale...

 

[Boghie]

Re: Doom - The Corona Virus is SO Scary. Gotta get into the market before it collapse

I really am not market timing this thing to much of an extent. BTW, currently we are at a -5% from the high on the S&P500. I am hoping for a 7% change - which is my normal marker. So, lets pray for another 2% of panic

My old allocation of 18%/19%/29%/24%/10% has behaved (since 1972) as follows:

• CAGR: 8.24%
• Risk: 9.72%
• Best Year: 24.50%
• Worst Year: -22.28%
• Max Drawdown: -34.49%

Current Allocation of 4%/21%/32%/29%/14% is:

• CAGR: 8.94%
• Risk: 11.55%
• Best Year: 28.64%
• Worst Year: -26.96%
• Max Drawdown: -40.68%

S&P500 Allocation of 0%/0%/100%/0%/0% is:

• CAGR: 10.44%
• Risk: 14.74%
• Best Year: 37.45%
• Worst Year: -37.02%
• Max Drawdown: -50.97%

I am using the on-line Portfolio Visualizer: https://www.portfoliovisualizer.com/backtest-asset-class-allocation#analysisResults

The allocation I am moving to is a Super Science Ric Edelman mapping. He uses many more individual types of assets in his portfolios - I just did an approximation mapping to TSP.

So, in reality my change wasn't much of a change. The only thing I have to watch for is a 2008 style max drawdown. With the flu being the reason for the recent crushing collapse I think I will have time to bail to safety. I have just been waiting for a drawdown to get more fully invested.

 

[Boghie]

Doom - The Value of Science!!!

Got in a bit early, eh

As of last night the S&P500 was down about 9% from the high and I was down about 5.33%. That is the value of allocation. Moving 10% from safety (G) to risk (C/S/I) COB on Monday 'was not a good move'. It did increase the losses on Tuesday, Wednesday, and likely today more than my earlier allocation. But, the F Fund is currently buffering those losses to some extent - as it did with the earlier allocation.

Now, where science comes in is that either allocation cut my losses by about 40% - which allows me to wait out potential further losses. My normal -7% mark may hit today or we may rebound - but, I did not feel the need to move out of equities during a situation that I feel is media hyped. If it is not hyped than my life does not end if my holdings decline -7% to -10%. I can move to safety sometime in that range. If, however, the world does not end I will be invested for a better rebound. It is not all or nothing. This does not feel like 2008 or 2009. This seems normal. And, this may be the washout that gets the weak kneed their guaranteed losses and paves the way for rare(ish) summer gains.

This Lion likes to eat more than he likes to rest. And, to eat one must be active. You have to be in to win...

 

[Boghie]

Doom - Smug Cloud may Impair Vision

Ugh...

Will wait till closer to IFT time limit, but it looks like I may have to cut bait and go to my conservative allocation.

That allocation is:

• G: 4%
• F: 46%
• C: 26%
• S: 16%
• I: 8%

I may change it to:

• G: 30%
• F: 20%
• C: 26%
• S: 16%
• I: 8%

because money has been flowing into AGG (F Fund) during this panic. I would rather not be affected by market (whether equity or bond) swings on the rebound.

Sometimes you just have to accept that you are wrong and move on. My account is now down 8.16% from the top market close and things seem to be heading down from here. The 'trend is your friend' - even if it isn't very friendly. The 50% holdings in equities will mean more risk than pure Lilly Pad holdings, but it will also give me some of the rebound. I still see this thing as a Dumb Money Move. Ugh.

However, not making the IFT yet. Just stream of thought and manic depression;damnit

 

[Boghie]

Re: Doom - Smug Cloud may Impair Vision

Weird that gold is declining rapidly.

That is usually a safe haven for folks when they drop their sticky pants...

 

[Boghie]

Doom - Smug Cloud may Impair Vision, Sticky Pants Dropped

Ugh,

Not going to participate fully in the churn. And, don't want to burn a March IFT dropping my Sticky Pants in public:

• G: 30%
• F: 20%
• C: 26%
• S: 16%
• I: 8%

IRR/CAGR: 7.41%
Risk: 7.75

This allocation should let me sleep ok and give me decent upside for the early recovery. That 'G Fund' holding is ready for a Market Smile in March...

 

[nasa1974]

Re: Doom - Smug Cloud may Impair Vision, Sticky Pants Dropped

Ugh,

Not going to participate fully in the churn. And, don't want to burn a March IFT dropping my Sticky Pants in public:
...

I'm bleeding so bad that my sticky pants stop sticking and I stopped wasting money on depends. I've been going through a case a day. ;damnit

 

[Whipsaw]

Re: Doom - Smug Cloud may Impair Vision, Sticky Pants Dropped

My sticky pants are starting to get ripe...