Monevator "Slow and Steady" Passive Portfolio

guymo

AlwaysLearnin wrote: »

Coincidently, the Q4 2014 update is out today, and property has now been added:

http://monevator.com/the-slow-and-steady-passive-portfolio-update-q4-2014/

It's not particularly coincidental because that was exactly what we were talking about

AlwaysLearnin

Ah yeah. That'll teach me to skim read!

Ryan_Futuristics

sthrax wrote: »

A similar question but I was looking at the vangaurd lifestrategy funds. What is the advantage of picking the funds yourself rather than just investing in one lifestrategy fund?

If you're looking for a truly passive portfolio it seems that investing in just one diversified fund is the way forward? Or am i missing something?

The biggest disadvantage is that you can't buy all the regions and assets classes *cheap* at the same time

Valuation is the safest and most reliable indicator of market returns, and a fixed-allocation multi-fund will usually involve buying a combination of cheap and expensive assets (so what you're really relying on is the market as a whole giving you a general up-trend)

e.g. I wouldn't buy bonds or US stocks at the moment, but Europe and Emerging Markets look good value

It's probably quite safe over a 5-year period, but over 10-15 years you might realise you wanted a slightly different asset allocation

There is a good argument for holding 50% emerging markets (if you've got the discipline to sit-and-hold, and not fiddle with them) as they represent 50% of the world GDP, and that's likely to keep rising

TheTracker

Ryan_Futuristics wrote: »

Valuation is the safest and most reliable indicator of market returns

Where did you come up with that assertion? If it was from the article
The Single Greatest Predictor of Future Stock Market Returns
then the author followed up by saying he was exaggerating for effect "The title, “The Single Greatest Predictor of Future Stock Market Returns”, was something of an intentional exaggeration, chosen not only to draw attention to an out-of-the-box (and, in my opinion, useful) way of thinking about equity returns, but also to take a subtle jab at commonly-cited valuation metrics. The title was not meant to be taken literally." In the follow up he describes the dangers of using valuation as a strong predictor.

Ryan_Futuristics

TheTracker wrote: »

Where did you come up with that assertion? If it was from the article
The Single Greatest Predictor of Future Stock Market Returns
then the author followed up by saying he was exaggerating for effect "The title, “The Single Greatest Predictor of Future Stock Market Returns”, was something of an intentional exaggeration, chosen not only to draw attention to an out-of-the-box (and, in my opinion, useful) way of thinking about equity returns, but also to take a subtle jab at commonly-cited valuation metrics. The title was not meant to be taken literally." In the follow up he describes the dangers of using valuation as a strong predictor.

A fascinating trip into the blogosphere, Tracker ... More that they're the only consistent predictor of market returns
http://www.starcapital.de/docs/2014_02_CAPE_Predicting_Stock_Market_Returns.pdf

The blogs were interesting, but he didn't have access to the information he needed on global markets (although I found the bit where he said "I don't think they would" quite compelling)

And QE's made the point he's rehashing far more effectively - it would be very hard to stick to Shiller's original concept of mean reversion with $trillions sloshing around inflating asset prices today (but the US looks expensive every way you cut it)