chiangmai
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Post by chiangmai on Jun 23, 2022 16:47:06 GMT 7
So 60/40 is not just one of the many similari mixed assets, who ever would have known! Well, pretty much everyone involved in investing their money, but clearly not you. (And in your defence, you are very new to this.) However, you may take the stance of Humpty Dumpty: “When I use a word,” Humpty Dumpty said in rather a scornful tone, “it means just what I choose it to mean—neither more nor less.” Let's take this in baby steps shall we, this may be less emotional for you. Question one, is 60/40 a mixed asset product?
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AyG
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Post by AyG on Jun 24, 2022 12:13:57 GMT 7
Well, pretty much everyone involved in investing their money, but clearly not you. (And in your defence, you are very new to this.) However, you may take the stance of Humpty Dumpty: “When I use a word,” Humpty Dumpty said in rather a scornful tone, “it means just what I choose it to mean—neither more nor less.” Let's take this in baby steps shall we, this may be less emotional for you. Question one, is 60/40 a mixed asset product? Yes, it's a mixed asset product. However, it refers to a very specific type of mixed asset product, with 60% equities and 40% bonds. You can't replace the 40% bonds with T-bills, matabele gumbo bean futures, old shoe laces, or pocket lint.
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chiangmai
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Post by chiangmai on Jun 24, 2022 12:37:27 GMT 7
Let's take this in baby steps shall we, this may be less emotional for you. Question one, is 60/40 a mixed asset product? Yes, it's a mixed asset product. However, it refers to a very specific type of mixed asset product, with 60% equities and 40% bonds. You can't replace the 40% bonds with T-bills, matabele gumbo bean futures, old shoe laces, or pocket lint. Good. And is it true to say there is a range of similarly styled funds where the ratio of equities to bonds varies from between 20% to 80%?
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chiangmai
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Post by chiangmai on Jun 26, 2022 6:44:36 GMT 7
Yes, it's a mixed asset product. However, it refers to a very specific type of mixed asset product, with 60% equities and 40% bonds. You can't replace the 40% bonds with T-bills, matabele gumbo bean futures, old shoe laces, or pocket lint. Good. And is it true to say there is a range of similarly styled funds where the ratio of equities to bonds varies from between 20% to 80%? It seems AyG doesn't want to play this game any more, I wonder why....never mind! I was just looking at Ruffer (RICA) which, being risk averse, I do like very much. In case you've never looked at them before their portfolio is as follows: Stock - 43.6 Bond - 34.6 Other - 12.5 Cash - 9.4 Not quite a traditional 60/40 but I doubt it includes shoelaces etc. Funds such as this one, along with PNL and CGT are a natural extension of the original 60/40 concept which has been adapted to suit the risk tolerance of investors. What makes them different is not just the ratio of equities to bonds but also the other instruments they include within the fund which can mean precious metals, options et al. Vanguard seems to have tried to board this train by offering low percentage equity funds, 20/80 and 40/80 but the problem is the remaining non-equity components which seem to be traditional bonds and that just doesn't seem to work any longer. I think anyone today who buys into a 60/40 fund expecting safety and reduced risk, probably tried to buy a Hillman Mix and expecting it to have air bags and self drive technology....buying the traditional name alone doesn't imply modern construction. The other way to tackle the problem of course is to construct your own holdings that are balanced in a way that provide the level of risk aversion that makes you happy. I've tried to do that using CGT and PNL as a core and then adding small amounts of other things around them to provide more appropriate diversification and balance.....it's hard going trying to set all this stuff out in spreadsheets but it can be done. As much as hedge funds are despised in this forum, I do believe there is a potential role for them in a portfolio such as I've just described, a minor holding at best. Anyway, that's the mixed asset spectrum, of which traditional 60/40 funds sit as a single option. My advice to anyone considering buying MA is to concentrate more on the contents of the 40% than on the equities element because that's where the protection is. There will be a rebuttal shortly telling us that all of this is utter tosh and complete bollocks, you must decide whether it is or it is not.
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chiangmai
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Post by chiangmai on Jun 26, 2022 10:59:22 GMT 7
Here's the same portfolio breakdown for PNL:
Equity 39.05 Property 0.12 Fixed Income 2.87 Other 9.51 Cash 12.98
And CGT follows the same pattern but with a smaller equities holding:
Equity 26.73 Property 1.35 Fixed Income 22.24 Other 19.67 Cash 4.41
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chiangmai
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Post by chiangmai on Jun 26, 2022 13:10:54 GMT 7
And now for something different:
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chiangmai
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Post by chiangmai on Jun 27, 2022 10:00:24 GMT 7
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AyG
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Post by AyG on Jun 27, 2022 11:56:38 GMT 7
It seems AyG doesn't want to play this game any more, I wonder why....never mind! I've stopped playing because I can't believe anyone is as clueless as you appear to be, so I reckon you're just trolling me, taking advantage of my willingness to help people who are seemingly trying to learn and grow. As for my assertion that a 60/40 portfolio is one with 60% equities and 40% bonds, your latest link www.investmentexecutive.com/news/products/wanted-a-substitute-for-the-60-40-portfolio/ confirms this: "the balanced portfolio of 60% stocks, 40% bonds". Anyway, that's my final word on the matter.
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chiangmai
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Post by chiangmai on Jun 27, 2022 13:30:36 GMT 7
Ah yes, the classic AyG exit scenario, CM is a dunce and AyG knows everything, yawn, the same old rehtoric gets old.....don't think you haven't been rumbled.
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AyG
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Post by AyG on Jun 27, 2022 16:25:07 GMT 7
^^^ Get back under your bridge, troll.
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chiangmai
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Post by chiangmai on Jun 27, 2022 17:52:05 GMT 7
You know AyG, I actually recognize your extensive knowledge in the area of investing plus I also acknowledge your intellect, I suspect most forum members do.....well, Tony may not but that's neither here nor there currently. But I also acknowledge your inability to accept anyone else's opinion on matters where you regard yourself as expert (which appears to be most things), along with your propensity to slip into abusive comment at the drop of hat. The most surprising part is your inability to debate, given your intellect I would have thought the opposite would have been true, which does call into question the accuracy of my assessment. Maybe you don't debate with lesser mortals or people below your station. Or maybe you're just a sensitive soul whose defense mechanism includes assuming the posture of the stern school teacher who must never be challenged or his views questioned. Regardless, it's all very odd behavior on your part, fortunately for everyone else it's only a part time trait. Oh well, viva la difference.
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chiangmai
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Post by chiangmai on Jul 3, 2022 7:26:32 GMT 7
More arguments in favour of adapting the 40% to include other products, aimed at reducing risk. "Individual investors don’t typically have access to alternatives like hedge funds and private equity, hence, stocks and bonds typically serve as their most easily investible assets. Those choices, however, have become problematic this year, since individual investors essentially had nowhere to turn, besides cash, or a commodity-focused fund. Indeed, over the past six months, more than 90% of assets tracked by Goldman have underperformed a portfolio of cash equivalents in the form of short-dated Treasury bills. Institutional investors, on the other hand, have more options for hedging their portfolios against simultaneous selling in bonds and stocks. According to Bhandari at Capstone, one option available to pension funds, hedge funds and other institutions is buying over-the-counter options designed to pay off when both stocks and bonds decline. Bhandari said options like these allowed his firm to hedge both their equity and bond exposure in a cost-effective manner, since an option that only pays off if both bonds and stocks decline typically is cheaper than a standardized option that pays off if only stocks decline". www.marketwatch.com/story/the-60-40-portfolio-is-supposed-to-protect-investors-from-volatility-so-why-is-it-having-such-a-bad-year-11656716626?mod=home-page&tesla=y
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AyG
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Post by AyG on Jul 3, 2022 8:42:28 GMT 7
"Individual investors don’t typically have access to alternatives like hedge funds and private equity" What a bizarre statement. There are publicly traded hedge funds such as KKR and Apollo in the USA and BH Macro in the UK. As for private equity there's Carlyle Group, Blackstone &c. (USA) and 3i, HgCapital, Pantheon and more (UK). So, individual investors do have access to alternatives. Whether they'd want to, or should, is a different matter.
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chiangmai
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Post by chiangmai on Jul 3, 2022 8:58:46 GMT 7
"Individual investors don’t typically have access to alternatives like hedge funds and private equity" What a bizarre statement. There are publicly traded hedge funds such as KKR and Apollo in the USA and BH Macro in the UK. As for private equity there's Carlyle Group, Blackstone &c. (USA) and 3i, HgCapital, Pantheon and more (UK). So, individual investors do have access to alternatives. Whether they'd want to, or should, is a different matter. I believe the article refers to the average investor rather than the experienced one, it does say "typically". By your own admission the average investor is woefully uneducated and inexperienced, I'm certain most average investors wouldn't know one if it dropped on their head or where to begin to find hedge funds or private equity firms let alone know what to look for or ask for once they found them. Hello, is that the Hedge Fund/Private Equity company, I'd like to buy something that makes money for me when everything else is falling, do you have a catalogue you can send me and does it have pictures? As for whether they would want to is a matter of education and training, many would but don't know it, ditto whether they should.
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chiangmai
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Post by chiangmai on Jul 3, 2022 9:13:27 GMT 7
"Income-oriented investors, it’s time to celebrate. There are suddenly many more opportunities—in areas ranging from junk bonds to real estate investment trusts—after the bear markets in stocks and bonds in the first half of 2022. In the bond market, yields in many cases have doubled, to around 8%, after one of the sharpest selloffs in history. This enhances the diversifying power of bonds in equity-heavy portfolios, and should revive interest in the traditional 60/40 mix of stocks and bonds". www.barrons.com/articles/best-income-investments-bonds-yields-51656713799?siteid=yhoof2
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