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King Lodos
Posted: 01 November 2020 15:10:00(UTC)
#63

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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.


What's going on over the longer-term with CGT, PNL, Harry Browne, etc. can be explained a bit better by this:

https://i.imgur.com/H4WHMTb.png

If your £100 portfolio loses 50%, it's worth £50 .. So to get back to even, you now need a 100% return.

If you hit a really big crash, like the Tech crash or Japan, and go down 80%, your portfolio's now worth £20, and you really do need a 400% return to get even. (doesn't apply to very short-term volatility, which tends to be down to liquidity.)

So – while only talking about the past – if you look at the long-term chart of RIT Capital Partners, it appears to be very high growth .. but it's not .. This is a portfolio that's tended to only capture about 75% of market upside, but avoid 50% of market downside .. So because it's not hitting bear markets full force, it avoids this anti-compounding effect, and therefore manages to compound at a higher overall rate

https://static.seekingalpha.com/uploads/2019/5/30/49419486-15592274471613798_origin.png
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King Lodos
Posted: 01 November 2020 15:21:04(UTC)
#106

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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.


My perspective on this has always been that: you shouldn't expect the past to repeat to the extent that it could make a difference.

Backtesting is essential for testing ideas .. Running a strategy you haven't backtested extensively is insane – it's at very least akin to test-driving a car before you buy it (maybe even getting behind a wheel and working out if you can drive).

At the same time, smart people trip up on backtesting all the time .. When we adjust a backtest to give a better result, we're very quickly into back-fitting – which doesn't necessarily tell us anything, apart from what happened over a specific period .. So backtesting is there to test principles.

It should always follow:
– Hypothesis
– Test
– What are the challenges to this principle going forwards, and why will it continue to work?

So if we backtest stock and bond allocations, the important part of the process is asking: What happens when bond yields are zero? If you can find a way to answer that, then you're into ideas that might be applicable to the future
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Tim D
Posted: 01 November 2020 15:34:30(UTC)
#68

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King Lodos;135418 wrote:
I think they perhaps have the luxury of older, more experienced investors not expecting everything to perform like SMT.


That reminded me of Ruffer's April review - https://www.ruffer.co.uk...20-Q1-Investment-Review - after their expensive "protection" had finally paid off and he was looking to what's next. A chunk from the conclusion, my emphasis:

Quote:
Not many of us old-timers who acquired our hard wiring before 1987 are left; I started as a stockbroker in 1972, when a falling stock market was friendless, and bad news was pretty much just that – bad. Buying the dips is predicated on the assumption that bad news is in fact good news since it opens up Uncle Sam’s pocketbook. Now debt is so great, and the promises needed so egregious, that there has to be a question mark over the efficacy of the pocketbook. Any loss of confidence in the value of the collateral will manifest itself in a fear of inflation, since money is an expression of confidence in a token (fiat money, it is called – the divine ‘let it be’) – and if that confidence is lost, it ceases to do its job as a store of value. What is clear is that central banks and governments will use whatever firepower they have – even if it turns out that their cheques are blank.

Accordingly, we have increased again our holdings in inflation-linked bonds (notably in the US). These will be a proper protection against a grinding bear market in money, in savings, in prosperity. The time is moving on from a world where we had to protect against sudden shocks – catastrophe insurance is behind us, job done. The investment landscape is going to become much more familiar, but it will only be a homecoming to the greybeards (what’s the gender neutral word for this? The mind boggles) who have lived it before. Thirty-three years is a long detour – and for many it will have proved a cul-de-sac. It is difficult to master old tricks, secondhand, but my prediction is that it will prove a valuable quality over the next longish while.


He seems to be rather relishing a return to "the good old days" (if/when we get there... it's entirely possible we end up somewhere completely different).

The latest one - https://www.ruffer.co.uk...20-Q3-Investment-Review - has a great analogy too:

Quote:
We sometimes liken investment to the art of juggling grenades – Ruffer puts a premium on keeping the pins in place.
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Aminatidi
Posted: 20 November 2020 18:11:19(UTC)
#107

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Half Year Report out.

Report
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Aminatidi
Posted: 28 January 2021 19:11:07(UTC)
#108

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Latest Quarterly

Quarterly Report
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7upfree
Posted: 29 January 2021 10:41:44(UTC)
#109

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Aminatidi;149049 wrote:
Latest Quarterly

Quarterly Report


Interesting that the Gold allocation is now north of 12%.

I am damping down my equity allocation a little and spreading it towards CGT and PNL.

For all we can say it's different this time (and yes, I get that relative to bonds, stocks are not overpriced), the market is certainly not cheap, nor fair value.
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Aminatidi
Posted: 29 January 2021 14:56:43(UTC)
#110

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Where are you getting 12% from or are you including the Franco Nevada holding?
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7upfree on 29/01/2021(UTC)
7upfree
Posted: 29 January 2021 17:21:23(UTC)
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Aminatidi;149214 wrote:
Where are you getting 12% from or are you including the Franco Nevada holding?


Yes - overall gold exposure.
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Aminatidi on 29/01/2021(UTC)
Aminatidi
Posted: 04 February 2021 17:37:43(UTC)
#112

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Looks from the latest factsheets like a couple of small new holdings in Pernod Ricard and Moodys.

I suppose I can't complain when my money is in a "protect and try to grow" fund but it does look like PNL is lagging CGT and RICA a little right now.

Hmm.
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Trudy Scrumptious
Posted: 04 February 2021 17:43:31(UTC)
#113

Joined: 10/01/2008(UTC)
Posts: 169
Aminatidi;150413 wrote:
Looks from the latest factsheets like a couple of small new holdings in Pernod Ricard and Moodys.

I suppose I can't complain when my money is in a "protect and try to grow" fund but it does look like PNL is lagging CGT and RICA a little right now.

Hmm.


Do you have any thoughts on the MFS Meridian Prudent Capital fund ? Performance and volatility in line with the all weather funds. I've got a chunk but don't have the confidence to make it one of my core holdings like CGT, PNL & RICA.
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