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Author: Rayvt Big gold star, 5000 posts Top Favorite Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 79104  
Subject: Re: Hi gang... wow!!! Date: 9/16/2013 11:05 PM
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What kind of allocation has that net performance? Heck, it doesn't even have to be a naked B&H... it could be *any* mechanically self-adjusting system (could include mechanical rebalancing, hedging, etc.) I am *absolutely* open to (and looking for) such a passive, long term, buy & forget it mix.

There is no such thing as a no-risk, no drawdown investment. Even T-Bills or cash -- which never have a nominal drawdown -- lose purchasing power due to inflation. Searching for such a thing leaves you vulnerable to scammers -- both illegal and legit -- who will promise or imply a promise that they can get it for you.

There's no such thing as an no-effort, outperforming buy-and-forget strategy, either. If you expect to grow a modest investment into six-figures you're just gonna have to put in some effort. Otherwise the losers I see lined up around the block at the liquor store on payday would be sending their chauffeurs.

But there's something pretty good that is very low effort that increases the risk-adjusted return and reduces the MaxDD of a S&P500 investment.

I haven't really talked about it, but it's right there on my spreadsheet. The 10 month SMA timing method that's between the B&H section and the IUL section. And on the chart, the orange line.
Every month compute the simple moving average of S&P500 for the last 10 months.
Buy (stay in) the S&P when the current price is >= the SMA.
Sell (stay out) when the current price drops more than 3% below the SMA.
When you are out, put in all in 1-yr Treasuries.
CAGR is about the same, but stdev is lower, volatility is lower, MaxDD is lower, Sortino Ratio is higher.

It's bad enough to leave $800,000 on the table by getting ans IUL instead of S&P500 B&H. But when the alternative to IUL would have you leaving $1.4M on the table??
How frightened of a bit of volatility do you have to be to willingly give up a Million bucks?
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