pyad wrote:Interesting results G.
[Deleted.]
Marshmallows are 75% dearer over the 20 years - assuming Marshmallow prices paced inflation, so a 4.41 total return (accumulation) gain factor relative to 1.75 multiple higher prices, over 20 years = 4.7% annualised real reward total return. Near-as the exact same as a Permanent Portfolio that has just 25% stock exposure. But where the worst year for the PP was less than a -5% decline, whilst the HYP endured a -40% hit in year 8.
Many consider volatility to be a risk factor, and generally the same reward with less volatility is considered as being the better risk-adjusted reward. Or put another way - uncompensated risk. Allowing tilt towards high concentrations in a few stocks is yet another risk factor that might otherwise be diversified away. But some like the thrill from taking unnecessary risks - at least until that backfires. If for instance you were drawing a 4% inflation adjusted income out of total returns, and then in year 8 saw a -40% decline in total return value ... well that's a experience you'd have to actually live through in order to determine whether you were hard core enough to 'stay the course' or whether you were the capitulator that many are after seeing a substantial part of their lifetime savings/investments vaporised. Many hereabouts are more of the hard-core nature as the capitulators are less inclined to stick around such boards or are less able to access such boards from soup kitchens.
Moderator Message:
Moved here from HYP Practical as this has nothing to do with the practical running of an HYP. - Chris
Moved here from HYP Practical as this has nothing to do with the practical running of an HYP. - Chris