Down over two percent since last Friday. All three assets were down simultaneously again. Correlations just got worse. The decision to move away from bond into stocks last week was relatively a good one, but going to cash would have been better.
Obviously the portfolio has shifted a bit so the strategy rebalances midweek. This market is an Achilles heel for Geometric Balancing, but it’s likely a problem for many strategies. Highly correlated assets are no fun. Lately there isn’t anywhere to hide except cash. On February 25th, the strategy rebalanced to:
48% SPY , 16% TLT , 16% GLD , 20% Cash
The Portfolio page is up. It’s set to update automatically every Friday soon after after 5:00 EST. The midweek update isn’t automated yet though, so I will still post when that is necessary until it’s working. I also haven’t settled on a notification method yet.
This means the weekly updates posts will stop unless there is something interesting to write about, like there was this week. We’ll see what next week brings.
*All investing strategies come with the risk of loss, including this one. This portfolio may not be appropriate for your investment goals and requirements, and it is not investment advice.
It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities in this list.
Calculations are my own. Returns shown do not include trading costs. They do not include any fees. Past performance is not indicative of future performance. Dividends are re-invested.
Thanks for the Portfolio page.
The addition of Permanent is nice.
You really should add 33/33/33 split between Gold/S&P/Bonds though because this is actually closer to what Geometric really does.
You could even do something like:
30/30/30/10 (with cash) if you feel that is more fair, as Geo does tend to hold a little cash.
As you’ve said yourself, historical Geometric is:
“about 50% stocks, 35% bonds, 5% gold, and 10% cash.”
So a comparison with Permanent isn’t fair.
Over this period, the permanent portfolio already has higher volatility (risk) than Geometric Balancing. How does increasing the risk even further make it a better comparison?
Because a 1/3 Split has compelling risk:return vs. S&P and is far simpler to implement.
It’s kind of like an aggressive Permanent Portfolio.
Historically, the returns are comparable to Geometric, but have zero effort to implement in comparison. It’s entirely agnostic to volatility and correlation.
I get your point about risk though.
If I remember correctly from your rebalancing frequency post, your idea was to match your rebalancing periods to your data granularity. Weekly data -> weekly rebalance, daily data -> daily rebalance. But it looks like you’re planning the portfolio page for a weekly, or possibly twice weekly, update.
Is this due to automation difficulty/issues with the new page, or am I misinterpreting something?
It does seem to make some difference, as one might expect. This week was close to a point of performance difference between daily rebalance and weekly.
And thanks for your willingness to share all of this!
Just weekly rebalancing, still with the option to rebalance midweek when things change a lot like I always have. Conceptually, I’d rather rebalance daily, but that is much harder to execute manually. You are correct that volatile weeks benefit much more from more frequent rebalancing, which is why I allow for a midweek rebalance when things get choppy. I’m try to get a bit of the best of both worlds.
Thank you for sharing your blog with us.
How can People who would like to replicate your allocations, replicate your allocations?
What I mean is explained below:
Even if you rebalance twice a week, I want to rebalance once a week.
Monday morning at 9:31 am New York time, one minute after the market open,
buy SPY, TLT, GLD, in the % allocation shown for the week that is just starting at the market opening price for each. Hold them for the week.
rebalance once a week on Monday morning to the most recent allocation posted on your blog.
what are your thoughts on the above procedure?
I don’t normally rebalance twice a week, only when things are volatile. Your plan should track the posted model reasonably well. But just remember, This is not a recommendation or advice, as it may be a bad portfolio for you.