Ray Dalio's all weather portfolio

Sailtheworld

sixpence. said:

I think if you look at the data, you'll find Dalio's returns are a bit better than that. 
Also you talk about a 10% standard deviation but equities can drop 50-70% during a recession. At one point, Dalio's portfolio only dropped -3%. 
I agree that it differs from person to person! That's a good point. I like the principle behind his strategy though. 

A standard deviation of 10% and a market crash of 50% aren't mutually exclusive. 

From what I gather the returns haven't been too shabby but everyone's a brilliant investor when markets are hitting records. The elephant in the room of course is that if Dalio has hit upon a sure fire way of delivering better risk adjusted returns the market will have spotted it and priced the future accordingly. He should've shared the golden goose with only his nearest and dearest. It's dead now.

Thrugelmir

Sailtheworld said:

sixpence. said:

I think if you look at the data, you'll find Dalio's returns are a bit better than that. 
Also you talk about a 10% standard deviation but equities can drop 50-70% during a recession. At one point, Dalio's portfolio only dropped -3%. 
I agree that it differs from person to person! That's a good point. I like the principle behind his strategy though. 

From what I gather the returns haven't been too shabby but everyone's a brilliant investor when markets are hitting records. The elephant in the room of course is that if Dalio has hit upon a sure fire way of delivering better risk adjusted returns the market will have spotted it and priced the future accordingly. He should've shared the golden goose with only his nearest and dearest. It's dead now.

No secret that the S&P 500 has been the best performing market (for a US investor) for the past 25 years. 

thegentleway

Sailtheworld said:

More for older people then?

Yes, people with a lower capacity for risk/shorter term goals. I think a lot of people also don't invest because they are scared of losses. This portfolio could help aleviate some of their concerns and actually get them to invest.

Sailtheworld

Thrugelmir said:

Sailtheworld said:

sixpence. said:

I think if you look at the data, you'll find Dalio's returns are a bit better than that. 
Also you talk about a 10% standard deviation but equities can drop 50-70% during a recession. At one point, Dalio's portfolio only dropped -3%. 
I agree that it differs from person to person! That's a good point. I like the principle behind his strategy though. 

From what I gather the returns haven't been too shabby but everyone's a brilliant investor when markets are hitting records. The elephant in the room of course is that if Dalio has hit upon a sure fire way of delivering better risk adjusted returns the market will have spotted it and priced the future accordingly. He should've shared the golden goose with only his nearest and dearest. It's dead now.

No secret that the S&P 500 has been the best performing market (for a US investor) for the past 25 years. 

The secret is getting S&P500 returns but taking less risk. That's what the Dalio portfolio has done.

Probably luck because it's so unlikely the truth was all over youtube and the market didn't watch it.

sixpence.

Thrugelmir said:

sixpence. said:

Thrugelmir said:

Why would the suggested portfolio apply to anybody else other than US investors? 

Why wouldn't it though? 

I'll leave that to you to figure out. 

I'll leave you explain it 

sixpence.

Sailtheworld said:

sixpence. said:

I think if you look at the data, you'll find Dalio's returns are a bit better than that. 
Also you talk about a 10% standard deviation but equities can drop 50-70% during a recession. At one point, Dalio's portfolio only dropped -3%. 
I agree that it differs from person to person! That's a good point. I like the principle behind his strategy though. 

A standard deviation of 10% and a market crash of 50% aren't mutually exclusive. 

From what I gather the returns haven't been too shabby but everyone's a brilliant investor when markets are hitting records. The elephant in the room of course is that if Dalio has hit upon a sure fire way of delivering better risk adjusted returns the market will have spotted it and priced the future accordingly. He should've shared the golden goose with only his nearest and dearest. It's dead now.

I don't think people investing in this strategy with reverse the causality of it's success? The reason it works is because of the negative correlation between asset classes AND the understanding the equities are more risky than most people think. Also it's still useful because we can tailor it to our own diversification perceptions and learn from Dalio 

Aminatidi

I wouldn't take the Ray Dalio portfolio necessarily literally but it seems a good advert for diversification and that over the long term you can make reasonable returns and limit downside by doing so.

I have about 85% of my invested wealth split between Personal Assets Trust and Capital Gearing Trust both of which I think are about as close to an "all weather" type allocation as you can easily get.

I sleep at night.

sixpence.

Aminatidi said:

I wouldn't take the Ray Dalio portfolio necessarily literally but it seems a good advert for diversification and that over the long term you can make reasonable returns and limit downside by doing so.

I have about 85% of my invested wealth split between Personal Assets Trust and Capital Gearing Trust both of which I think are about as close to an "all weather" type allocation as you can easily get.

I sleep at night.

Link us to these trusts please so we can contextualise them in terms of Dalio's idea?
Honestly, I'm reading about commodities right now and while gold makes sense, I am not really commodities other than gold. Oil seems stupid if the USA has sorted out fracking on home ground. I can't work out why you wouldn't just invest in gold. Also, oil hasn't negatively correlated with equities since 2008; some say this is because the way we get it has changed, some say this is because it hasn't reverted back to the normal negative correlation yet. 

ColdIron

Personal Assets Trust is very similar to Troy Trojan, same manager

sixpence.

Hmm, okay actually maybe oil is negatively correlated to the S&P... i read an article that said it wasn't but it does seem to be: https://www.macrotrends.net/1453/crude-oil-vs-the-s-p-500
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