As you’re already financially independent the latter will help you improve thinking about spending levels (vs 4% rule heuristics) and the former will help build some mental scaffolding on failsafe ways to improve long-term growth
Also it amuses me you’re listening to Hoffstein, he’s a
Also, thanks for your reading suggestions. Do you think tail hedging makes sense long-term for unleveraged portfolios, given the costs? Especially compared to just holding multiple uncorrelated assets/strategies with positive expected returns?
Safe havens in one period of market volatility may react differently in another, so there is no consistent safe haven approach other than portfolio diversity, imo. The only reliable safe haven is buying puts, which is an expensive loser’s game long-term imo.
You can download the SG Trend index (not SG CTA index) and ask KMLM to send you the MLM index. Both go further back in time. MLM does not include costs.
Buying puts is not a loser’s game in the same way buying insurance isn’t – while it’s costly at the individual level it’s highly beneficial at the overall portfolio level!
One good mantra is “I don’t care about being right I care about making money”, so after you make a bundle on a strat all those debates fade into the background lol
As to Hoffstein, I think he’s both - do checkout episode S2E2 with Benn Eifert, he’s more of a quant and it’s super interesting
CHF hedging means you are trying to mitigate/negate the Swiss inflation. No bond nor fund that I know of does that.
You can mitigate the inflation happening in the countries using the currencies of the inflation linked bonds but if you are not spending in them, it does you little good and is more of a bet on unexpected inflation in those countries than a rightful protection.
Even then, @Compounding do you understand what inflation linked bonds are?
They do not protect against inflation, they’re used to bet for/against inflation predictions. They performed very well recently because actual inflation was above the predicted inflation, but in the future even with high inflation, it doesn’t mean they’re better than e.g. bond (inflation could for example stay high, but be below the predicted rate).
Real assets would cover commodities (among which gold), probably unleveraged real estate (so no REITs, that usually have a large exposure to debt instruments), maybe artwork and collectibles and anything non-perishable that you can buy and won’t go out of fashion. Those either have volatile prices, are illiquid or both so aren’t perfect inflation hedges.
The usual longer term hedge against inflation are usually considered to be equities. As Swiss investors, we don’t have, to my knowledge, reliable short term instruments to hedge inflation.
Arguably, human capital or AHV/IV (depending on your stage of life/situation) would be good hedges, as salaries are often indexed on inflation and AHV/IV is.
Edit: scratch my former reply to @nabalzbhf (deleted to replace by this): indeed, as inflation linked bonds bought on the secondary market are subject to market expectations, they are not directly linked to actual inflation, though they allow to make a prediction of the amount of real currencies that will be available when they mature.
I haven’t done active research on them so, no. I would actually be very surprised if real estate funds without the use of leverage existed, except maybe if they invested in agricultural land only.
That’s what many “big shots” were saying about 2023.
Just 24 days more until their crystal balls become marbles again.
(Although I wouldn’t mind another good buy opportunity soon)
If there is debt and interest expense wrapped up in the leveraged QLD product, isn’t that effectively off-setting and neutralising your Fixed income and associated diversification ?
And don’t you bear the cost of the interest rate spread as a result (interest rate charged on borrowing higher than interest rate received on deposits)
I am not familiar woth qld or leveraged products in general so sorry if it is a dumb question
If you are not yet fed up with my completely theoretical ideas, here is one more. Combination of the bond/cash tend and the glide path to higher equity allocation:
start with more cash than the target allocation, although I was thinking more about 70% stocks at the start vs. 80% target.
Define the amount to withdraw. I was thinking around 3.5% of the initial portfolio value.
Consume the asset that is currently above the target allocation (or all if almost the same).
This way one consumes first the cash excess and start consuming stocks earlier if they run well or later if they are depressed. With respect to the dividend use I am rather neutral: take as cash or reinvest, should not make a big difference.
Target allocation range + neutral alloc looks fine, if with a heavy delta to current allocation except for real estate.
What I see with my retired friends is there’s always some project that ends up making cashflow (rare folks also focus on forced appreciation or long shot bets), so once you “settle in” there may be excess liquidity to funnel into equities.
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