Part Active, Part Passive and Part Larry

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Topic Author
invest2bfree
Posts: 1279
Joined: Sun Jan 12, 2020 8:44 am

Part Active, Part Passive and Part Larry

Post by invest2bfree »

I have taken Blair Academy Portfolio designed by Bogle as an all weather portfilio with (Wellington, Balanced Fund, Gold and Emerging Markets) which can be used in all situations.

Modified that and included Larry's Swedroe Small Cap value and came up with the portfolio below-

DODBX 36% (401k)
VT 27%
AVUV 9%
AVDV 9%
BND 19%

Bogle recommends Wellington but looking at the size and holdings it looks like Wellington has become a closet index fund.
Choose Dodge and Cox balanced Fund instead since it is Value tilt.

In my taxable just have VT with small cap mix recommended by Larry. Rest In Bonds.
Overall portfolio is 70% stocks and 30% bonds.
One poster KlangFool has a portfolio similar to this but he uses Wellington.

What does everyone think about a portfolio like this?


This portfolio handled 5% withdrawal rates much better than balanced Fund or a pure S&P 500 portfolio.

https://www.portfoliovisualizer.com/bac ... ion5_2=100
36% (IRA) - Individual LT Corporate Bonds , 33%(taxable) - schy, 33%(taxable) - SCHD Dividend Growth
000
Posts: 8211
Joined: Thu Jul 23, 2020 12:04 am

Re: Part Active, Part Passive and Part Larry

Post by 000 »

I think it's ok but the bigger question is are you going to be able to stay the course with this portfolio? You've been making some major portfolio tweaks lately which is fine but may indicate you're not comfortable with the amount of risk?
exodusNH
Posts: 10347
Joined: Wed Jan 06, 2021 7:21 pm

Re: Part Active, Part Passive and Part Larry

Post by exodusNH »

invest2bfree wrote: Wed Oct 20, 2021 4:25 pm I have taken Blair Academy Portfolio designed by Bogle as an all weather portfilio with (Wellington, Balanced Fund, Gold and Emerging Markets) which can be used in all situations.

Modified that and included Larry's Swedroe Small Cap value and came up with the portfolio below-

DODBX 36% (401k)
VT 27%
AVUV 9%
AVDV 9%
BND 19%

Bogle recommends Wellington but looking at the size and holdings it looks like Wellington has become a closet index fund.
Choose Dodge and Cox balanced Fund instead since it is Value tilt.

In my taxable just have VT with small cap mix recommended by Larry. Rest In Bonds.
Overall portfolio is 70% stocks and 30% bonds.
One poster KlangFool has a portfolio similar to this but he uses Wellington.

What does everyone think about a portfolio like this?


This portfolio handled 5% withdrawal rates much better than balanced Fund or a pure S&P 500 portfolio.

https://www.portfoliovisualizer.com/bac ... ion5_2=100
Did you not wind up making the move as discussed here?

viewtopic.php?p=6195425&sid=ecd8fed537c ... a#p6195425

It sounded like you did. But if not, why not and why are you talking about switching again two months later?
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Candor
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Joined: Sat May 28, 2011 4:25 pm

Re: Part Active, Part Passive and Part Larry

Post by Candor »

A couple of months ago you switched from 60/40 to 100% equities and now you are going back to 70/30? All this while the market has been relatively stable. You need to suss out an appropriate AA and stick with it.
The fool, with all his other faults, has this also - he is always getting ready to live. - Seneca Epistles < c. 65AD
Topic Author
invest2bfree
Posts: 1279
Joined: Sun Jan 12, 2020 8:44 am

Re: Part Active, Part Passive and Part Larry

Post by invest2bfree »

Thanks everyone, I have been in a lot of stress lately on what to do. Too much financial news, too much tweaking and it has adversely affected my sleep.

All asset allocations I have gone through, I did not have the confidence to hold.

Couple of things I have decided to do is to ignore the markets and look at my portfolio as less often as possible.
36% (IRA) - Individual LT Corporate Bonds , 33%(taxable) - schy, 33%(taxable) - SCHD Dividend Growth
sycamore
Posts: 6360
Joined: Tue May 08, 2018 12:06 pm

Re: Part Active, Part Passive and Part Larry

Post by sycamore »

invest2bfree wrote: Wed Oct 20, 2021 4:25 pm I have taken Blair Academy Portfolio designed by Bogle as an all weather portfilio with (Wellington, Balanced Fund, Gold and Emerging Markets) which can be used in all situations.
Interesting - I didn't know of Blair Academy or that John Bogle was a graduate who contributed generously to the school. I couldn't find anything about a "Blair Academy Portfolio" though.
invest2bfree wrote: Wed Oct 20, 2021 4:25 pm Modified that and included Larry's Swedroe Small Cap value and came up with the portfolio below-

DODBX 36% (401k)
VT 27%
AVUV 9%
AVDV 9%
BND 19%

Bogle recommends Wellington but looking at the size and holdings it looks like Wellington has become a closet index fund.
Choose Dodge and Cox balanced Fund instead since it is Value tilt.

In my taxable just have VT with small cap mix recommended by Larry. Rest In Bonds.
Overall portfolio is 70% stocks and 30% bonds.
One poster KlangFool has a portfolio similar to this but he uses Wellington.

What does everyone think about a portfolio like this?


This portfolio handled 5% withdrawal rates much better than balanced Fund or a pure S&P 500 portfolio.

https://www.portfoliovisualizer.com/bac ... ion5_2=100
The portfolio you described comes out to 45% US stocks, 25% ExUS stocks (about 2/3 US, 1/3 ExUS) and 30% bonds. That's a reasonable asset allocation, and your choice of funds is also reasonable.

But who knows how well it will perform in the future? The back test can't tell you that.

One problem with your portfoliovisualizer back test is you didn't actually test your proposed portfolio. Instead of 36% DODBX, your backtest used DODFX (a foreign stock fund); in place of 27% VT, you used 27% SPY; in place of 9% US Small Value and 9% Intl Small Value, you used 18% US Small Value. Maybe you posted another backtest you were trying out instead of the one you wanted?

Your proposed portfolio is hard to backtest because AVUV and AVDV are very new. If we substitute older DFA funds (to at least allow a back test since VT started) your proposed portfolio doesn't keep up with the one 60/40 Balanced fund. Here's a comparison of your original back test and your proposed portfolio (I hope I got it right!) Note that my back test only goes back to 2009 because that's as far as VT data goes.

Thoughts:
1) If you want to back test, be very careful about your input data. "Garbage in garbage out." :-)
2) You can learn all kinds of things from back testing, but they often apply only to some situations and some time periods. Change even one parameter and you might learn the opposite thing from before.
3) It's very likely that a simple portfolio that covers the basic asset classes will perform "good enough".
invest2bfree wrote: Thu Oct 21, 2021 8:26 am Couple of things I have decided to do is to ignore the markets and look at my portfolio as less often as possible.
As others noted, be careful if you find yourself switching investments. These two decisions of yours will help avoid problems. Good luck!
Topic Author
invest2bfree
Posts: 1279
Joined: Sun Jan 12, 2020 8:44 am

Re: Part Active, Part Passive and Part Larry

Post by invest2bfree »

sycamore wrote: Thu Oct 21, 2021 1:33 pm
Interesting - I didn't know of Blair Academy or that John Bogle was a graduate who contributed generously to the school. I couldn't find anything about a "Blair Academy Portfolio" though.
https://youtu.be/3uJbHREmUs4

56 minute mark he discusses this in detail.


This according to Bogle is the all weather which can be used in all situations.


45% - vwelx Wellington ACTIVE
45%. 60/40 vbiax BALANCED
5%. VWO. EMERGING MARKETS
5%. GLD. GOLD
Last edited by invest2bfree on Thu Oct 21, 2021 5:22 pm, edited 1 time in total.
36% (IRA) - Individual LT Corporate Bonds , 33%(taxable) - schy, 33%(taxable) - SCHD Dividend Growth
Topic Author
invest2bfree
Posts: 1279
Joined: Sun Jan 12, 2020 8:44 am

Re: Part Active, Part Passive and Part Larry

Post by invest2bfree »

sycamore wrote: Thu Oct 21, 2021 1:33 pm
One problem with your portfoliovisualizer back test is you didn't actually test your proposed portfolio. Instead of 36% DODBX, your backtest used DODFX (a foreign stock fund); in place of 27% VT, you used 27% SPY; in place of 9% US Small Value and 9% Intl Small Value, you used 18% US Small Value. Maybe you posted another backtest you were trying out instead of the one you wanted?

Your proposed portfolio is hard to backtest because AVUV and AVDV are very new. If we substitute older DFA funds (to at least allow a back test since VT started) your proposed portfolio doesn't keep up with the one 60/40 Balanced fund. Here's a comparison of your original back test and your proposed portfolio (I hope I got it right!) Note that my back test only goes back to 2009 because that's as far as VT data goes.

The key was to start in 2000 unfortunately I could not find anything to substitute for VT so I used spy.

Starting in 2009 at the bottom is a no big deal, I want portfolio to be at the top of the market peak and see how it performs against a balanced fund.
36% (IRA) - Individual LT Corporate Bonds , 33%(taxable) - schy, 33%(taxable) - SCHD Dividend Growth
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