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Shetland
Posted: 01 November 2020 10:18:59(UTC)
#62

Joined: 13/03/2015(UTC)
Posts: 1,243
Aminatidi;135486 wrote:
King Lodos;135418 wrote:
I'm slightly pessimistic on All Weather going forwards .. But I think you can put CGT's success down to them doing things that are fairly likely to work over long time-scales .. So all three maintain this market neutral asset allocation (which we know works with HB –> it's unpredictable events that tend to be the problem); CGT particularly factors in value between asset classes, and consistently buying ITs below their NAV (two forms of value investing in which I think you do still get clear price disparities); it makes full use of the free lunch of diversification; and they all have a long-term macro outlook (short-termism being a major problem for retail funds .. I think they perhaps have the luxury of older, more experienced investors not expecting everything to perform like SMT)




This is something I spend a fair bit of time thinking about.

I've been doing this for almost 3 years.

It would be so easy to look at the recent history and assume that things simply keep going up.

I often find myself reading the annual reports of the the likes of Personal Asset or Capital Gearing simply because they seem to be run by people who have been there and got the tee-shirt so to speak.

Keeps me grounded and stops me trying to think I'm too smart.


But CGT and PNL still rise and fall with the markets, its just that the percentages are smaller. They don't go up so much so they don't fall as much. Over the medium and long term, 18 months or more, a low cost index tracker will perform better.
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Jeff Liddiard
Posted: 01 November 2020 10:27:15(UTC)
#67

Joined: 20/01/2012(UTC)
Posts: 908
Shetland;135492 wrote:
Aminatidi;135486 wrote:
King Lodos;135418 wrote:
I'm slightly pessimistic on All Weather going forwards .. But I think you can put CGT's success down to them doing things that are fairly likely to work over long time-scales .. So all three maintain this market neutral asset allocation (which we know works with HB –> it's unpredictable events that tend to be the problem); CGT particularly factors in value between asset classes, and consistently buying ITs below their NAV (two forms of value investing in which I think you do still get clear price disparities); it makes full use of the free lunch of diversification; and they all have a long-term macro outlook (short-termism being a major problem for retail funds .. I think they perhaps have the luxury of older, more experienced investors not expecting everything to perform like SMT)




This is something I spend a fair bit of time thinking about.

I've been doing this for almost 3 years.

It would be so easy to look at the recent history and assume that things simply keep going up.

I often find myself reading the annual reports of the the likes of Personal Asset or Capital Gearing simply because they seem to be run by people who have been there and got the tee-shirt so to speak.

Keeps me grounded and stops me trying to think I'm too smart.


But CGT and PNL still rise and fall with the markets, its just that the percentages are smaller. They don't go up so much so they don't fall as much. Over the medium and long term, 18 months or more, a low cost index tracker will perform better.



Could you please give examples of specific index trackers that beat CGT and PNL (with a chart?) Thanks.
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Aminatidi
Posted: 01 November 2020 10:38:23(UTC)
#66

Joined: 29/01/2018(UTC)
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Shetland;135492 wrote:
But CGT and PNL still rise and fall with the markets, its just that the percentages are smaller. They don't go up so much so they don't fall as much. Over the medium and long term, 18 months or more, a low cost index tracker will perform better.


Respectfully I think the numbers paint a slightly different picture over the long term.

It's certainly not as clear cut as I think you make it sound.
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9 users thanked Aminatidi for this post.
Monty Claret on 01/11/2020(UTC), Tim D on 01/11/2020(UTC), Lindisfarne on 01/11/2020(UTC), SoBo65 on 01/11/2020(UTC), mdss68 on 01/11/2020(UTC), The Thin White Duke on 01/11/2020(UTC), Trudy Scrumptious on 01/11/2020(UTC), Laurence O'Brien on 02/11/2020(UTC), Jesse M on 25/02/2022(UTC)
Tim D
Posted: 01 November 2020 10:50:03(UTC)
#64

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Shetland;135492 wrote:
But CGT and PNL still rise and fall with the markets, its just that the percentages are smaller. They don't go up so much so they don't fall as much. Over the medium and long term, 18 months or more, a low cost index tracker will perform better.


You're missing the point again. Yes in normal risk-on bull-market times an all-equities index will surely outperform CGT (e.g look at last 10 years' annualised returns FTSE World vs CGT in Aminatidi's chart above). But if your 18 month period happens to intersect with a big crash then the equities will be 40% down and take years to climb back to where they were while CGT was just flat for a bit before resuming its slow and steady upward course. Take your pick; the relevant questions are: 1. Do you feel lucky? 2. Will CGT manage to dodge the next Big One as well as they did the last two, or was that just a fluke?
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11 users thanked Tim D for this post.
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Aminatidi
Posted: 01 November 2020 11:25:09(UTC)
#65

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Tim D;135500 wrote:
Shetland;135492 wrote:
But CGT and PNL still rise and fall with the markets, its just that the percentages are smaller. They don't go up so much so they don't fall as much. Over the medium and long term, 18 months or more, a low cost index tracker will perform better.


You're missing the point again. Yes in normal risk-on bull-market times an all-equities index will surely outperform CGT (e.g look at last 10 years' annualised returns FTSE World vs CGT in Aminatidi's chart above). But if your 18 month period happens to intersect with a big crash then the equities will be 40% down and take years to climb back to where they were while CGT was just flat for a bit before resuming its slow and steady upward course. Take your pick; the relevant questions are: 1. Do you feel lucky? 2. Will CGT manage to dodge the next Big One as well as they did the last two, or was that just a fluke?


I think the "problem" is charts can be used a lot.

Whilst Shetland's coming up with examples of how a tracker is better over the long term here's something starting at Jan 1st 2000.

Still happy with that tracker? Give it long enough and you might be but if you needed your money at any point in the past 20 years you'd probably sooner it had been in CGT albeit with the benefit of hindsight.

Look at the past ten years and I wish I'd given it all to Terry Smith or James Anderson because hey look how it's all worked out and what could possibly ever go wrong doing that?
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5 users thanked Aminatidi for this post.
Rob B on 01/11/2020(UTC), Paul durland on 01/11/2020(UTC), mdss68 on 01/11/2020(UTC), SimonHughes on 01/11/2020(UTC), Tim D on 01/11/2020(UTC)
Rob B
Posted: 01 November 2020 11:39:26(UTC)
#101

Joined: 07/10/2018(UTC)
Posts: 1,702
I do find charts a little confusing in the picture they paint. I'm presuming it would be entirely different for watching the outcome of a lump sum vs. monthly investment?

It would be really good to see the effect of starting with nothing and putting £1K into both CGT and a global tracker each month from 2000 until now.

Considerations would need to include cost of purchase (trading and stamp duty). It looks like you would be accumulating lots of tracker units at a low price for a decade up to c.2010?

This is definitely one for the more mathematically astute!
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Apostate
Posted: 01 November 2020 13:16:40(UTC)
#102

Joined: 02/04/2018(UTC)
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Rob B;135507 wrote:
I do find charts a little confusing in the picture they paint. I'm presuming it would be entirely different for watching the outcome of a lump sum vs. monthly investment?

It would be really good to see the effect of starting with nothing and putting £1K into both CGT and a global tracker from 2000. Considerations would need to include cost of purchase (trading and stamp duty). It looks like you would be accumulating lots of tracker units at a low price for a decade up to c.2010?


You can do something like this with US funds on Portfolio Visualizer using the funds PRPFX Permanent Portfolio and VITSX Vanguard Total Stock Market Index tracker. Starting with $1 in 2000 and contributing a fixed $1000 per year you end up with

$40,347 for PRPFX
$59,853 for VITSX

VITSX lagged PRPFX until about 2014

of course PRPFX is not PNL (or CGT) but you get the general idea

link to the data below

https://bit.ly/3jN8yXR

starting with $1000 and without making contributions then PRPFX is well ahead since 2000

https://bit.ly/2TGEHFQ
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2 users thanked Apostate for this post.
Rob B on 01/11/2020(UTC), smg8 on 17/02/2021(UTC)
Rob B
Posted: 01 November 2020 13:40:12(UTC)
#103

Joined: 07/10/2018(UTC)
Posts: 1,702
Thanks Apostate. I was editing as you replied (I omitted to put in 'each month').

I think what it shows is that it's 'horses for courses' as always. If I was wanting to protect my wealth / take a lower risk position / have a well diversified portfolio then CGT / PNL have been incredible investments.

Going forward both may need a little re-identification (as Peter S identified in the last quarterly update). I've yet to read Robin's recent wisdom.
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1 user thanked Rob B for this post.
Paul durland on 01/11/2020(UTC)
Aminatidi
Posted: 01 November 2020 14:09:18(UTC)
#104

Joined: 29/01/2018(UTC)
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Rob B;135516 wrote:
Thanks Apostate. I was editing as you replied (I omitted to put in 'each month').

I think what it shows is that it's 'horses for courses' as always. If I was wanting to protect my wealth / take a lower risk position / have a well diversified portfolio then CGT / PNL have been incredible investments.

Going forward both may need a little re-identification (as Peter S identified in the last quarterly update). I've yet to read Robin's recent wisdom.


Don't think you will as the latest quarterly from him is his last so far as I'm aware.

I've struggled to find anything similar to Portfolio Visualiser though sadly it doesn't seem to have anything UK specific as it's very US centric.
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Tim D
Posted: 01 November 2020 14:26:21(UTC)
#105

Joined: 07/06/2017(UTC)
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Aminatidi;135518 wrote:
I've struggled to find anything similar to Portfolio Visualiser though sadly it doesn't seem to have anything UK specific as it's very US centric.


Portfoliocharts https://portfoliocharts....portfolio/my-portfolio/ is very good, I find myself using it far more than Portfolio Visualiser. Support for non-US investors seems to keep getting better; you can change the home country (used for currency and inflation) and the definition of "world". Bit of a learning curve getting used to all the asset class acronyms and output charts though.
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